Skip to main content

tv   The Exchange  CNBC  June 9, 2022 1:00pm-2:00pm EDT

1:00 pm
perfect route because you have the fed meeting coming up on the 14th and 15th. >> good point about that, too. we'll be talking about that quickly. josh brown >> charge point had a huge rally on a big deal with the national electricians union and it's flat after that digesting it. that's very positive >> i'll see you in a few hours "the exchange" is now. thanks very much, scott. welcome to "the exchange." i'm dominic chu in for kelly evans. markets are lower but not by much the recent rebound peteerring ot just a bit plus, shortage to glut lumber prices are tumbling down nearly 60% in three months and now there's an oversupply, believe it or not. is this a sign of broader deflationary pressures and earnings from docusign and
1:01 pm
stitchfix and vail resorts we begin with today's market action i will take you through some of those numbers right now, and because we did mention that marginal move lower, a lot of this might be just jockeying for position ahead of the very big consumer price index, cp ireport coming up for u.s. inflation tomorrow morning, a big ecb, european central bank, decision may be weighing on things, slightly worse than expected jobless claims numbers a 50-point loss for the dow. the s&p is above 4,100 it's down 11 points or about a quarter of a percent the nasdaq composite down about 55 points or roughly half a percent decline here one place to keep an eye on what's happening with transportation stocks, relative strength in fedex today, but overall that transportation index weaker on the day down nearly 3.5% and has been on a
1:02 pm
near-term down trend despite a bounce off the lows. some folks still look at this transportation index as one of those places that could be a more leading indicator for how things go in the rest of the market we'll keep an eye on this etf, the iyt, which tracks the dow jones transports index and then the stock of the day right now is meta. meta platforms and now officially meta in terms of the ticker was the official change for meta platforms down 2.5%, losing steam throughout the course of the session. remember, this is a stock at this point that has gone from a near $1.1 trillion valuation at the highs now to be roughly $520 billion to $530 billion. that's how far the decline has been it has some traders and investors wondering whether that meta verse trade that could play out in the next several years is worth looking into what these valuations, it has fallen quite a bit. now inflation concerns and aggressive interest rate hikes may be weighing on stocks
1:03 pm
overall. my next guest says this is just a nonrecessionary slump. he says stocks are bouncing to the bottom and is optimistic about the second hatch of the year joining me is the chief equity strategist and senior portfolio manager at mai capital management this has been the question a lot of folks have been asking about whether or not there's another leg lower right now, but you feel more constructive take us through why given all those macro head winds we've just talked about. >> sure, dom it's nice to see you again and nice to be with you. first of all, to set the backdrop, in 2011 and 2018 we had nonrecessionary market slumps both times the market dropped almost exact ly 19% on march 20th the market closed at its low down 18.7%. so maybe history is not the same, but maybe it's rhyming pretty closely that assumes there's not going
1:04 pm
to be a recession, which i think if there is we have considerably more down side we feel strongly there probably won't be, and we have about five or six reasons the biggest reasons -- several times ago i was here, we were upset the yield curve was inverted that's reversed. it remains positively slow we've never had a recession without a sharp yield curve inversion. long rates have stabilized at about 3% on the ten year that's below the 20-year average. as you mentioned lumber has been cut down, wages rising slowly, shipping containers, all have moderated in price clearly energy is the exception, and that's a concern, but everything else seems to be going the right way. and finally i would ask your viewers, does it feel like a recession? have you lost your job are the restaurants full are you paying a lot for ai airfares are the stadiums sold out? are you paying tons for those
1:05 pm
seats? i think the answer is yes. it doesn't feel like a recession out there and, therefore, we have a decent amount of confidence for the second half >> if there is confidence then, you are right. anecdotally speaking real life is not indicating all of those recessionary signs just yet. they do catch people off guard >> sure. >> i wonder in this environment are there opportunities you are finding now? we know value outperforms growth it has been for a while. there have to be places more attractive than others right now. where are those in your mind >> sure. one stock that we really like are air products, typical of what we would be looking for and i might suggest your viewers might look for which is a stock in a commodity area but that also has high returns on equity. they sell industrial gases and, for example, they're a huge beneficiary to lng and are a beneficiary of inflation they are selling hydrogen and liquid nitrogen and there are
1:06 pm
