The team preview Mag 7 results (AAPL, AMZN, GOOG, META, MSFT) plus updates from BP, HFD, TET and W7L

In our latest Podcast, the Sharesify team talk ‘Mag 5’ earnings plus big beats and big misses. The discussion also turns to new highs, new lows and more UK M&A.

Our resident tech guru Steven previews results from Alphabet (GOOG), Amazon (AMZN) and Meta (META). He also explains why new Apple (AAPL) CEO John Ternus could be working on a major new product reveal.

James discusses energy giant BP’s (BP.) Q1 earnings beat. He also flags a surprise profit upgrade from car parts-to-bicycles seller Halfords (HFD). James tells us why investors are wiping cosmetics maker Warpaint (W7L:AIM) from portfolios and raises the takeover of Treatt (TET) by German rival Döhler for discussion.

Ian observes that it’s taken an outsider to realise the extreme value in the UK market. As Joe Bauernfreund, manager of investment trust AVI Global (AGT), said on the show last week, there are lots of under-researched stocks out there right now.

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Transcript

SPEAKER_02 0:05

Hello, and welcome to another Patch Show. Today we're talking Mag 5. I think that's right, isn't it, Steve? Five of the Mag 7 reporting.

SPEAKER_00 0:14

Well, this week that's right, yeah.

SPEAKER_02 0:16

Yeah. Plus, we've got some big beats, we've got some big misses, we've got some new lows, we've got some new highs, a bit more MA, but Steve, got your energy drinks in. Are you all set?

SPEAKER_00 0:28

Yeah, I think that I'd have to go and get a monster. Um, yeah, so to overnight tonight, listeners, we've got um four of the big um Mag 7 companies, so it's uh Alphabet, Amazon, Meta, and Microsoft all after the bell this evening, so around half past nine or or so UK time. Now there's three key things to be looking out for here. Uh, of course, how did their last quarter go? Um, some quite big numbers in the market, look where it's expected. No one's really expecting them to be missing there. Um, second thing is guidance. You know, what kind of confidence do they have going forward for the next quarter and the following quarters in this uh next um uh financial period? Um and I mean there's a clue overnight. We had some very strong moves from some memory chip companies, um, and it was all off the back of some brilliant knockout results from a company called Seagate Technology. Now, you might not be familiar with the company, but they're very big in hard disk drives, in solid state drives, and all things memory tech basically. And they really knocked it out of the park, both in terms of performance guidance and um you know they were so optimistic about the the supply-demand chain going for going forward. Um, so I would expect um uh the the the um the guidance to be very strong with uh as companies tonight. The third thing to look out for though, and this might be the most important one of all, CapEx. Now we know these companies amongst just these four are going to spend somewhere north of $500 billion this calendar year. Um, this is all on growing out the AI data center um uh foundation that they want to build. Um, what is the trajectory of that spending pattern? Is it gonna flatten? Is it gonna accelerate further? And are there going to be signs about getting some bang for your buck? Will we see start seeing return on investment? That's exactly what markets really want to start seeing now. They no longer want just a puff story, they want to see bang for buck, are we getting our money's worth? So that'd be really interesting.

SPEAKER_02 2:26

Yeah, as you say, Steve, that return on investment. I've seen a number of articles on that. A lot of people saying this is what we need to now be focused on. Um, so James, what has caught your eye this week?

SPEAKER_01 2:37

Yeah, it's a bit a bit of a mixed bag, isn't it? Ian. So we had positive update from BP, which perhaps wasn't that surprising given the sort of surging oil price. Uh Q1 profits more than doubled how that goes down with how households struggle in with cost of living pressures. Uh, probably not that well. Um surprise one was Halfford's was actually uh raised its full year, got profit guidance with uh new CEO Henry Birch's turnaround. Seems to be working. They flagged strike trading, yeah, which has always been a bit of a patchy one, hasn't it?

SPEAKER_00 3:03

Half I've got a gun renew my uh windscreen wipers, James. So uh so I'm I'm pleased to know they're running running in a good ship.

SPEAKER_02 3:09

Yeah, some batteries. Yeah, we had to we had to do the same, Steve. Um where else do you go, to be honest?

