Fed Keeps Rates Steady For Now...

If you're looking to take your investing knowledge to the next level, make sure to check out our latest free courses offered on mainstreetwolf.com!

Market News and Short-Term Predictions

U.S. stocks on Wednesday came well off their session highs to eventually end mixed. Still, Treasurys climbed as investors took heart from the Federal Reserve's plans to slow the pace of its balance sheet runoff and chair Jerome Powell's messaging that the next policy move was unlikely to be a rate hike.

The Fed kept its key federal funds rate steady at a more than two-decade high of 5.25%-5.50%. Moreover, the Fed decision statement acknowledged that in recent months, there had been a lack of progress towards its 2% inflation target

Beyond the fed meeting, we had a handful of earnings come out this week and some names that are part of the portfolio along with some names on the watchlist.

It was a mixed bag of results, so let's go rapid-fire on high-level results and takeaways.

Domino's (DPZ)

• Q1 GAAP EPS of $3.58 beats by $0.18.

• Revenue of $1.08B (+5.9% Y/Y) in-line.

• U.S. same-store sales growth of 5.6%.

• Global net store growth of 164.

Their loyalty program is driving more customer retention and they continue to see growth in order counts for carryout and deliveries. Aka people love deals and cheap pizza.

McDonald's (MCD)

• Q1 Non-GAAP EPS of $2.70 misses by $0.03.

• Revenue of $6.17B (+4.6% Y/Y) in-line.

• Global comparable sales increased 1.9%.

The opposite to Domino's they say lower household income customers sales are under pressure due to inflation. They also are testing larger burgers and concepts like CosMc's (so super size me???). Aka people are noticing the price increases as of late and so pricing sensitivity has been reached.

Amazon (AMZN)

• Q1 EPS of $0.98 may not be comparable to consensus of $0.83.

• Revenue of $143.3B (+12.5% Y/Y) beats by $750M.

• AWS segment sales increased 17% year-over-year to $25.0 billion.

AWS is still a solid growth engine for the top and bottom lines. They are still pouring an insane amount of capex spend to stay competitive, innovate, and increase their moat in the cloud computing and logistical realms.

CVS (CVS)

• Q1 Non-GAAP EPS of $1.31 misses by $0.39.

• Revenue of $88.4B (+3.7% Y/Y) misses by $800M.

• The MBR increased to 90.4% in the three months ended March 31, 2024, compared to 84.6% in the prior year driven by increased Medicare utilization, the unfavorable impact of the Company's 2024 Medicare Advantage star ratings, the unfavorable year-over-year impact of prior-year development, as well as the impact of an additional day in 2024 due to the leap year.

• Revised Adjusted EPS guidance to at least $7.00 from at least $8.30 vs. $8.27 Consensus

This was a bigger miss and it was due to MBR being higher than expected. The stock essentially dropped with the % drop in its FY revised EPS. They are valued at a low P/E so expectations are low, but they need to focus on their margins in the insurance business to bounce back.

Starbucks (SBUX)

• Q2 Non-GAAP EPS of $0.68 misses by $0.12.

• Revenue of $8.56B (-1.8% Y/Y) misses by $600M.

• Q2 Active U.S. Starbucks (SBUX) Rewards Membership Totals 32.8 Million, Up 6% Over Prior Year.

• Global comparable store sales declined 4%.

• The company opened 364 net new stores in Q2, ending the period with 38,951 stores: 52% company-operated and 48% licensed.

The big news here is that comparable store sales are down which means people aren't going to Starbucks as much and similar to McDonald's may be finding out the upper limit of what people are willing to pay for their products. I don't think the growth is gone, but it may lean more on store count growth vs. same-store sales growth.

In regards to the overall market, we have finally had a 5% pullback and a consolidation period instead of continuing to climb to higher highs with an already elevated RSI. I think it's a healthy pullback and adding to stalwarts on the dip.

Portfolio Update

Stock Watchlist

Stocks: TSLA, LLY, ADSK, SBUX, NOW, CELH

See premium membership for details on interested entry points.

If you don't want to miss out on the following: weekly buy/sell activity in the stock portfolio (Excel Spreadsheet with full details), real-time alerts through Discord, and access to premium courses & tools check out the premium membership!