only three companies that do that on a global scale they're one of them. you get the best of both worlds, a growth company also in a value area, so stuff like that we really like. >> now the capital market activity, the volatility we've seen, does that at all present an opportunity is it in the banks is it elsewhere right now? >> dom, great question, man. what we're really liking here is intercontinental exchange or without credit risk or interest rate risk in the energy markets they basically own the brent contract and what better market would you want to be in? they just care that the volumes are high and the volatility is high and, boy, do we have that right. the stock is down a bunch because they also have a mortgage servicing business. again, i would emphasize
1:07 pm
servicing not credit risk and not making mortgages but they service them anything with mortgage right now has been tainted they're bouncing along ten-year low p/e ratios for i.c.e it's a great can be. >> intercontinental exchange, two big picks from chris grisanti the 30-year bond option is up rick santelli is tracking all the action down in chicago take us through the action what's going on? >> reporter: well, this was definitely the best of breed, dom. 19 million 30-year bonds rounding out the trifecta at 96 billion and the grade a-minus. the yield 3.185. it was definitely stopped through by a basis point and a half trading around 3.20 3.20 down to 3.185 lower yield, higher price if we look at all the metrics,
1:08 pm
they were all near or slightly above the auction average. nothing jumped out at me the fact it priced so well with all the metrics in place really shows that the longest maturity with the biggest yield, but it's a three-legged stool if you're looking for liquidity and you want to own a good yielding instrument in a world where many yields are lower, 30-year bond may be it everyone seems to have stepped up after this option and all the supply from the treasury on the coupon side is completed back to you. >> dealers didn't have to take so much this time around the 30-year long bond. so now call it the netflix of gaming, microsoft releasing an xbox app for smart tvs, enabling consumers to stream and play games without buying the console itself all you need are the
1:09 pm
controllers. the new app is launching at the end of the month in partnership with samsung the smart tv platform to carry it, $15 a month, and gives players access to hundreds of video games that they can stream right to their tv. so for more on what this means for gaming and the competition, let's bring in doug clinton, luke ventures, for more on just what this does do to the video game landscape and i wonder, doug, is this a game changer is this one that kind of resets everybody in terms of the content versus hardware discussion >> i think it does microsoft more than any other company in gaming changing the nature of the business an acquisition a couple years ago.
1:10 pm
next year i think they're married the two worlds perfectly. competitors like sony and other companies that have dabbled and maybe intimated they are interested in getting in gaming, they have to decide if they're really serious and compete with microsoft on this kind of content, really high-end content paradigm. >> so let's put the rubber to the road situation, doug do others have to match what microsoft is doing and how much in resources here with samsung >> probably two steps. the one thing with sony that is interesting for them obviously they have a tv business already. it's not as big as samsung's business, but they can probably move fairly quickly and at least get a product on market. i think the bigger challenge for a company like sony or anybody
1:11 pm
else who might want to get into the streaming gaming space is having enough breadth of content to compete and that's where microsoft has strategically been thinking about this for years if not maybe the better part of a decade others want to compete, they have to think about going out into the market and making acquisition of the mid to smaller sized publishers >> when it comes to video games they are big business. but they're not the primary business for companies like sony or microsoft for that matter it's dwarfed by other parts of microsoft right now. when you do look at content versus hardware, you mentioned the content side of things how much more important will this be for the content publishers, people like electronic arts on ak at thi
1:12 pm
if we look at our portfolio gaming is the biggest in our portfolio. we are comfortable owning gaming stocks whether we go into recession or not, they've proven to be counter cyclical they don't get hit as hard as other digital consumer names what's so important about content there are so few truly great content titles and we like to invest in companies that build true worlds. take two is one of the bigger positions. their crown jewel is grand theft auto they're still working on an eight-year-old game with grand theft auto and it's one of the top games in the world if you think of the power of content, it's a world that's been around, arguably stale. it's almost a decade old and
1:13 pm
people still go and play it because they've done a great job updating the world with new experiences for players. >> more than a decade old. i remember gta in my early to mid-20s. doug clinton, thank you very much coming up on the show, lumber prices have been taken to the woodshed, so to speak, plunging 60% from their march highs. so what's to blame for the overstock in supply? we'll get a view up next a rare interview with one of the most prominent impact oriented activist investors out there, lauren taylor wolfe fresh off her presentation at the investor conference coming up
1:14 pm
this thing, it's making me get an ice bath again. what do you mean? these straps are mind-blowing! they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. and you are? i'm an invesco qqq, a fund that gives me access to... nasdaq 100 innovations like... wearable training optimization tech. uh, how long are you... i'm done. i'm okay.
