News and analysis

As a huge fan of US retailers, I can confirm that most of my favourite stocks in this segment may rejoice in the success of their hard work during the sales season. Collected by Adobe Analytics, the latest data on spending online indicated that Black Friday generated nearly $10.8 billion this year, which marked more than 10% surplus vs 2023 records. Compared to the same day one year ago, Cyber Monday also gave a solid 7.3% rise to reach $13.3 billion. Amazon (AMZN) and Walmart (WMT) are leading in Adobe's list of the best holiday sales numbers. Therefore, it is not surprising that both giants are hitting new records in terms of their market values. Meanwhile, Amazon (AMZN) ranks first in the list of consumer discretionary ETF (XLY) contributors, with a share of 23% at the moment, but a shining Tesla just ranks second, with a nearly 18.85%. The record breaking Home Depot (HD), Booking Holdings (BKNG) and TJX (TJX), and slowly recovering Lowe's (LOW), McDonald's (MCD) and Starbucks (SBUX) are forming the backbone of a fast-growing XLY index.

All of the above mentioned stocks deserve their rightful places in any reasonable investment portfolio for mid-term strategies, as well as Costco (COST) and Walmart (WMT) being the two headline components of a widely utilized consumer staples ETF (XLP) tracking the correspondent segment of the S&P 500. The XLP, which belongs to consumer staples, usually refers to companies that create the most essential category of products like foods, beverages, household goods and hygiene products, as well as alcohol and tobacco. Its current dynamics is still lagging behind the XLY, belonging to consumer discretionary that sell goods and services which people want, but don't necessarily need today or can't afford to buy right at the moment like electronic devices or vehicles. Yet, many sellers of consumer staples like Procter & Gamble (PG), Coca Cola (KO) and PepsiCo (PEP) can catch up soon, while the two segment leaders are relentlessly hitting their historical highs.

Walmart (WMT) is quoted around $95 per share vs nearly $75 in early September, with several investment funds even trying to adjust their outlook on the world's largest economy store chain to the upside. As an example, RBC Capital Markets freshly increased its price target from $96 to $105, sustaining its outperforming status. Walmart (WMT) is priced around $95 per share vs nearly $75 in early September, with several investment funds even trying to adjust their outlook on the world's largest economy store chain to the upside. As an example, RBC Capital Markets freshly increased its price target from $96 to $105, sustaining its outperforming status and citing Walmart's growing ad and loyalty membership income. I would also mention the AI features support for comfortable purchasing, when consumers often buy an actually wider range of goods, which they initially didn't plan to buy at all.

Another flagship of the segment, which is Costco (COST), will deliver its quarterly earnings in just three days, on December 12. This may help the whole XLP segment to climb further, as this well-known membership warehouse club is soaring by more than 50% year-to-date and trading within touching distance from a nice round figure of $1,000 per share. According to Baird analysts, the stock is going to rally to $1,075 at least in case of releasing successful Q3 profits, as an example of estimates I do agree with. Costco has reported a 8.8% annual rise in its net income three months ago, when it showed an all-time record earnings of $5.29 per share against average Wall Street consensus of $5.08, plus as much as a 18.9% e-commerce sales increase. Costco is now the fifth largest retail company in the US, which also operates in Canada, Mexico, New Zealand, China, Spain, France, Great Britain and Iceland. It has announced plans to open 29 new retail territories in fiscal 2025.

Where there is some temporary weakness are shares of Target (TGT). Despite a double-digit price drop after its quarterly report on November 20, this is still one of my favourite corporates. Much weaker than expected profit results has made this slide down fully justified, no doubt. Yet, revenue numbers did not disappoint. This means, most loyal customers visited their lovely shopping places as they used to do before, and only well-discounted prices for thousands of goods lessened the seller's profit. Some market watchers may think that Target managers have overdone with discounted items and didn't earn enough. But I feel they did exactly the right thing to save their audience to earn more money on higher prices in the future when consumers would feel better. The purchasing power of their customers will improve when interest rates by the Fed and taxes under Trump would be lower to revitalise salaries. By saving their customer base, the retail chains will benefit much more.

In a similar way, Tesla's Elon Musk adhered to discount policy for electric vehicles, even though Tesla did it in a much more expensive price segment. Tesla was offering huge discounts in China and Europe, and so what? Musk was badly criticized by the crowd of market experts, while Tesla shares were falling down to almost $100 per a piece. But, it turned out later that he was right, sales volumes recovered and went up the hill. Now, everyone who bought his or her Tesla car at a discount, will buy spare parts more than once, will buy service, electric batteries and electricity itself from Tesla's exclusive gas station networks etc. Similarly, Target will later sell much more goods to its loyal customer audience, which would remind the shopping centre as a lucky place with cheaper goods, granting bonuses for loyalty programs which these people will come to spend. People will spend even more of their own money when prices on durable goods are no longer as low as they were during tough times. Households will continue to visit the same place to buy essentials. So, shares of Target already started to bounce, from $120 to above $130. But even if Target may drop below $100, I say it will cost $200 in a less than a year, and so I'm just adding more to my stake in the company.

