BED BATH & BEYOND
KeyBanc Capital Markets notes that investors’ enthusiasm for BED BATH & BEYOND seems to have faded as trading based on information gained from Reddit activity waned. Also, the firm’s fundamental recovery might be slowing down.
“1Q data suggests potential outperformance relative to Street expectations… However, monthly trends peaked in April and have since slowed, indicating that BBBY’s strength was largely driven by government stimulus,” the note said.
KeyBanc has set a price target of $22 per share, which is 30% lower than the stock’s closing price on Thursday. The difference is due to the Reddit-inspired surge, which makes the stock a risky bet for investors, according to the firm.
“We believe BBBY is a fundamentally challenged retailer undergoing a turnaround under the leadership of a highly respected new management team. Given this context, we believe valuation is an important consideration for investors. With shares up significantly year to date… and activities spurred by the Reddit message board ‘WallStreetBets’ to push short squeezes, we believe BBBY shares currently far exceed fair value,” according to the note.
Investors are putting a significant amount of money into electric vehicles and related battery technologies, but one of the market’s leading investment strategists believes investors should avoid this industry for now.
To successfully foresee future events, David Roche, who accurately forecast the 1997 Asian financial crisis and the 2008 global financial crisis, says it’s important to remain away from the investments that power and provide energy for electric car and battery manufacturers.
“One is that the electric vehicle manufacturers appear to me to be overpriced,” said Roche, president and global strategist at Independent Strategy, on CNBC PRO Talks with Tanvir Gill on Wednesday.
“Secondly, battery manufacturers are likely to enter an oversupply situation within the next five years.”
Instead, here’s how Roche plans to invest in the sector: Using commodity plays.
“The commodities are the primary means by which we hold investments in electric vehicles and the supply chain,” he explained. “Of course, some of these commodities, such as cobalt and lithium, are difficult to invest in. Some, however, such as copper, are not.”
Cobalt and lithium are commonly found in batteries used to power electric vehicles.
Copper is used five to six times more in electric vehicles than in traditional internal combustion engine vehicles, according to Roche.
There are winners and losers.
The strategist predicted that among the top players in the electric vehicle sector, there will be one survivor and one dominant producer in various economic blocs, without naming specific stocks.
According to Roche, this includes a major player in Germany, one in China, and another in the United States.
“I think what’s interesting is that I can’t name (a winner) in Japan,” Roche explained.
He noted that in the 1970s and 1980s, Asia’s second-largest economy was the market leader in the automobile race. However, it “appears to be the big loser in the EV race.”
Automakers in Japan have been less aggressive in their response to the shift toward electric vehicles. Nissan, for example, plans to release eight all-electric vehicles by 2023, but the company has stated that EVs are a “consequence” rather than the goal.
Volkswagen, Audi, Daimler-subsidiary Mercedes-Benz, and BMW are among the German automakers that have already announced their electric vehicle offerings. While Tesla is a household name in the United States, Chinese start-ups such as Nio, Xpeng, and Li Auto have entered China’s burgeoning electric vehicle market.