In an unexpected twist for homebuyers, Walmart (WMT) is stepping into the tiny house market, providing affordable living options just as Amazon previously ventured into this space with trendy pop-up homes.
The retail giant is offering an “expandable prefab house” from Chery Industrial, priced at an attractive $15,900 for the 19-by-20-foot model.
This price point is notably lower than Amazon’s earlier listing of $19,000 for a similar tiny home, which included a temporary discount of $1,000 back in April; however, that model is currently unavailable on Amazon’s site.
For those seeking even greater savings, the manufacturer has a more compact version of the prefab house—a 15-by-20-foot model—currently retailing for just below $12,000.
Purchasing one of these homes requires some additional effort; buyers will need to secure a parcel of land, along with the necessary foundation, power supply, and water connection.
The house itself comes equipped with essential amenities, including a toilet, shower, cabinets, and door locks.
Upon delivery, the house arrives in a compact, folded state.
Buyers will need assistance to unfold the walls and ceiling to achieve the full structure. While furniture is not included, shoppers can conveniently find furnishings at Walmart or Amazon.
The tiny-home trend has gained momentum over the past couple of decades, driven by millennials who are increasingly rejecting sprawling “McMansions” amidst soaring housing prices.
One 24-year-old who embraced the tiny home lifestyle in her parents’ backyard managed to save enough for a $250,000 house and amassed a significant TikTok following sharing her journey.
In an era where affordability feels increasingly out of reach, Walmart’s tiny homes could very well redefine what it means to live large on a smaller scale, offering a practical pathway to achieving the dream of owning a home.
China’s central bank unveiled two new funding schemes on Friday, aiming to inject as much as 800 billion yuan ($112.38 billion) into its stock market.
These initiatives, introduced by the People’s Bank of China (PBOC), are designed to promote the “steady development” of the nation’s capital markets.
Boosting market stability through new tools
The newly launched swap and relending schemes, initially proposed in late September, are part of China’s broader strategy to stabilize its financial markets.
The country’s recent stock market bull run has started to lose momentum as investor optimism over government stimulus measures has turned to caution.
Despite this, the benchmark CSI300 Index saw a positive turnaround on Friday, closing the morning session 0.8% higher.
The swap scheme, valued at 500 billion yuan, allows brokerages, fund managers, and insurers to access liquidity from the central bank by using assets as collateral to purchase stocks.
According to the PBOC, 20 companies have already been approved to participate, with initial applications surpassing 200 billion yuan.
“The swap scheme will become a market stabilizer,” Xinhua Financial reported, explaining that demand for the tool will rise when stocks are oversold, though the appetite for it will diminish as markets recover.
In addition, this facility enables institutions to secure liquidity during market downturns without needing to sell shares at a loss.
Eligible assets such as bonds, stock ETFs, and holdings in CSI300 constituents can be swapped for more liquid assets like treasury bonds and central bank bills.
Relending scheme supports share buybacks
The PBOC also launched a 300 billion yuan relending scheme, which allows financial institutions to borrow from the central bank to fund share purchases by listed companies or their major shareholders.
With a one-year interest rate set at 1.75%, 21 institutions—including policy and commercial banks—are eligible to apply for the loans at the start of each quarter.
Listed companies and their shareholders can then borrow from banks at rates of up to 2.25% for share buybacks and purchases.
This scheme is an exception to China’s usual restrictions on bank lending in the stock market.
China’s financial regulators have urged swift implementation of these expansive policies to support the economy and its capital markets.
Japan’s currency officials have issued a warning as the yen has dropped beyond the critical threshold of 150 per dollar, signaling the risk of additional declines despite potential intervention measures.
Following the remarks of Atsushi Mimura, the country’s top currency official, the yen managed a slight recovery, climbing 0.2% to 149.86 per dollar.
According to a Bloomberg report, analysts monitoring the currency suggest it could depreciate further, possibly reaching 160 per dollar, influenced by robust US economic data that has led traders to temper expectations for Federal Reserve rate cuts.
