Happy Fed Day!

Join TradeAlgo's Free Live Trading Session ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ [EARN WHILE YOU LEARN! JOIN OUR FREE LIVE TRADING SESSION!]( Hello investor, Happy Fed Day! What is happening in the market right now? Notably, there is a rotation going on. Yesterday, communication services (which includes Alphabet and Meta Platforms) and semiconductor had a losing day while energy and utilities stocks had the best day. Liz Ann Sonders at Charles Schwab believes the recent inflow in other sectors demonstrated investors’ confidence in the economy. - “All else equal, it’s not a bad thing to see this rotation and churn happening under the surface,” Liz Ann Sonders, chief investment strategist at Charles Schwab. “I think it is sending a message about economic resilience, and that’s why there’s more of a cyclical bias to what has been working.” Liz Ann Sonders, chief investment strategist at Charles Schwab (Photo: CNBC) But yesterday’s trading was light since investors are waiting on today’s release of the Federal Reserve’s interest rate decision. Fed officials are largely expected to leave rates unchanged, but they will release the updated rate projections. Wall Street will pay attention whether the recent acceleration in inflation will cause some officials to reduce the amount of projected rate cuts from three to two this year. - “The dot plot could show that we’ve taken yet another cut out of what have been three,” Sonders said. “The question, though, is at what point does it hit the market, given we’ve had this market resilience. I think ultimately, it’s not just about the Fed reaction function, but the sustainability of the economic growth profile.” Fed Chair Jerome Powell will host a press conference today after the release of the FOMC’s decision. His comments will be digested for any clue on whether Powell is becoming worried about the recent acceleration in inflation — or still view it as an outlier before inflation begins slowing down again. The Fed, however, is unlikely to overreact to the recent inflation data. There’s no reason to do so. They have several months of data before they meet again, so they will likely be in a “wait and see” mode. The next few inflation data will be important to determine whether the recent reading is an outlier or a beginning of a new trend. A Dark Horse Pick With A Huge Cost Structure Advantage Over Other Competitors Today’s Stock Pick: Technoglass ([TGLS]( What Technoglass offers is straight forwarding. It is the manufacturer of high-spec architecutral glass and windows for residental and commercial applications. If the buildings require fancy glasses, that’s right in Technoglass’s backyard. But business is far more than just offering good products. It is how you structure the company that offers you the cost advantage over other competitors. It is how Coca-Cola has dominated in the soft drink category for hundreds of years. It doesn’t matter whether a soda is good tasting. Coke built a powerful distribution network that allows it to feed products to restaurants, vending machines, and supermarkets instantly all over the world at cost-effective. Precisely, that was what Technoglass did. The company is vertically integrated where it owns the process from raw materials to end products. It has 4.1 million square foot manufacturing unit in Barranquila, Colombia. Low labor costs give Technoglass an enormous advantage over U.S. competitors. Believe it or not, Technoglass’s labor cost per hour is just $3.5 versus $24 in America – or ~7x cheaper. Its investments in solar power and on-site natural gas led to ~56% lower energy cost per KwH than the U.S. Lastly, its transportation costs are about ~39% lower due to favorable shipping rates for exports since Colombia has net import trade imbalance, versus land transportation costs from Midwest to major coastal cities. (Source: Technoglass) Through joint ventures and ownerships, Technoglass owns the process from raw materials to sales, distribution and installation. It also hedges against the cost of aluminum to stabilize the product cost. As a result, the company could capture cost benefits from being vertically integrated. (Source: Technoglass) What is the result of all of these advantages? Very high margins. The company enjoys nearly 37% EBITDA margin – an insane margin for physical products. The company could offer prices equal (or less) than U.S. competitors while having immense cost advantages. That builds a huge margin for Technoglass. And here’s good news – the company is also growing at a robust pace. Its EBITDA grew ~27% CAGR from 2012 to 2023. (Source: Technoglass) 2024 guidance: Technoglass expects its adjusted EBITDA to jump between 13% to 21% year over year. That’s solid. It’s the backlog that makes it intriguing. It has about $870 million in backlogs, as of December 2023. That is more than Technoglass’s FY 2023 revenue of $833 million. (Source: Technoglass) About 99% of backlog rolls off within 18 months historically, and backlog to revenue conversion is typically above 90% within the next 18 months. So, there is a very good chance that a bulk of its $870 million backlog would translate into actual revenues. Bottom line: Technoglass has an unique cost structure that gives it a high barrier to entry advantage over other competitors. The stock is currently trading at a 12 P/E which is a good value for the stock. [EARN WHILE YOU LEARN! JOIN OUR FREE LIVE TRADING SESSION!](       © All Rights Reserved, Trade Alliance [Unsubscribe]( | [Manage Preferences](