SPEAKER_00 3:15

Uh absolutely, yeah. Unless you know a mechanic somewhere, yeah.

SPEAKER_01 3:19

Uh Coca-Cola, they they beat and raise. So um, you know, one of Warren Buffett's classic investments, uh selling more single server and smaller sizes at lower price points, which seems to be you know keep consumers coming back for the brand. Um, and then on the negative side, we've had uh this morning War Paint, which is down to a new 52-week low. So the cosmetics that are they they issued that dreaded second half waiting warning, you know, which always suggests they're you know they've got a lot of hard work to do to meet the numbers.

SPEAKER_00 3:46

It's such a crowded space, though, isn't it, James? I mean, um, there's some huge companies in that market with a long track record and massive brands. Um, it's it's it's difficult to know that sometimes, or for me anyway, where War Paint really sits in this market. It does seem to where you rely on the sort of the teen girls kind of scenario. Is that is that how you read it?

SPEAKER_01 4:06

Yeah, I think you're right. And also in today's sort of you know, today's backdrop, you can just launch a brand on the internet, it's a lot easier, isn't it? So yeah, the competitive backdrop is very, very fierce. Um, another one that's quite interesting was uh treat, which is being bought at a big premium by a German firm Dirler, which is a supplier and a customer of treat, so that they've offered a 48% premium to take it over. Uh the two companies have had a close relationship for years. So I suppose there are benefits in merging that to form a global platform.

SPEAKER_00 4:33

And another another UK company going, Ian. I know you you were mentioning this this morning in uh in the website story today. There's been a lot of UK companies just disappearing, haven't there?

SPEAKER_02 4:43

That's it, Steve. I mean, you know, the if you look at the flows into UK stocks over the last 10 years, it we've just become a backwater and it's become a really rich picking ground for foreign buyers, trade buyers, private equity. It's you you've got these two dynamics, haven't you, in the market? You've obviously got all the focus on the big tech stocks, and rightly so, because they're the biggest companies in the world. And then you look at the UK. I mean, Microsoft is bigger market cap terms than the entire UK market. So if you're a global investor, you say to yourself, you know, what am I going to realistically look at in the UK that's going to move the needle for me? But if you're not a global investor, if you are UK retail investor, there are so many opportunities here. It's like Joe Baumfreum was saying, James, wasn't it? We um had him on the podcast last week. So he's the CEO, CIO of Asset Value Investors and the manager of AVI Global Trust. And they look in these kind of less researched areas of the market, and the UK's been really fertile for those guys, and I think it's going to continue to be. You know, when you've had 10 years of outflows from international investors, UK pension fund weightings in is a sort of all-time record low. You're getting mispricing in this. Yeah, Ian.

SPEAKER_00 6:04

I mean, this is a really interesting point because uh Rebecca McLean uh yesterday we we had her on a podcast um from Dened and um income growth. She was making the exactly the same point that you've got some really good high-quality companies on the UK market now, and you're not being asked to pay high-quality prices. Um, so there's that that real disconnect between you know the the potential to buy very good businesses but for for pretty low prices. Um the idea though is those prices should should gravitate higher over time. But what we're seeing is actually they're not gravitating over time, they're not being given the time, something's coming up and snapping them up.

SPEAKER_02 6:38

Uh yeah, and as usual, it's taking an outsider to kind of realize the value in it. But um, I say going back to that interview with Joe last week, really, really worth watching. 650 views already. Um, and talking to special guests, um, who else have we had on?

SPEAKER_01 6:56

Well, we we had obviously Rebecca yesterday. Tomorrow we've got uh James Bruger, CIO and joint managing partner of Seraphim Space. So that'll be really interesting. So Seraphim's raising uh 350 million through a C share placing. Um, they argue the space tech industry is at an inflection point, so we'll get all the details for you tomorrow. And then next week we've got JP Morgan Asia Growth and Income Trust coming on the show. So, you know, very busy in podcast world.

SPEAKER_00 7:20

Yeah, I mean I know I know Ian's particularly a fan of Seraphim, and um it I mean, given the fact there's been so much fluff and huff and puff around a SpaceX IPO, uh this whole market is being drawn, it's drawing the attention, but isn't it? I mean, SpaceX are acting as a funnel for a lot of investors to start saying hello, you know, uh lower low earth orbit is suddenly a really exciting uh place to be.

