Latest news with #marketleadership
Zawya
a day ago
- Business
- Zawya
Simah Rating Agency (Tassnief) assigns 'A-' solicited national scale entity ratings to Arabian Centres Company
Riyadh: Tassnief has assigned long-term national scale entity rating of '(A-)'' (Single A Minus) and short-term entity rating of 'T-3' to Arabian Centres Company ('Cenomi' or 'the Company'). The assigned ratings reflect high creditworthiness, thus low credit risk. Risk profile may exhibit variation due to changes in economic and sector conditions. Rating Rationale: The assigned ratings incorporate Cenomi's leading market position, satisfactory business diversity, strong operating performance supported by high occupancies and footfall growth as well as sound tenant mix comprising renowned local, regional and international brands. Ratings also reflect a favorable operating environment which is expected to support operating performance over the rating horizon. Ratings are constrained by aggressive financial and development policies and weak credit metrics, although improvement in the same is expected when Jawharat Riyadh and Jawharat Jeddah are at full stabilization, generating incremental EBITDA of over SAR 650m. Cenomi has a leading market share of approximately 18% in Gross Leasable Area (GLA), three times that of its nearest competitor, underscoring its scale advantage and operational depth in a fragmented market. Cenomi's market leadership offers strong pricing power, high tenant retention, and resilience to competitive pressures. The Company's competitive advantage and strong operational performance emanates from its high-quality malls' portfolio, having strategic composition and broad geographical footprint, although some revenue concentration is present in tier-A malls. The key business risk factors include i) half of the malls built on leasehold land which expose the Company to lease non-renewal risk, and ii) sizeable lease expiries due in 2025. Tassnief expects revenue loss due to lease expiry risk to remain manageable over the rating horizon, while ongoing expansion will further strengthen its market position and enhance revenue diversity. Moreover, comfort is drawn from strong track-record of client lease renewals and historically high tenant retention. Assessment of financial risk profile reflects aggressive financial and development policies which have resulted in weakening in credit metrics and deterioration in working capital cycle, as evident from cashflow from operations (CFO) having remained consistently lower than Funds Flow from Operations (FFO) over the last 3 years. Full recovery in credit metrics is expected to materialize by 2028 where we expect the full EBITDA impact of Jawahrat Jeddah and Jawahrat Riyadh to be reflected in financials. Tassnief is incorporating improved credit metrics while assigning the current ratings. Both malls are expected to contribute SAR 650m in new cash flows at stabilization. Rating Triggers Negative rating triggers include Any further weakening in FFO-based interest coverages from around current level. Further increase in Net Debt to EBITDAR from the current level of 7.51x. Non-materialization of improvement in FFO-based interest coverages and Net Debt to EBITDAR post-stabilization of Jawahrat Jeddah and Jawahrat Riyadh. Continued deterioration in working capital, resulting in lower CFO generation as compared to FFO. Significant weakening in operating performance through decline in occupancies levels below 90%. Deterioration in operating environment, which Tassnief does not anticipate in its base case scenario. Positive rating triggers include A sustained shift towards a balanced financial policy, resulting in notable improvement in debt and interest coverages. Improvement in occupancies levels above 95% following the stabilization of Jawahrat Jeddah and Jawahrat Riyadh. Improvement in FFO based interest coverages to around 2.75x and Net Debt to EBITDAR to below 5x on a sustainable basis. About the Company: Arabian Centres Company, referred to as "Cenomi" or "the Company", is a Saudi Joint Stock Company registered in the Kingdom of Saudi Arabia under the commercial registration number 1010209177. Cenomi is the largest owner, operator and developer of contemporary lifestyle malls in Saudi Arabia. For further information on this rating announcement, please contact Mr. Talha Iqbal (Ext. 6627) at +966-112506627 or email at RS@ Rating Methodology for Corporate (v.2. 2019) can be found on the website:
Zawya
3 days ago
- Business
- Zawya
Investors see US stocks rally broadening, even as 'Magnificent Seven' rebound
