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19800.0
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2022-08-11 00:00:00 UTC
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Disney (DIS) Q3 Earnings Top Estimates, Revenues Jump Y/Y
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AAPL
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https://www.nasdaq.com/articles/disney-dis-q3-earnings-top-estimates-revenues-jump-y-y
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nan
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The Walt Disney Company DIS reported third-quarter fiscal 2022 adjusted earnings of $1.09 per share, beating the Zacks Consensus Estimate by 15.96% and surging 36.3% year over year.
Revenues jumped 26.3% year over year to $21.50 billion and beat the consensus mark by 1.83%.
Segment Details
Media and Entertainment Distribution (65.6% of revenues) revenues increased 11.3% year over year to $14.11 billion.
Revenues from Linear Networks inched up 3.3% year over year to $7.19 billion. Direct-to-Consumer revenues surged 18.8% year over year to $5.06 billion. Content Sales/Licensing and Other revenues soared 25.6% year over year to $2.11 billion.
Parks, Experiences and Products revenues (34.4% of revenues) surged 70.3% year over year to $7.39 billion.
Domestic revenues were $5.42 billion, significantly up from $2.66 billion reported in the year-ago quarter. International revenues increased 49.8% year over year to $788 million in the reported quarter.
The Walt Disney Company Price, Consensus and EPS Surprise
The Walt Disney Company price-consensus-eps-surprise-chart | The Walt Disney Company Quote
Disney’s nearest peer, Comcast CMCSA reported strong second-quarter 2022 results in its Theme Park business.
Comcast generated Theme Park revenues of $1.8 billion, up 64.8% year over year, reflecting higher attendance and increases in guest spending at its parks in the U.S. and Japan.
Meanwhile, revenues from Consumer Products increased 2.1% year over year to $1.18 billion.
Subscriber Details: Disney+
ESPN+ had 22.8 million paid subscribers at the end of the fiscal third quarter compared with 14.9 million at the end of the year-ago quarter.
Disney+, as of Jul 2, 2022, had 152.1 million paid subscribers compared with 116 million as of Jul 3, 2021.
The rapidly growing subscriber base strengthens Disney’s position in the increasingly saturated streaming space currently dominated by Netflix NFLX and the growing prominence of services from Apple AAPL, Peacock, Amazon prime video and HBO Max.
Netflix lost 0.97 million paid subscribers globally, lower than its estimated loss of two million users. Netflix had added 1.54 million paid subscribers in the year-ago quarter.
Apple’s streaming service, Apple TV+, continues to gain recognition with its critically acclaimed and popular shows like Ted Lasso. This year, Apple TV+ has earned 52 Emmy nominations, with the second season of Ted Lasso getting 20 nominations overall. Another show, Severance, has garnered 14 total nominations in its first season.
Meanwhile, Disney’s Hulu ended the quarter with 46.2 million paid subscribers, up from 42.8 million reported in the year-ago quarter.
The average monthly revenue per paid subscriber for ESPN+ increased 2% year over year to $4.55.
The average monthly revenue per paid subscriber for Disney+ was $4.35, up 5% year over year.
The average monthly revenue per paid subscriber for Disney’s Hulu SVOD-only service declined 2% year over year to $12.92.
The average monthly revenue per paid subscriber for Disney’s Hulu Live TV + SVOD service rose 5% from the year-ago quarter to $87.92.
Operating Details
Costs & expenses increased 21.7% year over year to $19.07 billion in the reported quarter.
Segmental operating income was $3.57 billion, which jumped 49.7% year over year.
Media and Entertainment Distribution’s segmental operating income declined 31.8% year over year to $1.38 billion.
Linear Networks’ operating income increased 12.9% to $2.47 billion.
Direct-to-Consumer operating loss was $1.06 billion, wider than the year-ago quarter’s loss of $293 million. The increase in loss was primarily attributed to higher losses at Disney+, and to a lesser extent, at ESPN+.
Content Sales/Licensing and Other operating losses were $27 million against operating income of $132 million reported in the year-ago quarter.
Parks, Experiences and Products’ operating income was $2.19 billion compared with the year-ago quarter’s operating income of $356 million.
The domestic segment reported an operating income of $1.65 billion compared with $2 million reported in the year-ago quarter.
The international segment reported a loss of $64 million compared with an operating loss of $210 million reported in the year-ago quarter.
Consumer Products’ operating profit increased 6.2% year over year to $599 million.
Balance Sheet
As of Jul 2, 2022, cash and cash equivalents were $12.96 billion compared with $13.27 billion as of Apr 2, 2022.
Total borrowings were $51.60 billion as of Jul 2, 2022 compared with $46.6 billion as of Apr 2, 2022.
Free cash flow was $1.92 billion in the reported quarter compared with free cash flow of $1.47 billion in the previous quarter.
Outlook
For fiscal 2022, Disney expects capital expenditures to be $5 billion compared with fiscal 2021 capital expenditure of $3.6 billion.
This Zacks Rank #3 (Hold) company expects cash content spending to be roughly $30 billion. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
For the next couple of years, Disney expects to be roughly in the low $30 billion range.
Moreover, for 2024, Disney+ subscriber base is now expected between 135 million and 165 million. Disney+ Hotstar now expects to have 80 million subscribers by the end of fiscal 2024.
Zacks' Top Picks to Cash in on Electric Vehicles
Big money has already been made in the Electric Vehicle (EV) industry. But, the EV revolution has not hit full throttle yet. There is a lot of money to be made as the next push for future technologies ramps up. Zacks’ Special Report reveals 5 picks investors
See 5 EV Stocks With Extreme Upside Potential >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Apple Inc. (AAPL): Free Stock Analysis Report
Comcast Corporation (CMCSA): Free Stock Analysis Report
Netflix, Inc. (NFLX): Free Stock Analysis Report
The Walt Disney Company (DIS): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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The rapidly growing subscriber base strengthens Disney’s position in the increasingly saturated streaming space currently dominated by Netflix NFLX and the growing prominence of services from Apple AAPL, Peacock, Amazon prime video and HBO Max. Apple Inc. (AAPL): Free Stock Analysis Report The average monthly revenue per paid subscriber for Disney’s Hulu Live TV + SVOD service rose 5% from the year-ago quarter to $87.92.
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The rapidly growing subscriber base strengthens Disney’s position in the increasingly saturated streaming space currently dominated by Netflix NFLX and the growing prominence of services from Apple AAPL, Peacock, Amazon prime video and HBO Max. Apple Inc. (AAPL): Free Stock Analysis Report The Walt Disney Company DIS reported third-quarter fiscal 2022 adjusted earnings of $1.09 per share, beating the Zacks Consensus Estimate by 15.96% and surging 36.3% year over year.
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The rapidly growing subscriber base strengthens Disney’s position in the increasingly saturated streaming space currently dominated by Netflix NFLX and the growing prominence of services from Apple AAPL, Peacock, Amazon prime video and HBO Max. Apple Inc. (AAPL): Free Stock Analysis Report International revenues increased 49.8% year over year to $788 million in the reported quarter.
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Apple Inc. (AAPL): Free Stock Analysis Report The rapidly growing subscriber base strengthens Disney’s position in the increasingly saturated streaming space currently dominated by Netflix NFLX and the growing prominence of services from Apple AAPL, Peacock, Amazon prime video and HBO Max. International revenues increased 49.8% year over year to $788 million in the reported quarter.
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19801.0
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2022-08-11 00:00:00 UTC
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Meta Platforms (META) Launches Portal Productivity Tools
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AAPL
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https://www.nasdaq.com/articles/meta-platforms-meta-launches-portal-productivity-tools
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nan
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nan
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Meta Platforms META recently announced that it is collaborating with the Duet Display app, which turns Meta Portal Plus (Gen 2) and Meta Portal Go into a second display for computer screens.
This will help users juggle multiple apps and complex tasks seamlessly without any lag. Also, users don’t need to take up desk space with a separate monitor.
Simultaneously, Meta Platformslaunched the Meta Portal Companion app on Apple’s AAPL Mac for easy screen sharing and access to video-calling controls.
META specifically built the Meta Portal app for Apple’s macOS, which helps connect the touch-based Meta Portal from any Mac, making it easier to work across devices. The new portal app helps in sharing the computer screen while on a call and enables to quickly access controls to raise one’s hand, mute oneself and adjust the volume during video calls on Portal.
Meta Platforms is investing heavily in building different AI softwares, which will help it address the negative impact of the digital advertising business and diversify income. The recent software launched in collaboration with the Duet Display app will help META address the current hybrid work trend and aid users in working smoothly from their homes.
The newly-launched Meta Portal Plus is available for free in the United States, Canada, the UK, France, Spain, Italy, Australia and New Zealand. Whereas, Meta Portal Go is available for free in the US, Canada, the UK, France, Spain and Italy.
Meta Platforms, Inc. Price and Consensus
Meta Platforms, Inc. price-consensus-chart | Meta Platforms, Inc. Quote
Meta Platforms Investing Heavily in AI to Aid Revenue Growth
Shares of Meta Platforms, which currently has a Zacks Rank #4 (Sell), have tumbled 45.8% in the year-to-date period compared with the Zacks Internet – Software industry’s decline of 43.4%. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
The recent fall in the share price can be attributed to geopolitical tensions like the Russia-Ukraine war, which reduced META’s monthly active users across its Family of apps, namely Facebook and Instagram. Also rising inflation weakened digital advertising revenues. The global economic downturn is currently witnessing a worse phase than what it was a quarter ago. This, in turn, hurt investors’ sentiments around the ad-revenue-dependent companies.
Intensifying competition for ad dollars and user engagement from the likes of Snap SNAP, Twitter TWTR and TikTok are other headwinds that persist.
Snap is benefiting from improving user engagement, particularly in the 13-34-year-old demography, which is expanding its advertiser base. SNAP is also providing competition to Meta in the metaverse. It collaborated with Vogue to feature a virtual try-on experience of select pieces from Balenciaga, Dior and Gucci, which will be available for snapchatters, globally.
Even as Meta Platforms is investing aggressively in building the metaverse, Twitter surpassed it as the first social media giant to enter the Non fungible token marketplace by launching a tool to showcase and sell NFTs on its platform.
Although Meta Platforms’ short-term revenue growth looks bleak, it is confident about its long-term prospects. META is pumping resources into developing AI to address solutions for megatrends like hybrid work environment, which will drive its user base across various platforms like Meta Portal Go.
Investments in AI are also expected to draw higher revenues from its ad business.
Reels is the newest trend right now and AI is increasingly recommending the feeds. This will enable Meta to evolve its ad systems to help creators earn through Facebook and Instagram, and create new ad revenues for organic growth.
Additionally, this strategic move will pool in funds for building the metaverse and generate positive returns from Meta Platforms’ investments in AI.
Zacks' Top Picks to Cash in on Electric Vehicles
Big money has already been made in the Electric Vehicle (EV) industry. But, the EV revolution has not hit full throttle yet. There is a lot of money to be made as the next push for future technologies ramps up. Zacks’ Special Report reveals 5 picks investors
See 5 EV Stocks With Extreme Upside Potential >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Apple Inc. (AAPL): Free Stock Analysis Report
Twitter, Inc. (TWTR): Free Stock Analysis Report
Snap Inc. (SNAP): Free Stock Analysis Report
Meta Platforms, Inc. (META): Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Simultaneously, Meta Platformslaunched the Meta Portal Companion app on Apple’s AAPL Mac for easy screen sharing and access to video-calling controls. Apple Inc. (AAPL): Free Stock Analysis Report Meta Platforms is investing heavily in building different AI softwares, which will help it address the negative impact of the digital advertising business and diversify income.
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Simultaneously, Meta Platformslaunched the Meta Portal Companion app on Apple’s AAPL Mac for easy screen sharing and access to video-calling controls. Apple Inc. (AAPL): Free Stock Analysis Report The recent software launched in collaboration with the Duet Display app will help META address the current hybrid work trend and aid users in working smoothly from their homes.
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Simultaneously, Meta Platformslaunched the Meta Portal Companion app on Apple’s AAPL Mac for easy screen sharing and access to video-calling controls. Apple Inc. (AAPL): Free Stock Analysis Report Meta Platforms META recently announced that it is collaborating with the Duet Display app, which turns Meta Portal Plus (Gen 2) and Meta Portal Go into a second display for computer screens.
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Simultaneously, Meta Platformslaunched the Meta Portal Companion app on Apple’s AAPL Mac for easy screen sharing and access to video-calling controls. Apple Inc. (AAPL): Free Stock Analysis Report Meta Platforms is investing heavily in building different AI softwares, which will help it address the negative impact of the digital advertising business and diversify income.
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19802.0
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2022-08-11 00:00:00 UTC
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7 Reddit Stocks to Buy on the Dip
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AAPL
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https://www.nasdaq.com/articles/7-reddit-stocks-to-buy-on-the-dip
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nan
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nan
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InvestorPlace - Stock Market News, Stock Advice & Trading Tips
Investors looking to understand the overall picture around Reddit stocks should consider ApeWisdom. The website tracks trends surrounding popular stocks that are gaining or already have lots of traction on the aggregation and discussion social media platform. So, it’s a great first stop when considering which Reddit stocks to buy on the dip.
It really depends on the risk tolerance of the individual who uses Reddit forinvestment advice but these stocks can be a mixed bag. Speculation is rampant on the site. That means risk-tolerant investors can easily find riskier picks on the site.
But at the same time, there is plenty of more moderate advice to be found as well. That’s mostly what is included in this list, because predicting the next AMTD Digital (NYSE:HKD) is exceedingly difficult. That said, here are seven Reddit stocks to buy on the dip.
TSLA Tesla $874.16
AA Alcoa $54.43
AAPL Apple $169.68
AMD Advanced Micro Devices $100.09
ON ON Semiconductor $66.96
PYPL PayPal $100.39
OXY Occidental Petroleum $65.24
Reddit Stock to Buy on the Dip: Tesla (TSLA)
Source: Zigres / Shutterstock.com
It’s fairly easy to construct a positive narrative around Tesla (NASDAQ:TSLA) stock whenever it falters. So, although Tesla is down 25% year-to-date (YTD), plenty of bullishness remains.
The electric vehicle (EV) pioneer has proven masterful at remaining top-of-mind. Company leadership is doing what it should be given share prices are part science and part art. Elon Musk is always in the spotlight, and that keeps Tesla prices high to a degree.
Investors should also remain optimistic about TSLA stock on the news that shareholders are behind a 3-for-1 stock split based on early voting. A split would be the second of its kind in two years if successful. The last split resulted in a tripling in share price, so investors are likely to be behind this one as well.
Further, Musk recently stated Tesla will require roughly a dozen factories in order to meet its annual sales goal of 20 million vehicles by 2030. All signs point to serious growth ahead.
Alcoa (AA)
Source: Daniel J. Macy / Shutterstock.com
Alcoa (NYSE:AA) is a commodity stock representing a firm that produces bauxite, alumina and aluminum products. It presents an opportunity to buy a company that is growing steadily, yet hasn’t been immune to macrotrends.
Company-wide revenues increased per the most recent earnings report. In fact, revenue grew nearly 29% in the second quarter while net income rose by more than 76%, reaching $496 million in the quarter.
But the problem is that sequential results may be scaring investors away. Alcoa’s revenues increased from $3.3 billion to $3.6 billion between the first and second quarters this year. However, net income decreased from $577 million to $496 million.
Investors are shying away from shares based on that fact. But for buyers who understand sequential results don’t make for an apples-to-apples comparison, the opportunity is obvious.
At the end of the day, Alcoa is performing extraordinarily well and has met or exceeded guidance in each of the last four quarters.
Reddit Stock to Buy on the Dip: Apple (AAPL)
Source: Vytautas Kielaitis / Shutterstock.com
In some sense, Apple (NASDAQ:AAPL) has already beaten the dip. The firm’s July 28 earnings report proved to be better than expected. Apple reported $83 billion in sales and earnings per share, or EPS, of $1.20 while Wall Street had been expecting $82.8 billion and $1.16, respectively.
Those strong results were bolstered by iPhone sales that totaled $40.7 billion. It wasn’t all rosy, however, as Mac sales fell short of their $8.7 billion goal, reaching $7.4 billion.
Overall, the news was strong, as Apple set a June quarter revenue record. The company returned $28 billion to its shareholders during the quarter as well.
Further, Apple generated $23 billion in operating cash flow, which suggests it will have no problem financing its growth objectives, including bringing chip manufacturing in-house for iPhones. There’s a strong case to be made that Apple is the best tech stock available at this time.
Advanced Micro Devices (AMD)
Source: JHVEPhoto / Shutterstock.com
Advanced Micro Devices (NASDAQ:AMD) stock is primarily known as a semiconductor supplier to the computer industry and data centers.
Investors are stumbling to make sense of recent news as the company sees a weakening personal computer market. Despite the fact that AMD derives much of its business from that sector and predicts a slowdown, the company has not slashed its full-year outlook. That is in sharp contrast to rival Intel (NASDAQ:INTC).
Investors should understand AMD is doing well despite the broader macro environment. Revenue increased 70% following AMD’s long-awaited acquisition of Xilinx. That acquisition did, however, lead to net income decreasing 37% in the quarter.
The bullish narrative is that a reinvigorated AMD, bolstered by Xilinx’s strength in FPGA chips, looks much stronger moving forward and is better able to capture important markets.
Reddit Stock to Buy on the Dip: ON Semiconductor (ON)
Source: Shutterstock
ON Semiconductor (NASDAQ:ON) stock represents a rapidly-growing, profitable chipmaker involved in several important sectors.
The company has a strong presence in the automotive sector and is particularly notable for its position in relation to EVs. And while it benefits from secular trends around that burgeoning industry, its current performance should really attract investors.
The company just recorded its first-ever quarter with revenues in excess of $2 billion, representing a 25% increase on a year-over-year (YOY) basis. Firm profits increased from $184.1 million to $455.8 million in the same period.
The company is currently benefiting from strong auto demand, so ON stock is ideal for investors seeking a stock to capitalize on that trend. It also expects to record revenues exceeding $2 billion in the coming quarter.
PayPal (PYPL)
Source: Michael Vi / Shutterstock.com
There’s lots of good news surrounding PayPal (NASDAQ:PYPL) stock currently. For one, the pioneering fintech firm did better than expected in Q2. Perhaps most importantly, PayPal’s Q2 earnings exceeded analyst expectations.
Shares lost massive value in 2022 and the company had to revise guidance downward earlier in the year. Prices tumbled and had the market wondering if PayPal was on a path to irrelevance as the market tightens.
The earnings beat eased a lot of that worry. PayPal also revealed a $15 billion share buyback plan which should serve to ease investor worries even more.
PYPL stock is unlikely to rebound to the high-$200 price range it tested in late 2021. But there is still plenty of upside from its current $99 price point. There are signs the tech wreck has turned a corner. If that’s true, PayPal is at a great entry point.
Reddit Stock to Buy on the Dip: Occidental Petroleum (OXY)
Source: Pavel Kapysh / Shutterstock.com
Occidental Petroleum (NYSE:OXY) stock saw an uptick in interest through Q2 as Warren Buffett’s firm bought heavily in June and July. That had many investors interested in the oil extraction firm.
Buffett was proven correct as Occidental Petroleum topped estimates in the quarter on strong commodity prices. The reason to like OXY stock moving forward is the company maneuvered deftly this quarter. It used those higher-than-anticipated profits to pay down a whopping 19% of outstanding debts.
That’s a textbook Buffett play. Additionally, the company repurchased $1.1 billion of its shares in the quarter, proving it rewards shareholders who believe in it. In short, energy stocks will remain volatile, but OXY stock is operating a fundamentally smart business with long-term value in mind.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
The post 7 Reddit Stocks to Buy on the Dip appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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TSLA Tesla $874.16 AA Alcoa $54.43 AAPL Apple $169.68 AMD Advanced Micro Devices $100.09 ON ON Semiconductor $66.96 PYPL PayPal $100.39 OXY Occidental Petroleum $65.24 Reddit Stock to Buy on the Dip: Tesla (TSLA) Source: Zigres / Shutterstock.com It’s fairly easy to construct a positive narrative around Tesla (NASDAQ:TSLA) stock whenever it falters. Reddit Stock to Buy on the Dip: Apple (AAPL) Source: Vytautas Kielaitis / Shutterstock.com In some sense, Apple (NASDAQ:AAPL) has already beaten the dip. Further, Musk recently stated Tesla will require roughly a dozen factories in order to meet its annual sales goal of 20 million vehicles by 2030.
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TSLA Tesla $874.16 AA Alcoa $54.43 AAPL Apple $169.68 AMD Advanced Micro Devices $100.09 ON ON Semiconductor $66.96 PYPL PayPal $100.39 OXY Occidental Petroleum $65.24 Reddit Stock to Buy on the Dip: Tesla (TSLA) Source: Zigres / Shutterstock.com It’s fairly easy to construct a positive narrative around Tesla (NASDAQ:TSLA) stock whenever it falters. Reddit Stock to Buy on the Dip: Apple (AAPL) Source: Vytautas Kielaitis / Shutterstock.com In some sense, Apple (NASDAQ:AAPL) has already beaten the dip. Advanced Micro Devices (AMD) Source: JHVEPhoto / Shutterstock.com Advanced Micro Devices (NASDAQ:AMD) stock is primarily known as a semiconductor supplier to the computer industry and data centers.
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TSLA Tesla $874.16 AA Alcoa $54.43 AAPL Apple $169.68 AMD Advanced Micro Devices $100.09 ON ON Semiconductor $66.96 PYPL PayPal $100.39 OXY Occidental Petroleum $65.24 Reddit Stock to Buy on the Dip: Tesla (TSLA) Source: Zigres / Shutterstock.com It’s fairly easy to construct a positive narrative around Tesla (NASDAQ:TSLA) stock whenever it falters. Reddit Stock to Buy on the Dip: Apple (AAPL) Source: Vytautas Kielaitis / Shutterstock.com In some sense, Apple (NASDAQ:AAPL) has already beaten the dip. InvestorPlace - Stock Market News, Stock Advice & Trading Tips Investors looking to understand the overall picture around Reddit stocks should consider ApeWisdom.
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TSLA Tesla $874.16 AA Alcoa $54.43 AAPL Apple $169.68 AMD Advanced Micro Devices $100.09 ON ON Semiconductor $66.96 PYPL PayPal $100.39 OXY Occidental Petroleum $65.24 Reddit Stock to Buy on the Dip: Tesla (TSLA) Source: Zigres / Shutterstock.com It’s fairly easy to construct a positive narrative around Tesla (NASDAQ:TSLA) stock whenever it falters. Reddit Stock to Buy on the Dip: Apple (AAPL) Source: Vytautas Kielaitis / Shutterstock.com In some sense, Apple (NASDAQ:AAPL) has already beaten the dip. InvestorPlace - Stock Market News, Stock Advice & Trading Tips Investors looking to understand the overall picture around Reddit stocks should consider ApeWisdom.
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19803.0
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2022-08-11 00:00:00 UTC
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2 Best Buffett Stocks to Buy for the Long Haul
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AAPL
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https://www.nasdaq.com/articles/2-best-buffett-stocks-to-buy-for-the-long-haul
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nan
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nan
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If you're looking to invest like Warren Buffett's Berkshire Hathaway, you'll need to be ready to strap in for years on end to see your purchases pay off big. The Oracle of Omaha is accustomed to that, but for most everyone else, it's nice to see a bit of growth right away to confirm that their decision was sound.
In that vein, there are a couple of Buffett stocks that are likely to be both short- and long-term winners. You probably won't lose any sleep at night as a result of holding these companies. And you'll likely become wealthier, too.
1. Johnson & Johnson
Though it only makes up 0.02% of Buffett's holdings, Johnson & Johnson (NYSE: JNJ) is a great stock for the steady and long-term wealth compounding he's known for chasing. Since early August 2012, its trailing-12-month (TTM) net income has grown by 116%, topping $18.3 billion. To accomplish that, the company develops and sells a slew of medicines and vaccines, not to mention medical devices and consumer health products like Sudafed and Tylenol.
It's likely that J&J's long track record of success in growing its diversified base of revenue year after year is what attracted Buffett. The only competitive advantages that the company has are its sheer scale compared to competitors and the brand strength of its products, so it doesn't exactly have the wide economic moat that Buffett would normally be looking for.
Nonetheless, a large portion of its product mix speaks to a Buffett preference for generating income without needing to invest more in development. Think about it: You've probably bought Tylenol or Listerine mouthwash many times in your life, and the formulas haven't changed by very much at all, nor have J&J's unit economics for producing them. And the same is true for some of its medical technologies as well: Derivatives of the sterile sutures it first started making decades ago are still used in clinics everywhere.
While it hasn't outperformed the market in the last 10 years, the company delights its shareholders by consistently paying and increasing its dividend. Though Buffett isn't traditionally a lover of dividends, J&J's ability to keep paying and hiking them speaks to its financial stability and health over time, which doubtlessly both attract him. Just be ready to hold your shares for a Buffett-esque period of a few decades to get the most out of your investment.
2. Apple
Apple (NASDAQ: AAPL) makes up nearly 42.8% of Buffett's portfolio, and it's his single largest holding by far. Its smartphones, computers, peripherals, software, streaming video services, and payment solutions are sold around the globe, and its TTM net income of more than $99.6 billion is significantly larger than the gross domestic product (GDP) of most of the countries in the world.
Plus, Apple is the most valuable brand in the world, which means it has an economic moat that supports customer retention. And Buffett loves wide moats, as they preserve profit margins in the face of determined competition.
Its moat is so effective that its profit margin has actually been increasing over time, albeit slowly. That's quite unusual, as the typical trajectory for massive businesses is that they end up seeing their margin eroded by competition as their markets are saturated. The takeaway for investors is that Apple is so adept at developing new products in its ecosystem and catering to consumer preferences that it's hard for other players to undercut them across the board.
The other appeal of holding this stock for the long haul is that management is aggressive about returning capital to shareholders despite also spending plenty on investments for future growth. Since 2012, it repurchased $529.1 billion of its shares in addition to paying out $128.2 billion in dividends. That's a major part of the reason the return of its shares over the last 10 years crushed the market's return of 263.3%, growing by 782%.
It's forward dividend yield of less than 0.6% isn't good for much more than beer money, but with so many share repurchases, it shouldn't dissuade investors whatsoever.
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Alex Carchidi has positions in Apple. The Motley Fool has positions in and recommends Apple and Berkshire Hathaway (B shares). The Motley Fool recommends Johnson & Johnson and recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), long March 2023 $120 calls on Apple, short January 2023 $200 puts on Berkshire Hathaway (B shares), short January 2023 $265 calls on Berkshire Hathaway (B shares), and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Apple Apple (NASDAQ: AAPL) makes up nearly 42.8% of Buffett's portfolio, and it's his single largest holding by far. The only competitive advantages that the company has are its sheer scale compared to competitors and the brand strength of its products, so it doesn't exactly have the wide economic moat that Buffett would normally be looking for. Though Buffett isn't traditionally a lover of dividends, J&J's ability to keep paying and hiking them speaks to its financial stability and health over time, which doubtlessly both attract him.
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Apple Apple (NASDAQ: AAPL) makes up nearly 42.8% of Buffett's portfolio, and it's his single largest holding by far. Johnson & Johnson Though it only makes up 0.02% of Buffett's holdings, Johnson & Johnson (NYSE: JNJ) is a great stock for the steady and long-term wealth compounding he's known for chasing. The Motley Fool has positions in and recommends Apple and Berkshire Hathaway (B shares).
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Apple Apple (NASDAQ: AAPL) makes up nearly 42.8% of Buffett's portfolio, and it's his single largest holding by far. Johnson & Johnson Though it only makes up 0.02% of Buffett's holdings, Johnson & Johnson (NYSE: JNJ) is a great stock for the steady and long-term wealth compounding he's known for chasing. 10 stocks we like better than Johnson & Johnson When our award-winning analyst team has a stock tip, it can pay to listen.
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Apple Apple (NASDAQ: AAPL) makes up nearly 42.8% of Buffett's portfolio, and it's his single largest holding by far. While it hasn't outperformed the market in the last 10 years, the company delights its shareholders by consistently paying and increasing its dividend. Since 2012, it repurchased $529.1 billion of its shares in addition to paying out $128.2 billion in dividends.
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2022-08-11 00:00:00 UTC
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Bill George Talks About What Makes a Good CEO
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https://www.nasdaq.com/articles/bill-george-talks-about-what-makes-a-good-ceo
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Some leaders get it, and some really don't. During Bill George's tenure as CEO at Medtronic, the company's market cap rose from $1 billion to $60 billion. He believes that leading with authenticity is one of the reasons he was able to help do that. Motley Fool producer Ricky Mulvey caught up with George to discuss his book, True North: Leading Authentically in Today's Workplace, as well as:
How Best Buy CEO Corie Barry pivoted during the pandemic.
Mark Zuckerberg vs. Satya Nadella.
Why more companies may benefit from giving CEOs a term limit.
Mary Barra's big goals at General Motors.
How to find your own "true north."
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.
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This video was recorded on August 6, 2022.
Bill George: CEOs, instead of talking about last quarter's earnings, look, that's history. It's interesting, but it's history. You should be talking about market share, net promoter scores, customer satisfaction, new products, new innovation, what's coming. What are your employee surveys showing in terms of the engagement of your employees?
Chris Hill: I'm Chris Hill and that's Bill George. He knows a thing or two about spotting great leaders. He's a senior fellow at the Harvard Business School and before that, he spent a decade as the CEO of Medtronic, overseeing the growth and the company's market cap from one billion dollar to 60 billion. Ricky Mulvey caught up with Bill George to talk about how investors like us can evaluate CEOs, turnarounds at Microsoft and General Motors, and Best Buy, and why more companies could benefit from giving CEOs a term limit.
Ricky Mulvey: Let's first talk about what a True North is and then we're going to have a discussion about maybe some leaders with a strong True North, maybe ones that are wavering from it a little bit and then we'll see where we go from there.
Bill George: Your True North is who you are. It's your most deeply held principles that you lead by, your beliefs, and your values. It's also where you find fulfillment and satisfaction in your life. It's not about the external money, fame, and power. It's really about who you are. It's not about external identities. I think it's so important that every leader, every person discover their True North.
Ricky Mulvey: Let's say you're struggling to find that a little bit. You don't know where to start. What are some questions you would encourage a listener if you were to ask themselves to help find where their True North is leading them?
Bill George: I think it starts to some introspection going back and looking at your life story, who am I? Where do I come from? Who influenced me early in my life? What would my parents influence? Mentors, coaches, teachers that had a big influence and what's shaped me as a person. Then second, learn to look at your lifeline the difficult times you face, which we call crucibles. I think that's where you all the pretentious stripped away and you find out who you really are and so looking at that hard because a lot of times with principals, people say, I don't want to talk about that. Actually, it's where do you learn more about yourself than anything else, because when things are going well, you think you're better than you are. But in a crucible moment, you have to look at yourself in the mirror and say, hey, so I have to change. Who am I? I think that is critical to so many leaders' development because oftentimes they find it in that what do they really want to do with their lives.
Ricky Mulvey: Took you a little while to find your True North, right, about how you found it in your 30s? I would say doing professionally well at Honeywell, but personally not finding a lot of satisfaction in it, would it take for you to find your True North?
Bill George: Well, actually Ricky, it goes back deeper than that. I'm an only child of older parents. My father wanted me to lead a big company and, I'm 9 or 10 and he's naming companies like Coca-Cola and Procter & Gamble. But I saw, I never selected to lead anything in high school and junior high. Finally threw my hat in the ring to be president of my senior class; I lost by a margin of 2-1 still you see, kids in our school didn't think I was a leader, which I wasn't. I went off to college and repeated the same thing at Georgia Tech. I ran for election six more times. I was 0 for 6 and now I really feeling down and so people, seniors in the school gave me the best advice I ever got. Said Bill, no one is ever going to want to be working with you, much less be led by you, because you're moving so fast speed ahead you never take time for other people.
You know what they were right, and so I put my own self-help leadership development program together. Now it's interesting all the way into my latter Honeywell years and I was on the way. It's actually my early 40s. I was on the way to the top of Honeywell and was one of two leading candidates. But then again, I had the same issue. I head way back in high school and college and trying to need that title. Looking for the Chairman and CEO of Honeywell and decisions about three years off. One day I was driving home and I look myself in the mirror. What I saw was a miserable person, me. Why? How could I a miserable? I have a great wife and two great kids, great friends. I was miserable because I was losing sight of my True North. I was losing sight.
I was putting more emphasis on getting the title than I was in helping develop other people and it turned out as normal about me than it was about the team and I wouldn't pass it at all about the business. I talked to my wife then I talked to some friends finding out the courage to call Medtronic back, I turned the company down three times to be number 2 in the company, much smaller company at that time. I felt like when I went to the company, I felt like it was coming home to a company with a really great mission of restoring people to full life and health and a great set of values I could relate to and my job is to build the company from what it was at that time, 750 million to well, I can't take credit for going to 32 billion today, but it clearly was to put them on that course of where the company wanted to go. But I think if I hadn't gone through that tough time, I would never down a good job at Medtronic.
Ricky Mulvey: Let's focus on some leaders who have found a True North, some who haven't. One you highlight in the book is Satya Nadella, CEO of Microsoft. You've had some conversations with him. In your view, why is he a leader with a strong True North? Then also, I mean, that's, that's got to be intensely difficult to maintain when you're running a company worth a couple of trillion dollars. How do you think he maintains it?
Bill George: Yeah, exactly. Well, Satya, I had been with [inaudible 00:05:51] is a lifer and he took over from Steve Ballmer. Honestly, the company had been going sideways for 14 years under Ballmer, they best every single new opportunity coming along in Silicon Valley and then the whole IT field. Wisely Satya came in and he knew how to lead with his heart, not just his head. He'd had a crucible early in his life when his son Zane, was born with cerebral palsy and Satya really as a computer engineer had to learn some empathy. In fact, he said to his wife, said, wow, this is going to be really, we already really tough life with a son with cerebral palsy and his wife pull him up short and said Satya, do you think it's going to be tough for us? How do you think it would be for our son? Well, sadly, his son just died this winter at the age 26, but he did have a good life for 26 years.
But that changed Satya and he realized that he had to lead with empathy, have compassion for people, and your customers and, your employees. Beyond that, he said, we used to think we were God's gift to creation back in the late '90s and we had to go from learn it all to know it all. He challenges everyone, how are you growing? How, and I think that's why he's built such a great company. He's got a group of tremendous people, but he's very customer-oriented, client-oriented, and very oriented toward his people. As a result, stock rate has gone up eight times since he took over in 2014. That's pretty good. I wish I'd invest it back in '14 with them.