Uncertainties in both Japanese and US monetary policies are contributing to fluctuations in the yen’s value.
Prime Minister Shigeru Ishiba indicated earlier this month that Japan is not prepared for additional interest rate hikes, though he later aligned his views with those of the Bank of Japan (BOJ).
Conversely, overnight indexed swaps suggest that the Fed is likely to implement at least two quarter-point rate cuts in the coming three meetings through January.
“The market is still over-pricing a rate cut from the Fed, so as we see expectations recede, I think the yen will gradually weaken,” stated Tohru Sasaki, chief strategist at Fukuoka Financial Group Inc. He added that the yen could reach the 160 mark as we head into the new year.
A further decline in the yen towards 150 or 155 could prompt the BOJ to consider earlier rate hikes than anticipated, according to Kazuo Momma, a former BOJ executive director, speaking at a Bloomberg conference last week.
He noted that the BOJ’s decision to raise rates in July was largely driven by the yen’s weakness.
Until now, officials from the finance ministry have largely refrained from commenting on the yen’s movement since October 7, when strong US jobs data triggered a selloff.
Their statements typically indicate the level of concern regarding the currency’s stability and the likelihood of intervention.
“There is a possibility that the dollar-yen will rise more, so Mimura probably made the comment to curb the yen’s further depreciation,” observed Teppei Ino, Tokyo head of global markets research at MUFG Bank Ltd.
He cautioned that the BOJ might be running out of time to intervene effectively.
Investor sentiment is also shaped by uncertainties surrounding upcoming elections in both the US and Japan.
The potential return of former President Donald Trump or the risk of Japan’s ruling Liberal Democratic Party losing its majority in the lower house adds to market volatility.
“If we break 152, I see 156 if we do not see any intervention from the Ministry of Finance,” predicted Shoki Omori, chief desk strategist at Mizuho Securities Co.
He noted that while verbal interventions may increase, the likelihood of Japan actively supporting its currency before the national election on October 27 seems low.
Market participants will closely monitor statements from central bank officials in both countries, particularly a speech by BOJ Deputy Governor Shinichi Uchida, representing Governor Kazuo Ueda.
However, some analysts believe significant movement in the currency is unlikely in the short term due to the prevailing cautious environment.
“With the Trump risk in mind, it seems that the environment will continue to make it difficult to sell the dollar in the short term,” wrote Yujiro Goto, head of foreign-exchange strategy at Nomura Securities Co. in Tokyo.
He added that while he anticipates a readjustment of the dollar-yen exchange rate toward the end of the year, it is likely to remain elevated around the 150 mark in the near term.
The USD/JPY exchange rate continued rising as the US dollar index (DXY) and bond yields rose to the highest point in months. The pair rallied to a high of 150, its highest level since August 1, and 7.5% above its lowest point this year.
Japan inflation and BoJ outlook
The USD to JPY pair continued its uptrend after Japan published encouraging inflation data on Friday.
According to the statistics agency, the headline Consumer Price Index (CPI) declined by 0.3% in September after growing by 0.5% in the previous month. This decline translated to a year-on-year increase of 2.5%, lower than the previous 3.0%.
The core Consumer Price Index came in at 2.4% in September, higher than the median estimate of 2.3%. It was also an improvement from the previous increase of 2.8%.
These numbers mean that Japan’s inflation is moving in the right direction and that it will likely hit the BoJ target of 2.0% in the coming months.
Analysts expect that the Bank of Japan (BoJ) will embrace a wait-and-see approach before committing to interest rate hikes in the coming meetings.
The BoJ, unlike other central banks, has embraced a relatively hawkish tone in the past few months. It initially hiked interest rates by 0.10% earlier this year and then another 0.25% in July.
The 0.25% hike led to major global volatility as investors started to unwind the Japanese yen carry trade. A carry trade is a situation where investors borrow a lower-yielding currency and invests in another higher-yielding one.
For a long time, investors borrowed the negatively-yielding Japanese yen and invested in other assets in the United States, Australia, and other countries.
