How will investors be able to make money this year, according to Druckenmiller? Personally, he believes in these 2…
Recently, the situation on the stock markets has partially calmed down. But many analysts believe that we are not yet at the end of the tunnel. So how can investors make money this year, according to Druckenmiller?
Legendary investor Stanley Druckenmiller predicts a recession in the U.S. later this year while seeing huge opportunities for patient investors during the coming period.
I think the way to make money over the next two years in the equity space is to be patient because I think there may be some rough roads ahead and I think the central bank will react in some crazy way that will give you a period like year 70 to 72 when you can make money or year 76 to 78 when you could make a lot of money, I think the opportunities will be amazing.
According to his portfolio, Druckenmiller currently trusts these two giants. So could there be potentially big profits here? Let's take a look.
Chevron Corporation $CVX-0.2%
Chevron
CVXFounded in 1879, Chevron is one of the largest oil companies in the world, headquartered in San Ramon, California. With a market capitalization of $302 billion, the company is engaged in the production, transportation, processing and marketing of oil and natural gas. Chevron operates in more than 180 countries and has a significant presence in the energy sector.
Chevron's business model is based on a diversified set of activities that include upstream, downstream and chemical operations.
- Upstream includes oil and natural gas production.
- Downstream includes the processing, distribution and marketing of these commodities.
- The company also manufactures and sells chemical products.
In recent years, Chevron has made a number of acquisitions and joint ventures to strengthen its global position and expand its portfolio. For example, in 2020, the company acquired Noble Energy, which expanded its presence in the Eastern Mediterranean region and the U.S. Permian Basin.
Chevron had a strong quarter overall in Q1, although revenue fell 6.6% year-over-year to $50.79 billion. This decline was partially offset by improved oil and gas prices and increasing demand for energy products.
Chevron's strengths include its size, global footprint and broad portfolio of activities. In addition, the company is beginning to focus on renewable energy to adapt to the changing energy market. The company is also investing in research and development of carbon capture and storage technologies, which could help mitigate its environmental impact.
On the other hand, Chevron faces challenges such as fluctuating oil prices and pressure to reduce greenhouse gas emissions.
In addition to Druckenmiller, analyst Justin Jenkins of Raymond James sees a bright future for the company.
With a strong financial base, a high relative shareholder payout and an attractive portfolio of relative assets, we think Chevron still offers the most direct positive risk/reward in a market that is becoming increasingly difficult to differentiate between large oil and gas companies. Q1 earnings were solid in the upstream CVX portfolio, while subsequent results have added to the upside. As execution continues into the 2H23+ weighted Permian production profile, we think investor concerns will ease.
Along with this commentary, Jenkins has set a target price of $208 for the company. Along with him, a total of 16 analysts have recently looked at this company, agreeing on an average target price of $190.
Coupang, Inc. $CPNG+1.6%
Coupang, Inc.
CPNGFounded in 2010, Coupang is the largest e-commerce platform in South Korea with a market capitalization of over $30 billion. The company is headquartered in Seoul and operates in a wide range of industries, including electronics, fashion, food, health and beauty, travel, and more. Coupang is a fast-growing player in the e-commerce market that focuses on innovation and improving the customer experience.
Coupang's business model involves selling goods through its online platform, where it offers a wide range of products from independent retailers as well as its own brands. The company also focuses on providing quality customer service such as fast delivery, easy returns and comprehensive customer support.
One of the key aspects of Coupang is its logistics solution, Rocket Delivery. Rocket Delivery ensures fast delivery to customers, often within 24 hours of ordering, thanks to its extensive network of distribution centers and partners. Coupang is also investing in the development of artificial intelligence and machine learning to help improve the company's efficiency and competitiveness.
During the fourth quarter, revenue grew 4.3% year-over-year to $5.3 billion. However, net income improved dramatically from a loss of $405 million in the year-ago period to a record $102 million.
Coupang's advantages lie in its strong position in the South Korean market, rapid growth, innovative services and a wide range of products and services. The company is able to respond quickly to changing customer preferences and market trends, giving it a competitive advantage. Coupang also invests in its own logistics and infrastructure, which contributes to a more efficient and competitive operation.
On the other hand, Coupang faces challenges such as intense competition in the e-commerce market, expansion costs and investment in new technologies and services. The company also faces pressure to improve working conditions and address sustainability and environmental issues.
Among the bulls here is Goldman Sachs analyst Eric Cha, who believes in the company's next big potential.
The company's continued momentum in gaining market share, as shown by the large gap between Coupang's current market share (c20% of domestic e-commerce TAM) and its growth share (c50%+), is supported by its defensive moat (i.e., nationwide coverage of next-day delivery and low ASPs), and we think the momentum in market share gains is offsetting industry headwinds and also generating significant profitability improvements through economies of scale. Moreover, we believe Coupang is poised to take advantage of other opportunities (e.g. fintech, OTT, overseas expansion, etc.).
Along with this commentary, Cha set a price target of $26. In addition to him, 11 other analysts have recently looked at the company and have agreed on an average price target of $21.
Conclusion
Both Chevron Corporation and Coupang, Inc. are companies that occupy important positions in their respective industries. During the upcoming recession expected later this year, patient investors could focus on companies like Chevron and Coupang that have the potential for long-term growth. Both of these players are able to adapt to changing market conditions, which could provide profitable opportunities for investors.
WARNING: I am not a financial advisor, and this material does not serve as a financial or investment recommendation. The content of this material is purely informational.
