The Investing Week Ahead: 10/4/21
Join me as I highlight the most important topics to attack the investing week ahead.
Welcome back to our Monday Special - a quick breakdown and interpretation of the investing week ahead of us.
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In this post, I’m going to cover:
Hot IPOs taking place this week
Quarterly financial reports worth reading
Investor events to keep an eye on
Major economic releases
If you want to learn more about the companies mentioned in this post, consider using Unhedged to conduct your research.
IPOs to Watch this Week:
This week is relatively slow with only 2 companies making their public debuts - both companies however will demand multi-billion dollar valuations and operate in the fitness segment.
The Utah-based fitness company was founded to develop fitness equipment and connected subscription-based exercise equipment & services. They’re the “parent company” of NordicTrack, ProForm, Freemotion, Weider, Weslo, and a few others.
The company boasts over 6.1 million total members - of which, 1.5 million were Total Fitness Subscribers. These subscribers generated nearly $1.8 billion in revenue for the company on a trailing 12 month basis (2Q21).
S-1 filing can be found here.
Despite the robust growth, I believe Peloton is still the authority in this space. Their net promoter score is undefeated, customer churn is very low, and as we learned from their recent invest event - they’re intensely focused on increasing household penetration during 2022.
Life Time Group (LTH):
This Minnesota-based company was founded to develop, acquire, and operate premium athletic health and wellness locations. Long story short, they’re a massive gym chain spanning across 29 states in the USA and a few places in Canada.
The company reports more than 1.4 million members who visited their locations more than 92 million times in 2019 (pre-pandemic). The company will likely end 2021 with ~$1.0 billion in revenue (-50% when compared to pre-pandemic levels).
S-1 filing can be found here.
I’m not too excited here. Gym memberships have sort of become commoditized and the ones that haven’t are after a very specific type of member (affluent). Life Time Group’s revenue rebounded since the pandemic, but is still down on a 2-year basis. Plus, they have an unlimited amount of competition in the space.
Key Earnings Announcements:
The ‘theme’ this week is consumer food and beverages with 3 companies in this segment reporting their quarterly financial results.
October 5: PepsiCo (PEP)
October 6: Constellation Brands (STZ), Levi Strauss & Co (LEVI)
October 7: Conagra Brands (CAG), Helen of Troy (HELE)
Personally, I’ll be keeping my eye on the Pepsi and Constellation Brands earnings results - these companies have weathered a storm of increasing cost pressure and slowing mobility gains as the Delta Variant ran its course during Q2.
Wall Street has a $170 PT on PepsiCo (+12% upside) and $275 PT on Constellation Brands (+30% upside).
Unless you’re a car enthusiast, things are going to be pretty slow from this front.
October 6: Marvell Technology (MRVL) Investor Day, General Motors (GM) Investor Day
Never heard of Marvell Technology, but they’re a ~$50 billion microchip company raking in about $3.5 billion in revenue annually. Historical revenue for the company has been lumpy, but their stock is up +26% YTD, so maybe something to keep an eye on?
General Motors is.. well General Motors.
Major Economic Updates:
Trade deficit and payrolls - everyone’s favorite topics.
October 5: US Balance of Trade for August 2021 from the Bureau of Economic Analysis
October 6: US Non-farm Payrolls for September 2021 from the Bureau of Labor Statistics
Our trade deficit jumped to a 12-year high during the month of July, with data suggesting trade could drag on economic growth during the third quarter of 2021. This jump was mainly caused by a decrease in our services surplus for the month as a country. It’ll be interesting to see what August has in store.
Thanks for reading!
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Disclaimer: This is not financial advice or recommendation for any investment. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.