Monday May 5, 2025 - How is earnings season going?
40:05 Share

Bill Gunderson

And welcome to the Monday morning. It is Monday, 5-5-25. And we are off on the wrong foot so far in the market after a huge day on Friday, however. We're down just a little bit here so far. This is Bill Gunderson, president of Gunderson Capital Management. And this is the Best Stocks Now show. The Dow is down 123 right now.

to 41,193, but it has made up all of its losses since so-called Liberation Day. The NASDAQ is down 135. We've got a lot of earnings coming in still this week. The NASDAQ is at 17,833, but it has been on a torrid run here. And meanwhile, the S&P is down 39 points today.

which equals 68 basis points. It's at 5,647. We have gold is having a good day. A little money going out of stocks into gold. I think gold probably on this pullback last week is a pretty decent entry point on gold right now. Gold is at 3,325. It's up 2.5% so far.

Silver is at $32.52. HiHo Silver away. Ten-year is down a little bit. The ten-year is sitting at $4.32. The big story again is oil as OPEC votes to increase output. Go figure. And oil is down 1.4% to $57.48.

So welcome to today's Best Stocks Now show with professional money manager Bill Gunderson, President of Gunderson Capital Management.

I'm here with Barry Kite, our chartered financial analyst. Barry, the biggest story we've got to lead with here is not only did we get folks back to where they started from before Liberation Day, but we gave out the winner of the Kentucky Derby in the last message we sent out on Friday. That was a bonus to all subscribers.

And I did pick and did have a little wager. I had 20 to win on him. We had like $32 in our account at whatever it is. I haven't used it in years. And I put 20 to win on the nose of Sovereignty. Sovereignty, yeah. Who I thought would be the biggest closer in the stretch, and he did. He was by far the best horse. Now, he is owned by...

He's owned by Godolphin Racing Stables, which is Sheikh Al Maktoum, who is the leader of Dubai. He's quite a horse racing fan, and I guess a lot of the taxpayer money there goes into it. They have a huge worldwide horse racing operation, not only in thoroughbreds but also equestrian horses.

But it's always good to watch that Kentucky Derby on a sloppy day in Louisville. And it's sloppy. Yeah, it's better to watch it on TV than this last go around. My wife said, I'm glad we didn't go this year. Her hair does not like humidity like that in rain. So anyways, okay, we're starting off the market. We finished the market up. Wow, Friday was an explosion to the upside. And that has its good points and it has its bad points.

The Dow was up 564 on Friday. The NASDAQ was up 267, okay? The good points are is that the market has now gained back everything since that fateful day on March the 8th. I wrote my article the very next day, and boom, we've had the biggest rally in 20 years, okay? That's a good thing.

The bad thing is a lot of the valuation disappeared out of the market very, very, very quickly. We're no longer at those very juicy forward P.E. ratios, number one. And number two, individual stocks, Palantir comes to mind, Netflix comes to mind. They're back to where they were at those lofty levels that they were at before all of this began happening.

And so I think you have to step very carefully right now in the market. I surely would not be putting new money right now into a stock like Palantir. That's just me, okay? It's come a long ways in a short period of time. It's now $268 billion in market cap. It still has a bright future, but it's at a very, very rich valuation right now.

And I mention Netflix because it, too, is at a very rich valuation. And you see that there's going to be a tariff. If you download an American movie in a foreign land, you're going to pay a tariff. And that's going to hurt, I would think, Netflix. Well, and potentially vice versa. What it does, it'll create more expense. It'll be more expensive to create content. Absolutely. Right, if it apparently...

um you know in terms of it and not really sure exactly how it's going to work i heard some executives talk about it this morning and it's essentially a message on true social i think from uh from from from the president but um it'll be interesting to see how it works i think netflix was down about four percent on the news early this morning i don't know what it's sitting at at the moment yeah it's uh it's done well for us i mean it's come a long ways in a long period of time and

I don't think I want to have too much of a concentration on any one stock or any two stocks or any three stocks. I want to kind of keep...

