As earnings reports continue to roll out from the US, it was the retailers who have been the canary in the coal mine for tariff implications. Overnight saw retail giants like Target Corporation (NYSE: TGT) and Lowes Companies Inc (NYSE: LOW) report softer numbers, pointing the finger firmly at consumer confidence.
- S&P 500 = -1.7%
- Nasdaq = -1.7%
- Aussie dollar up 0.3% to 64.45US cents
- Iron up 0.5% to $99.90 US a tonne
The softness in consumer spending does not surprise us, I mean, what would you do? Another reason why we’re not surprised is because this is exactly what Pimco’s Mark Kiesel said would happen when we sat down with him almost two months ago. Mark is the Chief Investment Officer for Global Credit at Pimco, the largest fixed income investment firm in the world with $3 trillion under management.
Mark’s key phrase was the “US consumer is going on a diet” and is “slimming”. His forward looking indicators are travel stocks, think airlines and hotels, things people book in advance. When you are incredibly uncertain of your future life’s luxuries get cut. Your big holiday overseas gets scaled back. You might not fly somewhere, but instead drive down the coast.
Year to date the US airlines – think Delta, United, American – are down between 20 to 35%. Marriot International Inc (NASDAQ: MAR) has defied that trend slightly, only down 6% year to date. In its last quarterly report, US and Canada revenue growth was up 4%, but this can be attributed to growth in properties and rooms which also came in at 4%.
Catapult continues to impress
Speaking of past guests, if we did a review of the most talked about small cap stocks by our guests over the last few years, Catapult Group International (ASX: CAT) would be at least in the top three.
As recently as five months ago we had Steve Johnson from Forager highlight it. In December Ben Richards from Seneca was banging the drum. Three years ago Luke Winchester from Merewether Capital was excited about it and of course Strawman’s Andrew Page, has been telling us for years about this overachieving Aussie sports tech business.
Congratulations to anyone who bought shares in Catapult at any point along the above timeline, you’ve done well.
Just yesterday Catapult released strong full year numbers sending the share price up 13%. According to CEO Will Lopes, the key stat to watch is the annualised contracted value, “Our annualised contract value – the clearest signal of our long-term growth – rose 18% year-on-year.”
Catapult provides professional sports clubs all over the world with world class athlete performance tracking products. When you’re watching a sport and you see the small square lump on a players back under their jersey, that’s Catapult.
The company has developed a powerful footing which it can leverage with further value adding products. Customer retention is also a high 96%.
If the runway for growth slows down in sports, I am sure there’s a corporate market. Owen can have them on us in client meetings, podcast recordings, CEOs and executive teams wearing the gear during AGMs to ensure peak performance, bankers hitting maximum stride down Collins Street on their way to Strozzi. Do a deal with RM Williams, put it in the heel.
As always, please feel free to reach out to me directly via Rask Invest, the Community or the chat function in the bottom right.
