Morgan Stanley CEO says the bank’s push for more stable revenue streams has worked. It’s a key reason we own the stock

Morgan Stanley CEO says the bank’s push for more stable revenue streams has worked. It’s a key reason we own the stock

Post By Business Banks, Breaking News: Markets, business news, Goldman Sachs Group Inc, Investment strategy, James Gorman, Jim Cramer, JPMorgan Chase & Co, Markets, Morgan Stanley

Morgan Stanley ‘s (MS) multiyear transformation plan has been a success, CEO James Gorman said with pride Thursday — and, as shareholders, we see no reason to disagree. “We’ve steadily de-risked parts of the business that got us in trouble during the [Great Financial Crisis], and we obviously made a major push in building up wealth and asset management, and it worked,” Gorman said in a CNBC interview from the World Economic Forum in Davos, Switzerland. “We’re delighted with where we got to.” The Club is delighted, too, even if the market hasn’t always shared our conviction in the shift Gorman has engineered since taking over the Wall Street bank in 2010. Under Gorman’s leadership, Morgan Stanley has pivoted toward the more stable revenues associated with wealth and asset management, which decreases its reliance on the often volatile investment banking and trading businesses. This strategy attracted us to the stock nearly two years ago, believing that it would boost Morgan Stanley’s valuation over time — because, in general, investors put a premium on steady sales streams. MS 6M mountain Morgan Stanley’s stock performance over the past six months. Morgan Stanley’s strong quarterly results earlier this week validated our ownership yet again. Those fourth-quarter numbers also came on the same morning its longtime Wall Street rival, Goldman Sachs (GS), reported a sizable earnings miss due, in part, to its expansion into consumer banking . While declining to comment Thursday on his competitor, Gorman happily outlined what he views as the benefits of Morgan Stanley’s transformation. “We needed to build a business where, if the world got tough again — which we just saw last year an example of it — we would be just fine. And the way to do that is to build businesses that are stable; it doesn’t matter what the market conditions are,” Gorman said. “Listen, every person who is buying a stock, there’s somebody else selling it. Everybody who is buying a bond is taking money out of cash. … There’s constant movement of money. Our job is to be in the middle.” Acquisitions were a big part of how Morgan Stanley maneuvered its way into the middle of that money flow. The bank took full control of wealth manager Smith Barney a decade ago. More recently, it purchased brokerage E-Trade and investment management firm Eaton Vance . Valued at roughly $20 billion in total, those acquisitions closed in October 2020 and March 2021, respectively. The deals were “aggressive,” Gorman acknowledged. “We were told consistently when we bought Smith Barney then E-Trade, then Eaton Vance, we overpaid on all of them. My response was, ‘You’re right.’ But it doesn’t matter,” Gorman told CNBC. “We now own the business. It doesn’t matter plus or minus a billion dollars. What matters is over a 10-year period what you can do with that business.” We now own the business. It doesn’t matter plus or minus a billion dollars. What matters is over a 10-year period what you can do with that business. Morgan Stanley CEO James Gorman Economic outlook Gorman was also asked about his thoughts on the global economy, inflation and the Federal Reserve. His outlook was relatively optimistic at a time when consensus expectations are for a U.S. recession, albeit a mild one. Gorman said he thinks 2023 will be an improvement compared with 2022, which was filled with slumping stock markets and elevated price pressures that prompted a very aggressive interest rate-hiking campaign from the Federal Reserve. “I think it’ll be better. I really do,” Gorman said. While it’s unclear what the Fed will do with rates in the coming months, Gorman said that one favorable development, at least, is that U.S. inflation has already peaked. Recent government data has supported Gorman’s contention, with price pressures cooling for both consumers and wholesale producers . Another positive is what’s happening economically in China, Gorman said. While the CEO said Beijing’s decision to relax strict Covid controls is important, he put more emphasis on an adoption of growth-oriented economic policies and a thawing of U.S.-China tensions. He pointed to the meeting this week between U.S. Treasury Secretary Janet Yellen and Chinese Vice Premier Liu He as evidence. Elsewhere across banking, JPMorgan (JPM) CEO Jamie Dimon told CNBC earlier Thursday he believes the Fed may need to rise interest rates above its current projections because, he thinks, “there’s a lot of underlying inflation, which won’t go away so quick.” The Club’s take Despite widespread recession fears since last year, the Club has maintained its belief in Morgan Stanley. The transformation plan that Gorman touted throughout Thursday’s interview showed why we not only stayed invested but bulked up our position at lower levels as the stock sold off early last year. As of right now, we’ve got a 2 rating on Morgan Stanley, meaning we’d wait for a pullback before buying more shares. The stock has gained more than 10% already in 2023 — helped in large part by a nearly 6% advance Tuesday as investors cheered the bank’s earnings report. We can certainly afford to be patient while we wait for investment banking revenues to bounce back from a multi-quarter slump. Morgan Stanley shares carry a roughly 3.3% dividend yield, and it bought back $1.7 billion worth of stock in the fourth quarter. The firm appears to be positioned to continue repurchasing stock because in June its board authorized a multiyear, $20 billion buyback program . (Jim Cramer’s Charitable Trust is long MS . See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

James Gorman, Chairman & CEO of Morgan Stanley, speaking on Squawk Box at the WEF in Davos, Switzerland on Jan. 19th, 2023..

Adam Galica | CNBC

Morgan Stanley‘s (MS) multiyear transformation plan has been a success, CEO James Gorman said with pride Thursday — and, as shareholders, we see no reason to disagree.

Source link

#Morgan #Stanley #CEO #banks #push #stable #revenue #streams #worked #key #reason #stock

Top Wall Street analysts like these stocks amid easing inflation

Post By Business Alphabet Class A, business news, Hims & Hers Health Inc, Intuitive Surgical Inc, Investment strategy, Markets, OrthoPediatrics Corp, The Chefs' Warehouse Inc, Weekend brief

The logo of Alphabet Inc’s Google outside the company’s office in Beijing, China, August 8, 2018.

Thomas Peter | Reuters

Last week, December’s consumer price index reading showed that prices are cooling.

The index dropped 0.1% on a monthly basis, but the metric gained 6.5% from the prior year. Investors seemed to appreciate the news, as the three major indexes closed higher on Friday.

Nevertheless, investing in this uncertain environment can be tricky.

To help the process, here are five stocks chosen by Wall Street’s top pros, according to TipRanks, a platform that ranks analysts based on their track records.

Alphabet

Google-parent Alphabet (GOOGL) is a frontrunner in every major trend in technology, including the growth of mobile engagement, online activities, digital advertising and cloud computing. Additionally, its focus on artificial intelligence is driving the development of better and more functional products.