My wrist spread out a little bit because there's still some heavy lifting to do. Well, in the new agreements, right? Right. Everything's very fluid at the moment. Yes. Okay. So having said that, though, you can see what my market outlook in the newsletter. I updated my target price, and we do have a lot of earnings coming in. But really, the big story is going to be on Wednesday. Do you think there's any chance whatsoever that,

that Jerome Powell swallows his pride. But look, I think even without the Trump comments, very few people would expect a rate cut.

I think we're due for one, but I don't think you're going to get one. Do you think there's any chance at all on Wednesday of a rate cut? Yeah, I mean, when you look at the problem, obviously if he wanted to get some heat off his back, he certainly would just give a quarter point, right? The market has a 3% chance of a quarter point cut, 97% chance that we stay where we are. 97%? Oh, that's not very good. That's like that horse that came in 20th.

Covered in mud, you know, that's not a very good chance. Did you see the layer of mud on those, even the winter horses? I mean, it was... I saw one race, I think one of the prelim races where somebody, one horse led from start to finish. Not a wick of dirt on them. That's the way to do it if you can pull it off. Yeah. Yeah.

But anyways, okay, so we've got the stock down today. We're awaiting the Fed's decision on Wednesday. The market would certainly celebrate.

Investors would celebrate. He would be in good standing with Trump again, right? Jerome Powell. But, you know, I have a hard time seeing him coming through with the... I think we're due for one. I really do. I think inflation has drifted away. But you do have the fear of inflation, right?

coming and you know it's going to hit the fan this week the trading has come to a standstill between us and China and it's going to start showing up on the shelves it's going to start showing up in the prices on Amazon I haven't seen any evidence of it yet

But, I mean, it's just a matter of time before we start seeing higher prices on a lot of goods, okay, because of the tariffs. Have you seen something? I saw one freighter right in on the Wando side this weekend. I think I saw one on the other side as well. That's not much.

We usually have six or seven. Right. I saw two leaving the port on Friday. We were at the party at the point on watching a Grateful Dead cover band. They're pretty popular around here. They're reckoning.

And as we were watching the music, and it's funny to watch the deadheads spinning and twirling, and even the kids, even the little kids are spinning and twirling. And we were just enjoying a night out and listening to some music, and I saw two freighters leaving. I don't know if they were leaving full or not.

or empty, there's no way to know what's in those containers, but they were leaving with quite a few containers still on them, so I don't know where that stands. Now, okay, Asia stocks gain on China's potential U.S. trade talks. They are coming closer and closer, and that's what really set the market off on Friday,

was news that the groundwork is being laid. I can tell you this, that on the other side of the pond in China, factories have come to a halt and ships are not being loaded in China. So this is all coming to a head here.

And I would think that China's in a lot worse shape than we are. That's just one of the whole situation. And I know that our Treasury Secretary, Scott Besson, would agree with that. He thinks that their situation is unsustainable in China. Now, Europe, on the other hand, their index has little changed.

As investors read trade developments, we have not heard of any new trade deals coming from Canada, Mexico, Europe, India, China, Pakistan, you name it. But they're being worked on, and I have an update on a few. Okay, more on all of this when we come back.

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And welcome back here to the second quarter of today's Best Docs Now show update on earnings season. A very important update on earnings season. We now have, I want to say 73%, 72% of the companies in the S&P 500 have now reported earnings.

With quite a few left here this week, we'll get to those in a bit. 76% have reported a positive earnings surprise and 62% have reported a positive revenue surprise. For me, the big number was that we're now up to 10.1%.

10.1% growth which is up from 7.2% two weeks ago. So we've really had an excellent quarter. But I think there's a caveat here as I think about it, Barry. We've talked about this a lot and that is that front loading. You know, look, all these companies that needed parts and whatnot,

On the one side, maybe they front-loaded their expenses, loading up on inventory. And on the other side, though, I think it helped earnings more than it hurt earnings. But having said that, this has been a very, very good earnings season and much better than expected. And that leads me to the conclusion that the market really kind of over-expected

worried about tariff concerns. I mean, even the companies I'm seeing report today, like a Tyson Foods, which is pork, chicken, et cetera, saying that they're not being impacted by tariff concerns or tariffs. So, yeah, I think there's a lot in the direct line, but overall I don't think it's had a minimal impact on the overall earnings for the S&P 500. Now, it could get tougher going forward,

But hopefully we get something worked out here fairly soon. The forward P.E. ratio of the S&P goes up to 20.2%.

