Straight from Benzinga newsdesk, hosts Michael O'Connor and David Willey bring you the market news and stocks to watch.
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Hosts: Michael O'Connor , Benzinga Newsdesk & David Willey , Benzinga Newsdesk
Subscribe to our Stocks To Watch Newsletter here : https://go.benzinga.com/sales-page-187126583617110118712659
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Hosts: Michael O'Connor , Benzinga Newsdesk & David Willey , Benzinga Newsdesk
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NewsTranscript
00:00 Good morning, Zinger Nation.
00:04 It's Friday, ladies and gentlemen.
00:07 We're a little, Mr. David Willey here, my co-host.
00:09 Also, a little casual Friday action.
00:12 You'll love to see it.
00:13 I hope everyone has had a fantastic week so far
00:17 and a great day and a gearing up for a good weekend.
00:19 Today is Friday, July 28th, 2023.
00:24 Welcome back to Daily Stocks to Watch
00:27 from the Benzinga Pro News Desk.
00:29 The place to get some fresh, hot trading ideas
00:33 every single trading day.
00:35 At least five ideas to talk about,
00:38 to learn a little bit about,
00:39 know what's going on in the markets,
00:41 and then get you out to your trading day.
00:44 How are you doing today, David?
00:46 - Doing fantastic, thank you, Michael.
00:49 Yep, doing well.
00:50 I'm painting my deck this weekend,
00:52 so it's nice to be on Friday to begin sort of planning
00:56 the moves and enjoying the weekend.
01:00 - Wow, all right, all right.
01:01 A deck painting weekend.
01:03 That's gonna be wild. - A deck painting weekend.
01:05 - Okay, I hope that'll be a good one.
01:09 - I encourage everyone to get outside this weekend.
01:11 You know, you gotta get away, get outside,
01:14 enjoy the sunshine, enjoy the July weather.
01:17 - Touch some grass.
01:18 It's the last weekend of July.
01:20 It's crazy.
01:20 It's gonna be August soon.
01:22 That's absolutely insane.
01:24 And with the timing, we've got more earnings reports
01:27 that you gotta be watching,
01:28 so we'll crack into our list right now.
01:31 Stock to watch number one is the Chevron Corporation.
01:34 That's ticker CVX.
01:37 Number two, we've got Intel, which is INTC.
01:40 Number three is Procter & Gamble.
01:42 That's ticker PG.
01:44 Number four, we've got the ExxonMobil Corporation.
01:46 That's XOM.
01:47 And number five, big movement play.
01:51 This is a wild one for the day.
01:53 That's Rita Pharma.
01:54 That's ticker R-E-T-A, Rita, Reuter.
01:58 It's Riatta.
02:00 It's the spell for Riatta Pharmaceuticals.
02:02 Whatever it is, we'll talk about it in a little bit.
02:04 But starting off, let's talk about Chevron
02:08 posting the quarterly earnings
02:11 for the opening bell this morning
02:13 with expectations at 313 per share revenue, 48.17 billion.
02:18 Some pretty big numbers there.
02:21 But Chevron is one of the huge oil giants,
02:23 one of these companies.
02:24 If you're watching the earnings right now,
02:26 what is going on now?
02:29 Down a little bit pre-market.
02:30 They were actually down about 2%
02:33 right at the open of pre-market hours.
02:35 Now, only down about half a percent.
02:38 Nothing absolutely crazy going on with Chevron.
02:41 But looking at the year to date,
02:43 stock is down almost 11% year to date.
02:45 Has been having kind of a choppy 2023 so far.
02:49 Some upward movements, some downward movements.
02:51 I mean, past year, we're looking at a little over 5%
02:54 up in a year, up almost 30% in the past five years.
02:58 After COVID, Chevron has handily recovered
03:02 and is doing well.
03:02 But the whole oil sector has been doing pretty good
03:07 post-COVID, pretty darn good.
03:09 If you got in right when the crazy dip happened,
03:12 you're sitting very pretty right now.
03:14 But I think also starting to face a bit of a conundrum
03:17 of where do they go from here?
03:19 We've seen increasing regulations,
03:22 increasing calls for governments to take action
03:26 on green energy, a whole slew of things.
03:29 And these big companies are apparently investing
03:32 more into green energy, more into different ways
03:35 of creating the revenue and profit that they are known for.
03:39 The time will tell and definitely be tuning
03:41 into that earnings call right now.
