👉 The Investing Week Ahead: 6/5/23

“Nvidia currently has only $26 billion in sales versus $208-525 billion for the Big 4 (Microsoft, Apple, Google and Amazon).

Just how high are these expectations? Nvidia now trades at over 38x sales and over 200x earnings. We’ve never before seen a price to sales ratio that high for a company of its size…

… The closest recent comparison is Tesla, which traded at nearly 30x sales when it hit the $1 trillion mark back in 2021. What happened after that? It would go on to decline over 70% with its price to sales ratio falling to 5x.

I posted that it was overvalued near its peak, and unsurprisingly was slammed by Tesla critics.”

— Peter Mallouk, CEO of CPIWealth

What We’re Watching:

Academy Sports & Outdoors’ last investor event focused on sustainable growth in the retail space, differentiating their brand through customer experiences, and unveiling a multi-year growth plan.

Perhaps the biggest callout was the argument that ASO has the most productivity per square foot of each store throughout its sector (Dick’s Sporting Goods, Sportsman’s Warehouse, etc.)

DocuSign’s Spring 2023 Investor Presentation highlighted solid revenue growth (in-part due to expenses reduction), with billings growth that was accelerating at a decreasing rate.

The most interesting callout was reaching 1,080 customers in FY’23 that had an annualized contract value of over $300K with DocuSign. This number was 437 customers in 2020. We’ll be interested to see if they can peak our interest this week.

"Although we recognize that the AR/VR industry as a whole has generally been disappointing, we believe that Apple's potential AR/VR headset can succeed where others may have not.” — Goldman Sachs analyst Michael Ng, who has AAPL stock as buy with a PT of $209

This tweet shows the flight path — and it sure is wild.

What We’re Watching:

In May, the ISM Services PMI registered 50.3%, a -1.6% decrease compared to the April reading of 51.9%. A reading above 50 percent indicates the services sector economy is generally expanding; below 50 percent indicates it is generally contracting.

The past relationship between the Services PMI® and the overall economy indicates that the ISM Services PMI for May (50.3%) corresponds to a +0.2% increase in real gross domestic product (GDP) on an annualized basis.

The May US services purchasing managers' index (PMI) conducted by S&P Global came in at 54.9, which was just below the 55.1 forecast. This morning's reading keeps the index in expansion territory for the fourth straight month and is the strongest reading in over a year.

"The US continued to see a two-speed economy in May, with the sluggishness of the manufacturing sector contrasting with a resurgent service sector. Businesses in sectors such as travel, tourism, recreation and leisure are enjoying a mini post-pandemic boom as spending is switched from goods to services.”

As broken down in the most recent Week in Review — we have a credit crisis on our hand. The consensus prediction is Q3 summer spending + Q4 holiday spending will only hurt the debt trends in the U.S. Last month’s reading was $26.5B of additional consumer debt and the forecast for this reading (April) is $21.6B.

The News section of the LevelFields site helps us find some of the biggest-moving stocks — including calling out the largest dividend increases each week.

Last week, Lowe’s announced a +5% increase in its quarterly cash dividend. It’s now set at $1.10 per share.