These stocks are overbought after a strong May for Wall Street and could be due for a pullback
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Miami Herald
2 hours ago
- Miami Herald
Trump lauds the economy on his 200th day in office
Aug. 7 (UPI) -- Trump lauded the nation's economy while celebrating his administration's accomplishments on the 200th day of his second term in the White House on Thursday. The White House promoted the day as "200 days of winning" for the nation and its economy. "We have a country that is the hottest country right now anywhere in the world," Trump said. "A year ago, it was in a lot of trouble." Trump made the comments during a White House event announcing the creation of National Purple Heart Day on Thursday. A White House announcement lists several promises that Trump has kept many of the promises that he made while campaigning for office, according to a White House announcement. They include "delivering the largest tax cut in history for working- and middle-class Americans," including no tax on Social Security, overtime and qualifying tips. Trump's policies also closed the border, created "eight historic trade deals" with major trading partners and helped the S&P 500 and Nasdaq to reach record-highs several times, the announcement says. "Inflation has moderated, business is booming, the economy is growing and egg prices fell 67% from their peak," the White House says. Americans can invest in alternative assets with their retirement accounts and enjoy greater freedom of financial services under executive orders signed Thursday by President Donald Trump. More than 90 million Americans have employer-sponsored defined-contribution retirement accounts that have not allowed them to invest account funds in alternative assets, according to the White House. Trump on Thursday signed an executive order enabling such investments while protecting against "burdensome lawsuits" and "regulatory overreach." He also signed his "Guaranteeing Fair Banking for All Americans" executive order to stop financial institutions from engaging in "unacceptable practices" that restrict individuals' and businesses' financial services due to political or religious beliefs. The executive order cites the flagging of purchases made through Cabela's and Bass Pro Shop and those involving terms like "Trump" or "MAGA" despite no evidence of criminal conduct. The executive order calls such policies "politicized or unlawful debanking activities" that are not based on "individualized, objective, risk-based standards." "As a result, individuals, their businesses and their families have been subjected to debanking on the basis of their political affiliations, religious beliefs or lawful business activities," the executive order says. The result often causes "frozen payrolls, debt, crushing interest and other significant harms to their livelihoods, reputations and financial well-being," it continues. The executive order requires federal banking regulators to end such practices and to make reasonable efforts to identify and reinstate any current or previous clients who were denied financial services due to politicized or unlawful debanking actions. Copyright 2025 UPI News Corporation. All Rights Reserved.
CNBC
2 hours ago
- CNBC
Asia-Pacific set to mostly open lower as two key Wall Street benchmarks fall
Asia-Pacific markets are set to open mostly lower Friday, after two of the three key benchmarks on Wall Street gave back gains and closed lower. Good morning from Singapore, and happy Friday. Investors are awaiting a slew of data from Japan, including its current account balance for June. The country's benchmark Nikkei 225 was set to open higher, with the futures contract in Chicago at 41,285 while its counterpart in Osaka last traded at 41,170, against the index's Thursday close of 41,059.15. Futures for Hong Kong's Hang Seng index stood at 24,876, pointing to a weaker open compared with the HSI's last close of 25,081.63. Australia's S&P/ASX 200 was set to start the day lower with futures tied to the benchmark at 8,757, compared with the index's last close of 8,831.40. — Amala Balakrishner Traders work on the floor of the New York Stock Exchange during afternoon trading on August 1, 2025 in New York City. Michael M. Santiago | Getty Images The latest gauge of investor sentiment is rife with uneasiness. Counterintuitively, some market strategists think that could be a bullish sign that forces traders to get back into the market and drive stocks higher. Bearish individual investor sentiment toward stocks over the next six months rose more than 10 percentage points, the most since February, in the latest weekly survey by the American Association of Individual Investors. Investor sentiment is viewed by many as a contrarian indicator. The idea is that when investors are bearish, they are more likely to have already sold stocks and have more cash on hand to put to work. And when more are bullish, the reverse is true. "If the poll is bearish, that is encouraging," Sam Stovall, chief investment strategist at CFRA Research, said in an email to CNBC. "The institutional investor (smart) money tends to look at retail investors as 'dumb money' and tends to make near-term price performance projections accordingly." More here. — Pia Singh, Scott Schnipper
CNBC
2 hours ago
- CNBC
Texas Roadhouse's mixed results capture the conundrum this stock has become
Texas Roadhouse on Thursday evening reported mixed second-quarter results as elevated beef prices weighed on profitability. Still, the company posted strong comparable sales and said the ongoing third quarter was off to a great start, offsetting some fears around higher input prices. Revenue in the quarter ended July 1 increased 12.8% year over year to $1.51 billion, exceeding the LSEG-complied Wall Street consensus estimate of $1.50 billion. Earnings per share (EPS) increased 4% on an annual basis to $1.86, missing expectations of $1.91, LSEG data showed. Shares were down a little more than 1% in extended trading Thursday. The stock has been drifting lower this summer, closing the regular session down 7.4% from its late May high of the year. Bottom line Texas Roadhouse is executing on what it can control – creating an enjoyable environment and offering full menus at affordable prices – and it's showing within the results. When the restaurant chain reported Q1 results