03:44 If you're a shareholder, you should at least be checking out
03:47 what the guidance is.
03:48 And even if not, check out what the reports are
03:50 after we get final, after they close things out.
03:53 Exxon is also on the list as well,
03:55 which will be coming up a little later.
03:57 But these stocks are crucial to be watching.
03:59 If you're looking at the macro plays,
04:01 if you're looking at where commodities are going
04:04 and where the companies that lead it, what they're doing.
04:07 - Yeah, and as you said, Mike,
04:09 we will be touching on Exxon in a little bit.
04:12 But a question I have looking at these big
04:18 net oil companies is as the shift towards green energy
04:23 gets really accelerated in part, as you said,
04:28 pushed by government regulations
04:31 and there's a lot of consumer interest.
04:34 Do you, traditionally, obviously,
04:38 these oil companies have been very dependable,
04:41 very high rewarding stocks,
04:43 but do you think these companies have the ability
04:46 to pivot towards more sustainable,
04:49 more renewable forms of energy?
04:51 Do we continue investing in these stocks
04:54 because we think, okay, they have it in them
04:56 to keep with the times and to make these adjustments
05:00 or are they gonna get left behind?
05:01 Are they gonna get sort of caught
05:03 in the crossfires of renewable energy
05:05 and sort of not be able to make, not be able to pivot?
05:10 - I think that's the big question
05:14 that is on the mind of every big oil company exec
05:18 and big shareholders
05:20 as they're listening into these earnings calls.
05:23 It's a tough question to answer
05:25 because I think certain industries have achieved that.
05:28 Some industries have managed to keep up with the times
05:32 and keep up with the trends
05:34 in consumer and regulatory preferences.
05:36 I think it could be a situation similar to electric cars.
05:41 We've seen the auto industry pretty quickly
05:45 be able to shift their investments,
05:48 their research and development.
05:50 Surprisingly, frankly, I've been very surprised
05:52 at the speed of the big legacy automakers
05:56 coming out with electric models.
05:58 Do I totally agree with full electrification of cars?
06:01 I don't know.
06:02 I like some internal combustion engines,
06:03 but it's an interesting, it's a whole debate to be had.
06:06 I think these companies,
06:09 maybe on the upside,
06:11 the companies that have already started these initiatives,
06:16 maybe in the last decade,
06:18 I feel like, I think it was Shell
06:21 and I believe Chevron have been talking about
06:23 increasing investments to diversify
06:25 their revenue generation for the last decade.
06:27 If these things actually work out, I think it's possible.
06:32 I think we have seen companies where you think of the name
06:35 and you think of one specific type of product
06:37 or one specific commodity or one specific service,
06:41 have been able to pivot in the past.
06:43 I think it's gonna be tough.
06:45 I mean, it falls a lot on management,
06:47 it falls a lot on good execution.
06:49 So definitely something to watch out for
06:51 when you're listening to these earnings calls,
06:52 what the forward-looking guidance is,
06:55 how the tone of the CEO or other presenters on the call,
06:59 how they sound, if they're optimistic,
07:01 if they're downtrodden, checkout.
07:04 I got the human side is how these companies
07:07 are actually going to take action and fail or succeed
07:11 and the goal is to diversify and have additional ways
07:15 to be in the energy market,
07:17 no matter what happens on the regulatory side.
07:20 Also a quick update, Chevron did beat on revenue
07:25 with 48 point, almost just about 48.9 billion,
07:29 beating consensus 48.8,
07:30 but missed on EPS at $3.08,
07:35 missing the consensus of $3.28.
07:37 - Now our next stock to watch is Intel Corporation,
07:43 that's ticker INTC.
07:46 They reported better than expected results
07:48 for their second quarter and issued strong guidance.
07:51 Intel shares jumped 8% to $37.34 in after hours trading.
07:58 And right now they're looking at about $36.78,
08:03 a jump of about 6.5%.
08:07 Now their revenue was $12.9 billion
08:12 versus the 12.13 billion expected by the streets.
08:17 So almost, that's about 0.8 billion beating expectations.
08:22 Their earnings per share were 13 cents per share
08:28 versus an expected loss of three cents per share.
08:31 That was also quite an impressive
08:35 degree to beating expectations.
08:38 And they have an adjusted gross margin of 40%,
08:41 which was slightly above what we've expected.
08:44 Now, you know, tying back into the conversation
08:47 from the, it's come up frequently this week about AI.
