Weekly Performance Review Jan. 4th – 8th, 2021

Equity markets saw a strong start to the year globally, with major indexes hitting fresh record highs last week. The Dow finished the week 1.6% higher, The S&P 500 gained 1.8% and the Nasdaq stacked on 2.4% for the week.  

Democrats secured the Senate majority following a pair of narrow runoff victories in Georgia, potentially paving the way for more fiscal stimulus later in the year to aid the recovery.  Democrat control also raises the prospects of higher corporate tax rates but considering the razor-thin majority and current state of the economy, tax reform might not be a priority in 2021. 

Ten-year yields moved above 1% for the first time in nine months, while small-cap and international stocks outperformed, signaling optimism around the outlook for the post-vaccine phase. Adding to the positive sentiment, WTI oil prices rose above $50, a level last seen in February, as Saudi Arabia announced an unexpected production cut.

Continue to the article to find out how our trades did for the week.

01-04-2020_SEDG up 10.58%

SolarEdge Technologies (SEDG) manufactures power optimizers and inverters used to convert the sun’s energy into usable electricity.  SolarEdge’s focus on manufacturing low-cost power optimizers has enabled it to win market share from its competitors as solar project developers focused on cost.  

The company complements its leading market position with a strong, cash-rich balance sheet.  That provides it with financial flexibility to invest in expanding its manufacturing capacity and technological lead over its competitors.  Those factors set SolarEdge Technologies up for success in implementing its plan to expand its reach in the fast-growing solar sector.

01-05-2021_ZUO up 6.37%

 Zuora Inc. (ZUO) recently announced today that it is helping Siemens Healthineers AG (SHL.DE), a leading medical technology company with over 120 years of experience and 18,500 patents globally, introduce new recurring revenue streams from its Digital Health Solutions Portfolio using Zuora Billing and Zuora Revenue.

Automating the order-to-revenue process with Zuora has enabled Siemens Healthineers to reduce the number of manual processes by more than 60% and become more agile by shortening the processing time by about 75% for their subscription management.

Perhaps just as important as pricing flexibility and efficiency gains from automation has been Zuora’s unique expertise on the cultural shift to subscriptions. “Zuora has given us both technical and strategic capabilities to achieve our long-term goal of running a successful subscription model in the backend,” said Florian Rachny, Head of Digital Business Processes, Siemens Healthineers.  

---

---

01-06-2021_CGRO up 0.43%

Collective Growth Corp. (CGRO) is a special purpose acquisition company that plans to merge with Israel’s Innoviz Technologies, which develops lidar sensors.

Innoviz agreed to sell its lidar to BMW for use in its 2021 SUV. Importantly, Innoviz recently announced that it released a cheaper lidar system more feasible for “mass market” automobiles. Indeed, the company “claims its technology is some of the most cost effective for automakers on the market,” according to Yahoo Finance.

In 2025, Innoviz predicts gross margin will reach 52%, with its operating margin hitting 31%. The SPAC provided $150 million in cash and raised $200 million from investors in the deal that gives th combined company a $1.4 billion equity value. This will make Innoviz one of the cheaper lidar plays.  They expect the transaction to close in the first quarter of this year. 

The combination of a top-notch customer, huge investors, affordable products and a relatively low valuation make Collective Growth/Innoviz (CGRO) one of the best lidar stocks to buy.

01-07-2021_LYB down 0.69%

LyondellBasell (LYB) had a brutal 2020, never sniffing a positive return from day one.  It’s primarily in the business of selling plastics and petrochemicals, but it also has a large refinery business that makes gasoline, diesel fuel and jet fuel.  

 LYB shares were cheap before the March selloff, and they remain cheap today.  The stock trades 1.1 times sales and 13 times expected 2021 earnings.  To put that into perspective, the S&P trades at an almost shocking 2.7 times sales and 22 times expected 2021 earnings.  

As Wall Street settles into the new year select value stocks appear to be gaining steam.  We’ll see if this is a blip or if it represents a sustained shift in sentiment.  But regardless, LYB is a cheap stock showing strong momentum, and that puts it on strong footing to one of 2021’s top value stocks.   

01-08-2021_AY up 6.71%

Atlantica Sustainable Infrastructure PLC (AY), which was formerly known as Atlantica Yield plc, is an infrastructure company. Based in Brentford in the United Kingdom, the company owns and manages renewable energy, natural gas, transmission and transportation infrastructures and water assets.

For the quarter ended September 2020, AY’s revenue increased 3.3% year-over-year to $303 million. Its net profit increased 103.7% year-over-year to $89.4 million. EPS increased 104.7% year-over-year to $0.88. And for the nine-month period ended September 2020, revenue from the water segment increased 63.7% year-over-year to $30.2 million.

Analysts expect AY’s revenue to increase 18.2% for the current quarter which ended in December, 8.7% for 2020, and 7.8% this year. The company’s EPS is expected to increase 2,100% for the current quarter, 55.7% this year, and at a rate of 49.5% per annum in the next five years. The stock has gained over 70% in the past twelve months and we think there is plenty more tailwind for AY due to technological advancements and cost cutting strategies adopted by the company.