Fast Money Blog- 5/17/24
This week on Wall Street was a busy one, as The Home Depot, Inc. (HD) and Applied Materials , Inc. (AMAT) released their earning reports and the U.S. Bureau of Labor released its Consumer Price Index report. Moreover, the Dow ended the week above 40,000 for the first time in history!
On Tuesday, May 14th, Home Depot’s Q1 2024 earnings showed a mild slow-down as shoppers are holding back on home improvement projects due to inflation.
Q1 top-line revenue totaled $36.4 billion, down 2.3% year-over-year.
Global comparable store sales fell 2.8% from the same period a year ago.
Customer transactions declined 1% to 386.8 million and the average ticket fell 1.3% to $90.68.
These slight declines are all indicators of the change in consumer spending that’s a part of today’s economic cycle.
Even though HD’s revenue declined slightly, I still think the stock makes a great long-term date, as the company is the world’s largest home improvement retailer and pays an extremely high dividend.
On that note, HD also announced an increase in its quarterly dividend to $2.25 per share, or $9 per share annually!
Presently, I expect the stock to stay range-bound at around $335-$345 per share for the next six weeks.
On Wednesday, May 15th, the C.P.I. report showed an encouraging sign for the economy. The Consumer Price Index climbed 3.4 percent in April, down from 3.5% in March. And core prices (which exclude food and fuel) came in at 3.6% in March, lowest annual increase in core inflation since early 2021.
On Thursday, May 16th, Applied Materials released its Q2 2024 earnings with quarterly top-line revenue of $6.65 billion, holding steady year-over-year.
Over the past 6 months AMAT has benefited from growing demand for wafer fabrication equipment, the expensive machinery used to make semiconductors, as AMAT’s customers are investing heavily to produce artificial intelligence chips.
AMAT has also seen sales of DRAM memory chips increase significantly. DRAM, which stands for dynamic random-access memory, is a requirement of the computing and data centers that produce AI chips.
AMAT’s DRAM equipment sales accounted for 32% of the company's semiconductor system sales in the quarter, up from 11% year-over-year.
In addition, the company generated $1.39 billion in cash from operations and distributed $1.09 billion to shareholders, including $820 million in share repurchases and $266 million in dividends.
Because of the demand for semi-conductor chips and equipment, I expect it to drive AMAT’s future revenue higher. Therefore I have to recommend AMAT stock as a short-term trade and hold-term hold.
As this earnings period comes to an end, almost all Wealthy Investor stocks performed very well.
Stay Open and Stay Positive!
Tyrone Jackson, The Wealthy Investor