TRG | The Bottom Line – 8/28

The week’s headlines were dominated by Nvidia and Warsh (the Fed Chairman) expressing some caution on inflation staying elevated, which could imply rates could go up later in the year. While this could pressure housing affordability and light commercial construction, as well as raise costs (pressuring near-term gross margins), we continue to seek out ideas that are less linked to these macro moves. For instance, road spending has been and should stay resilient, as there is still significant dollars yet to flow from IIJA. The reindustrialization story can still play out even if rates rise, supporting a number of TRG’s stocks. Nvidia projects monumental growth to continue as more data center capacity is still needed. A large GC we spoke with this week said the demand for data centers is still staggering and they have to turn down work because they are effectively sold out. Most all stock prices get swept into the macro and what the Fed does, but over time the earnings growth stories for many TRG stocks is still positive and the risk/reward of their valuations is appealing. In this market with mixed cross-currents, we advocate for investors to parse out companies’ exposures and internal growth strategies, and look beyond the blips, to find excess returns.

‍ ‍

Disclosure: This content reflects the independent views of Thompson Research Group, LLC (“TRG”), is provided for informational purposes only, and does not constitute an offer or solicitation to buy or sell any security. Additional information, including analyst certification and compensation-related conflicts of interest, may be found here: (disclosures).