The Service Sector Surged at the Fastest Pace in 2+ Years

Earn While You Learn! ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ [EARN WHILE YOU LEARN! JOIN OUR FREE LIVE TRADING SESSION!]( Hello investor, The Service Sector Surged at the Fastest Pace in 2+ Years The Nasdaq surged yesterday on the presidential election day. It was no surprise. Why? The S&P 500 rose on nine of the last 11 election days with a median return of 0.8%. Goldman Sachs expects more volatility later this week, as investors adjust to the new expectations. Generally, Wall Street is feeling bullish. The economy is growing. Inflation is cooling. The Federal Reserve is cutting interest rates. Big Tech companies delivered strong earnings growth. For example, the service sector expanded in October at the fastest pace in over two years. You can see how it has spiked in the last few readings in the chart below: (Source: Bloomberg) There are a lot of things to like. So, Goldman Sachs expects just an 18% chance of a bear market in the next 12 months, eve. if bond yields rise over the next few weeks. “Equities should be able to digest higher bond yields as long as they are driven by better growth,” the Goldman strategists wrote in a note. The Federal Reserve will announce its interest rate decision tomorrow. Fed Chair Jerome Powell will also take the podium to share his latest insights on the path for interest rates. October’s jobs report was subpar but was distorted by labor strikes and hurricanes. Investors will want to hear the Fed’s take on it. Lately, the market has been trading in a consolidation phase. Investors are waiting until the clouds clear up before making major bets. Stocks could be headed in a new direction once the Fed announces its rate decision and shares its rate outlook. Stay tuned. Get In Early: This Company Is Taking Over The Entire Industry With A Clear Path To Monopoly Today’s Pick: SiteOne Landscape Supply, Inc. (SITE) Harvard Business Review published a study in 2002 on industry consolidations. Two decades later, the overall lesson still applies: - Stage 1: Aggressive expansion. It’s a land grab. As venture capitalists Peter Thiel and Reid Hoffman put it, successful companies need to escape the competition. - Stage 2: Build scale. This stage involves mergers and acquisitions as the industry starts to consolidate. - Stage 3: Focus on key growth drivers. Large companies emphasize their core competencies. - Stage 4: Dominant market position. Even the largest companies must find new S-curves to stack atop their business to drive growth. The value returned to shareholders can also be increased through capital efficiency. Each industry goes through these cycles. In the chart below, some examples may be ancient history. Telecoms aren’t fragmented anymore, for example. They’ve consolidated. Nonetheless, it’s a good graph to apply its lesson to nowadays: (Source: Harvard Business Review) SiteOne Landscape Supply has only just begun to scale. (Stage 2 above.) They offer landscape supplies, tools, and maintenance. Right now, landscape wholesale is still a fragmented industry. Hence the extraordinary opportunity. SiteOne has been using its cash flow from profits to acquire companies left and right. They have acquired 410 companies since 2014! (Source: SiteOne Landscape Supply) The result: SiteOne has become the only full-service nationwide landscape wholesaler. In fact, they’re five times bigger than their next biggest competitor. They can now offer over 160,000 different items and additional value-added services to consumers and professionals. (Source: SiteOne Landscape Supply) However, it’s only the beginning. You’d be getting in early with SiteOne because they only have 17% market share. It’s inevitable that they would become the dominant market leader. And they built a world-class team of 80+ associates -- whose full-time jobs are to hunt for acquisitions like a bloodhound dog: (Source: SiteOne Landscape Supply) SiteOne has only just started to scale. Management sees both geographic and product line expansion opportunities. They currently only offer full product lines to ~23% of their target markets, which spells opportunities to grow revenue in their current markets. (Source: SiteOne Landscape Supply) Financially, the company has produced consistent growth. Its 15% compound annual growth rate on revenue is nothing to turn your nose up towards. (Source: SiteOne Landscape Supply) But the true benefit of consolidating is economies of scale. SiteOne’s profits are growing at a quicker pace than their sales. Executives specifically pointed out that their suppliers offer SiteOne sweetheart discounts. Why? Of course, SiteOne is most likely to be their largest customer as the #1 leader in landscape wholesale. (Source: SiteOne Landscape Supply) Bottom line: SiteOne Landscape Supply (SITE) has already become the most dominant player in their industry. Profit growth now outpaces revenue growth due to economies of scale. However, you’re still getting in early. The company hasn’t rolled out full product lines to 77% of the markets they cover. Buy this stock in a “boring” industry before Wall Street notices the extra growth headroom. [EARN WHILE YOU LEARN! 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