Okay, that's the negative, this big run that we've had. We got down into the 17 area, I want to say, here recently. And we got as high as what? Close to 23, right? Yeah, 23. 22.8 or something in that range. So now we're at 20.2, about where it belongs, maybe a little bit. I kind of think this is a 21x market right now. So we have a little bit, but a lot of that easy money.

has been made here over the last four weeks. Now, coming up this week, of course, we had some monster reports. Microsoft and Meta were excellent reports last week, and there were others sprinkled in there.

This week... Of course, Apple and Amazon, in terms of market cap, not as great of reports, certainly, as in Microsoft. And Warren Buffett was extolling the virtues of Apple, which he claims has made him a lot of money since he bought it. But lately, I just don't think it's a very good stock. Myself, it's still their biggest holding at Berkshire Hathaway. And, of course, he announced his retirement.

Over the weekend, yeah, that was kind of surprising. I was watching it rain leading up to the Kentucky Derby, and the news kind of popped, came out at the end of his, you know, they had, of course, the big deal in Omaha over the weekend. And, you know, it's interesting, you know,

there's been case studies done for years and years ago. If, uh, if Warren Buffett passed away, I think the, uh, you know, the, the, the stock was, you know, wrote down potentially 20%. Of course, you know, he's built his legacy and he's kind of passed it on to other handlers. Uh,

And so in this sense, it's, you know, what stock I think was down maybe 3% when I saw it earlier today. He sounded pretty rough for the first time. You know, did you hear his voice? Maybe he had a bad cold, but look, he's 90-something, right? He's in his early 90s. Yeah, I think 90, isn't he 99 or 98? No, he's not that old. I know Munger was a few years older. Munger was older. Munger was approaching 100. Yeah.

But I hope I can make it. I hope I'm still sitting here. Now, you know, Barry's there sitting there drooling, looks at my desk. No, I'm just kidding. He's ready and able, just like Greg Abel, right? Greg Abel's taking over. Oh, Abel. Yeah, right. But you know, I... He's 94 years young as Warren Buffett. Yes, 94 years young. Man, that's just incredible.

Okay, Monday. Here's the earnings that are going to come in this week. Don't expect much from Ford. Ford's going to report today, May the 5th. Palantir's reporting today? Wow. Oh, gosh. You know, that's a tough way to... If Mondays aren't hard enough and stressful enough, we've got to wait through Palantir's earnings after the close of the market. That could go either way, you know.

I mean, here's the problem. Palantir has come a long ways in a short period of time, and it's a very expensive stock, which makes it vulnerable. Cummins Engines has reported already. Tyson has reported already. Mattel is going to report. Now, tomorrow we're going to get AMD. That could be interesting.

AMD is a candidate, obviously, for the value, relative value portfolio, which Warren Buffett would not like a relative value portfolio. He's a pure value, intrinsic kind of guy. Deep value. Deep value. They still love Coca-Cola. I mean, they still love a lot of pretty soggy stocks, in my opinion.

You know, maybe Able... Insurers, concrete companies, they love concrete. Railroads. I mean, it could use a little freshening. We'll see what Able does, if he adds any of the stocks of today or kind of holds on to the Coca-Colas of the world. On Tuesday, AMD...

Let's see, Lucid, which is EVs. Datadog, Archer Daniels Midland, Rivian. Okay, that's another EV maker. Marathon Petroleum. Then on Wednesday, Disney, which is a really soggy company these days. Really, really soggy. I mean, it's a 1% over the last 10 years. That's what it's averaged under Disney.

the current leadership. Barrick Gold's going to report. Uber, that's a good one. That's a stock of today. Let's see, anything else? APA, Novo Nordisk, which has their oral drug submitted to the FDA. They may be the first one to get that oral drug approved. I don't think Lilly has submitted theirs. They've been getting good results, but I don't think it's submitted yet.

On Thursday, you get Shopify. That's a big one. ConocoPhillips. DraftKings.com.