Ricky Mulvey: Instead, it's always easy to look back in retrospect, but that was a stock that had suffered for, I think more than a couple of decades under Steve Ballmer. I guess as you would call it the know it all instead of learn it all style of leadership that seemed to have dominated, I would say maybe the 20th century of CEOs.
Bill George: You've nailed it. I tried to work with Ballmer really hard. We've gone out and met with Bill Gates, but it was impossible because it was all we want to dominate you. We couldn't be a partner and it was all about ego. It was about charisma, power, ego, and how much money they can make. That wasn't what we wanted to do so we had pulled back, now Medtronic is partnering with them. That just shows you though how leadership, as you said, has changed from the 20th century when I was their CEO to today, I'd say it's actually much harder today because the expectations are so high of leaders. But you can't get away with just being a big, powerful person on top.
Ricky Mulvey: But also it must be, there's got to be some balance. If you're Satya Nadella, you're dealing with thousands of employees, you can't listen to everyone's individual concerns. Which would seem to me to make it even more difficult to lead with the style of empathy you're talking about.
Bill George: No doubt. I think Satya is just trying to create an inclusive organization where one feels a sense of belonging. Yeah, but you have to really care about your employees, but you can't take it out every complaint everyone has, but you do have to build leaders at all levels. I think with a powerful command and control leader you built followers. I don't believe in that. I think people want to lead. The whole purpose of my new book, the emerging leader addition True North is to say open up the door to people in their 20s and 30s, and 40s. Don't make them satellite. They don't want to be followers. They want to show their own creativity and that's exactly what Satya has done. I can tell you. I had the door open for me, Ricky, when I was 27 years old, I got the chance to be general manager and then president of the Litton industries microwave oven division.
Well, at the time I started in 1970, there was no microwave ever in the market didn't exist, so we had to build the market. It was very challenging for a young guy like me. The people who work with me on average are about twice my age, make twice as much money. But what was important as I had to, I know how to bring people together, but somebody gave me that opportunity to learn how to do it and how to build a company. Then we grew the company 20 times in eight years. It was a very exciting ride and I love the experience and I think companies need to look who are their young talents and let's give them a chance to show they don't have to go through every step before we give them the job.
Ricky Mulvey: On the flip side of that in your book, you highlight Mark Zuckerberg for perhaps the wrong reasons. I'm a shareholder in Meta, perhaps unfortunately right now. But in your view, why is Mark Zuckerberg exactly the leader? You don't want to be in this new inclusive 21st-century environment.
Bill George: Mark is a brilliant guy and he did, he had a brilliant idea by building a social network, but he started at age 19. He never took time to learn his True North and he was measuring everything by how many users does he have. Frankly, he never really went back to figure out, clearly, at least never would admit how many of those are bots and phony users and frankly, some pretty evil people. I remember he found out right after this 16 election that Cambridge Analytica had invaded their site and influenced a lot of people. He suppressed that information for two years because he didn't want to hurt his user base. Why didn't he come forward and admit that? That'd became a huge scandal.
He's never solidified in his values and what he believes, he talks a great game. Frankly, I think they're losing it if you want to know the truth because just this week he came out and they have down earnings, but that's now is important. That's important. They are losing users because everyone's moving away from Facebook. Now it's just going do, it's no longer going to be a friend site, which was the core. He's got to move it to where like TikTok and you know what TikTok, is it something like nothing and my 10 year old granddaughter is love use TikTok and make videos. But that's not what Facebook. I think the whole meta is a great idea, but it's maybe five,10 years off. I think that's because he's seen Facebook tipping over. I think you'll see sites like LinkedIn doing much better because I respond to every comment.
I like LinkedIn because they're really serious, thoughtful comments. I learned a lot every time I get comments. I think you can see Mark never solidified in that and it's really too bad. There's some others, unfortunately. We have the stars out of Silicon Valley, but also people like Elizabeth Holmes, which created a phony company, Adam Neumann and WeWork, there's nothing wrong with the idea. But in Elizabeth's case, I knew it wouldn't work. I'm in the healthcare business and I was under Mayo board. We talked about it's not going to work. But in Adam Neumann's case, it's real estate. If you want to sell real estate, fine, but don't try to fake it.
Ricky Mulvey: You wrote about Elizabeth Holmes. I wanted to take into the comment that you knew it wasn't going to work. There were a lot of investors, very, very smart people who got suckered into the scheme. What did you see at the time?
Bill George: Well, first of all, I know a lot about blood draws. I'm on the board of Mayo and I consulted the top doctors at mayo. There's no way one finger-prick one drop of blood can replace a whole draw from your arm and allow them to do 400 or 500 tests and differentiated. But there's a lot of things on your fingers. They keep it from being cleaned drop. But beyond that, she didn't need do the testing. She wouldn't be honest. Mayo had an agreement with her and she never had Friday dated or mayo and so they never got going because they said until we can see currently and data between what you're doing, we're not going to risk our patients lives. I think she wouldn't go through all the steps. Now I feel sorry for her. She's going to jail as a young woman that just try to move too fast. A lot of people got thought it very smart people got suckered into that deal. But that's the problem. If you don't really know what you're investing in, in the and you're not going to do well. Crypto may sound good, which better know what you're getting into before you dive into these investments. You can see I'm working serve in a lot of people. At least is investing not business, but an investing.
Ricky Mulvey: With a lot of those leaders as well, it's people who seem to get suckered into the cult of personality versus essentially true leadership. You described this in your book, is searching for we leaders. I guess, is a stock investor, someone who's farther away from the company. What are some signs of of spotting a we leader? Then in a moment I'd like to highlight Anjali Sud, CEO of Vimeo, who you highlighted in True North.
Bill George: The eye leaders put themselves ahead. They're more interested in money, fame, and power for their own say, than they are in building the company. I have said to CEOs we teach CEOs at Harvard. I said if you have any line, your team is putting their own self-interest ahead of the companies, move them out. You don't need those people. The company's interests have to come first. You have to build a team and build a company where you taking advantage of your teammates, just like I went to Medtronic and I know nothing about medicine. I know a lot about technology, but nothing about medicine. I team up a the doctor and highlighted the people that are real experts in medicine and boy, that gave us a powerful team. Then we brought in a brilliant CFO and some other things. But the important thing is that you build a great team at the top. No company today can be successful with a single individual on top. Even Marc Benioff is a fantastic leader and a very, very charismatic individual. He has a co-CEO, he turned over. He's got a partnership. Of course, that's why Tim Cook did so well at Apple because he'd been Steve Jobs partner. You need that team at the top going all the way back to the guys at Intel like Andy Grove and Robert Noyce and Gordon Moore, they were the team. The best thing to do is look to see who's that team and is the CEO taken all the credit or not. But watch out for that because it will implode overtime.
Ricky Mulvey: Anjali Sud at Vimeo is someone who embodies that, someone building a great team around her. Of course, that's a company that's might be going through some crucibles right now, coming public via SPAC. Then like a lot of Software-as-a-Service companies getting hammered by the market. But can you talk about her leadership and why you chose her to exemplify this?
Bill George: By the way, getting hammered by the market. A lot of companies do that, particularly start-up. You just have to power through that phase to stay true to what you believe. She had this idea of transforming Vimeo. She got the job at a very young age. She is a little bit like I tried to do in the microwave business, built a strong team around her and I think that's what's led to her success. Another woman who has done that at a very young age as Jennifer Hyman and Rent the Runway. When COVID hit her and their business model, people were coined it. Fancy gender priorities and balls. I didn't want to get your dresses. She really transform, Rent the Runway under great pressure and still under some pressure, but she has that team and I think that's what counts. People around you who have different skills. I think your thing as a leader, Ricky, think what you got to do and it's like you're trying to build a great sports team. You don't want to take your point guard and planet center. You want to build a team where people are best in their position. But you don't want to have all stars that won't play each other. I won't give each other the ball. You'd have to get people to play together as a team. Only works when people are in their sweet spot, which is where they're really good and they're highly motivated and then they play together as a team. If you get too many stars on your team, it will fall apart like AOL Time Warner did years ago. I think that's the key to building a we-organization in my opinion, and that's what I tried to sell my career.
Ricky Mulvey: Through the pandemic. You've certainly gotten a lot of new material for the new addition of True North. I think one of the interesting pivots that happened in the pandemic as well that you highlight is Best Buy with CEO Corie Barry. Here you have a CEO who did not even want the role, which in some ways would make you think that she's even more suited for it, like power should maybe be for those who don't seek it as much. But how did Best Buy pivot during the pandemic and why do you think Corie Barry was so suited to make that pivot well?
Bill George: She did a brilliant job, 44 years old when she took over as CEO Best Buy and her successor, Hubert Joly who I know extremely well. Had been highly successful in the company and totally turned around and she took it already was at its peak. But she's been in the job about six months when all of a sudden she sees COVID coming from Asia. She misjudges and initially think it's their problem, their supply chain. She says, when she's coming to Seattle, she said, oh my god, it's spread throughout the US. She in the matter of like two weeks, totally transformed the company. She closed down a 1,026 stores. She had to furlough 52,000 people and change their stores from places where people who went in and look at all the equipment to do everything online, to really beef up their online ordering.
Then put in a whole different way of selling, where the store is became more distribution centers. You could drive up, attach so-called touchless, somebody who deliver your television set, your computer. Frankly, the business flourish because all of a sudden people are working at home and they need to have computers at home and they need to be fully equipped with your phones like you have or whether they have multiple screens at our they gave us two or three screens, had to change everything overnight. That's a leader. There was very flexible and transform. Predecessor even said you never want to lay people off. Well, she did for a little people, but as early as May, she's not recalling him back.
That's it, flexibility. But what she did is also extremely important. She laid out three criteria. What we're going to do, none of which led to a short-term profitability. They had to do with long-term value creation. Of course, she cut her own salary 50 percent and the salary of all executives because they had to preserve cash and she took down their lines of credit. But she knew with the most important thing is that we're preserving our relationship with our customers. She did that, I think, extremely well, and it paid off for and that's the mark of a really good leader. I'm very proud of her. She's done a great job.
Ricky Mulvey: Great leaders also have great mentors. How did who Hubert Joly help prepare Corie Barry for that role in those crucibles?
Bill George: Corie was not the odds-on favorite. There was somebody had been running all their stores, have been her boss and maybe 10-15 years older. Hubert saw her potential. He takes any says I'd like you to consider the CEO and she says, oh no, I'm not ready for that. I'm happy to be CFO, which I am now. He said, well, I want you to go home and think about it. She writes some attend page paper and says it all the reasons I can't do the job. He said, let's have dinner. He went down each one of the points and helped her see she could do the job and realized she was the right person for it and a great teaming relationship. He stayed with her as a mentor even now that he's no longer on the board.
Ricky Mulvey: Talking about companies that really focused on customers. You write in True North, "In my experience, many proponents of maximizing shareholder value never understood how companies create sustainable shareholder value. Or they don't care because they are simply short-term traders of stocks, not long-term investors in companies." What led you to that conclusion?
Bill George: Because I think we don't understand how shareholder value is created. It's not created by saying we're going to earn 391 a share or buying back, as General Electric did under Jeff ML, 50 billion in shares to try to get the stock price stuff that's artificial, that's financial engineering. That's what a lot of these guys that have failed. But the only way you can create sustainable shareholder values is create better value for your customers than any of your competitors can and create unique value whether that's what Tim Cook does at Apple, that's what Satya is doing at Microsoft. If you can create that unique value, and that's what motivates your employees. When you go out and talk to and that's your senior executives. Don't talk to the frontline of the employees.
They understand, if I'm making a thousand heart valves a year, and one out of a thousand is defective, someone's going to die. They understand perfect quality. They understand the innovation that can save a life from new medical advances. They understand working with doctors and supporting them. That applies to every business. It applies to finance. The great financial companies like US Bank and Goldman Sachs, and Goldman Sachs had to go through a little transformation, you realize that you make money for your customers, not off your customers. When you do that, you can create sustainable shares that's going to drive your profits. It's going to drive your revenues and growth. Does a lot of good things going on when you're growing, and you throw off a lot of profitability, but you'd have to reinvest in the business. You have to invest in R&D, invest in your people, Dustin capital.
Companies that just cut it short cut. That's what happened to Boeing. That's just a tragic example. Say what just the 737 MAX is that Boeing decided it was more important to buy back stock than it was to invent new planes. My friend Alan Mulally, before he went to Ford was there should have been the CEO. But Boeing, that's how they got in trouble. Notably, 346 people died in two crashes. But hey, from a shareholder value standpoint, billions and billions lost off their stock value because they didn't make the right investments long-term. That's what I'm saying. Look at what people are doing to build for the long-term and how they continuing to invest in a company? When they stopped doing that like GE did and it was just cut, you're never going to get there.
Ricky Mulvey: There's an idea among stock investing now. Well, backtracking a little bit. It is a strange relationship, which is if you're buying stock and a company, I don't want you to focus on too much on me as the investor. I want you to think about your customers. One of the great metrics that I think is not talked about is the net promoter score or your customers willing to recommend your product to other people. That might be it doesn't show up in the financial reports, but I think it's, as I start thinking about investing more, something that's going to drive a lot of decisions for me in the future.
Bill George: This is very true. We should be CEOs instead of talking about last quarter's earnings. Look, that's history. It's interesting, but its history. You should be talking about market share, net promoter scores, customer satisfaction, new products, new innovation, what's coming? On one hand, on the other hand, what are your employee surveys showing in terms of the engagement of your employees? Gallup has some terrifying surveys that show only 30 percent of people are engaged. That's as far as how I get, I should get rid of the other 70 percent. But companies that are not engaged in employees and they are turned off are going downhill. I can tell you it is just inevitable. You've seen this in a lot of big retailers that eventually gone out of business and yeah, they tried to J Crew tries to come back or the gap. Some of these retailers, they aren't coming back. The ones they tell their employees like Walmart and Target are going to flourish. You got to look, I think beneath the numbers to see what's really happening and how motivated are the people. That's how I think you can do good long-term investments.
Ricky Mulvey: One way that you can be a more engaged leaders to see yourself as a CEO is a coach for your organization. I've heard you say that Mary Barra, General Motors is one of the best in the business. What is she doing to be a great coach for her employees, pushing them, encouraging thought diversity, and then also holding extraordinarily high standards?
Bill George: Ricky, let me preface that. I grew up in Michigan and i watch for 50 years General Motors going down hill. They had brilliant financial people. You know what, they never focused on cars that people want to buy. Their market share went from over 50 percent of the US market to 18 percent. If you have that, you got to realize people are voting with their feet because you aren't just adding high-quality cars. They had this problem with the ignition switch and just when Mary took over, she know nothing about it. She was in charge of R&D, they said, when people died in a crash, they didn't send it to the design department or the quality department to get it fixed. They sent it to the legal department. She came in and she had to go in front of Congress and she said, we have to transform the culture. We have a sick culture and we have to change the culture that was pretty gutsy.
Congress typically mocked her about this. She was absolutely right and she has done just that. Now understand all these finance people that came in and never got engaged in the business, never got their fingers dirty, never designed a car. Never really were involved at the root of the car business. She'd been there since 18 years old. The Help Center to catering to get her engineering degree and Stanford Business School, but she has been there, I think now over 40 years. She knows the business, she knows the labor union. She knows the people, she knows what their life is like. She knows the front line. She cares about her employees. Then she's done a great job organizing and bringing in new people. She's send a lot of her people to my class at Harvard business. It's a totally different type of General Motors Executive. It's not these arrogant people that know it all. It's more like Microsoft.
These are really good people that are really learning how are they going to shift to electric cars? She gets them all aligned around this idea of what is it? Zero emissions, zero congestion, zero accidents. Amazing, big vision. Then what she's done is, but she's very challenging. She says, I hope we'll never forget this ignition switch from a week out to speak up for safety and never have another quality problems. That's idealistic but the ideas. Then she's out there working with the people rolling up her sleeves solving problems. That's what a good coach does today. I don't think we need people command and control, people sitting up giving you orders. I think we need people that really are coaches for their employees and bring out the best. I think their job and my mission personally is to bring out the full potential in every person. Then that what you would want in someone you're working for, someone who is watching your full potential and helping you develop, than he or she was in themselves.
Ricky Mulvey: As we wrap up our time together, one final question. You gave yourself a 10-year term limit as the CEO of Medtronic. Do you think those sorts of term limits help limit the desire for power and do you think more companies would benefit from those term limits for CEOs?
Bill George: Absolutely. I don't know if it's 10 or 12. All I know is that after I was elected CEO but before I actually took over, I told the board, high-tech creative company, you need new energy, new people coming in. I should not work here more than 10 years. I have no contract. You can fire me anytime. I held it to the day and our accounts succeeding me. But I think what's more important, Ricky, is that we're giving the younger people a chance to step in. David Solomon said at a Goldman when he took over, you've got to elevate the emerging leaders, see your generation of leaders knows how to lead in prices. That's all you've seen for the last 20 years since the twin towers toppled the Al-Qaeda back in 2001. Then we had global financial meltdown that was on the front lines of Goldman Sachs and yeah, it was terrifying. No one knew it was going to happen. We went to the Great Recession.
Now we've got COVID, we have Russia invading Ukraine. You've not seen an invasion like this in your lifetime. I'm too young to have remember the World War II. But that's the last time we saw anything like that. What it's trading, gas prices, food shortages, inflation. Are we going into recession? Very confusing times. I think you need a different caliber of CEOs, a unique caliber of CEOs that pull out the best in every one and creates an inclusive environment. Doesn't look at what people color of their skin or where they were born, it's what can they contribute to the company? I think it needs a whole new side of the baby boomers, to be honest, but they've had their day. It's time to step aside and let the emerging leaders, Gen X to millennials, and Gen Z. The baby boomers step aside and let the younger emerging leaders takeover. I'll tell you, they all perform like Corie Barry and Anjali Sud and many others have.
Ricky Mulvey: That's Bill George, he's the co-author of True North-Emerging Leader Edition, which he wrote with Zach Clayton. Bill, thank you so much for your time.
Bill George: Thank you.
Chris Hill: As always, people on the program may have interest in the stocks they talk about and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. I'm Chris Hill, thanks for listening. We'll see you tomorrow.
Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Chris Hill has positions in Apple and Microsoft. Ricky Mulvey has positions in Meta Platforms, Inc. and Procter & Gamble. The Motley Fool has positions in and recommends Apple, Best Buy, Goldman Sachs, Meta Platforms, Inc., and Microsoft. The Motley Fool recommends the following options: long January 2024 $47.50 calls on Coca-Cola, long March 2023 $120 calls on Apple, and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Motley Fool producer Ricky Mulvey caught up with George to discuss his book, True North: Leading Authentically in Today's Workplace, as well as: How Best Buy CEO Corie Barry pivoted during the pandemic. I had the door open for me, Ricky, when I was 27 years old, I got the chance to be general manager and then president of the Litton industries microwave oven division. We have the stars out of Silicon Valley, but also people like Elizabeth Holmes, which created a phony company, Adam Neumann and WeWork, there's nothing wrong with the idea.
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Motley Fool producer Ricky Mulvey caught up with George to discuss his book, True North: Leading Authentically in Today's Workplace, as well as: How Best Buy CEO Corie Barry pivoted during the pandemic. You should be talking about market share, net promoter scores, customer satisfaction, new products, new innovation, what's coming. The Motley Fool recommends the following options: long January 2024 $47.50 calls on Coca-Cola, long March 2023 $120 calls on Apple, and short March 2023 $130 calls on Apple.
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Ricky Mulvey caught up with Bill George to talk about how investors like us can evaluate CEOs, turnarounds at Microsoft and General Motors, and Best Buy, and why more companies could benefit from giving CEOs a term limit. I talked to my wife then I talked to some friends finding out the courage to call Medtronic back, I turned the company down three times to be number 2 in the company, much smaller company at that time. I felt like when I went to the company, I felt like it was coming home to a company with a really great mission of restoring people to full life and health and a great set of values I could relate to and my job is to build the company from what it was at that time, 750 million to well, I can't take credit for going to 32 billion today, but it clearly was to put them on that course of where the company wanted to go.
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Some leaders get it, and some really don't. I talked to my wife then I talked to some friends finding out the courage to call Medtronic back, I turned the company down three times to be number 2 in the company, much smaller company at that time. You don't need those people.
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19805.0
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2022-08-11 00:00:00 UTC
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4 Index Funds to Retire a Millionaire Without Lifting a Finger
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AAPL
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https://www.nasdaq.com/articles/4-index-funds-to-retire-a-millionaire-without-lifting-a-finger
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nan
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nan
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So you'd like to retire a millionaire. Who wouldn't? (Well, maybe billionaires.) In many ways, it all boils down to math: Invest a particular sum (ideally regularly), earn a particular return, and in a particular number of years, you'll get there.
A single lottery ticket might work, but really, whether you buy a ticket or not, your odds of winning a big jackpot are nearly the same. Instead, consider a much more reliable -- and easy -- strategy: investing in stocks over many years. Here's how to do that through index funds.
Image source: Getty Images.
Here's the math for becoming a millionaire
The table below shows how you can build wealth over different multiyear periods with regular investments of various sizes. Clearly, achieving millionaire status is possible, but you'll need to be diligent to get there. And if you don't have lots of decades ahead of you, you'll want to be investing a lot each year.
GROWING AT 8% FOR...
$10,000 INVESTED ANNUALLY
$15,000 INVESTED ANNUALLY
$20,000 INVESTED ANNUALLY
5 years
$63,359
$95,039
$126,718
10 years
$156,455
$234,682
$312,910
15 years
$293,243
$439,864
$586,486
20 years
$494,229
$741,344
$988,458
25 years
$789,544
$1,184,316
$1,579,088
30 years
$1,223,459
$1,835,188
$2,446,917
Data source: Calculations by author.
That 8% annual average growth rate isn't guaranteed, either. The stock market's average annual return over long periods is close to 10%, but it will likely be at least a little higher or lower over your particular investing time frame, and may be a lot higher or lower.
Here are four index funds that may deliver average annual gains of 8% to 10%, on average, over your investing time frame.
Four promising index funds
SPDR S&P 500 ETF
As a reminder, an index fund is a mutual fund or exchange-traded fund (ETF) that aims to deliver approximately the same returns as a particular index by holding the same securities in the same proportions. Index funds are great for most of us, with the best index funds offering solid performance, low fees, and simplicity. Buy the shares and then trust in the long-term growth of the economy.
The SPDR S&P 500 ETF (NYSEMKT: SPY) tracks the S&P 500 index of 500 of America's biggest companies, such as CVS Health, Amazon.com, Johnson & Johnson, and Pfizer. There are thousands of publicly traded companies in America, but these 500 together make up around 80% of the entire market.
Lots of financial services companies offer S&P 500 index funds, and there's a good chance that your company's 401(k) plan offers one, too. Any such fund, as long as it's a low-fee index fund, will be a solid candidate for your portfolio.
Over the past 10 and 15 years, the SPDR S&P 500 ETF has averaged annual gains of 13.6% and 9.4%, respectively.
Vanguard Total Stock Market ETF
If you'd rather spread your dollars (or some of your dollars) across an index that represents roughly 100% of the total U.S. market instead of just 80%, look at a "total stock market" index fund, like the Vanguard Total Stock Market ETF (NYSEMKT: VTI). It contains more than 4,000 different stocks, including lots of smaller- and small-cap companies, such as BJ's Wholesale Club and Texas Roadhouse.
Over the past 10 and 15 years, the Vanguard Total Stock Market ETF has averaged annual gains of 13.4% and 9.5%, respectively.
Vanguard Total World Stock ETF
You can do very well over the long run just by sticking with an S&P 500 index fund or a total stock market fund, but for those interested, you can spread your dollars even wider by opting for a "total world stock market" fund. Consider the Vanguard Total World Stock ETF (NYSEMKT: VT). It encompasses more than 9,000 stocks from countries around the world. Examples include Taiwan Semiconductor, Toyota Motor, Royal Bank of Canada, and of course, all those companies in the previous two index funds.
Over the past 10 years, the Vanguard Total World Stock ETF has averaged annual gains of 9.6%. It doesn't yet have a 15-year average.
Invesco QQQ ETF
Finally, if you'd like to aim for a higher growth rate than those offered by index funds targeting much of the United States or world market, consider the Invesco QQQ ETF (NASDAQ: QQQ). The focus of the Invesco QQQ ETF is much narrower, as it tracks the Nasdaq-100 Index of the 100 largest non-financial companies listed on the Nasdaq stock exchange, based on market cap. These are mostly well-known growth stocks. Here are the recent top holdings:
Apple
Microsoft
Amazon.com
Tesla
Alphabet
Meta Platforms
Nvidia
PepsiCo
Costco
Other components include Starbucks, Airbnb, and Intuitive Surgical. Over the past 10 and 15 years, the Invesco QQQ ETF has averaged annual gains of 18.4% and 14.6%, respectively.
With the overall market slumping significantly in recent months, and many growth stocks being hit especially hard, this is a great time to invest in one or more index funds, as prices are low. Give these ETFs some thought and start investing in earnest if you're aiming to be a millionaire.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Selena Maranjian has positions in Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Costco Wholesale, Intuitive Surgical, Johnson & Johnson, Meta Platforms, Inc., Microsoft, and Starbucks. The Motley Fool has positions in and recommends Airbnb, Inc., Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Costco Wholesale, Intuitive Surgical, Meta Platforms, Inc., Microsoft, Nvidia, Starbucks, Taiwan Semiconductor Manufacturing, Tesla, Texas Roadhouse, and Vanguard Total Stock Market ETF. The Motley Fool recommends CVS Health, CVS Health Corporation, and Johnson & Johnson and recommends the following options: long March 2023 $120 calls on Apple, short March 2023 $130 calls on Apple, and short October 2022 $85 calls on Starbucks. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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The focus of the Invesco QQQ ETF is much narrower, as it tracks the Nasdaq-100 Index of the 100 largest non-financial companies listed on the Nasdaq stock exchange, based on market cap. Here are the recent top holdings: Apple Microsoft Amazon.com Tesla Alphabet Meta Platforms Nvidia PepsiCo Costco Other components include Starbucks, Airbnb, and Intuitive Surgical. With the overall market slumping significantly in recent months, and many growth stocks being hit especially hard, this is a great time to invest in one or more index funds, as prices are low.
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Selena Maranjian has positions in Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Costco Wholesale, Intuitive Surgical, Johnson & Johnson, Meta Platforms, Inc., Microsoft, and Starbucks. The Motley Fool has positions in and recommends Airbnb, Inc., Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Costco Wholesale, Intuitive Surgical, Meta Platforms, Inc., Microsoft, Nvidia, Starbucks, Taiwan Semiconductor Manufacturing, Tesla, Texas Roadhouse, and Vanguard Total Stock Market ETF. The Motley Fool recommends CVS Health, CVS Health Corporation, and Johnson & Johnson and recommends the following options: long March 2023 $120 calls on Apple, short March 2023 $130 calls on Apple, and short October 2022 $85 calls on Starbucks.
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Vanguard Total Stock Market ETF If you'd rather spread your dollars (or some of your dollars) across an index that represents roughly 100% of the total U.S. market instead of just 80%, look at a "total stock market" index fund, like the Vanguard Total Stock Market ETF (NYSEMKT: VTI). Vanguard Total World Stock ETF You can do very well over the long run just by sticking with an S&P 500 index fund or a total stock market fund, but for those interested, you can spread your dollars even wider by opting for a "total world stock market" fund. The Motley Fool has positions in and recommends Airbnb, Inc., Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Costco Wholesale, Intuitive Surgical, Meta Platforms, Inc., Microsoft, Nvidia, Starbucks, Taiwan Semiconductor Manufacturing, Tesla, Texas Roadhouse, and Vanguard Total Stock Market ETF.
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Vanguard Total World Stock ETF You can do very well over the long run just by sticking with an S&P 500 index fund or a total stock market fund, but for those interested, you can spread your dollars even wider by opting for a "total world stock market" fund. Over the past 10 years, the Vanguard Total World Stock ETF has averaged annual gains of 9.6%. The Motley Fool has positions in and recommends Airbnb, Inc., Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Costco Wholesale, Intuitive Surgical, Meta Platforms, Inc., Microsoft, Nvidia, Starbucks, Taiwan Semiconductor Manufacturing, Tesla, Texas Roadhouse, and Vanguard Total Stock Market ETF.
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19806.0
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2022-08-11 00:00:00 UTC
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3 Reasons to Buy Apple Stock Now
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AAPL
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https://www.nasdaq.com/articles/3-reasons-to-buy-apple-stock-now-0
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nan
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nan
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It's been a busy year for Apple (NASDAQ: AAPL). In March, the company announced its budget-friendly iPhone SE and Mac Studio. The company then unveiled a new round of software updates across its devices in June. The latest rumors suggest Apple could announce a cheaper version of the iPad this fall, along with a 27-inch iMac Pro, with Apple's long awaited virtual reality (VR) headset possibly coming next year.
The recent stock market rally has sent Apple stock surging, but it's still down 6% year-to-date. Even at a forward price-to-earnings ratio of 27, which is a premium to the average stock's multiple of 21, Apple is still a top stock to consider for three important reasons.
Its gigantic installed base keeps growing
Apple's most recent investor update shows that its devices continue to win over new customers. Through the fiscal third quarter ended June 25, Mac sales were down 10% year-over-year -- but more importantly, Apple reported that nearly half of the people that bought a new Mac were new to the product.
The same trend is happening with the iPad and Apple Watch. The iPad installed base reached a new all-time high, with over half of those purchasing an iPad last quarter being new to the product, while over two-thirds of those purchasing an Apple Watch were new customers.
Perhaps the most telling sign of Apple's brand strength is its growing adoption in the enterprise space, where companies are increasingly using Apple products as a strategy to win new talent.
Apple has a full slate of new products and software updates on tap for the next year to keep its installed base growing. But at some point, investors should expect Apple to finally reveal what it's been working on in the transportation space in recent years. An Apple Car has long been rumored to be in development, but according to analyst Ming-Chi Kuo, Apple's car project is not just software, but also includes plans to launch a fully functioning autonomous vehicle. In March, Kuo expected Apple's vehicle to go into production as early as 2025.
That said, there are plenty of new categories of products that Apple hasn't penetrated yet that could lead to big returns for investors.
New services
With Apple generating over $100 billion in free cash flow on a trailing 12-month basis and spending $25 billion on research and development, there are obviously plenty of projects that are kept top secret at Apple headquarters. One opportunity for Apple's growing services business, which reported growth of 12% in the last quarter, is advertising.
Apple has numerous listings open for advertising positions, which means the company's next leg of growth in the services business may not be on the consumer side but within the enterprise market. The global advertising market is estimated to be approximately $750 billion, so this is another opportunity, along with transportation, that could take the lid off of Apple's growth potential.
Evercore ISI analyst Amit Daryanani has estimated Apple will generate $4 billion in revenue this year from advertising, which is included in services revenue. Looking out to 2025, advertising revenue could grow another fivefold to $20 billion. Apple's services business generated nearly $60 billion in revenue through the first three quarters of fiscal 2022, which is primarily from the App Store and paid subscriptions.
Apple's main advantage is that it has an installed base of over 1.8 billion active devices. That's millions of customers using Apple's apps every day, where it has full control of advertising over its operating system.
Sticky customer experience
Growth in the installed base of active devices and new products and services are two key drivers of Apple's expansion. An important third driver is increasing customer engagement with those services. On the lastearnings call Apple reported that paid subscriptions are now over 860 million, up from 480 million across the services platform over two years ago.
The company's brand and strong stance on user privacy help explain why customers are increasingly investing in the Apple ecosystem. But at a basic level, Apple simply has the resources to keep pouring billions of dollars into new features and services to keep customers loyal to the brand.
It's difficult to imagine how an iconic brand with $100 billion in annual free cash flow can be stopped. Apple likely has several new tricks up its sleeve. The optionality for new growth avenues over time is one of the best reasons to hold the stock, and if you don't already own it, it's not too late to buy Apple.
Find out why Apple is one of the 10 best stocks to buy now
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John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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It's been a busy year for Apple (NASDAQ: AAPL). Apple has numerous listings open for advertising positions, which means the company's next leg of growth in the services business may not be on the consumer side but within the enterprise market. Apple's services business generated nearly $60 billion in revenue through the first three quarters of fiscal 2022, which is primarily from the App Store and paid subscriptions.
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It's been a busy year for Apple (NASDAQ: AAPL). An Apple Car has long been rumored to be in development, but according to analyst Ming-Chi Kuo, Apple's car project is not just software, but also includes plans to launch a fully functioning autonomous vehicle. Evercore ISI analyst Amit Daryanani has estimated Apple will generate $4 billion in revenue this year from advertising, which is included in services revenue.
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It's been a busy year for Apple (NASDAQ: AAPL). Perhaps the most telling sign of Apple's brand strength is its growing adoption in the enterprise space, where companies are increasingly using Apple products as a strategy to win new talent. New services With Apple generating over $100 billion in free cash flow on a trailing 12-month basis and spending $25 billion on research and development, there are obviously plenty of projects that are kept top secret at Apple headquarters.
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It's been a busy year for Apple (NASDAQ: AAPL). Its gigantic installed base keeps growing Apple's most recent investor update shows that its devices continue to win over new customers. One opportunity for Apple's growing services business, which reported growth of 12% in the last quarter, is advertising.
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19807.0
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2022-08-11 00:00:00 UTC
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Understanding the War on Cash
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AAPL
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https://www.nasdaq.com/articles/understanding-the-war-on-cash
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nan
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nan
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A world without cash! Motley Fool senior analyst Jason Moser recenlty caught up with Brett Scott, author of Cloudmoney: Cash, Cards, Crypto, and the War for Our Wallets, to discuss:
Incentives in the war on cash.
How money transforms when it moves from your wallet to a Venmo account.
Why cash is like an emergency staircase.
How COVID changed the way we use money.
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.
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*Stock Advisor returns as of July 27, 2022
This video was recorded on August 7, 2022.
Brett Scott: I might find it useful to use elevator to get to the top of a skyscraper, but that doesn't mean I want the emergency stairs removed. In many senses, the cash system is like the emergency stairs, the payment systems, extremely resilient, doesn't go down when the power goes down or when the hurricane hits. Actually it's an extremely important system, and actually it's more advanced in many situations than digital payments are.
Chris Hill: I'm Chris Hill and that's Brett Scott. He's the author of the new book, Cloudmoney: Cash, Cards, Crypto, and the War for Our Wallets. For the past five-years on this show, we've talked a lot about the war on cash, but today, we're taking a closer look at the other side of the war on cash. Jason Moser interviewed Scott about the implications of moving toward a cashless society. How money transforms when it goes from your wallet to a Venmo account, and why fintech companies really don't want to become banks.