NEW YORK - Megacap technology and growth stocks have retaken U.S. market leadership in recent weeks, but investors say that factors are in place that could allow a broader group of stocks to outperform for the rest of the year. After technology shares led by a small group of stocks known as the "Magnificent Seven" drove equity indexes higher in 2023 and 2024, much of Wall Street expected a broader swath of stocks to do better this year. After stumbling in early 2025, the Magnificent Seven have stormed back amid an overall rebound in equities fueled by easing trade worries. The group, which includes Microsoft , Meta Platforms and Apple , has accounted for over 40% of the S&P 500's <.SPX> total return since the close on April 8, when stocks began to recover from U.S. President Donald Trump's jarring April 2 "Liberation Day" tariff declaration, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. The tech trade got a fresh boost on Thursday as shares of Nvidia , another Mag 7 company, gained 3% after the AI chipmaker's sales beat quarterly expectations. But investors say more enticing valuations and an improving earnings backdrop are poised to allow strong performance for a broader group of stocks, as long as the economy avoids significant hiccups in the coming months. Coming into the year, "we were pretty poised to see a broadening of market participation," said Michael Reynolds, vice president of investment strategy at Glenmede. "We think that's a story that's still relatively intact, that the rest of the market's earnings growth can actually be relatively competitive to some of these megacap tech companies and be supportive of returns through the rest of this year." The U.S. market has shown signs of broadening its gains. The top-performing S&P 500 sectors so far this year have been industrials <.SPLRCI>, consumer staples <.SPLRCS>, utilities <.SPLRCU> and financials <.SPSY>. After lagging badly the prior two years, the equal-weight version of the S&P 500 <.SPX> -- which represents performance of the average index stock -- has performed more in line so far in 2025 with the standard S&P 500, which is market-cap weighted so the larger stocks influence it more. More recently, however, the Mag 7 have outperformed as they did in 2023 and 2024 when they accounted for well over half the S&P 500'S 58% two-year return. While the S&P 500 has gained over 18% from its April lows, an ETF covering the Magnificent Seven -- which also includes Amazon , Alphabet and Tesla -- has surged more than 30%. A strong first-quarter earnings season in general helped lift the stocks, which as a group had sold off particularly sharply earlier in the year over worries about the artificial intelligence business landscape, and economic fallout from Trump's sweeping tariffs. Indeed, even as Nvidia reported another blockbuster quarter, the maker of AI chips did warn of more risks to its business emerging in the technology conflict between the U.S. and China. With the rebound, valuations for the Magnificent Seven have also become more elevated. The group's median price-to-earnings ratio as of Wednesday was around 28 times earnings estimates for the next 12 months, after falling as low as 22.2 in April, according to LSEG Datatream. The S&P 500, including the Magnificent Seven, was at a P/E of 21.4. Michael O'Rourke, chief market strategist at JonesTrading, said the megacap stocks have benefited recently as investors have been "chasing exposure" to equities on better-than-expected tariff news by buying funds covering indexes such as the S&P 500, in which the stocks have heavy weightings, or by buying the stocks themselves. "It's easier to just go for the index or go for the larger names in the index because they're liquid and you can quickly add exposure that way," O'Rourke said. However, he said, there are a lot of other large-cap names trading at "much more attractive levels." "The headline-driven trading has to subside," he said. "When the market is less focused on trade and geopolitics, that will allow broadening to re-emerge." To catch up, the rest of the S&P 500 may have to close the earnings growth gap with the Mag 7. In 2024, Magnificent Seven earnings grew 36.9% against a 7% increase for the rest of the S&P 500, according to Tajinder Dhillon, senior research analyst at LSEG. This year, the gap is expected to narrow, with Mag-7 earnings rising 15.9% against a 6.5% rise for the rest of the index. "All the earnings growth was in those big Mag-7 names, and we have started to see a broadening in earnings growth," said Chris Fasciano, chief market strategist at Commonwealth Financial Network. Commonwealth is recommending investors diversify their equity exposure, including to the financials and industrials sectors, as well as to mid-cap stocks, Fasciano said. Still, Mag 7 stocks could retain their popularity if Wall Street grows concerned about a significant economic slowdown, having become somewhat of a defensive play for investors in recent years. Their businesses are expected to be relatively resilient to the broader growth environment while investors are also drawn to their general financial strength. Indeed, stable economic growth will be especially critical for economically sensitive areas such as industrials, materials and financial stocks. "Better growth is going to be the trigger for a more sustainable broadening out and participation," said Garrett Melson, portfolio strategist at Natixis Investment Managers. (Reporting by Lewis Krauskopf; Editing by Alden Bentley and Deepa Babington)
