XYZ stock | Financial stocks get slammed as Canada, Mexico tariffs kick in (updated)

 

Financial stocks get slammed as Canada, Mexico tariffs kick in (updated)

Mar. 04, 2025 5:05 PM ETThe Financial Select Sector SPDR® Fund ETF (XLF), FINX, KBESCHW, AXP, BAC, COF, MS, USB, MET, CMA, BAM, TROW, KRE, PNC, LNC, PSP, IBKR, AB, BX, IVZ, KKR, CACC, CG, ALLY, SYF, XYZ, BHF, EQH, HOOD, SOFI, AFRM, BLKBy: Liz Kiesche, SA News Editor

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Updates with closing stock price movements.

Financial stocks led the broader stock averages down on Tuesday as Canada retaliated with 25% tariffs on imports from the U.S. to the Trump administration's 25% tariffs on imports from Mexico and Canada.

The S&P 500 Financials sector (NYSEARCA:XLF) slid 3.5% at the close, the worst performer of the S&P's 11 industry sectors, and steeper than the S&P 500's 1.2% decline. The tariffs aim to boost U.S. production by increasing the cost of imports. But in the near-term, that raises the price of many consumer products and risks constraining, if not reversing, economic growth.

Among the financial subsectors most affected are credit card issuers, auto lenders, fintechs, life insurers, banks, asset managers, and private equity companies.

Global X FinTech ETF (NASDAQ:FINX) dropped 2.4% in Tuesday trading. SoFi Technologies (SOFI) slid 3.5%, recovering some from its 9.9% plunge in the morning. Affirm Holdings (AFRM), which provides buy now, pay later financing, tanked 7.8%, and Block (XYZ) fell 5.4%.

Credit card companies stand to lose as consumers cut back or delay purchases. American Express (AXP) stock declined 4.1%, Capital One Financial (COF) sank 5.8%, and Synchrony Financial (SYF) dipped 3.3%.

Auto lenders Ally Financial (ALLY) fell 1.0% and Credit Acceptance (CACC) declined 2.5%, both off their session lows.

In the banking sector, the SPDR S&P Bank ETF (NYSEARCA:KBE) dropped 3.7% and SPDR S&P Regional Banking ETF (KRE) lost 3.5%. Bank of America (BAC) -6.3%, Morgan Stanley (MS) -5.7%, Comerica (CMA) -5.0%, PNC Financial Services (PNC) -4.8%, U.S. Bancorp (USB) -3.5%.

Online brokers also felt the pain, with Robinhood Markets (HOOD) slipping 1.4%, Interactive Brokers (IBKR) -2.7%, Charles Schwab (SCHW) -3.8%. HOOD recovered some from session lows after its CEO spoke at an industry conference.

Invesco Global Listed Private Equity ETF (PSP) dipped 2.3%, with Blackstone (BX) off 4.9%, Carlyle Group (CG) down 6.7%, and KKR (KKR) -9.2%.

Asset managers BlackRock (BLK) -1.5%, T. Rowe Price (TROW) -3.6%, Invesco (IVZ) -4.5%, Brookfield Asset Management (BAM) -5.3%.

Life insurers slid as well, with Brighthouse Financial (BHF) off 5.3%, MetLife (MET) -4.8%, Lincoln National (LNC) -5.4%, and Equitable Holdings (EQH) -5.4%.

More on Global X FinTech ETF, SPDR S&P Bank ETF, etc.

SABR stock | BofA raises Sabre stock rating to Buy, target to $6.10 from $4.50

Analyst Ratings

Published 03/04/2025, 05:21 AM

 On Tuesday, BofA Securities analyst Victor Cheng upgraded Sabre (NASDAQ:SABR) Corporation (NASDAQ: SABR) stock rating from Neutral to Buy, setting a new price target of $6.10, up from the previous target of $4.50. Cheng’s upgrade comes with a positive outlook on the company’s future, as risks related to disintermediation and market share loss are believed to have subsided. The upgrade aligns with the stock’s strong performance, having delivered a 62.4% return over the past year. According to InvestingPro data, analyst targets for Sabre range from $3.60 to $7.25, with the stock currently trading at $3.93.

The analyst’s increased confidence in Sabre’s fiscal year 2025 guidance is supported by the company’s fourth-quarter results. Over the past two years, concerns have centered around whether Sabre could meet its EBITDA and FCF targets through cost savings, which are generally seen as a less sustainable approach compared to revenue growth. Cheng now views the company’s financial outlook as more attainable, citing significant business wins that are expected to contribute to a compound annual growth rate (CAGR) of 7% in top-line revenue from fiscal year 2024 to 2026. Current InvestingPro data shows the company maintaining impressive gross profit margins of 59.01% and generating EBITDA of $381.74 million in the last twelve months, though operating with significant debt levels.

These wins are anticipated to drive a 22% adjusted EBITDA CAGR growth over the same period. The revision of the price objective to $6.10 reflects BofA Securities’ forecast for higher growth in the coming years. Additionally, the lowered weighted average cost of capital (WACC) from 10.3% to 9.9% plays a role in the more optimistic valuation.

