RJ Hamster
🦉 The Night Owl Newsletter for November 27th
Unsubscribe Decades of data show this force has driven repeatable gains… (From ProsperityPub)Keysight Technologies’ Surge: The Market Wakes Up to This AI PlayWritten by Jeffrey Neal JohnsonA nearly 10% surge in Keysight Technologies’ (NYSE: KEYS) stock has turned heads on Wall Street, and for good reason. The sharp upward move followed a fiscal Q4 2025 earnings report that beat expectations.This strong market reaction indicates a broader recognition of Keysight’s crucial role in developing the world’s most advanced technologies. This marks a strategic entry point for investors looking to capitalize on the growth of artificial intelligence (AI) and 6G technology.Unpacking the Strong QuarterThe direct catalyst for the stock’s upward movement on Nov. 25, 2025, was the company’s fiscal Q4 financial report. The results painted a clear picture of broad-based strength and accelerating business momentum.Top and Bottom-Line Beat: Revenue for the quarter grew 10% year-over-year (YOY) to $1.42 billion. Non-GAAP earnings per share (EPS) numbers were even more impressive, climbing 16% to $1.91 and easily beating the analyst consensus of $1.83.Fueled by Key Growth Sectors: The company’s Communications Solutions Group saw revenue increase by 11%, driven by heavy spending on AI data center infrastructure and early 6G research. Meanwhile, its Electronic Industrial Solutions Group posted 9% growth, fueled by semiconductorclients expanding testing capacity for advanced AI chips.A Healthy Pipeline: Looking ahead, Keysight reported a 14% YOY jump in new orders. This demand has built a substantial $2.7 billion order backlog, providing excellent visibility into future revenue and signaling that the current momentum is sustainable.Selling Shovels in the AI and 6G Gold RushKeysight’s core investment thesis is best understood through the classic pick-and-shovel analogy. During the gold rush, the most consistent profits were made by selling the essential tools.Keysight functions as that tool provider for the modern tech boom, supplying the critical electronic design and testing equipment that all companies in the AI, semiconductor, and communications industries must have to innovate and manufacture their products.This position allows Keysight to profit from the entire sector’s growth, regardless of which company wins the market-share war.This model is reinforced by the company’s impressive diversification.While AI and 6G are powerful narratives, Keysight is not a one-trick pony. Its Aerospace, Defense & Government segment delivered 9% revenue growth, providing a stable business line driven by long-term government investment. Furthermore, the Automotive segment is showing a strong recovery, with orders returning to growth. This positions Keysight to benefit from the durable trends of vehicle electrification and autonomous driving.A key risk-mitigating factor for investors is Keysight’s broad customer base. No single customer accounts for more than 10% of the company’s revenue. This structural advantage insulates the business from the volatility that can arise from over-reliance on a single corporate client, making it a more resilient play on broad technology trends.More Than Hardware: The Software ShiftKeysight’s management is actively evolving the business to capture future growth. Recent strategic acquisitions, especially the acquisition of Spirent Communications, signal a deliberate pivot from a pure hardware provider to a more integrated, software-centric solutions company. This is a crucial element of the long-term investment case.For investors, this shift is significant.Software-based recurring revenue is more predictable than one-time hardware sales, which often results in a higher, more stable stock valuation.By embedding software more deeply into its customers’ workflows, Keysight becomes a more essential partner, thereby strengthening its competitive position and margin profile.The financial impact is expected to be clear and near-term, with these new businesses projected to add approximately $375 million in revenue in the coming fiscal year.A Bullish Outlook and a $1.5B BuybackA company’s own forecasts and financial actions are often the clearest signals of its internal confidence. Keysight has recently provided two powerful, bullish indicators. First, its guidance for the next quarter projects revenue of $1.53 to $1.55 billion and non-GAAP EPS of $1.95 to $2.01, both well ahead of prior analyst estimates.Second, the Board of Directors authorized a new $1.5 billion share repurchase program. This move directly signals that the board believes the company’s stock is a sound investment. It also serves as a direct mechanism for returning value to shareholders by reducing the number of shares