Blowout earnings from Alphabet and Facebook; Biden's 100-day stock market performance; The Rental Car Crunch; Charles de Vaulx's suicide; Tough Mudder race

1) When I launched Empire Investment Report two year ago, the first four stocks I recommended to provide the foundation for the portfolio were mega-cap stocks that I thought were undervalued based on their strong future growth prospects: Berkshire Hathaway (BRK-B), Amazon (AMZN), Facebook (FB), and Alphabet (GOOGL).

Since then, they're up 38%, 86%, 82%, and 91%, respectively – an average of 74% versus 45% for the S&P 500 Index.

This week, Alphabet and Facebook reported phenomenal earnings – driving their stocks higher. Let's take a look at both...

Alphabet's revenue (excluding foreign currency changes) soared 32% to $55.3 billion, beating estimates by 7%. A major driver was Alphabet's YouTube subsidiary, which did a better job monetizing its billions of eyeballs, resulting in revenue jumping 49% to $6 billion. YouTube's viewership numbers boggle my mind... For example, 18- to 49-year-olds now spend more time watching YouTube than traditional TV!

Alphabet's bottom line was even more impressive, as the company is showing financial discipline consistent with a more mature company. Despite such massive revenue growth, operating expenses rose a mere 4%, such that operating income, adjusted for one-time events, more than doubled to $12.5 billion, even though Google Cloud and "Other Bets" each racked up more than $1 billion in losses. Adjusted earnings per share ("EPS") of $21.54 smashed expectations by more than a third.

In another welcome sign of Alphabet's new-found maturity, the company repurchased $11.4 billion of its own stock. This was Alphabet's largest-ever capital return and represented more than 85% of its free cash flow during the quarter.

I remain incredibly bullish on Alphabet, as I think it has at least four businesses with trillion-dollar potential in Search, YouTube, Cloud, and autonomous-vehicle company Waymo.

2) Turning to Facebook, the company reported arguably even better earnings – smashing revenue estimates by more than 10% and earnings per share estimates by more than 40%.

The company's ad sales, which account for 97% of revenue, grew a remarkable 46% to $25.4 billion. To put this in context, Facebook grew ad revenue by $8 billion year over year... or more than the 2020 revenue of social media peers Snap (SNAP), Pinterest (PINS), and Twitter (TWTR) combined!

Beyond ads, Facebook's virtual reality headset Oculus is taking off... as the company's "Other Revenue" grew 146% to $732 million.

Facebook's financial discipline was nearly as impressive as Alphabet's, as operating expenses were up just 15%, resulting in operating income nearly doubling to $11.4 billion.

With WhatsApp still very much under-monetized, in-app commerce expanding rapidly, and Oculus beginning to resemble a platform, I remain bullish on Facebook's future.

3) Here's an interesting fact I wasn't aware of: Biden's 100-day stock market performance is the hottest going back to the 1950s. Excerpt:

• President Joe Biden has witnessed an unprecedented growth on Wall Street in his first 100 days in office, better than any of his predecessors going to at least Dwight Eisenhower. 
• Massive stimulus and a booming economy, both of which were underway well before he took office, have helped propel the market.
• If anything, the market's main worry may be that it's moving too fast and a policy mistake could slow it down.

4) Here's more evidence of a booming economy...

I rented a car in Atlanta on Friday, and the cheapest rate I could find was $86 per day – 2 or 3 times what the normal rate would be. And even at these elevated prices, there were almost no rental cars in the garage, as you can see in this picture I took:

A friend added:

It's the same all over the country. A close family member has been traveling to one particular destination once every three weeks for the last few months, and for the last three trips the rate has been around $500 per day!

In Hawaii, the cheapest car rental in Maui for the month of March was $722 per day (see: Rental car prices are so high in Hawaii, tourists are renting U-Haul trucks)!

My family member chose not to rent for those kinds of prices and rely on Uber (UBER) and Lyft (LYFT) instead. But they're hard to come by this month too! Car shortage? No, driver shortage, thanks to high unemployment and other transfer payments.

Here's some advice: How to Deal With the Rental Car Crunch.

5) I met Charles a few times when he spoke at my old conference business, the Value Investing Congress. He was one of the good guys. How sad! Charles de Vaulx's apparent suicide a tragic Wall Street tale. Excerpt:

A prominent investor's apparent suicide after his financial empire collapsed is being mourned as a Wall Street tragedy.

Shortly before 1 p.m. Monday, Charles de Vaulx entered the posh Midtown tower at 717 Fifth Ave. that had long housed the offices of International Value Advisers, an investment firm founded 14 years ago, according to police.

Minutes later, de Vaulx – who built IVA into a financial powerhouse with $20 billion in assets at its peak before it abruptly liquidated last month – plummeted from the 10th floor, according to a building employee. Responders at the scene pronounced him dead at 1:05 p.m.

6) I had a fun time in Atlanta last weekend at my first Tough Mudder race in 17 months. I ran two laps (20 miles) in a torrential downpour with my buddy, former Navy SEAL Mark James. Here's a picture of us at the finish (I posted more pictures on Facebook here):

Best regards,

Whitney