WSWD Weekly Roundup

Stocks rallied last week.  The S&P 500 gained 3.84% for the week.  The Dow ended the week up 3.27%.  The Nasdaq finished with a solid 4.56% addition.  The Russell 2000 was the leader of the pack, stacking on 6.38%.  Are we heading back to new highs?  

Here are some of our picks from last week that are worth revisiting.

GAN Limited (GAN)

Shares of GAN Limited (GAN) have plunged more than 35% since they reported horrific Q2 losses back in August.  This week the company announced that Wynn Resorts, Limited (WYNN) has engaged in a 10-year agreement to be the enterprise software platform for its Internet sports betting and internet casino gaming business in the State of Michigan.  The Company expects to launch Wynn online in Michigan alongside the first regulated online gambling operators in November 2020. 

Jeffrey B. Berman, Chief Commercial Officer of GAN, commented:

“We look forward to powering the Wynn brand in Michigan with our highly optimized technology platform and enabling Wynn to efficiently invest their marketing capital to attract loyal sports betting and iGaming players. We are pleased to onboard Wynn, with its national casino brand and substantial Michigan-region patron base, as a major operator client and are excited at the opportunity presented by potential roll-outs in multiple additional states in the future.”

 Shares are catching a bid on the news, but GAN stock has much more to offer.

Social gaming has emerged as a global phenomenon in terms of revenue and player engagement for gaming companies around the world.  Simulated Gaming ™, GAN’s proprietary experience deployed from GameSTACK ™, is a market leading offering which enables operators to deliver an exciting online social casino-style experience, control content and marketing, all while observing responsible gaming best practices such as Know Your Customer.  GameSTACK ™ IGS is compatible with the complex technical requirements of the most stringent jurisdictions around the world.

Investors continue to speculate that online gambling will expand at a rate that will lead to tremendous growth for every company involved.  That may not be the case because the market is already flooded with dozens of suppliers.  But GAN Limited is uniquely positioned to provide a platform casino operators can use easily to launch their own online gambling platforms.  That could keep GAN growing, and may make it one of the best investments for those looking to profit from the industry over the long-term.  

Plug Power (PLUG) 

Plug Power (PLUG) designs and manufactures hydrogen fuel cell systems that replace conventional batteries in equipment and vehicles powered by electricity.

“Hydrogen is expected to be one of the fastest growing segments of the energy industry representing as much as 18% of the energy mix by 2050. Today, Plug Power is the largest user of liquid hydrogen and has built more hydrogen refueling stations than anyone else in the world,” Plug noted in a letter to shareholders.

Plug Power is currently moving forward with expansion beyond its core capacity.  The company will soon compete in the large-scale backup power market.  Plug management expects its new GenSure HP (high power) platform, which is currently in production, to reach customers in 2021. 

Plug Power recently announced that it is collaborating with “other transportation, gas and utility industry executives” to promote a new study from consulting firm McKinsley called the Road Map to US Hydrogen Economy.  In the upcoming report McKinsley will explain how “hydrogen demand in the US could reach 17 million metric tons by 2050, roughly equivalent to 14% of energy demand” — and PLUG is situated at the beating heart of this hydrogen economy as a premier producer of hydrogen for energy use.  

Telefonaktiebolaget LM Ericsson (ERIC)

5G stocks are doing well under current leadership — and are set to cash in perhaps even further with a change in leadership. 

To make 5G work, the number and locations of antennae is going to be vastly greater than for the previous generations.  Furthermore, 5G networks will utilize higher frequency airwaves in urban areas.  As a result, they require more equipment – a long-term bullish sign for network gear makerTelefonaktiebolaget LM Ericsson (ERIC).

The Ericsson network segment provides hardware, software and related services for radio access and transport, as well as related services such as design, tuning, network rollout and customer support.  

Ericsson offers a relatively direct play on 5G infrastructure and it is trading at just 20x forward earnings.  That means there’s a path for ERIC to show market-beating returns in the next couple of years. The Swedish company is executing well ahead of 5G demand tailwinds and continues to build its market share lead.

Federal Signal Corporation (FSS)

Federal Signal Corporation (FSS) owns a collection of niche businesses serving municipal and industrial customers.  Over 80% of its sales are granted by its environmental solutions group (ESG), which provides municipalities with a range of surface and sewer cleaning equipment, road digging and marking equipment, and industrial cleaning machinery.  

The rest of its revenue comes from its safety and security systems group (SSG), a collection of signals, sirens, and warning systems used by the police, municipalities, and industry.  It’s also a business that has experienced strong growth over the last decade, driven by acquisitions and supported by underlying demand for municipal spending on infrastructure.

Management believes a “combination of organic growth in excess of GDP and targeted acquisitions will lead to a high single digit revenue growth.  FSS, like many of its peers, is set for a COVID-19 earnings decline in 2020. But a forward P/E of ~18 makes it an attractive option for a company with growth opportunities within relatively stable markets. 

Parker Hannifin Corporation (PH) 

Parker Hannifin Corporation (PH) manufactures and sells motion and control technologies and systems for various mobile, industrial, and aerospace markets worldwide.  

Bank of America recently listed PH as one of its top stocks for October.  Analyst Andrew Obin says investors “don’t fully appreciate the company’s operational improvements.”  The company is expected to report earnings on October 29th and Obin is forecasting a significant earnings beat on better-than-expected margins.  In addition, Obin says any economic data suggesting a recovery in industrial activity should be a bullish catalyst for the stock.  Bank of America currently has a “buy” rating and a $265 price target for PH stock.

B of A isn’t the only analyst group who are optimistic about PH stock.  Parker Hannifin currently has a consensus rating of “buy” based on 15 “buy” ratings, no ”hold” ratings and no “sell” ratings.


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