Pricing power is what’s allowing many companies — including seven of our Club holdings — to support revenue growth and enhance, or at the very least protect, profitability during an earnings season marked by a still-elevated inflationary environment. When we’re talking about “pricing power,” it’s the ability of companies with strong brands to raise prices without seeing too much impact on demand. In many cases, it’s because consumers, who are also feeling the bite of inflation in their personal budgets, are willing to pay those higher prices because the products are so essential to their everyday lives. And, in times of economic uncertainty, consumers tend to take comfort in their favorite brands. For example, Club holding Procter & Gamble (PG) beat on the top and bottom lines in its fiscal third quarter as price increases enriched profit margins despite a small slip in volumes . Similarly, comparable sales at McDonald’s (MCD) increased by 13% in the first quarter and traffic increased despite increased menu prices. Strategic price hikes at Coca-Cola (KO) resulted in strong Q1 revenue and a muted effect on people’s buying habits. “Some of the best brands in America have been able to push through price increases and have seen favorable demand to where the consumer has responded without too much negativity,” Bradley Thomas, consumer and retail analyst at KeyBanc, said in an interview with CNBC. Cash-strapped Americans are “seeking value,” Thomas added. Remember, value is not always about offering the lowest price, it’s about offering the greatest bang for your buck. The pricing success at P & G, Coca-Cola, or McDonald’s comes down to consumers feeling that they are still getting that value from brands they know and love. Here’s a list of Club holdings with pricing power, starting with a closer look at P & G. PG YTD mountain Procter & Gamble’s stock performance year to date. Procter & Gamble last week delivered quarterly earnings and revenue beats while raising guidance for full-year organic sales growth. The consumer goods powerhouse raised prices across segments, lifting its gross margin by 150 basis points to 48.2% in its fiscal third quarter. P & G reported a 4% increase in fiscal Q3 sales. Organic sales, which exclude the impacts from foreign exchange, acquisitions and divestitures, rose 7%. That increase was driven by a 10% boost from higher pricing. But the Tide, Pampers and Gillette maker’s volume fell 3% as some shoppers traded down to cheaper alternatives. We aren’t concerned since some volume decline is to be expected given the magnitude of the price hikes. Management was able to strike a balance between delivering growth and the best value to customers through its premium products. JNJ YTD mountain Johnson & Johnson’s stock performance year to date. Johnson & Johnson (JNJ)exhibited pricing power during the first quarter in its consumer business, which will be separated later this year and brought public as a standalone company called Kenvue. The unit sales increased 11.4% in Q1, driven by strong pricing actions and healthy demand across its product categories including over-the-counter, skin, health and beauty, and baby care, to name a few. Management during last week’s post-earnings call said its consumer unit, post-separation will be even more competitive. The company’s pharmaceuticals and medtech divisions, which drive a majority of revenue, will remain, and they will keep the Johnson & Johnson name. LIN YTD mountain Linde’s stock performance year to date. Industrial gas giant Linde (LIN) is our way to play decarbonization in an economy focused on clean energy initiatives, and it’s another Club holding that has pricing power. The company produces, processes, and sells different kinds of gases used in a variety of industries including healthcare manufacturing, food, beverage carbonation, steel making, and aerospace. Due to the complexity of the supply chain, Linde has the distinct advantage of contractually passing on additional costs to its customers. This prevents profits from being crunched by higher energy prices and allows Linde to deliver consistent future cash flow and strengthen its earnings power. In its latest earnings, out Thursday, the company said volumes were flat but its price and mix contributed 8% to the top line. Halliburton HAL YTD mountain Halliburton’s stock performance year to date. Halliburton (HAL) on Tuesday announced strong financial performance in the U.S., and international markets in Q1. Total revenue rose 33% year over year while earnings per share more than doubled on an annual basis. The top and bottom-line beats were accompanied by strong operating margin performance and operating cash flow. The oilfield services company has benefitted from an increase in inflation, which has partly resulted from higher energy prices this year. “Pricing continues to trend up for all product lines in all regions,” Halliburton CEO Jeffrey Miller said on the call. Sustained customer demand was also a crucial factor of growth for the