It’s showtime!

Earn While You Learn! ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ [EARN WHILE YOU LEARN! JOIN OUR FREE LIVE TRADING SESSION!]( Hello investor, It’s showtime! It’s showtime. Federal Reserve Chair Jerome Powell will take the mic at 10am ET today to reveal his latest take on the central bank’s future interest rate plans. Wall Street is bracing for what he might say. Right now, the swap market is pricing in about one percentage point cut this year. Some analysts questioned this expectation. Might it be too aggressive? Jose Torres at Interactive Brokers expects Powell to sound conservative during his speech. - “Will Powell allude to a slow walk down the monetary policy stairs or a speedy elevator ride down to the basement?” said Jose Torres at Interactive Brokers. “Powell is likely to choose the stairwell rather than the elevator.” Jose Torres at Interactive Brokers (Photo: Yahoo Finance) A September rate cut is basically a sure thing. The debate is about the size of the rate cut in September and how many cuts in total by the end of the year. Two Fed officials said yesterday that cutting rates would be appropriate soon. But they indicated a “gradual” and “methodical” approach to it. (These were the terms used by Boston Fed President Susan Collins.) Collins said she didn’t see any “big red flags” in the economy. So, her focus is on “preserving that healthy labor market while we continue to bring inflation down.” Philadelphia Fed President Patrick Harker said the first cut should be in September. - “In September we need to start a process of moving rates down,” Harker said. “We need to start bringing them down methodically.” What about the size of that rate cut? He wanted more information before deciding on it. However, Kansas City Fed President Jeffrey Schmid wasn’t ready to commit to cutting rates yet. - “It makes sense for me to really look at some of the data that comes in the next few weeks,” said Schmid. “Before we act — at least before I act, or recommend acting — I think we need to see a little bit more.” If these comments were any indicator, Powell is unlikely to hint at a 50 basis-point cut. - “The script is clear — the Fed is going to ease in September, but no one is portraying a desire to ease 50 basis points at this time,” said Andrew Brenner at NatAlliance Securities. Yesterday’s jobless claims data showed the labor market cooled slightly. US manufacturing activity shrank at the fastest pace this year. Lastly, existing-home sales rose for the first time in five months. - “The US economy overall has, thus far, been robust enough to take an extended Fed rate pause,” said Don Rissmiller at Strategas. “But there’s a clear case for rate cuts soon.” Aging Population Brings A Big Tailwind To This Stock With 25% EPS CAGR Today’s Stock Pick: Chemed Corporation (CHE) How does a 20-year EPS growth of 21.7% CAGR sound to you? That was what Chemed offered to its shareholders, and the stock is a perfect addition to your portfolio for the next decade, as well. Chemed is a holdings company with two key acquisitions that transformed its business. First, it bought Roto-Rooters Plumbing & Water Cleanup Service. Not a sexy industry, obviously. It offers plumbing services with franchises all over America. It boasts that its locations serve approximately 90% of the U.S. population and 40% of the Canadian population. It maintains an estimated 15% of the drain cleaning market and 2-3% share of the same-day service plumbing market This segment has been growing revenues steadily at 6.7% CAGR since 2004: (Source: Chemed) More importantly, thanks to its improving margins, the adjusted net income grew by 12.4% CAGR in the same period. In other words, Roto-Rooters is a cash-generative business that continues to expand its margins while maintaining its revenue growth. That’s a perfect recipe for a compounding stock. Okay, that’s for Roto-Roosters. It makes up 42% of Chemed’s revenues in 2023. Now, onwards to the next segment. VITAS Healthcare What was a plumbing company doing when it acquired hospice services in 2003? Well, it proved to be a phenomenal acquisition. Chemed knows a thing or two about scaling a business nationwide. And the huge advantage was that hospice services were (and still are) highly fragmented. It’s mostly made up of mom-and-pop businesses. What it offers is not quite a happy thought, but it does an important service. Hospice care is a special kind of care that focuses on the quality of life for people and their caregivers who are experiencing an advanced, life-limiting illness. In other words, it manages symptoms to reduce pain as a person goes through the final stage of life. VITAS immediately became the largest provider of hospice services with approximately 7% of the U.S. market share. The industry is growing rapidly as the U.N. projects the number of persons aged 80 and above to triple, going from 143 million to 426 million by 2050. What’s more, about half of Americans who died today employed a hospice service at some stage, according to the Washington Post. (Source: Chemed) Alongside with the industry, VITAS has been growing steadily: (Source: Chemed) And it has plenty of room to grow. It only has 53 locations in 15 states. Chemed said it plans to grow organically and through acquisitions. With consistent EPS growth and expanding margins, Chemed’s EPS grew by 18.9% CAGR in the last 20 years: (Source: Chemed) Chemed also loves to return earnings to the shareholders through buybacks and dividends. In fact, Chemed has returned $2.5 billion to shareholders since 2007, out of $2.9 billion generated from free cash flow. That says a lot about Chemed’s ability to grow without requiring incremental capital invested. (Source: Chemed) Bottom line: Chemed has two excellent businesses. Roto-Rooster dominates its market with expanding margins. That business spits out cash for Chemed to invest in faster-growing VITAS and to return to the shareholders. As for VITAS, the aging population brings a tailwind to the business. And there’s plenty of consolidation opportunity. There’s a lot to like about Chemed. If you are looking for a company with steady growth, it’s your best bet. [EARN WHILE YOU LEARN! 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