Therefore, with Japan’s economy weakening and with inflation moving in the right direction, the BoJ will likely maintain rates at the current rate for a while.
This explains why Japan’s government bond yields have continued rising. The 10-year yield rose to 0.97% on Friday, its highest point on August 7, and a 32% increase from the lowest point in September.
Federal Reserve actions
The USD/JPY exchange rate has also staged a strong comeback because of the actions of the Federal Reserve.
In its last meeting, the bank decided to cut interest rates by 0.50%, the biggest rate in over four years.
Since then, the US has published strong economic numbers. Data released earlier this month showed that the unemployment rate retreated to 4.1% in September, the lowest level in two months.
The economy created over 254k jobs in September while wage growth continued expanding during the month.
The latest US economic data showed that core retail sales rose by 0.5%, while the headline figure rose to 0.4%. Initial and continuing jobless claims numbers were better than expected last week.
Therefore, the Federal Reserve will likely act in two ways at the next meeting: cut interest rates by 0.25% or hold them steady.
This explains why the US dollar index (DXY) has soared to $103.87, its highest level since August 2nd. It has risen by over 3.52% from its lowest point this year.
US government bond yields have also jumped. The ten-year rose to 4.088%, its highest point since July 31st. Similarly, the five-year yield rose to 3.9%.
The daily chart shows that the USD to JPY exchange rate staged a strong comeback this week. It has risen to 150, its highest point since July 31st, and 7.15% from its lowest point in August.
The pair has moved above the 38.2% Fibonacci Retracement point. It has also crossed the 50-day and 100-day Exponential Moving Averages (EMA).
Also, the Relative Strength Index (RSI) has moved above the neutral point at 50, while the MACD indicator has crossed the zero line.
Therefore, the USD/JPY pair will likely continue rising as bulls target the next point at 153.70, the 23.6% retracement point.
The China renminbi held steady against the US dollar after the country published the latest GDP, industrial production, and retail sales data. The USD/CNY exchange rate was trading at 7.1178, 1.54% above the lowest point this month.
China GDP data
The Chinese economy continued growing at a slower pace than expected after the National Bureau of Statistics (NBS) released the latest GDP data.
The numbers revealed that the economy expanded by 0.9% in Q3, missing the analyst estimate of 1.0%. It had grown by 0.7% in the second quarter.
This growth translated to an annual expansion of 4.6%, also lower than Q2’s growth of 4.7%. It was also in line with what analysts were expecting, but lower than the 5% target set by Beijing.
China also published other strong economic numbers. Retail sales rebounded by 3.2% in September after growing by 2.1% in the previous quarter.
This is an important report because the recent leading indicators showed that the retail sector slowed down. For example, LVMH, the biggest brand in the luxury industry, said that its business continued to underperform the market in the third quarter.
Other Chinese online retailers like Alibaba, JD.com, and PDD Holdings also released relatively weaker numbers than expected.
China’s retail sales have been weak because of the worsening labor market and as more people prioritised debt reduction to spending. In a note to Invezz, Maggie Wang, a 35-year-old lady said:
“The economy is not doing well, and so, we have deliberately reduced our spending this year. We are focusing on reducing our debt first until things improve.”
China retail sales, industrial production, and house prices
Retail sales likely did well because of the inflation situation in the country. Data released earlier this week showed that the headline Consumer Price Index (CPI) slowed from 0.4% to 0.0% on a MoM basis, and from 0.6% to 0.4% on an annual basis.
Another report showed that China’s industrial production made some modest improvement in September. It grew by 5.4% on an annual basis, higher than the median estimate of 4.6%. It expanded by 4.5% in August. The unemployment rate improved to 5.1% from 5.3% in the previous month.
The USD/CNY also reacted to the weaker housing data. The NBS said that the house price index dropped from 5.3% in August to 5.8% in September.
Therefore, these numbers mean that the economy will likely continue doing well in the coming months because of the recently announced stimulus package.
