Hundreds of investing and finance newsletters hit my (and maybe your) inbox every week. This is the best of the best.
This week, we bring you
- Five surprising downsides of being rich
- Microsoft is going hard on Nuclear energy
- Why are Bitcoin and Stocks Trading in Opposite Directions?
- Big Tech is Crushing it
Table of Contents
Five surprising downsides of being rich
via Short Squeez
Mo money, mo problems. Maybe not exactly, but wealth comes with various subtle downsides that may surprise mere mortals.
Short Squeez unearthed this gem that originally appeared in Inc.
Microsoft is going hard on Nuclear energy
Spotted in last week’s link dump from Marginal REVOLUTION, Microsoft will build its own nuclear reactors to power its data centers.
One more piece in the bullish puzzle for uranium.
Word is out: Microsoft is plunging ahead on nuclear energy.
— Mark Nelson (@energybants) September 23, 2023
They want a fleet of reactors powering new data centers. And now they're hiring people from the traditional nuclear industry to get it done.
Why?
Lack of stable long-term power, whether clean or dirty, is constraining… pic.twitter.com/8NF7qFeGO7
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Why are Bitcoin and Stocks Trading in Opposite Directions?
via Daily Dough
For nearly a decade, Bitcoin remained uncorrelated to the broader equity and bond markets. Then everything changed in 2021, and crypto and equities started moving in lockstep.
That’s changed again, and Daily Dough tells us (a) why and (b) why it’s important.
Subscribe to the Daily Dough.
Big Tech is Crushing it
While the S&P 500 has corrected 10% since its summer highs, it could be much worse. Big tech is propping up the index.
As Charlie Bilello points out, the tech behemoths are slaughtering earnings:
- Microsoft’s revenues increased 13% over the last year to a new quarterly high of $56.5 billion. Net income grew 27% YoY to a record $22.3 billion. Operating profit margins increased to 47.6% from 42.9% a year ago.
- Google’s revenues increased 11% over the last year to a new quarterly high of $76.69 billion. Net income increased 42% YoY to $19.69 billion. Operating profit margins increased to 28% from 25% a year ago.
- Meta’s Q3 revenues increased 23% over the prior year to a new quarterly high of $34.2 billion. This was their highest revenue growth since Q3 2021. Net income increased 164% YoY to a record $11.6 billion, and operating margins increased from 20% to 40%.
Subscribe to Charlie Bilello’s The Week in Charts
Stock ideas
With hedge funds “piling into” uranium stocks, which are up 34% TTM, here are three solid options for your portfolio.
Remember to always DYOR.
Uranium Energy ($UEC)
Bull Case
- Expanding Operations: UEC has significantly expanded its operations and is poised to benefit from the anticipated stabilization of uranium prices at $60 per lbs.
- Strong Financial Performance: Despite a net income deficit, UEC recorded a transformative year with record revenues, fueled by accretive North American acquisitions and is now production-ready in the USA.
- Positive Analyst Outlook: Analysts rate UEC a “Strong Buy” with a 12-month stock price forecast indicating a potential upside of approximately 17% from its current price.
Bear Case
- Financial Health Concerns: With a net income of -$3.31M in the trailing twelve months, the financial health of UEC could be a concern.
- Dependency on Uranium Prices: UEC’s profitability is heavily dependent on the stabilization and increase of uranium prices.
- High Volatility: With a beta of 1.89, UEC’s stock is quite volatile which could mean higher risk for investors, particularly in a market where prices are driven by global geopolitical and economic factors..
Cameco Co ($CCJ)
Bull Case:
- Robust Financial Performance: Cameco’s Q3 2023 net earnings of $148 million and adjusted net earnings of $137 million demonstrate a strong financial performance. The gross profit improved due to lower unit costs in the uranium segment and higher average realized prices driven by increases in the uranium spot price.
- Promising Revenue Outlook: Cameco has increased its 2023 consolidated revenue outlook to between $2.43 billion and $2.58 billion.
- Long-term Contracting Success: With commitments requiring delivery of an average of about 29 million pounds per year from 2023 through 2027, and a large and growing pipeline of business under discussion, Cameco is well-positioned to benefit from long-term contracts.
Bear Case:
- Production Challenges: A reduction in production due to a snag in Cameco’s production schedule, coupled with potential further delays in expected shipments, could impact the company’s ability to meet delivery commitments and potentially affect revenue.
- High Valuation: Despite a strong financial performance, the stock is trading at a P/E ratio of 261.67.
- Geopolitical Uncertainty: The geopolitical uncertainty brought on by Russia’s invasion of Ukraine and a coup in Niger has intensified supply concerns. This geopolitical backdrop could pose risks to uranium supply and downstream processing, impacting Cameco’s operations and the broader uranium market.
Global X Uranium ETF ($URA)
Bull Case:
- Diversified Exposure: URA offers diversified exposure to companies involved in uranium mining and the production of nuclear components, aligning with the broader theme of nuclear energy resurgence.
- Strong Performance: URA, being the world’s largest ETF exposed to the uranium space, has shown strong performance to date, demonstrating a positive momentum as uranium prices continue to rise.
- Beneficiary of Uranium Upswing: With uranium prices at a 12-year high and anticipated to rise to $60 per lbs, URA stands to benefit due to its heavy investment in uranium-centric companies.
Bear Case:
- Geopolitical Risks: The geopolitical environment, especially political fallout risks and supply concerns due to global tensions, could adversely affect the uranium market and, subsequently, the performance of URA.
- Sector-Specific Risks: Being a sector-specific ETF, URA is highly susceptible to any negative developments within the uranium and nuclear sectors which might affect the fund’s performance adversely.
- Expense Ratio: URA has an expense ratio of 0.69%, which, while not exorbitant, could impact returns over time, especially if the anticipated upswing in uranium prices does not materialize as expected
That’s it for this week.
If you write amazing content and want to be featured, please send it through for consideration.
Cheers,
Wyatt
Disclosures
- There are affiliate links above; we’ll get a couple of bucks if you take action after you click through.
- This newsletter was brought to you thanks to our friends at Fenchurch Legal.
- I don’t hold positions in any of the investments above.
- Nothing above is financial advice. DYOR, you filthy animal.
