Hey everyone meet kevin here in this video we're going to talk about a problem with some data, that's coming up, which is not so great for the market, but we're going to also talk about some of my favorite stocks going into this evolving market that we're going To be expecting over the next 12 months now, the first thing we're going to talk about is black friday sales data. Then i'm going to talk about 10 to 15 stocks that i'm going to be paying attention to or not paying attention to for a very particular reason as we go into next year and uh encourage you to share your commentary down below as well. But let's take a look at this. First of all, uh early black friday data is out.

Final data will not be out until early 2022, but there are many many mixed estimates. Okay, so right now, you've got indications from mastercard that black friday in-store sales were up. Nearly 43 compared with the same time a year ago. This is not too much of a surprise, since we were still in the midst of a pandemic.

Last uh last black friday, in fact, we were in the middle of a winter wave. So that's not very very exciting. This was actually more concerning here. Adobe's current estimate for online spending was 8.9 billion for this black friday.

That is actually less than last year is at the lower end of expectations, and is the first time that we've seen a reversal in the trend of online spending. Now this could potentially be because people have been spreading out their purchases. More people have bought stuff before black friday that they weren't just waiting for black friday, and maybe we saw less sales than expected on black friday and we also saw thanksgiving day. Sales come in flat at a sign of five point or at a total number of a one point or five point: one billion dollars again reiterating that potentially people because of fears of supply chains or whatever else have moved some of their spending upwards now online sales.

According to mastercard, though, and this is where the the data is a little confusing - according to mastercard spending polls, black friday online sales were up 10.6, so you've got adobe projecting a miss the first decline. Ever since last year we were at 9 billion online and accordingly to adobe now we're at 8.9 and mastercard, saying we beat slightly. The point here is well we're not seeing consensus. It's a sign that we're not beating expectations across the board, which is something honestly.

I expected i expected to blow these uh these estimates out of the water. I thought we were gon na have one of the biggest black fridays that we've ever seen with the amount of money that people have right now saved up either from the wealth effect of stocks or real estate or leftover stimulus or whatever else. And so this is making me kind of wonder: hey wait a minute. Maybe we've got to pay attention a little bit to a shift in what might come next year, and this is an interesting one.

So, first of all, we know that right now we're expecting inflation inflation inflation month over month over month over month. At some point, though, next year we do expect businesses whether or not supply chain issues have completely resolved themselves. We do expect businesses to have much more inventory to have a lot of product, and people certainly expect to have less money next year than they did this year, especially if, if they were relying on any kind of pandemic relief, related payments - and so this is leading Me to wonder, maybe for 2022, it's time to really focus our investments, not financial advice, of course, but potentially our opportunity to focus our investments on margin place really really really important. The reason i say that is if consumers already right now are spending their money.

They're kind of spreading out their spending and we're seeing unclear mixed signals for black friday. Then that's a sign that spending in 2022 might not be as violent as we potentially expected, especially coming out of the end of of this year, where we were expecting crazy, crazy spending and if it's all getting buttered out more and people have done their spending. It's not all getting consolidated on black friday. Cyber monday anymore or people are taking a little bit of a breather on spending spending spending which we've been doing like crazy.

Then we're going to want to look at companies next year that have potentially more product to sell or more whatever, to sell, but potentially face the risk of having to lower some of those prices to be competitive. To try to prompt those sales to get people to spend the leftover money that they do have in 2022. And this is where i believe, it's really important to look for margin place or companies that have a room to actually discount prices, because when they have room to discount prices it means they can remain competitive companies with very, very low profit margins net profit margins might Be a little bit more beaten up next year now we are already seeing some companies get beaten up this year that have very very low margins like redfin or expi, but that could be because of the real estate cycle. So i'm going to kind of like put them aside.

I think there are a lot of interest rate fears for for these particular stocks. But here are some examples. So etsy right now sits at a 25 net margin and it's like it's expected to grow over 18 percent for the next five years. I think this is actually phenomenal.

Now etsy makes a lot of money really in not just commissions from store owners, but also advertising right advertising to grow their business. So this it's not exactly directly product sales, but still their net margin sitting at 25 means even if their cost of labor goes up. A little bit they still have the buffer of of a nice fat margin. So i think this is really good at etsy and face has growth expectations of over 25 through 2024, with net margins around 22.

That's because they get into the higher margin products like converters and batteries compared to getting into solar panels, which they don't do, which are extremely low margin, see. I've been more nervous for solar panel manufacturers as those margins get squeezed, but inverters and batteries have much more room in them. Here's another one: paypal paypal is expecting growth of 18 through 2025, with a 22.4 net margin, not gross margin net margin. It's really good visa is expecting 12 to 15 growth through 2025..

Listen to this one folks visa has a 53 net margin. They bring so much freaking money to the bottom line. Out of all the companies, we're about to talk about visa has the highest net margin. It is crazy and both visa and paypal have sold off.