in early May, management said same-store sales growth for the second quarter were tracking at 5%. This is key restaurant industry metric is also called comparable sales, or comps. We were pleased to see that the 5% growth rate not only sustained through the quarter, but improved a little further. What a difference the weather can make. By month, comparable sales, a key restaurant industry metric, increased 4.3% in April, 7.2% in May, and 5.8% in June. Companywide, same-store sales increased 5.8% in the quarter, mostly driven by an increase in customer traffic — a good sign. This result beat the consensus of 5.3%, according to FactSet. Even better, these positive trends continued early into the third quarter, with comparable sales up 5.3% through the first five weeks, beating the consensus estimate of about 5%. This strong rate includes a negative 60 basis point pressure from the calendar shift of the Fourth of July. Texas Roadhouse Why we own it: Texas Roadhouse is a fast-casual steak chain that offers quality food at an affordable price in a fun atmosphere, creating one of the more compelling value propositions for consumers in the full-service dining category. A substantial majority company's stores are company-owned stores, with only a small proportion as franchise locations. Competitors: Darden (Olive Garden, LongHorn Steakhouse), Brinker (Chili's and Maggiano's), Bloomin' Brands (Outback, Carrabbas Italian Grill, BonefishGrill) Portfolio weighting: 2.3% Most recent buy: April 9, 2025 Initiated: Feb. 4, 2025 Usually, strong traffic and comparable sales performance translate to operating leverage, margin expansion, and earnings per share growth. But out of the company's control is beef inflation. This headwind weighed on the second-quarter results and is expected to be even worse in the third quarter. The company has some counterbalances in its disposal, including raising menu prices and labor inflation is coming in a little bit better than expected. On the call, CEO Jerry Morgan said the company plans to raise prices by 1.7% at the beginning of the fourth quarter. "We feel confident this is the right level of pricing to maintain our everyday value while offsetting some of the inflationary pressures we are facing," he said. We are once again torn on Texas Roadhouse. The continued traffic-driven comps are proof that the brand is loved and the concept works wherever they open up a new location – and the company is doing plenty of it. The consumer may get more "picky" and "choosy" in the back half of the year, but Texas Roadhouse is a sensible place to flock to get great bang for one's buck. However, beef prices are everything for this steakhouse chain, and even with the strong comps, we probably won't see the big stock breakout we've been waiting for until prices fall. Tight cattle supplies in the U.S. have driven beef costs up in recent years. On Thursday, cattle futures traded on the Chicago Mercantile Exchange hit another record high. That's our current view. We remain optimistic about the future, supported by strong traffic trends, ongoing franchise acquisitions, and growth from new store openings. However, commodity pressures remain a headwind, which is why we're maintaining our hold-equivalent 2 rating and refraining from buying the stock until we see a more attractive entry point. Commentary The better than expected comparable sales growth of 5.8% was driven by a 4% increase in traffic and a 1.8% increase in the average check. Management spent some time on the earnings call walking through some of the mix dynamics— an industry term for the items sold — impacting check levels. The alcohol category continues to be a drag, a sign that people are drinking less when they are dining out. This is a society-wide trend. Introducing nonalcoholic cocktails, often called mocktails, to the menu has been one way the company has addressed the weakness in alcohol. On the entree side, management called out guests trading up to either bigger steaks or ordering steak more often as opposed to other dishes like chicken. During the quarter, Texas Roadhouse opened four-company owned restaurants, including two Bubba's 33 locations, and one franchise restaurant. Management said it's on track to open approximately 30 company-owned restaurants this year and could do a little more than that next year due to plans to step up growth for Bubba's 33, its sports-bar chain with 52 locations currently. Additionally, Texas Roadhouse completed the acquisition of three franchise restaurants, bringing its year-to-date total to 17. Texas Roadhouse said it has plans in place to acquire eight domestic franchise restaurants in the coming quarters, including its five remaining franchised locations in California. The company buys back these franchised locations from time to time, and we generally think these are a good use of cash. Bringing franchised locations under the corporate umbrella gives the company more control over everything in its restaurants and typically leads to stronger operating results. As for cash returns to shareholders, the company bought back $9.8 million worth of stock in the quarter. That's a step down from the $50.2 million worth of shares repurchased in the first quarter. Guidance As mentioned earlier, Texas Roadhouse comparable sales at company-owned restaurants increased 5.3% year over year through the first five weeks of the third quarter. For 2025, management reaffirmed most of its outlook. It continues to expect positive comp sales growth, including the benefit of menu price actions. It also continues to expect capital expenditures totaling $400 million and so-called store week growth of 5% Store week growth is a way to measure both new store openings and franchise acquisitions. However, the company now expects commodity cost inflation to be approximately 5%, which is up from last quarter's view of 4%. This is obviously disappointing to see but it's not a complete surprise since beef prices are on the rise. Partially offsetting the worsening commodity costs is a better view on wage and labor inflation. Management now sees that increasing 4%, which is the low end of its previous guidance range of 4% to 5%. Management also lowered its expected effective income tax rate to 15% from a range of 15% to 16%. (Jim Cramer's Charitable Trust is long TXRH. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