1:15 pm
millions have made the switch from the big three to xfinity mobile. that means millions are saving hundreds a year on their wireless bill. and all of those millions are on the nation's most reliable 5g network, with the carrier rated #1 in customer satisfaction. that's a whole lot of happy campers out there. and it's never too late to join them. get $250 off an eligible 5g phone with xfinity mobile. take the savings challenge at or visit your xfinity store and talk to our switch squad today.
1:16 pm
welcome back to "the exchange." we've heard a lot about supply chain shortages, outages, linkages, but what about the oversupply story there are now some indications lumber is suffering from that very particular problem. prices are down more than 50%. supply lines have now caught up perhaps almost too much. jpmorgan noting supply is, quote, flush at home depot,
1:17 pm
lowe's while foot traffic has slowed down. on the earnings call it cut saw mill production. with the pandemic period or at least one of them has now come crashing down-to-earth, is this the leading deflationary indicator? let's bring in the chief operating officer. kyle, i've watched your segments on this show talking about the supply/demand dynamics it caught a lot of people off guard. how did it shift so quickly? >> thank you for having me again, dom we have been very much in the forefront of what's happening with regard to supply change about two years ago we indicated
1:18 pm
on your show in the past that we were in a cyclical bull wave and that would last 24 to 30 months. we're in month 25 of that. we're right now really about a month or twof away of finally confirming from a technical perspective that cycle is over and we're moving into a new cycle and all indications are and, again, earlier this year, lumber had even more of a supply chain problem early on this year and was set to actually move to all-time highs even higher than in 2020 and 2021 it wasn't able to do so because we've seen a substantial change on the demand side and the supply side. >> let's talk about i'm a homeowner. i put in my deck before the pandemic in retrospect the timing looks good i used pvc versus wood i had to use wood for the frame. should homeowners, consumers, go
1:19 pm
out and start green lighting some of those lumber projects, or is there more down side to come >> with the pent-up demand and the backlog of current orders lumber is probably going to trade from a historical standpoint a higher range than we have historically been. so to put it in perspective a contract at 562. the 20-year average is below $400 we still are very, very high based on historical standards. that being said -- and we'll likely go a little bit lower than where we are today. we are in the process of redefining the new range we call it the great reset into what the new lumber cycle range will trade >> before we let you go, you're the expert on lumber, take us through whether or not you are worried about higher interest
1:20 pm
rates. >> we're very much worried about that >> and any indication that your business will suffer because of fed policy >> we've already seen that we indicated that earlier on this year. we felt the first half would be good with the supply side issues and the demand forefront we've had. the second half would be very much in question and of concern of future growth ultimately we predicted demand construction >> kyle little, thank you very much we appreciate it have a good day, sir up next on the show we are breaking down the nuts and bolts, literally, and the companies responsible for putting together aircraft, planes we have some under the radar stocks to help your portfolio take flight. but first, a downhill for vail
1:21 pm
resorts. docusign is up from its lows just four weeks ago and then stitch fix is trying to snap an 11-month downturn. what should investors be watching after the closing bell today we have all that coming up in thearng enis exchange after the break. we're back after this. udit syst? so you tap ibm to un-silo your data. and start crunching a year's worth of transactions against thousands of compliance controls with the help of ai. now you're making smarter decisions faster. operating costs are lower. and everyone from your auditors to your bankers feels like a million bucks. let's create smarter ways of putting your data to work. ibm. let's create ♪♪ this... is the planning effect. this is how it feels to know you have a wealth plan that covers everything that's important to you.
