We hope you had a great weekend.
Our quick callout of the day comes from a few time zones over…
You’ve heard us mention before that India deserves some attention. But did you know…
2023 is the year India becomes the world’s largest population
Indians are the number one users of Facebook, Instagram, YouTube and WhatsApp
In 2021, India exported more in software ($133 billion) than Saudi Arabia did in oil ($113 billion)
We’re going to see if we can put our money where our mouth is and find out the best way to gain exposure to India’s growth. Reporting back soon… hold us to it.
Portfolio Updates:
I shared the below post with you all on Thursday — be sure to give it a read if you haven’t already!
As always, above is the performance of my Dividend Growth Portfolio. I haven’t made any major buys / sells to the portfolio this week — still dollar cost averaging when I can afford to.
With that being said, I wanted to also share with you all the YTD progress of my cryptocurrency portfolio — Bitcoin and Ethereum.
Not included above is my massive position in Chainlink (LINK) — the above image is just my cryptocurrency holdings after I began dollar cost averaging back into the market in February.
I don’t talk about cryptocurrency too much over here, but I do believe it should make up some portion of everyone’s invested assets. Specific, Bitcoin, Ethereum, and Chainlink. We can argue and go back and forth about other “altcoins” to include — but these three, in my opinion, are the “blue chips.”
For paying subscribers, here’s a link to my PORTFOLIO TRACKER.
For everyone & anyone, be sure to use StockUnlock for all of your portfolio analysis and tracking — can’t recommend them enough. Click here!
Week in Review — Too Long, Didn’t Read:
UnitedHealth Group dispels questions around profitability, Delta is forecasting flat growth in 2024, BlackRock continues to take marketshare, Amazon’s Prime Day expectedly set new records, Activision Blizzard may get its golden deal, Inflation for both Consumers & Producers is looking solid, and Consumer Credit could get scary.
Key Earnings Announcements:
UnitedHealth Group dispels questions around profitability, Delta is forecasting flat growth in 2024, and BlackRock continues to take marketshare.
UnitedHealth Group (UNH)
Key Metrics
Revenue: $92.9 billion, an increase of +16% YoY
Operating Income: $8.1 billion, an increase of +13% YoY
Profits: $5.7 billion, an increase of +9% YoY
Earnings Release Callout
“Our diverse health care capabilities and dedicated colleagues are enabling us to meet the needs of more people in more ways, driving substantial growth and expanding our opportunities to serve well into the future.”
My Takeaway
As you all might know, UnitedHealth Group was a massive position in my portfolio during 2022. As we turned our calendars from December 2021 to January 2022, everything began to crumble — while healthcare (especially the largest provider in the country) stayed strong.
I exited this position late-2022 and used the liquidity to begin averaging into beaten down Big Tech — since exiting, UNH’s stock price has fallen -14%. The reason for this sell-off was primarily the questions investors were asking around future growth and profitability.
After their Q2 earnings report was published, shareholders now understand that’s not the case — the future for UNH seems brighter than ever with revenue per Optum Health patient increasing +33% YoY, as more than 900K patients are being served under value-based care arrangements.
It’s not all good news, though. Their Optum Health operating margins have now fallen for two quarters in a row, one of the main reasons investors got spooked last quarter. Its net profit margin shrank from 7.3% last year, to 6.9% in Q1, and now to 6.6% in Q2 — nearly an entire percentage point YoY.
With all of the to say — I’m bullish, and after seeing them raise their annual dividend by +14% this year, I’m going to add them into my dividend growth portfolio. By the looks of this chart, it’s pretty obvious their stock is fairly valued at the moment.
As a reminder, the black line is their stock price and the blue line is their earnings per share (profits). For the last decade plus, their stock price moves in tandem with their EPS — now very much aligned with it after overshooting to the upside in 2021 and 2022.
Delta Air Lines (DAL)
Key Metrics
Revenue: $15.6 billion, an increase of +13% YoY
Operating Income: $2.5 billion, an increase of +64% YoY
Profits: $1.8 billion, an increase of +149% YoY
Earnings Release Callout
“With this performance, we generated record revenue and profitability in the June quarter. Consumer demand for air travel remains robust. Against this constructive backdrop, we are increasing our 2023 earnings guidance to $6 to $7 per share and reiterating our recently updated outlook for $3 billion of free cash flow.”
My Takeaway
This was a name I had mentioned in a “My Favorite Stocks Right Now” post from a few weeks ago — specifically because of their obvious earnings potential (below).
The company had reinstated their dividend a few weeks ago, sending their stock higher in the near-term. Passenger revenues grew by +21%, driven by a combination of capacity growth (+17%), expansion in unit revenues (+3%), and expansion in load factors (+1%). Overall, revenue increased by +21% in all passenger end markets, while forecasts show continued demand for international corporate travel in the coming months.
So all of this good news — why did the stock fall? Well, Delta guided for their 2024 revenue to be generally the same as their 2023 revenue — not the growth investors were hoping for. Now with that being said, the company is working on longer-term cost saving measures — the reason we see the profit growth in the graph above.
All in all, I think Delta is worth rolling the dice on if you’re a speculative investor — something 1-3% portfolio weighting. But with revenue flat YoY, I’m not yet overly excited to become an actual long-term investor in the company (nor the industry).
BlackRock (BLK)
Key Metrics
Revenue: $4.5 billion, compared to $4.5 billion last year
Operating Income: $1.6 billion, compared to $1.7 billion last year
Profits: $1.4 billion, an increase of +27% YoY
Earnings Release Callout
“BlackRock generated an industry-leading $190 billion of total net inflows in the first half of 2023, including $80 billion in the second quarter. Wealth and institutional clients across regions continue to turn to BlackRock for solutions across their whole portfolio – driving second quarter net inflows across ETFs with $48 billion, cash with $23 billion and active with $4 billion.”
My Takeaway
Just so we’re all on the same page, BlackRock is the only Financial Services firm to offer a diversified investment and technology platform across a broad suite of secular growth products where they’re also the leader in said products.
Their “platform-as-a-service” model and distribution network are their competitive advantages — therefore the reason why they experienced nearly $200B in net inflows into their products and platforms.
I’m still learning about this company, but from what I’ve read it’s reasonable to expect them to begin to outperform given their significant scale advantages, especially with global distribution as institutions and retail begin to consolidate their asset manager relationships.
No position.
Investor Events / Global Affairs:
Amazon’s Average Prime Day order rose to over $54 and the Activision Blizzard x Microsoft deal is getting closer to actually happening.