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Welcome to our Newsletter!

Our Club

The Dead of Winter

Hello friends, we hope all is well. Since we last met, a lot has escalated in the world: Basketball legend Kobe Bryant has died in a helicopter crash alongside his daughter Gianna and seven others. The Kansas City Chiefs have won their first Super Bowl in fifty years led by twenty four year old superstar quarterback Patrick Mahomes, and finally the Coronavirus has spread widely having a heavy impact on the global economy as we will discuss more below. 

As for our club, our third stock pitch of the semester will be held next Wednesday on campus at 6pm. We have a noteworthy amount of cash we are willing to invest with, so the executive board is looking forward to it. We are currently managing $45,500 in our portfolio (26% increase since May).
Stay updated with our instagram: @mcinvestmentclub, for more info!

Market Overview

Sector Rundown

Technology sector

Written By: Ian Scheuer, Technology Associate

In the game of baseball it is well known that the third batter up is in the hole. Since our last edition, you could have described the US stock market in the same way, “in the hole”. As the corona virus continued to spread it took its  toll on the market and discouraged many investors and companies. From January 17th to January 31st, NASDAQ, the S&P 500, and the NYSE all fell sharply. However, since the beginning of February, they have all recovered and continue to sore. As investors we begin to realize that the coronavirus is not only a health risk but is clearly a large scale financial risk as well. Until this disease is contained the market will not be stable and sharp drops will likely recur. 

The color green is contagious when viewing the tech sector and since our last edition (1/17/2020) Tech stocks have continued to soar. Microsoft (MSFT) has grown 12.5% and is now selling at $187.53, Shopify (SHOP) has gone up 9.56% and looks as though it is going to break $500 a share with a current selling price of $497. Amazon (AMZN) has skyrocketed 16.5% and is now selling at $2,164 a share.

Although Amazon is one of the hottest stocks on the market they have experienced some bumps in the road. Amazon had recently failed to close the Pentagon’s $10 billion cloud computing JEDI contract. Many believe this deal did not go through due to the troublesome relationship between CEO Jeff Bezos and U.S. President Donald Trump. When most deals fall through with the pentagon there is now coming back. However, Amazon is appealing this failed deal on the grounds of Trump’s biased point of view on Bezos. Since the pentagon has such a high demand for data storage they are likely to renegotiate with Amazon’s appeal.

*All stock prices are from Feb 11, 2020
 
Consumer Goods Sector

Written By: Gregory Evans, Consumer Goods Associate

As the coronavirus continues to spread, companies in the travel business, such as Hilton and American Airlines, begin to see declines in revenue. Luxury brands in the US and Europe begin to feel the effects of a decline in Chinese tourists. Those specifically in New York, Paris, and Milan depended heavily on Chinese tourists as they tend to spend more than the average tourist. The parent companies of Jimmy Choo and Versace have warned their shareholders of the possibility of weaker than expected sales for the current fiscal quarter.

For the month of January, although the American economy added 225,000 jobs, our employment rate rose by 0.1% due to a growing labor force. This is good news for the Consumer Sector due to an expectation of low international earnings, specifically those in for the first quarter. Companies such as Hilton Worldwide Holdings Inc., who closed 150 hotels in China, are facing difficulty over the virus crisis. The Walt Disney Company has closed its theme parks in Hong Kong and Shanghai. This will hurt its first-quarter earnings despite reporting 26.5 million subscribers beating estimates by 1.5 million. The release of Disney+ in the UK on March 31 will add to the company’s international subscriber growth and help offset some of the loss from closed theme parks. Although the coronavirus impacts a fraction of US earnings and outsourced manufacturing, US stocks and indices continue to rise as investors see limited damage to American and European economic standing.


 
Industrials Sector

Written By: Sarah Dziewit, Industrials Associate

January headlines have been tirelessly updating the public on the international dilemma of the Coronavirus from Wuhan, China. While there are many officials warning on the increased toll the virus may have on humanity, the industrial sector seems to be taking some side-effects as well. Dow Chemical (DOW) is seeing an increased demand for cleaning and sterilization products, food packaging and other medical plastics. 3M (MMM) is ramping up production for protective face masks, which help reduce the spread of disease. Other industry leaders are bracing for less impressive growth from consumers in China as fear spreads, trade-deals remain unsettled, and Chinese operations for American companies have been temporarily suspended. 