Tigress Financial Partners analyst Ivan Feinseth recently reiterated a buy rating on the stock. His bullishness is attributed to robust trends in cloud and search, which “continues to highlight the resiliency of its core business lines.” (See Alphabet Blogger Opinions & Sentiment on TipRanks)

AI-focused investments and efforts to achieve cost and operating efficiencies should continue to drive Alphabet’s growth. Feinseth said that any weakness in the near term is a great buying opportunity.

The analyst is also upbeat about Alphabet’s financial health. “GOOGL’s strong balance sheet and cash flow enable the ongoing funding of key growth initiatives, strategic acquisitions, and the further enhancement of shareholder returns through ongoing share repurchases,” said Feinseth, who is ranked No. 229 among more than 8,000 analysts on TipRanks.

The analyst’s ratings have been profitable 60% of the time and each rating has generated average returns of 11.1%.

Hims & Hers

Another stock that Feinseth has recently reiterated as a buy is the multi-specialty telehealth company, Hims & Hers (HIMS). The analyst also raised his 12-month price target on the stock from $11 to $12.

Feinseth is confident in HIMS’s strong brand equity and customer loyalty, which he expects will continue to drive business performance. Moreover, new product innovations are supporting the company’s highly scalable business model, and they are expected to boost this year’s profits. (See Hims & Hers Health Hedge Fund Trading Activity on TipRanks)

The massive health-care market is always evolving and requires strong players with flexible business models to serve the growing demand. The analyst thinks that HIMS is well positioned in this area to be one of the top beneficiaries.

“HIMS’s scalable business model, expanding services, and rapidly growing customer base will drive significant revenue growth. Its asset-light business model of connecting patients to service providers and providing access to high-quality branded healthcare products will eventually drive a significant Return on Capital (ROC), grow Economic Profit, and increase shareholder value creation,” said Feinseth.

OrthoPediatrics Corp.

As the name suggests, OrthoPediatrics (KIDS) deals in the design, manufacture, and commercialization of products that are used in the treatment of orthopedic conditions in children. The company operates in more than 35 countries worldwide.

The pediatric orthopedic market is a niche market that is relatively underserved, which has worked to the company’s advantage. OrthoPediatrics has dominance in this market, giving it a competitive edge in the medical equipment industry. BTIG analyst Ryan Zimmerman notes that the company stands to benefit from this space as larger players have mostly overlooked the opportunity. (See OrthoPediatrics Financial Statements on TipRanks)

Last week, Zimmerman reiterated his buy rating and $62 price target on KIDS stock. In addition to the market opportunity, the analyst said that “with a leading brand among pediatric orthopedic surgeons and a concentrated customer base that performs the majority of cases at a limited number of hospitals, the model is scalable and defendable.”

Zimmerman has the 660^th ranking among more than 8,000 analysts tracked on TipRanks. Moreover, 47% of his ratings have been successful, generating 9% average returns per rating.

Intuitive Surgical

Medical technology company Intuitive Surgical (ISRG) is a pioneer in robotic-assisted, minimally invasive surgery. The company is also one of Zimmerman’s favorite stocks for the year.

Recently, Intuitive Surgical announced preliminary 4Q22 results and growth guidance for procedures in FY23, which were as Zimmerman expected. Following the results, the analyst reiterated his bullish stance on the company with a buy rating and $316 price target. (See Intuitive Surgical Stock Investors on TipRanks)

“There continue to be headwinds entering FY23, but we think ISRG is poised to continue to see improving market dynamics coupled with the potential for the launch of a next-generation system. We would be buyers on today’s weakness,” said Zimmerman, justifying his bullishness.

The analyst is bullish on the company’s long-term growth potential in the area of robotic surgery, and sees ISRG as a “clear leader in the space.” Zimmerman said that the pandemic has increased the importance of computer-aided surgery, thanks to accurate clinical outcomes. This is expected to drive the adoption of Intuitive Surgical’s products over time.

The Chefs’ Warehouse

Another BTIG analyst, Peter Saleh, who has the 491^st ranking in the TipRanks database, has recently reiterated his bullish stance on food distributor Chef’s Warehouse (CHEF). The company is a premier distributor of food to high-end restaurants and other expensive establishments.

Saleh sees several upsides to share growth thanks to its “compelling business model as a niche foodservice distributor, more upscale and differentiated customer base, and unfolding sales recovery in key markets.” (See The Chefs’ Warehouse Stock Chart on TipRanks)

The analyst is upbeat about the reopening of markets in key regions and gradual recovery in serviceable areas like hospitality. These upsides are expected to drive sales this year. Saleh said that these upsides, combined with CHEF’s long-term opportunity to enhance market share, underpin his bullish stance on the company.

The analyst gave a “Top Pick” designation to CHEF stock, with a buy rating and $48 price target. “While the capital structure has changed and the technical overhang from the recent convertible issuance seems to remain, we view shares as simply too cheap given fundamentals,” said Saleh.

The analyst has delivered profitable ratings 61% of the time, and each of his ratings has generated returns of 10.9% on average.

Source link

#Top #Wall #Street #analysts #stocks #easing #inflation

Why we still like Coterra Energy despite the recent fall in natural gas prices

Post By Oil and Gas Breaking News: Markets, business news, Coterra Energy Inc, Devon Energy Corp, Energy, Halliburton Co, Investment strategy, Jim Cramer, Markets, Natural Gas (Feb'23), Pioneer Natural Resources Co