Telegraph
3 days ago
- Business
- Telegraph
In markets where the winner takes all, there's only one company worth buying
Questor is The Telegraph's stock-picking column, helping you decode the markets and offering insights on where to invest. Market leadership can be a huge advantage in business. Dominating a market allows a company to outspend its rivals in areas that drive sales, such as marketing and product innovation. Meanwhile, scale can lower the cost of making goods, providing services and distribution. Once businesses establish leadership, they often command significant 'pricing power' because customers have few viable alternative sources of supply – a particularly good characteristic to have with the threat of tariffs looming. The markets that best lend themselves to fostering leaders tend to be niches as they are only big enough to support limited numbers of players, which accelerates the winner-takes-all dynamic. French buildings product and services company Legrand has a keen appreciation of this. It describes itself as 'a giant in profitable niches' and says two thirds of sales come from markets in which it boasts a number one or two leadership position. The pricing power this gives the group was underlined during rampant inflation earlier this decade. Between 2019 and 2023 the group matched cost increases with price rises of 23pc, while managing to achieve annualised sales growth of 9.2pc. Meanwhile, Legrand is confident it can mitigate an expected $150-to-200m tariff hit though price increases coupled with savings and supply chain changes. The company's strong competitive position is reflected in a record of dividend growth every year since its 2006 Paris IPO. British buyers of the shares, which are available through major brokers, need to fill out the correct paperwork to minimise withholding tax and should check for additional dealing costs. Legrand sells digitalisation and electrical products and services to the construction industry. It offers a vast array of products including cabling, lighting, EV charging and datacentre kit, to name a few. It supports its competitive position with solid research and development spending, averaging about 5pc of sales, and boasts a huge network of third-party distributors and installers across 180 countries. Its most important geographies are Europe and the Americas, which account for just over two fifths of sales each. Legrand also taps into long term megatrends – the energy transition is driving demand for electrification and energy-efficiency solution, a housing shortage and aging population in developed economies is benefiting digitisation. Plus, the recent surge in spending on AI has powered a sharp rise in datacentre demand, which the company expects to account for 20-to-25pc of sales this year. Just under half of sales are exposed to what the group defines as its higher growth markets and brokers forecast annualised sales increases for the group as a whole of 6.5pc for the next three years. However, an appetite for acquisitions and plans to spend €5bn on deals between 2025 and 2030 could boost growth further. One of the problems with targeting niche markets is that, by definition, they are not big, which limits growth. Legrand's solution to this is to make many small acquisitions that consolidate its dominance and moves it into attractive adjacent markets. It estimates 60pc of sales in its higher growth operations are acquired. The businesses Legrand buys tend to have lower margins than its own operations, which is unsurprising given the benefits to profitability that leadership and scale brings. However, the group's impressive operating margin of just over 20pc is expected to remain stable in the coming years as Legrand consistently grinds out new savings from recent acquisitions and existing operations. The business model and growth prospects resonate with many of the world's best fund managers, and 11 of these individuals, all identified as among the top-performing 3pc of equity managers globally by financial publisher Citywire, hold shares in Legrand. The high level of smart money interest results in Citywire awarding the company its highest Elite Companies rating of AAA. While leadership in niche markets coupled with strong brand recognition and reputation underpins demand, the company's fortunes are unavoidably linked to the health of the construction industry globally. Currently, the rampant growth from datacentres is offsetting weakness elsewhere, particularly Europe. While management has yet to see any clear signs of a recovery in Europe, it expects a pickup towards the end of 2025. If a recovery can add to the tailwind from the AI boom, there is room for the shares rating to improve based on the current valuation of 21 times forecast next year's earnings, but expectations for ongoing, profitable growth should provide momentum in its own right.