outstanding.The market’s strong reaction to Keysight’s performance is well-founded. The results confirm the company’s essential role as a foundational technology partner. For investors seeking strategic, diversified exposure to the long-term growth of AI and 6G, underpinned by financial strength and a forward-looking strategy, Keysight Technologies presents a clear, validated investment case. READ THIS STORY ONLINEMy research tells me this gold stock will rise 400% in Q1 2026 (Ad)“Like buying gold for $1,000/oz”If you could go back in time to 10+ years ago and buy gold for $1,000 an ounce, it would be one of the biggest no-brainer decisions and an easy 4X gain. But you can’t go back… Gold analyst Garrett Goggin believes there’s a similar opportunity right now in his #1 favorite gold stock.OWN GARRETT’S #1 GOLD STOCK NOW: CLICK HERE TO SEE THE DETAILSIs American Express the Credit Stock For a K-Shaped Economy?Written by Dan SchmidtConsumer delinquency rates are on the rise, and recent market volatility shows investors are on edge as economic worries drag sentiment down. Shares of Visa Inc. (NYSE: V) and Mastercard Inc. (NYSE: MA) have barely moved since April despite quality earnings, while American Express Co. (NYSE: AXP)has outperformed despite a Q3 revenue miss. Can AXP continue to lead the pack? It depends on which type of consumer feels the heat as 2026 approaches.Hints from Q3 Earnings on Consumer StrengthActions speak louder than words, which is most accurate when discussing the U.S. consumer. Right now, sentiment is weak, with University of Michigan survey data pointing to deteriorating consumer expectations. However, though consumers are skittish, they’re still spending enough to keep the economy afloat.According to the Federal Reserve’s economic data, net credit card charge-off rates at commercial banks have dropped to 4.17%, nearly 50 basis points lower than the rate at this time last year. All three major credit card companies reported Q3 earnings in October, and each showed surprising consumer strength despite headwinds such as tariffs, high rates, and souring sentiment.American Express: In its Oct. 17 conference call, AXP reported a revenue miss but a strong EPS beat. Despite missing expectations, revenue still set a quarterly record, and the company raised full-year sales guidance to reflect 9-10% growth. Delinquencies and write-offs are below 2019 levels, thanks to the company’s affluent client base, and credit losses were down 5% year-over-year (YOY).Visa: A small EPS beat and massive revenue beat were the highlights of Visa’s fiscal Q4 2025 earnings call on Oct. 28, with net revenue up 11% YOY and EPS up 14% YOY. However, the company guided to lower-than-expected revenue growth and anticipates higher operating expenses in 2026.Mastercard: On Oct. 30, Mastercard also posted a top- and bottom-line beat for Q3 2025, including impressive revenue growth of 15% YOY. However, the Capital One migration remains a 2026 revenue headwind, and the company has a pricier valuation than its peers in the sector.All three companies highlighted stronger-than-expected consumer spending across all income levels, even as those at the bottom tier became more cost-conscious. Resilient consumer spending is a tailwind for any financial company that earns transaction fees. Still, one of these credit card issuers is better positioned than the other two to win in this environment.American Express Gains From Affluent Focus but Takes on More RiskThe K-Shaped economic narrative began to take shape following the April market reversal, after President Trump cancelled his calamitous Liberation Day tariffs. All three credit card stocks rebounded in May, but American Express began separating from the pack in early June.This was one of the earliest signals that the economy was turning K-shaped, with affluent customers continuing to spend while lower and middle-class consumers became more frugal.  American Express earns lower margins than Visa or Mastercard, mainly because American Express acts as a bank as well as a card issuer. While Visa and Mastercard issue cards through banks and earn fees through transactions, American Express loans money directly.Making loans opens up an additional revenue stream for American Express, but also an additional risk factor should an economic slowdown reach the higher tier of the K. If affluent customers stop paying their bills, American Express is on the hook for those payments, while Visa and Mastercard outsource that risk to other banks.Visa and Mastercard Are Susceptible to the Lower End of the “K”Visa and Mastercard have a larger client base, but they earn less revenue because their clients are more spread out across the income spectrum, and they only make money through transaction fees. In addition to greater susceptibility