Recently. Paypal is selling for 26 times 2022 expected earnings, visas sitting at 28 times 2022 earnings. So, honestly, both of these companies for just a one year out p e, not incredibly expensive, they've, recently sold off they've, got incredible growth visa expecting to grow a little slower than paypal, but that margin at visa 53. My goodness now some folks think that maybe companies, the payment, processors like paypal and visa might be selling off because blockchain might come in and start robbing them of some of their business.

But i i expect paypal and visa will actually incorporate and adopt blockchain. So i'm not too worried about their capabilities of innovating. This space uh money losing companies also expected to be out of favor in going into 2022, as labor costs might go up. Then research and development costs go up.

Product costs go up. Service costs go up; whatever data center costs go up, then then you become basically a money losing company that just loses more money. These would be companies right now, and this is not to bag on them. It just is what it is.

Companies like pound here, lemonade insurance, a firm they're all expected to lose money and probably lose more money. Now. One of the things that i like about pound tier is that long run phenomenal company. It's going to be about five years to really grow them, though lemonade they're, they're betting on millennials.

It's probably going to take 10 years for that bet to start paying off until millennials, actually start buying homes, more homes and a firm. Well, they might be a money-losing company if people have less cash in 2022, they're more likely to use a firm, which i know i don't know how we feel about that from maybe like an ethical point of view, because it's like kind of like man. So what you're saying is sell to people that have no money right, but i mean okay, that's that's sort of the business side and then there's the the you know, but anyway uh growth, uh growth, expected of over 40 through 2024 for a firm which is really Good and kind of shows the projections that uh the street does expect uh some big growth there for a firm. Ironically folks, zoom we get the zoom gets pooped on all the time, but they're expecting 18 growth through 2025 net margins of almost 30 percent.

There's they're. Only well they're selling for 27.8 times 2025 earnings, so you're really kind of projecting out to 2025. On that one, not bad for for a growth company 18 growth, though, could be a little better for that uh. You know a little higher on the peg ratio here then we've got google uh, with growth exceeding 14 to 16 for the next five years, expecting net margin, though 33 to 36 percent, really really really good.

Now tesla has low net margins but impressive gross margins, and that's because they're really early on the s curve and so just compare gross margins of, for example, tesla to ford tesla sits at about 30. Without regulatory credits for gross margins, ford sits at just 15. So a lot more efficiency over at tesla. Of course, we've got some work to do to get the bottom line.

Moving up and that'll come with scale squares, expecting average growth of around 25 margins on the low end out of the payment processors really on the low end for square just five to six percent net. Now that could be because square uh inc includes a lot of bitcoin uh purchases and sales in in their total revenue, and so it skews the numbers a little bit because they actually lose money processing a lot of their crypto transactions. That's probably why this this number looks so low, so probably can't do a direct like for like comparison between square and visa and paypal. For that reason does make the analysis a little bit more complicated, but it is something that you know if you got hedges.

Just looking at that bottom line number, it is something that's a little bit of like a little eyebrow eraser. Unsurprisingly, nvidia is expected to grow over 20 through 2026, and this blew my mind. Okay, because i know they do software data, centers chips and everything, but folks this blew my mind. Nvidia's and net margins set at 41.2 percent.

That means they make a hundred dollars on the top line. They bring 41.2 percent to shareholders 41.2 dollars to shareholders. That's nuts! Compare that to amd growing at 15 to 25, relatively similar growth rate, but net margins about half of what nvidia's are closer to 21. Now, don't count the advertisers out like trade desk.

I do think advertising to consumers is going to be a big deal in 2022. As more businesses try to compete for market share of whatever leftover money, people have or they're left over a firm buying power, but trade desk is expected to grow 25 to 30 percent over the next four years. Net margins around 30 to 33 percent. Don't count trade desk out, i think that's, that's, potentially a good one uh for comparison, though, amazon sits at 16 growth through 2025 only margins of around five to eight percent, though on the lower margin side.

Unsurprisingly, as well, restaurants like the cheesecake factory net margins around just four and a half percent, not a surprise, so i do think certain retailers uh restaurants, probably going to have a little bit more pain, although they could just trade solely off the covet news. Quite frankly, yeah but uh yeah anyway. So for me, the highlighter in the stock sector is really probably for 2022, going to be on advertising companies like google and trade desk products with high margin, because those advertisers are also high margin. But that's a service products with high margin and face nvidia tesla they're going to have pricing power and when we start having a sort of an overwhelming backlog, potentially of inventory they'll be able to lower prices, still get sales and just shave a little bit off of Their margin, but still have very strong and growing businesses and payment processing companies, honestly like paypal and visa, even though they've sold off recently, i don't know if it's justified so pay attention to some of these.

You know, obviously not financial advice, but these are some of my thoughts. These are some of the companies that i'm looking at and researching in depth. We'll talk more obviously in the course member live streams. Folks, thank you so much for watching this video, i hope you're having a wonderful weekend and we'll see what the market does tomorrow, thanks again goodbye.