08:50 We had the Intel CEO, Gelsinger,
08:55 saying that the semiconductor company will,
08:57 and I quote, "Build AI into every product that we build."
09:02 So Intel definitely looking to compete
09:06 and challenge the success of Nvidia.
09:08 That's another big name in the computing sector,
09:12 has done really well with AI investments.
09:16 Now Nvidia's stock has increased, I think, 140%
09:20 in the past six months because they, you know,
09:23 seem to have done really well with AI computing.
09:25 Let's take a N-V-D-A.
09:28 And so Intel looking to really get involved
09:32 in bringing AI as well into the computing sector
09:36 and into the semiconductor space.
09:38 - And Intel, one of those companies that,
09:42 if you are looking into the sector,
09:43 if you got it, you got to watch these big brands.
09:47 These big moves from these big brands are pretty crazy.
09:49 I mean, we saw Nvidia, like you mentioned, David,
09:51 huge move a while ago.
09:55 It feels like that was yesterday
09:57 that Nvidia was the huge news piece in the markets,
10:02 almost in that, I think they did,
10:04 maybe they had for a little bit of time
10:05 that trillion dollar market cap,
10:07 just an absolutely monster move.
10:10 So you see a big move coming out of Intel.
10:12 Anything, I mean, a 7% move on the morning for Intel,
10:16 this is a huge company.
10:17 These are very, very strong numbers,
10:20 at least in terms of the way the market is reacting.
10:23 Intel has been investing pretty darn heavily
10:26 into building new fabrication sites, new centers.
10:29 I mean, I think it's working with the US government.
10:32 They just announced another big foundry.
10:35 They've got a multi-billion dollar project in Ohio,
10:38 another multi-billion dollar project somewhere else.
10:39 Like they're really throwing some money around
10:42 with a lot of taxpayer dollars as well.
10:45 So a little bit of a tandem operation there,
10:47 but it's going to be interesting to watch
10:50 what happens in the coming years
10:52 for nearshoring semiconductor manufacturing
10:56 and how Intel and these other big players in the industry
10:59 are going to come out of that.
11:01 Stock to watch number three, we've got Procter & Gamble.
11:04 That's ticker PG, the consumer packaged giant.
11:09 Expectations were at about, what, $1.32 per share
11:13 on revenue of 19.98 billion,
11:16 but they beat on both, not by much,
11:18 but a little bit with fiscal fourth quarter earnings
11:21 of $1.37 a share on revenue of 20.6 billion.
11:26 So a nice tidy little beat there,
11:29 talking about, on the call itself,
11:32 talking a good bit about raising prices
11:35 to match with inflation.
11:37 And consumer preferences staying pretty robust,
11:40 people not necessarily minding too much
11:43 when their head and shoulders costs an extra 35 cents a bottle
11:46 or something along those lines.
11:47 Procter & Gamble, probably the king
11:49 of the consumer packaged goods industry,
11:52 along with, I guess, Unilever,
11:54 maybe Nestle is in there too,
11:56 some of these really large, huge category spanning companies
12:01 that fill the shelves of supermarkets worldwide.
12:05 One of those names that is very, very good to look at
12:08 for consumer sentiment,
12:09 and we've seen the Fed raising rates recently,
12:12 we've seen reports that inflation
12:14 is continuing to trend downward,
12:17 maybe avoiding that recession possibly,
12:21 I don't wanna say too much,
12:23 but it seems like the Fed may have been able
12:25 to pull off a soft landing
12:27 and companies like Procter & Gamble
12:29 could be some of the happiest about that,
12:32 at least in terms of the consumer sector,
12:33 because they rely completely on consumer spending
12:37 for the revenue,
12:38 but a pretty darn good quarter for Procter & Gamble.
12:41 - Absolutely.
12:45 Now, our fourth stock to watch
12:47 is tying us back to the beginning
12:49 of our conversation about oil.
12:52 It's ExxonMobil, that's ticker XOM.
12:57 Now, analysts expected quarterly earnings
12:59 at $2.01 per share on revenue of just over 80 billion
13:04 before the opening bell,
13:06 and ExxonMobil shares initially rose
13:09 to about $105.70 in after hours trading.
13:13 They have since taken a bit of a dip
13:16 since the earnings were posted.
13:19 Now, the income was about 7.8 billion,
13:23 and that was $1.94 per share.
