OPEC Goes Virtual
Now you can buy a fraction of a stock for a fraction of a stock price on the FIDELITY MOBILE APP VISIT FIDELITY DOT com slash fractionals for more details fidelity brokerage services member NYC SIPC STOCKS TO WATCH WALL STREET BREAKFASTS. Weekend Edition Our news teams. We can preview of upcoming. Ipo's earnings reports conference presentations investor days. Fda Decisions Barons mentions and other key events that could impact stocks to set you up for the week ahead in the markets. Subscribe to this podcast on Apple. Podcast Google podcasts. Spotify stitcher good morning. Today is Sunday April Fifth and I'm your host renewable. We begin with a breakdown of the week ahead. From seeking Alpha's news team OPEC in its partners are expected to hold an emergency virtual meeting between April eighth and April ninth. In a concerted effort to stabilize markets after the meeting was pushed back from its original date of April sixth all eyes are on whether or not Saudi Arabia Russia and the US will reach an agreement to take up to fifteen million barrels of crude off the market. Heading into next week Brent crude traits currently at thirty four dollars a barrel up fourteen percent from Friday and US West Texas Intermediate stands at just over twenty eight dollars up twelve percent with oil majors. Exxonmobil Chevron Total EP and Royal Dutch. Shell all looking for positive developments to help start a recovery. No great surprise but jobs are going to be a major focus again next week after over. Six million jobless claims came in J. P. Morgan forecast another seven million. Unemployment claims will be coming down next week and some estimates even higher other economic reports of note include the Jolt Update and a check on consumer prices while the FOMC. We'll drop the minutes from it's latest meeting to the delight of fed-watchers in earnings news is a small group. But simply good foods reports on the sixth greenbrier Revlon Levi Strauss and Lindsey report on the seven price smart on the eighth and Delta Airlines shock medications and W forty report on April ninth in. Ipo News no hence company going public next week but IPO share lockups expire unbiased HP financial and Vir biotechnology analysts can also start covering Amara. The biotech stock closed at over fifteen dollars on Friday after the IPO. Was priced at sixty dollars per share in Emma News. The tender offer on the forty seven Gilead Sciences deal expires April. Sixth shareholders vote on the Annex. Ter- International West go international merger on April eighth and look for more indications that the CAESARS entertainment Eldorado resort steel and Delphi Technologies Warner combination. We'll make it to the finish line. Traffic at Costco stores has finally tailed off. Just a bit. Amid social distancing efforts the retailers report on March sales has the potential to be quite the head-turner as a reminder costco so US comparable sales soared twelve percent in February as the consumer stockpiling trend. I started to take off and the consensus mark for COSCO'S Q. Two comparable sales. Us candidate and international. Is that a healthy nine point. Three Percent Buckle Kato Price. Smart are also in line to issue monthly sales reports airline. Traffic reports will start arriving next week could include some color on the devastating impact of the pandemic unload factors earnings and the government aid late on Friday jet blue warned of a crash. Crunch Delta Airlines said it's burning through sixty million a day and United Airlines. Set the high water for distress by disclosing that. It's losing one hundred million a day. It's likely to be another week of volatile trading for airline carriers the car on April seven through the eighth has switched to an online format due to the pandemic the All star roster of speakers includes executives from mercedes-benz. Google iheartmedia Lincoln Ford an Intel. The expected timeline and uses for five G. Bay cellular connectivity into cars could be an interesting topic. The restaurant industry will be put to the test again next week. As operators continue to look for takeout and delivery work arounds to keep at least some revenue coming in analysts expected industry could look different on the other side of the pandemic. Cowan's Andrew Charles Sees Domino's pizza and Papa. John's international nabbing market share from independence and value minded chains like Red Robin Gourmet Burgers. An Olive Garden resonating in a harsh economy. The pivot for chains focused in dense. Urban areas isn't quite so simple. Shake shack isn't standing still already adding ubereats endured ashes. Delivery options and partnering on Cook at Home Burger Cats. The list of short favorites is worth taking a look at him. In the wild market swings while Blue Apron Peleton interactive has defied the market collapse as favourite. Stay at home stock picks. There are plenty of short picks cooperating looking ahead to next week. The list of HIGH SHORT INTEREST NAMES INCLUDES GAME. Stop match group Gogo Mellon Crowd Smile. Direct Club Tanger Factory Outlet Car Vanna. Amc ENTERTAINMENT DILLARD's stitch fix and wayfair and a pure dollar basis tesla is also near the topless with short interest standing at over a billion. Then in what would have been a shocking development. A few months ago short interest on Nike starbucks Home Depot has moved much higher than historic norms. Analysts seemed to be in disagreement over whether the closing of many retail stores will be offset by the boost in digital sales amid the pandemic and the positive side. There's also been an increase in twitch viewership and steam users to go along with explosive sales of Nintendo's animal crossing however that burst of energy comes against a long street of monthly declines in video game sales ahead of the console refresh cycle the next test of the market could activision Blizzard's release of call of duty modern warfare season three on April eighth the shock of the massive amount of furloughing of US employees will wear off a little bit next week to leave the question of what it means for. Investors analysts say the crisis management skills of top executives and the strength of the underlying businesses will be critical factors in