The government is working to boost spending and invest in strategic sectors. For example, it has unveiled over $70 billion in funds to save the real estate sector, which collapsed after Bejing changed its national policy on debt. In a note, analysts at Bloomberg said:
“Stronger-than-expected headline readings…do not mean China’s economy is on the mend. Looking ahead, we expect the economy to pick up speed, but only gradually.”
Federal Reserve rate cuts
The USD/CNY and USD/CNH exchange rates also reacted to the recent US economic numbers and their implications on the Federal Reserve.
Data released on Thursday showed that the headline retail sales rose from 0.1% in August to 0.4% in September, higher than the median estimate of 0.3%. Sales rose by 1.74% on an annual basis.
Core retail sales, which excludes the volatile food and energy prices, rose from 0.2% in August to 0.5%in September, higher than the median estimate of 0.1%.
Retail sales are important numbers for two reasons. First, the retail sector is one of the biggest employers in the US. Second, it is a good prediction of consumer spending, the biggest part of the American GDP.
More data showed that US manufacturing production dropped by 0.4% in September, while industrial production fell by 0.3% during the month. These drops were worse than what most analysts were expecting. US initial jobless claims improved to 241k, while the continuing claims fell to 1.867 million.
These numbers mean that the Federal Reserve will likely remain under pressure in the coming meetings. Analysts see the bank opting for a 0.25% rate cut instead of the 0.50% it slashed in the last meeting.
The daily chart shows that the USD to CNY exchange rate bottomed at 7.017 in September, and has rebounded to 7.12. It has jumped to its highest point since September 11, and moved above the 50-day moving average.
The Relative Strength Index (RSI) and the MACD indicators have pointed upwards, meaning that it has bullish momentum.
Therefore, the USD/CNY exchange rate will likely continue rising as bulls target the next key resistance point at 7.20. More downside will be confirmed if the pair drops below the key support at 7.017.
The 3M stock price has done well this year, making it one of the best-performing companies in the S&P 500 index. It has soared to a high of $140.70, its highest point since September 21, and by over 105% from its lowest point in 2023. This recovery has brought its market cap to over $74 billion.
3M turnaround approach
3M has done well this year as investors predict that its past woes are behind it going forward. As you recall, the company faced major headwinds in the past few years that have cost it billions of dollars.
In April, the company settled with public water suppliers for its PFAS or forever chemicals, agreeing to pay a $10.3 billion fine over 13 years. It agreed to pay $2.9 billion this year followed by $1.8 billion, $0.4 billion, $2.6 billion, and $1.6 billion in the next four consecutive years. The remaining amount will be paid in a reducing balance.
3M also agreed to pay $6.5 billion for selling faulty earplugs that led to hearing loss to the US military. As with the PFAS settlement, the funds will be paid over time, with $1 billion of it being in the form of stock.
The company has now taken measures to simplify and improved its business. The most important measure was to spin off Solventum, its healthcare business that provides solutions like advanced wound care, sterilisation assurance, surgical solutions, and oral care.
3M still holds a substantial stake in Solventum, a company whose stock has surged by over 44% in the last three months, bringing its market cap to over $12.5 billion. As with other spin offs, it will likely continue reducing its stake in the company, and use the proceeds to reduce debt and pay fines.
As part of the turnaround, the company has introduced Bill Brown as the new CEO. As part of his strategy, Brown wants to boost product development, simplify its operations by selling some underperforming divisions, and then focus to higher growth areas.
Brown has a history of turning around large companies, including Harris Corp and L3Harris, one of the top defense contractors in the US.
Slow growth across segments
In the last earnings call, he agreed with analysts that 3M’s portfolio of products was made up of ageing brands that were growing slowly. As such, as part of his strategy, he his open to implementing several large acquisitions.
The most recent results show how these brands have contributed to slow growth. For example, in the safety and industrial division, the company generated an organic growth of 1.1% in the previous quarter. The three sections in this division: industrial adhesives, abrasives, and personal safety recorded low-single-digit growth.
The transport and electronics division had an adjusted organic growth of 3.3%, while its consumer segment had a negative organic growth of 1.4%. Therefore, the company needs to make major changes, in terms of R&D and acquisitions to boost this growth.
