Josh Kohn-Lindquist's avatar
$17.1m follower assets
FedEx up 15% on 53% Dividend Raise
Also added Jim Vena, former COO of $UNP and $CNI (a couple of dividend-growers that have done alright over time), to its board, along with Amy Lane from Merrill Lynch's investment banking group.

I still really like the dividend potential $FDX has -- even after this significant bump.

The payout ratio should remain below 25-30% for 2022 and 2023, and EPS/FCF generation should continue to rise along with the company's improving margin profile.

They still need to execute on integrating their TNT acquisition and tiptoe through this market, but things look promising.
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"A Freight Recession is Imminent" says Freightwaves
Amid the supply chain crisis, transportation companies have been firing on all cylinders. With a flood of orders, transportation companies have been able to charge more for their services.

For the railroad companies like $UNP and $CNI, they've been able to charge clients storage fees since they didn't have enough space in their trains to transport all the goods that needed to be shipped.

As for the cargo ship companies, they were able to charge a lot more for contracts. $RH CEO was notable for talking about it in his earnings call about inflation.

And for the truckers, it's a mixed situation. With a tight labor market, they have more negotiating power than ever. However, with higher fuel prices, more routes are becoming unprofitable for truckers and companies are either stepping up and offering more pay for truckers or are choosing to wait out for a possible freight recession.

Freightwaves, a notable blog that covers the transportation sector, has a great track record of predicting the future movements of the sector. They're predicting another freight recession coming soon. Here are a couple of quotes that explain their thesis:

"The typical trucking cycle is three years and usually what kills it is oversupply – too many trucks chasing high-paying spot freight and high load volumes."

"The problem is that capacity expansion always continues well past the peak and can even continue for a time after the market has entered a recession."

The core of Freightwave's recession call is the tender rejection rates. This measures the willingness of truckers to accept or reject a load. If the rejection rate declined, it means that capacity is loosening.

This is the chart that Freightwaves posted. it looks like truckers are receiving less business now and could see themselves enduring conditions similar to that of the pre-pandemic and early COVID economy.

It's important to note that March is usually the time when truckers receive the most business. This March however hasn't been too hot. Retail stores seem to be less serious about stocking up their shelves for the summer. A weak March implies a weak economy for the rest of the year. That's how important March's data was.

To conclude, it's possible that we could be seeing a freight recession in the near future. Trucking companies are going to be the most impacted. Cargo ships continue to have pricing power as ports continue to deal with the massive line of ships and trains will be seeing less revenue from storage fees.
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Pretty frighting stuff! Let’s hope they’re wrong for all our sakes. What do you think it would take to prove their prediction wrong? What events would have to happen or what catalyst for change could take place that would turn this back on track?
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All-Weather Dividend Growth
I wrote about two of my favorite (but boring) dividend growth stocks -- $KR and $UNP -- and highlighted why their inflation-resistant operations and shareholder returns are a perfect pair.

Both fit my Dividends500 mold to perfection with 15+ years of dividend increases and payout ratios below 50%, leaving room for future raises and extra cash to fund growth.

Kroger is particularly unique as its dividend yield of 1.8% and a payout ratio of 22% mean it could theoretically boost its dividend to nearly 7% and still fund it from earnings.

I do not own either yet, but I am considering them both for my parent's retirement accounts.

Earnings Last Week!
In our newsletter highlighting key quotes from earnings calls this week:

  • Consumers more accepting of price increases
  • American Airlines getting a new CEO
  • Oil capital spending on the rise

Happy Sunday all! Here's some weekend reading:

This week:

  • Market Recap
  • Macro of the Week - The Hiking Cycle
  • Earnings - Banks [$GS & $MS], Consumer Staples [$PG], Transportation [$UNP & $JBHT], Airlines [$UAL & $AAL] & Mining [$AA]
  • The Week Ahead - Event Calendar
  • Closing Thoughts - Does a Market Bottom Matter?

Upcoming Earnings Calendar (Jan 17-21th)
Hey guys! Here's next week's upcoming earnings calendar!

The most important thing I'm interested in is if there's a change of character relative to the past earnings season. Growth stocks got hammered last time. Hopefully this quarter the worst has been priced in and companies are evaluated on their actual results.

Some other things I'm interested in:
  • $PG - Are sales numbers still strong? Has supply chain inflation persisted?
  • $NFLX - Streaming trends over the past quarter. (I hold $ROKU and a bit of $FUBO)
  • $UAL and $AAL - Comments on the Omicron variant and corporate travel demand.
  • $PNC $BAC $KEY - Insights on the economy. December retail sales were down, so we'll see if banks also point to weak consumers.

What are you guys interested in?

If you'd like an easier way to track earnings dates, you can automatically sync your portfolio's earning dates to your personal calendar with just a couple of clicks here.

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Top 25 Holdings
$BTI is a new position entirely.
$UNP $PYPL $MELI are position increases.
$OKTA $ESTC were sold off before their respective earnings report.
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Looks like you've got some nice ballast between your allocation to big tech and cash, @strategicinvestors—good positioning for this volatile market we find ourselves in, and long-term, I think $GOOGL looks really attractive here
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Featured earnings for the week of Oct 18
Earnings season (finally) getting into full gear!

So many interesting companies announcing earnings next week. Here are is the Fincredible Featured list. View all here.

Here are some I own / or particularly interested in

$JNJ - very interested to see results in the medical devices segment. Specifically are their signs of closing the gap with $ISRG with their new platform and are elective surgeries coming back

$ISRG - flip side of the $JNJ narrative. I love it when competitors announce close to each other :)

$NFLX - international subscriber numbers

$T - update on discovery spin-off, dividend and 5G capex

$XM - $MNTV is my top 3 holding based on thesis they are making inroads in enterprise market, which $XM dominates. Big enough market for both but want some context.

A few companies like $PG on inflation numbers, but I suspect @awallis will be kinda enough to provide a MacroTalk update on this topic again

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