💼 Retail earnings are here

and beware of Magnificent 7

Good morning investors! The market was red yesterday with most big companies losing value. Now, today we’ll be keeping an eye for Nvidia’s earning report.

Let’s talk! We started a Discord channel so we can all talk about investments, the economy and Nvidia earnings! Click here to join the free channel.

Today we cover:

  • Are the ‘Magnificent 7” companies too big?

  • Retail earnings are here.

  • More tax-free incomes in the US.

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🔈 Audio version: Apple Podcasts | Spotify | YouTube |  Discord 

📊 Economy and News 

Are the Magnificent 7 too big?

The "Magnificent Seven" consists of seven top names, including Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia and Tesla. These tech companies together are worth more than the second largest stock exchange in the world.

Though exciting to know, this information has analysts worried as they question if these companies have gotten too big (and powerful).

In fact, according to Deutsche Bank, Microsoft and Apple, individually, have similar market caps to all combined listed companies in each of the UK, France, and Saudi Arabia.

Deutsche Bank recently warned that “the U.S. stock market is rivaling 2000 and 1929 in terms of being its most concentrated in history.”

We have already seen Tesla suffer this year after staying among the top 5 companies for over a year. It’s down -22% YTD. On the other hand, Nvidia is up 43% YTD.

These big companies have consistently given great numbers but some argue that a crash might be near.

On the other hand, some experts believe that investors are concentrating too much on the big tech and neglecting other great opportunities.

Global hits:

Interesting read: Citi analysts think gold will hit $3,000 by 2025 and oil will cross $100.

📈 Stocks

S&P 500 4,975.51 (-0.60%)
DJIA 38,563.80 (-0.17%)
NASDAQ 17,546.10 (-0.79%)
BRENT CRUDE 82.52 (-1.24%)
* Prices as of Feb 21st, 12:20 AM UTC

Retail earnings are here

Walmart (WMT, +3.45%) beat holiday-quarter earnings and revenue expectations:

  • Earnings per share: $1.80 adjusted vs. $1.65 expected

  • Revenue: $173.39 billion vs. $170.71 billion expected

According to the company, quarterly revenue rose 6%, as shoppers turned in big numbers throughout the holiday season and the company’s global e-commerce sales grew by double digits. Furthermore, the company is serious about growing and is buying TV maker Vizio for $2.3 billion to shore up its advertising business.

Moreover, it has plans to expand or open over 150 new stores in the country. Lastly, the company is raising its dividend by 9% this year, the largest increase in more than a decade.

Guidance: Walmart said it expects consolidated net sales to rise 4% to 5% in its fiscal first quarter. For its fiscal 2025, the retailer expects consolidated net sales will climb 3% to 4%.

Home Depot (HD, +0.061) beat earnings and revenue estimates even as sales fell:

  • Earnings per share: $2.82 vs. $2.77 expected

  • Revenue: $34.79 billion vs. $34.64 billion expected

Net income for the fiscal fourth quarter fell to $2.80 billion from $3.36 billion a year earlier. 

Net sales decreased from $35.83 billion in the year-ago period. 

Guidance: The store is looking at a weak 2024.

Also check: Barclays reported a fourth-quarter net loss of £111 million ($139.8 million). The bank is planning a huge operational restructure, including substantial cost cuts, asset sales and a reorganization of its business divisions.

Just in: Capital One is buying Discover for $35 billion in 2024’s biggest deal so far.

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💵 Personal Finance

Incomes that are tax free - Part IV

Let’s continue the series and have a look at a few more ‘incomes’ that are not taxed in the US:

Corporate Income Earned in 6 States

It might be a good idea to consider these six states as they levy no corporate income taxes:

  • Texas

  • Nevada

  • Ohio

  • Washington

  • South Dakota

  • Wyoming

Wyoming and South Dakota are our favorites as they have very friendly corporate tax laws. The remaining states on the list above do tax gross receipts.

Disability Insurance Payments

Disability benefits are generally taxable; however, there are some exceptions. You will not pay taxes from benefits you receive from supplemental disability insurance paid for by you, even if bought through your employer, are tax free.

Similarly, benefits you receive from a private disability insurance plan you purchased with after-tax dollars. Also, workers' compensation, including compensatory damages for all kinds of physical injuries and physical sickness, are tax free. However, punitive damages are not included.

There may be some other exceptions as well. It might be a good idea to talk to a tax specialist and learn more about how specific insurance payments are taxed.

💰 Be a Better Investor

“There’s a virtuous cycle when people have to defend challenges to their ideas. Any gaps in thinking or analysis become clear pretty quickly when smart people ask good, logical questions. You can’t be a good value investor without being an independent thinker – you’re seeing valuations that the market is not appreciating. But it’s critical that you understand why the market isn’t seeing the value you do. The back and forth that goes on in the investment process helps you get at that.”

Joel Greenblatt

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