To The Moon

🧩 A pullback after reaching new highs, the looming recession is now a big concern.

🔍 $Howmet Aerospace Inc.(HWM)$ / $Meritage Homes(MTH)$ / $Ingevity(NGVT)$ : Precisely targeting industries that will benefit first.

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Revolutionary Road

|The hope of it all

On September 5, data from the U.S. Department of Labor shocked the market. August's job growth was only 22,000, with the unemployment rate rising to 4.3%, marking the fourth consecutive month of disappointing employment data. The non-farm payrolls for August fell significantly short of expectations, causing the stock market to rise initially before turning downward.

Which will arrive first, economic recession or inflation? At this moment, economists on Wall Street are engaged in intense debates about the economic outlook for the second half of 2025 and beyond. UBS has assessed U.S. economic data and concluded that recession risks have significantly risen, with a 93% probability in July. They further predict that the U.S. economic outlook will trend towards "weakness," a sentiment echoed by BofA, which also holds a pessimistic view of the economic future. JPMorgan has stated that such a decline in labor demand "is undoubtedly a warning sign of recession."

U.S. on the brink of recession? What kind of future awaits the world? In response to the employment data, U.S. Treasury Secretary Yellen stated that the U.S. economy is poised for a "significant acceleration" in the fourth quarter. This optimistic forecast stands in stark contrast to the current weak employment performance. Yellen expressed optimism that employment in manufacturing and construction will improve as business capital expenditures increase.

Despite the looming shadow of an economic recession, there are strong reasons for the market not to be entirely pessimistic. While pessimists may be correct, optimists take action to seize core profit opportunities, a timeless truth in trading. Notable opportunities to watch include:

🔍 $Howmet Aerospace Inc.(HWM)$ / $Meritage Homes(MTH)$ / $Ingevity(NGVT)$ .

| Market recap

Last Friday, major indices shifted from gains to losses. $NASDAQ(.IXIC)$ fell by 0.03%, but rose 1.14% over the week; $S&P 500(.SPX)$ decreased by 0.32%, while experiencing a weekly increase of 0.32%. The weak non-farm payroll for August bolstered market bets on a rate cut in September, leading indices to reach new highs before declining due to pressure from large tech stocks. Although there was a gradual recovery, the market closed slightly down.

Amid concerns regarding increasing market competition, $NVIDIA(NVDA)$ dropped 2.7%, dragging down the tech sector. However, notable performances among large-cap stocks included $Broadcom(AVGO)$ rising by 9.4% and $Tesla Motors(TSLA)$ increasing by 3.6%.

$NASDAQ Golden Dragon China Index(HXC)$ rose by 1.16%, $Baidu(BIDU)$ gained nearly 4%, and $Alibaba(BABA)$ saw a 3.6% increase.

Megacaps - Doubing down on the future

On September 5, 2025, the White House hosted a dinner inviting CEOs from tech giants like Microsoft, Google, Apple, and Meta to discuss the development of the AI industry, clearly outlining future core directions for AI in energy security, computational power investment, and application integration.

The most significant event of the evening was the commitments made by these companies regarding future investments: Microsoft pledged to invest $75-80 billion annually, Google plans to add $250 billion over two years, Meta committed $600 billion over four years, and Apple promised to bring back $600 billion for investments primarily in data center development and AI infrastructure.

$Tesla Motors(TSLA)$ : Elon's new agenda

Interestingly, the most prominent headline of the day came from Elon Musk, who did not attend the event above. Tesla's stock surged dramatically following the announcement of a new compensation plan for Musk, with a cap approaching $1 trillion. To become the highest-paid human in history, Musk's OKR include (but are not limited to): ultimately leading Tesla's market cap to $8.5 trillion, delivering 20 million Tesla vehicles, achieving 10 million active FSD subscriptions, delivering 1 million robots, and 1 million Robotaxis by 2025. Will you take the challenge?

IPO watch - King of the Continent

Upcoming IPO $Klarna Group plc(KLAR)$ was once Europe's highest-valued startup. During its peak in 2021 (a notably unique period), Klarna's valuation even surpassed that of some European banks.

After experiencing multiple delays, the long-awaited IPO has finally materialized. This Swedish company popularized the BNPL model globally, gaining favor among Gen Z. Currently, the company's IPO valuation is approximately $14 billion—although this figure has shrunk by 69% from its peak, it marks a step out of the shadows towards a brighter future.

In 2021, Klarna soared ahead, leading in valuation among global fintech firms and becoming a frontrunner among European startups, only trailing Stripe. However, in 2022, rising interest rates and tightening regulations on BNPL led to a staggering 85% drop in Klarna's valuation, halving it to $6.7 billion.

Can it regain its golden era? Klarna has now expanded its services into advertising and consumer services, with an improving financial outlook, and is expected to become the biggest IPO of the year. Following its listing, will Klarna surpass $Affirm Holdings, Inc.(AFRM)$ ? Investors have high hopes: Klarna's successful IPO could not only yield returns but also pave the way for Stripe, potentially ushering in more good news for the market.