Jason Moser: Brett, your position on cash comes from not really politics, but rather a critique of financial capitalism as you mentioned in the book. Let's get started. Tell us a little bit about your background in finance and what inspired you to write this book.
Brett Scott: Sure. I actually worked in, I guess, high finance for awhile, which was in the realm of over-the-counter derivatives contracts. Particular swap contracts. This was during the financial crisis and these are considered exotic derivatives. People often think of ease is very complicated instruments that are hard to understand. I found when I was working in high finance, lots of people, they had very high opinions of their financial skills, but often actually wouldn't really understand much about the monetary system. It turns out to be a high finance trade, you don't really need to understand the huge amounts, but how the monetary system works.
I was working that for a little while and then I left and read a book called The Heretic's Guide to Global Finance, which was a book basically for ordinary citizens who are concerned about the financial sector and who are interested in finding new ways to challenge its power or to build alternative types of finance. That book came out 2013, and then since then, I moved into working lots of different financial reform campaigns, but also working on potential alternatives including alternative currencies, alternative banking, alternative fund management, all stuff like that. By alternative, I mean, alternative to business as usual, thinking about new types of finance that might be better for society. This eventually took me into looking at this realm of where technology intersects with finance, so the whole world of fintech and the fintech community often had this little self image of being a disruptor that was really going to revolutionize finance and so on.
I really started to adapt this narrative, and it became very apparent to me that actually with the fintech community was often doing was simply automating finance. That might be experienced by some people as empowering in a certain sense. But really, when you zoom out and you look at roll of fintech sector, it's basically been to try and extend the power of big finance, more often than not, rather than actually reforming the financial sector. This is it that led to my new book, Cloudmoney, which is looking at how actually in a way the cash system, which is often reviled as those out-of-date system. Actually the cash system is much loved by people, and there's a lot of ideology and attacks that go against the cash system, but many people actually value the cashless and very, very deeply, but are constantly told that they should feel ashamed for using this non-automated form of more money. I'm looking at the power dynamics of who's attacking the cash system, why, how big tech and big financial involved.
Jason Moser: Well, let's dig into that power dynamic because I think it's really all boils down to incentives. The parties that participate in this value chain in their incentives. In the book you talk about the four war on cash conspirators, which I love how that sets the table. Who are these conspirators and what are their incentives?
Brett Scott: Well, first of all, I'll quickly say that I use the term conspirator in a tongue-in-cheek way. Because actually in a big economic system, you don't really need to directly via conspirator to push your power and messaging to society. Actually a lot of the big banks and stuff we're involved in as a tech tuck-ins, cash wouldn't think about themselves as being conspirators. But in reality, this is like how they're operating. The big parties who are attacking the cash system, the first-party is the banking sector. Bear in mind that the banking sector runs the underlying account infrastructure that is used in mainstream digital payments. When you're tapping your card, or when you're using a mobile app of some sort making payments, inevitably going through the banking sector.
The Bank of America CEO has openly said this, he say, we want a cashless society precisely because they run the underlying account infrastructural fire, which they can get data and fees via digital payments. The second big body of players as the payments companies like Visa and Mastercard, which who basically specialize in telling the banks who's trying to move money from who to who. They basically intermediaries and for Visa and Mastercard, it's very straightforward. I mean, every cash transaction is a transaction they're not making fees from. It's very straightforward for Visa or Mastercard, they openly attack the cash system all the time. The third player is actually the fintech sector. fintech companies, they do more than just payments, are often trying to automate loans, are trying to automate insurance claims, they do all automation activities and finance. For them, cash has an offline form of money that it doesn't gel well with automated systems.
It's a human to human form of payment. The ideal form of payment for a fintech company who want to automate things is to deal with the data centers of the banking sector. To say, work with other big institutions rather than trying to directly deal with cash payments from people. In terms of the automation, all the big tech players want to work together. The fourth set of players, it's actually governments. There's lots of governments who have attacked the cash system. Governments are slightly more complex because they have multiple different departments who have different agendas. For example, some people in central banks are very reticent about letting the cash system go down. Whereas some people in, for example, securities circles, I'd say, hey, we can watch payments more easily if they're digital, so let's attack the paper cash system. Amongst certain nation-states, there isn't anti-cash push too depending on where you are.
Jason Moser: Let's dig into the fintech side of things for a moment because I think our investor community can really relate to that word fintech, it's an bandied about a good bit here recently as really opportunity for investors. First and foremost, just going back to exactly how money moves, physical cash versus digital currency. Can you give us just a quick tour on the mechanics of how money changes from cash to your bank to then a tertiary player in the space like a PayPal for example.
Brett Scott: Sure.
Jason Moser: How does that money move along that chain?
Brett Scott: That's very big question that could take a little time unpacking. [laughs] Let me try give a simple version of it. One of the metaphors that are sometimes used to try and quickly convey the dynamics of this is to ask people to think about casinos. If I walk into a casino with let's say, $100 in cash and I hand it over to the cashier and they hand me $100 worth of the casino chips. If you think what has just happened there, the casino took ownership of my physical cash and gave me this physical chip, which I can now use within the confines of the casino. Now that's casino chip is actually a secondary form of money. It's a privately issued form of money that's tethered to the original form of money, the actual government cash, but it's privately issued and it's within this casino. Now if you want to understand the banking sector, something related actually happens in the banking sector.
If I handover cash to, let's say, Bank of America, they take ownership of that cash and they issue me a chip, the equivalent of a casino chip, but it's in digital form, so it's a digital chip issued by Bank of America. If you have a Bank of America account and you see numbers in that account, you're basically seeing the digital chips they've issued to you. It's a privately issued form of money that can be moved around within the confines of the bank payments system. Now the big power that banks have, unlike actual casinos, is banks can issue far more of these digital chips, and they have been government money reserves. That's sometimes called fractional reserve banking, probably more accurately called credit creation of money, but the basic deal is banks have the ability to expand the money supply through issuing far more of these chips than they haven't reserved. They do that through the process of when issuing loans.
But the basic deal is when we're using the digital payment system, and by that I mean, when using your credit card or debit cards, all these types of apps and things like that, you're using these Bank issued chips within elaborate series of data center operations, the paper going with the help of Visa and Mastercard. If you're looking at players like PayPal, they actually add a new layer onto it. They will take your bank issued chips, take control of them and issue you their own third tier chips as it were. It's like taking your casino chip to a different casino and then they take ownership of that and giving you a new chip. Basically the monetary system is often made up of what we call the US dollar, is actually multiple different currencies with different issuers that have the same name, that are tethered together with each other. What's often called the cashless society is a society where you essentially lose the ability to hold government money in physical form, and you have to use this bank issued or corporate issued money like PayPal issues.
Jason Moser: We talk about big banks, and you keyed in on something there in the power that the big banks have really throughout all of this. Why don't fintechs ultimately want to be banks? Do you feel like this puts them in a longer-term precarious position? At least competitively speaking, it feels banks can really come in there and more or less call the shots if it's fintech layer, I don't know if it necessarily needs to exist. It feels like it's very convenient, but ultimately it does feel like if they don't want to be banks, that's going to limit the power that they have.
Brett Scott: Absolutely. But I don't think many fintech have ever wanted to be banks. Bear in mind, if you're running a big bank, it's a big ship. It's a big ship and it's hard to turn it in different directions, but it's extremely powerful. If you're sitting in the boardroom meeting of one of the big banks, they are thinking about many things. For example, how exposed are we to the geopolitical risks of Russia or what about are there are risk portfolio? That they're thinking about is a very big issues. Things like, what does our new app look like, is but one of many issues that they're thinking of. Fair amount this banks do want to automate, they do want to create these fintechs systems to essentially automate their interaction with their customers because that's how you optimize profit, but they're quite slow to do it. Whereas if you're running a 10-person start-up, it's simply specializes in building apps, you're much faster.
A lot of the fintech accelerators and so on basically specialize in these small teams, who if they were within a bank would be a very specialist little division, but they can operators as a start-up initially, get venture capital financing, build these nice-looking apps, which essentially are basically interfaces that we would interact with, and which often will plug into the banking sector in the background. Now, a lot of these fintechs don't want a banking license. They don't want to deal with all the actual politics of being a bank. What they often will do, is enter into partnerships with the banking sector, and find ways to interface with them, or else they just get bought up. I was just in London, and I remember about 10 years ago or so, maybe there was a new start-up in London called Nutmeg, which was investing start-up.
They had this whole advertising campaign which they were putting on the London underground system, a train system, saying, don't trust the banks. Now, go back 10 years later, and I see Nutmeg now belongs to JPMorgan, so it has a JPMorgan company underneath it. Basically they did this, it was outsourced R&D effort in the end for JPMorgan. Now have been incorporated in, which happens in a lot of fintechs. Many of the fintechs sector is grafting itself onto the banking sector. In the process actually enables Big Tech like Apple, and so on to interface more effectively with the financial sector.
Jason Moser: You certainly talk about that threat of consolidation, the risks that come with that. I don't know that anything can really stop that ball from rolling. I wanted to ask in regard to cash specifically, and I'm not a lawyer, I didn't go to law school, I don't think you're a lawyer either, but I talked to a lawyer friends about this from time to time. It's interesting when you look at actual physical cash. The notes says, and I quote, this note is legal tender for all debts public and private end quote. That's on the bill. Given that, it feels there has to be some legal ramification for a store or for a merchant saying, no, we don't accept cash. In a book that you called out the example on the flight where you're trying to buy the drink, you offer cash, and they say, I'm sorry, we don't accept cash. Someone, a stranger that jumped in and there and budget a drink with a card, but he ruined your point, he's still your thunder. Are their legal ramifications for saying listen, we just don't accept cash, because I feel like I've read at least of some litigation out there coming to the surface where people are challenging this?
Brett Scott: Legal tender laws are actually a lot more subtle than people think often. Legal tender doesn't mean a person has to accept cash for anything. That doesn't have to accept the legal tender for any transaction, what it means is they have to accept it if the person giving it to them is in debt to them.
Jason Moser: Got you.
Brett Scott: Notice actually on the bill you, the quote was for all debts public and private, for all debts. If I enter a shop, and I'm not in debt to the shop, they can actually refuse legal tender. But for example, imagine I went into a restaurant, ate the food, which would actually technically put me in debt to them, because I've taken something from them without paying. Now, actually the legal tender laws start to kick-in. Because now they if they tried to refuse my legal tender, they're trying to prevent me from exiting debt, which historically is debt bondage. These legal tender laws are trying to stop forms of debt bondage. If a person is trying to exit their debt, and you're stopping them, you are in breach of legal tender laws. That's what the legal tender thing is.
That's an interesting legal cases to test out when it comes to people refusing cash. Which situations are truly in breach of legal tender laws. But in terms of, for example, when banks are doing things like shutting down ATMs, or trying to make it out as though the provision of cash is some burden upon them, that is a very dubious legal situation, because think of that casino metaphor I gave to you earlier, if I have a casino chip, that's actually a legal claim upon cash held with the cashier. If I go back to the cashier and they say, sorry, we don't actually redeem those anymore, they are now in breach of their legal agreements. This is not in the realm of legal tender, but this is a different legal issue. When banks say, we're going to penalize you for using cash, we're going to stop you from exiting our system bio through the ATM, they are now in breach of some other types of laws. Does that make sense?
Jason Moser: Yeah, absolutely. In line with this use of cash, do you feel going cashless marginalizes certain parts of society, and if so, how?
Brett Scott: Absolutely, there's a huge class dynamic to this. It's very easy to see that this, you don't need it to have a sociology PhD to notice which places, "go cashless first." It's always boujee, upper income places. Largely because not only do banks historically have targeted those people before they target poorer people, but actually those people in those type of establishments have much higher trust in institutions more generally. Whereas people who are more marginalized not only get less service from institutions, but they also often don't trust those institutions either. There's a very strong correlation between socioeconomic status, and cash usage.
There's many studies which will show this. When there's this public messaging coming out, that there's something wrong with the cash system, or somehow it's an inferior form of payment, that's a very strong class dynamic to that. There's a very strong value judgment being made upon people who actually often prefer the cash system. If you think about that messaging, you basically been told, if you don't want to be absorbed by large scale banking institutions, there's something wrong with you. That is a very loaded message that comes out of many mainstream circles. But we live under an ideology which says, where we always have to go to is evermore scale speed, complexity, automation. That's really a corporate message, that's not something that ordinary people resonate with necessarily.
Jason Moser: That feels like when we talk about the war on cash, steering away from cash, the risks of systems of digital money. Looking at what's been going on recently in regard to the war in Ukraine. You see networks cutting off Russian nationals. I think a lot of the world is probably on board with that. You see folks were resorting to alternate forms of currency, whether it's cash or whether it's crypto in order to be able to move money around, and that really goes to one of the greater risks here of a cashless society in that. Maybe a lot of folks right now are on board with what's going on in shutting off Russian nationals because of what's going on in Ukraine. But what happens when they're shutting you off? What is something that you agree with? What happens when the shoe is on the other foot, because it feels like that's just a matter of time.
Brett Scott: Yeah, absolutely. If you're a citizen of authoritarian country, you very quickly understand the implications of what a cashless society means. Because basically it means, all your transactions can go through institutions that can be watched, but they can also perform a vector via which power can be exercised, so you can be stopped from doing certain things and so on. Now obviously there's an interesting balance here when we're talking about potentially. This is a debate that goes throughout society more generally about, when is it OK to exert power and when does it form of overreach? Now actually in the case of Russia right now, while you say, many people agree with the idea of imposing these sanctions, bear in mind that within Russia, there are many people who hates pizza and who chooses to agree with his policies and are now finding themselves essentially shafted because they are not bearing the brands.
Often these are people who don't have the ability or the buffers to actually deal with that. The actual Russian Elite are not going to be heavily affected necessarily, they have ways of surviving, but many poorer people don't. Things like the cash system in this context becomes super useful. But even outside of the Russian contexts, it's a plus. In a good example, which is in Hong Kong. During the Hong Kong protests. Hong Kong is a highly digitized society in many ways, but people were queuing up at the train stations to try and buy paper tickets with cash precisely because they were aware of those potential that if authorities could watch where there were traveling to via digital payments systems, they would be identified as potential protesters. Now the cash system and that situation enables that alternative but imagine if you don't have that alternative. But not only could you be watched, but hypothetically, you could be stopped from exiting a particular station, for example. There's a huge potential problem in getting rid of cash and nobody is really thinking about it right now because cash still remains an option. But in some future where it doesn't, then you get to know about it.
Jason Moser: Yes, I have a hard time imagining a world without and can't imagine I know a lot of listeners probably know, I mean, I love the investing opportunity in regard to digital payments, payment networks, and whatnot. I mean, I own shares in companies like Visa, and Mastercard, and PayPal, and [Block's] Square. I'm a big proponent of cash. I feel like if you're a merchant and you don't accept cash you're explicitly telling people you don't want their business, which I just find to be the opposite of what you should be doing.
Brett Scott: One of the great metaphor is that people actually want to convey this as cash is like the public bicycles system of payments. Whereas things like your Venmo and so on, you can think about them as being at the private Uber system of payments. Now you might like Uber, it doesn't mean you want them controlling the entire transport system. That just gives too much power. You want a balanced transport system with multiple different options. With payments it's very similar, you want a balanced payment system with multiple options. You don't have to be anti-digital to be pro-cash. They're not mutually exclusive. You can have both these and actually, it's extremely important for the resilience of economies to have both of these. Unfortunately, the only players who benefit from the removal of the option to use cash are the companies.
But for most ordinary people, they want options to remain open. Nobody wants a reduction in payments options. There's always want an increase. It's only the industry that has an incentive to destroy the ability to use cash. One final metaphor is quite useful to grasp the dynamics of this, as I might find it useful to use elevator to get to the top of a skyscraper. But that doesn't mean I want the emergency stairs removed. In many senses, the cash system is like the emergency stairs that payment systems extremely resilient doesn't go down when the power goes down or when the hurricane hits. Actually, it's an extremely important system and actually, it's more advanced in many situations than digital payments are.
Jason Moser: Yes, I like that analogy there. Speaking of cash and having that emergency use case, early on, COVID accelerated this movement away from cash. The general idea was cash is dirty. It transmits germs, therefore, stores more and more really try to steer away from the use of cash. Then I think you actually said it, as time has gone on, we've seen there's greater risk and actually using things like the PIN pad on the actual hardware than transacting in cash. It feels like we're moving back away. Maybe we're seeing that that risk isn't necessarily as great as once thought, but it also feels like this is something we could probably expect to see more and more of down the road. I don't mean COVID specifically, but it does feel like the industry itself will find every opportunity for reasons why we shouldn't be using cash and should be focusing more on digital payments.
Brett Scott: I mean, one of the big things I'm talking about in the book is there is war on cash, which is a way of talking about the top-down pushes against the cash system. Because historically the narrative that comes out, the standard narrative is that it's a bottom-up process. You'll find this idea that, the reason why we've seen the decline of cash because ordinary people are just making this choice. But that completely ignores half of the picture, which is that these very big players has been a very long time undermining the cash system, which makes it ever more likely that you will "choose to use digital payments." Actually, during the pandemic we saw this, big players will always against the cash system. They were pushing its cash system will fall prior to the pandemic. But as soon as the pandemic came, they will very quickly weaponized it.
Being extremely aware that people were scared temporarily of physical contact, they rarely weaponized and pushed that narrative forward the cash is dirty and transmits disease. This narrative is unscientific. I'm based in Germany here and the Robert Koch Institute, which is one of the world's preeminent Health Institute's based in Germany came out and said there's no evidence that cash transmits COVID. In fact, subsequent research has shown as you mentioned, that actually the digital screens and check on self-checkout counters and PIN pads of the card terminals pose a greater risk of transmitting COVID. But in places like London, for example, all these big retailers used it as an excuse to push forward this automation drives that we're interested in. Now in London, people, for example, don't wear masks anymore.
All these COVID measures have been reversed, but these players have stayed with their anti-cash position. They've used it to ratchet up the use of digital payments and to not go back. That's been happening and this is a very big problem and one final example I can give you there is actually the NFL entered into deal with Visa in 2019. Sponsorship deal with Visa said we want you to do cashless Super Bowls. The first one of these cashless Super Bowls came out in 2020 and the narrative that surrounded that was all about COVID, but that deal was signed in 2019. [laughs] This was prior to that, and they just happen to find a convenient narrative for that. There's a lot of top-down players that are working to not only [inaudible 00:28:04] shut down the cash infrastructure, but also have ideological war against it to make people feel ashamed for using this and essentially make people feel ashamed for not wanting to use large institutions all the time.
Jason Moser: Brett, I want to be respectful of your time here, maybe if we could just wrap up with one more question because ultimately, this goes back to, I think one of the themes in the book and these contradictions of corporate capitalism. We as consumers, we weigh the convenience versus things like monitoring, censorship, manipulation, whatever that may be. It feels like it's going to be difficult to go back. But like I said, as much as I like the idea of the war on cash from an investor's perspective. I mean, I personally have a hard time believing we'll ever actually live in a fully cashless world, at least in my lifetime. That being said, what is the path forward with this?
Brett Scott: Sure, I mean, the first thing I'll say is the de facto mainstream narrative is that cash will die. The reason why the narrative exists is that, if you just push play on standards capitalism as it were, companies try to scale, they try to automate, and so on. The cash system stands against that. But as we know, companies often don't actually act in their own best interests collectively. Sometimes they can mess themselves up and this is a contradiction in market systems. In reality, in terms of what's in the best interests of a market economy, it's actually to maintain the cash system because the cash system creates resilience for the monetary system. It actually helps to keep the whole monetary system together. If you're thinking about what's actually in the long-term interests of an economy. It's some super important to maintain the cash system, not only for personal privacy and all the things we've mentioned but just for the basic stability of markets, financial stability perspective.
I think what's going to start to happen is actually, many policymakers will start to realize this and they already have started to realize this. Especially in Rome and an era of increased geopolitical instability, where there's massive potential for cyber attacks. Also in an era of climate change with ever-increasing natural disasters, it's actually not obvious that you want to get rid of the cash system where you want to be totally dependent upon these digital infrastructures. I think in the next few years we're going to see a lot more discussions as quite serious discussions about how to protect the cash system and how to actually counter in a way, going back to the metaphor of cash being the public bicycle of payments to promote and say actually, this is a very viable and important system to keep. But bear in mind, I'm going against the ideological grain by saying this because de facto standard story is that we have to get ever more automation, ever more connection, ever more convenience, and so on and so on. I'm not going to bet against cash by any means.
Jason Moser: His new book is Cloudmoney: Cash, Cards, Crypto, and the War for Our Wallets. Mr. Brett Scott, thanks so much for joining us today.
Brett Scott: Thanks for having me.
Chris Hill: As always, people on the program may have interest in the stocks they talk about and the Motley Fool may have formal recommendations for or against. Don't buy or sell stocks based solely on what you hear. I'm Chris Hill. Thanks for listening. We'll see you tomorrow.
JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Bank of America is an advertising partner of The Ascent, a Motley Fool company. Chris Hill has positions in Apple, JPMorgan Chase, PayPal Holdings, and Visa. Jason Moser has positions in Apple, Mastercard, PayPal Holdings, and Visa. The Motley Fool has positions in and recommends Apple, Mastercard, PayPal Holdings, and Visa. The Motley Fool recommends Uber Technologies and recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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The Bank of America CEO has openly said this, he say, we want a cashless society precisely because they run the underlying account infrastructural fire, which they can get data and fees via digital payments. Being extremely aware that people were scared temporarily of physical contact, they rarely weaponized and pushed that narrative forward the cash is dirty and transmits disease. In fact, subsequent research has shown as you mentioned, that actually the digital screens and check on self-checkout counters and PIN pads of the card terminals pose a greater risk of transmitting COVID.
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That book came out 2013, and then since then, I moved into working lots of different financial reform campaigns, but also working on potential alternatives including alternative currencies, alternative banking, alternative fund management, all stuff like that. Jason Moser: Yes, I have a hard time imagining a world without and can't imagine I know a lot of listeners probably know, I mean, I love the investing opportunity in regard to digital payments, payment networks, and whatnot. The Motley Fool recommends Uber Technologies and recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple.
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Actually the cash system is much loved by people, and there's a lot of ideology and attacks that go against the cash system, but many people actually value the cashless and very, very deeply, but are constantly told that they should feel ashamed for using this non-automated form of more money. If I handover cash to, let's say, Bank of America, they take ownership of that cash and they issue me a chip, the equivalent of a casino chip, but it's in digital form, so it's a digital chip issued by Bank of America. Brett Scott: I mean, one of the big things I'm talking about in the book is there is war on cash, which is a way of talking about the top-down pushes against the cash system.
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Jason Moser: That feels like when we talk about the war on cash, steering away from cash, the risks of systems of digital money. Brett Scott: I mean, one of the big things I'm talking about in the book is there is war on cash, which is a way of talking about the top-down pushes against the cash system. In reality, in terms of what's in the best interests of a market economy, it's actually to maintain the cash system because the cash system creates resilience for the monetary system.
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19808.0
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2022-08-11 00:00:00 UTC
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Disney's (DIS) Ad-Supported Disney+ Basic to Arrive on Dec 8
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https://www.nasdaq.com/articles/disneys-dis-ad-supported-disney-basic-to-arrive-on-dec-8
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Disney DIS recently announced that a new ad-supported offering for the Disney+ streaming service will be available starting Dec 8, 2022.
The new ad-supported Disney+ Basic subscription will cost $7.99 a month, which is the current pricing for Disney+ without ads. Disney notes that the ad-free subscription plan will be called Disney+ Premium and will cost $10.99 a month.
Disney is also raising the price of its Hulu subscription. The ad-free tier will jump from $12.99/month to $14.99, while the ad-supported version will cost $7.99/month, up from $6.99. The new pricing goes into effect on Oct 10, 2022. A price hike for ESPN+ streaming was announced in July, taking the monthly price from $6.99 to $9.99/month
Users with an ad-free Disney+ subscription along with an ad-supported plan for Hulu and ESPN Plus will increase from $13.99 to $14.99/month. Disney is also introducing a bundle that includes Disney+ and Hulu with ads for $9.99/month. Meanwhile, bundled together, Disney+, Hulu, and ad-supported ESPN+ will cost $19.99/month.
Disney has also adjusted its pricing for its Hulu live TV bundles. Hulu’s live TV bundle with ad-supported Disney+, Hulu, and ESPN+ plans will cost $69.99/month. The live TV bundle with ad-free Disney+, as well as ad-supported Hulu and ESPN+ plans, will cost $74.99. Users will have to spend $82.99/month to get a live TV plan without ads on Disney+ or Hulu and ad-supported ESPN+.
The Walt Disney Company Price and Consensus
The Walt Disney Company price-consensus-chart | The Walt Disney Company Quote
Disney Outnumbers Netflix’s Subscriber Base but Will It Sustain?
Overall, Disney+ subscriptions went up to 152.1 million for its third fiscal quarter that ended on Jul 2, and the streaming giant added 14.4 million new subscribers in the April-June period. Most of the new Disney+ subscribers came from outside the United States and Canada. Of the 14.4 million new customers, only 100,000 came from North America.
In total, Disney streaming services, comprising Disney+, Hotstar, Hulu and ESPN+, now have over 221.1 million subscribers worldwide. The recent gains propelled the company past rival Netflix NFLX, which at the end of the second quarter had 220.7 million subscribers.
In the face of growing subscription costs and declining viewership, Netflix is set to introduce a new lower-priced ad-supported subscription plan apart from its existing ad-free basic, standard and premium plans. The streaming giant is partnering with Microsoft MSFT to power its first ad-support subscription offering.
The software giant brought in $10 billion in ad revenues last year, selling ads on various services such as its Bing search engine and its business-focused social network, LinkedIn. Last month, Microsoft completed its acquisition of AT&T’s online advertising platform, Xandr, which allows advertisers to buy ad space across thousands of websites and target audiences.
Netflix’s most popular streaming plan in the United States is now $15.50 per month. That follows several rate hikes to help pay for its original programming, which has gained importance since Disney pulled its programming and classic movies from Netflix after licensing agreements between the companies expired.
Apple’s AAPL streaming service, Apple TV+, continues to gain recognition with its critically acclaimed and popular shows like Ted Lasso. This year, Apple TV+ has earned 52 Emmy nominations, with the second season of Ted Lasso getting 20 nominations overall. Another show, Severance, has garnered 14 total nominations in its first season.
For Disney, the increase in ad-free subscription pricing comes as rising production and programming costs for Disney+ and higher sports programming costs at ESPN+ contributed to operating losses in the recently reported fiscal third quarter. Direct-to-Consumer revenues increased 19% year over year to $5.1 billion and operating loss increased $0.8 billion to $1.1 billion. The increase in operating loss was due to a higher loss at Disney+, lower operating income at Hulu and, to a lesser extent, a higher loss at ESPN+.
This Zacks Rank #3 (Hold) company lowered its 2024 forecast for Disney+ between 215 million and 245 million subscribers. It had previously set subscriber guidance in the range of 230 million-260 million by the end of fiscal 2024. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of the company have lost 27.4% year to date compared with the Zacks Consumer Discretionary sector’s decline of 28.8% on a year-to-date basis.
The new adjustment arrived from reduced expectations for India, where the company is losing streaming rights for Indian Premier League cricket matches. This is for the first time that Disney broke out estimates for Disney+ Hotstar customers in India from the rest of Disney+.
Disney+ Hotstar has added 8.3 million subscribers in the company's third fiscal quarter, reaching 58.4 million subscribers in India and Southeast Asia.
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Apple Inc. (AAPL): Free Stock Analysis Report
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The Walt Disney Company (DIS): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Apple’s AAPL streaming service, Apple TV+, continues to gain recognition with its critically acclaimed and popular shows like Ted Lasso. Apple Inc. (AAPL): Free Stock Analysis Report The recent gains propelled the company past rival Netflix NFLX, which at the end of the second quarter had 220.7 million subscribers.
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Apple’s AAPL streaming service, Apple TV+, continues to gain recognition with its critically acclaimed and popular shows like Ted Lasso. Apple Inc. (AAPL): Free Stock Analysis Report The Walt Disney Company Price and Consensus The Walt Disney Company price-consensus-chart | The Walt Disney Company Quote Disney Outnumbers Netflix’s Subscriber Base but Will It Sustain?
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Apple’s AAPL streaming service, Apple TV+, continues to gain recognition with its critically acclaimed and popular shows like Ted Lasso. Apple Inc. (AAPL): Free Stock Analysis Report The Walt Disney Company Price and Consensus The Walt Disney Company price-consensus-chart | The Walt Disney Company Quote Disney Outnumbers Netflix’s Subscriber Base but Will It Sustain?
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Apple’s AAPL streaming service, Apple TV+, continues to gain recognition with its critically acclaimed and popular shows like Ted Lasso. Apple Inc. (AAPL): Free Stock Analysis Report The new ad-supported Disney+ Basic subscription will cost $7.99 a month, which is the current pricing for Disney+ without ads.
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19809.0
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2022-08-10 00:00:00 UTC
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Could This Behemoth Company's Latest Gambit Spell Doom for Its Stock?
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https://www.nasdaq.com/articles/could-this-behemoth-companys-latest-gambit-spell-doom-for-its-stock
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Since entering the gaming space last year, Netflix (NASDAQ: NFLX) has released almost two dozen mobile games that are exclusively available to subscribers of its streaming video service. The lineup of iOS and Android titles includes Bowling Ballers and Shooting Hoops, along with show tie-ins like Stranger Things: 1984. Netflix says it plans to have at least 50 games available by the end of 2022.
Image source: Getty Images.
But there are indications that Netflix's entry into the video game market is not off to a great start. While the streamer has over 220 million subscribers, app insights company Apptopia estimates Netflix's games have only been downloaded 23.3 million times globally across Apple's App Store and Alphabet's Google Play.
Apptopia also says 1.7 million people play Netflix games on a daily basis. If those stats are correct, then it indicates Netflix could be pursuing a fruitless strategy.
Netflix wants to diversify its appeal
When compared with its streaming peers, Netflix is unique in that it doesn't have any notable ancillary businesses that it can rely on to drive significant revenue. Its legacy DVD rental service still exists, but that brought in just $200 million in 2021, a tiny fraction of the almost $30 billion the company generated last year.
By contrast, Amazon has several businesses including retail and web services, while Walt Disney is an all-round entertainment company with theme parks, TV networks, theater shows, and more.
Netflix has lost about 1.2 million subscribers over the last two quarters. In calls with investors, Netflix executives have stressed the company's ambitions in the gaming space as key to reversing declining customer numbers. Co-CEO Ted Sarandos has told shareholders that the company is focused on creating "games that people really love," suggesting such titles could eventually become "a big revenue and profit stream."
Netflix is trying to become a player in a growing industry
To help it reach its goals, Netflix has acquired three games studios over the past year: Night School, which is known for Oxenfree; Next Games, developer of Stranger Things: Puzzle Tales; and most recently Boss Fight Entertainment, maker of strategy title Dungeon Boss.
Following the takeover of Boss Fight Entertainment, Amir Rahimi, Netflix's vice president for games studios, reasserted the streamer's ambitions. "[W]e hope to build a world-class games studio capable of bringing a wide variety of delightful and deeply engaging original games -- with no ads and no in-app purchases -- to our hundreds of millions of members around the world."
As Rahimi said, Netflix does not intend to profit directly from individual games. So for them to become a "profit stream" for the company, they have to add value to its subscriber plans. And judging by Apptopia's numbers, that's simply not happening. At least, not yet.
The subscription gaming industry was worth an estimated $7.8 billion in 2021, a figure expected to roughly double by 2027. With this in mind, it makes sense for Netflix to try to get into the space. But it's going up against some of the biggest names in gaming: Microsoft's Xbox Game Pass, Sony's PlayStation Now, and Nintendo's Switch Online -- from companies that have been in the video game arena for decades.
As things stand, Netflix's biggest barrier to success is not direct competition, but rather its lack of compelling titles that subscribers want to play. Considering mobile games can cost $1 million to develop, while more-advanced titles are in the eight-figure range, the company is taking on an expensive venture that is showing little sign of working.
That's not to say Netflix won't eventually come up with some hits that really do drive customer sign-ups, but the longer subscribers ignore its efforts, then the less likely it will be to justify the investment. And for a company that is trying to deliver growth in a difficult economic, winning at games might be a challenge too far.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Tom Wilton has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Microsoft, Netflix, and Walt Disney. The Motley Fool recommends Nintendo and recommends the following options: long January 2024 $145 calls on Walt Disney, long March 2023 $120 calls on Apple, short January 2024 $155 calls on Walt Disney, and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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By contrast, Amazon has several businesses including retail and web services, while Walt Disney is an all-round entertainment company with theme parks, TV networks, theater shows, and more. Co-CEO Ted Sarandos has told shareholders that the company is focused on creating "games that people really love," suggesting such titles could eventually become "a big revenue and profit stream." Considering mobile games can cost $1 million to develop, while more-advanced titles are in the eight-figure range, the company is taking on an expensive venture that is showing little sign of working.
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While the streamer has over 220 million subscribers, app insights company Apptopia estimates Netflix's games have only been downloaded 23.3 million times globally across Apple's App Store and Alphabet's Google Play. The Motley Fool has positions in and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Microsoft, Netflix, and Walt Disney. The Motley Fool recommends Nintendo and recommends the following options: long January 2024 $145 calls on Walt Disney, long March 2023 $120 calls on Apple, short January 2024 $155 calls on Walt Disney, and short March 2023 $130 calls on Apple.
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Since entering the gaming space last year, Netflix (NASDAQ: NFLX) has released almost two dozen mobile games that are exclusively available to subscribers of its streaming video service. While the streamer has over 220 million subscribers, app insights company Apptopia estimates Netflix's games have only been downloaded 23.3 million times globally across Apple's App Store and Alphabet's Google Play. Netflix is trying to become a player in a growing industry To help it reach its goals, Netflix has acquired three games studios over the past year: Night School, which is known for Oxenfree; Next Games, developer of Stranger Things: Puzzle Tales; and most recently Boss Fight Entertainment, maker of strategy title Dungeon Boss.
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Since entering the gaming space last year, Netflix (NASDAQ: NFLX) has released almost two dozen mobile games that are exclusively available to subscribers of its streaming video service. So for them to become a "profit stream" for the company, they have to add value to its subscriber plans. The Motley Fool has positions in and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Microsoft, Netflix, and Walt Disney.