Fortunately, the company’s stock and strong balance sheet of over $10 billion in cash will help it do some large acquisitions. The CEO said:
“While no acquisitions are on the near-term horizon, I will be taking a fresh, dispassionate look at our portfolio to determine if any assets have greater value owned by others, and along the same line, what assets might be a good fit for 3M.”
The next catalyst for the 3M stock will be its upcoming earnings scheduled on Tuesday, October 22nd.
These results will help to show whether the company was making progress. Analysts expect that its revenue will come in at $6 billion, followed by $5.8 billion in the fourth quarter.
Its annual revenue is expected to be $23.62 billion followed by $24.4 billion next year. This year’s numbers will be weaker than in 2023 because of the Solventum spin off.
3M has also continued to reward its shareholders. It has boosted its dividends in the last 65 years, making it one of the top dividend kings. It is also repurchasing substantial shares. It bought $400 million last quarter and plans to continue doing so this year.
The weekly chart shows that the 3M share price has been in a strong bull run in the past few years. This trend started after it bottomed at $68.43 in August last year.
3M shares have formed a golden cross pattern as the 50-week and 200-week moving averages have crossed each other. This trend means that bulls are in control for now.
The stock is also forming a cup and handle pattern, a popular bullish sign. Therefore, the 3M share price will continue rising as bulls target the key resistance point at $150, its highest point in May 2021.
Warner Bros. Discovery (WBD) has been one of the worst-performing media stocks this year, facing numerous headwinds. It has dropped by over 31% this year, while popular American indices like the Nasdaq 100, S&P 500, and Dow Jones surged to a record high.
Top WBD headwinds
Warner Bros. Discovery has faced a few major challenges this year. First, the cord-cutting trend has continued, with millions of Americans moving away from cable subscriptions.
As a result, most cable companies have reported slow revenue growth in the past few quarters. For example, Charter Communications, a leading cable company, reported revenues of $13.6 billion, a small increase from the same period last year.
Other cable companies like Comcast, Cox Communications, and Altice have reported significantly weak results.
The cable industry is a notable one for a company like Warner Bros. Discovery because of its large television business. It owns some of the most iconic television brands in the US like CNN, Food Network, Oprah Winfrey Network, and Discovery.
Warner Bros. makes substantial sums of money from cable companies, which pay it for providing channels to customers.
Warner Bros. Discovery also lost major NBA sporting rights to Amazon, which could hurt its streaming business. It has sued the NBA for that but most analysts believe that, as the rights holder, NBA has a strong case.
Additionally, the company is going through the challenge of a weaker advertising environment as companies prioritize cost savings and other advertising channels like social media.
Netflix competition and growth
Warner Bros. Discovery has placed a big bet on the streaming business, where it hopes to become a major player in the industry.
Its primary solution is Max, one of the largest streaming solutions in the industry. The challenge, however, is that its growth has been significantly slower than other firms in the sector.
For example, Netflix’s revenue continued growing in the second quarter as it added over 5 million new members. It now expects that its annual revenue will jump to over $45 billion, helped by its subscription and advertising business.
Netflix’s performance means that it has won the streaming battle and that companies like WBD and Paramount will struggle to catch up.
The most recent results showed that Warner Bros. Discovery’s direct-to-consumer business is not doing well. Its DTC subscribers rose by 3.6 million in the second quarter, while its revenue dropped by 5% to $2.5 billion.
The DTC revenue fell mostly because of the 70% drop in content revenue. Advertising revenue in DTC rose by 98%, while its distribution segment was largely flat. The segment had an adjusted EBITDA loss of over $107 million.
Warner hopes that its streaming solution will continue doing well, helped by international expansion. It added more countries recently like Malaysia, Singapore, Thailand, and Hong Kong.
Warner Bros. earnings ahead
The next important catalyst for the Warner Bros. Discovery stock will be its earnings, which are set to happen on November 7.