Natural gas prices jumped Thursday following a multiweek swoon, providing a lift to shares of Club holding Coterra Energy (CTRA), which lately has relied on the commodity for more than half its operating revenues. U.S. natural gas prices rose nearly 4% Thursday to roughly $3.81 per million British thermal units (MMBtu). Coterra shares climbed nearly 3% to over $25 apiece. Thursday’s natural gas gains — on top of a 0.88% jump on Wednesday — reverse some of its recent losses. But only partially. As recently as Dec. 15, U.S. natural gas prices settled at nearly $7 per million British thermal units. So far in 2023, natural gas remains down around 12%. Unusually warm winter weather across the U.S. and Europe is a major culprit for the falling prices. Demand for natural gas fell in response, with less of it is needed to heat homes. Proof is in the data. The amount of working gas in storage actually rose 11 billion cubic feet in the week ended Jan. 6, the U.S. Energy Information Administration said Thursday. That’s the first weekly inventory build in January on record, according to FactSet. Of course, the price of natural gas matters to consumers and their energy bills. It also matters greatly to investors in Houston-based Coterra, the product of a 2021 merger between Cabot Oil & Gas and Cimarex Energy. Coterra has the most natural gas exposure of the three exploration and production (E & P) firms in the Club portfolio, with the commodity accounting for nearly 58% of its operating revenue through the first three quarters of 2022; fourth-quarter results aren’t out yet. Pioneer Natural Resources (PXD), by contrast, has generated 11% of its operating revenue from natural gas over the same span. That figure is roughly 14% for Devon Energy (DVN). Oil and natural gas liquids are the other major products all three E & P companies sell. In a very basic sense, the higher the price of natural gas, the more money Coterra can make from its operations — which ultimately influences the company’s free cash flow and, by extension, its dividend payment. But the company’s realized price in a quarter can be different than the average market prices over that same timeframe. This is because companies like Coterra will enter into agreements to sell natural gas or oil at a predetermined price at a future date. Sometimes, that agreed-upon price will be higher than the market price on that day. Other times, it will be lower. This is what determines the difference between a company’s realized price and the spot price of the commodity in question. Coterra investors still pay attention to the swings in natural gas prices. The company’s sales are not fully hedged, so what happens to market prices does impact the amount of revenue it generates. In an interview with Jim Cramer earlier this week, Coterra CEO Tom Jorden sought to downplay worries about natural gas price declines. “Prices are constructive on both oil and gas, and our returns are really extraordinary at current conditions,” he said Tuesday night. The Club and other shareholders care a great deal about those returns. Coterra employs a fixed-plus-variable dividend, so the payout changes quarterly based on the company’s free cash flow in the trailing three months. The company has committed to returning at least 50% of its free cash flow each quarter to shareholders. Including dividends and stock buybacks, Coterra returned 74% of free cash flow in the third quarter and 80% in the second quarter. At Wednesday’s closing price of $24.69 per share, Coterra’s dividend yield stood at roughly 11%, based on its most recent payout of 68 cents on Nov. 30 . “We can never predict the price going forward, but we can control being good at the business, being disciplined in our investments and managing a prudent, healthy balance sheet,” Jorden told Jim. No doubt, predicting the price of volatile commodities is a tough task. But agencies and research firms still do so. In its short-term outlook issued Tuesday, the U.S. EIA forecasted natural gas prices to average $4.90 per MMBtu this year, down nearly 10% from its prior projection of $5.43. Through the first nine months of 2022, Coterra’s realized natural gas price was $4.79 per MMBtu. This is notable because even though natural gas soared to over $9 per MMBtu at times in the spring and summer of last year, Coterra’s realized sale price wasn’t nearly as high as market prices. This helps explain why the Club hasn’t run for the hills as natural gas prices fell in recent weeks. Volatility is to be expected, and we know Coterra is able to maintain a very attractive dividend even if commodity prices are a bit lower than where they were in 2022. In a very uncertain market environment, being invested in companies that return significant capital to shareholders is a good place to be. Jim said Wednesday morning he believed Coterra was worth buying at current levels, due in part to reassurances Jorden provided on recent reserve write-downs at the company. Elsewhere in energy, the Club trimmed its position in oilfield services Halliburton (HAL) on Thursday. While we still like the stock overall, we wanted to be disciplined due to its recent strength and book some profits. (Jim Cramer’s Charitable Trust is long CTRA, DVN, PXD and HAL . See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Pipes at the landfall facilities of the ‘Nord Stream 1’ gas pipeline are pictured in Lubmin, Germany, March 8, 2022.

Hannibal Hanschke | Reuters

Source link

#Coterra #Energy #fall #natural #gas #prices

Top Wall Street analysts pick these stocks to celebrate the new year

Post By Business Amazon.com Inc, Apple Inc, Booking Holdings Inc, Breaking News: Markets, Bumble Inc, business news, DoubleVerify Holdings Inc, Investment strategy, Markets, Meta Platforms Inc, Microsoft Corp, Perion Network Ltd, Weekend brief

Apple CEO Tim Cook poses in front of a new MacBook Airs running M2 chips display during Apple’s annual Worldwide Developers Conference in San Jose, California, June 6, 2022.

Peter Dasilva | Reuters

With the brutal 2022 behind us, we look ahead to a year of relatively predictable challenges. This calls for careful investing with a longer-term view. To help the process, here are five stocks chosen by Wall Street’s top analysts, according to TipRanks, a platform that ranks analysts based on their track record.

DoubleVerify Holdings

As its name suggests, DoubleVerify (DV) helps to improve the safety and security of online advertising. A pioneer in this area, the company’s services are employed by customers in the financial services, retail, automotive, travel, telecom, and pharmaceutical sectors. (See DoubleVerify Holdings Stock Chart on TipRanks)

Truist analyst Youssef Squali sees multiple growth opportunities, especially in the social media field. Interestingly, DoubleVerify’s social media client roster includes names such as TikTok, Microsoft (MSFT)-owned LinkedIn, Reddit, Amazon’s (AMZN) Twitch, Meta’s (META) Facebook and Instagram, and YouTube. Looking at this, Squali expects “social media as a channel has unlocked incremental spend for DV to attack within walled gardens, which advertisers value vs. letting these platforms ‘grade their own homework.'”

Moreover, the analyst pointed out that DoubleVerify’s sophisticated software solutions help client companies safeguard their brand reputation while maximizing their return on ad spend. This is particularly important as the digital advertising ecosystem is growing and so is competition. A safe, fraud-free, and appropriately targeted ad environment also helps companies draw traffic.

Squali is “incrementally bullish” on DoubleVerify, with a Buy rating and $36 price target. The analyst stands 92^nd among more than 8,000 analysts tracked on TipRanks. Moreover, 57% of his ratings have been profitable, bringing 17.6% returns per rating on average.

Apple

Investors may be spooked by Apple’s (AAPL) weakening demand and production issues right now (as evident from the sharp decline in stock value). However, taking into account the value that the company has returned to shareholders in the past years, even through market downcycles, these headwinds seem to be mere hiccups in the company’s long-term journey.

Tigress Financial Partners analyst Ivan Feinseth agreed, adding that the “near-term production headwinds create a long-term buying opportunity, and its massive installed user base, increasing ecosystem, and growing Services revenue will continue to drive accelerating Business Performance trends, and greater shareholder value creation.”

Feinseth is particularly upbeat about the company’s foray into the metaverse with the launch of its mixed-reality headset this year.

Moreover, strong balance sheet and cash flow generating capabilities should enable Apple to continue to invest in growth-driving initiatives and enhance shareholder returns through share repurchases and dividend hikes. (See Apple Dividend Date & History on TipRanks)

The analyst reiterated a Buy rating on AAPL stock with a price target of $210. “AAPL is on our Research Focus List and in our Focus Opportunity Portfolio,” emphasized Feinseth, who holds the #269 position among more than 8,000 analysts on TipRanks.

The analyst’s ratings have been profitable 59% of the time and each rating has generated average returns of 10.5%.

