Stanley's Hydration Hype

The Stanley Quencher has achieved a level of popularity where it can be considered a status symbol, having more fans than Taylor Swift. [The Daily Peel... ]() January 8, 2024 | Peel #621 Silver banana goes to... [CFA Institute. ](=) In this issue of the Peel: - The U.S. economy added 216k jobs in December, much higher than the newly revised November additions of 173k and more than double the also-newly-revised October count of 105k. - Elanco Animal Health and Constellation Brands had a ripe day, while Medical Properties Trust and Agilon Health suffered share price declines. - The Stanley Quencher has achieved a level of popularity where it can be considered a status symbol, having more fans than Taylor Swift. Market Snapshot Happy Monday, apes. What a time to be alive, unless you’re Stephen Hawking, then you’d probably be hyped not to be alive right now. But damn, those memes have been sick. And while 2024’s meme market is on one of the biggest bull runs in history, we unfortunately can’t say the same thing for equity markets. Friday was an okay day, with U.S. indices primarily flat for much of the session. The S&P’s 0.18% gain led on Friday, while the Russell 2k’s 0.29% fall was the only index in the red. This time, the WSO Alpha portfolio managed to actually outperform, gaining 0.30% on the day. Maybe it’s all those [new trades]() the apes placed at the end of last week…’ Yields had a busy day on Friday as well. Treasuries gained in response to the December jobs report (more below), then plummeted out of nowhere close to the end of the session, only to pick right back up to nearly where they fell off. The 10-year ended right around 4.05% while the 2-year was vibing right around 4.40%. Let’s get into it. Set the standard. [image]() If you care about the state of the world and want to set it on a better course, we have a solution that may be somewhat surprising: work in finance. At CFA Institute, our courses are deeply rooted in ethical perspective. But we don’t just teach — we create codes of conduct, and impact key policy issues with global governments and regulators. Visit [cfainstitute.org/setthestandard]() to join a global network of investment professionals setting the standard through performance with purpose. [Get Started]() Banana Bits - U.S. lawmakers are close to deciding the best way to eviscerate almost [$1.6tn in funds]( to avoid yet another impending government shutdown. - Peloton shares [ripped again on Friday](=) as the firm confirmed that mooching off other companies through “partnerships” is their best way to survive. - J.P. Morgan is either smoking crack or brilliant in claiming that U.S. consumers still have [~$1tn in excess savings](=) to burn through. - [These charts]( tell the story of the U.S. economy in 2023. Macro Monkey Says Help Wanted It’s not a stretch to say that we all kinda had a feeling that 2024 would be an interesting year, to say the least. When there’s a U.S. Presidential election, it’s hard not to be—but damn, it’s barely been a week, and every day seems to just try to one-up the prior day in terms of insanity. And as we learned on Friday, even our economic news is on the same trend. To close last week, the Bureau of Labor Statistics tantalized markets and market watchers far and wide with the release of the December jobs report. Everyone was forecasting a slowdown in hiring, but as was suggested with the ADP Employment report on Thursday, it looks like the opposite is what happened. The U.S. economy added 216k jobs in December, much higher than the newly revised November additions of 173k and more than double the also-newly-revised October count of 105k. Economists were expecting a slight slowdown from the November numbers, but clearly, there was just far too much help wanted. That brings the national unemployment rate to 3.7%, officially marking the longest streak of sub-4% unemployment in the U.S. [literally since ‘Nam.]( "That brings the national unemployment rate to 3.7% ..." Meanwhile, the real shocker of the report was a surprise uptick in wage growth. Average hourly earnings were expected to grow at 3.9% in December, just below the 4% growth seen in November. But the absolute grinders driving the U.S. economy forward managed to grow their earnings an average of 4.1% instead. Now, that might not seem like a big deal, but this is another case of the direction mattering far more than the level. The simple fact that the rate of wage growth actually grew in December—against expectations and bucking the 5-month trend of declining growth rates—suggests that demand for labor may not have been as brutally murdered as Fed Chair JPow would’ve liked. The FOMC has been raising rates with the goal of