Cloudflare, which is one of the better software stocks out there in the cybersecurity world. Anheuser-Busch. Then on Friday is Enbridge. Yeah, but there's still a lot, but most of the big ones have reported. And, of course, it's been a much better earnings season.

than we anticipated. We'll be right back. This is Bill Gunderson. Thank you for tuning in to today's Best Stocks Now, Best Inverse Funds Now show.

I put several hours of research in during the wee hours of the morning each day to bring you the very best cutting-edge stories that I can. To get two free weeks of my newsletter, go to GundersenCapital.com. To talk to us about our fee-based only money management services, call us at 855-611-BEST. Now, back to the second half of the show. Music

Call out the instigator, because there's something in the air. We've got to get together sooner.

And welcome back here to the second half of today's Best Stocks Now show. Now, okay, Apple has been one of Buffett's biggest winners. He doesn't consider it a tech stock. He considers it a consumer good stock, and I think that's probably the correct way to look at it. Now, over the last 10 years, Apple's had a good run. There's no question about it.

because there was a lot of innovation and new upgrades that were very desirable. And the stock has beaten the S&P 500 over the last 10 years with a 21.7% gain over that period of time. Over the last five years, it's beaten the S&P 500 with a 24% gain, but it's starting to slow down big time.

Decelerate is what I call it. You know, from a momentum point of view, deceleration is not good. Buffett doesn't care about momentum. Buffett doesn't care really that much about growth. I mean, he's more...

Where does the value, what is the valuation as it relates to the growth or to what Apple owns, you know, which, you know, that's not really a big consideration with Apple. It's more about the products they have, the dominant position. He likes companies that have dominant positions.

Over the last 12 months, Apple's up 21.9%. My problem is going forward. I think it's a single-digit grower. And, you know, I think it proved that when it reported its earnings. Was it Friday that Apple reported its earnings? No.

I think so. Yeah, it was after the close on Thursday. Thursday, okay. Yeah, we had the Thursday close, so we didn't talk about it until Friday's show between Apple and Amazon. And the stock is down 3.4% today, which isn't very good. And their sales were up 5%, 5%. So it's entered that Coca-Cola-like territory.

And in the middle of the China battle, too, by the way. I mean, in the middle, in the right...

smack in the middle of that deal. No matter if they build, you know, they're talking about, of course, moving production to India and basically U.S. All their production. iPhone. Well, I think what they said is their iPhones that end up making it to the U.S. Oh, that's right. That's right. May come from India, but then, you know, the remainder elsewhere, but they're still in the middle of, you know, whether they're trying to sell to Chinese, you know, consumers or whether they're trying to build them there and ship them elsewhere. They're still in the middle.

right in the middle of that. And they lost a lot of their market share in China to Huawei, who Jensen Wang says is the most formidable company out there in China, tech company, because not only have they dominated Apple in the mobile phone market, but now they're nipping at NVIDIA's heels, and I think they might have something that's a serious competitor. We'll see.

So, well, and that's the other thing, right, with Apple is they've been behind on the AI front. I mean, the best way to show you how far behind they are is they're basically going to, you know, it sounds like they're going to really rely on Gemini. Yeah, Gemini from Google. That's weird. They're going to really use them, which is weird with the Android store, right, that whole thing on the Google side. It's a weird mix. And so, you know, if they're going that route, then that tells you that, you know,

They're behind. Yep, and I don't think there's much innovation there, and their earnings were up 8%. Okay, so we don't own Apple at all, and anybody who transfers to their portfolio, unless they tell me, don't sell my Apple.

You know, I sell it. I just don't think it's the best stock now. Even though it is the second, let's see, it's the second biggest market cap company out there. Microsoft took over $3.23 trillion as Microsoft.

And Apple is 2.98. So all of a sudden, Microsoft has pulled away. And of course, Bill Gates and Steve Jobs were always competitors with each other. I mean, they still are today, the late Steve Jobs. Apple and Microsoft still duke it out.

for the top spot in market capitalization. I prefer Microsoft myself, and the time has shown that Microsoft is a more dominant or more innovative. They're still innovating. ChatGPT just two years ago ignited this whole AI thing

Okay, now, other things here to talk about here. Let me get back to my notes here on this week. We've got Apple. Okay, we talked about that. Coca-Cola features prominently at the Berkshire Hathaway meeting. Once again, the legendary investor defended his well-known junk food diet while sitting with two cans of Coca-Cola and a box of seized chocolates in front of him.

