Watch Our Earnings Recap on Walmart, Home Depot, Lowes, TJX Companies, Target, and More

Hello, everybody. Nice to see you. Thanks for being here. Appreciate your patience. It's been an exciting time. A lot of stuff going on here. Pretty wild market here. What happened today? Stocks are going up because we're going to cut rates. Good news is bad news. Bad news is good news. Rate cut may be justified given rising concern about job market. Job market sucks, we're going to cut rates, stock market up. Yeah, okay, it's a pretty wild time to say the least. All right, we're going to do our earnings watch today and we're going to cover a bunch of stocks that are very popular. I'm going to do this in a different way. We are going to be doing this using our Stock Tracker 50 membership. Normally I do these with our professional membership, and, and those are very rich presentations because, hey, giving away a lot of information. Today we are running a special offer on our professional membership, so I'm not giving away free memberships or free access to research on the professional membership today. So it'll be a little different. We'll still be able to get the signals and see what's going on with the stock ratings. But the view will be a little different. Let me show you what I'm talking about here. Let's get going with sharing the screen. Q&A, we got here. MD, look at this. You guys know what's going on here. I love it. There's no hesitation here. You got tickers coming in before I even have to get that chance to ask for them. I like it. I like it. I'm going to clear out the current portfolio. Let me share my screen here. This is our Stock Tracker 50 membership. And I'm clearing out the current portfolio so we can put in the stocks that we're going to talk about for the earnings watch today. Okay, here's what we got, man. It's been an interesting week. Our special offer for the Pro membership is here, so it's a super good deal. We're offering multiple— several months off, free months of access off of Pro memberships. And in the meantime, let's talk about stocks. WMT, Walmart. How they doing today? Man, they're down. So I thought Walmart did a pretty good job. They're winning over shoppers. Earnings miss forecasts as US sales— okay, so stock is down and it's even down today in a really strongly up market. Why do we think that is? The answer to that question is, look, this is an expensive stock, pure and simple. And I don't know about the earnings distortion score. That would be in a pro membership only. But yeah, good company, bad stock, right? It shows you all the same things really in terms of the equity, the position on the stock. And what we think here is that if these guys don't blow the numbers out of the water, you're going to see the stock go down and it's going to go down precipitously. And even in an up market, even in an up market. As we're seeing here. So yeah, Walmart, great company, always been a great company. It used to be a focus list stock, but, you know, look, it just, it just went up for so long and so much. Look at that chart. Wow. I think we were focus list around here. I have to go back. I don't remember for sure, but it was, it was floundering for a while. And by the way, I was pumped because here it was real expensive, real expensive. And then things started to turn and I was like, oh yeah, we can get into Walmart now. I like this. And that was great because when a stock like that gets cheap, it's like it's a special thing, a special thing. So when it's not cheap though, you really got to be careful. You got to stand back and be a little more careful. Home Depot is a similar situation, folks. Good company, almost exactly the same, right? Slightly different, both really good underlying economics of the business, but expensive valuation. What do we see with Home Depot this week? Kind of a similar situation, right? Okay, it was up. Interesting. I remember Tuesday morning these guys came out and remember thinking that it was down Tuesday morning because I remember I was watching these guys while I was working out, watching the report come in. So interesting. So I think it's been a bounce back. Whatever they did, they, they shifted the narrative. Um, that's good. I think they're making an acquisition to boost the professional business, so that's good. And yeah, so interesting, up pretty strongly, which is saying a lot considering it's already an expensive stock. Yeah, if you can't tell, I'm a little bit surprised. I think somebody raised their hand. Please, if you don't mind, put your question into the chat or the Q&A. That's where we can handle those a little better. All right, so Home Depot. Yeah, I'm kind of curious where I get the wrong read here. Raises red flag about customer behavior in stores. Home Depot earnings underline 3 themes to watch in retail stores. Momentum drives shares higher as investors jump ahead of Fed rate cuts. What else was in here? Yahoo Finance, CNBC. After earnings miss estimates, jumped anyway. Yeah, so they, they missed higher 2nd quarter interest rate cuts. Well, so they missed, but they still went up. Interesting. Appeared to be in July. Oh, you know, that is one thing I do remember. They had a huge jump in comparable store sales month over month in July. So that's some pretty strong momentum. They stuck by their guidance for the year, which I think is helping. So, you know, yeah, we had a bad quarter, but we're going to be making it up later. So it's not really a miss. A miss, but not really a miss. So, you know, I