Hey Snackers,
First, Carl's Jr. cooks up a CBD burger. Then Beyoncé breaks Coachella (and she wasn't even there).
Now 3 major IPOs are launching on stock exchanges today — Welcome, Pinterest, Zoom, and Greenlane.
With markets closed tomorrow for Good Friday, your Snacks team will see you again Monday.
Soda (not sugar) powers Pepsi to all-time high
In the era of extra virgin kale... Pepsi has aggressively focused on healthier-anything. It recently acquired fruit/veggie innovator Bare Foods, dropped $3.2B to buy SodaStream, and launched LIFEWTR water. But shares jumped to a record high Wednesday thanks to the opposite: Salty snacks and soda — Growth was its fastest in three years:
- Frito-Lay: Sales surged 5.5% last quarter — The new CEO called that "extraordinary" and thanked Super Bowl stock-ups.
- The Pepsi soda fam: Sales across Pepsi-branded drinks rose 3% after years of not doing that.
But calories are complicated... Dive deeper into Pepsi's drink menu and you see its top-performers are specifically the anti-sugar crew — Healthy fizz is making up for slowness in cavity-inducing sodas:
- Bubly: Pepsi's new Insta-friendly sparkling water earned its 1st Super Bowl ad and the 16% sales jump since last year scares your LaCroix pamplemousse.
- Pepsi Zero Sugar: The least unhealthy Pepsi option enjoyed a 29% sales surge thanks to a year-long marketing campaign.
Kansas City Southern railroad is thriving with Mexico trade
Your 1887-self telegrammed... It's so proud of what you've become, Kansas City Southern. The historic freight train made the most of its 6,700 miles of track last quarter, hitting record revenues of $675M. Its specialty is US-Mexico trade, and it wouldn't trade that for anything right now. Shares just rose to a 3-year high.
Monthly active thieves... The train biz has to deal with vandalism because its trains are 6K feet long on average. That's why "velocity" (train speed) is crucial — It inched up 12 mph for KC Southern last quarter. Faster trains can ship more of anything (cars, food, oil) with a fixed number of boxcars and locomotives.
Geopolitics is the X-factor... KC Southern's 6% revenue jump was driven by cross-border biz with Mexico (it's got plenty of train track there). US-Mexico trade has boomed since 1995 — Cars built in Mexico have quadrupled over that period. But KC Southern's stock rides with politics:
- On Trump's inauguration day, shares hit a low of $67 after he campaigned on fighting Mexican trade.
- Today, the stock's risen to $123 as a new trade agreement has calmed cross-border econ tensions for now.
Healthcare stocks fall, because, politics
Not a VEEP episode... Real life DC intensity has hurt healthcare stocks all year. While the broader stock market (the S&P 500) is up 16% in 2019, healthcare stocks are down 1%. That lack of fun stretched from patient to pill the past five trading days:
- Health insurance: Cigna (-14%), UnitedHealth (-12%), and Anthem (-18%)
- Pharmaceuticals: Pfizer (-7%), Eli Lily (-8%)
There's nowhere to hide... New business regulation usually gets pushed by one side of the political spectrum. But two very old, very different New Yorkers are trapping healthcare execs:
- The left: Bernie Sanders wants to eliminate private health insurance completely, replacing the health-care middlewoman with a government-run system.
- The right: To shame pharma firms into lowering (often exorbitant) prices, President Trump's admin is exploring new rules to stick drug prices clearly on labels and in commercials.
US healthcare's been un-fixable so far... The cost to keep an American healthy is double the cost for humans in other developed economies. Health insurance makes customers oblivious to treatment prices. And competition-less, patent-protected drugs let pharma firms charge anything. But healthcare profits have always seemed to beat healthcare reform proposals.
What else we’re Snackin’
- Alexa-ish: Facebook leak reveals it's working on its own voice assistant
- Hangry: Europe threatens sanctions on American ketchup, cheese, and fish because of US subsidies supporting Boeing
- Hungry: Canopy Growth cannabis co. pops on word it's close to buying hemp producer Acreage Holdings
- Bank'd: Morgan Stanley jumps 3% thanks to its wealth management biz, finishing off big bank earnings season
- Up: China's GDP rose 6.4% last quarter driven by consumer spending that beat analysts' expectations
- Grounded: Jet Airways, India's 2nd largest airline, just ran out of money and shut down
Thursday
- 3 big IPOs to know: Pinterest, Zoom, and Greenlane
- Earnings from Blackstone, Skechers, and VF Corp (the North Face and Vans parent)
- Markets closed tomorrow for Good Friday
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