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19810.0
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2022-08-10 00:00:00 UTC
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Wall Street rally lifts Nasdaq 20% from low as inflation fears ebb
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AAPL
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https://www.nasdaq.com/articles/wall-street-rally-lifts-nasdaq-20-from-low-as-inflation-fears-ebb
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nan
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nan
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By Herbert Lash and Bansari Mayur Kamdar
NEW YORK, Aug 10 (Reuters) - Wall Street surged on Wednesday, putting the Nasdaq more than 20% above its June low, after U.S. inflation slowed more than expected in July and raised hopes the Federal Reserve will become less aggressive on interest rates hikes.
A sharp drop in the cost of gasoline helped the U.S. Consumer Price Index stay flat last month after advancing 1.3% in June, the Labor Department said. The CPI rose by a less-than-expected 8.5% over the past 12 months after a 9.1% rise in June.
The rally came in the wake of the first notable sign of relief for Americans who have watched inflation steadily climb. The Nasdaq now is up 20.8% since bottoming but still needs to pass its prior peak in November to confirm a new bull market.
Fed funds futures traders are now pricing in only a 43.5% chance that the U.S. central bank hikes rates by 75 basis points when it meets in September, compared with 68% before the data. A 50 basis point hike is seen as a 56.5% probability.
"For the market, it's sort of a Goldilocks scenario right now because you have the labor market holding up and inflation potentially starting to come down. That is what a soft landing would look like," said Shawn Snyder, head of investment strategy at Citi U.S. Wealth Management in New York.
But one month of slowing inflation is not enough for the Fed to send an all-clear signal, Snyder said.
The rally on Wall Street was broad-based, with all 11 S&P 500 sectors rising in a sea of green. Growth stocks .IGX rose more than value .IVX, while Dow transports .DJT, small caps .RUT and semiconductors .SOX also rose.
The Dow Jones Industrial Average .DJIrose 535.1 points, or 1.63%, to 33,309.51, while the S&P 500 .SPXgained 87.77 points, or 2.13%, to 4,210.24 and the Nasdaq Composite .IXICadded 360.88 points, or 2.89%, to 12,854.81.
It was the biggest single-day gain for both the Nasdaq and S&P 500 in two weeks, and for the Dow in three weeks. It was the highest close for the S&P 500 since early May.
"(Inflation at) 8.5% is still very high, but there is optimism that perhaps June was the peak," said Randy Frederick, vice president of trading and derivatives for Charles Schwab.
Producer prices data for July on Thursday along with August inflation and employment data for release next month could alter the course of the Fed again, Frederick said.
The Fed has hiked its policy rate by 225 basis points since March despite fears the sharp rise in borrowing costs could tip the U.S. economy into a recession.
The slowing of inflation was the first "positive" reading on price pressures since the Fed began tightening policy, Chicago Fed President Charles Evans said, even as he signaled he believes the Fed has plenty more work to do.
After a rough start to the year, the benchmark S&P 500 is up nearly 15% from mid-June lows, largely on expectations the Fed will be less hawkish than anticipated in its efforts to provide a soft landing for the economy as it fights to curb inflation.
But the S&P 500 is 12% below its all-time high in January, having been in a bear market since then.
The CBOE Volatility index .VIX, Wall Street's fear gauge, fell below the 20.00 level to close at more than a four-month low.
High-growth and megacap technology stocks, whose valuations are vulnerable to rising bond yields, rose as Treasury yields fell sharply across the board. Apple Inc AAPL.O, Alphabet Inc GOOGL.O, Amazon.com Inc AMZN.O and Microsoft Corp MSFT.O all rose more than 2% each. US/
Economy-sensitive banks .SPXBK advanced 2.7%, with Goldman Sachs Group Inc GS.N and Morgan Stanley MS.N climbing about 3% each.
"Banks have underperformed and are now getting bid," said Thomas Hayes, managing member of Great Hill Capital LLC, adding that investors are chasing the laggards that have not participated in the rally since June lows.
Tesla Inc TSLA.O rose 3.9% after Elon Musk sold $6.9 billion worth of shares in the electric vehicle maker to finance a potential deal for Twitter Inc TWTR.N if he loses a legal battle with the social media platform. Twitter gained 3.7%.
Meta Platforms Inc META.O jumped 5.8% after the Facebook parent said on Tuesday it had raised $10 billion in its first-ever bond offering.
Volume on U.S. exchanges was 11.33 billion shares, compared with the 10.98 billion average for the full session over the past 20 trading days.
Advancing issues outnumbered declining ones on the NYSE by a 5.69-to-1 ratio; on Nasdaq, a 3.34-to-1 ratio favored advancers.
The S&P 500 posted five new 52-week highs and 29 new lows; the Nasdaq Composite recorded 64 new highs and 54 new lows.
GRAPHIC-Inflation set to ease, but by how much?https://tmsnrt.rs/3bLcJWj
U.S. consumer prices unchanged in July as cost of gasoline tumbles
Fed seen delivering half-point rate hike in Sept as inflation eases
(Reporting by Herbert Lash; Additional reporting by Bansari Mayur Kamdar, Aniruddha Ghosh, Sruthi Shankar, Medha Singh and Karina D'Souza in Bengaluru; Editing by Anil D'Silva, Shounak Dasgupta and Lisa Shumaker)
((herb.lash@thomsonreuters.com; 1-646-223-6019; Reuters Messaging: herb.lash.reuters.com@reuters.net))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Apple Inc AAPL.O, Alphabet Inc GOOGL.O, Amazon.com Inc AMZN.O and Microsoft Corp MSFT.O all rose more than 2% each. By Herbert Lash and Bansari Mayur Kamdar NEW YORK, Aug 10 (Reuters) - Wall Street surged on Wednesday, putting the Nasdaq more than 20% above its June low, after U.S. inflation slowed more than expected in July and raised hopes the Federal Reserve will become less aggressive on interest rates hikes. Tesla Inc TSLA.O rose 3.9% after Elon Musk sold $6.9 billion worth of shares in the electric vehicle maker to finance a potential deal for Twitter Inc TWTR.N if he loses a legal battle with the social media platform.
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Apple Inc AAPL.O, Alphabet Inc GOOGL.O, Amazon.com Inc AMZN.O and Microsoft Corp MSFT.O all rose more than 2% each. By Herbert Lash and Bansari Mayur Kamdar NEW YORK, Aug 10 (Reuters) - Wall Street surged on Wednesday, putting the Nasdaq more than 20% above its June low, after U.S. inflation slowed more than expected in July and raised hopes the Federal Reserve will become less aggressive on interest rates hikes. The Fed has hiked its policy rate by 225 basis points since March despite fears the sharp rise in borrowing costs could tip the U.S. economy into a recession.
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Apple Inc AAPL.O, Alphabet Inc GOOGL.O, Amazon.com Inc AMZN.O and Microsoft Corp MSFT.O all rose more than 2% each. By Herbert Lash and Bansari Mayur Kamdar NEW YORK, Aug 10 (Reuters) - Wall Street surged on Wednesday, putting the Nasdaq more than 20% above its June low, after U.S. inflation slowed more than expected in July and raised hopes the Federal Reserve will become less aggressive on interest rates hikes. The slowing of inflation was the first "positive" reading on price pressures since the Fed began tightening policy, Chicago Fed President Charles Evans said, even as he signaled he believes the Fed has plenty more work to do.
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Apple Inc AAPL.O, Alphabet Inc GOOGL.O, Amazon.com Inc AMZN.O and Microsoft Corp MSFT.O all rose more than 2% each. By Herbert Lash and Bansari Mayur Kamdar NEW YORK, Aug 10 (Reuters) - Wall Street surged on Wednesday, putting the Nasdaq more than 20% above its June low, after U.S. inflation slowed more than expected in July and raised hopes the Federal Reserve will become less aggressive on interest rates hikes. Growth stocks .IGX rose more than value .IVX, while Dow transports .DJT, small caps .RUT and semiconductors .SOX also rose.
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19811.0
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2022-08-10 00:00:00 UTC
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US STOCKS-Wall Street rallies as cooling inflation eases rate hike fears
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AAPL
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https://www.nasdaq.com/articles/us-stocks-wall-street-rallies-as-cooling-inflation-eases-rate-hike-fears
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nan
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nan
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By Herbert Lash and Bansari Mayur Kamdar
NEW YORK, Aug 10 (Reuters) - The Nasdaq and S&P 500 surged more than 2% on Wednesday after data showed U.S. inflation slowed more than expected in July and raised hopes the Federal Reserve will become less aggressive on interest rates hikes.
A sharp drop in the cost of gasoline helped the U.S. Consumer Price Index stay flat last month after advancing 1.3% in June, the Labor Department said. The CPI rose by a less-than-expected 8.5% over the past 12 months after a 9.1% rise in June.
The data was the first notable sign of relief for Americans who have watched inflation steadily climb the past two years.
Fed funds futures traders are now pricing in only a 43.5% chance that the U.S. central bank hikes rates by 75 basis points when it meets in September, compared with 68% before the data. A 50 basis point hike is seen as a 56.5% probability.
"For the market, it's sort of a Goldilocks scenario right now because you have the labor market holding up and inflation potentially starting to come down. That is what a soft landing would look like," said Shawn Snyder, head of investment strategy at Citi U.S. Wealth Management in New York.
But one month of slowing inflation is not enough for the Fed to send an all-clear signal, Snyder said.
The rally on Wall Street was broad-based, with all 11 S&P 500 sectors rising in a sea of green. Growth stocks .IGX rose more than value .IVX, while Dow transports .DJT, small caps .RUT and semiconductors .SOX also rose.
The Dow Jones Industrial Average .DJIrose 535.1 points, or 1.63%, to 33,309.51, while the S&P 500 .SPXgained 87.77 points, or 2.13%, to 4,210.24 and the Nasdaq Composite .IXICadded 360.88 points, or 2.89%, to 12,854.81.
It was the biggest single-day gain for both the Nasdaq and S&P 500 in two weeks, and for the Dow in three weeks. It was the highest close for the S&P 500 since early May.
"(Inflation at) 8.5% is still very high, but there is optimism that perhaps June was the peak," said Randy Frederick, vice president of trading and derivatives for Charles Schwab.
Producer prices data for July on Thursday along with August inflation and employment data for release next month could alter the course of the Fed again, Frederick said.
The Fed has hiked its policy rate by 225 basis points since March despite fears the sharp rise in borrowing costs could tip the U.S. economy into a recession.
The slowing of inflation was the first "positive" reading on price pressures since the Fed began tightening policy, Chicago Fed President Charles Evans said, even as he signaled he believes the Fed has plenty more work to do.
After a rough start to the year, the benchmark S&P 500 is up nearly 15% from mid-June lows, largely on expectations the Fed will be less hawkish than anticipated in its efforts to provide a soft landing for the economy as it fights to curb inflation.
But the S&P 500 remains in a bear market and must climb more than 12% past its all-time high in January to begin a new bull market.
The CBOE Volatility index .VIX, Wall Street's fear gauge, fell below the 20.00 level to close at more than a four-month low.
High-growth and megacap technology stocks, whose valuations are vulnerable to rising bond yields, rose as Treasury yields fell sharply across the board. Apple Inc AAPL.O, Alphabet Inc GOOGL.O, Amazon.com Inc AMZN.O and Microsoft Corp MSFT.O all rose more than 2% each. US/
Economy-sensitive banks .SPXBK advanced 2.7%, with Goldman Sachs Group Inc GS.N and Morgan Stanley MS.N climbing about 3% each.
"Banks have underperformed and are now getting bid," said Thomas Hayes, managing member of Great Hill Capital LLC, adding that investors are chasing the laggards that have not participated in the rally since June lows.
Tesla Inc TSLA.O rose 3.9% after Elon Musk sold $6.9 billion worth of shares in the electric vehicle maker to finance a potential deal for Twitter Inc TWTR.N if he loses a legal battle with the social media platform. Twitter gained 3.7%.
Meta Platforms Inc META.O jumped 5.8% after the Facebook parent said on Tuesday it had raised $10 billion in its first-ever bond offering.
Volume on U.S. exchanges was 11.33 billion shares, compared with the 10.98 billion average for the full session over the past 20 trading days.
Advancing issues outnumbered declining ones on the NYSE by a 5.69-to-1 ratio; on Nasdaq, a 3.34-to-1 ratio favored advancers.
The S&P 500 posted five new 52-week highs and 29 new lows; the Nasdaq Composite recorded 64 new highs and 54 new lows.
GRAPHIC-Inflation set to ease, but by how much?https://tmsnrt.rs/3bLcJWj
U.S. consumer prices unchanged in July as cost of gasoline tumbles
Fed seen delivering half-point rate hike in Sept as inflation eases
(Reporting by Herbert Lash; Additional reporting by Bansari Mayur Kamdar, Aniruddha Ghosh, Sruthi Shankar, Medha Singh and Karina D'Souza in Bengaluru; Editing by Anil D'Silva, Shounak Dasgupta and Lisa Shumaker)
((herb.lash@thomsonreuters.com; 1-646-223-6019; Reuters Messaging: herb.lash.reuters.com@reuters.net))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
|
Apple Inc AAPL.O, Alphabet Inc GOOGL.O, Amazon.com Inc AMZN.O and Microsoft Corp MSFT.O all rose more than 2% each. By Herbert Lash and Bansari Mayur Kamdar NEW YORK, Aug 10 (Reuters) - The Nasdaq and S&P 500 surged more than 2% on Wednesday after data showed U.S. inflation slowed more than expected in July and raised hopes the Federal Reserve will become less aggressive on interest rates hikes. Tesla Inc TSLA.O rose 3.9% after Elon Musk sold $6.9 billion worth of shares in the electric vehicle maker to finance a potential deal for Twitter Inc TWTR.N if he loses a legal battle with the social media platform.
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Apple Inc AAPL.O, Alphabet Inc GOOGL.O, Amazon.com Inc AMZN.O and Microsoft Corp MSFT.O all rose more than 2% each. By Herbert Lash and Bansari Mayur Kamdar NEW YORK, Aug 10 (Reuters) - The Nasdaq and S&P 500 surged more than 2% on Wednesday after data showed U.S. inflation slowed more than expected in July and raised hopes the Federal Reserve will become less aggressive on interest rates hikes. The Fed has hiked its policy rate by 225 basis points since March despite fears the sharp rise in borrowing costs could tip the U.S. economy into a recession.
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Apple Inc AAPL.O, Alphabet Inc GOOGL.O, Amazon.com Inc AMZN.O and Microsoft Corp MSFT.O all rose more than 2% each. By Herbert Lash and Bansari Mayur Kamdar NEW YORK, Aug 10 (Reuters) - The Nasdaq and S&P 500 surged more than 2% on Wednesday after data showed U.S. inflation slowed more than expected in July and raised hopes the Federal Reserve will become less aggressive on interest rates hikes. The slowing of inflation was the first "positive" reading on price pressures since the Fed began tightening policy, Chicago Fed President Charles Evans said, even as he signaled he believes the Fed has plenty more work to do.
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Apple Inc AAPL.O, Alphabet Inc GOOGL.O, Amazon.com Inc AMZN.O and Microsoft Corp MSFT.O all rose more than 2% each. Growth stocks .IGX rose more than value .IVX, while Dow transports .DJT, small caps .RUT and semiconductors .SOX also rose. Producer prices data for July on Thursday along with August inflation and employment data for release next month could alter the course of the Fed again, Frederick said.
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19812.0
|
2022-08-10 00:00:00 UTC
|
Wall Street rallies as cooling inflation eases rate hike fears
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AAPL
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https://www.nasdaq.com/articles/wall-street-rallies-as-cooling-inflation-eases-rate-hike-fears-0
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nan
|
nan
|
By Herbert Lash and Bansari Mayur Kamdar
NEW YORK, Aug 10 (Reuters) - The Nasdaq and S&P 500 surged 2% on Wednesday after data showed U.S. inflation slowed more than expected in July and raised hopes the Federal Reserve will become less aggressive on interest rates hikes.
A sharp drop in the cost of gasoline helped the U.S. Consumer Price Index stay flat last month after advancing 1.3% in June, the Labor Department said. The CPI rose by a less-than-expected 8.5% over the past 12 months after a 9.1% rise in June.
The data was the first notable sign of relief for Americans who have watched inflation steadily climb the past two years.
Fed funds futures traders are now pricing in only a 43.5% chance that the U.S. central bank hikes rates by 75 basis points when it meets in September, compared with 68% before the data. A 50 basis point hike is seen as a 56.5% probability.
"For the market, it's sort of a Goldilocks scenario right now because you have the labor market holding up and inflation potentially starting to come down. That is what a soft landing would look like," said Shawn Snyder, head of investment strategy at Citi U.S. Wealth Management in New York.
But one month of slowing inflation is not enough for the Fed to send an all-clear signal, Snyder said.
"They're going to need to see a sustained trend, and even then some, to moderate monetary policy that could potentially lead to a recession," he said.
The rally on Wall Street was broad-based, with all 11 S&P 500 sectors rising in a sea of green. Growth stocks .IGX rose more than value .IVX, while Dow transports .DJT, small caps .RUT and semiconductors .SOX also rose.
The Dow Jones Industrial Average .DJIrose 535.1 points, or 1.63%, to 33,309.51, while the S&P 500 .SPXgained 87.77 points, or 2.13%, to 4,210.24 and the Nasdaq Composite .IXICadded 360.88 points, or 2.89%, to 12,854.81.
It was the biggest single-day gain for both the Nasdaq and S&P 500 in two weeks, and for the Dow in three weeks. It was the highest close for the S&P 500 since early May.
"(Inflation at) 8.5% is still very high, but there is optimism that perhaps June was the peak," said Randy Frederick, vice president of trading and derivatives for Charles Schwab.
Producer prices data for July on Thursday along with August inflation and employment data for release next month could alter the course of the Fed again, Frederick said.
The Fed has hiked its policy rate by 225 basis points since March despite fears the sharp rise in borrowing costs could tip the U.S. economy into a recession.
The slowing of inflation was the first "positive" reading on price pressures since the Fed began tightening policy, Chicago Fed President Charles Evans said, even as he signaled he believes the Fed has plenty more work to do.
After a rough start to the year, the benchmark S&P 500 is up nearly 15% from mid-June lows, largely on expectations the Fed will be less hawkish than anticipated in its efforts to provide a soft landing for the economy as it fights to curb inflation.
The CBOE Volatility index .VIX, Wall Street's fear gauge, fell below the 20.00 level, hitting its lowest since April.
High-growth and megacap technology stocks, whose valuations are vulnerable to rising bond yields, rose as Treasury yields fell sharply across the board. Apple Inc AAPL.O, Alphabet Inc GOOGL.O, Amazon.com Inc AMZN.O and Microsoft Corp MSFT.O all rose more than 2% each. US/
Economy-sensitive banks .SPXBK advanced 2.7%, with Goldman Sachs Group Inc GS.N and Morgan Stanley MS.N climbing about 3% each.
"Banks have underperformed and are now getting bid," said Thomas Hayes, managing member of Great Hill Capital LLC, adding that investors are chasing the laggards that have not participated in the rally since June lows.
Tesla Inc TSLA.O rose 3.9% after Elon Musk sold $6.9 billion worth of shares in the electric vehicle maker to finance a potential deal for Twitter Inc TWTR.N if he loses a legal battle with the social media platform. Twitter gained 3.7%.
Meta Platforms Inc META.O jumped 5.8% after the Facebook parent said on Tuesday it had raised $10 billion in its first-ever bond offering.
Volume on U.S. exchanges was 11.33 billion shares, compared with the 10.98 billion average for the full session over the past 20 trading days.
Advancing issues outnumbered declining ones on the NYSE by a 5.69-to-1 ratio; on Nasdaq, a 3.34-to-1 ratio favored advancers.
The S&P 500 posted five new 52-week highs and 29 new lows; the Nasdaq Composite recorded 64 new highs and 54 new lows.
GRAPHIC-Inflation set to ease, but by how much?https://tmsnrt.rs/3bLcJWj
U.S. consumer prices unchanged in July as cost of gasoline tumbles
Fed seen delivering half-point rate hike in Sept as inflation eases
(Reporting by Herbert Lash; Additional reporting by Bansari Mayur Kamdar, Aniruddha Ghosh, Sruthi Shankar, Medha Singh and Karina D'Souza in Bengaluru; Editing by Anil D'Silva, Shounak Dasgupta and Lisa Shumaker)
((herb.lash@thomsonreuters.com; 1-646-223-6019; Reuters Messaging: herb.lash.reuters.com@reuters.net))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
|
Apple Inc AAPL.O, Alphabet Inc GOOGL.O, Amazon.com Inc AMZN.O and Microsoft Corp MSFT.O all rose more than 2% each. By Herbert Lash and Bansari Mayur Kamdar NEW YORK, Aug 10 (Reuters) - The Nasdaq and S&P 500 surged 2% on Wednesday after data showed U.S. inflation slowed more than expected in July and raised hopes the Federal Reserve will become less aggressive on interest rates hikes. Tesla Inc TSLA.O rose 3.9% after Elon Musk sold $6.9 billion worth of shares in the electric vehicle maker to finance a potential deal for Twitter Inc TWTR.N if he loses a legal battle with the social media platform.
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Apple Inc AAPL.O, Alphabet Inc GOOGL.O, Amazon.com Inc AMZN.O and Microsoft Corp MSFT.O all rose more than 2% each. By Herbert Lash and Bansari Mayur Kamdar NEW YORK, Aug 10 (Reuters) - The Nasdaq and S&P 500 surged 2% on Wednesday after data showed U.S. inflation slowed more than expected in July and raised hopes the Federal Reserve will become less aggressive on interest rates hikes. The Fed has hiked its policy rate by 225 basis points since March despite fears the sharp rise in borrowing costs could tip the U.S. economy into a recession.
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Apple Inc AAPL.O, Alphabet Inc GOOGL.O, Amazon.com Inc AMZN.O and Microsoft Corp MSFT.O all rose more than 2% each. By Herbert Lash and Bansari Mayur Kamdar NEW YORK, Aug 10 (Reuters) - The Nasdaq and S&P 500 surged 2% on Wednesday after data showed U.S. inflation slowed more than expected in July and raised hopes the Federal Reserve will become less aggressive on interest rates hikes. The slowing of inflation was the first "positive" reading on price pressures since the Fed began tightening policy, Chicago Fed President Charles Evans said, even as he signaled he believes the Fed has plenty more work to do.
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Apple Inc AAPL.O, Alphabet Inc GOOGL.O, Amazon.com Inc AMZN.O and Microsoft Corp MSFT.O all rose more than 2% each. The Dow Jones Industrial Average .DJIrose 535.1 points, or 1.63%, to 33,309.51, while the S&P 500 .SPXgained 87.77 points, or 2.13%, to 4,210.24 and the Nasdaq Composite .IXICadded 360.88 points, or 2.89%, to 12,854.81. Producer prices data for July on Thursday along with August inflation and employment data for release next month could alter the course of the Fed again, Frederick said.
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19813.0
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2022-08-10 00:00:00 UTC
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US STOCKS-S&P, Nasdaq jump as cooling inflation eases rate hike bets
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AAPL
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https://www.nasdaq.com/articles/us-stocks-sp-nasdaq-jump-as-cooling-inflation-eases-rate-hike-bets
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nan
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nan
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By Herbert Lash and Bansari Mayur Kamdar
NEW YORK, Aug 10 (Reuters) - Wall Street rallied more than 1% on Wednesday after data showed U.S. inflation slowed more than expected in July and raised hopes the Federal Reserve will cut back on aggressively boosting interest rates.
A sharp drop in the cost of gasoline helped the U.S. Consumer Price Index stay flat last month after advancing 1.3% in June, the Labor Department said. The CPI rose by a less-than-expected 8.5% over the past 12 months after a 9.1% rise in June.
The data was the first notable sign of relief for Americans who have watched inflation steadily climb the past two years.
Fed funds futures traders are now pricing in only a 39.5% chance that the U.S. central bank hikes rates by 75 basis points when it meets in September, compared with 68% before the data. A 50 basis point hike is seen as a 60.5% probability.
"For the market, it's sort of a Goldilocks scenario right now because you have the labor market holding up and inflation potentially starting to come down. That is what a soft landing would look like," said Shawn Snyder, head of investment strategy at Citi U.S. Wealth Management in New York.
But one month of slowing inflation is not enough for the Fed to send an all-clear signal, Snyder said.
"They’re going to need to see a sustained trend, and even then some, to moderate monetary policy that could potentially lead to a recession," he said.
All the 11 major S&P 500 sectors except energy .SPNY advanced, with materials .SPLRCM gaining the most, a sign that cyclical stocks do better in a stronger economy.
The Dow Jones Industrial Average .DJIrose 473.59 points, or 1.45%, to 33,248, while the S&P 500 .SPXgained 78.93 points, or 1.91%, to 4,201.4 and the Nasdaq Composite .IXICadded 327.99 points, or 2.63%, to 12,821.92.
"(Inflation at) 8.5% is still very high, but there is optimism that perhaps June was the peak," said Randy Frederick, vice president of trading and derivatives for Charles Schwab.
Producer prices data for July on Thursday along with August inflation and employment data for release next month could alter the course of the Fed again, Frederick said.
The Fed has hiked its policy rate by 225 basis points since March despite fears the sharp rise in borrowing costs could tip the U.S. economy into a recession.
The slowing of inflation was the first "positive" reading on price pressures since the Fed began tightening policy, Chicago Fed President Charles Evans said, even as he signaled he believes the Fed has plenty more work to do.
After a rough start to the year, the benchmark S&P 500 is up nearly 15% from its mid-June low, largely on expectations the Fed will be less hawkish than anticipated in its efforts to provide a soft landing for the economy.
The CBOE Volatility index .VIX, Wall Street's fear gauge, fell below the 20.00 level, hitting its lowest since April.
High-growth and megacap technology stocks, whose valuations are vulnerable to rising bond yields, rose as Treasury yields fell sharply across the board. Apple Inc AAPL.O, Alphabet Inc GOOGL.O and Amazon.com Inc AMZN.O rose more than 2% each. US/
Economy-sensitive banks .SPXBK also advanced 3.0%, with Goldman Sachs Group Inc GS.N and Morgan Stanley MS.N climbing about 3% each.
"They (investors) are chasing the laggards that haven't participated in the huge run off the June lows," said Thomas Hayes, managing member, Great Hill Capital LLC, New York.
"Banks have underperformed and are now getting bid."
Tesla Inc TSLA.Orose 3.5% after Elon Musk sold $6.9 billion worth of shares in the electric vehicle maker to finance a potential deal for Twitter Inc TWTR.N if he loses a legal battle with the social media platform. Twitter gained 2.8%.
Meta Platforms Inc META.Ojumped 5.5% after the Facebook-parent said on Tuesday it had raised $10 billion in its first-ever bond offering.
Advancing issues outnumbered declining ones on the NYSE by a 5.50-to-1 ratio; on Nasdaq, a 3.46-to-1 ratio favored advancers.
The S&P 500 posted five new 52-week highs and 29 new lows; the Nasdaq Composite recorded 55 new highs and 51 new lows.
GRAPHIC-Inflation set to ease, but by how much?https://tmsnrt.rs/3bLcJWj
U.S. consumer prices unchanged in July as cost of gasoline tumbles
Fed seen delivering half-point rate hike in Sept as inflation eases
(Reporting by Herbert Lash; Additional reporting by Bansari Mayur Kamdar, Aniruddha Ghosh, Sruthi Shankar, Medha Singh and Karina D'Souza in Bengaluru; Editing by Anil D'Silva, Shounak Dasgupta and Lisa Shumaker)
((herb.lash@thomsonreuters.com; 1-646-223-6019; Reuters Messaging: herb.lash.reuters.com@reuters.net))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Apple Inc AAPL.O, Alphabet Inc GOOGL.O and Amazon.com Inc AMZN.O rose more than 2% each. By Herbert Lash and Bansari Mayur Kamdar NEW YORK, Aug 10 (Reuters) - Wall Street rallied more than 1% on Wednesday after data showed U.S. inflation slowed more than expected in July and raised hopes the Federal Reserve will cut back on aggressively boosting interest rates. Tesla Inc TSLA.Orose 3.5% after Elon Musk sold $6.9 billion worth of shares in the electric vehicle maker to finance a potential deal for Twitter Inc TWTR.N if he loses a legal battle with the social media platform.
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Apple Inc AAPL.O, Alphabet Inc GOOGL.O and Amazon.com Inc AMZN.O rose more than 2% each. By Herbert Lash and Bansari Mayur Kamdar NEW YORK, Aug 10 (Reuters) - Wall Street rallied more than 1% on Wednesday after data showed U.S. inflation slowed more than expected in July and raised hopes the Federal Reserve will cut back on aggressively boosting interest rates. The Fed has hiked its policy rate by 225 basis points since March despite fears the sharp rise in borrowing costs could tip the U.S. economy into a recession.
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Apple Inc AAPL.O, Alphabet Inc GOOGL.O and Amazon.com Inc AMZN.O rose more than 2% each. The Fed has hiked its policy rate by 225 basis points since March despite fears the sharp rise in borrowing costs could tip the U.S. economy into a recession. The slowing of inflation was the first "positive" reading on price pressures since the Fed began tightening policy, Chicago Fed President Charles Evans said, even as he signaled he believes the Fed has plenty more work to do.
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Apple Inc AAPL.O, Alphabet Inc GOOGL.O and Amazon.com Inc AMZN.O rose more than 2% each. The CPI rose by a less-than-expected 8.5% over the past 12 months after a 9.1% rise in June. Fed funds futures traders are now pricing in only a 39.5% chance that the U.S. central bank hikes rates by 75 basis points when it meets in September, compared with 68% before the data.
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2022-08-10 00:00:00 UTC
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What Stocks To Buy Today? 3 Consumer Stocks For Your August 2022 Watchlist
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https://www.nasdaq.com/articles/what-stocks-to-buy-today-3-consumer-stocks-for-your-august-2022-watchlist
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Are These The Best Consumer Stocks To Invest In 2022
It’s no surprise that consumer stocks are among the most popular sectors for investors in the stock market now. This is largely due to the fact that consumer companies tend to be moderately stable and generate consistent profits year-over-year. In addition, consumer stocks tend to be less volatile than other types of stocks, making them a good choice for defensive investors. While there are a number of different consumer stocks to pick from, some of the most popular include retailers, consumer goods, manufacturers, food, and beverage.
We can look at consumer discretionary companies like Apple (NASDAQ: AAPL) that continue to bring in a flux of new consumers with its latest tech offerings. Meanwhile, if you’re more of a defensive investor, we could look at consumer staples stocks like The Clorox Company (NYSE: CLX) Utimately, consumers tend to purchase their offerings out of necessity. Therefore, the demand for these goods will, in theory, continue despite the current economic conditions. Hence, I could understand if investors are keen on consumer stocks right now. With that, here are three top consumer stocks to watch in the stock market today.
Consumer Stocks To Buy [Or Avoid] Right Now
The Home Depot Inc. (NYSE: HD)
Costco Wholesale Corporation (NASDAQ: COST)
Target Corporation (NYSE: TGT)
Home Depot (HD Stock)
Starting off this list is Home Depot (HD). For starters, Home Depot is the largest home improvement specialty retailer worldwide. According to its most recent quarterly update, the company operates via a total of 2,316 retail stores. This includes all 50 U.S. states, the District of Columbia, Guam, Canada, Mexico, and other locations. Powered by its huge workforce of more than 500,000 employees, Home Depot offers consumers a broad range of home improvement items combined with relevant services. The company is set to report its second quarter 2022 earnings on August 16, 2022, before the market opens.
With that, let’s just recap Home Depot’s most recent quarterly earnings result from May of this year. In detail, the company recorded its “highest first-quarter sales” in the history of the company. Specifically, Home Deport notched total sales for the first quarter of 2022 of $38.9 billion, representing a $1.4 billion gain year-over-year. Interestingly, over the last four quarters, the average earnings surprise has been 7.2%. Considering this, will you be watching HD stock prior to these earnings?
Source: TD Ameritrade TOS
[Read More] Stock Market Today: Dow Jones, S&P 500 Rally On Less-Than-Expected Inflation Report
Costco Wholesale (COST Stock)
Next, we have Costco Wholesale (COST). In brief, Costco Wholesale is a membership-only big-box retail store where consumers go shopping for items in bulk. The company sells a broad selection of products ranging from dry food and sundries to consumer durables to fresh food. For a sense of scale, Costco Wholesale currently operates 834 warehouses globally, with the majority being in the U.S, Canada, Mexico, and Japan.
Just last week, the retailer reported its July 2022 sales results. Diving in, the company posted net sales of $16.85 billion for the retail month of July. This reflects an increase of 10.8% from $15.21 billion in 2021 for the same time period. What’s more, for the forty-eight weeks ended July 31, 2022, Costco recorded net sales of $205.19 billion, which is an increase of 16.4% versus $176.3 billion during the same time period the year prior. In the last month of trading action, COST stock has gained 8.41%, and is currently trading at $541.02 per share on Wednesday afternoon.
Moving along, last month Costco announced its quarterly cash dividend. Specifically, Costco’s board of directors declared a quarterly cash dividend on Costco’s stock of $0.90 cents a share. The quarterly dividend is payable on August 12, 2022, to shareholders of record at the close of business on July 29, 2022. Given all this, is COST a consumer stock to watch right now?
Source: TD Ameritrade TOS
[Read More] 4 Top Industrial Stocks Moving Today
Target (TGT Stock)
Lastly, let’s dive into Target (TGT). This big box retailer needs little to no introduction, but if you’re new here let’s take a brief look. The company is a general merchandise retailer that sells products through its retail stores and e-commerce channels. Its product category includes accessories and apparel, household essentials and beauty, food and beverage, home furnishing, and decor. As of Wednesday afternoon, shares of TGT stock are trading up 4.25% at $172.13 per share.
Back in May, Target’s board of directors announced that they have declared a quarterly dividend of $1.08 per common share. This reflects a 20% increase from $0.90 in the previous quarter. Impressively, this is the company’s 220th straight dividend paid since October 1976. As a result, Target is on track to record its 51st consecutive year of increased annual dividends. Continuing on, investors will be waiting to see how the company performs in its second quarter 202 earnings results. These results are expected to be announced on Wednesday, August 17. As such, should you add TGT to your August 2022 watchlist?
Source: TD Ameritrade TOS
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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We can look at consumer discretionary companies like Apple (NASDAQ: AAPL) that continue to bring in a flux of new consumers with its latest tech offerings. This is largely due to the fact that consumer companies tend to be moderately stable and generate consistent profits year-over-year. Its product category includes accessories and apparel, household essentials and beauty, food and beverage, home furnishing, and decor.