WBD has a long history of missing analysts’ estimates, meaning that this trend may continue. Analysts expect that its revenue dropped by 1.50% in the third quarter to $9.83 billion.
Annual revenue is expected to drop by 2.90% to $40.1 billion, followed by $40.7 billion next year.
These results will provide more information on the trends in advertising and its direct-to-consumer business.
Analysts are mostly neutral on Warner Bros as they assess its performance. The most bearish analyst is from Bernstein, who downgraded the firm from outperform to market perform in August.
Other analysts at Needham, Goldman Sachs, Benchmark, and Rosenblatt have all maintained a neutral stand on the firm. The average stock estimate is $10.43, 34% higher than the current level.
Warner Bros. Discovery technical analysis
The daily chart shows that the WBD stock price has been in a strong downtrend in the past few months. It has formed a descending channel since March 2023 and is now slightly below its upper side.
WBD is consolidating at the 50-day and 100-day Exponential Moving Averages (EMA). The Relative Strength Index (RSI) and the MACD indicators have moved to the neutral levels.
Most notably, the stock has found a strong bottom at $6.92, where it failed to move below on June 18, August 12, and September 11.
Therefore, with so many negatives baked in, there is a likelihood that the stock will stage a comeback before or after its earnings. We have seen several embattled companies like PayPal and Walgreens Boots Alliance do that recently.
More gains will be confirmed if the Warner Bros. Discovery stock rises above the key resistance point at $8.83, its highest point in July and September this year, and its lowest point in December last year. If this happens, it could surge to the next resistance level at $12.67, its highest point in December.
Warren Buffett has always warned investors on the risks of betting against America for decades. His bullishness has paid off as evidenced by the performance of Berkshire Hathaway, a company that has attained a market cap of over $1 trillion.
More companies like Apple, Nvidia, and Microsoft are now valued at over $3 trillion, while Amazon and Google are getting close to a $2 trillion valuation. Similarly, the S&P 500 index has jumped from about $68 in 1975 to almost $6,000 today.
There are many ways to bet on America. One of them is to invest in all American stocks and the other is to focus on a subset of US companies. The Vanguard Total Stock Market ETF (VTI) and the Vanguard S&P 500 ETF (VOO) are two of the cheapest funds to bet on America.
Vanguard Total Stock Market | VTI
The Vanguard Total Stock Market ETF is one of the biggest funds in the market with over $440 billion in assets under management.
It is a popular fund that tracks the CRSP US Total Market Index, which focuses on all American companies listed in the US.
According to its website, it has a small expense ratio of 0.03%, and has invested in 3,654 American stocks. It has a price-to-earnings ratio of 26.5 and a price-to-book ratio of 4.3, and a return on equity of 24.
By focusing on all American companies, it means that technology is the biggest part of the fund with a 33.45 stake. The other biggest segments in the fund are consumer discretionary, industrials, health care, financials, and consumer staples.
The biggest companies in the fund are the likes of Apple, Microsoft, NVIDIA, Amazon, Meta Platforms, and Alphabet. Therefore, while the fund tracks all companies in the fund, the top ten firms accounts for 29% of the fund.
The VTI’s average annual return is about 8.8%. Its total five-year return was 104.46%, while its return this year was 22.5%.
Vanguard S&P 500 ETF | VOO
Like the VTI, the VOO ETF is another popular cheap funds in the market. It has a 0.03% expense ratio and tracks the 500 biggest companies in the US.
Data shows that it has over $528 billion in assets, and is one of the fastest-growing funds in the market in terms of inflows. The fund has added over $50 billion in assets this year, and is closing in on the S&P 500 ETF because of its cost advantage.
Instead of tracking all companies, it focuses on the 500 biggest companies in the US. As a result, its constituent structure is similar to that of the VTI fund. The biggest companies in the fund are in the tech sector (31.67%), followed by financials, healthcare, consumer discretionary, and communication services.
The most notable names in the fund are Apple, Microsoft, Nvidia, Amazon, Meta Platforms, and Alphabet. Its top-ten holdings account for 34% of the entire fund.