Now, there's something we have in common with Warbuck. We are, I am personally, I grew up with See's Candies in the house. You know, my mother and father and See's being, I think, in California company. I don't know if it still is, but it was. Uh...

Look, that junk food diet has been okay to Warren at 94 years of age. I've been able to drink whatever I like to drink. He likes, I think, Cherry Coke, I think. I drink Diet Cherry Coke myself. And if I have these chocolates around, they're the best. There's no question about it.

Okay, so he did announce his retirement. Palantir is well positioned for new federal spending environment. That's Wedbush. They've always been a big fan, cheerleader. They've been a big fan of Apple, too, of Palantir. Palantir is set to report first quarter earnings after the close of trading next.

They are helping to lead the AI revolution into the use case phrase as its AIP product moat is unmatched. They're saying that they have a large moat around them as a company. And even though the Doge is cutting an estimated $165 billion from the federal budget, Palantir is not on the dark side of the cuts.

according to wedbush now me at this level palantir i would not be putting new money into it right now as it is very very expensive it's only down 1.3 the p.e ratio is 303 right now there ain't no way but abel yeah

He is not ready and able to add that to the Berkshire portfolio at 300. I think if he did, Buffett would have a heart attack and that would be it. Rest in peace, Warren Buffett, volunteer.

303. Wow. Yeah. Now, did you look at their – I mean, and here's the thing. I mean, their earnings could be blowout earnings. We could look at them and think they're fantastic, and the stock could go down, right? I mean, you look at their – in terms of earnings raises, there's been – over the last 90 days, I saw where there's been 12 analyst earnings upgrades, right, in the name of

So that tells you that expectations seem to be pretty high, right? And so we'll see where we end up. I think it will be a good report. It just depends on how good. Yes, very interesting today. And it is trading optimistically. I mean, with the NASDAQ being down, it's down just one. Now,

Look, it got up to 125 here recently. That was the high in mid-February. That's when everything was peaking. And then along came the Canada and Mexico tariff announcement, and it went down to 66 from 125. That shows you how vulnerable this stock is at this level.

To go from 125 to 66, that's a 45% drop, okay? 47, somewhere in there. It lost half of its value at that point in time. And then it finally bottomed at that level in early April, on that fateful April 8th day, when things looked as dark as they could possibly be.

And it, too, like the NASDAQ, has recouped everything it lost. Really, Independence Day, I don't look back at Independence Day as the bottom of the market. It was previous to that. It was a few weeks prior to that when he first announced the 20% tariffs on Canada and Mexico. No exceptions. It was banned. And that sent it down. And that Friday is when the market bottomed.

Yeah, because you had February. I mean, essentially, what, February 17th, 18th, around there was the top. And then, you know, we didn't have Liberation Day until, you know, 4-2, I think, right? April 2nd, somewhere around there. And so, you know, you look at that. Well after that. It was a month and a half in between, right? Okay. So anyways, now, all right.

So Palantir tonight, that could be very interesting. Now, okay, when we come back, we're going to talk about NVIDIA because the lawmakers, Congress is trying to pass a bill to keep it out of China's hands.

to stop the smuggling, there's smuggling going on of NVIDIA chips, believe it or not. And Congress wants to bring a halt to it. We'll be right back. We'll give you an update on NVIDIA. And then a small hyperscaler that's the stock that's built. You gotta go where you wanna go and do what you wanna do and live to a value.

And welcome back here to the final segment of today's Best Docs Now show. As I look at NVIDIA now, we have the lawmakers trying to...

Stop the smuggling. I don't know how you do that. A bill's not going to stop the smuggling. It's going to take something else. Figuring out who's smuggling it, which borders it's going through, etc. But if you look at the valuation, NVIDIA is trading at 20 times earnings, forward earnings, and Palantir is trading at 164 times forward earnings. Is Palantir really that much better than

Then NVIDIA 164. Is it growing that much faster than NVIDIA? To me at this level the better buy is NVIDIA but that's just me. NVIDIA is down just a hair here this morning.

