Microsoft
and
Amazon.com
’s AWS cloud
computing business have been
generating of late. But it would be
Oracle’s best growth rate in three
years. The past four quarters aver-
aged a decline of 0.2%.
Investors should note Oracle has
a mixed record when it comes to
pleasing Wall Street. The stock
price dropped following eight of
the past 12 quarterly reports, ac-
cording to FactSet. Still, last year’s
third-quarter report sparked the
stock’s biggest single-day gain in
more than a decade, as better-
than-expected results came with a
boosted share buyback program.
This time around, Oracle’s growth
will need to speak louder than its
checkbook.
—Dan Gallagher
Oracle’s revenue per fiscal quarter,
change from a year earlier*
Source: FactSet
Note: Fiscal year ends on May 31.
7.5
–7.5
–5.0
–2.5
0
2.5
5.0
%
’18
’19
’20
’21
FY2017
PROJECTIONS
U.S. cannabis growers are becom-
ing attractive bets. Many investors
still have to settle for shakier Cana-
dian names which are easier to buy.
On Tuesday,
Curaleaf
kicks off
fourth-quarter reporting for multi-
state American cannabis companies.
Canadian rivals
Tilray
,
Canopy
Growth
,
Aphria
and
Cronos Group
raised sales 52% year over year on
average during the winter months.
That is impressive, but will prob-
ably pale in comparison to what
American growers achieve. Curaleaf
and peers
Green Thumb Industries
,
Cresco Labs
and
Trulieve
have ben-
efited from demand for cannabis in
the U.S., a much bigger pot market
than Canada. American names are
also more likely to be profitable
than peers north of the border,
which overexpanded in recent years.
That makes today’s stock-market
valuations a conundrum. The four
Canadian companies trade at a diz-
zying average multiple of 18 times
projected sales, compared with
seven times for the Americans.
The explanation mostly lies in
where stocks are listed. Canadians
have a major edge because they
are allowed on U.S. stock ex-
changes such as the NYSE and ben-
efit from a flood of investor cash.
The U.S. federal ban on pot means
American growers must list on less
liquid exchanges in Toronto.
If U.S. federal laws change, the
Canadian growers could use their
expensive equity to snap up the
American names. The risk for the
Canadian companies is that reforms
stop short of full legalization, leav-
ing them locked out of the attractive
U.S. market for several more years.
This appears to be how things are
unfolding: The SAFE Banking Act,
legislation that would give American
growers access to normal banking
services, will probably be the first
reform that Democrats attempt.
U.S. cannabis stocks look like a
better trip long-term—if investors
can get their hands on them.
—Carol Ryan
sors Jeff Immelt and John Flannery
and put his own spin on the con-
glomerate. Whether it is a strategic
win is more debatable, though.
GE’s exposure to aviation is
large even without Gecas. In 2019,
jet engines accounted for 34% of
total revenue, compared with 13%
in 2011. Engine manufacturers are
in the eye of the storm because
the retirement of older planes de-
presses lucrative maintenance rev-
enues. Gecas’ portfolio was
marked down by $500 million in
the fourth quarter, in part due to
disproportionate exposure to re-
gional jets, as well as to the kind
of older aircraft being scrapped.
This is why the deal presents
risks for Mr. Kelly, too. In his last
earnings call he didn’t sound opti-
mistic about these types of jets,
which he may now have to incorpo-
rate into his younger fleet as a
trade-off for scale.
The deal’s timing may also favor
Mr. Culp more than might be imag-
ined given the industry backdrop.
Research by New York University
professor David Yu shows that jet
gigawatts of capacity would suffer
steep financial losses if nothing is
done to unwind the peak power
prices that were set during the
winter storm.
There seemed to be a small
possibility that some scarcity pay-
ments to power providers—which
the grid operator set to the maxi-
mum of $9,000 per megawatt-
hour for days—could be reversed
after an independent market mon-
itor said the grid operator kept
prices high for 33 hours longer
than warranted. But the Public
Utility Commission of Texas on
Friday signaled that such a rever-
sal is unlikely, noting that doing
so could have unintended conse-
quences, such as harming certain
power providers.
Power-market participants that
benefited from the peak prices will
likely not want to give up their
gains. Notably, Australia’s
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