killing demand for labor enough to chill growth in wages, largely believed to be driving the “wage push” inflation we’ve seen in the post-pandemic era. Just as we’re getting closer and closer to the Fed’s 2% target, it looks like there might be more work to do. "... market-implied odds of a rate cut in March dropped below 60% ..." Rate markets have already reacted as well. Immediately after the report dropped, market-implied odds of a rate cut in March dropped below 60% for a hot minute. Now, the trillion-dollar question is how long this trend of a reheated labor market lasts. If accelerating wage growth is BACK for good, it’s probably safe to assume inflation would be, too. It’s hard to be mad at the fact that more people than expected have found a new way to earn some kind of livelihood and to get paid more in doing so at the same time, but when JPow and the FOMC want you and me to get fired and be poor, it’s important to realize they could take it out on us with an extension of “higher for longer” or a delayed rate cut. Maybe the best way to contribute to the economy this month isn’t to go out and donate (a.k.a. buy stupid sh*t) to the economy, but to go ask your boss for a pay cut. Fortunately, I didn’t even have to ask for one, but in case your pay hasn’t been slashed, maybe consider doing the right thing. Remember, it’s all for shareholder value after all, right? What's Ripe Elanco Animal Health (ELAN) $15.45 (↑ 6.19% ↑) - Everybody loves their pets, and on Friday, the dawgs over at Stifel decided the company that helps keep them healthy deserves some love, too. - Shares in Elanco Animal Health, a leading animal healthcare and pharmaceutical firm, ripped on Friday as the analysts at Stifel said the company looked undervalued compared to peers like IDEXX Labs and Zoetis. - From there, it was off to the races. Pets are only becoming more and more popular as it appears the “C-19 dog” trend that emerged when we were all trapped at home is here to stay. - With that said, I, for one, am sick of this freeloading animal living in my house and not paying for his own damn healthcare. Time to put our pets to work—who’s with me?? Constellation Brands (STZ) $247.53 (↑ 2.15% ↑) - Everyone knows that drugs and alcohol are super cool and consuming them will instantly make you popular (obviously), so does that mean owning them in your portfolio makes me a cool investor, too? - My team is letting me know nothing I do could ever be considered cool, but I do know that if I did own drugs and alcohol maker Constellation Brands on Friday, my portfolio would at least be worth a little more. That’s because the firm knocked it out of the park on earnings once again. - One man’s trash is another man’s treasure, and in this case, the reputational damage done to Bud Light has been a real treasure for Modelo-maker Constellation Brands. The company earned $3.19/sh on $2.47bn in sales, beating the $3.01/sh expected but missing the $2.54bn anticipated on the top line. - Analysts clearly didn’t mind the sales miss, which is an interesting divergence from other reactions we’ve seen in Q3. But, the surprising continued success of Modelo and less-than-garbage performance by some of the company’s in-house weed portfolios ostensibly took the limelight. What's Rotten Medical Properties Trust (MPT) $3.55 (↓ 29.00% ↓) - Apparently, charging thousands of dollars for simply breathing inside a U.S. hospital still isn’t enough for these places to cover their costs. Hospitals hate paying their bills just as much as we do. - And for most of us, that doesn’t really matter unless you’re a shareholder of Medical Properties Trust. The REIT that specializes in hospital and other medical leases got absolutely bullied on Friday as it released another update on one of its largest tenants and spoiler alert, that tenant still ain’t paying full rent. - I wish I could get this kind of treatment with my own rent, but apparently, hospital operator Stewards Health Care System owes about $50mn in rent to MPT. Instead of evicting them on the spot like my landlord would love to do (lol), this landlord has actually given Stewards a $60mn bridge loan to help them get through these tough times. - In the face of this deferred revenue, Wall Street lost a lot of confidence in MPT’s rent collection abilities. As a result, shares got hammered (and not in a good way). Agilon Health (AGL) $8.63 (↓ 28.56% ↓) - Like stubbing your toe and deciding to get your entire leg amputated, investors in Agilon Health reacted incredibly strongly to a minor reduction in sales targets for Agilon Health. But, there may be more than meets the eye here. - The maker of healthcare platforms for “community-based physicians” (whatever tf that means) lowered