quarter. Halliburton has exhibited strong pricing power due to massive demand from global end markets, benefitting from years of under-investment in drilling. AAPL YTD mountain Apple’s stock performance year to date. Apple (AAPL) is another Club holding with pricing strength. In addition to premium prices on its hardware devices, the iPhone maker increased its subscription rate for its streaming service by 40% in November 2022. The monthly price for Apple TV+ rose to $6.99 from its previous $4.99. When Apple TV+ was first rolled out, it only had a few shows and movies, and the price tier was a more affordable option. A few years after its 2019 launch, the platform now has a wider selection of documentaries, films, and TV series in many categories. At that time, the company also increased prices for its Apple Music service to $10.99 from the prior $9.99, in addition to its Apple One bundle service, which hosts these plans among other services to $16.95 from $14.95. When it reported its fiscal first quarter in February, Apple delivered a new record for Services revenue of $20.8 billion despite the difficult macroeconomic backdrop. Apple is out with its latest quarterly next week. MSFT YTD mountain Microsoft’s stock performance year to date. Earlier this year, Microsoft (MSFT) announced changes to global pricing for its cloud services, effective April 1. Microsoft’s cloud offerings, which include Microsoft 365 and Azure, are 9% more expensive in the U.K., and 15% more expensive for customers in the European Union. Microsoft said this price hike is an effort to “align the pricing of our Microsoft Cloud products globally.” Looking ahead, the company will “assess pricing in local currency as part of a regular twice-a-year cadence, taking into consideration currency fluctuations relative to USD [dollar].” While its cloud growth slowed during its fiscal third quarter , rising 27% compared with 31% growth in the prior quarter, the company said Azure took market share, attracting more customers to its AI-powered applications. CAT YTD mountain Caterpillar’s stock performance year to date. During its first-quarter earnings results, out Thursday, Caterpillar (CAT) delivered solid year-over-year revenue growth in each of its product segments, along with meaningful margin expansion. Management said the strength was driven by “favorable price realization and higher sales volume.” Its Construction Industries unit saw sales up 10% and profit margins grew to 26.5% from 17.3%, fueled by stronger pricing and strong demand in both residential and non-residential markets in the U.S. Caterpillar’s latest report shows how its business is benefitting from strategic pricing, which offset costs. (Jim Cramer’s Charitable Trust is long PG, JNJ, LIN, HAL, AAPL, MSFT, CAT. 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. 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A grocery cart sits in an aisle at a grocery store in Washington, DC, on February 15, 2023.
Stefani Reynolds | AFP | Getty Images
Pricing power is what’s allowing many companies — including seven of our Club holdings — to support revenue growth and enhance, or at the very least protect, profitability during an earnings season marked by a still-elevated inflationary environment.
Kia’s upcoming entry-level EV has finally made its way to the famous Nurburgring for testing. The EV4 hatch was spotted ripping across the track, nearly on two wheels at one point, as Kia preps for its big debut.
According to Kia, the EV4 is “an entirely new type of EV sedan. ” It was first unveiled last October during Kia’s first annual EV Day, alongside the EV3 and EV5 as part of its new low-cost lineup.
The EV5 launched in China last year, while the EV3 is already rolling out in Korea and Europe. Next up, we will finally see the production version of the EV4.
Although its four-door format suggests it’s a sedan, Kia said the EV4’s bold design is a symbol of the company’s innovation. Its low nose, long-tail silhouette, and added roof spoiler give it an almost racecar-like feel.
With its official debut approaching, Kia’s EV4 has been spotted out in the wild several times. Last week, it was caught testing in the US for the first time.
A hatchback model has also been spotted. It was first caught on European roads this summer and in the US earlier this month.
Kia EV4 hatch takes on the Nurburgring as debut looms
After the EV4 was spotted racing across the Nurburgring for the first time, we are getting our best look yet at the upcoming Kia model.
The video from CarSpyMedia shows the EV4 hatch carving up sections of the track. Several times, you can see the EV4 is being pushed to the limits, nearly going up on two wheels.
However, with a low center of gravity and likely added stabilization tech, the EV4 appears to handle it with ease. You can also see the difference between the sedan model and the hatchback, with the bulky backside.
As it takes on the track, it almost looks like the 576 hp EV6 GT, Kia’s fastest and most powerful car. At least for now.
