A chart on fast food inflation has been floating around the internet highlighting the price increases at several fast-food giants. In the US, from 2014 to 2024, average menu prices have risen between 39% and 100% - all of which are increases that far outpace inflation of 31% during the same time period. McDonald’s menu prices are up a whopping 100% increase since 2014 across popular items — the highest of any chain analyzed. Popeyes follows McDonald’s with an 86% increase, and Taco Bell is third at +81%. Menu prices at Subway and Starbucks have risen by 39% since 2014 the lowest among chains studied. According to the Bureau of Labor Statistics, the cost of goods has risen 31% since 2014. Much of this change has happened in the last 5 years where inflation is up 22%. We can only hope that fast-food chains re-prioritize affordability soon!

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Portfolio Notes

(+) indicates a positive development, (-) indicates negative, and (~) indicates neutral

(+) Deckers Brands (DECK-US) Shares surged after achieving record results during fiscal year 2024 with revenue growth of 18% and EPS rising by 51%. HOKA and UGG remain two of the most admired and well-positioned brands in the marketplace. HOKA® brand net sales increased 34.0% to $533.0 million compared to $397.7 million. UGG® brand net sales increased 14.9% to $361.3 million compared to $314.3 million. Teva® brand net sales decreased 15.6% to $53.0 million compared to $62.8 million. Sanuk® brand net sales decreased 39.1% to $6.5 million compared to $10.7 million. Owned in US Portfolio.

(+) First Solar (FSLR-US) soared to its highest in nearly 16 years, on news that China's main solar industry body called for an end to a profit-slashing price war. In addition, UBS increased its price target on the solar company with the firm positing that investors were overlooking First Solar’s potential benefit from the rise of artificial intelligence. Other alt energy stocks also surged, in part owing to enthusiasm that AI will lift power demand. Owned in ESG+ Portfolio.

(+) Nvidia (NVDA-US) The chipmaker and artificial intelligence beneficiary spiked after they posted strong fiscal first-quarter results, issued better-than-expected guidance and announced a 10-for-1 stock split. Management is expecting $28 billion in current quarter revenues, once again beating the $26.61 billion anticipated by Wall Street. Data center revenues were up a whopping 427% YoY, with overall revenue rising 262% YoY and EPS jumping 560% YoY. Remember, this is a multi-trillion-dollar company we’re talking about. These types of growth rates are not supposed to be possible and yet the company continues to deliver. Clearly, the company cannot continue this growth rate forever at its massive scale, but betting on when growth will slow remains a tough game to play. For now, the momentum remains in favor of the bulls. And until there’s a meaningful shift in stock (or business) momentum, many expect the path of least resistance to remain higher. Owned in ALL Newton Group Portfolios.

(-) Palo Alto Networks (PANW-US) delivered strong earnings in FQ3, driven by stronger margin delivery vs. consensus while revenues came in roughly in-line with consensus expectations. Given the strong run in the shares going into earnings, it was not a surprise to see the shares retrace some of those gains, with the shares down. We continue to recommend holding the shares. Owned in US and Opportunity Portfolios.

(+) Restaurant Brands International (QSR-T) The company's Burger King chain said it was bringing back its $5 value meal at a time when many other rivals in the fast-food industry have ramped up promotional offers in order to lure consumers back to their stores. Burger King will bring back its $5 Your Way Meal in April, a company spokesperson told Seeking Alpha. Meanwhile, McDonald's is reportedly set to launch its $5 value meal in June. Owned in Core Portfolio.

(+) Toronto-Dominion Bank (TD-T) reported a beat relative to consensus expectations, supported by strength across all major business lines (Canadian/U.S. P&C, Wealth & Insurance, and Wholesale Banking). Pre-provision pre-tax earnings grew ~10% Y/Y and was ~8% ahead of the street. Credit provisions also came in slightly above street estimates, but it looks like the variance was due to performing loans as opposed to impaired loans. Interestingly, impaired PCLs declined on a sequential basis (a positive development). Elsewhere, the bank also benefited from NIM expansion, capital remains in good shape, and operating leverage is positive. Uncertainties associated with TD’s AML issues will continue to keep shares in the penalty box in our view. Shares are trading at ~9.5x forward earnings versus the peer group average of ~10.5x on consensus estimates. Owned in Cash Flow Portfolio.

Company of the Week: Humacyte

Corporate Presentation March 2024

 

Weekend Reading

Canadian inflation prints to show another step down in April. Next week’s Canadian April inflation report will be the last major data release before the Bank of Canada’s next interest rate decision on June 5th. RBC ECONOMICS

Maybe Baby Boomers Won’t Tank the Stock Market by Cashing Out The common wisdom has been that retirees will liquidate their holdings in securities and real estate to fund their old age. CIO

Modern Meditations: Tyler Cowen The renowned economist shares his thoughts on AI teddy bears, nuclear risk, and darkly plausible futures. THE GENERALIST

Javier Milei’s Radical Plan to Transform Argentina Argentinian President Milei certainly has his critics and it’s frankly too early to tell if his economic plans will pan out for Argentina in the long run, but the guy is doing what he promised to do, and the early results speak for themself. TIME