Ticker Reports for March 5th
CrowdStrike's Growth Remains Strong—Buy While It's Down
CrowdStrike’s (NASDAQ: CRWD) uptrend will continue because the cybersecurity company has traction, momentum in its deal cycle, and a forecast for another record-setting year in 2025. The Q1 2025 stock price decline is an opportunity that shouldn’t be passed up. It was caused by unexpectedly weak earnings guidance, but there is a silver lining.
The expectation of higher tax rates impacts the guidance, resulting from its growing business and improving profitability. While a headwind, it is offset by robust cash flow and rapidly improving shareholder value, trends expected to continue this year.
The analysts’ response to the 2024 earnings news says it all. MarketBeat tracks a relatively high number of analysts covering this stock, 44, and despite mixed activity following the release, the trends are only bullish. Analysts' trends include increasing coverage, firming sentiment, a high conviction in the Moderate Buy rating, a bullish bias with 72% of the ratings pegged at Buy or higher, and a rising price target.
The consensus price target reported by MarketBeat implies a 12% upside from critical support levels, rising by 20% the day following the release. The revisions include some price target reductions, but all fresh targets are above the consensus, leading to the high-end range and another 15% upside when reached.
Takeaways from the analyst chatter include concerns about slowing penetration growth and margin guidance, but positives overshadow them. Positives include improving deal momentum after last year's outage, the 25% increase in ARR, and expected business acceleration. Dan Ives of Wedbush says the company is moving in the right direction and has reaffirmed the long-term outlook.
The long-term outlook includes a low 20% revenue CAGR through 2035, with bottom-line results compounded by a widening margin. Earnings are expected to grow at a more robust 30% CAGR, which puts this stock at only 11x its 2035 EPS target.
CrowdStrike Insiders Sell Stock in Q1: Institutions Are Buying
The insider activity is a red flag for CrowdStrike investors but doesn’t negate the long-term outlook for share prices. Although they are selling in Q1 2025 and have sold on balance for numerous consecutive quarters, the sales are small, periodic, and from multiple insiders aligning with other companies that utilize share-based compensation. The more telling data is that insiders have considerable skin in the game, holding more than 4.25% of the stock, and the institutions are buying.
Institutional activity is noteworthy because the group sold on balance in Q2 of 2024, reverted to buying in Q3 and ramped activity into Q1 of 2025. In only two months, the Q1 2025 activity set a two-year high and may surpass the prior peak before the quarter ends. They own more than 70% of the stock and strongly support this market.
Analysts and institutions are on board because of CrowdStrike’s rapidly improving financial condition. At the end of 2024, the highlights included increased cash, current, and total assets, with total assets growing at nearly double the pace of liability. Total liability leverage fell to 1.6x equity from 1.85x, increasing equity by more than 40%. Similar gains are expected for F2025 because of the outlook for record earnings.
The Technical Outlook: CrowdStrike Pulls Back to Test for Support
CrowdStrike’s stock price action in early 2025 is ugly, with the stock pulling back by 25%. However, the pullback is expected due to the rapid rise in share price from summer 2024 until Q1 2025 and move to new highs. The pullback is testing for support and shows it at a critical level, aligning with the 150-day EMA and previous price action.
Support is near the $355 level, coincident with a price gap that opened in June 2024 and a consolidation leading to new all-time highs at the year’s end. Assuming the market continues to support this stock at present levels, the rebound should begin soon and could take this market to a new high by the end of 2025.
77 Hedge Funds Are Betting On This Off-Radar Mineral
With surging prices... supply shortages... and growing demand, hedge funds are betting big on potash.
In fact, 77 hedge funds have quietly increased their positions, pouring millions into companies poised to capitalize on this essential commodity.
The reason is simple: America currently depends on Canada for 80% of its potash supply.
2 Energy Stocks to Play Both Sides of Tariff Uncertainty
President Trump’s 25% import tariffs on Mexico and Canada and an additional 10% tariff on China are causing investors to seek shelter from the potential fallout. Canada is of particular concern since it is a top supplier of energy to the United States, including crude oil and natural gas.
The United States imports most of its crude oil from Canada. According to the Cato Institute, if energy imports were taken out of the equation, the United States would have a trade surplus with Canada. A third of all the crude oil imported by the United States also comes from Mexico. If energy imports are keeping you up at night, here are two stocks in the oils/energy sector to trade in each direction of the tariffs.