Booking Holdings

Booking Holdings (BKNG) is an online platform for making travel and restaurant reservations, which, needless to say, has been benefiting lately from the easing of Covid-related travel restrictions. The stock joins Apple in Ivan Feinseth’s “Research Focus List” and “Focus Opportunity Portfolio.”

Continued travel demand has been transcending the current macroeconomic uncertainties, and that is a boon for Booking. Feinseth also points out that the reopening of China after a prolonged period of strict zero-Covid policy “creates a massive upside catalyst.” (See Booking Holdings Hedge Fund Trading Activity on TipRanks)

The company is also gaining increased penetration in the direct travel booking market thanks to its Genius loyalty program and its concept of travel integration. “BKNG’s ability to optimize its market reach and profitability through new technology, including machine learning and other forms of AI (Artificial Intelligence), enables it to expand its global reach, drive more competitive pricing, and increase profitability,” said the analyst.

Feinseth reiterated a Buy rating on Booking, with a price target of $3,210.

Bumble

The challenging economic environment has led to too many problems for the public to be thinking about love. This has left investors swiping left on online dating service provider Bumble (BMBL), leading to a sharp drop in share prices.

Nonetheless, Stifel Nicolaus analyst Mark Kelley maintains a solid relationship with Bumble. “We view Bumble as one of the most innovative companies in the global online dating space offering a compelling and differentiated value proposition for consumers, which we believe will lead to a long runway of paying user/ARPPU growth, and a multi-year operating leverage story,” noted Kelley.

In the last quarter, Bumble launched its message-before-match feature, “Compliments,” which is expected to boost user engagement and thus, support monetization efforts. (See Bumble Blogger Opinions & Sentiment on TipRanks)

Additionally, the analyst believes that Bumble’s mission to prioritize user safety, accountability, and control helps the company stand out in the crowd of competing platforms. Importantly, Kelley also believes that Bumble may be heading into its best days as users increasingly open up to real-life dating after the COVID-19 pandemic disrupted the dating ecosystem since 2020.

Despite reducing the near-term price target to $27 from $30, Kelley maintains a Buy rating on Bumble.

The analyst’s track record shows that his conviction is worthy of consideration. Kelley has a 103^rd ranking among more than 8,000 analysts. Moreover, 70% of his ratings have been successful, generating 31.5% average returns per rating.

Perion Network

Global technology player Perion Network (PERI) is another stock that Mark Kelley has vouched for recently. The analyst’s optimism was reflected in the reiteration of his buy rating and higher price target ($34 from $29). Its recent quarterly results showed positive trends, which led to the renewed conviction.

The analyst views Perion as a “unique ad tech offering,” boasting a portfolio of technology for helping advertisers and publishers scale their business. Perion’s growth journey has been a combination of organic expansion and expansion through acquisitions. Together, they have built a suite of assets that serve the “three pillars of digital advertising” — search, social media, and display/CTV. (See Perion Network Financial Statements on TipRanks)

Kelley expects the global digital advertising market to reach $650 billion by the end of this year. Within that, the analyst estimates the exact opportunity of Perion in terms of TAM (total addressable market) to be around $190 billion, keeping aside the $460 billion TAM estimate for Google search.

Source link

#Top #Wall #Street #analysts #pick #stocks #celebrate #year

Land & Buildings spots a chance to build value in a real estate play with Six Flags

Post By Business business news, Investment strategy, Six Flags Entertainment Corp

Customers are socially distanced on rides like the Wonder Woman: Lasso of Truth at Six Flags Great Adventure in Jackson, New Jersey.

Kenneth Kiesnoski/CNBC

Company: Six Flags Entertainment (SIX)

Business: Six Flags is the largest regional theme park operator in the world and the largest operator of water parks in North America. They generate revenue primarily from selling admission to their parks and from the sale of food, beverages, merchandise and other products and services within the parks.

Stock Market Value: $1.9B ($23.25 per share)

Activist: Land & Buildings Investment Management

Percentage Ownership: about 3.0%

Average Cost: n/a

Activist Commentary: Land & Buildings is a real estate focused long-short hedge fund that will try to engage with management on a friendly basis when it sees deep value. It invests in deeply discounted real estate in the public markets and select corporate engagements. The firm’s positions are often under the 5% 13D reporting threshold. It’s prepared to nominate directors and has received board seats at American Campus Communities, Brookdale Senior Living, Felcor Lodging Trust, Life Storage, Macerich, Mack-Cali (now Veris Residential) and Taubman Centers.

What’s Happening?

On Dec. 21, Land & Buildings issued a presentation detailing a potential operational and strategic turnaround of Six Flags Entertainment, which includes monetizing the company’s real estate assets and considering a sale-leaseback.

Behind the Scenes

Land & Buildings (“L&B”) is a real estate focused investor, and this is primarily a real estate play. The firm is suggesting that Six Flags separate its real estate holdings, which L&B believes are worth more than the current enterprise value of the company. L&B has extensive knowledge and experience in this area. In 2015, the hedge fund commenced an activist campaign at MGM Resorts International, which ultimately led to the formation of an MGM real estate investment trust acquired by VICI Properties and significant margin enhancement at the operating company. Recent private transaction comps for gaming real estate, as well as public gaming REIT valuations, point to a 6% to 7% cap rate and mid-teens multiple for assets like theme parks. L&B believes there would be many interested acquirers.

In its analysis, L&B assumes a 7.25% cap rate and a $2.8 billion value for the real estate. A sale-leaseback of the real estate could decrease earnings before interest, taxes, depreciation and amortization from $520 million to $315 million and assuming a 7x EBITDA multiple (SIX’s current multiple is 8x), the operating company would have a $2.2 billion enterprise value. With $2.8 billion in cash and $2.4 billion in debt, that would equate to a $2.6 billion asset value or market cap. With 83 million shares outstanding, that would equal a $31.32 share price, or a 34% upside to Six Flags’ current stock price (47% upside from the company’s unaffected stock price prior to the L&B plan being made public). L&B performed the same analysis on 2024/2025 EBITDA goals, which led to a $6.8 billion value and a 150% upside. Moreover, the hedge fund’s analysis assumes the $2.8 billion stays on the company’s balance sheet. If it is used to buy back shares around where they are trading now,, the return would even be greater.

L&B believes that a sale of Six Flags’ real estate would allow the company to increase share buybacks, reinstate its dividend (which was eliminated at the beginning of the Covid pandemic) and pay down debt. Moreover, this is a shareholder base with many like-minded investors (HG Vora, H Partners, Long Pond Capital) and a relatively new CEO (November 2021) who may be amenable to a plan like this.

