Report
Dave Nicoski ...
  • Ross LaDuke
EUR 48.31 For Business Accounts Only

Vermilion Compass: Weekly Equity Strategy

Semiconductors Re-emerge as Leadership; Still Bullish

The Fed injected some volatility into the market after their December meeting, as they noted an uncertain inflation outlook and the SEP showed the median expected rate cuts for 2025 fell to just 50bps, down from 100bps at the September meeting. We discussed in our latest report (12/23/24 ETF Pathfinder), and continue to believe, that this is a buying opportunity. Market dynamics remain risk-on, the S&P 500 remains above 5850 (a key support level we have discussed since late November), mid-caps (IJH) and small-caps (IWM) remain above key supports at $61.50 and $218, and commodity prices (Bloomberg Commodity index, crude oil, and gasoline) remain neutral-to-bearish long-term, suggesting inflation concerns could be overblown. As a result, our outlook remains bullish as long as the S&P 500 remains above 5850 and 5600-5670, and we are buyers on this pullback.

Market Dynamics Remain Risk-On. High yield spreads are at 17-year narrows.
Underlyings
Ambarella Inc.

Archrock Inc.

Archrock is an energy infrastructure company with a pure-play focus on midstream natural gas compression. The company is the provider of natural gas compression services to customers in the oil and natural gas industry and a supplier of aftermarket services to customers that own compression equipment. The company has two primary business segments: Contract Operations, which provides contract operations services, including the personnel, equipment, tools, materials and supplies to meet its customers' natural gas compression needs; and Aftermarket Services, which sells parts and components and provides operation, maintenance, overhaul and reconfiguration services to customers who own compression equipment.

Cactus Inc

Cactus is a holding company. Through its subsidiaries, the company is primarily engaged in the design, manufacture and sale of wellhead and pressure control equipment. In addition, the company maintains a fleet of frac valves and ancillary equipment for short-term rental. The company's products are sold and rented principally for onshore unconventional oil and gas wells and are utilized during the drilling, completion and production phases of its customers' wells. The company also provides field services for all of its products and rental items to assist with the installation, maintenance and handling of the wellhead and pressure control equipment as well as provides repair and refurbishment services.

Chart Industries Inc.

Chart Industries is a manufacturer of equipment servicing multiple market applications in energy and industrial gas. The company's product portfolio is used throughout the liquid gas supply chain in the production, storage, distribution and end-use of atmospheric, hydrocarbon, and industrial gases. The company's equipment and systems are primarily used to cool gases often to cryogenic liquid temperatures and then to transport and store them as liquids. The company's products include vacuum insulated containment vessels, heat exchangers, cold boxes, liquefaction process units, other cryogenic components, gas processing equipment, ambient temperature fans and after market services.

Frank's International NV

Himax Technologies Inc. Sponsored ADR

KODIAK GAS SERVICES INC

Kopin Corp.

Kopin is an inventor, developer, manufacturer and seller of components and systems for industrial, public safety and consumer augmented and virtual reality wearable headsets, soldier, avionic and military armored vehicle applications, 3D optical inspection systems and training and simulation markets. The components that the company provided for sale in consisted of its proprietary miniature active-matrix liquid crystal displays, liquid crystal on silicon displays/ Spatial Light Modulators, organic light emitting diode displays, application specific integrated circuits, backlights, optical lenses and audio integrated circuits.

Liberty Oilfield Service

Liberty Oilfield Services is a provider of hydraulic fracturing services to onshore oil and natural gas exploration and production companies in North America. The company provides its services primarily in the Permian Basin, the Eagle Ford Shale, the Denver-Julesburg Basin, the Williston Basin and the Powder River Basin.

MaxLinear inc

MaxLinear is a provider of radio frequency, analog, and mixed-signal communications systems-on-chip solutions for the connected home, wired and wireless infrastructure, and industrial and multi-market applications. The company's products are integrated into a range of electronic devices, including cable, terrestrial, and satellite video set-top boxes and gateways, cable DOCSIS data and voice gateways, hybrid analog and digital televisions, direct broadcast satellite outdoor units, optical modules for data center, metro, and long-haul transport network applications, RF transceivers and modem solutions, wireline connectivity devices, and power management and interface products.