guess pretty, pretty generally positive overall. So a miss here, but they feel like there's enough strength in what they've seen so far this year that the business is going to hold up. That said, like, this is an expensive stock. I wouldn't be all that interested in this one. Wouldn't be all that interested in this. I wouldn't, I wouldn't be interested. Neutral rating, right? We're not really interested in neutral ratings. Let's just show us all the stocks we've written on. Yeah, we took it off the focus list in 2023. When we put it on there, 2015. Anyway, yeah, good stuff on Walmart. TJ Maxx. What happened with TJ Maxx? TJX. All right, 5 days. Oh yeah, I think TJ Maxx had a good one too. They had a good warning. I think the word is that like the people are moving toward the discount stores. People are moving more. They're downshifting, which we think has been going to be positive for Dollar General, Dollar Tree, those stocks. Yeah, they're doing a good job on the tariff strategies. All-time high on upbeat results, TJ Maxx. But this has got to be an expensive stock. Not great underlying economics either. Not great underlying economics. Again, this is our Stock Tracker 50 membership, only $49 a month. This is an incredibly, incredibly inexpensive way to get access to the proven superior signals of New Constructs Research. Remember, when I say proven superior, I am talking about our ratings, our ratings which dramatically outperform the market. How well do our ratings do? Well, let's look at the very attractive stocks. Year to date, up 12%. The market's up just 10%. 5 years, 164 to 82, 82 percentage points beats. Rating system works pretty well, folks. I think it—you could say it works really well, right? And there's also the Core Earnings Leaders Index that outperforms by a bunch too. It's beating the S&P 500. It's 15 to 10. Very attractive is 12.5 to 10. B Corp beating by even more over five years: 121 to 82. So beating it by about 19 percentage points or 39 percentage points. Sorry. Interesting. Not quite as much as, as this guy. But anyway, you get the idea. Our research does really well. Kicks some tail, to say the least. So TJ Maxx, great return on invested capital. Quality of earnings, not so good. Valuation expensive. Glad to see them hitting an all-time high. This stock looks maxed out to us. Not a lot of upside left. Lowe's. Good company, bad stock. What does that look? That looks exactly like Home Depot, doesn't it? Yeah, boom. Like these guys are like mirror images of each other. Lowe's. Boop boop boop boop boop boop boop. Oh, little bit better on priced economic book value, but still very very very expensive. Take a look at this. Wow. Good week for Lowe's. They top. Tops Home Depot with a big buyout and earnings beat. Oh yeah, they're doing the big acquisition. Lowe's is not Home Depot buying a big pro business to help boost their— boost that part of their business, which probably smart move for them. The market is certainly rewarding it. All right. Target. Oh, this is the downer, I think, this week. Target. So not just a good company, but cheaper stock. Wow. Rallying today, probably on rate cuts, and just like the rest of the market, but still down pretty strongly for the week. Yeah, they— I think they canned their CEO, picks a new CEO, sales fell again. I don't think they had a good earnings report. Reported stronger than expected second quarter earnings, but that may not matter. We finally know who the next CEO is. So interesting. Dropped 10% at one point. They were hoping in it for an external hire. So yeah, Home Depot beat earnings, still dropped. Yeah, I think people are really questioning this business, and I don't, I don't think I can blame them. I don't think I can blame them. But I do. But I do. But I don't. It sort of looks like Target. You know, not great business. Got some attractive ratings over here. So my guess is that this stock is probably rallying today, but has been down on probably price neutral rating. So flat for the week, up today with the rest of the market. Drops after earnings. Let's see what it do. Let's see here. Yeah, so it added it. It did. It dropped on the earnings, and then it's kind of coming back with the with. Today's run kind of probably dropped 2%, up 2%, dropped 3%, up 3%. So not a lot of action there, folks. You know, the thing about these neutral-rated stocks is that they're neutral. They're in the middle. We are looking for things on the extremes, very attractive and very unattractive. That's where I think the action is. Oh, let's look at Didi Global. It's one of my favorite stocks to hate. Unattractive. This was a, you know, this was a flat-out Ponzi scheme in my opinion. This was a rip-off scheme from the IPO. Up 7%. Must have had a good earnings report. Yeah, we, we've been negative on this. I don't know if you guys remember, but interesting. This is before. Yeah, we wrote a pre-IPO Report on this guy. It's one of the kind honestly one of the biggest mistakes that we ever made on our focus list is we wrote this and we didn't get it in the focus list because we dropped the ball and it dropped like I mean some crazy amount. Let's take a look at the chart. Yeah, so it's still way below, but like we you know we we we put it on our focus list short as a danger zone pre-IPO pick and it dropped eighty percent. We didn't have that in our focus list. That's one we missed. We deserve credit for that one. We didn't get— we don't get credit for it. We deserve credit for it. We don't get credit for it. I'm not saying we're