Cenovus Energy: After a 70.4% Drop, Now May Be Time to Buy the Dip
The fear of import tariffs being levied on Canadian energy has been a key driver for the 36.8% drop in the stock of Canadian oil producer Cenovus Energy Inc. (NYSE: CVE). Shares are trading down 8.65% year-to-date (YTD) as of Feb 28, 2025.
Cenovus is one of Canada's largest heavy crude oil producers. Its heavy crude oil from the Alberta oil sands is ideal for United States oil refineries located in the Midwest and Gulf Coast. These factories are designed to process oil sands bitumen, a heavy crude oil type.
While the general public has been told that the United States is one of the largest producers of oil, most of it is considered "light sweet" oil, and most U.S. refineries are designed to process heavy crude oil.
Therefore, exporting light sweet crude is more profitable than trying to refine it domestically. The oil has to be shipped overseas to be refined into usable fuels, which is more costly than sticking to heavy crude oil. Cenovus is a major exporter to the United States due to its proximity to the country.
Cenovus Is Already Established With the U.S. Infrastructure
The U.S. already has established pipelines transporting heavy crude oil from Canada to the Midwest, which are even shorter and cheaper than shipping from the Gulf Coast. Midwest refineries rely on Canadian oil. If Trump applies a tariff on all imports, including Saudia Arabia, then Canadian crude oil imports would still be the cheapest.
Cenovus Is Locked in Tight With Phillips 66 Refineries
While Cenovus owns its two oil refineries in Saskatchewan, Canada, they also have a 50% ownership stake in two refineries in the Midwest, United States, with Phillips 66 (NYSE: PSX). The Lima Refinery produces low-sulfur gasoline and gasoline blends, jet fuel, ultra-low sulfur diesel, petrochemical feedstock and other byproducts, transported by pipeline and rail cars to market in Ohio, Illinois, Indiana, Pennsylvania and southern Michigan.
The Superior Refinery in Wisconsin produces gasoline, diesel and asphalt and refines light and heavy crude oil from North Dakota and Western Canada. It's over a century-old Toledo Refinery in Oregon, Ohio, and can process up to 160,000 bpd, including 90,000 bpd of heavy oil. It can produce 3.8 million gallons of gasoline, 1.3 million gallons of diesel and 600,000 gallons of jet fuel daily.
Cenovus Could Sell More Oil to Asia
Should there be a disruption in demand from the United States as a result of tariffs, Cenovus has no shortage of demand for its black gold. It could opt to sell more oil to Asia. China could buy more oil via the Trans Mountain pipeline. However, the export capacity is limited to around 590,000 barrels per day (BPD) versus 4 million BPD to the United States.
Cenovus reported Q4 2024 earnings per share (EPS) of 5 cents versus 17 cents consensus analyst estimates, missing by 12 cents. Upstream production rose 1% year-over-year (YoY) and 6% quarter-on-quarter (QoQ) to 816,000 barrels of oil equivalent per day (BOE/d).
It reached the highest ever quarterly and annual Oil Sands production rates of 628,500 BOE/d and 610,700 BOE/d, respectively, including record annual rates at Foster Creek and Lloydminster thermal assets. Downstream operating performance was improved, with 97% in Canadian Refining and 92% in U.S. Refining. Refining expenses, excluding turnaround costs, fell 18% YoY to $10.89 per barrel.
The Worst Case Is Likely Already Price In
Cenovus stock recently hit 52-week lows, mostly driven by tariff fears. The market always tends to overshoot in its reactions. Once tariffs are levied, a rebound is almost a certainty. Even with tariffs levied on Canadian oil, it may still prove to be cheaper to continue importing oil from Canada rather than paying to import from the Middle East.
NRG Energy: Sticking to Domestic Energy
For investors that want to stay away from import tariffs altogether, NRG Energy Inc. (NYSE: NRG) is a major independent power producer in the United States, generating 23 gigawatts (GW) and operating primarily in deregulated markets.
Their rates are market-based and are determined by supply and demand rather than being regulated as a single major utility in an area.
The company is enjoying a demand surge thanks to the AI and data center boom. This has allowed them to lock in major power purchase agreements (PPAs) as power-hungry campuses race to secure enough power, even locking in nuclear power agreements as illustrated by Constellation Energy Co. (NASDAQ: CEG) 20-year PPA with Microsoft Co. (NASDAQ: MSFT) in 2024.