Getting a plan like this done would give the CEO a lot of time and capital (both real and figurative) to do what really needs to be done – fix the operational issues. When Selim Bassoul was appointed as Six Flags’ CEO in November 2021, he embarked on a strategy of trying to enhance the guest experience and create a more profitable, higher margin business by migrating to a more affluent, family-oriented customer base. This new strategy, which included getting rid of several customer perks, led to a significant drop in attendance, alienation of many current customers and subsequent price underperformance to peers. However, the jury is still out on whether it is working. If it results in a higher attendance at higher prices in 2023, then it worked and nothing will need to be done operationally. However, if attendance continues to lag through 2023, Bassoul may have to start giving back many of the perks he had taken away, such as modified dining passes. He may even have to consider lowering prices to their prior levels. Without stabilizing operations, the real estate strategy can only create so much shareholder value. However, optimizing attendance and stabilizing operations will magnify any value created by the real estate strategy.

We would expect that Land & Buildings would want to have some sort of board representation to help with this strategy. Frankly, Six Flags should want the firm’s help if they choose to monetize the real estate. So, it would not be surprising to see an amicable settlement for a board seat or two. However, the director nomination window is between Jan. 11, 2023 and Feb. 10, 2023. If there is no settlement by then, L&B is almost certain to nominate directors, even if it is just to preserve the firm’s rights while it continues to talk with management. Should this go to a proxy fight, the like-minded investors mentioned above — H Partners (13.5%), HG Vora (4.2%) and Long Pond Capital (5.7%) — could be potential supporters of L&B.

Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and he is the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments. Squire is also the creator of the AESG™ investment category, an activist investment style focused on improving ESG practices of portfolio companies.

Source link

#Land #Buildings #spots #chance #build #real #estate #play #Flags

Oil expected to stay volatile in 2023, but the price could depend on China reopening

Post By Oil and Gas business news, China, Citigroup Inc, Economic events, Energy, Investment strategy, Jerome Powell, Oil and Gas, Russia, Stock markets, Ukraine, United States, Vladimir Putin, WTI Crude (Feb'23)

Source link

#Oil #expected #stay #volatile #price #depend #China #reopening

Rooftop solar: How homeowners should do the math on the climate change investment

Post By Business Alternative and sustainable energy, business, business news, Climate, Energy, Energy efficiency and conservation, Investment strategy, real estate, Renewable power generation, solar power, Technology

Solar panels create electricity on the roof of a house in Rockport, Massachusetts, U.S., June 6, 2022. Picture taken with a drone.

Brian Snyder | Reuters

When Josh Hurwitz decided to put solar power on his Connecticut house, he had three big reasons: To cut his carbon footprint, to eventually store electricity in a solar-powered battery in case of blackouts, and – crucially – to save money.

Now he’s on track to pay for his system in six years, then save tens of thousands of dollars in the 15 years after that, while giving himself a hedge against utility-rate inflation. It’s working so well, he’s preparing to add a Tesla-made battery to let him store the power he makes. Central to the deal: Tax credits and other benefits from both the state of Connecticut and from Washington, D.C., he says.

“You have to make the money work,” Hurwitz said. “You can have the best of intentions, but if the numbers don’t work it doesn’t make sense to do it.”

Hurwitz’s experience points up one benefit of the Inflation Reduction Act that passed in August: Its extension and expansion of tax credits to promote the spread of home-based solar power systems. Adoption is expected to grow 26 percent faster because of the law, which extends tax credits that had been set to expire by 2024 through 2035, says a report by Wood Mackenzie and the Solar Energy Industries Association.

Those credits will cover 30 percent of the cost of the system – and, for the first time, there’s a 30 percent credit for batteries that can store newly-produced power for use when it’s needed.

“The main thing the law does is give the industry, and consumers, assurance that the tax credits will be there today, tomorrow and for the next 10 years,” said Warren Leon, executive director of the Clean Energy States Alliance, a bipartisan coalition of state government energy agencies. “Rooftop solar is still expensive enough to require some subsidies.”

California’s solar energy net metering decision

Certainty has been the thing that’s hard to come by in solar, where frequent policy changes make the market a “solar coaster,” as one industry executive put it. Just as the expanded federal tax credits were taking effect, California on Dec. 15 slashed another big incentive allowing homeowners to sell excess solar energy generated by their systems back to the grid at attractive rates, scrambling the math anew in the largest U.S. state and its biggest solar-power market — though the changes do not take effect until next April.

Put the state and federal changes together, and Wood Mackenzie thinks the California solar market will actually shrink sharply in 2024, down by as much as 39%. Before the Inflation Reduction Act incentives were factored in, the consulting firm forecast a 50% drop with the California policy shift. Residential solar is coming off a historic quarter, with 1.57 GW installed, a 43% increase year over year, and California a little over one-third of the total, according to Wood Mackenzie.

For potential switchers, tax credits can quickly recover part of the up-front cost of going green. Hurwitz took the federal tax credit for his system when he installed it in 2020, and is preparing to add a battery now that it, too, comes with tax credits. Some contractors offer deals where they absorb the upfront cost – and claim the credit – in exchange for agreements to lease back the system.

Combined with savings on power homeowners don’t buy from utilities, the tax credits can make rooftop solar systems pay for themselves within as little as five years – and save $25,000 or more, after recovering the initial investment, within two decades.

“Will this growth have legs? Absolutely,” said Veronica Zhang, portfolio manager of the Van Eck Environmental Sustainability Fund, a green fund not exclusively focused on solar. “With utility rates going up, it’s a good time to move if you were thinking about it in the first place.”

How to calculate installation costs and benefits

Here is how the numbers work.

Nationally, the cost for solar in 2022 ranges from $16,870 to $23,170, after the tax credit, for a 10-kilowatt system, the size for which quotes are sought most often on EnergySage, a Boston-based quote-comparison site for solar panels and batteries. Most households can use a system of six or seven kilowatts, EnergySage spokesman Nick Liberati said. A 10-12 kilowatt battery costs about $13,000 more, he added.

There’s a significant variation in those numbers by region, and by the size and other factors specific to the house, EnergySage CEO Vikram Aggarwal said. In New Jersey, for example, a 7-kilowatt system costs on average $20,510 before the credit and $15,177 after it. In Houston, it’s about $1,000 less. In Chicago, that system is close to $2,000 more than in New Jersey. A more robust 10-kilowatt system costs more than $31,000 before the credit around Chicago, but $26,500 in Tampa, Fla. All of these average prices are as quoted by EnergySage.

The effectiveness of the system may also vary because of things specific to the house, including the placement of trees on or near the property, as we found out when we asked EnergySage’s online bid-solicitation system to look at specific homes.

The bids for one suburban Chicago house ranged as low as $19,096 after the federal credit and as high as $30,676.