Peg ratio under one. I know Warren would like that in terms of NVIDIA. What's the peg ratio on Palantir? It's got to be nosebleed, right? I see it as a 25% grower. That puts it around six, six and a half. Well, the app has it.

I can look it up on the app. The PEG ratio is the PE. No, I mean, they're forward. Yeah, I mean, it's 34% earnings growth for 2025, 25% for 2026. And so, yeah, you've got a 224 forward PE ratio. Then that's not a fantastic PEG ratio. No, that's a very expensive PEG ratio. Okay.

And can they grow into the multiple? Certainly, but that's what we've got to see, right? I mean, that's what we're, you know, that's why we're attention to earnings. Okay, all right. Now, here's the stock of the day, GPU-S. At least it was this morning. Let me check on it right now. GPU-S. It's still hyperbolic. Oh, my goodness. It's quadrupled.

It's up 313%. It's called Hyper Scale Data. There's some excitement in Las Vegas, Nevada today. They own and manage a data center and provide mission-critical products for defense and aerospace now.

It must have some news on it that is driving this gain. Let's try to find the news here. What is it? GBUS, okay. Yeah, GPUS. GPUS, okay. That's a good symbol. GPUS.

G-P-U-S. And the news on it is, man, it's quadrupled here so far this morning. That's exciting. Somebody knew something there. I want to know. Okay, let's see. Hyperscale reports a preliminary $25 million revenue for Q1. That's the only news there is. That must have really been a lot more than expected.

You'd have to go through who the $25 million came from, blah, blah, blah, but...

It's only an $8 million market cap. $8 million market cap. Okay, so it's not very big, but it's up 300%. Let's see here. Anything else? Tyson Foods has reported earnings. They back full-year guidance. It skips any mention of tariff or economic pressures. Okay, they just totally didn't even bring it up.

And I'm finding that with a lot of companies. And another one you would think would be impacted by the tariffs, Cummins Engines, CMI, is having a good report. Cummins Engines is up $2.43, almost 1% CMI. They beat earnings by $1.11. That's pretty good for a big industrial stock.

And I'm sure it's in the S&P 500. So good report continues that string of good reports. And last but not least, MicroStrategy, which renamed themselves MicroStrategy, MSTR. They're going to buy their whole business plan is buying Bitcoin.

With leverage. I've seen several. Yeah, I mean, they're floating bonds to buy Bitcoin. Is that a good foundation? I don't know. Only time will tell. And I've seen other companies adopt that business model. They were failing at what they were doing, though they said, hey, let's just start accumulating Bitcoin as a company. GameStop recently, remember? GameStop was one that announced that. On hyperscale...

On hyperscale data, that GPUS, here's the thing. As you always mention, stocks follow earnings. So their guidance, they passed the $25 million mark right in revenue. Their guidance for the full year, by the way, went from between now $115 million and $125 million. So I believe they raised the guidance. For revenue? For sales? Right. That's just for revenue. Right.

But eventually, maybe they'll have earnings. Well, if this market cap is right, it's trading at a minuscule price-to-sales ratio. I mean, with those kind of sales, you've got to look into this thing, right? There's more to this story than the eye can see. Now, okay, so we are headed to Cleveland now. This is the fifth, two weeks out.

actually to Warrensville, Ohio. And Edie is taking names. I'm teaching a workshop Tuesday night in Cleveland there in Warrensville at the Marriott. And we're meeting with folks on Tuesday and Wednesday from 6 a.m. till 7 p.m. How about that? No, from 7 p.m. till 6 p.m. I got that wrong.

Take no rest for the wicked. And if you would like to make an appointment with us, this is a rare opportunity to meet with us in person and get some advice. Question us. Meet with us. Behind closed doors, we'll talk about your situation. Call Edie at 855-611-BEST, 855-611-BEST. And I still offer out my free four weeks offer.

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Thank you.

This show is not a solicitation to buy or sell any securities. Bill Gunderson or clients of Gunderson Capital Management may have long or short positions in stocks mentioned during the show. Past performance is not indicative of future performance. Gunderson Capital Management is a fee-based registered investment advisory firm. All accounts are held at Charles Schwab. Schwab is a member of SIPC and FINRA.