1:22 pm
this is what it's like to have a dedicated fidelity advisor looking at your full financial picture. making sure you have the right balance of risk and reward. and helping you plan for future generations. this is "the planning effect" from fidelity. joel, since kansas, we've taken our own path. we've never done what everyone else did. we took on the fear. we ignored the doubt. we loved the excitement. we believed. even when our path didn't make sense to everyone else, we kept going. we keep going. until our path is the one they wished they had taken. ♪♪
1:23 pm
♪♪ ♪♪ ♪♪ ♪♪ welcome back to "the exchange." time for the earnings exchange where we get the action, the story and the trade and three names set to report results after the closing bell today first up you have docusign, shares falling after getting a boost from its newly expanded partnership agreement with microsoft in yesterday's
1:24 pm
session. it's now 70% off the highs as in-person business really gets going and kicks off and resumes. our own frank holland has the story. joining us with the trades today is nancy tangler let's get to the story first, frank. i'll hand it over to you hey there, dom earnings coming up after the bell today, estimates for $582 million. eps 46 cents a share that's not really the number to watch. the number is billings that's a backward looking metric this time it will be insightful about the future of docusign if that number can meet estimates, it's a very good sign even as we enter a quasi post pandemic environment, hard to say we're past the pandemic, but people are doing more things in person including signing documents in person like houses, cars, et cetera are they able to maintain that customer strength and possibly customer growth? that's something to watch right there. also the company sensitivity to other macro factors, the
1:25 pm
ten-year yield, the rising dollar, which we've seen throughout the last month or so. the stock performance the last month is up more than 25%. some of that a big boost from the microsoft partnership announced yesterday. a lot of people are believing it could be too cheap to ignore, services as we go into the, hopefully, post pandemic world are still in need and people want to sign remotely and getting another boost to the stock. >> there's the story and we get all of those aspects of it nancy, i turn to you now because this was a pandemic story, the pandemic seems like it was yesterday's story or two years' ago story at this point. is this a company that has a bright future even without a pandemic spur? >> so, dom, i think frank is right, this is a company that's become very cheap. relative price to sales ratio and it entered into our range recently down 71% from the peak
1:26 pm
so it's tempting for investors and we see multiple contractions but still trades 45 times next year's earnings. the billings question as frank mentioned will be the all-important thing to watch today. they have a very tough comp year over year. last year billings were up 54% the company has a tough comp expected to come in around 9 if they meet that the stock will probably be fine i actually think you have to pay attention to their go to market strategy because they need to raise average revenue. i'm on the sidelines with this one. i want to see what comes out of earnings valuation is there for sure, and there is potential growth with the new microsoft deal some of these really high flyers have come down-to-earth and they may still have further to go >> all right by the way, thank you very much, frank, for the story there a quick programming note here, docusign ceo dan springer will join "tech check" tomorrow morning to discuss the earnings
1:27 pm
results after our close today. he will be live 11:00 a.m. eastern time, 8:00 a.m. pacific time, a first on interview you will not want to miss tomorrow next up stitch fix, shares down 55% this year as the subscriber growth slows in the path to profitability still isn't clear for the company. lauren thomas has the story on this. lauren, can stitch fix get things going in the right direction? >> yeah, dom, that's the big question, right? this company has certainly been pressured not just this year but for a number of months now, shares down 55% year to date, like you said. if you do recall last quarter stitch fix cut its revenue outlook for this fiscal year it also totally withdrew its earnings guidance saying there were a number of things that it needed to re-evaluate. really its cost structure including marketing expenses,
1:28 pm
supply chain, weighing on a number of companies right now. the big thing that stitch fix really has to figure out under ceo elizabeth spalding they have freestyle option last quarter what the company told us that rollout didn't go as smooth as planned the company didn't onboard as many customers as it anticipated so we're looking for improvement there. the other thing i will mention last quarter stitch fix was facing supply chain delays anywhere between four to five weeks. we are looking for that time line to decelerate as well >> nancy, how important is profitability in this kind of an environment where interest rates are on the rise? >> yeah, i think this company is one you want to aprilvoid at al costs. as was just mentioned the freestyle rollout was terrible the leadership has been
1:29 pm
