JMC Investments Blog

According to Yahoo Finance , all of the Magnificent 7 stocks (Alphabet, Apple, Amazon, Meta, Microsoft, Nvidia and Tesla) have all reported their fourth quarter earnings as of February 23, 2024.  Amazon's North American revenue topped $100B in the fourth quarter reported earnings, beating analyst expectations. Their operating income and free cash flow have increased dramatically and sequentially since Q4 2022.              Figure1: Amazon's operating income (source: Amazon 4th quarter 2023 earnings conference call)            Figure 2: Amazon's free cash flow (source: Amazon 4th quarter 2023 earnings conference call) Amazon's stock price historically has tended to follow it's operating cash flow (OCF) as can be seen in the FASTgraphs chart below.  This is in contrast to many stocks where the price tends to track basic operating earnings.   Figure 3: 10-year price performance ve...

After the market close on February 21, 2024, NVIDIA reported it's fourth quarter earnings which beat analyst expectations with regard to both EPS and revenue.  According to Seeking Alpha News :  Nvidia ( NASDAQ: NVDA ): Q4 Non-GAAP EPS of $5.16 beats by $0.52 . Revenue of $22.1B (+265.3% Y/Y) beats by $1.55B . Data Center revenue for the fourth quarter was a record, up 409% from a year ago and up 27% sequentially. Gaming revenue was up 56% from a year ago and flat sequentially. Professional Visualization revenue was up 105% from a year ago and up 11% sequentially Outlook for the first quarter of fiscal 2025 is as follows: • Revenue is expected to be $24.0 billion vs. $22.03B consensus, plus or minus 2%. • GAAP and non-GAAP gross margins are expected to be 76.3% and 77.0%, respectively, plus or minus 50 basis points. If the stock price is able to reach $1,000/share, it would be extremely impressive since there was a 4:1 stock split that occurred on July 20, 2021.  Acc...

According to Wikipedia , "The Standard and Poor's 500 , or simply the S&P 500 , is a stock market index tracking the stock performance of 500 of the largest companies listed on stock exchanges in the United States. It is one of the most commonly followed equity indices and includes approximately 80% of the total market capitalization of U.S. public companies." The thesis of this short blog article will be to assert that the S&P 500 index is presently significantly overvalued historically.   The SPDR S&P 500 ETF Trust (SPY:US) seeks to achieve its investment objective by holding a portfolio of the common stocks that are included in the index (the “Portfolio”), with the weight of each stock in the Portfolio substantially corresponding to the weight of such stock in the index (ref. Yahoo Finance ).  The SPY ETF is a good proxy for tracking the S&P 500. The FASTgraphs chart of SPY below shows the historical index price trace (in black) versus the Normal P...

META Platforms INC (META) is a great tech company trading slightly overvalued as of February 15, 2024.  According to Yahoo Finance , "Meta is the world’s largest online social network, with nearly 4 billion family of apps monthly active users." As of 2024, I believe the majority in the investment community consider META to be a part of the "Magnificent Seven" tech companies in the S&P 500. According to Slickcharts , it is ranked number five as a percentage of portfolio holdings in the S&P 500 as of February 15, 2024.  On the FASTgraphs historical chart for META (below), the stock price on February 15th was trading at a blended P/E ratio of 31.20, which is rather high in comparison to the median P/E ratio for the S&P 500 (back to 1871) of 17.88 (ref. gurufocus.com ).  The S&P 500 P/E as of this writing was 27.63, less than plus one standard deviation, but still well above the historical normal. On the chart below, the black line represents the META s...