Top movers

• MU: The U.S. has taken strong action against Chinese semiconductor companies, revoking Validated End User (VEU) authorizations, resulting in significant gains for U.S. HDD and memory chip manufacturers. $Micron Technology(MU)$ rose by 5.8%, $SanDisk Corp.(SNDK)$ by 9.7%, and $Seagate Technology PLC(STX)$ by 2.3%.

• AVGO: Meanwhile, a chip battle is unfolding in the U.S., when $Broadcom(AVGO)$ surged 9.4% after gaining a fourth ASIC customer and reports of a deep collaboration with OpenAI drove its stock price higher. Competitor $NVIDIA(NVDA)$ fell 2.7% due to concerns over increasing market competition.

• OPEN: Amid fears of an economic downturn, the impressive meme stock army is making a comeback, with $Opendoor Technologies Inc(OPEN)$ rising by 11.6%. Discussions about the stock on Reddit remain intense, with pre-market prices approaching $7, and the sentiment continues.

|Revolutionary road

The significant slowdown in job growth has thrown the White House into a whirlwind of scrutiny. In response, Secretary Yellen pointed out that there is currently a "record investment intention" from companies planning to build production facilities in the U.S. She expects this will lead to job opportunities in construction first, followed by manufacturing. Companies likely to benefit first include 🔍 $Howmet Aerospace Inc.(HWM)$ / $Meritage Homes(MTH)$ / $Ingevity(NGVT)$ .

HWM

$Howmet Aerospace Inc.(HWM)$ is a leader in global aerospace engine structural components and one of the first companies to produce aerospace engine structural castings. Its core business includes engines and fastening systems. HWM has notable clients such as Boeing BA, which uses Howmet’s parts for its once again rising 737 Max aircraft. Lockheed Martin LMT also collaborates with Howmet on its F-35 Lightning fighter jets, with orders for engine spares accumulating. Currently, investors are actively withdrawing from large tech stocks and turning towards relatively underperforming sectors this year, such as small-cap stocks and non-tech companies, providing additional momentum for the defense sector.

The ongoing global geopolitical tensions, coupled with the increasing size of the global aviation fleet and a surge in military aircraft modernization, are projected to grow the global aerospace fastener market from $7.3 billion in 2024 to $14.9 billion by 2034, with a CAGR of 7.5%.

Benefiting from strong demand in the defense aerospace and industrial markets, the company has reported growth in its business. In the second quarter of 2025, Howmet Aerospace exceeded expectations with revenues of $2.53 billion and an EPS of $0.91, both surpassing analyst forecasts. The company anticipates that the commercial aviation and defense sectors will drive profit growth, particularly through maintenance, repair, and overhaul services, raising its full-year guidance for 2025 to $8.13 billion in revenue and an EPS of $3.60.

MTH

$Meritage Homes(MTH)$ is one of the top five publicly traded homebuilders in the U.S., with a 40-year history and a focus on the affordable entry-level and first-time homebuyer markets across 25 markets in 12 states. The strategy of constructing model homes and offering a 60-day closing guarantee is a key competitive advantage for Meritage Homes. Operating in 12 states, Meritage Homes has delivered over 200,000 homes.

Although this business faces some pressure, the company’s stock continues to rise, with a PE ratio of less than 9, making it attractive. Home deliveries in the second quarter of 2025 slightly increased from 4,118 units in Q2 2024 to 4,170 units, but home delivery revenue decreased by 5% to $1.62 billion due to a drop in average prices. Despite growth in sales, the company continues to face ongoing challenges in maintaining profitability.

To bolster market confidence, the company will distribute a quarterly dividend of $0.43 per share, payable on September 30, 2025, with a record date of September 16, 2025, yielding 2.29%. Additionally, the company plans to increase its share repurchase authorization by $500 million.

NGVT

$Ingevity(NGVT)$ is a leading global manufacturer of specialty chemicals. Despite facing revenue challenges, the company's profit margins have significantly improved, with EPS exceeding expectations. On August 5, the company released its Q2 2025 earnings report, emphasizing strong cash flow generation and continued progress in deleveraging while raising its full-year guidance. Management believes the "performance demonstrates a continued execution of strategic priorities, with significant improvements in business profit margins and strong cash flow generation."

The company views improvements in North American automotive production as a key factor in updating its guidance, expecting the Performance Materials segment to maintain an EBITDA margin of over 50% for the year. This growth is primarily driven by increasing demand for fuel-efficient internal combustion engine (ICE) vehicles and hybrid cars. Ingevity also highlighted progress in carbon technology for silicon anode batteries.

In July, Ingevity announced a collaboration with the U.S. Department of Energy's National Energy Technology Laboratory (NETL) to use simplified chemical processes to convert biomass and plastic waste-derived carbon materials into graphite, upgrading recycled plastic waste for use as feedstock in producing a range of high-value graphite materials suitable for supercapacitors and fast-charging battery anodes.

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