US stocks made some progress during a week curtailed by the Thanksgiving holiday. All the main indices were ahead thanks to reassuring noises from the US Federal Reserve about a slowing in the pace of interest rate hikes.
The minutes of the latest Fed meeting strongly hinted that the days of 75 basis point increases may now be behind us.
Ahead of the post-Thanksgiving Black Friday sales event, there were mixed fortunes for retail stocks as Best Buy (BBY:NYSE) impressed but discount store chain Dollar Tree (DLTR:NASDAQ) slumped thanks to a cut to 2022 profit guidance driven by inflationary pressures on margins.
Entertainment brand Disney (DIS:NYSE) was in demand following the return of former CEO Bob Iger to the hotseat. Following Bob Chapek's lacklustre tenure, which started in February 2020, Iger will be looking to get its streaming services and theme parks back to a high level of performance.
DEERE & CO
Shares in tractor maker and manufacturer of other agricultural equipment Deere & Co (DE:NYSE) hit a record high in the wake of strong numbers for the fourth quarter on 23 November.
The company posted earnings of $7.44 per share for the three-month period, up from $4.12 in the same period a year ago and ahead of the $7.11 pencilled in by analysts.
For the year as a whole running to 30 October 2022, earnings per share increased year-on-year from $18.99 to $23.28.
The company has seen strong demand as the world looks to increase food production to compensate for the disruption to supply caused by the conflict in Ukraine. The country is known as the 'bread basket' of Europe as it is a big exporter of wheat and other crops. Deere has overcome supply chain issues to increase its output and has also demonstrated pricing power, enabling it to protect margins in the face of inflationary pressures.
BEST BUY
Shares in unloved Best Buy (BBY:NYSE) rallied sharply after the Minnesota-based electronics retailer delivered better than expected third quarter results (22 November). While sales fell 11.1% year-on-year to $10.59 billion, this was still better than analysts feared and earnings per share of $1.38 topped the $1.02 called for by consensus.
Comparable sales declined by 10.4%, better than the 13%-plus plunge Wall Street scribes expected, and inventories of $7.3 billion at the quarter's close reflected a 14.7% decline from the prior year. Based upon optimism heading into the holiday season, management raised guidance for 2023 and now expects Best Buy to see a 10% decline in year-on-year comparable sales, improved from its earlier outlook of an 11% plunge.
‘We have strategically and effectively managed our inventory flow based on a shopping pattern that we believe looks more similar to historical holiday periods, with customer shopping activity concentrated on Black Friday week, Cyber Monday and the two weeks leading up to December 25,’ explained CEO Corie Barry.
POLESTAR
Shares in electric vehicle-maker Polestar (PSNY:NASDAQ) jumped more than 20% to $7.87 this week, meaning they have almost doubled from their October low of $4 in less than a month.
The car-maker, which was originally a development and racing division of Volvo and is now jointly owned by the Swedish company and its Chinese parent Geely Automobile (175:HKG), is celebrating two important milestones.
Its Chinese plant has just produced the 100,000th Polestar 2 saloon car, two and a half years after production began.
With demand for its vehicles strong across Europe, North America and China, the firm expects to deliver 50,000 units this year.
Also this week, chief executive Thomas Ingenlath revealed Volvo would provide the EV-maker with an $800 million loan while major shareholder PSD Investment would commit another $800 million in funding.
This $1.6 billion boost in capital, which is equivalent to 10% of the company's market value, will enable it to push ahead with production of its Polestar 3 luxury SUV (sports-utility vehicle), slated to have over 500 horsepower and a range of almost 400 miles.
Year-to-date, Polestar shares are down just over 30% but progress in the last few weeks means they have pulled ahead of established rival Tesla (TSLA:NASDAQ), whose shares have fallen almost 50%, and fellow start-up Rivian (RIVN:NASDAQ) whose shares have lost over 70% of their value in 2022.