challenged and subscriber growth in the return to fashion time has declined 161,000 quarter over quarter, and down twice in the last two quarters. so i think that you really have to stand aside and say there's a better place to be in retail if by some miracle they beat, i would take the gain and run. i think this company is doomed >> it could be a volatile trade for sure with a stock beaten up as badly lauren thomas, thank you very much for the story on stitch fix. finally, we're going to turn to what's happening with vail resorts, shares down 20% on the year as macro head winds persist. folks are eager to travel post pandemic, consumers are dealing with surging inflation, sky high fuel costs to get anywhere right now, road trip or otherwise. shares have jumped now in three of its last four reports our own travel guru seema mody has the story on vail. are as many people going to be
1:30 pm
out there skiing in the coming months ahead >> that's what we want to know, dom. vail has come under pressure in recent months, specifically earlier this year, there were pictures of ski resorts, overcrowded and vail fail was a hash tag trending on social media, blaming the company for selling too many passes. now since then it's raised the price of its epic ski pass the question now is going into the 2022-2023 ski season what do sales look like? are there plans to add more staff to the mountains to reduce the wait time at the ski lift? and is a very strong summer travel season encouraging people to book trips for the winter a strong pipeline. they tend to think of vail as they should. that will also be a key topic of interest when the company reports. >> seema, those are all excellent ports.
1:31 pm
i >> it's seasonal travel and leisure, forecasting and expectation that goes into the investing thesis like vail what exactly then does the vail story tell you about whether you should be buying the stock or not? >> this is a tough one it's really interesting to me, dom. it has come down, it's down 25% year to date, has a dividend yield of 3% which is interesting. but 90% of revenue comes from the scene resorts and i actually, my residence, in nevada which is lake tahoe, and we're in a very long seasonal drought. it's been many years now and so this one has the added difficulty of forecasting snowfall patterns and they haven't been good. so the ski pass sales are important, of course, and we'll be watching that in the earnings report, but we're really not going to know anything until later this summer. and so i think that's why people sitting on the sidelines wait to go see what's going to happen, and the forecast for snowfall are really not robust.
1:32 pm
so that's just something that has to be thought about as well. >> so the big trade there on vacations in the wintertime. thank you very much, seema mody. and also for nancy tengler, thank you for joining us on "the earnings exchange. still ahead on the show, the players behind the plane, we're looking at some under the radar names that help us kind of help us get the planes in the air, help them fly including this one, this stock in the mystery chart is down 24% over the course of this year. it has to do with navigation systems. the name, what it makes, all of that coming up ahead after this break. wow! it's been 38 years since we were here. back then we could barely afford a hostel.
1:33 pm
i'm glad we invested for the long term with vanguard. and now, we're back here again... no jobs, no kids, just us. and our advisor is preparing us for what lies ahead. only at vanguard, you're more than just an investor you're an owner. giving you confidence throughout today's longer retirement. that's the value of ownership. lemons, lemons, lemons. the world is so full of lemons. when you become an expedia member, you can instantly start saving on your travels. so you can go and see all those lemons, for less. (vo) hi. we're visible. a new kind of wireless company. started by this company. (hi, dad.) other companies pay for stores. which means you pay for stores. but this is our store. which means you get a single line unlimited plan... for as low as $25 a month. switch today at visible dot com.
1:34 pm
1:35 pm
pull over. -that's not how planes work. ♪ ♪ everybody hold onto somebody. [ roar ] welcome back to "the exchange." you can see the dow down about 147 points at the lows of the day, down roughly 232 points we were a tick higher in green up by 46 points. the s&p is off by half of a percent down 25 points, 4,090, now below that 12,000 mark
1:36 pm
11,985, down by nearly 1%. cruise stocks are among the worst, this despite susquehanna initiating coverage of norwegian and royal caribbean with positive ratings saying they have pricing power and a history of growing capacity. the firm is taking a neutral stance on carnival for more on that call head over to beyond meat falling after piper sandler reiterated its underweight trading saying a successful launch of its jerky offering is masking a greater acceleration in declines for the rest of its portfolio. that stock is on pace for its ninth weekly loss in the past ten and down 65% just since january alone. shares of affirm lower again today. today is the buy now/pay later company, facing pressure from rising interest rates, debt concerns and, of course, apple entering the space this week that stock has now lost a quarter of its value just this month alone.