going to take it, but we deserve it. We called it. And it's— yeah, it's up. You know, this is— this thing's— this is— I mean, look, the taxi business, folks, is not a really profitable business. And then it's going to be decimated by robotaxis. And yeah, robotaxis are going to be more profitable, but then the cost of riding is going to go down. Most of the benefit of a robotaxi is going to pass through to the consumers. Because if the robotaxi business has got a 50% margin, then someone else is going to go buy robotaxi and say, well, I'm happy to work at a 40% margin. Then someone goes, I'll go 30, 20, 10, 5, 10, 2. It's a race to zero. The only way you keep a high margin is if you have something that no one else has or can do something that no one else can do. Robotaxi driving is not that There's no moat, not a significant moat. So yeah, DD Global, we were— we warned people about this for a long time, and, and it went way down and we closed it. But we were, you know, that was a short amount of time, June 2021, and it debuted in July. So, and then we closed it in August. What did we close it that quickly? Looks like it, August 18th, and it dropped Wow, dropped a lot. Dropped to the 7s in August. Yeah, it's about when we dropped it. Yep, and it just kept going. Anyway, look out below. Don't say I didn't warn you. All right, last one. Williams-Sonoma. Good company, bad stock. But guess what? If you looked at this report, You'd know, you could infer that we liked this stock for a long time ago. Long idea, Williams-Sonoma. It's up there for free now. You can see it. I'll put this into the— anyway, yeah, great analysis here. That's how we identified the stock. It was cheap and it kept getting more and more profitable, and we loved it and we liked it and we kept it on the focus list for a long time, and then we had to let it go because it got expensive. How did they do? Yeah, not great. Mixed signals and volatile market. So net flat on the week after the big bump that everybody's getting today for, for, for the Fed rate cut. Everybody wins. More, more punch is being served to the party. Question: is this membership— where do you find stock price that the economic earnings support? In the Stock Tracker 50 membership, you don't really You don't really get that. You get the ratings themselves, but you don't get the underlying data. For $50 a month, the ratings are a great deal. If you want a professional membership, then you can get the economic book value per share, which is this more detailed view here. So you would be able to come in and say, okay, the economic book value per share is $50, $51 a share. And you can see the difference between price and economic book value. Does that answer your question, Marlene? That's, that's only in the professional membership. Again, special deal on the professional membership right now. Get the replay here. It's interesting. Well, let me put that in there. And then the order form is here. Anyway, point being, we're offering multiple months off. 1 month off on 6 months, 3 months off at 9 months. So, and you really can't beat our professional membership for just amazing research. It's unbelievable, especially in a market that's as crazy, volatile, and who knows what's going to happen. We got our bump on a rate cut. Okay, now what? All right, I'll take a few requests. Let's take some requests here. Also part of the Stock Tracker 50 membership, you can type in as many tickers you want here. So we have a few minutes, let's knock this out. Let me go here. Who was early? Somebody was real early here. Yeah, my buddy DL. DL, what did you squat today? Where's your workout? Ituran Location and Control. So this one's been attractive for a while. How's the performance been? I think this has been a home run. I actually pointed out this stock around a year ago in Vegas at the Stansberry Research Conference, pointed it out as a good idea. Fed 150 cows. All right, deal, that works. That's not easy either. I got you, I got you, I remember. Well, you just throw— you throw hay off the back of the truck, or do you Fill some troughs. How'd you do it? I've done both. Been a while. My youth, but that's a workout too. Farmer strong. Anyway, yeah, still looks good. We like this. It's had a big drop here recently. Look at that. I guess that's not so good. But in terms of the rating, still looks really strong. Still looks really strong. What else we got up next? Let's see. OXY, Occidental. Yeah, these, these energy companies, I like that it's cheap here, but I think that, you know, the peace dividend is a negative for energy companies. I think we're going to see more supply as there's less— there's more world peace, less conflict, there's more supply. I think things get worked out with Ukraine, probably brings more supply on board, some more Russian supply. Who knows? So we've been really bullish on energy companies, but really selective about certain energy companies that are still profitable, that still look attractive and cheap. But we've cut back on a couple. I think we closed a position a week or so ago on an energy business because it was just— we're just, you know, we think unless it's really cheap and still really profitable and not really price sensitive, we think energy prices have more risk to the downside than to the upside. All right, I've got 2 more here. Let's knock these out. MD Pediatrics Medical Group. Wow, we got a lot of similar stuff here. So not so good, but cheap. So if you think the profitability of this business is going to improve, it