to a slowdown in lower-end consumer spending, Mastercard and Visa also have starkly higher valuations than American Express, according to metrics such as Price-to-Earnings (P/E)and Price-to-Sales (P/S).Mastercard currently trades at more than 33 times forward earnings and 15 times sales, while Visa is slightly cheaper at 29 times forward earnings and 15 times sales. Compare these valuations to American Express, which trades at just 23 times forward earnings and 3.5 times sales, and you can see why AXP has outperformed V and MA as the economy begins to bifurcate.AXP Has Superior Metrics and Broader TailwindsAmerican Express has a more attractive valuation, higher revenue, and more economic tailwinds than Visa or Mastercard, and these factors have boosted AXP shares nearly 40% since April. Is the rally getting overextended? Not according to the technical data on the daily stock chart. Following a Golden Cross in June, the stock has built a strong support base along the 50-day SMA. Investors have also noticed an additional pattern over the last few months: selling when the Relative Strength Index (RSI) reaches Overbought and buying when the 50-day SMA is tested, a pattern that seems to be unfolding again now.For V or MA to catch up to AXP, economic distress will need to seep into higher-income earners, or the company’s credit situation will need to deteriorate. Right now, neither of those scenarios seems imminent, so AXP will likely continue outperforming V and MA in the near term. READ THIS STORY ONLINEDecades of data show this force has driven repeatable gains… (Ad)There’s a little-known market force that’s been quietly pushing certain stocks higher at the same time every year — for decades. It’s shown remarkable consistency across names like KO, WMT, and WFC, giving traders who know how to spot it a repeatable edge. I recently broke down how this pattern works, the key chart data behind it, and how to position for the next potential move. TAP HERE NOW TO WATCH THE FULL BREAKDOWNPowering Up: How a Credit Upgrade Fuels Vistra’s AI AmbitionsWritten by Jeffrey Neal JohnsonThe energy sector is witnessing a shift in how investors view Independent Power Producers (IPPs). Historically, companies that generated and sold electricity on the open market were seen as volatile, risky investments tied strictly to the ups and downs of commodity prices. However, a new narrative is taking hold: the growth utility. This label suggests a company that offers the stability of a traditional utility but possesses the rapid expansion potential typically associated with growth stocks.On Nov. 24, 2025, Moody’s Investors Service validated this shift for Vistra Corp (NYSE: VST). The ratings agency affirmed the company’s credit rating and, crucially, upgraded its outlook to Positive. While Vistra stock closed at $170.73 on Nov. 25, down slightly alongside broader market movements, this regulatory signal suggests the company’s fundamental transformation is gaining recognition.Strategic Leverage: From IPP to Growth UtilityVistra now sits at the intersection of strict financial discipline and the booming demand for energy from artificial intelligence (AI) data centers.A future upgrade to Investment Grade status would significantly reduce its cost of capital—fueling shareholder returns and capital-intensive nuclear expansion.The Road to Investment GradeA Positive outlook from an agency like Moody’s typically precedes a full credit upgrade. For a capital-intensive business like power generation, achieving Investment Grade status is a financial game-changer.It signals to the global market that the company is a safe borrower.This distinction opens the door to a broader pool of institutional investors, such as pension funds that are often restricted from buying lower-rated debt, and allows the company to borrow money at significantly lower interest rates.Vistra earned this outlook through aggressive, disciplined management of its balance sheet.The company has reduced its net leverage ratio to approximately 2.6x.This metric, which measures the company’s debt relative to its earnings, is now consistent with companies that hold high-grade credit ratings.Management is already actively utilizing this improved profile to optimize its finances. In October 2025, Vistra refinanced $1 billion in senior unsecured notes. This strategic move locks in financing and effectively lowers interest expenses. The logic for investors is simple: when a company spends less on servicing debt, it retains more Free Cash Flow (FCF). This extra cash becomes available for growth initiatives, acquisitions, and the return of capital to shareholders.Vistra’s Nuclear AdvantageThe primary catalyst behind Vistra’s re-rating is the surge in demand from hyperscalers, the massive technology companies