1:37 pm
now over to tyler mathison who has the cnbc news update dom, thank you very much. the justice department is starting a civil rights investigation into the louisiana state police it comes more than three years after the 2019 death of black motorist ronald greene police initially said he died in a car crash. video showed white troopers beating, stunning and dragging him on a rural road. the associated press found his death was among at least a dozen cases in which troopers or their managers ignored or concealed evidence of beatings military officials say all five marines on boboard an ospr aircraft died in southern california during a training mission. no details yet on why the aircraft went down but the osprey, which takes off like a helicopter and then cruises like a plane, has been criticized for its safety record. it's reportedly already responsible for some 46 deaths
1:38 pm
not including the latest incident and federal regulators are upgrading their investigation into 830,000 tesla vehicles with what the company calls autopilot technology after identifying six new crashes involving first responder vehicles at emergency scenes the new stage of the probe could set the stage for a recall dom, back to you >> tyler mathisen, thank you for the headlines. still ahead on the show, the 2022 conference is under way and heavyweights revealing their best investing ideas we are going to hear from one of the largest female hedge fund managers out there, impactive capital's lauren taylor wolfe. and during june celebrating pride month featuring some of our cnbc teammates and contributors as well here is our clip desk manager on pride month. my son opened up to me about
1:39 pm
his true identity when he was a freshman in high school. his ultimate goal is to be a commercial airline pilot and fly internationally. but there are 71 countries where being gay is a crime, and it's punishable by death in 13 of those countries. pride is a perfect time for allies to commit or recommit, to doing their part in achieving the best future for my son that's safe and fulfilling in any pa othwod fds rtf e rlheinhimself. if you used shipgo this whole thing wouldn't be a thing. yeah, dad! i don't want to deal with this. oh, you brought your luggage to the airport. that's adorable. with shipgo shipping your luggage before you fly you'll never have to wait around here again. like ever. that can't be comfortable though. the smart, fast, easy way
1:40 pm
to travel. ♪ ♪ ♪ (sha bop sha bop) ♪ ♪ are the stars out tonight? (sha bop sha bop) ♪ ♪ ♪ alexa, play our favorite song again. ok. ♪ i only have eyes for you ♪
1:41 pm
welcome back to "the exchange." some of the world's biggest investors revealing where they are seeing opportunities in a down market right now. lauren taylor wolfe delivered her presentation and joins us now along with our own leslie picker leslie, lauren, thank you very
1:42 pm
much for joining us. leslie, take it away >> dom, thank you so much and, lauren, thank you for being here hopefully we can do this in person but, again, sohn was digital, virtual in your presentation which just concluded, you talked about a b2b payments platform and some of the upside over a three-year time horizon what do you think are the catalysts for future value >> it is a high quality payments company that will generate double digit compounded returns. today the company trades at discounted 13 times earnings it hasn't traded there since the financial crisis and has normalized closer to 20 times. this is partly for two market misperceptions, the concern around new entrants in the payment segment and the other around the unit of economics, once they entered the fleet.
1:43 pm
our view based on a proprietary research of 100 fleet managers representing tens of thousands of vehicles is that once they enter this hybrid fleet there's huge revenue opportunities, and these are opportunities for creative new products around electricity price optimization, centralized reporting, carbon offsets and they will structure those in a very subscription oriented manager, that could drive an incremental billion dollars of high-quality revenue opportunity, also, as we've seen the past couple of quarters, free cash flow and profitability are extremely important here this is a company that's going to generate $2.2 billion of free cash floep in the next three years. in addition to debt capacity over the next three years that creates about $4.4 billion of capital available to deploy. that's 60% of the current market cap. the company can deploy that.