Globe and Mail
6 days ago
- Business
- Globe and Mail
Investors see U.S. stocks rally broadening, even as ‘Magnificent Seven' rebound
Megacap technology and growth stocks have retaken U.S. market leadership in recent weeks, but investors say that factors are in place that could allow a broader group of stocks to outperform for the rest of the year. After technology shares led by a small group of stocks known as the 'Magnificent Seven' drove equity indexes higher in 2023 and 2024, much of Wall Street expected a broader swath of stocks to do better this year. After stumbling in early 2025, the Magnificent Seven have stormed back amid an overall rebound in equities fueled by easing trade worries. The group, which includes Microsoft (MSFT-Q), Meta Platforms (META-Q) and Apple (AAPL-Q), has accounted for over 40 per cent of the S&P 500's total return since the close on April 8, when stocks began to recover from U.S. President Donald Trump's jarring April 2 'Liberation Day' tariff declaration, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. The tech trade got a fresh boost on Thursday as shares of Nvidia (NVDA-Q), another Mag 7 company, gained 3 per cent after the AI chipmaker's sales beat quarterly expectations. But investors say more enticing valuations and an improving earnings backdrop are poised to allow strong performance for a broader group of stocks, as long as the economy avoids significant hiccups in the coming months. Coming into the year, 'we were pretty poised to see a broadening of market participation,' said Michael Reynolds, vice president of investment strategy at Glenmede. 'We think that's a story that's still relatively intact, that the rest of the market's earnings growth can actually be relatively competitive to some of these megacap tech companies and be supportive of returns through the rest of this year.' The U.S. market has shown signs of broadening its gains. The top-performing S&P 500 sectors so far this year have been industrials, consumer staples, utilities and financials . After lagging badly the prior two years, the equal-weight version of the S&P 500 -- which represents performance of the average index stock -- has performed more in line so far in 2025 with the standard S&P 500, which is market-cap weighted so the larger stocks influence it more. More recently, however, the Mag 7 have outperformed as they did in 2023 and 2024 when they accounted for well over half the S&P 500'S 58-per-cent two-year return. While the S&P 500 has gained over 18 per cent from its April lows, an ETF covering the Magnificent Seven -- which also includes Amazon (AMZN-Q), Alphabet (GOOGL-Q) and Tesla (TSLA-Q) -- has surged more than 30 per cent. A strong first-quarter earnings season in general helped lift the stocks, which as a group had sold off particularly sharply earlier in the year over worries about the artificial intelligence business landscape, and economic fallout from Trump's sweeping tariffs. Indeed, even as Nvidia reported another blockbuster quarter, the maker of AI chips did warn of more risks to its business emerging in the technology conflict between the U.S. and China. With the rebound, valuations for the Magnificent Seven have also become more elevated. The group's median price-to-earnings ratio as of Wednesday was around 28 times earnings estimates for the next 12 months, after falling as low as 22.2 in April, according to LSEG Datatream. The S&P 500, including the Magnificent Seven, was at a P/E of 21.4. Michael O'Rourke, chief market strategist at JonesTrading, said the megacap stocks have benefited recently as investors have been 'chasing exposure' to equities on better-than-expected tariff news by buying funds covering indexes such as the S&P 500, in which the stocks have heavy weightings, or by buying the stocks themselves. 'It's easier to just go for the index or go for the larger names in the index because they're liquid and you can quickly add exposure that way,' Mr. O'Rourke said. However, he said, there are a lot of other large-cap names trading at 'much more attractive levels.' 'The headline-driven trading has to subside,' he said. 'When the market is less focused on trade and geopolitics, that will allow broadening to re-emerge.' To catch up, the rest of the S&P 500 may have to close the earnings growth gap with the Mag 7. In 2024, Magnificent Seven earnings grew 36.9 per cent against a 7-per-cent increase for the rest of the S&P 500, according to Tajinder Dhillon, senior research analyst at LSEG. This year, the gap is expected to narrow, with Mag-7 earnings rising 15.9 per cent against a 6.5-per-cent rise for the rest of the index. 'All the earnings growth was in those big Mag-7 names, and we have started to see a broadening in earnings growth,' said Chris Fasciano, chief market strategist at Commonwealth Financial Network. Commonwealth is recommending investors diversify their equity exposure, including to the financials and industrials sectors, as well as to mid-cap stocks, Mr. Fasciano said. Still, Mag 7 stocks could retain their popularity if Wall Street grows concerned about a significant economic slowdown, having become somewhat of a defensive play for investors in recent years. Their businesses are expected to be relatively resilient to the broader growth environment while investors are also drawn to their general financial strength. Indeed, stable economic growth will be especially critical for economically sensitive areas such as industrials, materials and financial stocks. 'Better growth is going to be the trigger for a more sustainable broadening out and participation,' said Garrett Melson, portfolio strategist at Natixis Investment Managers. Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.
Forbes
10-05-2025
- Automotive
- Forbes
Tesla Stock To $1,500?