These past two weeks have treated Tesla (TSLA) unbelievably well with staggering growth of share price. They’ve seen a near 80% increase since the New Year, and a historical record breaking trading volume this past week. There are certain apprehensions on how long this explosive winning streak can last, however. Model 3 production took a small hit as Gigafactory Shanghai was temporarily closed upon Chinese government orders, but share price still surged as Tesla announced that they have re-opened doors in Shanghai.


 
Healthcare Sector

Written By: William Szwartz, Healthcare Associate

The market can’t make its mind up over the coronavirus. After closing at record levels last week, the three benchmark indexes slipped on Friday as optimism over the virus subsided. U.S. stocks climbed higher on Monday as investors worked out what to make of the latest developments. Chinese officials reported 97 deaths on Sunday, a new daily record, diminishing hopes that the outbreak was stabilizing. However, a scientific model predicted the number of cases would peak in mid-to-late February. That said, many investors are recommending caution amid the current bout of coronavirus that was reportedly first identified late last year in Wuhan City, China, and has claimed 630 lives, with about 31,500 people sickened as of Friday, according to reports. The ability of the virus to halt travel and harm consumption, particularly in Beijing, are some of the ways an outbreak is likely to have economic implications that could wash up on U.S. shores.

However, sub-sectors of the healthcare industry have been impacted very differently depending on the possibility of use with the corona outbreak. Biotech companies such as Alexion (ALXN), and Stryker (SYK), have seen steady growth since the outbreak and continue to trek forwards into the new year. The pharmaceutical industry has seen dramatic changes as the race for the cure continues with altering companies leading the charge. Abbvie Inc, has had substantial growth as their drugs have been used to relieve symptoms of the corona virus and helping those affected to fight a little easier. Along with Abbvie, smaller companies focusing on the cure have seen astronomical growth while breakthroughs are being made and the press covers the company in good light. Whereas large scale companies including Johnson and Johnson and Pfizer have seen steady moves over the past few weeks.

Financial Sector

Written By: Artiom Bic, Financials Associate

Over the course of the recent weeks, the financial sector has behaved in a fairly consolidating manner. The financial sector has experienced a 0.78% increase with a slight bearish trend towards the end of January. Relative to the S&P500, the financial sector has been slightly underperforming but nevertheless has still shown stable overall growth. Taking a closer look at the financial subsectors, insurance has grown by 0.57% whereas the banking sector has only grown by 0.11%. On the other hand, the housing market has faced a more bullish trend relative to the other subsectors, with real estate having grown by roughly 1.23% in the recent weeks. 

Additionally, forecasts are showing that the financial sector should be benefitting from the current interest rate trends. While the Federal Reserve is expected to keep short-term rates low for now, improving economic conditions should contribute to rising longer-term Treasury yields. This in return should help financial institutions, which generally borrow at short-term rates and led at longer-term rates.


 
Utilities Sector

Written By: Veronica Vitollo, Healthcare Associate

2020 is all in for better, cleaner, safer, and becoming more environmentally conservation. Beside the fact that most utility companies understand the importance of growth through safer options, they also look at the importance of safety for their investors. Utilities are known for being the most volatile stocks that will be most reliable, no matter what may be going on in the economy. We can see this especially with the slip in the market with coronavirus concerns. This has been causing investors to rely on stocks that won’t get affected from this. 

In spite of slow growth across the energy sector as a whole, a handful of individual companies have thrived. Utilities have inflation-beating dividends as well as having great momentum. Dominion Energy (D), NextEra (NEP), and Duke Energy (DUK), are just examples of stocks that have exceeded the 3.5 dividend percentage. 

Energy can be a tough area to invest in, with volatile commodity prices from one month to the next and energy usage changing around the world. But what we are learning is that sometimes, it’s more important to have a practical portfolio rather than one with big names, especially in the economy we are in right now. Utility-scale solar and onshore wind continue to smash through most forecasts from previous years. If favorable economics continue to drive investment in the renewable duo, then utility-scale solar and onshore wind could generate 30% of America's total electricity in 2030, with all zero-carbon energy sources providing as much as 60%. 

 

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Copyright © 2019 Manhattan College Investment Club All rights reserved.

DISCLAIMER:
All information has been provided from individual writers associated 
with Manhattan College Investment Club. Any opinionated material
should not be used as financial advise.
Stocks we own: TMO, ORCL, AXP, RTN, JPM, AME, YETI, 
QRVO, BABA, EMR, ROST, TSLA, CVX, AMZN, GD, BA

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