their 2023 revenue target from a range of $4.31bn-$4.32bn to $4.30bn-$4.31bn. Needless to say, this 0.2% reduction is basically the equivalent of Armageddon. - Kidding, of course, but the main point could also be the fact that the target is still well below the $4.6bn estimated. But does that really justify a loss of over 1/4th of a company’s market share? - Markets sure think so, at least for now. But the surprising announcement that CFO Tim Bensley is dipping tf outta there in the meanwhile could have added fuel to the fire. Thought Banana The New Gold Rush Tulips, beanie babies, and JPEGs of f*ckin’ [rocks](=) have all driven demand crazes of diminishing logic throughout human history. Thankfully, the latest iteration of this collective sacrifice of sense actually serves some kind of purpose. For the first 110 years of existence, Stanley was just your average drinkware maker, famous for slinging their classic baby-barf green bottles and other products. The firm has a history of nicely mild success, generating ~$70mn-$100mn/yr with slight deviations in the past, but slow and steady has been the story. And it only took a century-and-a-decade of existence for the Seattle-based firm to start selling something people actually want… desperately. Whether you realize it or not, anyone who has gone outside in the past 3-6 months has seen this product. Something about this 40-oz water bottle has us more hyped than when In Da Club comes on at 1:17 am on Saturday night. "... 8 years later, the bottle has more fans than Taylor Swift." The Stanley Quencher, pictured below, was first introduced in 2016. Nobody really noticed it at the time, but 8 years later, the bottle has more fans than Taylor Swift. [image] I know, I can’t believe 2016 was 8 years ago either, but what’s even crazier is the fact that the above-pictured bottle is expected to lead to more than 10x in revenue for a certain segment of the firm in 2023. Alongside the pandemic, consumer demand for big *ss water bottles (to use the technical term) has grown with our newfound consciousness of staying hydrated. Teachers and nurses were really the first to get in on this wave, but now, the popularity of the Quencher is set to explode Stanley to a $750mn business in 2023, according to [CNBC]( projections. It’s not like they did anything super special to cause scenes like [this]( at Target stores across America, but there is one simple fact about these bottles that seems to have sparked this craze: they’re so damn Instagrammable. Just as being photogenic helps dogs get adopted, so too does looking good help sell consumer products. "... the newly famous water bottles have achieved a level of popularity ..." And now, the newly famous water bottles have achieved a level of popularity where they can be considered a status symbol. Having one of these signals to fellow apes and humans alike that you can afford to waste $50 on a way-too-big water bottle while also confirming that you have a good aesthetic taste. It’s a recipe for success that now has caused this product to cement itself as a household staple. I do have to admit, however, that as of Christmas day, I do own one of these (shoutout to my grandmother for the gift), but I did not receive the immediate +20 IQ points nor cure for cancer that I assumed must come along with such a popular product. If you haven’t noticed this trend, I have a feeling it’s now gonna be one of those things where you start to notice them all the time. $750mn is a ridiculous amount for almost anything, but it’s nice to quantify the craze over products/status symbols like this once in a while. Can’t wait to see what lucky company and product is up next. The Big Question: How long will this craze over Stanley water bottles last? Do you have one yet? Better question—how many do you have? What product is next to get the status symbol / Instagram boost? Banana Brain Teaser Friday — There are five sales agents in a certain real estate office. One month, Andy sold twice as many properties as Ellen, Bob sold 3 more than Ellen, Cary sold twice as many as Bob, and Dora sold as many as Bob and Ellen together. Who sold the most properties that month? Answer Cary sold the most properties. Today — A grocer has 400 pounds of coffee in stock, 20 percent of which is decaffeinated. If the grocer buys another 100 pounds of coffee, of which 60 percent is decaffeinated, what percent, by weight, of the grocer’s stock of coffee is decaffeinated? Shoot us your guesses at vyomesh@wallstreetoasis.com. Wise Investor Says “Consumers don’t want more choice, they want to be more confident in the choices presented.” — Scott Galloway How would you rate today’s Peel? 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