building data centers to train and run AI models. These facilities require massive amounts of electricity that must run 24 hours a day, 7 days a week. While renewable energy sources like wind and solar are valuable, they are intermittent. Nuclear power, however, is carbon-free and always-on, making it a premium product in today’s energy market.Vistra proved the value of its fleet in September 2025 by signing a 20-year Power Purchase Agreement (PPA) for 1,200 MW at its Comanche Peak Nuclear Plant. This massive contract guarantees revenue streams from late 2027 through the mid-2040s. For bondholders and credit agencies, this type of long-term, guaranteed contract provides the predictable cash flow they crave.To ensure the long-term reliability required by these contracts, Vistra is extending the life of its assets. The company recently secured a license renewal for its Perry Nuclear Plant, extending its operational life through 2046. This ensures Vistra has the inventory to sell into this growing market for decades to come.Gas Expansion and ReliabilityWhile nuclear garners attention, Vistra continues to invest in natural gas assets to maintain grid reliability—a key component of its growth utility model.On Oct. 22, 2025, Vistra completed the acquisition of seven natural gas plants from Lotus Infrastructure Partners. The deal, valued at approximately $1.9 billion, added roughly 2,600 megawatts of capacity in key markets, including PJM (Eastern US) and CAISO (California). These gas assets serve as reliability tools, backstopping the renewable and nuclear portfolio when demand spikes.Furthermore, the company is demonstrating its ability to build organically. Vistra recently announced plans to construct two new natural gas peaking units in the Permian Basin of West Texas. Expected to be operational in 2028, these units will support the electrification of the oil and gas industry and the region’s data center sector. This mix of acquisitions and new construction demonstrates that Vistra is investing in infrastructure to meet the nation’s power needs.Following the MoneyVistra’s confidence in its strategy is reflected in its updated financial guidance provided in November 2025. The outlook projects a steady climb in profitability over the next three years:2025 Full Year: Ongoing Operations Adjusted EBITDA guidance narrowed to a range of $5.7 billion-$5.9 billion.2026 Preliminary: Initiated guidance projecting $6.8 billion-$7.6 billion.2027 Opportunity: Midpoint earnings opportunity projected at $7.4 billion-$7.8 billion.This healthy cash flow directly supports shareholder returns. The Board of Directors recently authorized an additional $1 billion for share repurchases.In total, the company has approximately $2.2 billion in remaining buyback capacity that it expects to utilize by year-end 2027. Additionally, Vistra pays an annualized dividend of $0.90 per share. The connection to the credit rating is clear: cheaper debt service allows Vistra to fund these buybacks and dividends without stressing its balance sheet or cutting into operational funds.Stability Meets GrowthVistra Corp. is successfully executing a complex pivot, evolving from a traditional power generator into a critical infrastructure partner for the technology sector. The company is paying down debt, buying back stock, and expanding its fleet simultaneously, a balancing act that few companies manage effectively.The recent outlook upgrade from Moody’s provides external validation of this strategy. As Vistra moves closer to Investment Grade status, it becomes an increasingly attractive holding for investors. It offers a compelling mix: direct exposure to the AI energy trade through its nuclear fleet, combined with the financial stability of a utility-like balance sheet. While stock prices fluctuate day to day, the fundamental trajectory points toward a stronger, more profitable future. READ THIS STORY ONLINEBlackRock’s $91B secret (Ad)THIS just did 20x?A few weeks ago… this coin was trading in the Native Crypto Markets for mere pennies. What most investors don’t understand is coins like this launch DAILY—if you know where to look.CLICK HERE FOR THE FREE GUIDE ON HOW TO ACCESS THESE OPPORTUNITIES.More StoriesWhy Gold Loves Trump as Much as Trump Loves GoldGoogle’s Gemini 3 Sends Broadcom Soaring: TPUs Take Center StageWhat Traders Don’t Know About Earnings Season… Until Now (Ad)Insiders Are Snapping Up This AI Stock—Is a Big Bounce Coming?Tesla Just Got Called a “Must Own” Stock—Here’s WhyPalantir Isn’t Just Riding the AI Boom—It’s Orchestrating ItAmazon Enters Correction Zone—Time to Panic, or to Load Up?The Night Owl is a financial newsletter that provides in-depth market analysis on stocks of interest to individual investors. 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