SPEAKER_02 7:43

Yeah, absolutely. It's interesting because you know, when it came to market, everybody got excited about it, and then it kind of faded a bit. You get these themes coming along. Remember hydrogen? Hydrogen was gonna be the next big thing that kind of got a lot of interest, then it faded. Obviously, renewables were very in favour at one point, they kind of got out of favour, but space has endured actually, in fairness. And as you say, Steve, with that SpaceX IPO later this year, everybody's gonna want a piece of that, aren't they?

SPEAKER_00 8:12

Um and it will, I mean, the vet the Nasdaq have actually changed the rules about um how quickly they can get onto the Nasdaq market and so on. And it sounds like SP might also do the same and allow um the company to an accelerate pathway into the SP 500. I mean, I know it normally takes about about three months, I think. Um, and that they're looking potentially at giving them two, three weeks and putting them straight in. So you'll get all of those tracker funds that that have to buy just shares or have to descend onto the SpaceX stock. So it could be a really volatile uh first few weeks, even months, um, once the IPM actually happens.

SPEAKER_02 8:50

Yeah, yeah, yeah. Um so James, looking forward, we've only got a couple of days left. What have we got to what have we got coming up?

SPEAKER_01 8:57

Up and come, we've got Inch Cape, um, well, we've got Nat West on Friday, uh, and also Whipred and Rowtalk. Don't have got any views on any of those ones, Ian. I think whipped bread looks quite interesting, doesn't it? It does, yeah.

SPEAKER_02 9:09

They said the there was a Times story last weekend saying that they were going to sell a lot more of their freeholds and become more of a prop co than an opco. So this is a premier in, isn't it?

SPEAKER_00 9:22

Effectively.

SPEAKER_02 9:23

Yeah, yeah. And interestingly, I was talking with a firm Midweek, which is very active in MA and uh asset sales and valuations in the hotel and leisure space. Obviously, couldn't say anything about the Whitbread story, but I'd say watch this space because it is surprisingly active, actually. The secondary market in hotels, who knew? Um, I think we'll also be looking out for sand discs, Steve. Uh end of the week.

SPEAKER_00 9:53

Yeah, I mean, honestly, it's talking about companies that go on fire. I mean, its share price over the last year has just gone absolutely bananas. And again, it all plays into this this memory, uh, this massive demand for memory. We need memory, memory, memory, memory. And so sand disc has just gone absolutely bananas. Um, don't be surprised if the PE's well into the three three digits. Um, the other thing to point out as well, of course, is tomorrow after hours. We've got Apple now. Apple's in a lot of people's portfolios. Um, perhaps the most interesting thing to look out for here will be any signs that we know that Tim Caucus is gonna is handed on effectively the baton, uh CEO batten to John uh Turnus. Uh that he's more of a products guy. Um, people I've been talking to, I've been reading about. Um, there seems to be a growing uh confidence amongst the analyst community that this could potentially mean a new product category for Apple maybe early next year. Now, we don't know, this is pure speculation, but this is what a lot of analysts are starting to read between the lines that Tim Cook is ultimately setting turn us up to have this big kind of iPhone moment. And the market's been crying out for a new iPhone, you know, it's been such a successful product, and of course, Apple is still pretty much reliant on that iPhone for almost all of its revenues and and and um and and earnings. So that's something that might be interesting to watch out for. Any snippets of hints of new product designs coming to the market.

SPEAKER_02 11:18

Yeah, and of course, that is Buffett. We mentioned Buffett earlier, that is Berkshire's biggest holding by some way, isn't it?

SPEAKER_00 11:24

Yeah, massively so, yeah.

SPEAKER_02 11:26

Right. I think that just about that's it for us then, chaps, for today. Um, if you've enjoyed this, please like on uh your favourite podcast provider. And if you've been watching us on YouTube, please like as well. We'll see you. Well, we'll see you hopefully tomorrow with uh Seraphim Space, and we'll be back again on Friday with another roundup. Take care.

SPEAKER_00 11:47

Take care.

SPEAKER_02 11:48

Cheers.