The VOO ETF is more expensive than the VTI, with its P/E ratio of 27.4 and price-to-book ratio of 4.8%
So, which is the better ETF to buy if you are betting on America? The VOO ETF has been a better performer in the last five years as its total return was 110% compared to VTI’s 104%. As shown above, this trend has happened this year as the two have risen by 23.7% and 22.54%, respectively.
The two ETFs are highly correlated, meaning that they always have a similar performance over time. Besides, the top ten holdings account for over 25% of the entire fund.
Stilll, the Vanguard S&P 500 ETF seems like a better fund since it focuses on fewer bigger American companies.
This also explains why the Invesco NASDAQ 100 (QQQM) ETF has been a better fund than the two. It tracks 100 companies, with 52% of them being in the technology sector. The rest companies are in the communication, consumer cyclical, and consumer defensive sectors.
Looking ahead, the VTI and VOO ETFs will likely continue doing well in the long term, helped by several catalysts. Corporate earnings have been relatively strong in the past few weeks, the US has avoided a hard landing, and interest rates are coming downwards.
Lower rates will likely push funds that have been invested in money market funds into the stock market. Recent data shows that these funds are worth approximately $6.7 trillion. In a recent note, analysts at Goldman Sachs estimated that the S&P 500 index will rise to $6,200 by year end, saying:
“The equity market selloff is canceled, and a year-end rally is starting to resonate with clients shifting from hedging from the left-tail to the right-tail as institutional investors are getting forced into the market right now.”
Shares of HEG Ltd., a prominent graphite electrode manufacturer, witnessed an 80.12% drop in early trade on Friday, opening at ₹511 apiece against a previous close of ₹2,570.80.
While the sharp fall initially surprised some investors, the decline was attributed to the company’s 5:1 stock split.
HEG reduced the face value of its shares from ₹10 to ₹2, adjusting the stock price accordingly.
Stock split adjusts price but maintains market value
The stock split has realigned the per-share value, with no impact on HEG’s market capitalization.
Such splits are typically implemented to enhance liquidity and make shares more accessible to retail investors by lowering individual share prices.
HEG, based in India, operates one of the largest integrated graphite electrode plants globally and processes Ultra High Power (UHP) electrodes.
The company exports more than 70% of its production to over 30 countries, making it a key player in the global graphite electrode market.
HEG’s fundamentals remain strong, says Jefferies
Global brokerage firm Jefferies had issued a ‘buy’ recommendation for HEG earlier this year, underlining the company’s solid financial position and growth potential.
According to Jefferies, HEG recently expanded its electrode capacity by 20,000 metric tonnes (mt), which became operational in November 2023, bringing the total installed capacity to 100,000 mt.
Jefferies highlighted HEG’s robust balance sheet with minimal debt and significant cash reserves, positioning the company well for future growth.
The firm valued HEG at an EV/EBITDA multiple of 7 times, slightly below the stock’s historical 10-year average.
Forecasts for graphite electrode and needle coke prices
Jefferies’ analysis projects steady demand for graphite electrodes in the coming years, with average selling prices expected to reach $4,900 per mt in FY25 and $5,500 per mt in both FY26 and FY27.
The brokerage also forecasted needle coke, a key input in electrode production, to maintain an average price of $2,000 per mt over the same period.
Jefferies anticipates HEG’s operating margins to bottom out at 14.4% in FY25 before expanding to 34.6% by FY27, reflecting the company’s potential for sustained profitability as market conditions stabilize.
HEG’s bid to increase share liquidity
Following the stock split, HEG’s adjusted price reflects the company’s strategy to increase share liquidity while maintaining strong market fundamentals.
Investors are expected to monitor the company’s performance, especially given HEG’s reliance on international markets and evolving graphite electrode demand.
Despite the price adjustment, Jefferies’ outlook remains optimistic, with the firm believing HEG is well-positioned for growth amid favorable market dynamics.
At 10:15 AM, HEG shares were trading at ₹511, reflecting stable demand for the stock post-split.
Market analysts predict that investor interest may strengthen as the adjusted share price makes HEG more accessible to retail investors.
