Kellanova Surges on Mars Acquisition News

Plus a tiny logistics firm rallies 100%+

Author

Adam Garcia
August 14, 2024

Good morning. It’s August 14th, and today we’ll take a look at a $30 billion merger between two food industry giants, a possible breakup of Google, and Starbucks’ surge after changing its CEO.

Previous Close 📈

There was a broad rally for stocks yesterday, as all three major indices ended the day in green.

Futures

Stock futures are marginally up today after yesterday's Producer Price Index report showed that inflation might be lower than expected.

What to Watch

All eyes are on the Consumer Price Index data due to be released at 8:30 a.m. today.

Keep a close watch on Cardinal Health and Performance Food Group as they release their quarterly results before the opening bell.

After the market closes, Cisco Systems and Intercorp Financial Services will also be sharing their earnings reports.

Discover how to generate premium income even in stable markets during our upcoming webinar, "Premium Income for Neutral Outlooks I: Short Straddles & Strangles."

Join us on August 14th as OIC instructor Roma Colwell guides you through these strategies, focusing on key components, strike and expiration selections, and the risks involved in short option positions.

Event Details:

Entertainment

Mars Set to Acquire Pringles Maker Kellanova in Landmark $30 Billion Deal

Mars, the company behind iconic brands like Snickers and M&M's, is on the brink of acquiring Kellanova, the maker of popular snacks such as Cheez-It and Pringles, in a deal valued at nearly $30 billion.

The acquisition, expected to be announced on Wednesday, would be the largest in Mars' history, surpassing its $23 billion purchase of Wrigley in 2008.

Kellanova is rallying by nearly 8% in premarket trade today in anticipation of the announcement.

This move will consolidate a wide range of consumer favorites under one roof, combining Mars' chocolate brands like Twix and Milky Way with Kellanova’s snack portfolio, which includes Pop-Tarts and Eggo waffles.

The deal reflects ongoing consolidation in the U.S. packaged food sector, where companies are seeking scale to navigate challenges like inflation and shifting consumer preferences.

The acquisition is unlikely to face significant antitrust issues due to the limited overlap between the two companies' product lines. Kellanova, which separated from WK Kellogg Co. last year, primarily focuses on salty snacks and cereal markets outside North America.

Technology

Justice Department Eyes Google Breakup After Antitrust Ruling

The U.S. Justice Department is contemplating a significant move to break up Alphabet Inc.'s Google following a pivotal court ruling that determined the tech giant has monopolized the online search market.

This potential action would mark the first attempt by Washington to dismantle a company for illegal monopolization since the effort to break up Microsoft two decades ago.

Among the options being considered, the most notable is the forced divestment of Google's Android operating system and Chrome web browser. Other potential measures include preventing Google from using exclusive contracts to maintain its dominance and possibly requiring the company to share data with rivals like Microsoft’s Bing.

These discussions have intensified following the ruling by Judge Amit Mehta on August 5, which found that Google used unfair practices to maintain its search dominance.

The ruling has prompted the Justice Department to consider a range of remedies, including breaking up the company, to restore competition in the market.

If implemented, this breakup would be the most significant antitrust action in the U.S. since the dismantling of AT&T in the 1980s.

Retail

Starbucks Rebounds With Leadership Change, Stock Soars

Starbucks' stock surged nearly 25% yesterday after the company announced the immediate departure of CEO Laxman Narasimhan, to be replaced by Brian Niccol, the current CEO of Chipotle.

Chipotle’s stock, however, dropped 7.5% following the news.

Niccol, who will officially take the reins on September 9, is credited with doubling Chipotle's revenue and significantly boosting its profitability since 2018. The move follows months of declining sales and stock performance, with Starbucks struggling to maintain consumer interest amid global competition and economic challenges.

As Starbucks prepares for Niccol’s leadership, Rachel Ruggeri, the company's CFO, has been appointed Interim CEO, and Mellody Hobson, the board chair, will assume the role of Lead Independent Director.

Starbucks has faced criticism for a lack of innovation and a deteriorating customer experience in recent years.

Will this recent pullback become a full-blown market crash or recession?

Whitney has called nearly every major market crash of the 21st century with eerie precision, and he also went on camera just weeks ago to predict the recent market volatility.

But what's about to happen next – and the consequences for your wealth – are nothing like you might expect.

Movers and Shakers

Digital Ally, Inc. [DGLY] - Last Close: $0.85

Digital Ally is soaring by more than 100% in premarket trading today.

The company has received a U.S. patent for a new system that tracks and analyzes drivers in a fleet of vehicles.

This system helps monitor drivers' behavior, such as incidents while driving, and creates detailed profiles for each driver.

This patent could give Digital Ally a significant advantage in the fleet management market, leading to potential growth and profits.

My Take: The stock has low float, so its price can jump rapidly as more investors enter. Expect volatility if you want to invest in this.

NET Power Inc. [NPWR] - Last Close: $8.86

NET Power is up by 16% today in premarket trading.

The company reported strong progress in developing its clean power technology during its recent earnings call.

It confirmed that their first large-scale plant, Project Permian, is on track to start operations between late 2027 and early 2028.

NET Power is building a solid pipeline of future projects, especially in North America, where there's a demand for clean energy.

The company also has a healthy cash reserve of $609 million, which shows that it is financially stable and ready to grow.

My Take: The clean energy sector has been facing a challenging time recently. Despite the solid earnings report, it might be best to put this stock on the wait-and-watch list.

Cardinal Health, Inc. [CAH] - Last Close: $102.58

Cardinal Health is rallying by 7% in today’s premarket trading.

The company announced strong financial results for the fourth quarter and fiscal year 2024 and increased its earnings guidance for fiscal year 2025.

The company's revenue grew by 12% in the fourth quarter, reaching $59.9 billion, while non-GAAP earnings per share (EPS) jumped by 29% to $1.84.

For the entire fiscal year, revenues increased by 11% and non-GAAP EPS grew by 29% to $7.53. It also achieved record levels of cash flow.

My Take: Cardinal Health is a strong value stock with a lot of growth potential. Keep this one on your radar.

This company has been steadily building momentum over the past 3 months, and it could be gearing up for a big breakthrough in the coming days.

Shares are trading at a great price after a recent pullback but they're holding strong at support, so now could be the perfect time to get in position.

Everything Else

  • Norway’s wealth fund reported strong gains as technology stocks boosted its first-half profits.

  • Foxconn's quarterly profit surpassed expectations as AI demand continues to drive growth.

  • Tencent reported an 82% surge in second-quarter profit driven by gaming resurgence.

  • UBS saw higher-than-expected Q2 profits, fueled by the Credit Suisse consolidation.

  • Japanese PM Kishida bows out, signaling a leadership change within the ruling party.

  • Intel divested shares in Arm amid company-wide cost-cutting and restructuring.

  • Huawei challenges NVIDIA with a new AI chip as U.S. sanctions persist.

  • Carlsberg raised its 2024 profit outlook despite weaker Q2 sales due to bad weather.

That’s all for today. Thank you for reading. If you have any feedback, please reply to this email.

Best Regards,

— Adam Garcia
Elite Trade Club

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