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We can look at consumer discretionary companies like Apple (NASDAQ: AAPL) that continue to bring in a flux of new consumers with its latest tech offerings. Consumer Stocks To Buy [Or Avoid] Right Now The Home Depot Inc. (NYSE: HD) Costco Wholesale Corporation (NASDAQ: COST) Target Corporation (NYSE: TGT) Home Depot (HD Stock) Starting off this list is Home Depot (HD). Powered by its huge workforce of more than 500,000 employees, Home Depot offers consumers a broad range of home improvement items combined with relevant services.
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We can look at consumer discretionary companies like Apple (NASDAQ: AAPL) that continue to bring in a flux of new consumers with its latest tech offerings. Are These The Best Consumer Stocks To Invest In 2022 It’s no surprise that consumer stocks are among the most popular sectors for investors in the stock market now. Consumer Stocks To Buy [Or Avoid] Right Now The Home Depot Inc. (NYSE: HD) Costco Wholesale Corporation (NASDAQ: COST) Target Corporation (NYSE: TGT) Home Depot (HD Stock) Starting off this list is Home Depot (HD).
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We can look at consumer discretionary companies like Apple (NASDAQ: AAPL) that continue to bring in a flux of new consumers with its latest tech offerings. With that, let’s just recap Home Depot’s most recent quarterly earnings result from May of this year. Source: TD Ameritrade TOS [Read More] Stock Market Today: Dow Jones, S&P 500 Rally On Less-Than-Expected Inflation Report Costco Wholesale (COST Stock) Next, we have Costco Wholesale (COST).
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2022-08-10 00:00:00 UTC
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7 Massively Undervalued Micro-Cap Stocks to Buy Before Lift Off
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https://www.nasdaq.com/articles/7-massively-undervalued-micro-cap-stocks-to-buy-before-lift-off
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InvestorPlace - Stock Market News, Stock Advice & Trading Tips
Dr. Gerald W. Perritt, the founder of Chicago-based portfolio manager Perritt Capital Management, wrote a whitepaper a few years ago entitled “The MicroCap Advantage.” As the title suggests, it discussed why investing in undervalued micro-cap stocks makes sense.
The whitepaper showed that between 1926 and 2018, the compound annual growth rate (CAGR) of small company stocks was 11.8%, 180 basis points higher than the return for large company stocks. Further, despite the risk, small company stocks outperformed large company stocks in 54 of the 89 years.
The only caveat?
The annual standard deviation of small company stocks was almost two-thirds greater than their large company counterparts. Therefore, investing in micro-cap stocks is best if you have a fully-diversified portfolio that allocates a significant weighting to large-cap stocks.
With that in mind, I’ve selected seven undervalued micro-cap stocks from the First Trust Dow Jones Select MicroCap Index Fund (NYSEARCA:FDM), a collection of 201 small company stocks.
The exchange-traded fund (ETF) is down 11.15% year-to-date through Aug. 9. To qualify, a stock must be down by more than that amount.
EVC Entravision Communications $5.21
LOVE Lovesac Company $34.21
CENT Central Garden & Pet $43.26
OPY Oppenheimer Holdings $37.74
CCRN Cross Country Healthcare $22.33
TILE Interface $12.18
RMR RMR Group $28.37
Undervalued Micro-Cap Stocks: Entravision Communications (EVC)
Source: Casimiro PT / Shutterstock.com
Entravision Communications (NYSE:EVC) is a Los Angeles-based operator of an advertising, media, and technology solutions company.
It owns the largest digital advertising company in Latin America. It also operates digital marketing businesses in Asia and Africa. In 2012, Entravision generated 2% of its overall revenue from digital advertising. It now accounts for 73% of the company’s sales.
In addition to digital, it owns 49 local television stations in the U.S., catering to the Hispanic market. It is Univision’s largest affiliate group. Its stations have 3.7 million weekly viewers. It also operates 46 radio stations in 16 markets, reaching 96% of the Latino population.
Between 2019 and 2021, it grew its revenue by 67%, compounded annually to $760.2 million. On the bottom line, it increased its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) by 46% to $88.0 million.
Based on its 2021 free cash flow of $59.43 million, it has an FCF yield of 15.1%. I consider anything above 8% to be in value territory.
Lovesac Company (LOVE)
Source: JHVEPhoto / Shutterstock.com
Lovesac Company (NASDAQ:LOVE) has lost almost half its value in 2022. Despite the significant decline, its shares are still up 114% from its June 2018 initial public offering.
Lovesac’s best known for its modular couches, known as Sactionals, as well as for its Sacs, foam beanbag chairs. In the first fiscal quarter of 2023, its revenues jumped 56.0% to $129.4 million, while its adjusted EBITDA increased 19.5% over last year. It finished the first quarter with 162 furniture showrooms, 46 more than Q1 2022.
“Since our IPO four years ago, trailing 12-month sales have quintupled. We’ve driven trailing 12 months EBITDA from being negative into the double digits,” Lovesac CEO Shawn Nelson said about the company’s growth in its June conference call.
For the trailing 12 months (or TTM) ended Q1 2023, Lovesac’s FCF per share was $1.01, the highest since 2017. While its FCF yield of 2.9% isn’t in value territory, its growth more than makes up for the high valuation.
Interestingly, during its conference call, the company said its sales per square foot were almost as high as Apple (NASDAQ:AAPL) and Tiffany, owned by one of my favorite companies, LVMH (OTCMKTS:LVMUY).
2023 appears to be Lovesac’s year.
Undervalued Micro-Cap Stocks: Central Garden & Pet (CENT)
Source: Pavel Kapysh / Shutterstock.com
I’ve always thought that Central Garden & Pet (NASDAQ:CENT) has never quite lived up to its full potential, although its annualized total return over the past decade was 15.99%, 263 basis points higher than the entire U.S. market.
Between gardening and pets, you’ve got two of the most significant areas of consumer spending. Yet, it always seems to hit periods of underperformance. Take its latest quarter, for example. Its net sales decreased 2% — they were down 5% organically — while its operating income was up by 1%, but only because of a 12% increase from its Pet segment.
In fiscal 2017, it had revenue of $2.05 billion. In 2021, they were $3.3 billion, 61% higher. Its operating income over the same period increased 63% to $254.5 million, from $156.1 million in 2017.
The big positive: If you only look at the last three years, you will likely have a different impression of the company.
Valued at 0.73x sales, it hasn’t traded at this low a multiple since 2019. I wouldn’t bet the farm on CENT, but a small wager at current prices should pay dividends in 18-24 months.
Oppenheimer Holdings (OPY)
Source: Shutterstock
Next on my list of undervalued micro-cap stocks is Oppenheimer Holdings (NYSE:OPY). Oppenheimer is a middle-market investment bank and full-service broker-dealer based in New York.
The company’s stock is down more than 19% YTD due to a significant reduction in investment banking fees. In late July, it reported second-quarter 2022 results that included an 83.6% decline in advisory fees to $8.28 million from $50.5 million in Q2 2021. Oppenheimer’s revenue in the quarter fell 30.3% to $237.2 million, with a loss of $3.9 million.
On the plus side, its tangible book value per share increased 16.8% in the second quarter to $53.62 from $45.90 a year earlier. That’s due to share repurchases. YTD Oppebheimer has bought back 1.26 million of its shares. That’s a 10% reduction in its share count in the first half of 2022.
In a business like investment banking, the fact that CEO Albert Lowenthal owns almost 27% of the equity and controls 97.5% of the votes is a good thing, in my opinion, because it doesn’t hide who’s boss.
The investment banking business will return, and when it does, OPY will rebound.
Undervalued Micro-Cap Stocks: Cross Country Healthcare (CCRN)
Source: Supavadee butradee / Shutterstock.com
If you run a company with any medical staffing needs, Cross Country Healthcare (NASDAQ:CCRN) is one of this country’s leading human resources specialists, with more than $2 billion in annual revenue.
Founded in 1986 and publicly traded as of 2001, Cross Country’s 36-year journey has taken it from small business to digitally-savvy healthcare recruiter and staffing expert. The money spent on healthcare staffing across the country has more than doubled since 2013, from $10.2 billion to an estimated $24.7 billion in 2021.
That’s good news for Cross Country’s shareholders. And it’s likely to get even better as management continues to scale the business, making it more efficient and profitable.
In Q2 2022, the company increased its revenues by 127% to $753.6 million, while its adjusted earnings per share increased 198% to $1.40. Nurse and Allied Staffing led growth, up 131% in the quarter.
Down almost 20% YTD, it’s currently valued at 0.33x revenue. It hasn’t been valued this low since 2018.
If you believe the healthcare staffing shortage will continue indefinitely, CCRN is a stock for you to consider seriously.
Interface (TILE)
Source: Popovic / Shutterstock.com
Interface (NASDAQ:TILE) started in 1973 when founder Ray Anderson saw a carpet tile in Europe and thought it would go over well in the U.S. 49 years later, Interface generated $1.2 billion in annual revenue from more than 100 countries.
Anderson, who passed away in 2011 from cancer, was an industry leader in sustainability. He set out in 1994 to get the company to zero waste, zero impact, and zero environmental footprint by 2020. As a result of Anderson’s Mission Zero project, Interface has significantly reduced its global environmental footprint.
While initially intended for the office market, Interface now generates 52% of its revenue from non-office purposes. It is the market share leader in the $5 billion carpet tile industry.
It’s also working hard to become the global leader in both luxury vinyl tile (LVT) and rubber flooring markets. Its total addressable market has more than doubled over the past couple of years to more than $9.0 billion.
Its current earnings yield is 8.53%, higher than in the past decade. That makes it an easy buy.
Undervalued Micro-Cap Stocks: RMR Group (RMR)
Source: ImageFlow/shutterstock.com
RMR Group (NASDAQ:RMR) is a Boston-based alternative asset manager specializing in commercial real estate. It has more than $37 billion in assets under management (AUM).
The real estate investment trusts and assets it manages own more than 2,100 properties across the country. The company’s holdings are diversified amongst several types of commercial real estate, including retail, office, senior living, industrial, and hotels.
In February, I included RMR in an article about stocks to buy paying special dividends in 2021. It paid out $7 in special dividends and $1.52 in regular dividends in 2021. It currently yields 5.64% without any special dividends. That’s more than decent.
As I said in February, the company continues to grow its private capital AUM, which leads to higher fees. In the third fiscal quarter of 2022, the company earned $2.94 million in fees from its managed private real estate capital clients. That was up 130% from Q3 2021, so the plan appears to be working.
RMR Group’s forward price-to-earnings ratio is 12.66, the lowest since 2017. As recently as 2018, its share price traded close to $100.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
The post 7 Massively Undervalued Micro-Cap Stocks to Buy Before Lift Off appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Interestingly, during its conference call, the company said its sales per square foot were almost as high as Apple (NASDAQ:AAPL) and Tiffany, owned by one of my favorite companies, LVMH (OTCMKTS:LVMUY). We’ve driven trailing 12 months EBITDA from being negative into the double digits,” Lovesac CEO Shawn Nelson said about the company’s growth in its June conference call. In a business like investment banking, the fact that CEO Albert Lowenthal owns almost 27% of the equity and controls 97.5% of the votes is a good thing, in my opinion, because it doesn’t hide who’s boss.
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Interestingly, during its conference call, the company said its sales per square foot were almost as high as Apple (NASDAQ:AAPL) and Tiffany, owned by one of my favorite companies, LVMH (OTCMKTS:LVMUY). EVC Entravision Communications $5.21 LOVE Lovesac Company $34.21 CENT Central Garden & Pet $43.26 OPY Oppenheimer Holdings $37.74 CCRN Cross Country Healthcare $22.33 TILE Interface $12.18 RMR RMR Group $28.37 Undervalued Micro-Cap Stocks: Entravision Communications (EVC) Source: Casimiro PT / Shutterstock.com Entravision Communications (NYSE:EVC) is a Los Angeles-based operator of an advertising, media, and technology solutions company. Undervalued Micro-Cap Stocks: Central Garden & Pet (CENT) Source: Pavel Kapysh / Shutterstock.com I’ve always thought that Central Garden & Pet (NASDAQ:CENT) has never quite lived up to its full potential, although its annualized total return over the past decade was 15.99%, 263 basis points higher than the entire U.S. market.
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Interestingly, during its conference call, the company said its sales per square foot were almost as high as Apple (NASDAQ:AAPL) and Tiffany, owned by one of my favorite companies, LVMH (OTCMKTS:LVMUY). InvestorPlace - Stock Market News, Stock Advice & Trading Tips Dr. Gerald W. Perritt, the founder of Chicago-based portfolio manager Perritt Capital Management, wrote a whitepaper a few years ago entitled “The MicroCap Advantage.” As the title suggests, it discussed why investing in undervalued micro-cap stocks makes sense. EVC Entravision Communications $5.21 LOVE Lovesac Company $34.21 CENT Central Garden & Pet $43.26 OPY Oppenheimer Holdings $37.74 CCRN Cross Country Healthcare $22.33 TILE Interface $12.18 RMR RMR Group $28.37 Undervalued Micro-Cap Stocks: Entravision Communications (EVC) Source: Casimiro PT / Shutterstock.com Entravision Communications (NYSE:EVC) is a Los Angeles-based operator of an advertising, media, and technology solutions company.
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Interestingly, during its conference call, the company said its sales per square foot were almost as high as Apple (NASDAQ:AAPL) and Tiffany, owned by one of my favorite companies, LVMH (OTCMKTS:LVMUY). 2023 appears to be Lovesac’s year. Its operating income over the same period increased 63% to $254.5 million, from $156.1 million in 2017.
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2022-08-10 00:00:00 UTC
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10 Stocks That Could Rise 10x (Safely)
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https://www.nasdaq.com/articles/10-stocks-that-could-rise-10x-safely
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InvestorPlace - Stock Market News, Stock Advice & Trading Tips
This article is excerpted from Tom Yeung’s Profit & Protection newsletter dated Aug. 9, 2022. To make sure you don’t miss any of Tom’s picks, subscribe to his mailing list here.
Let’s face it. Finding 10x stocks is tough.
For every Meta Platforms (NASDAQ:META) that claws its way from $18 to $180, another dozen look more like Voyager Digital (OTCMKTS:VYGVQ), a crypto trading platform that went bankrupt after losing $650 million on a loan.
Or Enjoy Technology (OTCMKTS:ENJYQ), a SPAC that went bankrupt within 9 months of listing…
…Or Quibi… Celsius… Electric Last Mile (OTCMKTS:ELMSQ)…
That’s because high-growth investing is much like finding a career in acting or one in organized crime.
It’s a high-risk, high-reward activity.
Yet, some venture capital funds have made Hollywood stardom look easy. The well-regarded Sequoia Fund has managed to pump out 13% returns since its inception in 1970. $10,000 invested at its start would be worth $6 million today. And smaller funds like Union Square Ventures’ 2004 vintage have done even better by netting investors a 67% IRR. All without joining the mafia.
These funds understand that every fund only needs a couple of billion-dollar exits to offset the other bets that fall to zero. And the more you can tilt the scales in your favor, the better the chance of long-term success.
Finding the Billion-Dollar Winners
So, how can regular investors gain an advantage?
The most obvious way to land billion-dollar winners is to scatter bets across early stage tech companies with plenty of buzz.
It’s also the wrong way.
Data gathered by Profit & Protection has long shown that positive earnings growth is unintuitively a negative factor for returns. By scattering bets across too many hot-shots, investors tend to set themselves up for long-term underperformance.
Source: Chart by InvestorPlace
Instead, the Profit & Protection system has two proven ways to find more promising Moonshots with 10x potential.
1. High-Potential Tech Stocks on Blue-Light Special
The first strategy is finding beaten-down tech stocks where the market has thrown in the towel.
Apple (NASDAQ:AAPL) in 1997…
Amazon (NASDAQ:AMZN) in 2001…
Facebook (FB) in 2012…
Tesla (NASDAQ:TSLA) in 2018 (not 2022)…
That’s because even high-flying companies can run into short-term issues. And at these brief moments, the echo chamber of mainstream media can turn small speed bumps into a mountain of trouble.
“Amazon hopes that investors will ignore the inconvenient expense numbers in the real income statement,” one New York Times article wrote in 2001, “which will be left out of the creative one the company emphasizes.”
Yet, these negative headlines can provide incredible buying opportunities, especially if the company’s market capitalization falls below $5 billion. And if you can separate the Pets.coms from the Amazons, you’re even better equipped to find these 10x winners.
Today, plenty of high-quality companies now meet this first Profit & Protection strategy.
Desktop Metal (NYSE:DM). The 3D printing company trades 92% below its all-time high, despite its market-leading position in high-speed metal-printing machines.
Ginkgo Bioworks (NYSE:DNA). The bioengineering firm trades 82% off its peak and is a leader in bringing biotech to industrial applications.
SoFi (NASDAQ:SOFI). The fintech darling trades 68% below its highs, despite rapid growth and a sticky customer base.
RealReal (NASDAQ:REAL). The discount e-commerce firm is gaining scale as rivals are facing steep declines.
POSaBIT Systems (OTCMKTS:POSAF). A Canadian point-of-sale company has few competitors in the highly regulated world of cannabis finance.
Upstart Holdings (NYSE:UPST). The cloud-based AI lending platform has fallen 93% from its all-time high despite maintaining hyper-speed growth in its industry.
These firms are all leaders in their respective fields. And that’s essential.
Consider Facebook in social media, Amazon in e-commerce and Tesla in electric vehicles.
Hypergrowth winners aren’t always the first in the field…
…But they’re always the strongest competitor.
Given the choice between the No. 1 star vs. the No. 2 value play, hypergrowth investors should choose the former every time.
2. Perpetual Money Machines
Meanwhile, a second class of companies can also provide investors with 10x returns… provided you wait long enough.
Starbucks (NASDAQ:SBUX). +24,900% since 1992…
Silicon Valley Bank (NASDAQ:SIVB). +62,000% since 1987…
Home Depot (NYSE:HD). +508,700% since 1982…
These companies are what I call Perpetual Money Machines. By earning high returns and reinvesting the proceeds at equally high rates, these slow-burners keep marching upwards in both good times and bad. It’s compound interest at its finest.
Investors need patience with these Money Machines. A Home Depot shareholder might have happily sold their stake in 1986 for 400% returns but then miss out on more significant gains down the road.
Meanwhile, those with more self-restraint can often turn small investments into massive retirement portfolios.
To identify some of these firms, I’ve taken the quantitative Profit & Protection system and selected only high return on invested capital (or ROIC) companies trading under $5 billion market capitalizations with the potential for internal reinvestment.
Shoals Technologies Group (NASDAQ:SHLS). The Tennessee-based manufacturing firm creates high-value electrical balance of systems (eBOS) for PV solar panel arrays. It’s a major winner of global decarbonization efforts.
Gentex Corporation (NASDAQ:GNTX). The auto-parts manufacturer has pursued high-value businesses such as dimming rearview mirrors and camera-based driving systems. Growth in autonomous driving almost guarantees revenue growth for the next decade.
Alignment Healthcare (NASDAQ:ALHC). The Medicare provider looks much like UnitedHealth (NYSE:UNH) and other insurers that grew shares 10x. It’s a high-barrier-to-entry business that rewards existing players handsomely.
Planet Fitness (NYSE:PLNT). The franchise-based fitness firm shields itself from cyclical demand by shifting financial risk to its franchisees. A shift away from home exercise equipment will boost demand in the near term.
Not every firm will do well, of course. Franchise-based companies like Planet Fitness can do well, like Starbucks…
…or implode like Quiznos if they over-expand or alienate their franchisees.
But as a group, these Perpetual Money Machines operate in industries with high barriers to entry and earn sustainably high returns.
How to Invest Like a Venture Capitalist
When investing on crowdfunding sites like StartEngine, many accredited investors act as I do at a buffet.
A bite of quick-service kitchen Speedy Eats…
A sip of hard coffee firm Cask & Kettle…
A stop by Seattle-based Here Today Brewery & Kitchen…
You can afford to take dozens of samples when you have a big appetite (or huge pocketbook). Early stage venture capital firm Andreessen Horowitz alone counts 232 companies in its active portfolio
Meanwhile, investors buying later-stage companies on public markets need to act more like my partner at his favorite ice cream store.
“One tub of the Michigan special Superman ice cream,” he would say. “And that will be all, please.”
These professionals concentrate their bets on fewer big plays. Private equity firm Thoma Bravo fits neatly into this category.
That’s because when buying 10x companies (rather than 100x or 1,000x ones), investors need to make fewer bets, so that home runs make a difference.
Tom Yeung is the editor of Profit & Protection, a free e-letter about investing to profit in good times and protecting gains during the bad. To join Profit & Protection — and claim a free copy of Tom’s latest report — go here to sign up for free!
The post 10 Stocks That Could Rise 10x (Safely) appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Apple (NASDAQ:AAPL) in 1997… Amazon (NASDAQ:AMZN) in 2001… Facebook (FB) in 2012… Tesla (NASDAQ:TSLA) in 2018 (not 2022)… That’s because even high-flying companies can run into short-term issues. The most obvious way to land billion-dollar winners is to scatter bets across early stage tech companies with plenty of buzz. Data gathered by Profit & Protection has long shown that positive earnings growth is unintuitively a negative factor for returns.
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Apple (NASDAQ:AAPL) in 1997… Amazon (NASDAQ:AMZN) in 2001… Facebook (FB) in 2012… Tesla (NASDAQ:TSLA) in 2018 (not 2022)… That’s because even high-flying companies can run into short-term issues. InvestorPlace - Stock Market News, Stock Advice & Trading Tips This article is excerpted from Tom Yeung’s Profit & Protection newsletter dated Aug. 9, 2022. The most obvious way to land billion-dollar winners is to scatter bets across early stage tech companies with plenty of buzz.
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Apple (NASDAQ:AAPL) in 1997… Amazon (NASDAQ:AMZN) in 2001… Facebook (FB) in 2012… Tesla (NASDAQ:TSLA) in 2018 (not 2022)… That’s because even high-flying companies can run into short-term issues. To identify some of these firms, I’ve taken the quantitative Profit & Protection system and selected only high return on invested capital (or ROIC) companies trading under $5 billion market capitalizations with the potential for internal reinvestment. Early stage venture capital firm Andreessen Horowitz alone counts 232 companies in its active portfolio Meanwhile, investors buying later-stage companies on public markets need to act more like my partner at his favorite ice cream store.
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Apple (NASDAQ:AAPL) in 1997… Amazon (NASDAQ:AMZN) in 2001… Facebook (FB) in 2012… Tesla (NASDAQ:TSLA) in 2018 (not 2022)… That’s because even high-flying companies can run into short-term issues. Not every firm will do well, of course. Early stage venture capital firm Andreessen Horowitz alone counts 232 companies in its active portfolio Meanwhile, investors buying later-stage companies on public markets need to act more like my partner at his favorite ice cream store.
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19817.0
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2022-08-10 00:00:00 UTC
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US STOCKS-S&P, Nasdaq jump 2% as cooling inflation eases rate hike bets
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AAPL
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https://www.nasdaq.com/articles/us-stocks-sp-nasdaq-jump-2-as-cooling-inflation-eases-rate-hike-bets
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nan
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nan
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For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window
Fed now seen delivering 50 bps hike in September
U.S. consumer price growth unchanged for July
Musk sells Tesla shares worth $6.9 bln
Volatility index hits lowest in over 3 months
Indexes up: Dow 1.60%, S&P 2.02%, Nasdaq 2.66%
Updates prices, details; adds comment
By Bansari Mayur Kamdar and Aniruddha Ghosh
Aug 10 (Reuters) - Wall Street's main indexes rose more than 1% on Wednesday after data showing a slower-than-expected rise in inflation in July prompted traders to cut their bets on another super-sized rate hike by the U.S. Federal Reserve.
U.S. consumer prices were unchanged in July due to a sharp drop in the cost of gasoline, delivering the first notable sign of relief for weary Americans who have watched prices climb over the past two years.
Traders are now pricing in a 41.5% chance of a 75-basis-point increase in fund rates at the Fed's next meeting in September, compared with 67.5% before the data.
All the 11 major S&P 500 sectors advanced in mid-day trading, with consumer discretionary .SPLRCD, information technology .SPLRCT and communication services .SPLRCL stocks gaining between 2.5% and 3.0%.
"(Inflation at) 8.5% is still very high, but there is optimism that perhaps June was the peak," said Randy Frederick, vice president of trading and derivatives for Charles Schwab.
However, Frederick warned that producer prices data for July on Thursday, and August's inflation and employment data next month are still pending before the central bank meeting that could alter the course of the Fed again.
The Fed has hiked its policy rate by 225 bps since March despite fears that the sharp rise in borrowing costs could tip the economy into a recession.
At 12:04 p.m. ET, the Dow Jones Industrial Average .DJI was up 524.50 points, or 1.60%, at 33,298.91, the S&P 500 .SPX was up 83.13 points, or 2.02%, at 4,205.60, and the Nasdaq Composite .IXIC was up 332.30 points, or 2.66%, at 12,826.23.
After a rough start to the year, the benchmark S&P 500 is up nearly 15% from its mid-June low, largely on expectations the Fed will be less hawkish than anticipated in its efforts to provide a soft landing for the economy.
The CBOE Volatility index .VIX, Wall Street's fear gauge, fell below the 20.00 level, hitting its lowest since April.
High-growth and megacap technology stocks, whose valuations are vulnerable to rising bond yields, gained as Treasury yields fell sharply across the board. Apple Inc AAPL.O, Alphabet Inc GOOGL.O and Amazon.com Inc AMZN.O rose more than 2% each. US/
Economy-sensitive banks .SPXBK also advanced 3%, with Goldman Sachs Group Inc GS.N and Morgan Stanley MS.N climbing 3% each.
"They (investors) are chasing the laggards that haven't participated in the huge run off the June lows," said Thomas Hayes, managing member, Great Hill Capital LLC, New York.
"Banks have underperformed and are now getting bid."
Electric-vehicle maker Tesla Inc TSLA.O gained 2.6% after Chief Executive Elon Musk sold $6.9 billion worth of company shares.
Musk said the funds could be used to finance a potential Twitter Inc TWTR.N deal if he loses a legal battle. Twitter shares rose 3.6%.
Meta Platforms Inc META.O added 6.2% after the Facebook-parent said on Tuesday that it had raised $10 billion in its first-ever bond offering.
Advancing issues outnumbered decliners for a 6.51-to-1 ratio on the NYSE and a 3.42-to-1 ratio on the Nasdaq.
The S&P index recorded five new 52-week highs and 29 new lows, while the Nasdaq recorded 52 new highs and 46 new lows.
Inflation set to ease, but by how much?https://tmsnrt.rs/3bLcJWj
(Reporting by Bansari Mayur Kamdar, Aniruddha Ghosh, Sruthi Shankar, Medha Singh and Karina D'Souza in Bengaluru; Editing by Arun Koyyur, Anil D'Silva and Shounak Dasgupta)
((BansariMayur.Kamdar@thomsonreuters.com; Twitter: @BansariKamdar))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Apple Inc AAPL.O, Alphabet Inc GOOGL.O and Amazon.com Inc AMZN.O rose more than 2% each. For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window Fed now seen delivering 50 bps hike in September U.S. consumer price growth unchanged for July Musk sells Tesla shares worth $6.9 bln Volatility index hits lowest in over 3 months Indexes up: Dow 1.60%, S&P 2.02%, Nasdaq 2.66% Updates prices, details; adds comment By Bansari Mayur Kamdar and Aniruddha Ghosh Aug 10 (Reuters) - Wall Street's main indexes rose more than 1% on Wednesday after data showing a slower-than-expected rise in inflation in July prompted traders to cut their bets on another super-sized rate hike by the U.S. Federal Reserve. After a rough start to the year, the benchmark S&P 500 is up nearly 15% from its mid-June low, largely on expectations the Fed will be less hawkish than anticipated in its efforts to provide a soft landing for the economy.
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Apple Inc AAPL.O, Alphabet Inc GOOGL.O and Amazon.com Inc AMZN.O rose more than 2% each. For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window Fed now seen delivering 50 bps hike in September U.S. consumer price growth unchanged for July Musk sells Tesla shares worth $6.9 bln Volatility index hits lowest in over 3 months Indexes up: Dow 1.60%, S&P 2.02%, Nasdaq 2.66% Updates prices, details; adds comment By Bansari Mayur Kamdar and Aniruddha Ghosh Aug 10 (Reuters) - Wall Street's main indexes rose more than 1% on Wednesday after data showing a slower-than-expected rise in inflation in July prompted traders to cut their bets on another super-sized rate hike by the U.S. Federal Reserve. The CBOE Volatility index .VIX, Wall Street's fear gauge, fell below the 20.00 level, hitting its lowest since April.
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Apple Inc AAPL.O, Alphabet Inc GOOGL.O and Amazon.com Inc AMZN.O rose more than 2% each. For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window Fed now seen delivering 50 bps hike in September U.S. consumer price growth unchanged for July Musk sells Tesla shares worth $6.9 bln Volatility index hits lowest in over 3 months Indexes up: Dow 1.60%, S&P 2.02%, Nasdaq 2.66% Updates prices, details; adds comment By Bansari Mayur Kamdar and Aniruddha Ghosh Aug 10 (Reuters) - Wall Street's main indexes rose more than 1% on Wednesday after data showing a slower-than-expected rise in inflation in July prompted traders to cut their bets on another super-sized rate hike by the U.S. Federal Reserve. However, Frederick warned that producer prices data for July on Thursday, and August's inflation and employment data next month are still pending before the central bank meeting that could alter the course of the Fed again.
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Apple Inc AAPL.O, Alphabet Inc GOOGL.O and Amazon.com Inc AMZN.O rose more than 2% each. For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window Fed now seen delivering 50 bps hike in September U.S. consumer price growth unchanged for July Musk sells Tesla shares worth $6.9 bln Volatility index hits lowest in over 3 months Indexes up: Dow 1.60%, S&P 2.02%, Nasdaq 2.66% Updates prices, details; adds comment By Bansari Mayur Kamdar and Aniruddha Ghosh Aug 10 (Reuters) - Wall Street's main indexes rose more than 1% on Wednesday after data showing a slower-than-expected rise in inflation in July prompted traders to cut their bets on another super-sized rate hike by the U.S. Federal Reserve. All the 11 major S&P 500 sectors advanced in mid-day trading, with consumer discretionary .SPLRCD, information technology .SPLRCT and communication services .SPLRCL stocks gaining between 2.5% and 3.0%.
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19818.0
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2022-08-10 00:00:00 UTC
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1 Emerging Catalyst That Apple Investors May Have Missed
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AAPL
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https://www.nasdaq.com/articles/1-emerging-catalyst-that-apple-investors-may-have-missed
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nan
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nan
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Apple (NASDAQ: AAPL) released fiscal 2022 third-quarter results (for the three months ending June 25, 2022) on July 28, and investors should have been pleased to see an improvement in sales of the iPhone at a time when the overall smartphone market was in the soup.
More specifically, Apple's iPhone revenue increased to $40.7 billion last quarter from $39.6 billion in the prior-year period. While that isn't a huge jump, it is worth noting that global smartphone sales dropped 9% year-over-year in the second quarter of 2022, according to market research firm Canalys. Apple's iPhone shipments, however, reportedly increased 8% year-over-year to 49.5 million units as per Canalys.
Emerging markets were one of the reasons behind Apple's resilient iPhone sales performance last quarter. CEO Tim Cook said on the latest earnings conference call that Apple witnessed "very strong double-digit growth in Brazil, Indonesia, and Vietnam." He also added that the company's revenue in India nearly doubled. That's something investors should take note of, as the Indian market presents a solid long-term growth opportunity for Apple. Here's why.
Apple is benefiting from higher smartphone spending in India
Canalys reports that smartphone shipments in India hit 36.4 million units in the second quarter of 2022, an increase of 12% over the prior-year period. That means Apple grew at a much faster pace in the Indian market last quarter.
Though the company didn't clarify its revenue from the Indian market, estimates suggest that Apple's revenue from its Indian operations was close to $3 billionin fiscal 2021. The tech giant's Indian revenue reportedly increased 68% last fiscal year. In fiscal 2022 analysts expect Apple's top line to increase another 31% in the Indian market, which would bring its revenue over there close to $4 billion.
While that looks like a small amount compared to Apple's projected revenue of $392 billion in fiscal 2022, the company's impressive growth in India at a time of high inflation means that consumers are willing to spend on iPhones. More specifically, the average selling price (ASP) of a smartphone in India stood at $211 in the first quarter of the calendar year.
Apple's entry-level iPhone SE is priced at 43,900 Indian rupees in that market, which translates into roughly $553 at the current exchange rate. So Apple seems to be enjoying solid pricing power in India. This isn't surprising, as smartphone ASPs are rising in the Indian market thanks to the transition to 5G devices. Counterpoint Research estimates that the ASP of a smartphone in India increased 14% last year.
Apple capitalized on higher smartphone spending in India by cornering a 44% share of the market for devices priced at $400 or higher. Smartphone ASPs can be expected to head higher in India this year as sales of entry-level devices decline, driven by the growing adoption of 5G.
Sales of 5G smartphones reportedly increased 163% year-over-year in the second quarter in India as per CyberMedia Research. Even better, sales of premium (priced between $325 and $630) and super-premium smartphones (priced between $630 and $1,260) increased 80% and 96% year-over-year, respectively.
So the conditions are ripe for Apple to step on the gas in the Indian market, and the company is pulling the right strings to ensure that it doesn't miss out on the lucrative long-term opportunity present over there.
India could give the tech giant a big long-term boost
According to Ericsson, 500 million 5G smartphones could be sold annually in India by 2027, with the latest wireless standard accounting for 39% of overall mobile phone users in the country. That points toward a huge jump over last year's 5G smartphone shipments of 64 million units. Additionally, the 5G smartphone penetration rate in India that Ericsson sees in 2027 indicates that this market could keep growing at an impressive pace for a longer period.
Apple's strong position in the premium end of the Indian smartphone market means that it is well placed to take advantage of this opportunity. Additionally, the company has been shoring up its manufacturing capabilities in India to make its smartphones more accessible to customers over there. Apple started making the iPhone 13 in India earlier this year. It is expected to manufacture the next-generation iPhones as well over there to reduce dependence on China, which could help Apple keep the price of the upcoming devices competitive.
Apple recorded 48% growth in iPhone shipments in India in 2021 to 5.4 million units, cornering a 4.4% share of that market. This year Apple's share of India's smartphone market is expected to jump to 5.5%, with shipments increasing to 7.5 million units thanks to an increase in sales of high-end devices. It wouldn't be surprising to see this number head higher in the long run as 5G adoption improves.
