The Coming Student Loan Collapse: Avoid THESE Stocks.

so rightfully so a lot of people are

worried about what's going to happen to

the stock market once a student loan

repayments are begin again and Barclays

thankfully put together a phenomenal

piece on their estimate bear in mind

it's their estimate of what is going to

happen to the economy and which stocks

are going to benefit or fail based on

student loan repayment rebeginning so

we're going to talk specifically about

that by going through zabakley's a piece

uh this is by the way uh well I just

want to say by the way I'm grateful to

be coming to you from Canada I don't

think I've mentioned it yet but well

obviously many of you know I've been on

vacation in Canada for about the last 11

days with family and my goal is to still

bring quality content to everyone and so

I appreciate all of your support while

we've been out here with family and

we'll be back soon so anyway back to

Barclays or to Barclays what do we have

here pencils down payments up student

loan repayments impact who too juicy we

estimate the aggregate potential total

potential hit to uh from student loan

repayments to be somewhere around 15.8

billion dollars of a monthly headwind

and that will likely work out to an

incremental payment spend of about 390

dollars per person starting this fall

which is about an eight percent headwind

to monthly personal income now what

we're going to do is we're going to go

into some specific stocks that this

might affect and I want you to start

thinking about okay

who what kind of person what kind of

spender is most likely to be affected

and initially I had this impression that

oh well of course you know uh people

with less money are going to be more

affected by student loans but you have

to ask yourself wait a minute but people

in a certain level of poverty don't

actually have student loans to begin

with so there's there's this interesting

middle ground that we're going to be

paying attention to and stocks

associated with that middle ground uh

and I'll add my commentary of course on

that but anyway let's take a look at

this uh the expectation here from

Barclays is that we are likely to see

discretionary spend Fall by an equal

amount of this uh decline in in monthly

payments or this increase in monthly

payments people are going to make so for

example if you see uh people have 390

less available for spending you'll

probably see nearly all of that show up

as less spending so in other words now

people instead of spending 390 a month

on Etsy or potentially spending it on

student loans instead of spending it at

restaurants or spending it on student

loans instead of spending it you know

whatever at Target they're spending it

on student loans obviously to some

extent people are still going to spend

money on their Staples this would be the

discretionary money this is the this is

your toys your video games your Dave and

Busters Your Entertainment your travel

your airfares your hotels everything

because remember what people generally

do is they save up for travel right you

save up three months you got a thousand

bucks and then you go blow it on Disney

tickets for the weekend or whatever

which is the point of life anyway it's

like you know we work to have fun and we

work to provide fulfillment and the

meaning of success to our lives as we

provide value to society and our friends

and family and the companies around us

uh and and then we also want to balance

that by having fun and entertainment so

this is very normal but consider these

things so anyway uh so what we here's

how we come up with their calculation of

about this eight percent headwind to

monthly spend but take a look at this

I think this is very interesting because

they give me some stock implications

here in our view consumer discretionary

and apparel categories are likely to be

among the areas affected by incremental

wallet pressure okay incremental wallet

pressure in English it means they have

390 less dollars to spend

furthermore we view that equities are

among the most likely to be affected uh

or the equities to be most likely to be

affected are those that have a customer

base that skews look at this folks I was

actually surprised by this toward higher

income higher income higher education

consumers so think about it the the your

white collar Consulting students your uh

nurse students your doctor students your

you know uh mechanical engineers

electrical engineers your people who are

making six figure salaries but

potentially you're still living paycheck

to paycheck you know it's reportedly uh

CNBC at least did a survey on this 50 of

those

who make more than a hundred thousand

dollars a year still live paycheck to

paycheck

that's probably the base you're talking

about so to some extent does that mean

maybe you're talking about your

lululemons

those tight pants yes your under armours

your Lulu lemons your Urban Outfitters

your AEO your figs remember figs was a

huge fad there for a moment fake's uh

like nursing and doctors

um scrubs or whatever uh okay in the

first bucket we perceived the they have

three risk buckets in the first bucket

they think the greatest risk to

retailers is targeting recently

graduated or newly employed that's

because they likely have the lowest

built up excess savings and so that

would be your 18 to 34 year old range I

do think it's interesting that they

include 18 year olds in this since I

don't know a lot of 18 year olds

graduating from college so I would

probably be looking more like your 22 to

34 year old range this is your you know

finding yourself age you're more

critical you're more skeptical you're

you're you're more wise age group than

obviously like a 14 to 20 right it is

but it's all also your uh your age group

that's more willing to also spend

because we realize we're not just here

to work uh anyway you know to some

extent uh you know Tesla is within this

bucket right 25 to 34 or 25 to 45-ish

year old males make up like 70 of car

purchases from Tesla so uh that's

probably in that bucket and honestly 390

a month

is about half of a Tesla car payment

anyway uh we categorize exposure to

student loan debt repayment risk in

three main buckets

the first is the recently graduated and

newly employed in the second bucket we

consider a higher Target income like the

aspirational luxury category okay your