Here's how Tesla stock (NASDAQ:TSLA) can reach $1,500, up from $300 currently. Tesla sold 1.7 million cars in 2024. The key ingredient is that Elon Musk is back in the driver's seat, with his work at the Trump White House apparently winding down. Fully focused. Focused on the original mission: transition the world to electric vehicles and become a market leader. Ten million cars a year. Market leadership has a halo effect. We believe that momentum will provide a strong tailwind for Tesla's next bets - humanoid robots and robotaxis as well. As an aside, market leadership is in fact one of the factors we consider in constructing the market-beating Trefis High Quality portfolio (HQ) - a strategy of 30 stocks that targets long-term value creation. HQ has outperformed the S&P 500 and achieved returns greater than 91% since inception. We lay out our upside case for Tesla to $1,500 below, as a counterpoint to our previous analysis that outlined a downside case to $100. So, how does this happen? First, cars. Tesla already has EV leadership. Despite the recent slowdown in EV sales in the U.S., the truth is that people want electric vehicles. Nearly 50% of cars sold in China in 2024 were EVs. This didn't begin in China - it began in the U.S. Greta Thunberg thundered first in Europe. Then the climate message spread everywhere. People get it. Coal and gas are yesterday. Clean energy is today. The industry just needs its leader back - Musk, level-headed and championing clean energy again. The idea is simple. If China can do it, why can't America? Once consumers in the U.S. and Europe reconnect with the urgency of the climate mission, and Musk plays a central role in it, it becomes unstoppable. Can Tesla scale to 2.5 million cars this year and 3 million in 2026? Musk has done it before, going from 500,000 to 1.8 million cars in just three years. He can do it again. On the upside, we estimate that Tesla delivers 5 million vehicles by 2027, and 10 million by 2030. At an average price of $40,000 per vehicle and a conservative 20% net margin, that's $80 billion in profit. At a 25x multiple, that's a $2 trillion valuation for the automotive business alone. Tesla has other major projects that could drive valuation. The robotaxi launch in Austin, expected around June, could kick off an enormous new business. To be sure, Tesla will be playing catch-up with Google's Waymo, which has offered autonomous rides in several cities for almost five years now. But Tesla controls the whole stack - it builds the EVs, develops the software, and also operates the charging network. It also has a large base of vehicles on the road that can be brought on board its robotaxi fleet. That's a real edge. The ride-hailing market is already huge. Uber handled over 230 million rides per week in Q4 2024 alone. At roughly $30 per ride, that's a $375 billion annual revenue pool. And that's just human-driven rides. Autonomous could be bigger still. Waymo retains users better than Uber or Lyft and reports much fewer crashes than the U.S. average. Now for every person hailing a ride, ten still drive themselves. That could change quickly once people start seeing others relaxing in the back seat, watching Netflix, while they're stuck behind the wheel. The roughly $375 billion market could double. A $750 billion autonomous ride-hailing market isn't far-fetched. Now, suppose Tesla captures a third of that - $250 billion in annual revenue. At a 25% net margin, that's almost $63 billion in profit. Apply a 30x multiple, and you get $1.9 trillion in value for ride-hailing alone. Tesla is also working on humanoid robots called Optimus. The company says the robots are designed to carry out dangerous, boring, or repetitive tasks. Musk believes Optimus could eventually be Tesla's most valuable business - and with good reason. Global labor shortages, rising wages, and soaring demand for automation all make the case for physical AI compelling. Optimus is hardly a moonshot. It's the next logical step for a company that already builds advanced robots to manufacture its cars. And Tesla's cars themselves are among the most sophisticated robots on wheels. Musk has said Tesla will build 10,000 Optimus units in 2025, with 'several thousand' doing useful work by year-end. With a global labor force of over 3.5 billion people, even a fraction of that market could be transformative. In our upside case, Tesla might build 10 million Optimus units per year, priced at $20,000 each with 20% net margins - that's $40 billion in annual profit. At a 30x multiple, that implies a $1.2 trillion business. Add it all up, and a $5 trillion valuation for Tesla starts to look plausible. That translates to a stock price of over $1,500 per share. What about a timeline for this? Building this sort of scale can take some time. Investors will need to look well into the future. Think 2030 or maybe even more. The point is not to get stuck – if you're concerned, look even further out, say 2035! The bottom line: Tesla has the technology and scale, and is addressing a potentially massive market. With Musk back in the driver's seat, this high valuation is within reach. While Tesla is advancing transformative technologies, Trefis HQ portfolio is focused on long-term value creation. With a collection of 30 stocks, it has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics.