In all, Apple seems to be on its way to becoming a key player in India's smartphone space, and that could unlock a huge growth opportunity for this tech stock given the market's projected growth in the coming years.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Apple (NASDAQ: AAPL) released fiscal 2022 third-quarter results (for the three months ending June 25, 2022) on July 28, and investors should have been pleased to see an improvement in sales of the iPhone at a time when the overall smartphone market was in the soup. While that looks like a small amount compared to Apple's projected revenue of $392 billion in fiscal 2022, the company's impressive growth in India at a time of high inflation means that consumers are willing to spend on iPhones. So the conditions are ripe for Apple to step on the gas in the Indian market, and the company is pulling the right strings to ensure that it doesn't miss out on the lucrative long-term opportunity present over there.
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Apple (NASDAQ: AAPL) released fiscal 2022 third-quarter results (for the three months ending June 25, 2022) on July 28, and investors should have been pleased to see an improvement in sales of the iPhone at a time when the overall smartphone market was in the soup. Apple is benefiting from higher smartphone spending in India Canalys reports that smartphone shipments in India hit 36.4 million units in the second quarter of 2022, an increase of 12% over the prior-year period. The tech giant's Indian revenue reportedly increased 68% last fiscal year.
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Apple (NASDAQ: AAPL) released fiscal 2022 third-quarter results (for the three months ending June 25, 2022) on July 28, and investors should have been pleased to see an improvement in sales of the iPhone at a time when the overall smartphone market was in the soup. Apple is benefiting from higher smartphone spending in India Canalys reports that smartphone shipments in India hit 36.4 million units in the second quarter of 2022, an increase of 12% over the prior-year period. This year Apple's share of India's smartphone market is expected to jump to 5.5%, with shipments increasing to 7.5 million units thanks to an increase in sales of high-end devices.
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Apple (NASDAQ: AAPL) released fiscal 2022 third-quarter results (for the three months ending June 25, 2022) on July 28, and investors should have been pleased to see an improvement in sales of the iPhone at a time when the overall smartphone market was in the soup. The tech giant's Indian revenue reportedly increased 68% last fiscal year. Even better, sales of premium (priced between $325 and $630) and super-premium smartphones (priced between $630 and $1,260) increased 80% and 96% year-over-year, respectively.
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19819.0
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2022-08-10 00:00:00 UTC
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Wall Street rallies as cooling inflation eases rate hike fears
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AAPL
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https://www.nasdaq.com/articles/wall-street-rallies-as-cooling-inflation-eases-rate-hike-fears
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nan
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nan
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By Herbert Lash and Bansari Mayur Kamdar
NEW YORK, Aug 10 (Reuters) - Wall Street rallied to close more than 1% higher on Wednesday after data showed U.S. inflation slowed more than expected in July and raised hopes the Federal Reserve will become less aggressive on interest rates hikes.
A sharp drop in the cost of gasoline helped the U.S. Consumer Price Index stay flat last month after advancing 1.3% in June, the Labor Department said. The CPI rose by a less-than-expected 8.5% over the past 12 months after a 9.1% rise in June.
The data was the first notable sign of relief for Americans who have watched inflation steadily climb the past two years.
Fed funds futures traders are now pricing in only a 43.5% chance that the U.S. central bank hikes rates by 75 basis points when it meets in September, compared with 68% before the data. A 50 basis point hike is seen as a 56.5% probability.
"For the market, it's sort of a Goldilocks scenario right now because you have the labor market holding up and inflation potentially starting to come down. That is what a soft landing would look like," said Shawn Snyder, head of investment strategy at Citi U.S. Wealth Management in New York.
But one month of slowing inflation is not enough for the Fed to send an all-clear signal, Snyder said.
"They're going to need to see a sustained trend, and even then some, to moderate monetary policy that could potentially lead to a recession," he said.
The rally on Wall Street was broad-based, with all 11 S&P 500 sectors rising in a sea of green. Growth stocks .IGX rose more than value .IVX, while Dow transports .DJT, small caps .RUT and semiconductors .SOX also rose.
According to preliminary data, the S&P 500 .SPX gained 86.29 points, or 2.09%, to end at 4,208.76 points, while the Nasdaq Composite .IXIC gained 356.19 points, or 2.85%, to 12,850.12. The Dow Jones Industrial Average .DJI rose 532.93 points, or 1.63%, to 33,307.34.
"(Inflation at) 8.5% is still very high, but there is optimism that perhaps June was the peak," said Randy Frederick, vice president of trading and derivatives for Charles Schwab.
Producer prices data for July on Thursday along with August inflation and employment data for release next month could alter the course of the Fed again, Frederick said.
The Fed has hiked its policy rate by 225 basis points since March despite fears the sharp rise in borrowing costs could tip the U.S. economy into a recession.
The slowing of inflation was the first "positive" reading on price pressures since the Fed began tightening policy, Chicago Fed President Charles Evans said, even as he signaled he believes the Fed has plenty more work to do.
After a rough start to the year, the benchmark S&P 500 is up nearly 15% from mid-June lows, largely on expectations the Fed will be less hawkish than anticipated in its efforts to provide a soft landing for the economy as it fights to curb inflation.
The CBOE Volatility index .VIX, Wall Street's fear gauge, fell below the 20.00 level, hitting its lowest since April.
High-growth and megacap technology stocks, whose valuations are vulnerable to rising bond yields, rose as Treasury yields fell sharply across the board. Apple Inc AAPL.O, Alphabet Inc GOOGL.O and Amazon.com Inc AMZN.O rose more than 2% each. US/
Economy-sensitive banks .SPXBK advanced, with Goldman Sachs Group Inc GS.N and Morgan Stanley MS.N climbing about 3% each.
"Banks have underperformed and are now getting bid," said Thomas Hayes, managing member of Great Hill Capital LLC, adding that investors are chasing the laggards that have not participated in the rally since June lows.
Tesla Inc TSLA.O rose after Elon Musk sold $6.9 billion worth of shares in the electric vehicle maker to finance a potential deal for Twitter Inc TWTR.N if he loses a legal battle with the social media platform. Twitter also gained.
Meta Platforms Inc META.O jumped after the Facebook-parent said on Tuesday it had raised $10 billion in its first-ever bond offering.
GRAPHIC-Inflation set to ease, but by how much?https://tmsnrt.rs/3bLcJWj
U.S. consumer prices unchanged in July as cost of gasoline tumbles
Fed seen delivering half-point rate hike in Sept as inflation eases
(Reporting by Herbert Lash; Additional reporting by Bansari Mayur Kamdar, Aniruddha Ghosh, Sruthi Shankar, Medha Singh and Karina D'Souza in Bengaluru; Editing by Anil D'Silva, Shounak Dasgupta and Lisa Shumaker)
((herb.lash@thomsonreuters.com; 1-646-223-6019; Reuters Messaging: herb.lash.reuters.com@reuters.net))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Apple Inc AAPL.O, Alphabet Inc GOOGL.O and Amazon.com Inc AMZN.O rose more than 2% each. By Herbert Lash and Bansari Mayur Kamdar NEW YORK, Aug 10 (Reuters) - Wall Street rallied to close more than 1% higher on Wednesday after data showed U.S. inflation slowed more than expected in July and raised hopes the Federal Reserve will become less aggressive on interest rates hikes. Tesla Inc TSLA.O rose after Elon Musk sold $6.9 billion worth of shares in the electric vehicle maker to finance a potential deal for Twitter Inc TWTR.N if he loses a legal battle with the social media platform.
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Apple Inc AAPL.O, Alphabet Inc GOOGL.O and Amazon.com Inc AMZN.O rose more than 2% each. By Herbert Lash and Bansari Mayur Kamdar NEW YORK, Aug 10 (Reuters) - Wall Street rallied to close more than 1% higher on Wednesday after data showed U.S. inflation slowed more than expected in July and raised hopes the Federal Reserve will become less aggressive on interest rates hikes. The Fed has hiked its policy rate by 225 basis points since March despite fears the sharp rise in borrowing costs could tip the U.S. economy into a recession.
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Apple Inc AAPL.O, Alphabet Inc GOOGL.O and Amazon.com Inc AMZN.O rose more than 2% each. By Herbert Lash and Bansari Mayur Kamdar NEW YORK, Aug 10 (Reuters) - Wall Street rallied to close more than 1% higher on Wednesday after data showed U.S. inflation slowed more than expected in July and raised hopes the Federal Reserve will become less aggressive on interest rates hikes. The slowing of inflation was the first "positive" reading on price pressures since the Fed began tightening policy, Chicago Fed President Charles Evans said, even as he signaled he believes the Fed has plenty more work to do.
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Apple Inc AAPL.O, Alphabet Inc GOOGL.O and Amazon.com Inc AMZN.O rose more than 2% each. By Herbert Lash and Bansari Mayur Kamdar NEW YORK, Aug 10 (Reuters) - Wall Street rallied to close more than 1% higher on Wednesday after data showed U.S. inflation slowed more than expected in July and raised hopes the Federal Reserve will become less aggressive on interest rates hikes. Growth stocks .IGX rose more than value .IVX, while Dow transports .DJT, small caps .RUT and semiconductors .SOX also rose.
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19820.0
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2022-08-10 00:00:00 UTC
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EXPLAINER-How could the new U.S. corporate minimum tax affect companies?
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AAPL
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https://www.nasdaq.com/articles/explainer-how-could-the-new-u.s.-corporate-minimum-tax-affect-companies
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nan
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nan
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By Rose Horowitch and David Lawder
WASHINGTON, Aug 10 (Reuters) - The main revenue source in the U.S. Senate's newly passed tax, climate and drugs bill is a novel 15% corporate minimum tax aimed at stopping large, profitable companies from gaming the Internal Revenue Service code to slash their tax bills to zero.
The nonpartisan Joint Committee on Taxation estimates that the new tax will add around $222 billion to U.S. government coffers over the next 10 years, down from a previous projection of $313 billion after last-minute changes to the bill. It will apply to companies with more than $1 billion in "book income," the profits they report to shareholders before the effects of tax deductions and credits.
Here are some key details on how it would work:
What is the corporate minimum tax?
A wealth of deductions, credits and loopholes in the federal tax code has allowed some companies to report no income or negative income to the IRS while reporting strong profits to shareholders. Democratic President Joe Biden has repeatedly singled out Amazon.com Inc AMZN.O for paying little to no federal income tax despite billions of dollars in profits.
If enacted, the tax will serve as a corporate version of the Alternative Minimum Tax for individuals, which prevents the wealthiest Americans from zeroing out their tax bills with investment losses and other deductions and credits.
The tax would likely apply to around 150 of the world's largest companies, according to a Joint Committee on Taxation analysis. These include large pharmaceutical companies and major corporations like Amazon AMZN.O, Apple Inc AAPL.O, Exxon Mobil Corp XOM.N and Nike Inc NKE.N, according to several think tanks that support the new tax. Amazon declined to comment on a potential tax increase. Apple, Exxon Mobil and Nike did not respond to requests for comment.
Companies that meet this threshold must calculate their taxes under both the 21% income tax regime and the 15% corporate minimum tax regime -- and pay the higher bill.
The tax would take effect next year and affect companies that earned an average of $1 billion in book income for three consecutive years. It would also apply to foreign companies that earn $100 million of book income in the United States.
What are the exceptions for companies?
Some regular corporate income tax credits and deductions are still allowed under the minimum tax, including credits for foreign taxes paid. The carrying forward of prior-year losses to offset future income is also permitted, but only 80% can be applied to reducing taxable income. Credits for research and development expenses are also allowed, with 75% of the value applied to reducing corporate minimum tax.
At the urging of Democratic Senator Kyrsten Sinema, lawmakers added a provision to preserve deductions on capital investments such as machinery, vehicles and buildings. The exception would allow companies to more quickly offset these expenses against tax bills.
Under another last-minute change to the legislation urged by Sinema, companies controlled by private equity firms are not subject to the corporate minimum tax if they make less than $1 billion of book income, even if that investment firm's combined portfolio of companies exceeds the threshold. Some private equity firms may be able to shift assets among companies in their portfolios so that each earns less than the $1 billion threshold to avoid the minimum tax.
Book income is calculated based on the income companies report to shareholders, and the new tax may give companies an incentive to lower the book income they report, law firm Baker Hostetler said in a recent note. They pointed to a nonpartisan Congressional Research Service report showing evidence of how past efforts to levy taxes based on book income compelled corporate taxpayers to manage their earnings and adjust book income to reduce taxes.
Large companies also could try to lobby the nongovernmental Financial Accounting Standards Board for favorable changes to the rules for calculating book income.
(Reporting by Rose Horowitch and David Lawder; editing by Jonathan Oatis)
((Rose.Horowitch@thomsonreuters.com;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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These include large pharmaceutical companies and major corporations like Amazon AMZN.O, Apple Inc AAPL.O, Exxon Mobil Corp XOM.N and Nike Inc NKE.N, according to several think tanks that support the new tax. At the urging of Democratic Senator Kyrsten Sinema, lawmakers added a provision to preserve deductions on capital investments such as machinery, vehicles and buildings. Large companies also could try to lobby the nongovernmental Financial Accounting Standards Board for favorable changes to the rules for calculating book income.
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These include large pharmaceutical companies and major corporations like Amazon AMZN.O, Apple Inc AAPL.O, Exxon Mobil Corp XOM.N and Nike Inc NKE.N, according to several think tanks that support the new tax. It will apply to companies with more than $1 billion in "book income," the profits they report to shareholders before the effects of tax deductions and credits. Companies that meet this threshold must calculate their taxes under both the 21% income tax regime and the 15% corporate minimum tax regime -- and pay the higher bill.
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These include large pharmaceutical companies and major corporations like Amazon AMZN.O, Apple Inc AAPL.O, Exxon Mobil Corp XOM.N and Nike Inc NKE.N, according to several think tanks that support the new tax. By Rose Horowitch and David Lawder WASHINGTON, Aug 10 (Reuters) - The main revenue source in the U.S. Senate's newly passed tax, climate and drugs bill is a novel 15% corporate minimum tax aimed at stopping large, profitable companies from gaming the Internal Revenue Service code to slash their tax bills to zero. Companies that meet this threshold must calculate their taxes under both the 21% income tax regime and the 15% corporate minimum tax regime -- and pay the higher bill.
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These include large pharmaceutical companies and major corporations like Amazon AMZN.O, Apple Inc AAPL.O, Exxon Mobil Corp XOM.N and Nike Inc NKE.N, according to several think tanks that support the new tax. It will apply to companies with more than $1 billion in "book income," the profits they report to shareholders before the effects of tax deductions and credits. Under another last-minute change to the legislation urged by Sinema, companies controlled by private equity firms are not subject to the corporate minimum tax if they make less than $1 billion of book income, even if that investment firm's combined portfolio of companies exceeds the threshold.
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19821.0
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2022-08-10 00:00:00 UTC
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3 Stocks That Could Help Make You Richer
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AAPL
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https://www.nasdaq.com/articles/3-stocks-that-could-help-make-you-richer
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nan
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nan
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If you're like most investors, your ultimate goal is growing your current capital into a much bigger nest egg meant to be enjoyed down the road. If you're also like most investors though, you don't have time to keep constant tabs on your portfolio.
Good news! There are plenty of solid stocks out there that offer a nice balance of reliability with long-term upside potential. Your lack of time arguably works in your favor too, since these are the sorts of tickers best left alone to let time do its thing.
Here's a rundown of three such names well-positioned to power your portfolio to a size greater than you may even be envisioning.
Dollar General
At first blush it looks like just another brick-and-mortar retailer -- a business facing an unrelenting uphill battle. However, a closer look at Dollar General (NYSE: DG) reveals it's thriving for all the right reasons.
If you've never actually seen one, don't sweat it. It may be because the majority of the chain's 18,000-plus stores are located in communities with populations of less than 20,000, which tend to be underserved by bigger players like Kroger and Walmart. Yet three-fourths of U.S. residents live within five miles of a Dollar General, keeping them convenient for consumers looking to avoid a longer trip to a larger competitors' store. The average Dollar General locale's footprint is a modest 8,000 square feet as well, making them easy to get into and out of in a hurry.
The company isn't simply relying on a savvy location strategy to meet its growth goals, though. It's also thinking strategically about what one can find inside its stores. Unlike the average discounter, more and more Dollar General stores are carrying fresh foods like produce, eggs, and milk. Only a little over 2,100 stores currently offer this assortment, but Chief Operating Officer Jeff Owen commented in March that the ultimate goal was to eventually bring such staples to more than 10,000 locations. In the meantime, the retailer says it's still looking to open on the order of 1,100 new stores this year, and remodel more than 1,700.
It might have been difficult to believe a few years ago, but smaller, neighborhood-oriented general stores are looking like the future of retailing.
Taiwan Semiconductor Manufacturing
While the worldwide semiconductor shortage is a problem for most tech companies, it's proving a boon for Taiwan Semiconductor Manufacturing (NYSE: TSM).
As the name suggests, this company makes much-needed microchips. Its customers are paying almost any price for access to any silicon wherever they can find it. That's why Taiwan Semiconductor's top line is expected to grow more than 30% this year following last year's 18% uptick.
The situation is prompting bold responses from the tech industry. Looking to avoid similar supply problems in the future, several key semiconductor companies are planning to produce more of their own microchips in-house rather than rely on third-party manufacturers like Taiwan Semiconductor. Samsung is investing billions of dollars in its own production facilities, for instance, while Intel is committing $88 billion to build more of its own microchip foundries all across Europe. A few other names in the business are following this lead, albeit less dramatically, calling the need for outsourced chipmaking into question.
What's being lost in the worry is that even once all this new production capacity is brought online years down the road, it will still barely make a dent in the world's annual need for new semiconductors. McKinsey estimates the annual semiconductor market -- a big chunk of which is already handled by third-party manufacturers -- will grow from 2021's $600 billion to more than $1 trillion by 2030.
Meanwhile, Taiwan Semiconductor's most important customers like Apple, Qualcomm, and Advanced Micro Devices are among the tech names showing the least amount of interest in doing more in-house production of their own silicon. All in all, this should be good news for Taiwan Semiconductor.
Amazon
Amazon (NASDAQ: AMZN) stock is up by more than 1,000% over the past 10 years and over 19,000% for the past 20 years, making it one of the market's most rewarding names during that stretch.
Past performance is no guarantee of future results, of course. And this may be particularly true in the case of Amazon. There's only so much online shopping the world can do, and the company's perpetually paper-thin profit margins on its e-commerce operation has turned into a major problem this year. With shipping, payroll, and other costs being so high, the company's actually lost money by selling physical goods. Its year-to-date e-commerce loss in North America has reached $2.2 billion, with Amazon remaining in the red for both reported quarters. Internationally, selling goods online has led to more than a $3 billion loss in 2022.
It may not matter though, even if the company continues to lose money with its online marketplace. Its roots may be selling physical goods online, but that's no longer the company's core profit center. Although it only accounts for 16% of its revenue, Amazon Web Services produced nearly three-fourths of last year's income. Moreover, AWS's bottom line has only continued to grow this year.
And before you float the idea of Amazon ending its online-selling business to focus on its firmly profitable cloud computing venture, understand that e-commerce is still a means to an important end. Amazon leveraged the reach of its online marketplace to produce $31 billion worth of ad revenue supplied by many of the third-party sellers using the platform to promote their goods. Although the company didn't disclose how much of that revenue was turned into a profit, digital ad revenue tends to be high-margin.
It's an exciting, long-term growth prospect simply because Amazon is still figuring out how to make the most of both of these young initiatives.
10 stocks we like better than Dollar General
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They just revealed what they believe are the ten best stocks for investors to buy right now... and Dollar General wasn't one of them! That's right -- they think these 10 stocks are even better buys.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Amazon, Apple, Intel, Qualcomm, Taiwan Semiconductor Manufacturing, and Walmart Inc. The Motley Fool recommends the following options: long January 2023 $57.50 calls on Intel, long March 2023 $120 calls on Apple, short January 2023 $57.50 puts on Intel, and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Only a little over 2,100 stores currently offer this assortment, but Chief Operating Officer Jeff Owen commented in March that the ultimate goal was to eventually bring such staples to more than 10,000 locations. Meanwhile, Taiwan Semiconductor's most important customers like Apple, Qualcomm, and Advanced Micro Devices are among the tech names showing the least amount of interest in doing more in-house production of their own silicon. Amazon leveraged the reach of its online marketplace to produce $31 billion worth of ad revenue supplied by many of the third-party sellers using the platform to promote their goods.
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Meanwhile, Taiwan Semiconductor's most important customers like Apple, Qualcomm, and Advanced Micro Devices are among the tech names showing the least amount of interest in doing more in-house production of their own silicon. The Motley Fool has positions in and recommends Advanced Micro Devices, Amazon, Apple, Intel, Qualcomm, Taiwan Semiconductor Manufacturing, and Walmart Inc. The Motley Fool recommends the following options: long January 2023 $57.50 calls on Intel, long March 2023 $120 calls on Apple, short January 2023 $57.50 puts on Intel, and short March 2023 $130 calls on Apple.
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Taiwan Semiconductor Manufacturing While the worldwide semiconductor shortage is a problem for most tech companies, it's proving a boon for Taiwan Semiconductor Manufacturing (NYSE: TSM). Looking to avoid similar supply problems in the future, several key semiconductor companies are planning to produce more of their own microchips in-house rather than rely on third-party manufacturers like Taiwan Semiconductor. Amazon Amazon (NASDAQ: AMZN) stock is up by more than 1,000% over the past 10 years and over 19,000% for the past 20 years, making it one of the market's most rewarding names during that stretch.
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Amazon Amazon (NASDAQ: AMZN) stock is up by more than 1,000% over the past 10 years and over 19,000% for the past 20 years, making it one of the market's most rewarding names during that stretch. * They just revealed what they believe are the ten best stocks for investors to buy right now... and Dollar General wasn't one of them! The Motley Fool has positions in and recommends Advanced Micro Devices, Amazon, Apple, Intel, Qualcomm, Taiwan Semiconductor Manufacturing, and Walmart Inc.
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19822.0
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2022-08-10 00:00:00 UTC
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Food delivery’s next gig is software-as-a-service
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AAPL
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https://www.nasdaq.com/articles/food-deliverys-next-gig-is-software-as-a-service
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nan
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nan
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Reuters
Reuters
LONDON (Reuters Breakingviews) - Sugar is a quick fix to balancing salt and sour. Food delivery companies are similarly looking for ways to square their need for more customers with their investors’ need for profits. The secret ingredient could be selling their delivery technology as a service to retailers.
DoorDash, Uber Technologies and Grubhub owner Just Eat Takeaway are rapidly adjusting to the post-pandemic reality: fewer new customers are ordering takeaways, just as investors get hungrier for profits. Matching the rapid expansion of the last two years was always going to be a tall order. In the three months to June, revenue growth https://ir.doordash.com/financials/quarterly-results/default.aspx at $28 billion DoorDash, led by Tony Xu, was 30% year-on-year against 83% for the same period last year. Its gross profit margin shrank to 43% from 53% a year ago.
Reining in spending on marketing or hiring is a step towards profitability. Finding new sources of revenue, for instance by letting restaurants advertise on platforms, is another. Uber boss Dara Khosrowshahi hopes to increase advertising revenue in his delivery division sevenfold by 2024 to $1 billion.
But sucking in more customers is crucial to reducing costs per order and improving efficiency. One option is for the likes of DoorDash to offer rapid delivery capabilities as a service. For a monthly subscription, supermarkets or other retailers can use the know-how to track prices and drivers. The technology providers may also get a cut of the order. Over 100 retailers including Apple and Walmart already have such a tie-up with Uber; DoorDash is building warehouses and providing drivers for Loblaw https://www.loblaw.ca/en/doordash-and-loblaw-announce-pc-express-rapid-delivery-a-new-and-innovative-offering-to-bring-express-delivery-of-grocery-and-convenience-items-to-customers-in-canada, Canada’s largest grocer.
Since the technology already exists, the detour should yield juicier margins. Software subscription giants from Salesforce to SAP have roughly 70% gross profit margins, against 40% for delivery companies like Amazon-backed Deliveroo. That translates into higher ratings from investors – on average, software firms trade at nearly 7 times 2024 revenue. If Uber, say, could generate 5% of its expected 2024 delivery revenue through tech outsourcing, its top line would grow by over $700 million, based on analyst estimates compiled by Refinitv. On a software-style multiple, that’s worth around $5 billion in today’s money, nearly a tenth of Uber’s current worth.
London-listed grocery delivery outfit Ocado offers a note of caution. It has been outsourcing its robotic-warehouse technology for years but is yet to turn an operating profit. For the secret sauce to yield the desired outcome, retailers will need to have better luck with the mode of delivery.
Follow @karenkkwok https://twitter.com/karenkkwok on Twitter
CONTEXT NEWS
Deliveroo on Aug. 10 reported https://dpd-12774-s3.s3.eu-west-2.amazonaws.com/assets/2116/6010/7627/Deliveroo_H12022_Interim_Results_RNS.pdf a pre-tax loss of 147 million pounds ($177 million) in the first half of the year compared to 95 million pounds a year ago. Year-on-year gross transaction value growth slowed from 12% in the first quarter to 2% in the second.
The UK food delivery company said the slowdown reflected “increased consumer headwinds”. It also announced the launch of an advertising platform and the closure of its operations in the Netherlands.
DoorDash on Aug. 4 reported that revenue rose 30% to $1.6 billion in the three months ended June 30. Its quarterly net loss was $263 million, due to heavy investments in international expansion and non-food categories.
Uber Technologies on Aug. 2 said revenue from its delivery division, which includes Uber Eats, rose 37% to $2.7 billion year-on-year in the quarter ended June, compared to 122% year-on-year revenue growth the same quarter in 2021.
Privately owned Jiffy said on May 18 it would halt all consumer-facing delivery operations and become a dedicated software company.
(Editing by Ed Cropley and Oliver Taslic)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Over 100 retailers including Apple and Walmart already have such a tie-up with Uber; DoorDash is building warehouses and providing drivers for Loblaw https://www.loblaw.ca/en/doordash-and-loblaw-announce-pc-express-rapid-delivery-a-new-and-innovative-offering-to-bring-express-delivery-of-grocery-and-convenience-items-to-customers-in-canada, Canada’s largest grocer. Software subscription giants from Salesforce to SAP have roughly 70% gross profit margins, against 40% for delivery companies like Amazon-backed Deliveroo. If Uber, say, could generate 5% of its expected 2024 delivery revenue through tech outsourcing, its top line would grow by over $700 million, based on analyst estimates compiled by Refinitv.
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In the three months to June, revenue growth https://ir.doordash.com/financials/quarterly-results/default.aspx at $28 billion DoorDash, led by Tony Xu, was 30% year-on-year against 83% for the same period last year. DoorDash on Aug. 4 reported that revenue rose 30% to $1.6 billion in the three months ended June 30. Uber Technologies on Aug. 2 said revenue from its delivery division, which includes Uber Eats, rose 37% to $2.7 billion year-on-year in the quarter ended June, compared to 122% year-on-year revenue growth the same quarter in 2021.
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DoorDash, Uber Technologies and Grubhub owner Just Eat Takeaway are rapidly adjusting to the post-pandemic reality: fewer new customers are ordering takeaways, just as investors get hungrier for profits. Deliveroo on Aug. 10 reported https://dpd-12774-s3.s3.eu-west-2.amazonaws.com/assets/2116/6010/7627/Deliveroo_H12022_Interim_Results_RNS.pdf a pre-tax loss of 147 million pounds ($177 million) in the first half of the year compared to 95 million pounds a year ago. Uber Technologies on Aug. 2 said revenue from its delivery division, which includes Uber Eats, rose 37% to $2.7 billion year-on-year in the quarter ended June, compared to 122% year-on-year revenue growth the same quarter in 2021.
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Its gross profit margin shrank to 43% from 53% a year ago. One option is for the likes of DoorDash to offer rapid delivery capabilities as a service. Uber Technologies on Aug. 2 said revenue from its delivery division, which includes Uber Eats, rose 37% to $2.7 billion year-on-year in the quarter ended June, compared to 122% year-on-year revenue growth the same quarter in 2021.
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19823.0
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2022-08-10 00:00:00 UTC
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SPLG, AAPL, MSFT, BRK.B: Large Inflows Detected at ETF
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AAPL
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https://www.nasdaq.com/articles/splg-aapl-msft-brk.b%3A-large-inflows-detected-at-etf
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nan
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nan
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Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the SPDR Portfolio S&P 500 ETF (Symbol: SPLG) where we have detected an approximate $118.5 million dollar inflow -- that's a 0.8% increase week over week in outstanding units (from 301,100,000 to 303,550,000). Among the largest underlying components of SPLG, in trading today Apple Inc (Symbol: AAPL) is up about 1.5%, Microsoft Corporation (Symbol: MSFT) is up about 2%, and Berkshire Hathaway Inc New (Symbol: BRK.B) is higher by about 0.7%. For a complete list of holdings, visit the SPLG Holdings page » The chart below shows the one year price performance of SPLG, versus its 200 day moving average:
Looking at the chart above, SPLG's low point in its 52 week range is $42.78 per share, with $56.44 as the 52 week high point — that compares with a last trade of $49.11. Comparing the most recent share price to the 200 day moving average can also be a useful technical analysis technique -- learn more about the 200 day moving average ».
Free Report: Top 7%+ Dividends (paid monthly)
Exchange traded funds (ETFs) trade just like stocks, but instead of ''shares'' investors are actually buying and selling ''units''. These ''units'' can be traded back and forth just like stocks, but can also be created or destroyed to accommodate investor demand. Each week we monitor the week-over-week change in shares outstanding data, to keep a lookout for those ETFs experiencing notable inflows (many new units created) or outflows (many old units destroyed). Creation of new units will mean the underlying holdings of the ETF need to be purchased, while destruction of units involves selling underlying holdings, so large flows can also impact the individual components held within ETFs.
Click here to find out which 9 other ETFs had notable inflows »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Among the largest underlying components of SPLG, in trading today Apple Inc (Symbol: AAPL) is up about 1.5%, Microsoft Corporation (Symbol: MSFT) is up about 2%, and Berkshire Hathaway Inc New (Symbol: BRK.B) is higher by about 0.7%. For a complete list of holdings, visit the SPLG Holdings page » The chart below shows the one year price performance of SPLG, versus its 200 day moving average: Looking at the chart above, SPLG's low point in its 52 week range is $42.78 per share, with $56.44 as the 52 week high point — that compares with a last trade of $49.11. These ''units'' can be traded back and forth just like stocks, but can also be created or destroyed to accommodate investor demand.
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Among the largest underlying components of SPLG, in trading today Apple Inc (Symbol: AAPL) is up about 1.5%, Microsoft Corporation (Symbol: MSFT) is up about 2%, and Berkshire Hathaway Inc New (Symbol: BRK.B) is higher by about 0.7%. For a complete list of holdings, visit the SPLG Holdings page » The chart below shows the one year price performance of SPLG, versus its 200 day moving average: Looking at the chart above, SPLG's low point in its 52 week range is $42.78 per share, with $56.44 as the 52 week high point — that compares with a last trade of $49.11. Comparing the most recent share price to the 200 day moving average can also be a useful technical analysis technique -- learn more about the 200 day moving average ».
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Among the largest underlying components of SPLG, in trading today Apple Inc (Symbol: AAPL) is up about 1.5%, Microsoft Corporation (Symbol: MSFT) is up about 2%, and Berkshire Hathaway Inc New (Symbol: BRK.B) is higher by about 0.7%. Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the SPDR Portfolio S&P 500 ETF (Symbol: SPLG) where we have detected an approximate $118.5 million dollar inflow -- that's a 0.8% increase week over week in outstanding units (from 301,100,000 to 303,550,000). For a complete list of holdings, visit the SPLG Holdings page » The chart below shows the one year price performance of SPLG, versus its 200 day moving average: Looking at the chart above, SPLG's low point in its 52 week range is $42.78 per share, with $56.44 as the 52 week high point — that compares with a last trade of $49.11.
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Among the largest underlying components of SPLG, in trading today Apple Inc (Symbol: AAPL) is up about 1.5%, Microsoft Corporation (Symbol: MSFT) is up about 2%, and Berkshire Hathaway Inc New (Symbol: BRK.B) is higher by about 0.7%. Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the SPDR Portfolio S&P 500 ETF (Symbol: SPLG) where we have detected an approximate $118.5 million dollar inflow -- that's a 0.8% increase week over week in outstanding units (from 301,100,000 to 303,550,000). For a complete list of holdings, visit the SPLG Holdings page » The chart below shows the one year price performance of SPLG, versus its 200 day moving average: Looking at the chart above, SPLG's low point in its 52 week range is $42.78 per share, with $56.44 as the 52 week high point — that compares with a last trade of $49.11.
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19824.0
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2022-08-10 00:00:00 UTC
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US STOCKS-Wall St climbs as signs of cooling inflation ease rate hike bets
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AAPL
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https://www.nasdaq.com/articles/us-stocks-wall-st-climbs-as-signs-of-cooling-inflation-ease-rate-hike-bets
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nan
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nan
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By Bansari Mayur Kamdar and Sruthi Shankar
Aug 10 (Reuters) - Wall Street's main indexes rose more than 1% on Wednesday after data showing a slower-than-expected rise in inflation in July prompted traders to cut their bets on a third straight 75-basis-point interest rate hike in September.
U.S. consumer prices did not rise in July compared with June, marking the slowest monthly inflation in more than two years, as fuel prices dropped.
The market is now pricing in a 37.5% chance of a 75-basis-point increase in fund rates at the U.S. Federal Reserve's next meeting in September, compared with 67.5% before the data.
All the 11 major S&P 500 sectors advanced in early trading, with consumer discretionary .SPLRCD, information technology .SPLRCT and communication services .SPLRCL gaining between 1.7% and 2.6%.
"The sign of slowing in the rate of inflation offers hope the Fed's rate increases won't need to go as far as previously thought," said Mike Owens, global sales trader at Saxo Markets.
At 9:46 a.m. ET, the Dow Jones Industrial Average .DJI was up 513.98 points, or 1.57%, at 33,288.39, the S&P 500 .SPX was up 73.23 points, or 1.78%, at 4,195.70, and the Nasdaq Composite .IXIC was up 282.51 points, or 2.26%, at 12,776.44.
After a rough start to the year, the benchmark S&P 500 is up nearly 15% from its mid-June low, largely on expectations the Fed will be less hawkish than anticipated in its efforts to provide a soft landing for the economy.