Offsetting those costs are electricity savings and state tax breaks that recover the cost of the system in as little as 4.5 years, according to the bids. Contractors claimed that power savings and state incentives could save as much as another $27,625 over 20 years, on top of the capital cost.

Alternatively, consumers can finance the system but still own it themselves – we were quoted interest rates of 2.99 to 8.99 percent. That eliminates consumers’ up-front cost, but cuts into the savings as some of the avoided utility costs go to pay off interest, Aggarwal said.

The key to maximizing savings is to know the specific regulations in your state – and get help understanding often-complex contracts, said Hurwitz, who is a physician.

Energy storage and excess power

Some states have more generous subsidies than others, and more pro-consumer rules mandating that utilities pay higher prices for excess power that home solar systems create during peak production hours, or even extract from homeowners’ batteries.

California had among the most generous rules of all until this week. But state utility regulators agreed to let utilities pay much less for excess power they are required to buy, after power companies argued that the rates were too high, and raised power prices for other customers.

Wood Mackenzie said the details of California’s decision made it look less onerous than the firm had expected. EnergySage says the payback period for California systems without a battery will be 10 years instead of six after the new rules take effect in April. Savings in the years afterward will be about 60 percent less, the company estimates. Systems with a battery, which pay for themselves after 10 years, will be little affected because their owners keep most of their excess power instead of selling it to the utility, according to EnergySage.

“The new [California rules] certainly elongate current payback periods for solar and solar-plus-storage, but not by as much as the previous proposal,” Wood Mackenzie said in the Dec. 16 report. “By 2024, the real impacts of the IRA will begin to come to fruition.”

The more expensive power is from a local utility, the more sense home solar will make. And some contractors will back claims about power savings with agreements to pay part of your utility bill if the systems don’t produce as much energy as promised.

“You have to do your homework before you sign,” Hurwitz said. “But energy costs always go up. That’s another hidden incentive.”

Correction: An earlier version of this story misstated the name of the Solar Energy Industries Association.

Source link

#Rooftop #solar #homeowners #math #climate #change #investment

Bob Pisani: Think you’re a rational investor? These biases make it harder to reach your financial goals

Post By Business business news, Investment strategy, Markets, Personal Finance

Bob Pisani’s book “Shut Up & Keep Talking”

CNBC

(Below is an excerpt from Bob Pisani’s new book “Shut Up and Keep Talking: Lessons on Life and Investing from the Floor of the New York Stock Exchange.”)

Most people like to think that they’re rational. But — at least when it comes to investing — that’s not always the case.

Way back in 1979, Daniel Kahneman and Amos Tversky noted that human beings did not act the way classical economics said they would act.

They were not necessarily rational actors. They did not buy low and sell high, for example. They often did the opposite.

Why? Kahneman and Tversky proposed a theory, which they called prospect theory. Their key insight was that individuals don’t experience gains and losses in the same way. Under classical theories, if someone gained $1,000, the pleasure they feel should be equal to the pain they would feel if they lost $1,000.

That’s not what Kahneman and Tversky found. They found that the pain of a loss is greater than the pleasure from a gain. This effect, which came to be known as loss aversion, became one of the cornerstones of behavioral economics.

In later years, Kahneman and Tversky even attempted to quantify how much stronger the loss was. They found that the fear of an emotional loss was more than twice as powerful as an emotional gain.

That went a long way toward explaining why so many people hold on to losing positions for so long. The opposite is also true: people will tend to sell their winners to lock in gains.

You have more biases than you think

Over the years, Kahneman and many others went on to describe numerous biases and mental shortcuts (heuristics) that humans have developed for making decisions.

Many of those biases are now a common part of our understanding of how humans interact with the stock market.

These biases can be broken down into two groups: cognitive errors due to faulty reasoning, and emotional biases that come from feelings. Loss aversion is an example of an emotional bias.

They can be very tough to overcome because they are based on feelings that are deeply ingrained in the brain. See if you recognize yourself in any of these emotional biases.

Investors will:

Come to believe they are infallible when they hit a winning streak (overconfidence).

Blindly follow what others are doing (herd behavior).

Value something they already own above its true market value (endowment effect).

Fail to plan for long-term goals, like retirement, because it’s easier to plan for short-term goals, like taking a vacation (self-control bias).

Avoid making decisions out of fear the decision will be wrong (regret aversion bias).

There’s also cognitive errors

Cognitive errors are different. They don’t come from emotional reactions, but from faulty reasoning. They happen because most people have a poor understanding of probabilities and how to put a numerical value on those probabilities.

People will:

Jump to conclusions. Daniel Kahneman, in his seminal 2011 book “Thinking, Fast and Slow,” said that: “Jumping to conclusions on the basis of limited evidence is so important to an understanding of intuitive thinking, and comes up so often in this book, that I will use a cumbersome abbreviation for it: WYSIATI, which stands for what you see is all there is.”

Select information that supports their own point of view, while ignoring information that contradicts it (confirmation bias).

Give more weight to recent information than older information (recency bias).

Convince themselves that they understood or predicted an event after it happened, which leads to overconfidence in the ability to predict future events (hindsight bias).

React to financial news differently, depending on how it is presented. They may react to the same investment opportunities in different ways or react to a financial headline differently depending on whether it is perceived to be positive or negative (framing bias).

Believe that because a stock has done well in the past it will continue to do well in the future (the gambler’s fallacy).

Overreact to certain pieces of news and fail to place the information in a proper context, making that piece of news seem more valid or important than it really is (availability bias).

Rely too much on a single (often the first) piece of information as a basis for an investment (such as a stock price), which becomes the reference point for future decisions without considering other pieces of information (anchoring bias).

What’s the takeaway?

People have so many biases that it’s tough to make rational decisions.

Here’s a few key takeaways:

It’s possible to train people to think more rationally about investing, but don’t expect too much. With all this brilliant insight into how people really think (or don’t), you’d think that as investors we wouldn’t be repeating the same dumb mistakes we have been making for thousands of years.

Alas, investing wisdom and insight remains in short supply because 1) financial illiteracy is widespread. Most people (and sadly most investors) have no idea who Daniel Kahneman is, and 2) even people who know better continue to make dumb mistakes because overriding the brain’s ‘react first, think later’ system that Daniel Kahneman chronicled in “Thinking, Fast and Slow” is really, really hard.

The indexing crowd got a boost from behavioral economics. Billions of dollars have flowed into passive (index-based) investing strategies in the past 20 years (and particularly since the Great Financial Crisis), and with good reason: unless you want to endlessly analyze yourself and everyone around you, passive investing made sense because it reduced or eliminated many of those biases described above. Some of these passive investments can have their own biases, of course.

Stocks can be mispriced. Psychology plays a large part in setting at least short-term stock prices. It is now a given that markets may not be perfectly efficient and that irrational decisions made by investors can have at least a short-term impact on stock prices. Stock market bubbles and panics, in particular, are now largely viewed through the lens of behavioral finance.

