Yesterday, in my daily recap, I've done the "quick major news" and "what to look for tomorrow". But I think it doesn't bring that much value and a bot could do this. Tell me if you still want to have it. If enough people want it, I'll make a python script to fetch the major events and financial news of the day.
Weed stocks are high right now
Quick rundown : The Democrats took control of the Senate. People hope that they decriminalize weed on a federal level. People are optimistic about weed stocks.
I understand the optimism but it's not that big of a news as the states still decide their policy. Also, after the election, some states have already legalized pot so it's kinda old news as well.
Also, the big weed stocks financials are really not that great. Their cash reserves are running dry. Canopy Growth and Aurora Cannabis scaled back operations. There have been a lot of layoffs and departures from executives. The pandemic doesn't help as investors are looking for companies with enough money to survive another potential crisis.
So to me, the prospect might be, potentially, maybe a little bit positive but also :
- right now they don't have enough money to sustain the growth that people expect
- the rally that we've seen in the last months is not sustainable and reminds me of the 2018 rally (that didn't end well)
- they're losing money
And, I can't stress this enough, there are other stocks that perform just as well with much better financials and outlook.
But, two weed stock that I would root for are Aphria and Tilray since they've merged to be a big european player. And France seems to want to legalize weed as the government is currently running a poll to seek French people's opinion on the matter. France has selected Tilray to be a provider of medical cannabis products. Europe is already a big player in medical cannabis products. Most of Europe has yet to legalize recreational marijuana and they're on path to follow the US as the mentality on this matter shifted in the last few years.
I would see them as good long term plays. Personally, if the rally dies down, I might buy those 2 stocks in my long term portfolio.
Renault and Daimler
I wanted to talk about those 2 companies in my daily recap of yesterday but it was already late and thought "Ah let's do that tomorrow". So sorry if you missed on those amazing gains today but it's still not over.
So what about those companies? Well, I was really excited about a possible partnership between those two to create large vans. From the article :
Renault and Daimler could team up in some capacity to work on the next generation of Renault Master vans, which are built at Renault's Batilly plant in northeastern France, two people with knowledge of the discussions told Reuters. They said that talks may yet lead nowhere and have not yet concluded.
This is an incredible news for 2 reasons :
- The van market is pretty hot right now thanks to the pandemic.
- Renault and Daimler have slowly stopped many of their partnerships so seeing this gives a lot of hope for those two car manufacturers that were pretty hurt because of the pandemic and the rise of EVs.
And for Renault...
It has been in pretty bad financial state since beginning of 2018 as their sales and market share are decreasing rapidly and as Carlos Ghosn got arrested in Japan. So yesterday, I would have told you to bet heavily on them and a little bit on Daimler.
Today's news may have changed my opinion though. 50/50 could be a better bet as Daimler announced that he would separate his truck division from the rest of his businesses by doing an IPO. The shareholders would get shares of the new company if they actually follow through.
So now, their partnership would benefit those two businesses in 2 very different ways in my opinion :
- Renault would profit off of Daimler's really good market share in truck sales (roughly 20%).
- Daimler will increase his truck sales, possibly reduce cost and will have great financials to show for the IPO of its truck division.
The bull thesis for Renault is even better when you know that there was a new person appointed as CEO : Luca de Meo. He's really trying to turn things around. You have to know that the company hasn't changed his old processes in many MANY years. So 6 months ago, when the news hit that he would be the new CEO, it was pretty well received. Investors just wanted to see how he would change the company. A few days ago, he gave his plan (spoiler alert : it's a good one). First, he wants to cut production cost and increase profit margins by :
- Shrinking the product range by 30%. This technique is used by Tesla. Less different products means simplifying the production chain and reducing costs.
- Moving into more profitable, bigger SUVs and launching a French-made electric car costing less than 20,000 euros. SUVs and EVs have been booming recently.
This strategy is actually really good but most importantly, it's a breath of fresh air for this company. It was struggling big time during the pandemic, needed big loans from the government and was almost bankrupt. Furthermore, this strategy has already paid off for another company : PSA. It was in the same situation : almost bankrupt, changed his direction from increasing sales to increasing margins and profits and became very profitable even in German standards.
So... hum... that was longer than I thought. Anyway, Renault is a good buy (I think). Daimler too if you want to bet on this merger and its prossible IPO.
Quick talk on US oil companies
I don't have too much time right now to talk about this but tomorrow I'll maybe talk about it more. But the basics of my thesis is :
- Exports of US crude oil has been great lately
- Outflow of 2.5 million barrels from Cushing
- Rising oil price
- Since oil price has increased, it's more interesting to turn oil into products than to store it.
So I'm bullish in WTI crude oil and US oil companies (Chevron Corporation, Valero Energy, Phillips, Marathon Petroleum, ConocoPhillips).
Ok Bye!