Kia is expected to officially reveal the EV4 by the end of the year, with deliveries starting in 2025. Prices are expected to be in the $30,000 to $40,000 range. The hatchback model is likely aimed at Europe, but it could also find a market in the US as buyers drift toward more efficient options.
Ahead of the LA Auto Show later this week, Kia is teasing five new vehicles for the US, at least one being an EV. Will it be the EV4? EV3?
Source: CarSpyMedia
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Elon Musk is hinting at Tesla making bigger electric cars, but you shouldn’t hold your breath as it’s not the first time he said that.
In the last few hours, Musk responded to two fans on X, asking Tesla to build bigger vehicles to support larger families.
Musk often promotes the idea of having bigger families as he is afraid of declining populations due to low birth rates in some countries.
With the first one, the CEO responded with a simple “OK,” and with the other, he elaborated a bit more by referencing the recently unveiled Tesla Robovan and “some other things”:
Musk appears to be hinting at Tesla’s work on a bigger electric vehicle that has yet to be unveiled.
While interesting, it’s hard to give too much weight to the comment, considering Musk claimed that Tesla has been working on a higher passenger capacity vehicle for years.
A “high passenger-density urban transport” vehicle has been in Tesla’s official product roadmap since 2016 and has yet to be unveiled, unless you count the Robovan unveiled last month, but that’s completely attached to Tesla’s self-driving effort as the vehicle has no steering wheel or pedals.
As part of Tesla’s shift toward autonomous driving, the automaker has pulled back plans for several new electric vehicle programs in favor of those without any driver inputs, like Cybercab and Robotvan.
Tesla is expected to soon unveil two new vehicles to be launch next year, but those are based on the Model 3 and Model Y and therefore, they aren’t likely to be bigger vehicles.
Electrek’s Take
Like most things Elon says lately, it goes in my “I’ll believe it when I see it” folder.
That said, I think an electric van that can be configured for cargo, camper, or passenger, would make a ton of sense in Tesla’s vehicle lineup.
Of course, it’s harder to get the greenlight for a vehicle program like that if your CEO is perpetually convinced that the company is on the verge of achieving self-driving and making steering wheels obsolete.
I’m more of the opinion that Tesla should have played it more careful and continue working on growing its human-driveable EV lineup while working on self-driving.
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Penske Truck Leasing is rolling out rooftop solar on its US truck leasing, rental, and maintenance buildings, starting in Illinois.
Penske Truck Leasing, which offers an electric truck fleet leasing program, wants to cut emissions and save energy, so it’s activated its first rooftop solar system at its new facility in Channahon, Illinois (pictured). The 200 kW system is expected to generate about 80% of the building’s energy needs, and the rest will be supplied by the local utility.
The next Penske Truck Leasing rooftop solar system to come online will be in Grand Rapids, Michigan, “in the coming months,” followed by another in Linden, New Jersey, in 2025. All three of these new buildings are part of Penske’s LEED building program, which is designed to reduce energy use and promote sustainability.
Seven of Penske’s existing facilities in California will also get solar retrofits. These locations, which include Fresno, Hayward, La Mirada, National City, Riverside, San Diego, and San Leandro, are expected to generate about 600 kW of renewable energy in total.
Penske has teamed up with Sunrock Distributed Generation under a power purchase agreement to make the California upgrades happen. The company is also working with ForeFront Power, based in San Francisco, as its lead consultant for the solar rollout.
On average, these solar-powered Penske facilities will generate around 1 million kWh of renewable energy each year, preventing about 442 metric tons of CO2 emissions annually. That’s equivalent to the amount of energy needed to power nearly 90 homes for a year.
Drew Cullen, senior vice president of fuels and facility services at Penske, highlighted the significance of this move, noting:
Our solar program is an important piece of our renewable energy strategy, and ForeFront Power continues to be an outstanding partner in helping us bring these projects to fruition.
These investments will allow us to directly generate our own renewable energy to power our locations and continue to support our customers with sustainable solutions.
Penske Truck Leasing, part of Penske Transportation Solutions, is headquartered in Reading, Pennsylvania, and operates over 437,000 vehicles across North America, with nearly 1,000 maintenance facilities and more than 2,500 rental locations. Its investment in solar power is a key part of its broader sustainability strategy to cut emissions and reduce reliance on traditional energy sources.
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