High-growth and megacap technology stocks, whose valuations are vulnerable to rising bond yields, gained as Treasury yields fell sharply across the board. Apple Inc AAPL.O, Alphabet Inc GOOGL.O and Amazon.com Inc AMZN.O rose more than 2% each. US/
"Rising real yields, due to the Fed's commitment to fighting inflation, have been an enormous problem for valuations in 2022, so any dovishness is seen as positive by the stock market, particularly for the highest valued companies," said Oliver Blackbourn, multi-asset portfolio manager at Janus Henderson Investors.
Electric-vehicle maker Tesla Inc TSLA.O gained 3.4% after Chief Executive Elon Musk sold $6.9 billion worth of company shares.
Musk said the funds could be used to finance a potential Twitter TWTR.N deal if he loses a legal battle. Twitter shares rose 3.3%.
Meta Platforms Inc META.O added 5.7% after the Facebook-parent said on Tuesday that it had raised $10 billion in its first-ever bond offering.
Economy-sensitive banks .SPXBK also advanced, with Goldman Sachs Group Inc GS.N and JPMorgan Chase & Co JPM.N climbing 3% each.
Advancing issues outnumbered decliners for a 8.16-to-1 ratio on the NYSE and a 4.14-to-1 ratio on the Nasdaq.
The S&P index recorded five new 52-week highs and 29 new lows, while the Nasdaq recorded 38 new highs and 24 new lows.
(Reporting by Bansari Mayur Kamdar, Aniruddha Ghosh, Sruthi Shankar, Medha Singh and Karina D'Souza in Bengaluru; Editing by Arun Koyyur, Anil D'Silva and Shounak Dasgupta)
((BansariMayur.Kamdar@thomsonreuters.com; Twitter: @BansariKamdar))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Apple Inc AAPL.O, Alphabet Inc GOOGL.O and Amazon.com Inc AMZN.O rose more than 2% each. By Bansari Mayur Kamdar and Sruthi Shankar Aug 10 (Reuters) - Wall Street's main indexes rose more than 1% on Wednesday after data showing a slower-than-expected rise in inflation in July prompted traders to cut their bets on a third straight 75-basis-point interest rate hike in September. After a rough start to the year, the benchmark S&P 500 is up nearly 15% from its mid-June low, largely on expectations the Fed will be less hawkish than anticipated in its efforts to provide a soft landing for the economy.
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Apple Inc AAPL.O, Alphabet Inc GOOGL.O and Amazon.com Inc AMZN.O rose more than 2% each. By Bansari Mayur Kamdar and Sruthi Shankar Aug 10 (Reuters) - Wall Street's main indexes rose more than 1% on Wednesday after data showing a slower-than-expected rise in inflation in July prompted traders to cut their bets on a third straight 75-basis-point interest rate hike in September. "The sign of slowing in the rate of inflation offers hope the Fed's rate increases won't need to go as far as previously thought," said Mike Owens, global sales trader at Saxo Markets.
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Apple Inc AAPL.O, Alphabet Inc GOOGL.O and Amazon.com Inc AMZN.O rose more than 2% each. By Bansari Mayur Kamdar and Sruthi Shankar Aug 10 (Reuters) - Wall Street's main indexes rose more than 1% on Wednesday after data showing a slower-than-expected rise in inflation in July prompted traders to cut their bets on a third straight 75-basis-point interest rate hike in September. US/ "Rising real yields, due to the Fed's commitment to fighting inflation, have been an enormous problem for valuations in 2022, so any dovishness is seen as positive by the stock market, particularly for the highest valued companies," said Oliver Blackbourn, multi-asset portfolio manager at Janus Henderson Investors.
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Apple Inc AAPL.O, Alphabet Inc GOOGL.O and Amazon.com Inc AMZN.O rose more than 2% each. By Bansari Mayur Kamdar and Sruthi Shankar Aug 10 (Reuters) - Wall Street's main indexes rose more than 1% on Wednesday after data showing a slower-than-expected rise in inflation in July prompted traders to cut their bets on a third straight 75-basis-point interest rate hike in September. The market is now pricing in a 37.5% chance of a 75-basis-point increase in fund rates at the U.S. Federal Reserve's next meeting in September, compared with 67.5% before the data.
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19825.0
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2022-08-10 00:00:00 UTC
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US STOCKS-Wall St set for gains after soft inflation data eases rate-hike bets
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AAPL
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https://www.nasdaq.com/articles/us-stocks-wall-st-set-for-gains-after-soft-inflation-data-eases-rate-hike-bets
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nan
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nan
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By Bansari Mayur Kamdar, Medha Singh and Aniruddha Ghosh
Aug 10 (Reuters) - Wall Street was set to open sharply higher on Wednesday after data showing a slower-than-expected rise in inflation last month prompted traders to cut their bets on a third straight 75-basis-point interest rate hike in September.
U.S. annual consumer prices slowed to 8.5% in July. Economists polled by Reuters expected the Consumer Price Index to show year-on-year headline inflation of 8.7%, far above the Federal Reserve's target of 2%, but lower than last month's 9.1%.
Boosting sentiment, core inflation remained unchanged at 5.9%, while economists were expecting a rise to 6.1%.
The market is now pricing in 33.5% chance of a 75 basis point increase in fund rates at the Fed's next meeting in September, compared with 67.5% before the data.
"The sign of a slowing in the rate of inflation offers hope the Federal Reserve's rate increases won't need to go as far as previously thought," said Mike Owens, global sales trader at Saxo Markets.
"Those moves may be short lived if the market returns its attention back to the Fed, one month of data won't change their current hawkishness as it stands by its mission to force inflation down."
At 09:06 a.m. ET, Dow e-minis 1YMcv1 were up 419 points, or 1.28%, S&P 500 e-minis EScv1 were up 68.75 points, or 1.67%, and Nasdaq 100 e-minis NQcv1 were up 295.25 points, or 2.27%.
After a rough start to the year, the benchmark S&P 500 .SPX is up nearly 13% from its mid-June low, largely on expectations the Fed will be less hawkish than anticipated in its efforts to provide a soft landing for the economy.
High-growth and megacap technology stocks gained in premarket trading as Treasury yields fell sharply across the board. Apple Inc AAPL.O, Alphabet Inc GOOGL.O and Amazon.com Inc AMZN.O rose between 1.8% and 3.3%. US/
Tesla Inc TSLA.O gained 4.6% after CEO Elon Musk sold $6.9 billion worth of company shares.
Musk said the funds could be used to finance a potential Twitter TWTR.N deal if he loses a legal battle. Twitter shares rose 3.8%.
Meta Platforms Inc META.O added 3.9% after the Facebook-parent said on Tuesday that it had raised $10 billion in its first-ever bond offering.
Economy-sensitive banks also advanced in trading before the bell, with Goldman Sachs Group Inc GS.N and JPMorgan Chase & Co JPM.N climbing 1% each.
(Reporting by Bansari Mayur Kamdar, Aniruddha Ghosh, Medha Singh and Karina D'Souza in Bengaluru; Editing by Arun Koyyur and Anil D'Silva)
((BansariMayur.Kamdar@thomsonreuters.com; Twitter: @BansariKamdar))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Apple Inc AAPL.O, Alphabet Inc GOOGL.O and Amazon.com Inc AMZN.O rose between 1.8% and 3.3%. By Bansari Mayur Kamdar, Medha Singh and Aniruddha Ghosh Aug 10 (Reuters) - Wall Street was set to open sharply higher on Wednesday after data showing a slower-than-expected rise in inflation last month prompted traders to cut their bets on a third straight 75-basis-point interest rate hike in September. Economists polled by Reuters expected the Consumer Price Index to show year-on-year headline inflation of 8.7%, far above the Federal Reserve's target of 2%, but lower than last month's 9.1%.
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Apple Inc AAPL.O, Alphabet Inc GOOGL.O and Amazon.com Inc AMZN.O rose between 1.8% and 3.3%. By Bansari Mayur Kamdar, Medha Singh and Aniruddha Ghosh Aug 10 (Reuters) - Wall Street was set to open sharply higher on Wednesday after data showing a slower-than-expected rise in inflation last month prompted traders to cut their bets on a third straight 75-basis-point interest rate hike in September. "The sign of a slowing in the rate of inflation offers hope the Federal Reserve's rate increases won't need to go as far as previously thought," said Mike Owens, global sales trader at Saxo Markets.
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Apple Inc AAPL.O, Alphabet Inc GOOGL.O and Amazon.com Inc AMZN.O rose between 1.8% and 3.3%. By Bansari Mayur Kamdar, Medha Singh and Aniruddha Ghosh Aug 10 (Reuters) - Wall Street was set to open sharply higher on Wednesday after data showing a slower-than-expected rise in inflation last month prompted traders to cut their bets on a third straight 75-basis-point interest rate hike in September. "The sign of a slowing in the rate of inflation offers hope the Federal Reserve's rate increases won't need to go as far as previously thought," said Mike Owens, global sales trader at Saxo Markets.
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Apple Inc AAPL.O, Alphabet Inc GOOGL.O and Amazon.com Inc AMZN.O rose between 1.8% and 3.3%. Economists polled by Reuters expected the Consumer Price Index to show year-on-year headline inflation of 8.7%, far above the Federal Reserve's target of 2%, but lower than last month's 9.1%. The market is now pricing in 33.5% chance of a 75 basis point increase in fund rates at the Fed's next meeting in September, compared with 67.5% before the data.
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19826.0
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2022-08-10 00:00:00 UTC
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The Ultimate Growth Stocks to Buy With $1,000 Right Now
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AAPL
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https://www.nasdaq.com/articles/the-ultimate-growth-stocks-to-buy-with-%241000-right-now-0
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nan
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nan
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The stock market has been in a resurgent mood over the past month, as is evident from the 8% rally in the S&P 500 index.
The broad market rally has rubbed off positively on technology stocks as well, with the tech-laden Nasdaq-100 Technology Sector Index surging 16% in the past month. The tech stock rally isn't surprising, as major companies in this sector have reported solid earnings in recent weeks. Not surprisingly, the likes of Apple (NASDAQ: AAPL), Qualcomm (NASDAQ: QCOM), and Tesla (NASDAQ: TSLA) have appreciated strongly of late.
^SPX data by YCharts
It won't be surprising to see these companies sustain their impressive rallies in the long run thanks to a bunch of serious catalysts, which is why investors may want to put $1,000 in these growth stocks before they fly higher. Let's look at the reasons why Apple, Qualcomm, and Tesla are the ultimate growth stocks to buy right now.
Sunny smartphone prospects make Apple and Qualcomm solid long-term bets
The smartphone market has not been in the best shape this year. Smartphone shipments were down 8.9% year over year in the first quarter of 2022, according to IDC, on account of weak demand. The second-quarter decline was nearly identical at 8.7% year over year.
However, Apple and Qualcomm have done well despite the slowdown in smartphone sales, as is evident from their latest results. Apple released fiscal 2022 third-quarter results (for the three months ending on June 25, 2022) on July 28. The company's revenue was up 2% year over year to a record $83 billion, driven by a favorable showing from iPhone sales.
Apple's iPhone revenue was up 3% over the prior-year period to $40.7 billion, accounting for nearly half of the company's sales. The company reportedly increased its iPhone shipments by 3.3% year over year to 47.5 million units, according to Strategy Analytics. That's impressive considering the weak smartphone sales environment.
Apple was able to beat the slowdown on the back of robust demand from emerging markets and easing supply chain bottlenecks. Management believes that it is able to attract more users from the Android ecosystem toward the iPhone, which isn't surprising given Apple's move to launch a budget-conscious 5G iPhone.
More importantly, Apple seems to be in a solid position to grow its smartphone sales in the long run, given its 31%-plus share of the 5G space. The 5G smartphone market is expected to grow at an annual pace of nearly 130% through 2027, and Apple could continue to command a solid share of the same. This could supercharge the company's growth in the long run and send the stock higher.
Qualcomm is another company that's beating the smartphone slowdown. The chipmaker released fiscal 2022 third-quarter results (for the three months ending June 26, 2022) on July 27, posting a 37% year-over-year increase in revenue to $10.9 billion and a 54% spike in adjusted earnings to $2.96 per share.
Qualcomm's revenue from sales of chips used in handsets increased a whopping 59% over the prior year to $6.1 billion, accounting for a big chunk of the company's overall sales. Wall Street, however, was disappointed with Qualcomm's guidance. The chipmaker expects $11.4 billion in revenue in the current quarter along with adjusted earnings of $3.15 per share at the midpoint of its guidance range. That's lower than the consensus expectation of $3.30 per share in earnings and $12 billion in sales.
Still, Qualcomm's revenue is on track to increase 22% year over year at the midpoint. The company had reported $2.55 per share in earnings in the prior-year period, which means that its bottom line would jump 23% year over year.
Qualcomm's solid share of the smartphone application processor market and the radio-frequency (RF) front-end module space indicate that the company is built for long-term growth. Qualcomm controlled 28% of the smartphone application processor market in the first half of 2022, according to Counterpoint Research. Its share of the RF front-end space is expected to hit 20% this year.
These are big opportunities for Qualcomm. The RF front-end market is expected to generate $21 billion in revenue by 2026 as compared to $17 billion last year, driven by the growing adoption of 5G devices that require more RF content. The smartphone application processor market was worth nearly $31 billion last year, growing 23% over the prior year, and Qualcomm's solid share of this space gives it an opportunity to tap into yet another fast-growing opportunity.
Not surprisingly, analysts expect Qualcomm's earnings to grow at an annual rate of 14% for the next five years. The company also sports a solid dividend yield of 2% along with a low payout ratio. So, investors can get a nice mix of stock upside and dividend income from Qualcomm in the long run.
Tesla is tearing ahead in the electric vehicle market
Tesla is winning big from the growing adoption of electric vehicles (EVs). This was evident from the company's second-quarter results that were released on July 20. The company's top line jumped 42% year over year to $16.9 billion, while non-GAAP net income was up 57% to $2.27 per share thanks to fatter margins.
Analysts expect Tesla to maintain its impressive growth in the long run. Its earnings are forecast to increase at 45% a year for the next five years. Tesla can hit such impressive growth targets in the long run, since it reportedly controls more than 70% of the EV market in the U.S., and has been taking steps to increase its production capacity across the globe.
The company expects to produce 1.5 million vehicles this year. In the long run, Tesla aims to increase its annual vehicle deliveries by an average of 50%, so it is not surprising to see why the company is focused on ramping up production capacity at a nice clip. The company has raised its capital spending forecast for 2022 to a range of $6 billion to $8 billion, compared to the earlier range of $5 billion to $7 billion.
All this explains why Tesla's business is expected to boom in the future. So, investors looking to take advantage of the EV boom should consider going long on Tesla before this growth stock soars higher and becomes more expensive.
Find out why Apple is one of the 10 best stocks to buy now
Our award-winning analyst team has spent more than a decade beating the market. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed their ten top stock picks for investors to buy right now. Apple is on the list -- but there are nine others you may be overlooking.
Click here to get access to the full list!
*Stock Advisor returns as of July 27, 2022
Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Qualcomm, and Tesla. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Not surprisingly, the likes of Apple (NASDAQ: AAPL), Qualcomm (NASDAQ: QCOM), and Tesla (NASDAQ: TSLA) have appreciated strongly of late. ^SPX data by YCharts It won't be surprising to see these companies sustain their impressive rallies in the long run thanks to a bunch of serious catalysts, which is why investors may want to put $1,000 in these growth stocks before they fly higher. The chipmaker released fiscal 2022 third-quarter results (for the three months ending June 26, 2022) on July 27, posting a 37% year-over-year increase in revenue to $10.9 billion and a 54% spike in adjusted earnings to $2.96 per share.
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Not surprisingly, the likes of Apple (NASDAQ: AAPL), Qualcomm (NASDAQ: QCOM), and Tesla (NASDAQ: TSLA) have appreciated strongly of late. The chipmaker released fiscal 2022 third-quarter results (for the three months ending June 26, 2022) on July 27, posting a 37% year-over-year increase in revenue to $10.9 billion and a 54% spike in adjusted earnings to $2.96 per share. Qualcomm's solid share of the smartphone application processor market and the radio-frequency (RF) front-end module space indicate that the company is built for long-term growth.
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Not surprisingly, the likes of Apple (NASDAQ: AAPL), Qualcomm (NASDAQ: QCOM), and Tesla (NASDAQ: TSLA) have appreciated strongly of late. Sunny smartphone prospects make Apple and Qualcomm solid long-term bets The smartphone market has not been in the best shape this year. Qualcomm's revenue from sales of chips used in handsets increased a whopping 59% over the prior year to $6.1 billion, accounting for a big chunk of the company's overall sales.
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Not surprisingly, the likes of Apple (NASDAQ: AAPL), Qualcomm (NASDAQ: QCOM), and Tesla (NASDAQ: TSLA) have appreciated strongly of late. The smartphone application processor market was worth nearly $31 billion last year, growing 23% over the prior year, and Qualcomm's solid share of this space gives it an opportunity to tap into yet another fast-growing opportunity. So, investors can get a nice mix of stock upside and dividend income from Qualcomm in the long run.
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19827.0
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2022-08-10 00:00:00 UTC
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Buy This Buffett Stock Hand Over Fist Before It's Too Late
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AAPL
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https://www.nasdaq.com/articles/buy-this-buffett-stock-hand-over-fist-before-its-too-late
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nan
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nan
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Warren Buffett loves Apple (NASDAQ: AAPL) stock, which is evident from Berkshire Hathaway's massive position in the tech giant that's famous for its iPhones, iPads, and MacBooks.
Apple accounted for 41% of Berkshire's portfolio at the end of July 2022. A closer look at the iPhone maker's latest results will tell us why Buffett has bet big on Apple, and we'll also take a look at the reasons why the stock remains an enticing bet right now.
Apple stands tall despite headwinds
Apple released its fiscal 2022 third-quarter results (for the three months ended June 25, 2022) on July 28. The technology bellwether posted record quarterly revenue of $83 billion, an increase of 2% over the prior-year period. Adjusted earnings came in at $1.20 per share.
Wall Street would have been happy with $1.16 per share in earnings on $82.8 billion in sales. Apple, however, edged past those expectations thanks to the healthy demand for its products in emerging markets such as Indonesia, Vietnam, and Brazil. What's more, Apple's revenue in India nearly doubled last quarter.
Additionally, the supply chain constraints that Apple was anticipating were less severe during the quarter. All these factors helped Apple increase its iPhone revenue slightly during the quarter to $40.7 billion, up nearly 3% from the prior-year period. It is impressive to see Apple increase its iPhone revenue at a time when global smartphone sales collapsed.
According to Strategy Analytics, smartphone shipments fell 7.3% year over year in the second quarter of 2022 to 291.2 million units. But Apple's shipments increased 3.3% over the year-ago quarter to 47.5 million units, making it the second-largest smartphone vendor with a market share of 16.3%. It is worth noting that Apple's Chinese rivals such as Xiaomi, Oppo, and Vivo lost significant ground during the quarter, with their shipments declining 25%, 26%, and 21%, respectively.
Strategy Analytics' shipment figures suggest that Apple's iPhone average selling price (ASP) stood at $856 last quarter. That's impressive considering that smartphone ASP is expected to land at $402 in 2022, according to market research firm IDC. Apple's pricing power suggests that iPhone demand remains robust despite factors such as inflation, supply chain problems, and the weakness in the smartphone space on account of dipping demand.
The secret sauce that's driving iPhone sales growth
One key reason why iPhone sales are growing is because of Apple's dominance in the 5G smartphone market and a massive base of users that are in an upgrade window. What's more, Apple's move to diversify its iPhone line-up with the inclusion of a budget-friendly 5G iPhone SE is working in the company's favor. The company gained market share in Europe last quarter thanks to the latest iPhone SE on the back of a 3% increase in shipments, while the overall market was down 11% over the prior-year quarter.
All this indicates that Apple is able to attract Android users into the iOS ecosystem in the 5G smartphone era. This bodes well for the company's future. That's because 5G smartphones are expected to account for 53% of the industry's shipments this year, according to IDC. The market research firm estimates that 700 million 5G smartphones could be shipped this year, up 25% from 2021.
By 2026, IDC says 5G devices will account for 78% of overall smartphone shipments of 1.41 billion units. So, just over a billion 5G smartphones could be shipped in 2026. Apple dominated the 5G smartphone market with a 31% share in 2021.
If Apple continues to hold such an impressive share of 5G smartphones in 2026, which it seems capable of doing, its annual iPhone shipments could exceed 310 million units in four years. That would be a 32% jump over 2021's iPhone shipments of 235.7 million units. Throw in Apple's solid pricing power, and it is easy to see why the company's largest source of revenue is built for long-term growth.
Consider buying before it is too late
Apple stock has gained 15% in the past month. The company's resilient performance last quarter and room for growth in the 5G smartphone market suggest that it can sustain its rally for a long time to come.
That's why investors who haven't bought this Buffett favorite yet should consider doing so, as Apple stock is still available at an attractive valuation. Trading at 26 times trailing earnings, Apple is cheaper than its last year's earnings multiple of 31.6. Analysts expect the company's bottom line to grow at an annual rate of nearly 10% for the next five years, but it won't be surprising to see Apple do better thanks to the emergence of new growth drivers.
As such, investors looking to buy a top tech stock for the long haul are getting a good deal on Apple right now, and they should consider grabbing this opportunity before shares become more expensive.
Find out why Apple is one of the 10 best stocks to buy now
Our award-winning analyst team has spent more than a decade beating the market. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed their ten top stock picks for investors to buy right now. Apple is on the list -- but there are nine others you may be overlooking.
Click here to get access to the full list!
*Stock Advisor returns as of July 27, 2022
Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Berkshire Hathaway (B shares). The Motley Fool recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), long March 2023 $120 calls on Apple, short January 2023 $200 puts on Berkshire Hathaway (B shares), short January 2023 $265 calls on Berkshire Hathaway (B shares), and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Warren Buffett loves Apple (NASDAQ: AAPL) stock, which is evident from Berkshire Hathaway's massive position in the tech giant that's famous for its iPhones, iPads, and MacBooks. Analysts expect the company's bottom line to grow at an annual rate of nearly 10% for the next five years, but it won't be surprising to see Apple do better thanks to the emergence of new growth drivers. As such, investors looking to buy a top tech stock for the long haul are getting a good deal on Apple right now, and they should consider grabbing this opportunity before shares become more expensive.
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Warren Buffett loves Apple (NASDAQ: AAPL) stock, which is evident from Berkshire Hathaway's massive position in the tech giant that's famous for its iPhones, iPads, and MacBooks. Apple's pricing power suggests that iPhone demand remains robust despite factors such as inflation, supply chain problems, and the weakness in the smartphone space on account of dipping demand. The secret sauce that's driving iPhone sales growth One key reason why iPhone sales are growing is because of Apple's dominance in the 5G smartphone market and a massive base of users that are in an upgrade window.
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Warren Buffett loves Apple (NASDAQ: AAPL) stock, which is evident from Berkshire Hathaway's massive position in the tech giant that's famous for its iPhones, iPads, and MacBooks. But Apple's shipments increased 3.3% over the year-ago quarter to 47.5 million units, making it the second-largest smartphone vendor with a market share of 16.3%. If Apple continues to hold such an impressive share of 5G smartphones in 2026, which it seems capable of doing, its annual iPhone shipments could exceed 310 million units in four years.
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Warren Buffett loves Apple (NASDAQ: AAPL) stock, which is evident from Berkshire Hathaway's massive position in the tech giant that's famous for its iPhones, iPads, and MacBooks. It is impressive to see Apple increase its iPhone revenue at a time when global smartphone sales collapsed. Apple's pricing power suggests that iPhone demand remains robust despite factors such as inflation, supply chain problems, and the weakness in the smartphone space on account of dipping demand.
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19828.0
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2022-08-10 00:00:00 UTC
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Here's What Apple, Walmart, and UPS Just Told Us About the Broader Economy
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AAPL
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https://www.nasdaq.com/articles/heres-what-apple-walmart-and-ups-just-told-us-about-the-broader-economy
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nan
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nan
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Earnings season is an excellent time to tune in to company conference calls to get a feel for where a business stands and where it could be headed. However, it's important not to overvalue any singleearnings call-- and instead -- weave the findings into the broader investment thesis.
Aside from following businesses on your radar, it can also be useful to listen to industry leaders and follow macroeconomic data to get a better understanding of how a single company is performing relative to its peers, its industry, and within the context of the broader economy.
The stock market has had a volatile 2022, partly because investors are digesting a mixed bag of good and bad indicators. For example, last Friday, the U.S. Bureau of Labor Statistics (BLS) reported a scorching hot jobs report that pushed the unemployment rate down to a multi-decade low of just 3.5%. Recessions usually entail rising unemployment, so the low number signals a healthy consumer. However, the BLS also reported that the consumer price index rose 9.1% for the 12 months ended June 30, 2022, compared to the same period a year ago -- the highest year-over-year reading in over 40 years. Falling energy prices could mean that inflation cools off when the BLS releases the July report Wednesday morning. But there's no denying that the economy finds itself in a strange limbo between inflation, a strong jobs market, and high consumer spending.
In addition to macroeconomic readings, Apple (NASDAQ: AAPL), Walmart (NYSE: WMT), and United Parcel Service (NYSE: UPS) just made major announcements that help paint a clearer picture of what's going on across some of the most important sectors of the U.S. economy. Here are key takeaways from each company and how they could impact your investment portfolio.
Image source: Getty Images.
The power of brand loyalty
Apple's growth slowed in the third quarter of its fiscal 2022. But the company still posted record revenue thanks to strong iPhone and services results.
Apple continues to prove why it is the most valuable U.S.-based company. Despite being in the tech sector, which has been one of the worst-performing areas of the market in 2022, the stock is actually beating the S&P 500 year to date and is down just 11% from its all-time high.
What's amazing about Apple is that the stock has crushed the market and is up over 600% in 10 years, but it still isn't overpriced, with just a 26.4 price-to-earnings (P/E) ratio. There are a few reasons for this. The first is that Apple has grown its services business, benefited from international growth, and operates a high-margin business that translates into high profits. The second is that the company has reduced its outstanding share count by a staggering 38% in the last 10 years, which boosts earnings per share (EPS).
A blemish from Apple's results was lower-than-expected Mac revenue, which was nearly outpaced by the iPad for the quarter. But overall, the tech titan indicated that consumer spending for its products was stronger than expected.
Although the iPhone dominates Apple's product mix, it's important to call out its services segment. Services grew 12% in the fiscal third quarter compared to the year-ago period and made up 24% of total revenue. However, services have a far higher gross margin than products. For the quarter, products had a respectable 35% gross margin, which is excellent for a consumer electronics company. However, services had a gross margin of 71%.
All told, Apple's core products remain strong, and the company has unlocked a high-margin revenue stream that continues to fuel its bottom-line growth.
Dark clouds for the American consumer
Walmart wont reportearnings until Aug. 16. However, it released a bleak update on July 25 that called for lower-than-expected fiscal Q2 2023 and full-year profits despite higher revenue.
Walmart is struggling to offset higher inflation-related costs. It also finds itself with uncomfortably high inventories as customers curb discretionary spending and pivot toward essentials.
For Walmart and other big-box retailers, the narrative has completely shifted over the last two years, going from a consumer-driven pandemic-induced buying spree of discretionary goods to a much different buyer profile in 2022.
Walmart's updated guidance and the challenges it continues to face are similar to what it reported for Q1. Investors should pay close attention to Walmart's commentary on its second-quarterearnings callbecause it could reveal further details on the trends pressuring the retail industry.
Delivering record results
UPS reported earnings on July 26. As expected, package delivery volumes slowed. However, the company said that volumes slowed by more than anticipated, including an 8.2% decline in residential volumes for Q2 2022. But UPS said that it expects volumes to pick up in the second half of the year as companies try to reduce their inventories by marking down items in time for the holiday season. When combining Walmart's commentary with UPS', an investor gets a better sense of how inflation and inventory levels are affecting retailers and package delivery companies.
Despite the slowdown in delivery volumes, UPS is guiding for full-year operating margin of 13.7%, alongside record revenue, operating income, and adjusted EPS. And that's coming off incredibly difficult comps in 2021 and 2022.
UPS' results and guidance show its ability to pass along higher input costs to its customers. Investors should pay attention to the company's performance during Black Friday and the holiday season, as retailers could offer big sales and require additional shipping services from UPS even if consumer spending for discretionary products remains weak.
Reading the broader economy
The impact of inflation is rippling far past just consumer demand, but top companies are still excellent long-term buys. Apple showed that a premium product mix paired with its growing services business can overpower economic headwinds. Meanwhile, Walmart's lack of brand differentiation and low-margin, high-volume strategy fell victim to inflationary pressures. UPS displayed different ways to grow its top and bottom line, as well as an ability to pass along costs to consumers.
The biggest takeaway from Apple, Walmart, and UPS' results is that industry-leading companies tend to be able to navigate challenges better than their peers. On one hand, Apple and UPS provide discretionary products and services. However, consumer electronics and shipping have become essentials in the modern economy to the point where both companies can offset higher costs even as economic growth slows.
Find out why Apple is one of the 10 best stocks to buy now
Our award-winning analyst team has spent more than a decade beating the market. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed their ten top stock picks for investors to buy right now. Apple is on the list -- but there are nine others you may be overlooking.
Click here to get access to the full list!
*Stock Advisor returns as of July 27, 2022
Daniel Foelber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Walmart Inc. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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In addition to macroeconomic readings, Apple (NASDAQ: AAPL), Walmart (NYSE: WMT), and United Parcel Service (NYSE: UPS) just made major announcements that help paint a clearer picture of what's going on across some of the most important sectors of the U.S. economy. All told, Apple's core products remain strong, and the company has unlocked a high-margin revenue stream that continues to fuel its bottom-line growth. For Walmart and other big-box retailers, the narrative has completely shifted over the last two years, going from a consumer-driven pandemic-induced buying spree of discretionary goods to a much different buyer profile in 2022.
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In addition to macroeconomic readings, Apple (NASDAQ: AAPL), Walmart (NYSE: WMT), and United Parcel Service (NYSE: UPS) just made major announcements that help paint a clearer picture of what's going on across some of the most important sectors of the U.S. economy. However, it released a bleak update on July 25 that called for lower-than-expected fiscal Q2 2023 and full-year profits despite higher revenue. Despite the slowdown in delivery volumes, UPS is guiding for full-year operating margin of 13.7%, alongside record revenue, operating income, and adjusted EPS.
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In addition to macroeconomic readings, Apple (NASDAQ: AAPL), Walmart (NYSE: WMT), and United Parcel Service (NYSE: UPS) just made major announcements that help paint a clearer picture of what's going on across some of the most important sectors of the U.S. economy. Investors should pay attention to the company's performance during Black Friday and the holiday season, as retailers could offer big sales and require additional shipping services from UPS even if consumer spending for discretionary products remains weak. The biggest takeaway from Apple, Walmart, and UPS' results is that industry-leading companies tend to be able to navigate challenges better than their peers.
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In addition to macroeconomic readings, Apple (NASDAQ: AAPL), Walmart (NYSE: WMT), and United Parcel Service (NYSE: UPS) just made major announcements that help paint a clearer picture of what's going on across some of the most important sectors of the U.S. economy. But UPS said that it expects volumes to pick up in the second half of the year as companies try to reduce their inventories by marking down items in time for the holiday season. UPS' results and guidance show its ability to pass along higher input costs to its customers.
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19829.0
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2022-08-10 00:00:00 UTC
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3 Reasons to Buy Apple Stock Now
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AAPL
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https://www.nasdaq.com/articles/3-reasons-to-buy-apple-stock-now
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nan
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nan
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Is there more fuel left in Apple's (NASDAQ: AAPL) growth engine? Because the company has already delivered market-beating returns for years and is near the top of the exclusive group of trillion-dollar companies, some investors are wondering if it's time to cash in. Others still see signs that Apple isn't done growing just yet.
The Silicon Valley giant produced more evidence of its still-solid prospects when it released its latest quarterly update late last month. In it were clues that there are at least three reasons to think Apple isn't done growing yet and there is still time to get in on outsized returns. Let's take a look at those reasons.
AAPL data by YCharts
1. Despite economic headwinds, Apple is managing to do well
Fears of a coming (or already present) recession are not unfounded, and inflation is eroding wage gains and savings. In a macroeconomic environment such as this, consumers tend to hold off spending on things they may want but don't need. That could easily describe many of Apple's products. A new smartphone is nice, as is a sleek pair of Bluetooth headphones. In reality, no one needs brand new versions of those things that often sell for well-above-average prices.
This would suggest Apple is going to have a rough go of it. And while these challenging headwinds have certainly impacted its earnings, the tech giant is managing surprisingly well. In its latest quarterly update (the third quarter of its fiscal year 2022, ending on June 25), Apple's net sales were up by about 2% year over year to $83 billion.
This modest top-line growth amid the issues Apple is battling is commendable. Apple's earnings per share did decrease to $1.20, down from the $1.30 reported during the year-ago period. Rising costs and expenses, partly due to inflation, may have played a role here. Still, overall, Apple's results were pretty solid. The company owed much of this success to its signature device, the iPhone.
2. Long live the iPhone
Apple's iPhone has been its major source of revenue for over a decade now. It arguably no longer generates the buzz it once did; the tech industry used to stop everything and listen every time Apple would announce a new version of its prized device. But demand for the iPhone remains strong. During Apple's third quarter, revenue from this segment rose 2.8% to $40.7 billion.
According to CEO Tim Cook, "Looking at the data on iPhone for the June quarter, there's not obvious evidence in there that there's a macroeconomic headwind. I'm not saying that there's not one. I'm saying that the data doesn't show it where we can clearly see that in the Wearables, Home and Accessories area."
Selling more iPhones isn't just a matter of generating revenue for Apple. It also helps the company grow its installed base, provided a customer not previously part of Apple's network purchases a new device. That seems to be at least part of the story, as Apple reported that its installed base reached all-time highs across all its products during its latest quarter.
The long-run implications of these developments are significant. The more people are plugged into Apple's services network, the more it can monetize these users, and the more it can grow its services revenue. During Apple's third quarter, the tech giant's services segment grew faster than the rest of its business, recording total sales of $19.6 billion, 12.1% higher than the year-ago period.
3. Margins are making a difference for Apple
A key advantage of Apple's services segment is its higher margins. Although the services segment is still far behind in sales, Apple has made a concerted effort over the years to improve its margins, and this unit has helped these initiatives. During its third quarter, Apple's products business recorded a gross margin of 34.5%, down 1.5 percentage points compared to the year-ago period.
However, the company's services segment saw its margins improve from 69.8% to 71.5%. That helped Apple's total gross margin remain flat year over year at 43.3%. Investors should look for Apple's margins to continue improving thanks to its services unit that is growing in importance.