Behavioral economics wins the Nobel Prize

At least the world at large is recognizing the contributions the behavioral economists have made.

Daniel Kahneman won the Nobel Memorial Prize for Economic Sciences in 2002 for his work on prospect theory, specifically for “having integrated insights from psychological research into economic science, especially concerning human judgment and decision-making under uncertainty.”

Other Nobel awards for work in behavioral economics soon followed. Richard Thaler, who teaches at the University of Chicago Booth School of Business, won the Nobel Memorial Prize in Economic Sciences in 2017. Thaler, too, had demonstrated that humans acted irrationally, but they did so in predictable ways, giving hope that some form of model could still be developed to understand human behavior.

Yale Professor Robert Shiller won the 2013 Nobel Memorial Prize in Economic Sciences (with Eugene Fama and Lars Peter Hansen) for his contribution to our understanding of how human behavior influences stock prices.

Bob Pisani is senior markets correspondent for CNBC. He has spent nearly three decades reporting from the floor of the New York Stock Exchange. “In Shut Up and Keep Talking,” Pisani shares stories about what he has learned about life and investing.

Source link

#Bob #Pisani #youre #rational #investor #biases #harder #reach #financial #goals

Here’s what the Federal Reserve’s half-point rate hike means for you

Post By Business Banks, business news, Central banking, coronavirus, Coronavirus: Personal Finance, covid-19, Credit card debt, Economic events, Economy, Federal Reserve System, Inflation, Interest Rates, Investment strategy, Jerome Powell, Lendingtree Inc, Mortgages, Personal Finance, Personal loans, Personal saving, Prices, U.S. Economy

The Federal Reserve raised its target federal funds rate by 0.5 percentage points at the end of its two-day meeting Wednesday in a continued effort to cool inflation.

Although this marks a more typical hike compared to the super-size 0.75 percentage point moves at each of the last four meetings, the central bank is far from finished, according to Greg McBride, chief financial analyst at Bankrate.com.

“The months ahead will see the Fed raising interest rates at a more customary pace,” McBride said.

The latest move is only one part of a rate-hiking cycle, which aims to bring down inflation without tipping the economy into a recession, as some feared would have happened already .

“I thought we would be in the midst of a recession at this point, and we’re not,” said Laura Veldkamp, a professor of finance and economics at Columbia University Business School.

“Every single time since World War II the Federal Reserve has acted to reduce inflation, unemployment has shot up, and we are not seeing that this time, and that’s what stands out,” she said. “I couldn’t really imagine a better scenario.”

Still, the combination of higher rates and inflation has hit household budgets particularly hard.

What the federal funds rate means for you

The federal funds rate, which is set by the central bank, is the interest rate at which banks borrow and lend to one another overnight. Whether directly or indirectly, higher Fed rates influence borrowing costs for consumers and, to a lesser extent, the rates they earn on savings accounts.

For now, this leaves many Americans in a bind as inflation and higher prices cause more people to lean on credit just when interest rates rise at the fastest pace in decades.

With more economic uncertainty ahead, consumers should be taking specific steps to stabilize their finances — including paying down debt, especially costly credit card and other variable rate debt, and increasing savings, McBride advised.

Pay down high-rate debt

Since most credit cards have a variable interest rate, there’s a direct connection to the Fed’s benchmark, so short-term borrowing rates are already heading higher.

Credit card annual percentage rates are now over 19%, on average, up from 16.3% at the beginning of the year, according to Bankrate.

The cost of existing credit card debt has already increased by at least $22.9 billion due to the Fed’s rate hikes, and it will rise by an additional $3.2 billion with this latest increase, according to a recent analysis by WalletHub.

If you’re carrying a balance, “grab one of the zero-percent or low-rate balance transfer offers,” McBride advised. Cards offering 15, 18 and even 21 months with no interest on transferred balances are still widely available, he said.

“This gives you a tailwind to get the debt paid off and shields you from the effect of additional rate hikes still to come.”

Otherwise, try consolidating and paying off high-interest credit cards with a lower interest home equity loan or personal loan.

Consumers with an adjustable-rate mortgage or home equity lines of credit may also want to switch to a fixed rate.

Because longer-term 15-year and 30-year mortgage rates are fixed and tied to Treasury yields and the broader economy, those homeowners won’t be immediately impacted by a rate hike.

However, the average interest rate for a 30-year fixed-rate mortgage is around 6.33% this week — up more than 3 full percentage points from 3.11% a year ago.

“These relatively high rates, combined with persistently high home prices, mean that buying a home is still a challenge for many,” said Jacob Channel, senior economic analyst at LendingTree.

The increase in mortgage rates since the start of 2022 has the same impact on affordability as a 32% increase in home prices, according to McBride’s analysis. “If you had been approved for a $300,000 mortgage in the beginning of the year, that’s the equivalent of less than $204,500 today.”

Anyone planning to finance a new car will also shell out more in the months ahead. Even though auto loans are fixed, payments are similarly getting bigger because interest rates are rising.

The average monthly payment jumped above $700 in November compared to $657 earlier in the year, despite the average amount financed and average loan term lengths staying more or less the same, according to data from Edmunds.

“Just as the industry is starting to see inventory levels get to a better place so that shoppers can actually find the vehicles they’re looking for, interest rates have risen to the point where more consumers are facing monthly payments that they likely cannot afford,” said Ivan Drury, Edmunds’ director of insights.

Federal student loan rates are also fixed, so most borrowers won’t be impacted immediately by a rate hike. However, if you have a private loan, those loans may be fixed or have a variable rate tied to the Libor, prime or T-bill rates — which means that as the Fed raises rates, borrowers will likely pay more in interest, although how much more will vary by the benchmark.

That makes this a particularly good time to identify the loans you have outstanding and see if refinancing makes sense.

Shop for higher savings rates

While the Fed has no direct influence on deposit rates, they tend to be correlated to changes in the target federal funds rate, and the savings account rates at some of the largest retail banks, which were near rock bottom during most of the Covid pandemic, are currently up to 0.24%, on average.

Thanks, in part, to lower overhead expenses, the average online savings account rate is closer to 4%, much higher than the average rate from a traditional, brick-and-mortar bank.

“The good news is savers are seeing the best returns in 14 years, if they are shopping around,” McBride said.

Top-yielding certificates of deposit, which pay between 4% and 5%, are even better than a high-yield savings account.

And yet, because the inflation rate is now higher than all of these rates, any money in savings loses purchasing power over time.

What’s coming next for interest rates

Consumers should prepare for even higher interest rates in the coming months.