North American Construction Group

North American Construction Group is a holding company. Through its subsidiaries, Co. is organized into three business segments: the Heavy Construction and Mining segment which provides mining and site preparation services, and environmental services; the Piling segment which provides deep foundation construction and design build services, designs and manufactures screw piles and pipeline anchoring systems, provides tank maintenance services and sells pipeline anchoring systems; and the Pipeline segment which provides diameter pipeline construction and installation services as well as equipment rental.

ProPetro Holding Corp.

ProPetro Holding is a holding company. Through its subsidiary, the company is engaged as an oilfield services company providing hydraulic fracturing and other services to upstream oil and gas companies engaged in the exploration and production of North American unconventional oil and natural gas resources. The company's operations are primarily focused in the Permian Basin. In addition to its core hydraulic fracturing operations, the company provides complementary well completion and production services, including cementing, coiled tubing, flowback services and drilling. The company conducts its business through five segments: hydraulic fracturing (inclusive of acidizing), cementing, coil tubing, flowback and drilling.

Select Energy Services Inc. Class A

Select Energy Services is a provider of water-management solutions. The company's segments are: Water Services, which provides the services to support new oil and gas well completions as well as ongoing production over the life of the well, including water transfer, flowback and well testing; Water Infrastructure, which develops, builds and operates infrastructure solutions to support both new oil and gas well development; and Oilfield Chemicals, which develops, manufactures and provides a suite of completion and production chemical products, water treatment solutions and services utilized in hydraulic fracturing, stimulation, cementing and related well completion and production processes.

SiTime

SiTime is a provider of silicon timing systems. The company supplies oscillator products that are comprised of a MEMS resonator and clock IC that is integrated into a package, as well as standalone resonators. The company's products are designed to address a wide range of applications across a broad array of end markets. The company operates a fabless business model and leverages its global network of distributors and resellers to address the broad set of end markets that it serves.

Solaris Oilfield Infrastructure

Solaris Oilfield Infrastructure is a holding company. Through its subsidiaries, the company is a provider of supply chain management and logistics solutions for the oil and natural gas industry. The company's offerings include: system rental, which manufactures and rents equipment to manage the delivery, handling and storage of proppant and chemicals at the well site; field services, which provides trained personnel to maintain and support its systems, train its customers to operate the systems and assist in the transportation of its systems; and transloading services, which provides manifest and unit-train transloading services, as well as provides forward staging storage of regional and local proppant.

TETRA Technologies Inc.

TETRA Technologies is an oil and gas services company, focused on completion fluids and associated products and services, water management, frac flowback, production well testing and offshore rig cooling services, and compression services and equipment. The company has three divisions: Completion Fluids & Products, which manufactures and markets clear brine fluids, additives, and associated products and services as well as markets liquid and dry calcium chloride products; Water and Flowback Services, which provides water management services; Compression, which provides compression services and equipment for natural gas and oil production, gathering, transportation, processing, and storage.

USA Compression Partners LP

Provider
Vermilion Research
Vermilion Research

Vermilion Research delivers timely, actionable, and unique research inputs to professional investors. Our research strategists highlight securities which we believe are at major inflection points, based on our various proprietary technical indicators, and offer asymmetric risk/return profiles. We believe our research methodology, which is not limited by industry sector or market capitalization, enables us to deliver superior investment recommendations.

Our process begins by organizing all actively traded stocks into coherent sectors, then into logical industry groups. We then apply our proprietary relative strength tools to identify developing price trends. Once attractive trends are identified within a selected sectors or groups, we screen for individual stocks which we believe offer the best risk/reward profile. Vermilion offers U.S. and global equity market research products. Vermilion’s research team, which has received numerous awards and accolades, has a combined 70 year of experience in the analysis of investment securities.

Analysts
Dave Nicoski

Ross LaDuke

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