1:44 pm
that would generate a 25% irr. alternatively as we know the price of assets have come down substantially over the past couple of quarters they are in a unique position to go on offense and do creative m&a with that $400 billion of capital to deploy. we see a great opportunity for a double and a triple in our upside case. >> that's interesting you mentioned that the stock not even including today's moves,which it did go into positive territory after your presentation, is already up 25% year to date while the arc fintech innovation etf is down 55%. so you would potentially encourage them to be an opportunistic buyer. what category to do m&a right now? >> so this is a payments company. they have three different segments one is the fleet segment, which i mentioned. the other is corporate payments. it is about two-thirds of ebitda
1:45 pm
and an underappreciated jewel which is their health segment. in that health segment is where they generate really sass oriented revenues that have compounded at about 25% top line, 35% ebitda we believe there will be unique opportunities both to continue to acquire in that space in health as well as in the payment space. as long as it is given the upside we see the next couple of years as the company achieves its plan, we would say there will be opportunities abound across their three segments. >> potentially a rollup strategy i wanted to get your thoughts on the state of esg activism. karl icahn was unsuccessful on getting directors on the booard
1:46 pm
of mcdonald's over animal cruelty campaigns. do you think these are idiosyncratic situations or a signal that investors may not be as enthusiastic about esg activism as in 2021? >> so, listen, i think there's been a lot of noise, a lot of new products out there our view from the start with the exception of our firm has been the environmental, social and governance initiatives that matter are the ones that are linked to a business case, that are linked to profitability and long-run sustainable returns it's why up see companies like wex suggestion they invest in vehicles because there's a billion dollars of higher quality revenue opportunity over the next decade and with our other portfolio companies we are designing esg initiatives that address the business problem and, two, have a business case that drives long-term returns. so i'm not an expert on what karl icahn is doing, i admire
1:47 pm
him broadly speaking from an esg activism, you have to link to long-term sustainable profitability. >> it's not either/or. makes sense. lauren taylor wolfe, thank you for joining us fresh off of her presentation at sohn dom? >> all right, leslie picker, thank you so much. lauren taylor wolfe, thank you for the insights up next we are hitting the tarmac to get into the anatomy of an airplane and a look at the companies behind some of the components that go into flying check out this chart it's a composite materials company, and it's up nearly 11% this year, up, not own more under the radar names are ki b mess ll those names are up next. (vo) singing, or speaking. reason, or fun. daring, or thoughtful.
1:48 pm
sensitive, or strong. progress isn't either or progress is everything. ♪ ♪ wow, we're crunching tons of polygons here! what's going on? where's regina? hi, i'm ladonna. i invest in invesco qqq, a fund that gives me access to the nasdaq-100 innovations, like real time cgi. okay... yeah... oh. don't worry i got it! become an agent of innovation with invesco qqq
1:49 pm
1:50 pm
welcome back to "the exchange." let's dig into some of the under the radar names radar being a key clue on this one we are focusing on the names integral to building an airplane let's start with garmin. you will recognize it as a major player in the gps market, right? it's not just about cars and traffic. you will also find it in the cockpit of a plane aviation, by the way,
1:51 pm
represented 14% of its sales last year for garmin let's move on now and check out the shares, down 24% over the course of this year so far next up you've got hexcel, one of the largest u.s. providers of carbon fiber providing structure to the body of these frames and air frame, if you will that stock is up 10% on a year to date basis, as you can see there. again, up in a down market and finally there's triumph group and this company repairs and overhauls aerostructures and parts like stabilizers and fuel gates for all of these plane enthusiasts out there. shares of try up are down almost 18% so far as you can see. so are these names set to take off? my next guest thinks so. he's got a buy rating on all three of them regardless of what they've done so far this year. joining me is rob epistein, a wide range of coverage in this
1:52 pm
particular line of work that you have take us through these component makers why do these stand out as buys for you? what links them together >> yeah, sure, dom thank you for having me on when you think about investing in commercial aerospace you have to think about a couple of different things the companies that make the parts and then the companies that serve new airplanes versus replacement parts in old airplanes and they're both set right now to be profitable so if we walk through some of the names you talked about, garmin is a very, very interesting one. garmin knows from the wearables business and the consumer l electronics business and they started out in general aviation and they've become a very big player in executive aviation and i think soon you'll see them in large, civil aviation and that's boeing, airbus airplanes and it's an important piece of the business another name you mentioned, hexcel, as you said is a fabricator of carbon fiber and
1:53 pm
it's not just carbon fiber this isn't the carbon fiber you would find in your golf club or tennis racket. aerospace has great carbon fiber and they're a big supplier to airbus and airbus lately has been doing quite well and it goes into the narrow body airplanes and also the wide body, very large airplanes and when you think about that, the best is yet to come. the wide body market has aren't yet recovered yet and that will be a nice tailwind for hexcel and triumph group is a manufacturer of a lot of bits and pieces of airplanes and sub systems, actuators, mechanical things and they sell parts into the o e-market and the after market and they do other maintenance repair and overhaul services so all three of those benefit from the recovery we're in the midst of in civil of a ya aviation >> and you have a buy rating on all three.
