In today’s top stories, JD.com mulls an expansion into food delivery and easyJet warns of heightened operating costs. Meanwhile, metals prices could remain elevated amid a general reluctance among mining stocks to invest in new projects. Wells Fargo also names stocks to short, while Morgan Stanley compiles a list of recession-proof stocks to watch.
JD’s food delivery move
With consumers cutting back on discretionary spending, revenue growth has slowed at JD.com [JD]. To diversify its income, the ecommerce giant has “considered and explored” following big Chinese tech rivals Alibaba [BABA] and Meituan [3690.HK] into the food delivery game. When it might happen “will depend on our capacity and when we can build up a talent team,” JD Retail CEO Xin Lijun told Bloomberg TV on Friday.
EasyJet expects clipped wings
Pent-up demand to get away this summer should boost travel bookings even as global economies tighten. UK budget carrier easyJet [EZJ.L] saw demand in April and May rise sevenfold from the same period in 2021. Despite this tailwind, the company warned on Monday that operating costs will be higher in the second half of the year due to increased crew costs and airport charges. The airline industry is forecasting a return to profitability next year.
Mining giants curb investment
Mining giants such as Rio Tinto [RIO.L] and BHP [BHP.L] are reluctant to invest in new projects and this could prop up metal prices due to a shortage of raw materials, the Wall Street Journal reported over the weekend. Data from Bank of America seen by the publication showed that the top 10 mining companies are expected to spend about $40bn this year and next, in comparison with a peak of almost $80bn in 2012.
Wells Fargo’s short picks
With corporate outlooks set to shift this upcoming earnings season, Wells Fargo senior strategist Chris Harvey has picked 52 stocks to avoid or short. These are companies he believes “will underperform the market until we hear the Fed reference a slowing economy” and then see “violent reversals”. The list includes Disney [DIS], Etsy [ETSY], Walmart [WMT], Moderna [MRNA] and Avery Dennison [AVY].
Strong balance sheet stocks
For investors looking to weather a recession, Morgan Stanley has screened the Russell 1000 index to identify stocks with strong balance sheets. A key part of its criteria was that a company must have a cash must make up more than 3% of the enterprise value. United Therapeutics [UTHR] came out on top with 24.9%, followed memory chipmaker Micron [MU] with 12.2% and shoe brand Skechers [SKX] with 8.5%.
London wants Arm listing
The UK government is hoping to woo Softbank [9984.T] into listing Arm in London, whereas the Japanese conglomerate is set on a Nasdaq IPO. Hargreaves Lansdown’s Susannah Streeter said the government is keen to make the capital a more attractive place for high-growth tech companies to float but that it’ll have to “speed up reforms” if Softbank does end up shunning it for New York.
Atlantic Lithium’s hot run
With lithium in hot demand, it’s no surprise the Atlantic Lithium [ALL.L] share price is up more than 30% since the start of the year through 17 June. But, as with any junior miner, investors need to be wary. The company is at the exploration and development stage, which means it’s pre-revenue. A partnership with lithium hydroxide producer Piedmont Lithium [PLL.ASX] should boost future production at the flagship Ewoyaa project in Ghana.