Warren Buffett has always warned investors on the risks of betting against America for decades. His bullishness has paid off as evidenced by the performance of Berkshire Hathaway, a company that has attained a market cap of over $1 trillion.
More companies like Apple, Nvidia, and Microsoft are now valued at over $3 trillion, while Amazon and Google are getting close to a $2 trillion valuation. Similarly, the S&P 500 index has jumped from about $68 in 1975 to almost $6,000 today.
There are many ways to bet on America. One of them is to invest in all American stocks and the other is to focus on a subset of US companies. The Vanguard Total Stock Market ETF (VTI) and the Vanguard S&P 500 ETF (VOO) are two of the cheapest funds to bet on America.
Vanguard Total Stock Market | VTI
The Vanguard Total Stock Market ETF is one of the biggest funds in the market with over $440 billion in assets under management.
It is a popular fund that tracks the CRSP US Total Market Index, which focuses on all American companies listed in the US.
According to its website, it has a small expense ratio of 0.03%, and has invested in 3,654 American stocks. It has a price-to-earnings ratio of 26.5 and a price-to-book ratio of 4.3, and a return on equity of 24.
By focusing on all American companies, it means that technology is the biggest part of the fund with a 33.45 stake. The other biggest segments in the fund are consumer discretionary, industrials, health care, financials, and consumer staples.
The biggest companies in the fund are the likes of Apple, Microsoft, NVIDIA, Amazon, Meta Platforms, and Alphabet. Therefore, while the fund tracks all companies in the fund, the top ten firms accounts for 29% of the fund.
The VTI’s average annual return is about 8.8%. Its total five-year return was 104.46%, while its return this year was 22.5%.
Vanguard S&P 500 ETF | VOO
Like the VTI, the VOO ETF is another popular cheap funds in the market. It has a 0.03% expense ratio and tracks the 500 biggest companies in the US.
Data shows that it has over $528 billion in assets, and is one of the fastest-growing funds in the market in terms of inflows. The fund has added over $50 billion in assets this year, and is closing in on the S&P 500 ETF because of its cost advantage.
Instead of tracking all companies, it focuses on the 500 biggest companies in the US. As a result, its constituent structure is similar to that of the VTI fund. The biggest companies in the fund are in the tech sector (31.67%), followed by financials, healthcare, consumer discretionary, and communication services.
The most notable names in the fund are Apple, Microsoft, Nvidia, Amazon, Meta Platforms, and Alphabet. Its top-ten holdings account for 34% of the entire fund.
The VOO ETF is more expensive than the VTI, with its P/E ratio of 27.4 and price-to-book ratio of 4.8%
So, which is the better ETF to buy if you are betting on America? The VOO ETF has been a better performer in the last five years as its total return was 110% compared to VTI’s 104%. As shown above, this trend has happened this year as the two have risen by 23.7% and 22.54%, respectively.
The two ETFs are highly correlated, meaning that they always have a similar performance over time. Besides, the top ten holdings account for over 25% of the entire fund.
Stilll, the Vanguard S&P 500 ETF seems like a better fund since it focuses on fewer bigger American companies.
This also explains why the Invesco NASDAQ 100 (QQQM) ETF has been a better fund than the two. It tracks 100 companies, with 52% of them being in the technology sector. The rest companies are in the communication, consumer cyclical, and consumer defensive sectors.
Looking ahead, the VTI and VOO ETFs will likely continue doing well in the long term, helped by several catalysts. Corporate earnings have been relatively strong in the past few weeks, the US has avoided a hard landing, and interest rates are coming downwards.
Lower rates will likely push funds that have been invested in money market funds into the stock market. Recent data shows that these funds are worth approximately $6.7 trillion. In a recent note, analysts at Goldman Sachs estimated that the S&P 500 index will rise to $6,200 by year end, saying:
“The equity market selloff is canceled, and a year-end rally is starting to resonate with clients shifting from hedging from the left-tail to the right-tail as institutional investors are getting forced into the market right now.”