Even though the Fed has already raised rates seven times this year, more hikes are on the horizon as the central bank slowly reins in inflation.

Recent data show that these moves are starting to take affect, including a better-than-expected consumer prices report for November. However, inflation remains well above the Fed’s 2% target.

“They will still be raising interest rates now and into 2023,” McBride said. “The ultimate stopping point is unknown, as is how long rates will stay at that eventual destination.”

Subscribe to CNBC on YouTube.

Correction: A previous version of this story misstated the extent of previous rate hikes.

Source link

#Heres #Federal #Reserves #halfpoint #rate #hike #means

The Federal Reserve is about to hike interest rates one last time this year. Here’s how it may affect you

Post By Business Auto loans, Banks, business news, Credit cards, Economic events, Federal Reserve System, Inflation, Interest Rates, Investment strategy, Mortgages, Personal Finance, Personal loans, Personal saving, Prices, Student loans, U.S. Economy

The Federal Reserve is expected on Wednesday to raise interest rates for the seventh time this year to combat stubborn inflation.

The U.S. central bank will likely approve a 0.5 percentage point hike, a more typical pace compared with the super-size 75 basis point moves at each of the last four meetings.

This would push benchmark borrowing rates to a target range of 4.25% to 4.5%. Although that’s not the rate consumers pay, the Fed’s moves still affect the rates consumers see every day.

Why a smaller rate hike may be ‘pretty good news’

By raising rates, the Fed makes it costlier to take out a loan, causing people to borrow and spend less, effectively pumping the brakes on the economy and slowing down the pace of price increases.

“For most people this is pretty good news because prices are starting to stabilize,” said Laura Veldkamp, a professor of finance and economics at Columbia University Business School. “That’s going to bring a lot of reassurance to households.”

However, “there are some households that will be hurt by this,” she added — particularly those with variable rate debt.

For example, most credit cards come with a variable rate, which means there’s a direct connection to the Fed’s benchmark rate.

But it doesn’t stop there.

What the Fed’s rate hike means for you

Another increase in the prime rate will send financing costs even higher for many other forms of consumer debt. On the flip side, higher interest rates also mean savers will earn more money on their deposits.

“Credit card rates are at a record high and still increasing,” said Greg McBride, chief financial analyst at Bankrate.com. “Auto loan rates are at an 11-year high, home equity lines of credit are at a 15-year high, and online savings account and CD [certificate of deposit] yields haven’t been this high since 2008.”

Here’s a breakdown of how increases in the benchmark interest rate have impacted everything from mortgages and credit cards to car loans, student debt and savings:

1. Mortgages

Although 15-year and 30-year mortgage rates are fixed and tied to Treasury yields and the economy, anyone shopping for a new home has lost considerable purchasing power, partly because of inflation and the Fed’s policy moves.

“Though they are falling, mortgage rates are still at a more than 10-year high,” said Jacob Channel, senior economic analyst at LendingTree.

The average rate for a 30-year, fixed-rate mortgage currently sits at 6.33%, down from mid-November, when it peaked at 7.08%.

For would-be buyers, a 30-year, fixed-rate mortgage on a $300,000 loan would cost about $1,283 a month at last year’s 3.11% rate. If you paid today’s 6.33% instead, that would cost an extra $580 a month or $6,960 more a year and another $208,800 over the lifetime of the loan, Channel calculated.

Adjustable-rate mortgages, or ARMs, and home equity lines of credit, or HELOCs, are pegged to the prime rate. As the federal funds rate rises, the prime rate does, as well, and these rates follow suit. Most ARMs adjust once a year, but a HELOC adjusts right away. Already, the average rate for a HELOC is up to 7.3% from 4.24% earlier in the year.

2. Credit cards

Credit card annual percentage rates are now more than 19%, on average, up from 16.3% at the beginning of the year, according to Bankrate.

“Even those with the best credit card can expect to be offered APRs of 18% and higher,” said Matt Schulz, LendingTree’s chief credit analyst.

But “rates aren’t just going up on new cards,” he added. “The rate you’re paying on your current credit card is likely going up, too.”

Further, households are increasingly leaning on credit cards to afford basic necessities since incomes have not kept pace with inflation, making it even harder for those carrying a balance from month to month.

If the Fed announces a 50 basis point hike as expected, the cost of existing credit card debt will increase by an additional $3.2 billion in the next year alone, according to a new analysis by WalletHub.

3. Auto loans

Even though auto loans are fixed, payments are getting bigger because the price for all cars is rising along with the interest rates on new loans. So if you are planning to buy a car, you’ll shell out more in the months ahead.

The average interest rate on a five-year new car loan is currently 6.05%, up from 3.86% at the beginning of the year, although consumers with higher credit scores may be able to secure better loan terms.

Paying an annual percentage rate of 6.05% instead of 3.86% could cost consumers roughly $5,731 more in interest over the course of a $40,000, 72-month car loan, according to data from Edmunds.

Still, it’s not the interest rate but the sticker price of the vehicle that’s primarily causing an affordability crunch, McBride said.

4. Student loans

The interest rate on federal student loans taken out for the 2022-23 academic year already rose to 4.99%, up from 3.73% last year and 2.75% in 2020-21. It won’t budge until next summer: Congress sets the rate for federal student loans each May for the upcoming academic year based on the 10-year Treasury rate. That new rate goes into effect in July.

Private student loans tend to have a variable rate tied to the Libor, prime or Treasury bill rates — and that means that, as the Fed raises rates, those borrowers are also paying more in interest. How much more, however, will vary with the benchmark.

Currently, average private student loan fixed rates can range from 2.99% to 14.96%, and 2.99% to 14.86% for variable rates, according to Bankrate. As with auto loans, they vary widely based on your credit score.

5. Savings accounts

On the upside, the interest rates on some savings accounts are also higher after consecutive rate hikes.

While the Fed has no direct influence on deposit rates, the rates tend to be correlated to changes in the target federal funds rate. The savings account rates at some of the largest retail banks, which were near rock bottom during most of the Covid pandemic, are currently up to 0.24%, on average.

Thanks, in part, to lower overhead expenses, top-yielding online savings account rates are as high as 4%, much higher than the average rate from a traditional, brick-and-mortar bank, according to Bankrate.

“Interest rates can vary substantially, especially in today’s interest rate environment in which the Fed has raised its benchmark rate to its highest level in more than a decade,” said Ken Tumin, founder of DepositAccounts.com.

“Banks make money off of customers who don’t monitor their interest rates,” Tumin said.

With balances of $1,000 to $25,000, the difference between the lowest and highest annual percentage yield can result in an additional $51 to $965 in a year and $646 to $11,685 in 10 years, according to an analysis by DepositAccounts.

Still, any money earning less than the rate of inflation loses purchasing power over time.