The Investing Week Ahead: 12/6/21
Join me as I highlight the most important topics to attack the investing week ahead.
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A few callouts to mention before we get started:
I’m hosting a livestream with the Chief Investment Officer of Defiance Investments this Thursday at 11am ET. I’ll circle back around with an access link soon. They just launched $NFTZ - the very 1st ETF focused on companies involved in NFTs and related blockchain technology.
During last night’s Founding Member livestream, I explained why free cash flow per share is so important in relation to stock price - and subsequently rising interest rates. I’ll post a more detailed explanation for you all this week as I pull together my thoughts around the “new portfolio.”
If you haven’t read the post below - I walk through exactly how I’m investing my money and what I’m specifically doing to build wealth over my lifetime. If you’re new, or know someone who’d appreciate investing strategy insights, this is a great resource.
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In this post, we’ll 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.
The Investing Week Ahead - Too Long, Didn’t Read:
Billions will be raised via this week’s initial public offerings, all eyes on fast-growing tech companies as they release their quarterly earnings, a few CEOs in our coverage universe will be participating in investor conferences this week, and we’ll see just how “transitory” inflation was during the month of November.
IPOs to Watch this Week:
Two massive companies are raising billions this week during their public debuts - one built for digital payments in Brazil and another for constructing multi-cloud infrastructure globally.
Nu Holdings (NU):
This Cayman Islands-based company founded to “develop an online platform for providing commonly used financial services to consumers in various Latin American countries” is planning to raise $2.5 billion this week through an IPO.
The company generated $612 million in revenue in 2019, $737 million in 2020, and is on track to rake in $1.4 billion in revenue this year - with roughly 48% gross profit margins. This company has a track record of effective marketing - with market expense as a percent of revenue hovering around mid-single digits.
The company’s total addressable market of consumer credit in Brazil is on pace to grow by +30% within the next few years (depicted below) - blazing a clear runway for Nu Holdings to continue their outstanding revenue growth.
I’m intrigued, but I don’t know enough about the consumer credit landscape in Brazil to make any sort of strong judgement here. Looking at the numbers alone - they’re worth learning more about. What I’m trying to figure out is whether this company is the Cash App or Venmo of Brazil - as well as if people who live there truly love using this product.
This California-based company founded to “create a range of infrastructure services (IaaS) for cloud IT deployments for the purpose of simplifying and automating IT operations” is planning to raise $1.1 billion this week through an IPO.
If that was all mumbo jumbo to you, like it was to me, here’s a more detailed (20-minute long) video of their CEO explaining more of what they do.
The company generated $121 million in revenue in 2019, $211 million in 2020, and is on pace to generate $300 million in revenue this year - all with 84% gross profit margins. The company has shown strong execution on growth by their management team given their spend on sales and marketing as a percent of total revenue since 2019 has decreased from 74% to 63%.
The company is still operating at a loss - but their operating margin has improved dramatically from -47% in 2019 to only -28% this year.
On its surface, HashiCorp is valued around ~30X forward revenue - which for a company growing at +50% annually while maintaining 83% gross profit margins seem attractive. Their dollar-based net retention rate is also 127% - impressive.
Generally speaking, everything about this company seems to be pointing in the right direction - so I’m definitely going to be analyzing their S-1 this week and report back on my findings.
Key Earnings Announcements:
After seeing companies like DocuSign and Asana lose so much of their enterprise value after reporting earnings last week, high-growth tech stocks will be all people have their eyes on this week.
December 6: MongoDB (MDB), Coupa Software (COUP), GitLab (GTLB)
December 7: AutoZone (AZO), ChargePoint (CHPT), PagerDuty (PD), Stitch Fix (SFIX)
December 8: UiPath (PATH), GameStop (GME), Udemy (UDMY)
December 9: Oracle (ORCL), Costco (COST), Broadcom (AVGO), Lululemon (LULU), Chewy (CHWY)
December 10: Academy Sports and Outdoors (ASO)
MongoDB, Coupa Software, PagerDuty, UiPath, and a few others will move violently up or down this week - be ready. In other news, I just remembered I need to add Costco to my “new” portfolio for 2022 - that’s a no brainer.
No real rhyme or reason to the events taking place this week - just try keeping your head on a swivel.
December 6-8: Raymond James Virtual 2021 Technology Investors Conference
Dell Technologies (DELL)
Cisco Systems (CSCO)
NXP Semiconductors (NXPI)
December 8: CEO of Southwest Airlines (LUV), Gary Kelly, presents at the company’s 2021 Investor Day
December 9-10: Deutsche Bank Virtual AutoTech Conference
The conference will bring together corporates and investors to discuss current interests in the autotech sector. In addition to management participation, the conference will include panel discussions and one-on-one interviews. I’m hoping to find materials on the Nvidia (NVDA) management team’s presentation.
This week we have material events from the online learnings companies Coursera and Udemy - as I shared in Udemy’s brief IPO breakdown here. I think online learning is a secular growth trend worth considering in a portfolio. Hoping to learn more about what these online giants are building for their customers behind the scenes.
Major Economic Updates:
Trade balance, job reports, and inflation data - this week will be rocky.
December 7: US Balance of Trade for October from the Bureau of Labor Statistics
December 8: US Job Openings for October from the Bureau of Labor Statistics
December 10: US Consumer Price Index for November from the Bureau of Labor Statistics
Funny enough, I shared this video on TikTok about my thoughts surrounding the CPI for November - and even made a bet on the results. With the current volatility of equities markets, it’s of the utmost importance to keep review economic progress and actually view the data ourselves - not just through biased headlines or tweets. The good news - I got you!
Have a great start to your week!
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.