Sector News
NRG Energy (NRG), an integrated energy and consumer services company, agreed to acquire six Texas-based power generation
facilities from Rockland Capital for $560M, adding 738 MW of natural gas-fired capacity to its portfolio at $760/kW, which is
significantly below new construction costs. The acquisition will be primarily funded through corporate debt without affecting NRG’s
capital allocation plan and is expected to close in Q2 FY25. The stock retook its 200-DMA on above average volume with next
resistance at its 100-DMA (+5%). It is still 21% off highs. Decent fundamental profile- EPS Rank 70; SMR Rating of C. Technical
metrics are constructive reflecting healthy money inflow and positive demand for the stock. RS line is consolidating sideways with an
RS Rating of 89. Acc/Dist Rating of C+.
Author: Kenley Scott
Kenley Scott is a senior equity analyst and sector strategist covering the APAC region and the Energy sector. He is a member of the Global Focus List Committee, which approves all equity recommendations for developed, emerging, and frontier markets. Kenley also writes the Global Sector Summary, part of the Sector Strategy service, which identifies emerging sector strength and weakness across 46 countries every week. After working as a commodities broker, Kenley joined the firm in July 2006. He has a B.S. in Statistics from the University of California, Riverside and also holds a Series 65 securities license.
O’Neil Energy/Material Weekly
FL Updates for the Last Three Weeks
FL-stock Archrock (AROC) reported better-than-expected Q4 FY24 results. Revenue (+26% y/y) was in line with estimates, while adjusted EPS (+67% y/y) beat consensus by 25%. Revenue growth was driven by the contract operations segment (+34% y/y) but partially offset by the after-market services segment (-14% y/y) due to seasonal delays in service activity. Adjusted EBITDA came in at $184M (+52.8% y/y), beating estimates by 9%. For 2025, the company expects adjusted EBITDA of $750M–790M, beating estimates by 7% at the midpoint. Net income guidance of $253M–293M beat estimates by 11% at the midpoint. Management remains optimistic about 2025, citing sustained high utilization levels, rising energy demand, and increasing natural gas requirements to support LNG exports and power generation. Despite an initially positive reaction, the stock has not held the gains, and is now trading 21% off highs and trending towards the 200-DMA. Strong EPS Rank 99 and SMR Rating of A. RS line is trending downward, with an RS Rating of 90. Decent money flows, with an Up/Down Volume ratio of 1.9 and an Acc/Dist Rating of C+
O’Neil Energy/Material Weekly
Gold continues to rally in 2025, reaching a new all-time high this week. The surge is driven by economic uncertainty, central bank
policies, and global trade concerns. Recent U.S. tariff plans on steel and aluminum have raised fears of a trade war, increasing
market instability and boosting demand for gold as a safe-haven asset. Additionally, central banks have supported the rally through
gold purchases and monetary policy easing, lowering the opportunity cost of holding non-yielding assets like gold. The ETF tracking
gold prices, GLD, rose 6.8% in January and gained an additional 3.5% as of February 12, reflecting strong investor demand.
O’Neil Energy/Material Weekly
FL stock DSV (DSV.DK) reported mixed Q4 FY24 results Tuesday before market open. Revenue (+19% y/y) beat estimates by 4%,
while adjusted EPS (-5% y/y) missed estimates by 4%. The Air and Sea Division saw strong 32% revenue growth driven by higher
freight rates offset by cost inflation which kept margins flat. The Road Division revenue increased 2% y/y impacted by weak
seasonality and auto sector challenges. The Solutions Division remained flat in revenue but faced margin pressure due to lower
European activity and rising warehousing costs. The company expects FY25 EBIT before special items at DKK 15.5B–17.5B
(estimate: 19.8B), compared with DKK 16.1B in 2024. Air and sea freight are expected to grow by 3% y/y, in line with global GDP, with
stable gross profit yields. It also expects flat to low-single-digit growth in road and low to mid-single digit growth for contract logistics.
The stock is forming the right side of a stage-one consolidation base and is 9% to pivot. It has drifted lower signce breaching the 50-
DMA in November 2024, but is well above support at its 200-DMA (-6%) and the top of a long 2024 consolidation (DKK 1,285). Hold
positions.