Can NRG Maintain Its Momentum? Analysts Eye Continued Upside
The company reaffirmed its 2025 guidance, forecasting an adjusted EPS of $7.25 and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $3.85 billion.
The company posted record adjusted EBITDA of $3.8 billion in 2024, up $470 million YoY. NRG shares are trading up 17.17% YTD and pay a 1.66% dividend yield as of Feb 28, 2025.
Strong cash flow generation and disciplined capital allocation continue to support shareholder returns.
Management remains confident in delivering on its long-term financial targets, with a focus on operational efficiency and strategic growth initiatives.
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Grab Holdings: Time to Grab More of This Rideshare Beast
Grab Holdings Ltd (NASDAQ: GRAB) is the largest rideshare operator in Southeast Asia, serving nearly 44 million monthly transacting users (MTUs), also known as "paying users," across eight countries, including its base in Singapore, Indonesia, Malaysia, Thailand, Vietnam, Cambodia, Myanmar and the Philippines.
Computer and technology sector leader Uber Technologies Inc. (NYSE: UBER) sold its Southeast Asia rideshare business to Grab in March 2018 in exchange for a 27.5% stake in the company, which is now speculated to be down to 12.5%.
The Southeast Asia population is nearly 700 million people, and Grab has only penetrated 5%, which leads to a long runway for growth, which is a compelling prospect for growth investors.
Grab Is Now a Super App With Multiple Streams of Revenue
Parlaying off its rideshare business, Grab fosters the network effect by taking a page out of Uber’s playbook and adding more services. It’s transformed a rideshare app into a mobile super app that offers rideshare, food, courier and grocery delivery, gift cards, insurance, rewards, loans, digital banking and payment services. Grab appropriately calls itself the “The Everyday Everything App.” Business is thriving, as evidenced by its fourth quarter of 2024 results.
Grab’s Businesses Were Firing on All Cylinders in Q4
For the fourth quarter of 2024, Grab posted a profit of a penny per share, which matched consensus estimates. Revenues rose 17% year-over-year (YoY) to $764 million, beating consensus analyst estimates of $762.08 million. Its various services experienced double-digit growth across the board:
- On-demand gross merchandise value (GMV) rose 19% YoY to $5.03 billion. On-demand represents its Mobility and Delivery segments.
- Group MTUs, paying users, rose 17% YoY to 43.9 million.
- Partner incentives rose 18% YoY to $204 million.
- Consumer incentives rose 37% YoY to $308 million.
- The loan portfolio grew 64% YoY to $536 million.
Operating profit was $2 million, which represents a $48 million YoY improvement. Group adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was $97 million, an improvement of $61 million YoY. Regional corporate costs fell to $87 million, down from $100 million last year, as the company continues to optimize its cost base, with staff and variable costs falling 15% YoY.
Grab closed the year with $5.8 billion in net cash liquidity, helped by an increase in customer deposits in its digital banking business. Adjusted free cash flow was $61 million in Q4 and $136 million for the full year 2024. Revenues for the full year 2024 grew 21% YoY to $2.8 billion with an adjusted EBITDA of $313 million.
Grab Issues Full Year 2025 Guidance Implying 19% to 22% YoY Growth
For its 2025 full-year forecast, Grab sees revenues of $3.33 billion to $3.40 billion, with a midpoint at $3.365 billion. This represents an annual growth rate of 19% to 22% at a midpoint of 20.5%. Adjusted EBITDA is expected to be between $440 to $470 million, with a midpoint of $455 million and a growth of 41 to 50%, representing a midpoint of 45.5%.
The Q4 earnings results were robust enough to trigger a breakout attempt on the daily symmetrical triangle but faced profit takers, causing shares to get pulled right back into the triangle. The immediate Fib supports are $4.41, $4.26 and $4.10.
Upbeat CEO Comments and Only a 5% Penetration
CEO Anthony Tan pointed out that Q4 was the strongest quarter ever and achieved its first full year of positive group-adjusted EBITDA of $313 million.
There is much growth runway, as Tan points out. “We believe that there is plenty of headroom to drive organic growth in Southeast Asia, specifically in mobility, food, and groceries.
The addressable market is still significantly under-tapped. We've shown and proven we've had an all-time high of 44 million MTUs and this represents about 17% growth year-on-year, but we are still only serving 1 in 20 Southeast Asians.
So, we are actually just scraping the surface in terms of users that we can out-serve across this region.“
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