13:29 Now, this is set against the second quarter of 2022,
13:32 which was a record of 17 billion.
13:35 So, this is obviously a big dip,
13:39 about a 56% drop from their record of last year.
13:44 However, excluding,
13:47 and obviously that is just a terrible headline
13:50 that no CEO really wants to see posted about his company,
13:54 and it's sort of all over the news right now,
13:56 that this has been a big dip from Exxon's success last year.
14:01 But actually excluding last year's record second quarter,
14:04 Exxon posted some of its strongest quarter two results
14:08 in more than a decade,
14:10 and that was due in part to,
14:13 you know, they did some cost cutting,
14:15 they sold off some less profitable assets.
14:18 And so, again, I think the question
14:21 for a lot of these companies is,
14:23 you know, Exxon is, it's done, you know,
14:28 the past six months have not been great for the company,
14:30 'cause the stock has dropped about 7.5%,
14:35 but it's not, that isn't really that bad,
14:38 all things considered, and you know,
14:39 in the past five years,
14:40 they seem to have done pretty well,
14:44 increasing stock price by about 30%.
14:47 So, you know, these are not really terrible results
14:52 for Exxon, but I think a question,
14:55 as you said earlier, Mike, for a lot of investors,
14:58 right now will be, what does the future hold?
15:01 What is their ability to pivot?
15:02 What is their ability to adjust to changing circumstances?
15:07 - Definitely.
15:09 And in terms of pivoting and changing to circumstances,
15:13 Biogen is the bonus stock,
15:16 but the stock to watch number five is their buyout,
15:20 which is Rieta, it's R-E-A-T-A, I don't know if it's Rieta,
15:24 Rieta, but the ticker is R-E-T-A.
15:27 - I'd say Reta.
15:28 - Reta Pharmaceuticals.
15:30 (laughing)
15:31 And this was a big, big, big announcement this morning
15:34 in the biotech sector, a pretty darn big number
15:39 of $172.50 per share in cash.
15:44 That comes out to, I have the number here,
15:49 about $7.3 billion buyout.
15:53 So that's a big number.
15:55 As soon as you got the B there,
15:57 and it's more than one or two,
15:58 this is something that everyone, I think,
16:00 is looking at in the biotech sector.
16:02 Rieta up 51.5% today, but still, this is interesting,
16:06 still hovering around $164 a share.
16:09 So there's actually still a bit of a $8 wiggle room there
16:14 in terms of the cash price, if it will go through,
16:17 could always be canceled before it goes through.
16:19 So there's some risk there, but really, really,
16:21 really big movement pre-market.
16:24 And an interesting company as well.
16:25 I mean, the last year, Rieta up 440% seems to be
16:31 a pretty successful company,
16:34 at least in the sphere that it's in.
16:36 Back in February of 2020, it was actually worth
16:39 even more than it is right now at $225 a share at its peak.
16:43 So down a little bit from then,
16:44 but this is certainly some very good news for Rieta.
16:49 And Biogen originally was actually up a little bit
16:51 pre-market, about a 1.5%, a little bit down,
16:56 about a quarter of a percent down
16:58 once we have the market open.
17:00 Biogen, the company, spending that $7.3 billion
17:05 to acquire Rieta, a very large move for the company.
17:09 Biogen has been one that has pretty consistently,
17:12 at least as far as I can remember,
17:13 pretty consistently been bolstering its set of pipelines
17:18 and products in the pharmaceutical sphere.
17:20 It has to compete with the other big players
17:22 like Pfizer, Merck, AstraZeneca.
17:25 So Biogen making a very big move here this morning.
17:30 All right, we're gonna go back over our list.
17:33 Make sure we caught everything and then get you out
17:36 to your Friday trading day.
17:38 Stock to watch number one was Chevron Corporation
17:41 with ticker CVX.
17:43 Stock to watch number two was Intel Corporation
17:46 with ticker INTC.
17:48 Number three, we had Procter & Gamble, that's ticker PG.
17:51 Number four, we had ExxonMobil, that's XOM.
17:55 Number five was Rieta Pharmaceuticals, that's RETA.
17:59 Hope everyone has a great, great Friday
18:04 and a wonderful weekend.
18:05 And we'll be catching you on Monday.
18:07 - As always, Mr. O'Connor, it's been an honor.
18:12 Have a lovely weekend, everyone.
18:13 Take care.
18:14 [BLANK_AUDIO]