Research Reports

Stocks are trading lower on Tuesday morning on some weaker-than-expected economic data as well as growing concerns that AI-related stocks are overbought at this juncture. Specifically, the Conference Board's Leading Economic Index slipped 0.4% in January and was lower than the expected 0.3% drop. The index was down 3.0% over the past six months -- a narrower decline than the preceding six-month period, which fell by 4.1%. Still, with six of the 10 index components being positive over the past six-month period, the index no longer is signaling a recession ahead. Turning to stocks, shares of Nvidia (NVDA) are down today, with the company reporting earnings tomorrow after market close. Despite expectations for positive earnings results, the selloff indicates many investors may be concerned that the shares are due for a pullback following an impressive run this year (which saw shares rise over 50% to an all-time high set last week). Shares of other tech companies which also saw strong gains related to AI prospects are trading lower on overvaluation concerns, including Arm Holdings (ARM), Advanced Micro Devices (AMD), and Super Micro Computer (SMCI).

In this edition, we explore oil and gas exploration and production opportunities; Ameriprise manages to get a fair value estimate raise; we launch coverage of Kongsberg Gruppen; and Royalty Pharma, Hanesbrands, and Orsted.

The Cooper Companies is one of the largest eye care companies in the U.S. It operates in two segments: CooperVision and CooperSurgical. CooperVision is a pure-play contact lens business and is composed of a suite of spherical, multifocal, and toric contact lenses. The company also has one of the most comprehensive specialty lens portfolios in the world. With brands including Proclear, Biofinity, MyDay, and clariti, Cooper controls roughly a quarter of the U.S. contact lens market. CooperSurgical, founded in 1990, is made up of equipment related to reproductive care, fertility, and women’s care. Cooper has the broadest medical device coverage of the entire IVF cycle. It also has Paragard, the only hormone-free IUD in the U.S., and controls 17% of the U.S. IUD market.

Stock indices dipped in October 2023, with the S&P 500 falling a sharp 10% off summer highs. Looking at 13F filings of big institutional portfolios, we see that the big guns were busy last quarter taking advantage of that dip. Citadel Advisors went on a buying spree, adding to its $100 billion portfolio across a range of sectors. As did D.E. Shaw, adding to its $67 billion portfolio. Vickers Stock Research, a subsidiary of Argus Research Group, analyzes insider trading and institutional stock ownership. Form 13-Fs, which institutions must file to report their holdings, are due 45 days after the end of calendar quarters and have come in for 4Q24. We review 13Fs of major activists to determine core holdings and new purchases. Activist investing is now less about generating a short-term return and more about achieving long-term returns through an active management/investor partnership. Based on data from Vickers, here are some recent new purchases and key holdings of activist investors, as well as other high-profile money managers.

Two inflation reports were released last week. Both indicated that pricing pressures are retreating from peaks -- but inflation remains above the Fed's target of 2.0%. Progress to that level may be harder to achieve in the months ahead. According to the latest Consumer Price Index (CPI) report, the overall inflation rate in January of 3.1% was lower than the prior month's 3.4%. That's great -- except Wall Street was looking for 2.9%. The core CPI rate, excluding food and energy, didn't move at all and remains at 3.4%. What's propping up core CPI? Transportation Services (+9.5% YOY) and Shelter (+6.0%). These categories have prices that don't typically fall sharply. The other inflation report last week was the Producer Price Index (PPI). It measures pricing trends farther up the supply chain, at the manufacturing level. Here, we also saw a slowdown in the rate of decline in inflation. The core final demand PPI rate for January was 2.6%, steady month-to-month after having fallen from 4.4% a year ago. We have noted for months that progress will be slow for inflation returning to the 2.0% level. And nothing was terribly alarming in either report. Energy prices remain under control, and prices at the PPI Intermediate demand level (even farther up the value chain) continue to outright decline. We think the June 2022 CPI rate was the peak reading for the index this cycle, as the housing market cools, supplies of new vehicles are replenished, and the price of oil stays below $90 per barrel. The Fed lifted the feds fund rate from 0.0% to above 5.25% over the past 18 months, and the hikes appear to be reducing inflationary pressures. We still look for the U.S. central bank to be lowering rates in 2H24 as their concern shifts more toward economic growth.

While everyone in the investment world will be waiting (nervously or confidently) for Nvidia's quarterly numbers after the close on Wednesday, there certainly are other important Q4 EPS reports this week -- like those from WMT, HD, PANW, ADI, SNPS, VRSK, INTU, BKNG, MELI, EOG, BRK.B, among others. In addition to NVDA, stocks that are quite extended after large-to-massive moves since late October (about four months ago) include PANW, INTU, BKNG, MELI, and BRK.B. Betting on more near-term upside from these stocks, no matter what they report, is a tough technical game as they all have extreme 14-day and 14-week Relative Strength Index (RSI) readings in the high 70s to mid-80s. Needless to say, this should be another interesting week.

Weekly Tee Up: Walmart and Nvidia

The Vickers Top Buyers & Sellers is a daily report that identifies the five companies the largest insider purchase transactions based on the dollar value of the transactions as well as the five companies the largest insider sales transactions based on the dollar value of the transactions.

The Vickers Top Insider Picks is a daily report that utilizes a proprietary algorithm to identify 25 companies with compelling insider purchase histories based on transactions over the past three months.

In this edition, we explore oil and gas exploration and production opportunities; Ameriprise manages to get a fair value estimate raise; we launch coverage of Kongsberg Gruppen; and Royalty Pharma, Hanesbrands, and Orsted.

U.S. stocks were lower on Friday morning following higher-than-expected inflation numbers, which lowers expectations for a rate cut in the near term. The Producer Price Index (PPI) rose 0.3%. Core PPI rose 0.6%, the largest increase since January 2023, with both readings well ahead of their expected 0.1% increase. The latest readings bring annual PPI to 0.9% and core PPI to 2.6%. On the earnings front, Coinbase Global (COIN) shares rose 15% after it reported a profit. The S&P 500 was nearly flat, up 0.01%, the Dow was down less than 0.1% and the Nasdaq fell 0.2%. Crude oil traded above $78 per barrel and gold was up 0.3% to $2021 per ounce.