seen share prices. Recover a partial list of companies that instituted furloughs includes macy's Kohl's JC Penney L. Brands Children's Place Ross Stores Urban Outfitters Marietta International Steve Madden Lazy Boy. Ethan Allen Casper Sleep cheesecake factory. Five below shake shack CAESARS. Entertainment Fusco American Eagle outfitters and Marine Max. And this week in barons mentioned the stocks and the themes drawing attention in Barron's weekly addition the tough stretch ahead for the advertising industry profiled in detail with spending expected to be down sharply on the digital side. Facebook and twitter have already warned that they will take a hit from the downturn while Alphabets. Google is also likely to be hurt cable players like AMC networks Viacom CBS and discovery phase advertising dollars drying up as well as subscription services growth as well as a lack of sports programming in a triple whammy that could set the stage for an acceleration in the long running cord. Cutting trend sharp revenue drops are also expected for New York Times newscorp Meredith Gannett clear channel outdoor holdings out Front Media Iheartmedia and Cumulus media the largest. Us media businesses are seen as being a bit better off but trouble areas are still on the road ahead for comcast. At and T. and Disney the publication also sets out a list of biotechs to own for a post pandemic world that includes Gilead Sciences. Blueprint medicines who he biologics. Wou HE APP. Tech Invitation Bluebird Bio Therapeutics and Crisper Therapeutics as we do every we on this week sox to watch with our single stock focus and this week. We're taking a look at that. Beaten Down Stock Carnival Corporation Harry Ren took a look at the stock on Friday just before it closed the week at just under nine dollars. Harry ran who is bullish on the stock believes that the company won't go bankrupt. He begins his thesis. Thusly Carnival Corporation recently conducted a debt rates of five point. Seven five billion and an equity offering a five hundred million common stock priced at eight dollars a share to help alleviate liquidity pressure the company has cut its dividends and stopped all share repurchase programs for the foreseeable future which was expected. I believe the Carnival Corporation has many options to choose from regarding managing this new debt and as a result can stay afloat to reach evaluation. That more correctly reflects this cruise b. m. off twenty six dollars over the next two years ran then goes on to discuss. Why Carnival can service the debt doing some quick back of the Napkin? Math carnival originally had about eight billion in long-term debt. Do by twenty twenty three. This is on top of the newly issued five point seven five billion of notes and credit facility draw of three billion which can be extended to two thousand twenty six in total. That's roughly thirteen point. Seven five billion of debt do by twenty twenty three an important thing to note. Is that the original. Eight billion of debt is split up into four years at a little over two billion a year. Carnival needs to use its freshly raised funds. The most for the time period when it ships aren't an operation and it isn't generating internal cash assuming all of twenty twenty until two thousand twenty one. Where will get that? Cash brand answers internally. Carnival generates approximately four hundred million in cash every quarter. I expect this number to increase to eight hundred. After thirty percent cut in Capex from building new ships and stopping all share repurchase and dividend payouts. So we will see benefits from cuts. In dividends and share repurchase immediately the full forecast at eight hundred will start in twenty one and onward until cash flow from financing. An CAPEX can return to normal. Externally Carnival has received six point five billion from external investors via debt and equity issuance. The offering was oversubscribed which allowed the company to decrease interest rates to twelve from twelve point five percent. Originally we should note. These bonds are junk yield levels that have carnivals assets and vessels as collateral which makes for an attractive opportunity for bond investors also. Three billion was made available from the company. Credit Facility Carnival will use the credit facility debt issuance to cover any immediate debt. Do before twenty twenty one rent goes on to discuss the bailout. Carnival has other options not taken yet. That show us. There isn't a need for last resort measures at this time the trump administration has hinted at a previous corona virus briefing that if these cruise companies came back and register in the US it would be easier to grant them loans. Carnival has the option to do that but not yet taken steps in that direction nor has the company publicly voiced plans to do so and in conclusion ren ends here while much of the panic and selloff is justified for now. Carnival Corporation investors are pricing in a situation that takes bankruptcy and liquidation into account. According to my analysis the company will be able to service this debt until the twenty twenty three due date after which conditions have returned to normal for two years and a vaccine is most likely developed. The stock trades at prices significantly lower than both its assets and with the company is worth as a whole when afloat. This is a long term. Hold for at least two years as this thesis unfold and Carnival set sail to normal valuation again overall seeking Alpha contributors skew bullish on the stock with two very bullish six bullish four neutral and to bearish. That concludes this week. Stocks to watch. Thanks so much for listening. For the best investment analysis and news on the web go to seeking Alpha dot com. Subscribe to this podcast. An apple podcast. Google podcast spotify stitcher. You can sign up for other podcasts. Behind THE IDEA. Alpha traitor essay for f.a.s.t let's talk. Et APPs cannabis investing podcast and marketplace roundtable and those platforms. As well have a great week. Now you can buy a fraction of a stock for a fraction of a stock price on the FIDELITY MOBILE APP VISIT FIDELITY DOT com slash fractionals for more details fidelity brokerage services member NYC SIPC.