Ripple (XRP) is down 6.0% this week, trading at $2.4030, underperforming the broader market as Bitcoin (BTC) sees a modest decline of 1.0% to $99,000. XRP’s recent rally, which saw an impressive 375.0% surge following Donald Trump’s victory in the presidential election earlier this month, appears to be losing momentum. Much of this rally was driven by expectations of regulatory easing for Ripple, a sentiment that was confirmed with little market reaction to the nomination of Paul Atkins, a known advocate for crypto assets, as the new head of the Securities and Exchange Commission.

Current overbought conditions in XRP bear similarities to its performance in late 2017. Then, XRP experienced a sharp rise before entering a significant correction in early 2018. If this historical pattern repeats, a correction targeting $2.0000 or potentially lower could emerge in the coming weeks. However, Trump’s inauguration in January may provide fresh momentum for another rally, potentially offsetting the downside risks.

Shiba Inu (SHIB) has declined by 5.4% this week to $0.000030, underperforming the broader crypto market. Bitcoin (BTC) remains neutral at $97,850 after reaching a record high of $104,498 on Thursday. Market uncertainty is rising, with investors seemingly unprepared for Bitcoin to sustain levels above $100,000. This hesitation has weighed on altcoin performance, including SHIB, and while some altcoins may see short-term inertia-driven gains, the potential for a broader market correction looms large.

Despite this, Shiba Inu's ecosystem continues to evolve, with key developments such as the introduction of the stablecoin SHI, SHIB DeFi functionalities, a dedicated SHIB Marketplace, and SHIB Socials aimed at fostering community engagement. Whale investors are showing significant interest, highlighting confidence in the altcoin’s long-term prospects.

While the immediate outlook for SHIB reflects market-driven weakness, these ongoing developments provide a strong foundation for a potential rally once the broader market correction stabilizes.

Investors never feel fully satisfied with their takes but I am very close to this feeling of contentment in high spirits when watching at my mid-term targets clearly transcended in Salesforce positions. In fact, the current state of my stakes in this giant cloud platform creator for enterprises exceeds my wildest expectations. Initially I projected a maximum profit level up to 30%, betting on a moderate breakthrough just above the previous historical high around $317 per share. Being bought a bit below $255 in late August, it can be sold at $360 or even higher now, which would provide me with over 42% of net income in approximately three months. I am going to accept this opportunity, as there are seemingly no fundamental grounds behind much higher price goals.

The stock's value grew in a period between two solid quarterly reports and then it has gained a more than 12% of additional momentum on raising the lower end of its 2024 full-year revenue forecast and a fiscal 2025 profit guidance, despite the company's Q3 earnings fell slightly short of Wall Street estimates. Salesforce announced EPS of $2.41 on revenue of $9.44 billion vs analyst poll preliminary numbers for EPS at $2.44 on revenue of $9.35 billion. Of course, the uptrend in revenue persists, while the business has a 14% surplus in EPS year-on-year, but the previous two quarters were better in absolute numbers of EPS, i.e. $2.44 and $2.56 respectively. For the current quarter, Salesforce guided EPS varying in a range of $2.57 to $2.62 on revenue in the range of $9.90 billion to $10.10 billion, with an annual range for EPS between $9.98 and $10.03 in 2025 and a revenue guidance between $37.8 billion to $38.0 billion, compared with a prior inner estimate of between $37.7 billion to $38.0 billion.

This difference is surely pleasing to the eyes but is not a pure delight. The forecast may additionally cost a one-off double-digit percentage gain but hardly could provide much more on a regular basis. I mean, Salesforce is now worth the higher price the market indicates, yet the fast move may also deserve some correction soon. It gapped up on the hype around the company’s AI feature, named Agentforce and being able to perform many useful corporate tasks autonomously. Salesforce said that its Agentforce closed over 200 deals in just one week and it needs to hire 1,400 employees in the current quarter to support the growing demand. Yet, the company's price to earnings ratio is now even higher than with some of the “Magnificent Seven” tech stocks valuation.

I love the company, as it brought me much profit and joy, but it doesn’t excite me anymore. Therefore, I will sell a half of my stake in Salesforce at current price levels, and put a stop loss order just below $255 per share for the second half of the stake. It will be some kind of a tribute to recently raised price targets on the stock from $390 to $440 by several big investment banks like the Bank of America, RBC Capitals or Stifel. "Q3 results suggest that the company is leading the way in an agentic AI cycle with Agentforce," analysts at The Bank of America said, while emphasizing "meaningful customer interest" for "this emerging product cycle", which "is not derailing margin expansion".

If these reputable institutions are thinking right and better than me on target updates for CRM, I would be happy as well by earning more money on the rest of my old buy position. Meanwhile, RBC Capital raised its target to $420 but also expressed some caution, suggesting that "the market's expectations might be outpacing the near-term reality for the company". Again, it was Salesforce's own CFO, Amy Weaver, planning to step down after four years in the role, who recently admitted that it may still be early for Agentforce to contribute significantly to the company's financials.