1:54 pm
we often talk about boeing and airbus when it comes to aerospace and aircraft how much is the macro bigger picture return of travel demand go going to factor into your model as an analyst. >> that's a very important question we spend a lot of our time forecasting the demand for travel we've been saying now for quite some time that we expect global air traffic to get back to where it was pre-pandemic in about 2024 and that's about how it's playing out. the biggest variable there for traffic is what happens to traffic in china with the shutdowns that we saw in china, that kind of put a halt to their travel markets for a while, so it's been bumpy in the pacific rim, but traffic flows across the domestic markets to cross borders in europe have been doing quite well so an important piece for all of these companies both in their new oem equipment sales and in their after-market sales is a
1:55 pm
recovery in air rastraffic and that's what we've seen that's been bumpy to say the least and it's been up and to the right. so it's been going in the right direction. >> right with some overriding volatility. >> all right so it's garmin, hexcel, triumph, ron epstein, over at b of a, thank you very much. have a good day, sir. >> thank you coming up on the show, inflation is slicing into pizza sales. the names that might be showing signs ofring pci power and the chains taking a hit. that's coming up next. and walmart always keeps prices low on our fresh ingredients. so you can save money and live better. ♪
1:56 pm
space. the boundary of human achievement. the new frontier. ♪♪ eh. ♪♪ it's not time to escape. it's time to engage. it's time to plant more trees. hoo! ♪♪ time to build more trust.
1:57 pm
time to make more space for all of us. so while the others look to the metaverse and mars, let's stay here and restore ours. yeah, it's time to blaze our trail. 'cause the new frontier? it ain't rocket science. ♪♪ it's right here. ♪♪ you'll always remember buying your first car.
1:58 pm
but the things that last a lifetime like happiness, love and confidence... you can't buy those. but you can invest in them. at t. rowe price, our strategic investing approach can help you build the future you imagine. >> welcome back. food cost, labor shortages taking a bite out of pizza chains who is get hit and where the pricing power is >> hey, dom. domino's and papa john's were big pandemic winners and they're being hit like others in the restaurant space looking at same-store sales growth, only papa john's was the
1:59 pm
key to see change. and 6% respectively. kalinowski equity research says based on these metrics and average unit volume, domino's and papa john's are relatively better positioned to handle cost pressures than the average pizza hut unit in the u.s. especially as papa john's moves to close its gap between the biggest rival, domino's based on full-year analysts with kalinowski drivers, domino's which famously does not use the aggregators was hit by driver shortages last quarter and btig surveyed three active drivers and found that flexible sit most important for them particularly for younger drivers. 56% saying it was their top priority above pay names like domino's would have to supplement to get through current market trends. these stocks have been hit hard despite seeing gains over the
2:00 pm
course of the pandemic domino's down 27% and yum, pizza hut's owner down 10% in the last six months back over to you >> i am a pizza fan so i'll keep a close eye on those for sure. thank you very much, kate. you made me hungry that does it for "the exchange." the dow is off the session lows and we were down 232 at that point. that does it for us. "the exchange" is over "power lunch" starts right now ♪ ♪ thank you so much, dom and welcome, everybody, to "power lunch. so glad you could join us on spring thursday. here's what's ahead. signs of deflation yes, deflation most strrestaurant brands say ty are wrefrstling with rising prie and the opposite is happening and he'll explain exactly why. should the u.s. invoke the defense production act to support the oil an


info Stream Only

Uploaded by TV Archive on