Global Sector Strategy
Last week saw an unusual scenario where a group of stocks fell >20% directly from 52-week or all-time highs with very little prior warning from a technical standpoint. Below are notable >$10B stocks which fit the criteria, with a couple also included from earlier in January (RKLB, ALAB, NVDA), and a couple from late-week earnings related selloffs (NOW, DECK).
O’Neil Energy/Material Weekly
Key Sector News and Earnings Results
Agriculture stocks may finally be turning around after a multi-year downturn. A broad ETF which tracks agriculture (MOO), has rallied about 8% over three weeks and is approaching its 200-DMA. It has been in a downtrend since April 2022, losing about 35% over the 33 month period, versus a 35% gain for the S&P 500. While it still has key resistance levels to contend with, there are several stocks in the space that are further along in their recovery. These include equipment manufacturer Deere (DE), fertilizer providers and CF Industries (CF), ICL (ICL), and seed providers Corteva (CTVA) and Tres Tentos Agroindustrial (TTA.BR), which are all breaking out or nearing breakouts from early-stage bases. Although not the same degree of positive setups, notably Nutrien (NTR), Mosaic (MOS), and SQM (SQM) are back above their respective 200-DMA for the first time in two years.
O’Neil Energy/Material Weekly
Theme Under Spotlight: U.S. Airlines
Context: Delta Airlines CEO, Ed Bastian, during the Q4 FY24 earnings call, emphasized that the company anticipates strong travel
demand to persist and expects 2025 to be the best financial year in Delta’s 100-year history. Against this backdrop, we are analyzing
the recent outperformance of the U.S. airline industry and its outlook for 2025.
O’Neil Energy/Material Weekly
Sector News for the Week Ended 1/17/2025
Prices of several commodities are on the rise to begin the year.
Natural gas prices broke and closed the week above $4/mBTU for the first time since late-2022. Lower inventories, higher
demand on expectations for a cold January in the U.S., are adding to the data center demand and LNG export growth
stories.
Crude oil prices broke and closed above the 40-WMA and above $78/barrel for the first time since July 2024. New
sanctions on Russia may disrupt supply to China/India and are pressuring prices to the upside.
Copper prices broke back above the 40-WMA for the first time in two months after finding support at the key $4/lb level
over several weeks. Prices are still in a range and without an immediate significant upside catalyst.
Gold prices broke to the highest level in two months and are back within 2% of all-time highs. Softer inflation figures
increased odds for further U.S. interest rate cuts in coming months.
Global Sector Strategy
As is well established, the third year of the presidential cycle tends to be the standout in terms of stock market performance. The fourth year also has a mostly positive history, but two sizeable down years (2000, 2008) reflect on the averages
O’Neil Energy/Material Weekly
Hyundai Glovis (GLV.KR) – $6.8B market cap – Third-largest car shipping company, which engages in ocean transportation logistics advice, cargo space, loading/unloading, and packaging services. It is also expanding into AI-driven smart logistics, LNG shipping while also engaging in used car trading. 80% of sales are from affiliate companies like Hyundai and Kia.
- Affiliate vehicle sales (Hyundai + Kia) forecast strong growth, with expected sales rising to 10.2M vehicles in FY30 from 7.3M in FY23, creating higher demand for the company’s logistics services. EVs are expected to outpace growth, rising 16% annually over that timeframe.
- The company plans to invest $6.5B through FY30 to expand its business scope beyond automotive logistics, focusing on logistics (36%), shipping (30%), retail (11%), and new ventures like battery recycling and smart logistics (23%) while exploring growth through M&A. This could lead to non-affiliate sale growing to ~40% of sales by 2030.
- The Company just announced that it has signed a five-year maritime transport contract worth ~ KRW6.7T with HMC and KMC. The deal accounts for 26.1% of Hyundai Glovis’ FY24 sales and involves shipping 50% of Hyundai and Kia’s finished car exports to global markets. This is expected to increase revenue visibility for the company in the near-term and support fleet expansion plans for the company.
- Q3 results outpaced estimates across all key metrics.
