The calm before the storm on Wall Street

Earn While You Learn! ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ [EARN WHILE YOU LEARN! JOIN OUR FREE LIVE TRADING SESSION!]( Hello investor, The calm before the storm on Wall Street We shouldn’t read much into yesterday’s trading. Traders avoided big bets ahead of several major catalysts that will come out this week. Microsoft, Meta Platforms, Apple, and Amazon will report their results to determine the fate of the Big Tech rally. The Federal Reserve will also announce its rate decision this Wednesday. So, Wall Street will get some answers to some of its most important questions. The central bank is expected to shed some light on its future plans with interest rates. Rates will likely be unchanged this week, but Fed officials might clue in a September rate cut. Big Tech earnings may also reveal whether high growth expectations are justified or not. - “The Fed and tech earnings will have the spotlight for the week,” said Paul Nolte at Murphy & Sylvest Wealth Management. “The future direction of interest rates should be clearer after the press conference. Big tech can answer whether investor’s expectations for still high growth rates is warranted.” Paul Nolte at Murphy & Sylvest Wealth Management (Photo: Murphy & Sylvest Wealth Management) In the last few weeks, investors jumped the Big Tech ship and invested in other sectors. The Russell 2000 rallied. The S&P 500, however, fell for two straight weeks due to declines from tech stocks. Is it just a pullback, or a beginning of a bear market? Nobody knows. As of right now, things still look good in the economy. The GDP growth was around 3% in the most recent reading. Inflation is falling. The central bank is preparing to cut interest rates. - “It’s almost impossible to know if the worst of the recent market pullback is over, but we continue to believe the equity market backdrop is favorable due to resilient growth, falling inflation, likely Fed rate cuts, and AI spending,” said David Lefkowitz at UBS Global Wealth Management. Speaking of AI spending, ON Semiconductor surged as much as 14% yesterday after reporting better-than-expected results for the second quarter. On the other hand, the chipmaker STMicroelectronics NC plummeted more than 16% after cutting its revenue outlook. The results are mixed for the semiconductor industry, so we will get a better idea when Advanced Micro Devices reports its earnings result today. JOLTS job openings, consumer confidence, and Microsoft earnings will be out today. Fed rate decision and Meta Platform are due on Wednesday. Finally, initial jobless claims, ISM Manufacturing, and Amazon and Apple earnings are scheduled for Thursday. Here’s How to Bet on the Boom of the Aging Population Today’s Stock Pick: Pennant Group (PNTG) It is a worst-kept secret that the number of senior citizens is going to explode in the next two decades. In fact, the population above 65 is projected to nearly double by 2050. Now, about 70% of Americans who reach age 65 require some form of long-term care for an average of 3 years. (Source: Pennant Group) So, can you guess what this company does? Of course, Pennant Group offers long-term care for senior citizens. It specializes in home health. Basically, nurses will come to the client’s home and offer multidimensional home care to achieve goals based on the client’s diagnosis. Now, listen: Healthcare spending currently represents 18% of U.S. GDP. Can you believe it? The costs are ballooning. As a result, healthcare operators (such as health insurance) are focused on cutting costs. Home health is poised to grow rapidly in the next few years because it is 65x cheaper than acute care hospitals. Already, home health took a 4% share of post-acute care spending from 2016 to 2021. (Source: Pennant Group) Pennant Group is one of the leaders in this space. It has a strong local presence because relationships with local providers matter to patients. For example, a patient might see a doctor and receive home health care. It is preferred that both parties (doctors and home health) work in tandem to achieve goals for the patient through transparent data-sharing and responsiveness. What’s more, Pennant Group has multiple services (such as senior living) to help patients migrate through care settings as their needs change. You can see the cluster of Pennant’s services in two example locations — Phoenix and Southern California areas. (Source: Pennant Group) Pennant Group’s future is bright because home health, hospice, and senior living are very fragmented. For example, the top ten largest operators own only 27% of the market share in home health. (Source: Pennant Group) Meaning? The company has a tremendous opportunity to consolidate the industry through acquisitions. It operates in just 13 states, so there are plenty of other regions to expand. (Source: Pennant Group) And it is so good at growing the business of its acquisitions. For example, its acquisition of Comfort Home Health & Hospice led to a 311% revenue growth within nine quarters of the acquisition. EBITDA growth is much more prominent in all other acquisitions. In four examples below, all of them saw a triple-digit growth in EBITDA within the 9th quarter. (Source: Pennant Group) As a result, its gross revenue grew 13% CAGR from 2019 to 2023: (Source: Pennant Group) Bottom line: Pennant Group has an attractive investment thesis. Its market is poised to grow because (1) more people are reaching the senior citizen status and (2) more health care operators are turning to home health to cut costs. At the same time, Pennant has a proven acquisition playbook where it can consolidate the industry and grow its earnings primarily through acquisitions. [EARN WHILE YOU LEARN! JOIN OUR FREE LIVE TRADING SESSION!](       © All Rights Reserved, Trade Alliance [Unsubscribe]( | [Manage Preferences](