The Week Ahead – March 07, 2022

Summary

Commodities markets continue to dominate the discussion this week, as a result of Russia invading Ukraine.

There’s a lot of potential for LNG stocks. More LNG is anticipated to go to Europe as customers continue to turn away from Russian gas. We have already begun the trend of US exports of LNG to Europe topping Russian pipeline volumes.

That being the case, we did build a position in Chesapeake Energy at the start of the year. And we may add to this position in the coming months.

As an aside, Crescent Point Energy (CPG) is where I am working to build my largest energy position this year.

Traders begin to prepare for a Federal Reserve Meeting later this month; Powell anticipates a 25 bps (0.25%) hike of the Fed Funds Rate. There is still a lot of speculation surrounding the magnitude and pace of rate increases for 2022.

Consumer Prices come out on March 10, 2022. Economist are expecting an increase of 0.5% month-over-month rise in core CPO and a 7.5% year-over-year increase. I can see us get an 8% handle; the risk is clearly to the upside in this situation.

Economists expect to see strength in a variety of travel-related categories including: lodging, airfare, and car rentals after the Omicron spike.

Earnings

Monday, March 07
Ciena (CIEN)

Today is a good day to pick up CIEN. Results came in merely in line with expectations. Adjusted profits of $0.47/share beat consensus, though revenues grew by 11.5% largely as expected, mostly due to some slower growth in its key converged Packet Optical segment, which grew just 5.6% from the prior year. Gross margin ticked down slightly, to 45.5% from a prior-year 47.3%, and operating expense rose nearly 15%, to $324.2 million. Operating margin dropped 2.9 points, to 7.1%. On a non-GAAP basis, gross margin dipped to 46.2%, adjusted operating expenses rose to $290 million, and operating margin fell 2.8 points to 11.8%. EBITDA dropped 7.5% to $123.7 million.

Several reasons why I like CIEN for 2022 and beyond:

• Exceptionally strong order flow continues to drive a sizable backlog expansion
• The Huawei replacement opportunity should start translating into real business in ’22
• Ciena enjoys a strong market position in its core optical business
• Growth opportunities in L2/L3 switching/routing, automation software, share gains, and webscale

Tuesday, March 08 
Dicks Sporting Goods (DKS), MongoDB (MDB), Petco (WOOF), Casey’s General Stores (CASY), Stitch Fix (SFIX).

Wednesday, March 09  
United Natural Foods (UNFI), REV Group (REVG), Crowdstrike (CRWD).

Thursday, March 10
JD.com (JD), Oracle (ORCL), Docusign (DOCU), Rivian Automotive (RIVN).The electric vehicle sector saw some gains as investors bet oil prices may move up the timetable on EV adoption in new parts of the world. Many of the stocks were startups.On the flip side, some EV names continued to struggle on new supply chain concerns and the ongoing reset on valuation.

Friday, March 11
Ballard Power (BLDP).

IPO Watch

None

Other

Apple is scheduled to host the company’s a product event on March 8. The “Peek Performance” will be streamed on YouTube and Apple’s website. Apple is expected to debut a new iPad and a new silicon Mac. Details on the new iOS 15.4 software release are also anticipated.