SpaceX weighting in Nasdaq 100 set to more than double - Bloomberg
Market Scorecard
Ahh. Nothing beats the smell of coffee and fresh market highs in the morning. Before the US market opened yesterday, their first-quarter GDP read came in at 6.4%, up from 4.3% at the end of the year. Adding to the good economic data was the best jobless claims number since the pandemic started.
Take a good earnings season, where over 85% of companies have beaten expectations, throw in the strong economic numbers, add a sprinkle of cheap money from the Fed, and investors are feeling pretty jovial at the moment. It is not hard to see why markets are at record levels.
Yesterday the JSE All-share closed down 0.51%, the S&P 500 closed up 0.68%, and the Nasdaq closed up 0.22%.
Michael's Musings
Apple is the world's largest company, so it is no surprise that it is our most significant holding. There are 641 Vestact clients, owning just under $50 million worth of Apple shares (NASDAQ:AAPL). The good news is that Apple's numbers on Wednesday night smashed expectations!
For the six months ending March 2021, revenue increased 34% and profits increased 57%. Thanks to all the extra cash coming through the door, Apple increased their dividend by 7% and allocated a further $90 billion to their share buy-back program.
Growth came from all their divisions, which is good to see. iPhone sales grew 65%, Macs grew 70% and iPads grew 79%. The impressive iPhone growth is thanks to consumers upgrading old phones to the new 5G enabled hardware. Society shifting to working more from home was a great boost to iPad and Mac sales.
Can Apple sustain all of this growth, even from their big base? Management says 'yes'. The expectation is that they will continue to grow revenue by double digits. This is significant given that share prices focus on the future prospects of a company.
Bright's Banter
Visa (NYSE:V) reported better-than-expected earnings for the latest quarter, boosted by an 11% year-on-year increase in payments volume. The payment processing giant has been sluggish of late due to the lack of cross-border transactions and limited travel.
Revenues slipped 2% to $5.73 billion but came in well ahead of analysts' expectations of $5.56 billion. Net income came in at $3.03 billion, which is very impressive considering that the high margin cross-border payment volumes were down 11%.
Visa processed 37.6 billion separate transactions in the period, an 8% year-on-year increase, led by domestic transactions. Management said "Our key business driver growth rates are starting to ramp up, reflecting the depressed levels in 2020 due to Covid-19 and making year-over-year comparisons difficult to interpret".
Last year October I made a strong assertion that e-commerce will probably stay elevated thanks to pandemic induced behavioral changes and that companies like Visa, Mastercard (NYSE:MA) and other fintech business will emerge as winners. So far, we've seen that thesis play out first-hand!
Byron's Beats
Starbucks (NASDAQ:SBUX) released their second quarter results on Tuesday night, amongst many other Vestact stocks. The numbers looked good. Global sales increased 15% driven by a 91% increase from China. The comparable period included the Chinese lockdown. Comparable sales in the US grew by 9%.
Between China and the US, those two areas compromise 62% of Starbucks stores.
Revenues increased 11% and earnings per share doubled to 56c. The company is expected to make over $3 a share this year from the $1.16 per share made during a tough 2020.
These numbers show the resilience of the brand and the quality of the business. Starbucks was geared for an epidemic even before we had one with their payments app for placing online orders. The Starbucks app has doubled in users over the last year, now at 16.3 million.
Grabbing a coffee with friends and standing outside to drink will remain a great socially distant way of seeing people. Far safer than going to a bar.
As stores reopen and life goes back to normal, Starbucks will grow even more. It may not be as exciting as some of our other companies but we still see it as a great addition to the portfolio.
One Thing, From Paul
In this interesting blog post, Ben Carlson suggests that people ought to place a higher value on their time, freedom, and autonomy.
What's the point of working very hard to accumulate more and more money, but wrecking your family and social life in the process? At some point, money may lose its appeal, but your time on this planet is finite.
He also suggests that we should consider paying someone else for tasks that bring us no joy, budget our time as well as our money, and double down on doing the things that we love.
Signing Off
Amazon (NASDAQ:AMZN) followed the other Tech Titans by reporting record numbers. The stock is up over 2% in after-hours trading. Asian markets are higher this morning, but US futures are pointing towards a red open this afternoon. The Rand is currently trading at $/R14.30.