The positive assessment is rooted in a discounted cash flow (DCF) approach, which Cheng believes more accurately captures Sabre’s multi-year recovery and growth trajectory. This method takes into account the present value of expected future cash flows, adjusted for risk, and is a common technique for valuing companies with long-term growth potential.

Sabre Corporation’s upgraded outlook and new price target from BofA Securities indicate a shift in expectations for the company’s performance in the near future, with a focus on sustainable top-line growth and improved financial metrics.

In other recent news, Sabre Industries has had its credit rating upgraded to ’B’ by S&P Global due to improved leverage, with expectations of 3%-5% revenue growth and a 20% increase in adjusted earnings by the end of fiscal 2025. Additionally, Sabre Corporation has secured its 100th Network Planning & Optimization customer, Air India Express, which will use Sabre’s technology to enhance flight scheduling and slot management. In another development, Sabre has integrated LATAM Airlines (NYSE:LTM) Group’s New Distribution Capability content, expanding travel agencies’ access to LATAM’s offerings. Analysts at Mizuho Securities have increased their price target for Sabre to $4.00, maintaining a Neutral rating, citing Sabre’s market share gains and projected growth in air bookings and Central Reservation System transactions. Cantor Fitzgerald also maintained a Neutral rating with a $4.00 price target, noting Sabre’s fourth-quarter results aligned with previous guidance and highlighting growth in the Travel and Hospitality Solutions segments. Despite these advancements, Sabre’s first-quarter guidance for revenue and EBITDA fell short of expectations due to the timing of new commercial agreements. Sabre’s ongoing technology transformation is expected to provide cost savings, contributing to anticipated growth in fiscal year 2025.

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10 characteristics of great investors

 Michael Mauboussin, a successful value investor, has identified 10 characteristics of great investors. These include: 

• Being numerate: Understanding accounting and numbers 
• Understanding value: Understanding the present value of free cash flow 
• Assessing strategy: Understanding how a business makes money 
• Comparing expectations and fundamentals: Comparing what is expected with what is fundamental 
• Thinking probabilistically: Recognizing that there are few certainties 
• Updating views: Treating beliefs as hypotheses to be tested, not truths to be protected 
• Being aware of behavioral biases: Minimizing constraints to good thinking 
• Knowing the difference between information and influence: Distinguishing between information and influence 
• Position sizing: Adjusting the size of an investment based on perceived risks and rewards 
• Reading and keeping an open mind: Reading and being open to new ideas 

Mauboussin is the author of books such as The Success Equation and More Than You Know. He is also the Head of Consilient Research at Morgan Stanley Investment Management. 

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Confluence on indices

CAN SLIM using 50 SMA or 10 Weeks on D chart - Define uptrend - Long term investing 

My blog is here.

Confluence on Stocks 

3 areas of interest 

GAP

50 Day MA

Breakout area

Risk and reward - Most important

Confluence area

Benefits of confluence areas

MarketSurge.com | How to trade like a shark

MarketSurge.com | How to hold a stock for the long run | Nov. 12 2024 | 30 minutes webinar

 What is conviction? 

Conviction from a trader's/investor's standpoint is the ability to hold a stock with courage and unwavering resolution. 

"Know what you own, and know why you own it."

- Peter Lynch 

How to develop conviction

1. When analyzing a new company, ask yourself, "Is the company changing the way we work, live and play?"
2. Does the company have a large potential customer base? (TAM)
3. Can the company address a very large geographical market? Can it cross into different cultural/global markets?
4. Is there a high risk that the company's products/services can become obsolete?

Using NFLX, AAPL stocks to explain how to hold in long term, go through monthly chart. 

NFLX went up from $27/share in 2010 to $980/ share in 2025 

Technical indicators to use

The 10-week Simple Moving average (SMA) Line

• Institutional support
• Historically, instituions (e.g. mutural funds and hedge funds) will buy/support a stock at the 10-week moving average line
• Directin of the scope
• The slope of the 10-week line can indicate momentum. A risking 10-week line suggests increasing momentum in an uptrend, while a falling SMA suggests decreasing momentum in a downtrend
• Sell signal
• We use the 10-week line as a sell signal when a stock closes below the 10-week line above-average volume
• 
  

PANW stock as an example 

The 10-Month Simple Moving average (SMA) Line

• Clearer Long-Term Interpretation
• The 10-month duration provides a long-term perspective, filtering out short-term market noise and making it easier to identify the underlying trend
• This is particularly useful for investors who are interested in medium- to long-term trends rather than short-term fluctuations
• Reduced False Signals
• Since it only generates a new data point once a month, the 10-month moving average removes a lot of the head fakes and false signals that shorter-term moving averages might produce
• This makes it more reliable for generating fewer (but more significant) trading signals
• Support and Resistance Levels
• The 10-month moving average can act as a strong support or resistance level
• When a stock's price is above the 10-month moving average, it can indicate a bullish trend, and when below, it can suggest a bearish trend
• This makes it a useful tool for setting stop-loss levels and determining entry and exit points

My practics