🗞️ Gold Outside the Olympics

WHILE YOU POUR THE JOE… ☕️
New Kid Bot on the Block

Everyone knows that the term “Google it” 💻️ is synonymous with anything related to the search for an answer, as spiritual as that may sound.

Well, in the past couple of years, the term “ChatGPT” has risen in popularity too. Knowing they are just getting started, those at the Elon Musk-backed artificial intelligence company OpenAI decided to go for another squeeze.

This time, they’ve developed a search engine to compete with Google’s, and it’s called SearchGPT.

I haven’t tried it yet, but maybe that’ll be the goal for this week, I don’t know yet (I have so much to do).

Anyway, speaking of connecting the dots like AI does, let’s get on with today’s email 📧…

PUTTING IT TOGETHER
Stock Market Olympics

While athletes will showcase their endurance, strength, and skills in Paris, other countries are also making sure that they get all the gold 🪙 for an upcoming competition.

When a country raises money to fund infrastructure, construction, and defense budgets, it typically relies on taxation. But there are other ways that will be less annoying to the population.

One way is to print more money, which can cause inflation due to an oversupply of capital. Another way is to finance through selling bonds; unfortunately, the United States does both (it doesn’t produce or export much).

But, to raise money from lenders through bonds, these lenders need to see that the country asking for money has enough assets and cash to back up the repayment, so these countries - lacking in strong currency - will start accumulating gold.

Turkey, China, and India are all buying up gold like crazy and starting to reduce their dollar holdings. This is why gold prices have hit an all-time high and why so many are depositing their money in Turkish banks to get a 50% annual interest payout 📈.

One way you can profit from these trends is by investing in gold, but we already covered that in a previous post. Today, you can look into what comes after the gold stockpiling, and that’s construction, both infrastructural and otherwise.

Caterpillar (NYSE: CAT)

All these countries have something else in common, not just the sudden preference to hold more gold.

They all import their construction machinery from Caterpillar, which you can also get behind, as new orders will likely start trickling in soon for the stock.

According to Caterpillar’s latest quarterly financials, the order backlog rose by $400 million in the past quarter 💰️, and it looks like this trend might be taking on water now.

More than that, it looks like momentum is hitting the right spot for Caterpillar’s financials, as double-digit growth 🔥 will show across the board.

With this in mind, management also felt comfortable pushing the company’s 2024 guidance higher, led by a similar record level of net revenue and higher margins, leading to expanding free cash flow.

Here’s what Wall Street had to say:

•  5.7% EPS growth 📈 for the next 12 months, which seems conservative considering the recent 54% boost for the past 12 months.

• Goldman Sachs keeps its $408 price target 🎯 for Caterpillar stock, calling for 16.5% upside from where the stock is today.

Oh, and don’t forget, management just announced a $21.8 billion buyback program.

When companies buy back their own stock, it means that insiders believe the company is cheap today and expect to see higher prices in the relatively near future, so go figure.

WEEKSTARTER STOCK
Nurse for Hire

Unemployment is rising in the United States, and sadly, all high-paying jobs are going away.

As we become a nation of consumption in physical goods and entertainment, all the low-paying jobs are up for grabs. Healthcare is one of them, as hospitals and clinics will always need to house nurses.

That’s why today, we have found interest in a small-capitalization stock dealing with the healthcare industry, particularly in the hiring and staffing logistics.

Cross Country Healthcare (NASDAQ: CCRN)

We like a few things about this company, but whether we invest in it is up for discussion and the right price.

Nonetheless, it is still a worthy name to watch if you want an asymmetrical reward-to-risk ratio.

Here’s what the jobs landscape looks like today:

Unemployment is close to that uncomfortable level where the Federal Reserve (the Fed) starts acting to help the economy. Still, there is one sector specifically that seems to never get hurt by this.

That’s healthcare. Think about it, it doesn’t matter whether the economy is booming or busting; people will always have to look after themselves, creating an endless loop of hiring prospects.

This is the jobs data for the past month, the employment situation report, better known as the NFP 🔎 for retail traders who think FX will make them rich.

Notice that while unemployment is up, healthcare added over 48 thousand jobs, with half going to ambulatory services and the other half to hospitals.

They are likely nurses, but we even considered these numbers because Cross Country Healthcare stock is in the eye of the storm, making these hiring sprees happen for the sector.

Some of the stats we liked about Cross Country Healthcare:

• Has a gross margin of over 20%

• Return on invested capital (ROIC) above the national average of 12%

• Very (and I mean very) little debt, only 1% of company’s capital is debt

• Trades at a discount to sales, a price-to-sales (P/S) ratio of 0.3x despite a wave of incoming hires

With these trends in mind, Wall Street analysts decided to forecast earnings per share (EPS) growth for over 39% 📈 in Cross Country Healthcare stock, helping those at Barrington Research slap a price target of $21 a share on the company, daring it to rally by 27.3% 🔥 from where it trades today.

NOW GO AND MAKE IT HAPPEN
You’ve Got a Letter

Warren Buffett is famous for saying to “never bet against America.” But, he also warned his shareholders of the risks of growing national debts and budget deficits.

It cannot be sustained, and that might be why nations are ditching the dollar to return to gold. Today’s book recommendation 📖 spells out some of Buffett’s best advice on investing and global affairs.

To your success,

G. 🥃