In today’s top story, rising cannabis sales have led to the category swiping some of the alcohol market’s customers. Elsewhere, Tesla is reducing its Shanghai output after record deliveries in China and BP is accelerating its focus on hydrogen. We also look at the top picks that hedge funds are making for 2023, plus the stocks which are looking cheap at year-end.
Tesla reduces Shanghai output
China’s automotive industry is facing sluggish demand as Covid-19 lockdowns continue to disrupt production. As a result, Tesla [TSLA] has voluntarily cut Model Y production at its Shanghai plant, a move that will reduce its December output by up to 20%. Data from the China Passenger Car Association shows Tesla delivered a record 100,291 cars last month, up from 71,704 in October and 52,859 in November 2021.
Hedge fund favourites
Hedge funds are currently putting their money into stocks they believe will lead the market recovery. Cyclical sectors such as energy, industrials and materials are gaining traction, while defensive sectors such as consumer staples and utilities are not as popular, according to a research note from Goldman Sachs strategist David Kostin seen by Seeking Alpha. Constellation Energy [CEG], Humana [HUM], UnitedHealth [UNH] and Wells Fargo [WFC] are some of the hedge fund favourites for 2023.
BP accelerates hydrogen plan
North Sea oil giants have enjoyed bumper profits this year, but BP [BP.L] is keen to accelerate its transition to clean energy. “Hydrogen will be a big focus," BP’s CFO Murray Auchincloss told Reuters last month. Though it’s more expensive to produce, BP is looking to take advantage of financial incentives offered by the US Inflation Reduction Act by developing a low-carbon hydrogen hub at its Indiana refinery.
Cheap stocks for 2023
It’s been a tough year for tech stocks, but Amazon [AMZN], PayPal [PYPL] and Salesforce [CRM] present buying opportunities, according to CNBC. The S&P 500 was screened for stocks whose forward P/E ratio was lower than their average five-year forward P/E multiple and which also had buy ratings from at least 60% of analysts and at least a 30% upside to the average price target. Delta Airlines [DAL], Live Nation Entertainment [LYV] and Hasbro [HAS] also made its list.
Consumers turn to cannabis
More young people are giving up alcohol, but booze’s loss is cannabis’ gain, according to research by Cowen Equity Research analyst Vivien Azer. The cannabis market has brought in $26bn in sales in 2022, accounting for a tenth of the size of the alcohol market, up from 2% five years ago, wrote Azer in a note seen by MarketWatch. Green Thumb Industries [GTBIF] is Cowen’s top cannabis pick.