could be a great stock pick. Could be a great stock pick. In fact, why don't we jump in real fast into a Pro, a view of what Pro would show you on something like this. 0.7 price-to-economic-book value. What does that mean in terms of like, what's the upside here? Well, that means the current stock price is implying profits will permanently decline. It's getting a bad grade here for economic earnings because even though the economic earnings are— well, they're negative while the accounting earnings are positive and rising. Interesting, but they got less negative. So return on capital coming up, or return on tangible invested capital up, return on regular capital flat. If that's going to turn, and maybe the return on tangible invested capital is a leading indicator there, if that's going to turn, look at that, that's a big jump from 50 to 68.7. That's impressive. So the margin got quite a bit better. If that's going to continue Or if it just stays the same, if the improvement continues, if the margin stays the same, the value of the business, if profits stay the same, is $24. So, what, that's like a 50% jump from where it is now? That's quite a bit of upside. So, to Marlene's question, what's the economic book value of the stock support? Assuming profits stay the same from where they are, don't continue to improve, stock's worth $24. So you get a lot, you know, the pro membership is a lot of detail here. That's why it costs more. For people say that this is expensive, I say, give me a break. This is the cheapest high-quality research you're going to find. It would cost $50 grand to build a model like this for this one company to do this work. If you want to get somebody on Wall Street, or you want to spend that amount of time on your own, go ahead and try. Get 10 years of data, or at least for this, just for this view. 6 years of data. That's 24 filings, all parsed and the model built in a way. And then keep in mind, in order to know whether or not these ratings are good, you got to be able to compare it to every other company out there. So you got to have a model for every other company that's just as high quality so that you know that your comparisons here are high quality. And then you got the benchmarks. I mean, that's just, you know, to get something like this is going to cost you It costs millions of dollars to update per quarter, to say the least. Yeah. Yeah, I think DL had a good— can you guys all see what DL said here? Stock Tracker 50. It's great for covering the basics, right? For tracking stocks, seeing a thumbs up or down. And then if you want to go in a little deeper, you go for Gopher Pro. You can buy some model portfolios. You can get individual company reports. And you can go in deeper where you want. Or if you want to understand the whole market, you go deeper for the whole thing. All right, last stock. Last stock on the request list today, B-A-L-Y, Bally's. Speaking of the gym, yeah, not so good here. Unattractive. Suspended for some reason. It won't tell us in a Stock Tracker 50 because there's a lot of work that goes into, like, companies getting suspended. Like, for example, Could have weak internal controls. This is like deep research. You don't get anyplace else. So for $49 a month, you know, come on. I can't give you the keys to the kingdom for that, right? Can't give away too much milk for free. But if we went in here, we looked it up, we'd see that it was suspended. Weak internal controls. Oh, that's a, that's a good reason to be suspended. Added back to coverage in June. We got a new K and Q. Yeah, strong beat is expected, but unattractive rating. 3% return on capital, negative all the way around in economic earnings and accounting earnings. Free cash flow is positive. I'm guessing that that is probably more about changes in invested capital than in NOPAT. NOPAT is up a little bit here in the trailing 12 months, and invested capital Down. So the free cash flow is because they're selling off some assets or managing working capital better. So this would be one where I would like ignore this. Like if I were like doing this research, like, yeah, this is a false positive free cash flow in my opinion because assets are being reduced. And I think these guys are kind of a turnaround story. I mean, these gem businesses aren't that good. Like Planet Fitness is actually really competing. My kids have used it, like, you know, for temporary membership, you know, and then it's hard to get out of it. I had to ding my 15-year-old because he's like, yeah, let me borrow mom's card. I wanna go work out, blah, blah, blah. I'm like, you can wait. And I was like, no, I don't wanna miss work. All right, well, make sure you, you know, you sign up, you get done with it. Well, you know, we got charged for a couple months and man, the boy had to come outta pocket and pay me back. Like, did you, did you exit that membership? Yo, I think so. You better make sure. They're naive about how hard it is to get people to stop charging you. Good lesson for him to learn. Okay, folks, thanks very much for being with me today. Sorry for the late start. We are not probably— this is the end of earnings season, so we won't be doing any of these for a while. But make sure you tune in for our monthly webinars and for sure take advantage of this special offer for the Pro membership. It's a special deal. These do not come around very often. The best research in the world for US stocks, as proven by the performance of our indices and Harvard Business School and MIT Sloan. Thank you.