fancy pants this is your fancy pants

category uh including you can see some

of the tickers on screen here cpri tpr

Goose jwn your lulus your Ulta Ulta has

been on a tear so anything that says

Ulta might actually become affordable

again as a stock maybe is a good thing

but anyway in the third bucket we see

the least risk the lowest risk and this

would be a customer base that skews

towards a lower income or lower

educational levels this is going to be

your Gap your TJ Maxx your Old Navy uh

Burlington code Factory whatever so your

lower income actually at lower risk from

discretionary pain where it's really

that yeah there's Lulu it's really your

Lulu's your fakes right your Urban

Outfitters who knows maybe even your uh

oh what's that one place that Lauren

likes so much anthropology G's you know

that that sort of segment yeah they're

gonna get hit a little more I wonder

what that's going to do also

thinking about it to your home decor

Market to your chip and Joanna Gaines

inspired younger couples who are like I

gotta I Gotta Buy shiplap and new

furniture and and you know we gotta have

a new vintage looking oven and you know

all that kind of stuff so uh maybe uh to

some extent a little bit of everything

yeah there'll be a limit I expect to

make up but anyway uh this that's

actually just the piece here on student

loans it's just this segment here but I

think that actually gives us a lot of

color on student loans so I would pay

attention to this and uh look into some

of the uh

discretionary categories that have done

very well but do also consider a

comparison between some of the companies

that I've mentioned here and something

like an Etsy specifically just on stock

performance so let's let's for example

look here let's jump over to Weeble our

favorite desktop app for looking at

stocks uh and it's also a pretty good

mobile app and uh oh Tesla went Green in

the pre-market how funny but anyway

remember you can get yourself 12 free

Stocks by signing up for Weeble by going

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promotion with huibo anyway okay so

let's let's just from a technical point

of view let's just go solely technical

here so let's look at something uh like

Etsy and why don't we jump on over to uh

should we let's go to a week chart on

Etsy okay so this is Etsy on a week

chart so from a technical point of view

you've you've already experienced a

substantial amount of pain over here at

uh see and there's a limit to how much I

think Etsy can really get hit more in

this discretionary pain specifically

because they've already been hit so hard

and I think that probably creates more

of an opportunity than it does a deficit

so I'm watching Etsy very closely uh let

me throw over my stream yard overlay by

the way since I'm live streaming from

Canada I'm grateful to stream yard met

kevin.com stream yard for providing the

ability to throw up banners and share

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streamier to learn more okay so now

let's look at like a Lulu right let's

look at some of these other Pickers

mentioned here this is for Lulu here on

a week chart uh and you can see Lulu's

really been uh you could almost say

range bound I mean we could to some

extent we can go with uh some horizontal

lines here and we could somewhat set up

Lulu as range bound yeah there we go

it's it's not perfect but you could

really see how Lulu's been holding up

and a Spock that I saw that was range

Bound for a while that didn't get

punished yet was ubiquity and you could

see ubiquity was range bound over here

really between this 325 and 284 level it

was range mount for about two years it

just couldn't break out it it refused to

stay lower until it finally tanked this

is my buy point right here on ubiquity

and so I've actually actively been

increasing my personal exposure to

ubiquity because of this but we look at

something like uh like uh

Etsy seems like it's already had some of

its pain but then you look at a Lulu you

haven't really had that correction yet

on Lulu is it possible that the student

loan issue happens to Lulu yes now what

about like an Ulta boy this one's this

has been one of those rough ones where

it's like if you haven't been an Ulta

you're like man I wish I'd been an Ulta

because this is the weak chart for Ulta

and you can see here's the coven low

right here it's basically been straight

up I mean you could really just go in

here and draw a trendline support and go

who cares they've had a recent

correction this stock is straight up and

it ain't going anywhere and maybe that's

true or what's actually more likely to

be true is if that uh covid or rather

the student loan repayment uh begins

again and we do end up seeing some

pressure to Ulta's growth which Ulta is

is built on a lot of growth right now

you look at all times I mean even from a

p e ratio I'll pull let me pull up this

PEG ratio on Ulta but my my latest

recollection is that Ulta's growth was

actually pretty lofty not to be confused

with the company called Loft but anyway

lofty valuation and really relying on

growth so if you have something that

could take away even just the marginal

growth and write down growth at Ulta you

could see more of what you saw on the

right side there which was a correction

down but it's still only just a

temporary I mean still a range bound

correction we could actually break out

of this range would be the concern so uh

let's see here you've got you're sitting

at about an EPS on Ulta uh of a January

2024 of 2536 so we're going to divide

that by 447 divided by 25

36 that gives us a p e ratio of 17.6 now

you might say Hey Kevin that doesn't

sound so high why why is uh you know why

is that bad well what's bad is they're

only expected to grow their earnings by

about six percent that puts you at a PEG

ratio of nearly three for Ulta so on a

price to earnings growth basis it's very

high so these are some considerations

when it comes to student loans and what

we might end up seeing with student loan

repayments and some of the pain uh MC

Hammer thought the money would keep

coming in

yes yes exactly lifestyle creep yes

there's a lot of that a lot of a lot of

famous wealthy people who went bankrupt

uh just spending too much but anyway

these are some things to consider if you

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