Buy Apple and forget
Like the rest of the world, Apple is dealing with serious issues at the moment. But the company is not breaking under the weight of its (likely temporary) challenges -- not by a long shot. The customer loyalty it has built over the years is helping it grow sales, especially those of the iPhone. Apple boasts a valuable brand name that is second to none, be it in the technology sector or elsewhere.
Apple's services business is positively impacting the company's margins in a dynamic that will continue for many years. Overall, Apple still looks like an excellent long-term bet for patient investors. No wonder it is one of Warren Buffett's favorite stocks.
Find out why Apple is one of the 10 best stocks to buy now
Our award-winning analyst team has spent more than a decade beating the market. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed their ten top stock picks for investors to buy right now. Apple is on the list -- but there are nine others you may be overlooking.
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*Stock Advisor returns as of July 27, 2022
Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Is there more fuel left in Apple's (NASDAQ: AAPL) growth engine? AAPL data by YCharts 1. Despite economic headwinds, Apple is managing to do well Fears of a coming (or already present) recession are not unfounded, and inflation is eroding wage gains and savings.
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Is there more fuel left in Apple's (NASDAQ: AAPL) growth engine? AAPL data by YCharts 1. During its third quarter, Apple's products business recorded a gross margin of 34.5%, down 1.5 percentage points compared to the year-ago period.
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Is there more fuel left in Apple's (NASDAQ: AAPL) growth engine? AAPL data by YCharts 1. In its latest quarterly update (the third quarter of its fiscal year 2022, ending on June 25), Apple's net sales were up by about 2% year over year to $83 billion.
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Is there more fuel left in Apple's (NASDAQ: AAPL) growth engine? AAPL data by YCharts 1. In its latest quarterly update (the third quarter of its fiscal year 2022, ending on June 25), Apple's net sales were up by about 2% year over year to $83 billion.
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19830.0
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2022-08-10 00:00:00 UTC
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Can This Tech Giant Become a Dividend Aristocrat?
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AAPL
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https://www.nasdaq.com/articles/can-this-tech-giant-become-a-dividend-aristocrat
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nan
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Consumer electronics titan Apple (NASDAQ: AAPL) isn't considered a dividend stock by most; its association with the other FAANG stocks makes it look like a growth stock. But Apple has steadily evolved from a millionaire-making high flier to a cash cow overflowing with profits.
Here is why dividend investors can buy Apple stock today and enjoy passive income for potentially decades to come.
Gushing cash profits
Apple's growth stock label comes from decades of producing life-changing returns for investors. The stock returned a staggering 2,530% from 1990 to 2010 and another 1,960% from 2010 to today.
Two positive trends have remained steady over the years: First, the company's become more efficient at generating cash profits, now turning $0.25 of every revenue dollar into free cash flow. Second, Apple has become an enormous company with a market cap now at $2.6 trillion.
AAPL Market Cap data by YCharts
It will be harder for Apple to produce these substantial capital gains moving forward because of how big it's become. But shareholders now have a company making $107 billion in free cash flow over the past year, more than most companies do in sales.
Establishing a commitment to the dividend
Apple is one of Wall Street's wealthiest companies, so it only makes sense to share its profits with shareholders. Apple's significant share repurchases grab a lot of headlines, but the company has sneakily paid and raised a dividend for the past 10 consecutive years:
AAPL Dividend data by YCharts
It's nothing to brag about today; investors get a dividend yield of just 0.5%. But it's the future potential that should get your attention. The dividend payout ratio is just 13% of cash flow, giving management about as much flexibility as it wants to raise the dividend in the future.
Apple could stop growing immediately and still have the cash to raise the payout for years. But growth hasn't stopped -- annual revenue growth has averaged almost 12% over the past five years. The company's outstanding share count has also shrunk by 21% over the same time frame, allowing it to pay out its dividend to fewer shares.
The combination of growth and fewer shares means that Apple can raise the dividend per share and won't impact the payout ratio as much. The company has the look of a future Dividend Aristocrat, an S&P 500 company with at least 25 years of consecutive dividend raises.
Becoming a more consistent company
The iPhone has been Apple's primary revenue driver for years, and that also makes it a cyclical business. Revenue growth can spike when a new model comes out that has people rushing to upgrade their phones, but sales can also languish the other years:
AAPL Revenue (Quarterly YoY Growth) data by YCharts
Apple's services business, which includes the app store and complimentary subscriptions like Apple TV, Music, News, and Arcade, has steadily become an increasingly more significant piece of the pie, and now ranks second among the company's products:
Source: Statista
Services also happen to be Apple's fastest-growing business, which could eventually mean the segment grows large enough to offset some of the volatility in Apple's growth. Services are subscriptions that users pay for monthly, so they should be more stable than hardware sales.
Apple's massive balance sheet and billions in cash flow have helped the company endure different product sales cycles, enough to raise the dividend each of the past 10 years.
Services could eventually help smooth out Apple's year-to-year growth, and a more steady business would only make it a more robust dividend stock.
Investors shouldn't expect Apple to deliver thousands of percentage points in total returns anytime soon; those days might be over. But Apple can be the type of blue-chip stock that anchors a long-term portfolio. It has enough growth to build wealth for shareholders, and its dividend looks ready to create years of passive income.
Find out why Apple is one of the 10 best stocks to buy now
Our award-winning analyst team has spent more than a decade beating the market. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed their ten top stock picks for investors to buy right now. Apple is on the list -- but there are nine others you may be overlooking.
Click here to get access to the full list!
*Stock Advisor returns as of July 27, 2022
Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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AAPL Market Cap data by YCharts It will be harder for Apple to produce these substantial capital gains moving forward because of how big it's become. Consumer electronics titan Apple (NASDAQ: AAPL) isn't considered a dividend stock by most; its association with the other FAANG stocks makes it look like a growth stock. Apple's significant share repurchases grab a lot of headlines, but the company has sneakily paid and raised a dividend for the past 10 consecutive years: AAPL Dividend data by YCharts It's nothing to brag about today; investors get a dividend yield of just 0.5%.
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Apple's significant share repurchases grab a lot of headlines, but the company has sneakily paid and raised a dividend for the past 10 consecutive years: AAPL Dividend data by YCharts It's nothing to brag about today; investors get a dividend yield of just 0.5%. Revenue growth can spike when a new model comes out that has people rushing to upgrade their phones, but sales can also languish the other years: AAPL Revenue (Quarterly YoY Growth) data by YCharts Apple's services business, which includes the app store and complimentary subscriptions like Apple TV, Music, News, and Arcade, has steadily become an increasingly more significant piece of the pie, and now ranks second among the company's products: Source: Statista Services also happen to be Apple's fastest-growing business, which could eventually mean the segment grows large enough to offset some of the volatility in Apple's growth. Consumer electronics titan Apple (NASDAQ: AAPL) isn't considered a dividend stock by most; its association with the other FAANG stocks makes it look like a growth stock.
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Consumer electronics titan Apple (NASDAQ: AAPL) isn't considered a dividend stock by most; its association with the other FAANG stocks makes it look like a growth stock. Apple's significant share repurchases grab a lot of headlines, but the company has sneakily paid and raised a dividend for the past 10 consecutive years: AAPL Dividend data by YCharts It's nothing to brag about today; investors get a dividend yield of just 0.5%. Revenue growth can spike when a new model comes out that has people rushing to upgrade their phones, but sales can also languish the other years: AAPL Revenue (Quarterly YoY Growth) data by YCharts Apple's services business, which includes the app store and complimentary subscriptions like Apple TV, Music, News, and Arcade, has steadily become an increasingly more significant piece of the pie, and now ranks second among the company's products: Source: Statista Services also happen to be Apple's fastest-growing business, which could eventually mean the segment grows large enough to offset some of the volatility in Apple's growth.
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Apple's significant share repurchases grab a lot of headlines, but the company has sneakily paid and raised a dividend for the past 10 consecutive years: AAPL Dividend data by YCharts It's nothing to brag about today; investors get a dividend yield of just 0.5%. Consumer electronics titan Apple (NASDAQ: AAPL) isn't considered a dividend stock by most; its association with the other FAANG stocks makes it look like a growth stock. AAPL Market Cap data by YCharts It will be harder for Apple to produce these substantial capital gains moving forward because of how big it's become.
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19831.0
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2022-08-10 00:00:00 UTC
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Apple supplier Foxconn's Q2 profit up 12% on cloud demand
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AAPL
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https://www.nasdaq.com/articles/apple-supplier-foxconns-q2-profit-up-12-on-cloud-demand
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nan
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Adds details from statement, background
TAIPEI, Aug 10 (Reuters) - Apple Inc AAPL.O supplier Foxconn 2317.TW reported on Wednesday a 12% jump in second-quarter net profit, beating market estimates, helped by strong demand for its cloud computing products.
The Taiwanese company, the world's largest contract electronics maker, said net profit for the April-June quarter rose to T$33.29 billion from T$29.78 billion a year earlier.
Eleven analysts were expecting on average a profit of T$31.02 billion, according to Refinitiv.
The company, like other global manufacturers, has grappled with a severe shortage of chips that has squeezed smartphone production, and more recently a downturn in major markets amid high inflation and the war in Ukraine.
Foxconn shares closed 0.9% higher ahead of the earnings release, versus a 0.7% drop in the broader market .TWII. They have risen 5.8% so far this year, giving the company a market value of $50.3 billion.
(Reporting by Yimou Lee and Sarah Wu; Editing by Muralikumar Anantharaman)
((ben.blanchard@thomsonreuters.com;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Adds details from statement, background TAIPEI, Aug 10 (Reuters) - Apple Inc AAPL.O supplier Foxconn 2317.TW reported on Wednesday a 12% jump in second-quarter net profit, beating market estimates, helped by strong demand for its cloud computing products. The company, like other global manufacturers, has grappled with a severe shortage of chips that has squeezed smartphone production, and more recently a downturn in major markets amid high inflation and the war in Ukraine. Foxconn shares closed 0.9% higher ahead of the earnings release, versus a 0.7% drop in the broader market .TWII.
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Adds details from statement, background TAIPEI, Aug 10 (Reuters) - Apple Inc AAPL.O supplier Foxconn 2317.TW reported on Wednesday a 12% jump in second-quarter net profit, beating market estimates, helped by strong demand for its cloud computing products. The Taiwanese company, the world's largest contract electronics maker, said net profit for the April-June quarter rose to T$33.29 billion from T$29.78 billion a year earlier. They have risen 5.8% so far this year, giving the company a market value of $50.3 billion.
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Adds details from statement, background TAIPEI, Aug 10 (Reuters) - Apple Inc AAPL.O supplier Foxconn 2317.TW reported on Wednesday a 12% jump in second-quarter net profit, beating market estimates, helped by strong demand for its cloud computing products. The Taiwanese company, the world's largest contract electronics maker, said net profit for the April-June quarter rose to T$33.29 billion from T$29.78 billion a year earlier. The company, like other global manufacturers, has grappled with a severe shortage of chips that has squeezed smartphone production, and more recently a downturn in major markets amid high inflation and the war in Ukraine.
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Adds details from statement, background TAIPEI, Aug 10 (Reuters) - Apple Inc AAPL.O supplier Foxconn 2317.TW reported on Wednesday a 12% jump in second-quarter net profit, beating market estimates, helped by strong demand for its cloud computing products. The Taiwanese company, the world's largest contract electronics maker, said net profit for the April-June quarter rose to T$33.29 billion from T$29.78 billion a year earlier. Eleven analysts were expecting on average a profit of T$31.02 billion, according to Refinitiv.
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19832.0
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2022-08-10 00:00:00 UTC
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Apple supplier Foxconn's Q2 profit up nearly 12%
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AAPL
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https://www.nasdaq.com/articles/apple-supplier-foxconns-q2-profit-up-nearly-12
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nan
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nan
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TAIPEI, Aug 10 (Reuters) - Apple Inc AAPL.O supplier Foxconn 2317.TW reported on Wednesday an 11.7% rise in second-quarter net profit, according to Reuters calculations, beating market estimates.
The Taiwanese company, the world's largest contract electronics maker, said net profit for the April-June quarter rose to T$33.25 billion from T$29.78 billion a year earlier.
Eleven analysts were expecting on average profit of T$31.02 billion, according to Refinitiv.
(Reporting by Yimou Lee and Sarah Wu; Editing by Muralikumar Anantharaman)
((ben.blanchard@thomsonreuters.com;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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TAIPEI, Aug 10 (Reuters) - Apple Inc AAPL.O supplier Foxconn 2317.TW reported on Wednesday an 11.7% rise in second-quarter net profit, according to Reuters calculations, beating market estimates. Eleven analysts were expecting on average profit of T$31.02 billion, according to Refinitiv. (Reporting by Yimou Lee and Sarah Wu; Editing by Muralikumar Anantharaman) ((ben.blanchard@thomsonreuters.com;)) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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TAIPEI, Aug 10 (Reuters) - Apple Inc AAPL.O supplier Foxconn 2317.TW reported on Wednesday an 11.7% rise in second-quarter net profit, according to Reuters calculations, beating market estimates. The Taiwanese company, the world's largest contract electronics maker, said net profit for the April-June quarter rose to T$33.25 billion from T$29.78 billion a year earlier. (Reporting by Yimou Lee and Sarah Wu; Editing by Muralikumar Anantharaman) ((ben.blanchard@thomsonreuters.com;)) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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TAIPEI, Aug 10 (Reuters) - Apple Inc AAPL.O supplier Foxconn 2317.TW reported on Wednesday an 11.7% rise in second-quarter net profit, according to Reuters calculations, beating market estimates. The Taiwanese company, the world's largest contract electronics maker, said net profit for the April-June quarter rose to T$33.25 billion from T$29.78 billion a year earlier. (Reporting by Yimou Lee and Sarah Wu; Editing by Muralikumar Anantharaman) ((ben.blanchard@thomsonreuters.com;)) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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TAIPEI, Aug 10 (Reuters) - Apple Inc AAPL.O supplier Foxconn 2317.TW reported on Wednesday an 11.7% rise in second-quarter net profit, according to Reuters calculations, beating market estimates. The Taiwanese company, the world's largest contract electronics maker, said net profit for the April-June quarter rose to T$33.25 billion from T$29.78 billion a year earlier. Eleven analysts were expecting on average profit of T$31.02 billion, according to Refinitiv.
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19833.0
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2022-08-09 00:00:00 UTC
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Down 47% in a Year, Time to Buy This Growth Stock?
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AAPL
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https://www.nasdaq.com/articles/down-47-in-a-year-time-to-buy-this-growth-stock
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nan
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nan
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With a market cap of $8.3 billion, Cognex Corporation (NASDAQ: CGNX) is not a small-cap company. However, it's still a growth company trying to build out the adoption of technology with explosive growth potential. As the leader in machine vision, Cognex's strategic aim is to grow into a served market (estimated as being worth $4.2 billion in 2018) that management sees as growing at a 12% annual rate. The good news from 2022 is Cognex is achieving many of its strategic aims; the bad news is almost everything seems to be working against the company right now. Here's the lowdown.
What a growth company needs
If you are going to make up an informal list of objectives for a growth company, it will include the following:
Win over some highly prominent and visible customers to demonstrate your technology's efficacy, expand revenue, win follow-up business, and sell to lower-tier players as they follow their industry leaders in adopting machine vision.
Ensure you satisfy high-profile customers by investing in a high level of service.
Continue establishing your technology in new growth markets.
As alluded to earlier, Cognex is doing all three things. The company's three major machine vision markets are automotive, consumer electronics, and logistics/e-commerce. The biggest names in two of those three industries are Apple (named as a significant customer in a previous Cognex SEC filing) and Amazon.com (NASDAQ: AMZN). The latter was not named on Cognex's recentearnings call Still, Cognex's last 10-K filing referred to a large customer in the logistics industry that represented approximately 17% of their total revenue. When an analyst refers to "the world's largest e-commerce customer," it's a reasonable bet that it's Amazon.
One clear thing is that Cognex has won some very high-profile customers in the last five years, so you can tick off the first box on the checklist.
Servicing customers and establishing new markets
The other two boxes can be ticked off as well. Three sources indicate that Cognex is very careful in servicing its customers (an excellent quality in a growing company). First, back in 2014, when Cognex started working on Apple orders (its machine vision solutions help smartphone manufacturers fit screens), management significantly ramped its operating expenses to support the orders. Second, it was the same in 2021, with Cognex incurring an extra cost in providing a "higher level of support on a large deployment by a customer in logistics." Third, back on the fourth-quarterearnings callin February, CEO Robert Willett disclosed Cognex had "been prioritizing delivery during this time of global chip shortages that added incremental costs in 2021, due to the significant premiums we've paid to procure components through brokers, and for expedited freight."
As for establishing new markets, the logistics market is a relatively new one for Cognex that's grown at a compound annual growth rate of approximately 50% over the last five years.
What's gone wrong this year for Cognex
Unfortunately, the best-laid schemes of mice and men often go awry, and Cognex has been hit across the board this year:
A fire at its primary contractor site in Indonesia destroyed a "large amount" of component inventory and "was particularly disappointing given all our hard work to put us in a strong supply position prior to the fire," according to Willett in the earnings release.
Cognex will have to pay premium prices to brokers to secure components, not least to replace those lost in the fire.
It's well documented that Amazon is scaling back investment in fulfillment centers, and, Willett noted, there are "certain customers scaling back spending on new e-commerce fulfillment centers." Honeywell reported a similar phenomenon in its warehouse automation business.
Consumer electronics and automotives have been challenged this year with ongoing supply chain issues and fears over consumer discretionary spending in the economy.
Looking ahead
It all adds up to a frustrating year for the company. It's doing all the right things, but a confluence of negative factors is hurting its near-term earnings outlook. As a result, the risk around its earnings is rising, but Cognex's dip could provide a useful entry point for long-term investors who can tolerate the potential for negative newsflow.
10 stocks we like better than Cognex
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They just revealed what they believe are the ten best stocks for investors to buy right now… and Cognex wasn't one of them! That's right -- they think these 10 stocks are even better buys.
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*Stock Advisor returns as of July 27, 2022
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Lee Samaha has positions in Honeywell International. The Motley Fool has positions in and recommends Amazon, Apple, and Cognex. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Third, back on the fourth-quarterearnings callin February, CEO Robert Willett disclosed Cognex had "been prioritizing delivery during this time of global chip shortages that added incremental costs in 2021, due to the significant premiums we've paid to procure components through brokers, and for expedited freight." What's gone wrong this year for Cognex Unfortunately, the best-laid schemes of mice and men often go awry, and Cognex has been hit across the board this year: A fire at its primary contractor site in Indonesia destroyed a "large amount" of component inventory and "was particularly disappointing given all our hard work to put us in a strong supply position prior to the fire," according to Willett in the earnings release. As a result, the risk around its earnings is rising, but Cognex's dip could provide a useful entry point for long-term investors who can tolerate the potential for negative newsflow.
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The company's three major machine vision markets are automotive, consumer electronics, and logistics/e-commerce. The latter was not named on Cognex's recentearnings call Still, Cognex's last 10-K filing referred to a large customer in the logistics industry that represented approximately 17% of their total revenue. It's well documented that Amazon is scaling back investment in fulfillment centers, and, Willett noted, there are "certain customers scaling back spending on new e-commerce fulfillment centers."
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What a growth company needs If you are going to make up an informal list of objectives for a growth company, it will include the following: Win over some highly prominent and visible customers to demonstrate your technology's efficacy, expand revenue, win follow-up business, and sell to lower-tier players as they follow their industry leaders in adopting machine vision. The latter was not named on Cognex's recentearnings call Still, Cognex's last 10-K filing referred to a large customer in the logistics industry that represented approximately 17% of their total revenue. What's gone wrong this year for Cognex Unfortunately, the best-laid schemes of mice and men often go awry, and Cognex has been hit across the board this year: A fire at its primary contractor site in Indonesia destroyed a "large amount" of component inventory and "was particularly disappointing given all our hard work to put us in a strong supply position prior to the fire," according to Willett in the earnings release.
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As the leader in machine vision, Cognex's strategic aim is to grow into a served market (estimated as being worth $4.2 billion in 2018) that management sees as growing at a 12% annual rate. The latter was not named on Cognex's recentearnings call Still, Cognex's last 10-K filing referred to a large customer in the logistics industry that represented approximately 17% of their total revenue. The Motley Fool has positions in and recommends Amazon, Apple, and Cognex.
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19834.0
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2022-08-09 00:00:00 UTC
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Why This Investor Thinks Airbnb's Stock Buyback Plan Is a "Horrible" Idea
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AAPL
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https://www.nasdaq.com/articles/why-this-investor-thinks-airbnbs-stock-buyback-plan-is-a-horrible-idea
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nan
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nan
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In this podcast, Motley Fool senior analyst Tim Beyers discusses:
Airbnb's questionable decision to allocate $2 billion for a share buyback plan.
Match Group shares hitting a new low as the business has work to do.
MicroStrategy CEO Michael Saylor stepping down after the company reports an eye-popping loss of $94 per share.
Motley Fool producer Ricky Mulvey talks with Wall Street Journal tech columnist Christopher Mims about Meta Platforms, Apple, and how companies are using artificial intelligence.
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.
Find out why Apple is one of the 10 best stocks to buy now
Our award-winning analyst team has spent more than a decade beating the market. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed their ten top stock picks for investors to buy right now. Apple is on the list -- but there are nine others you may be overlooking.
Click here to get access to the full list!
*Stock Advisor returns as of July 27, 2022
This video was recorded on August 3, 2022.
Chris Hill: The fight between Apple and Meta Platforms is heating up and we've got the latest. Motley Fool Money starts now. I'm Chris Hill, joined by Motley Fool Senior Analyst Tim Beyers, our man in Colorado. Thanks for being here.
Tim Beyers: Fully caffeinated. Ready to go, Chris.
Chris Hill: That's good because we got a bunch of earnings [laughs] to get to and we're going to start with Airbnb. Help me understand what's going on here because Airbnb second quarter revenue was up nearly 60 percent. Their bookings were a record. At one point this morning, the stock was down more than 10 percent. It's recovered a bit. As we're recording this a little before lunchtime, it is still down five percent. This is a great quarter. What am I missing?
Tim Beyers: I don't think you're missing anything. It came in at 2.1 billion up 58 percent a year ago and apparently a hair below the consensus of 2.11 billion. If that sounds like splitting hairs of hairs, you're right. Revenues were up 64 percent on a constant currency basis. It's just like, the last time you and I got together, we said less bad is the new good and here's the reverse of that. It's like, good isn't good enough or if it's not great then we don't want to hear from you. It feels pretty silly here. Revenue was up 73 percent from 2019 levels, which is really interesting and the value of the gross booking was up 27 percent, which is, gosh, pretty incredible here at 17 billion. That's down slightly from 17.2 billion from the first-quarter, but overall, really very good here, Chris. I think in terms of the metrics, the key performance indicators here, the nights and experiences data, which is essentially rooms booked are 103.7 million during the quarter, that's up 25 percent.
All things look pretty good here, except for one thing I will point out that nobody's talking about. I guess leave it to me to be get off my lawn guy here, but they said that they would buy back two billion dollars worth of stock. I think that is a horrible idea, Chris. I don't know why they're talking about this because of all the good things that they announced. If you want to be nitpicky about something, let's be nitpicky about a thing that actually makes sense, which is why in God's name, if you're Airbnb, do you take two billion dollars off of a balance sheet that's getting better when you're generating honest-to-goodness real free cash flow and then throwing it at buying back shares when you don't need to do that? Chris, the number of things that Airbnb could do, buying tuck-in acquisitions of smaller companies in this space, reinvesting in R&D to make the software even better, and maybe making some capital expenditures because Airbnb has shown some willingness to maybe invest in some properties or maybe some prototype properties. There's a bazillion thing you could do and you want to throw two billion dollars in cold hard moola at buybacks? What is Brian Chesky thinking?
Chris Hill: I had as a follow-up question, they're buying back two billion dollars worth of stock. Is that the best use of two billion dollars? I have my answer. [laughs] The answer is overwhelmingly in your opinion. No, it's not the best use of two billion dollars.
Tim Beyers: It's a horrible use of two billion dollars and here's the thing. Airbnb has done a fairly good job, let's give them some credit here. Just looking at the cash flow statement here, Chris. Year-over-year, this is the comparable six months here stock-based compensation expense. In 2021, it was about $462 million, in 2022, $442 million. They've been really disciplined and diligent. Now that sounds like a lot, but when you're a company that generates over two billion dollars in net cash from operations when you include that money, about one and a half billion when you take it away. They've been very disciplined in this area. They give away good stock-based compensation to their employees, but not to such a degree that they can't generate real cash from the operations of their business. You've been really disciplined, you've got a great balance sheet, and you've got lots of greenfield opportunities in front of you. There is no earthly reason to be buying back stock, none.
Chris Hill: Let's move on then to the stock of the day, which is Match Group, the parent company of Tinder and Match.com and many other dating apps. It's the stock of the day because shares are down 20 percent after second quarter revenue was light. Their guidance was weak and there are times Tim, when a stock takes a hit like this, and it seems like a buying opportunity but at the moment, and I say this as a shareholder of Match Group, at the moment, this seems like a business that has a lot of work to do.
Tim Beyers: I agree. I completely agree. Revenue was up 12 percent to 794.5 million in the quarter that lagged the forecasts, net loss of 31.9 million and this is a company that's been profitable. They have a relatively new CEO in Bernard Kim but the Tinder CEO, Renate Nyborg, she's leaving the company. This is not a good sign in my opinion here, Chris. It's just that Tinder I guess it's not contributing in the way that Match would like it to and some of this is completely understandable. Obviously, during the pandemic, people getting together, setting up in-person dating arrangements, that was a business that was compromised by the pandemic. Some of this is completely understandable. Having said that, it's going to be really fascinating to me, Chris, when we get earnings from Bumble next week. I want to see if this is an industry problem or if this is a Match problem. I don't think we have the answer to that, Chris.
Chris Hill: It's a great question because we saw this in the past few weeks where Snap reported and everyone was quick to attribute the advertising problems that Snap was having to all other companies that sell digital ads, including, and especially Alphabet. Alphabet came out the next week and reported and basically said, no, we're not Snap. I think this will be very telling because, absent any other information you could look at Match Group and Bumble for that matter, and look at the overall environment of, hey, the world is really opening up and this seems like a time for these businesses to shine and in the case of Match Group, that is not the case.
Tim Beyers: It doesn't look like it. Now, let's be clear about something. If you were an investor and you wanted to make a speculative bet. I think I could absolutely see a speculative bet on Match here, but please remember, that's what you're doing here. You're making an informed speculation right now because the company you knew as a cash-generating, stable business that was profiting from a very durable trend, dating happens and will continue to happen forever as long as there are human beings. Clearly, there's a core business here that could get healthy. It could get healthy really quickly and in which case, you'd be buying a value right now. But to your point, Chris, I think there's a lot of unanswered questions.
Chris Hill: Shares in MicroStrategy are up more than 12 percent this morning and I do not think it's because of the massive loss the accompany just posted in the second quarter. My guess is the stock is up because CEO Michael Saylor is stepping down. What do you think?
Tim Beyers: Yet he is still going to be in charge of Bitcoin, Chris. Is this one of those where everything is changing, but really nothing is changing we're telling you things are changing, but really nothing is changing. I don't actually know the answer to that, but let's be clear about what happened here. Because of the way accounting rules work, MicroStrategy did have to report the drawdown in the value of its digital assets to the tune of about a billion dollars. I think it was a staggering per-share loss of something like $94.
Chris Hill: It was $94 per share.
Tim Beyers: Ninety four dollars per share loss, which is astounding. Having said that, there's going to be some temptation, I think, among investors to say, "Well, it can't really get worse here and maybe this is a value play here and we're moving Michael Saylor to the side." I would say, please don't go down that path just yet. This is a very dangerous place for a company that's doing very dangerous things with the capital that it has here. The balance sheet has essentially gone negative. What I mean by that is the value of all of the assets on MicroStrategy's balance sheet now, do not add up to as much as the debt that MicroStrategy carries and that debt, it was basically used to buy Bitcoin here. They're still buying more digital assets. Chris, I want to highlight just one thing very quickly. People really get how leveraged this company is. They spent, it's about $225 million in capital expenditures.
But those capital expenditures were for more digital asset. Essentially MicroStrategy is saying, we're going to make an investment in something that's supposed to give us an expectation of returns. So that is things like factories, equipment, or even loans if you're a bank. But we're going to make it in things like Bitcoin. We're going to take hard assets, invest it in a variable asset and we have no idea what the expectation of return is, and we're just going to keep doing this. Nothing has really changed the quality of the balance sheet's worse. The way that MicroStrategy is investing is the same. But Michael Saylor has a new role. I don't think this is a company you want to own or at least let's say this, Chris, it's not a company that I want to go anywhere near right now.
Chris Hill: I feel the same way and I get the reaction for the stock because it's clearly an indictment of Saylor. But as you say, he's staying on as Executive Chairman. This seems like a rough job for whoever the next CEO is.
Tim Beyers: It remains to be seen if this move allows for the possibility of MicroStrategy broadening itself to take a look at the core operation that was developing analytics and business intelligence software and making that better because that's been widely ignored for a long time now. Is there investments to be made there? Right now, there isn't. When MicroStrategy makes capital investments today, it is buy more stuff that might go to the moon. That's their capital investment strategy right now and I think that is sub-optimal to say the least. This is one of those things where sound and fury signifying nothing is what it looks like, Chris.
Chris Hill: Tim Beyers, always great talking to you. Thanks for being here.
Tim Beyers: Thanks, Chris.
Chris Hill: Can Meta Platforms artificial intelligence, fight back against Apple's privacy restrictions? Ricky Mulvey caught up with The Wall Street Journal tech columnist, Christopher Mims to talk about how companies are really using AI.
Ricky Mulvey: Today, we're talking to artificial intelligence. Joining us now to do that as Christopher Mims.
Alexa: According to Wikipedia, Christopher Mims is a technology columnist at The Wall Street Journal, which he joined in 2014. Mims received a bachelor's degree in neuroscience and behavioral biology from Emory University in 2001.
Ricky Mulvey: Thanks for that intro, Alexa. I guess the point of that is, I know you write about how artificial intelligence is good at playing boring games. Not boring games, but games with defined rule sets. We'll talk about some of those games in a moment. But it is absolutely wild to me just how much better is a consumer artificial intelligence has gotten within just the past couple of years.
Christopher Mims: That's absolutely true. When you talk about voice recognition, when you talk about the ability of smart assistance to do what we expect and be more flexible on their response to us. That's pretty impressive.
Ricky Mulvey: You got a new column in the Wall Street Journal called Real AI For The Workday World. Some of the applications you're excited though, you write, "isn't as flashy" as some of the artificial intelligences that have been getting wider attention lately. About those games with defined rule sets, what are some of the games that the AIs you're watching or playing? What's Amazon doing? What are restaurants doing? What are these recyclers doing?
Christopher Mims: One very narrowly defined game that somebody has been training in AI to do is to recognize which particles in a stream of crushed up e-waste are valuable metals like copper and gold and sort those out of a stream of waste. That's a very narrowly defined tasks at AI is potentially great at and can have a really big impact on an industry where I think between 10 and 20 percent of e-waste is actually recycled. It's abysmally low considering that it's literally gold. There's more gold in a pile of e-waste than there is in an equal size pile of gold ore from the ground. That's one example. Another example is there's a company out of Munich called Prezi Taste.
They're using AI with a bunch of fast food restaurants whose names we would recognize, but they're not able to disclose. To take some of the cognitive load away from the folks who are really hard pressed in the kitchen. Imagine you're working the line at Chipotle and you're trying to guess what lunch demand is going to be like. That means, 30 minutes, 45 minutes ago, you had to decide how many chickens to throw on the grill and how much guacamole to mash up. That's hard when you don't have enough staff. This AI aims to trace the path of food from when it leaves the fridge, to when it's delivered to somebody and to use predictive analytics to figure out how much of that food you should be preparing at any moment on any given day.
That's another example of a narrow task that AI can be quite good at and it can have a really big impact. There's a ton of giant companies that are trialing that technology right now. Those are just a couple of examples. There are many others, but in every case where you're trying to apply AI and I think self-driving is another good example of this. The more that companies are able to narrow that task, the simpler they're able to make it, the bigger impact it has for them. Because AI, it's really not that intelligent. It's a big pile of math and it's not very flexible. It's not great at doing a lot of the things that we were promised it would be able to do.
Ricky Mulvey: I guess I would push back on that. It seems to me that there are programs that are getting rapidly more creative. I think of even just the difference between Dolly 1 and Dolly 2, it takes texts, prompts and then generates images based on them. Dolly 1 would create these weird mash-up meme-looking things and then with Dolly 2, you could type in two bears at a picnic table and it could create this hyper-realistic, stylized art. That seems to me to be the creative thinking that we were promised and going beyond those narrowly defined rule sets.
Christopher Mims: Yeah, those are very cool. The results are very impressive, but I would hesitate to call it creative because of course, the reason it's able to do that is it's ingested so many images that has a super large library of images to draw from and remix. Is that creativity?. It's not really generating some things so much as cribbing from its huge database. I think also the essence of creativity is flexibility, is adaptability, is having a working model of the world. Dolly is cool, but it's not going to teach our kids or babysit our pets or solve the world's problems. I think that there is a real challenge we have where humans are great at anthropomorphizing inanimate objects. We get excited about these new tools. But at the end of the day that they live in these tiny boxes, or they live on the Internet or whatever. They're not embodied. They're not really being put into robots yet and they break down in funny ways. There's been a bunch of funny uses of Dolly where people will give it a really basic task like draw Pegasus. It spits out these hideous mutant things with no recognizable heads and five legs.
Or when you ask it to do human faces, it's really terrible. They're all blurred and smudged. I think it's a great example of something that can enhance human capabilities. Like a lot of designers have said, "I get really tired of doing mockups all day long. But if I asked Dolly to degenerate six different mock-ups of blank business cards on creative backgrounds. It can do that in a snap and then I can get onto the part of the client work that I enjoy." The same way that the big models for language like GPT-3 and all of its imitators or created auto-complete. They're auto completing our emails and our texts. They're auto completing code for programmers, they're generating fake reviews online. [laughs] These tools are tremendous when used by humans and can certainly make people more productive. They're not going to do anything on their own though, because they're not flexible. They're really great at these pretty narrow tasks.
Ricky Mulvey: It can do texts prediction, but once you get beyond a couple of lines, it goes in delulu ville. I do think some of the applications are a little bit frightening to me. You wrote about a company called Gong, which is essentially teaching salespeople to close more deals. As you write, basically it's telling salespeople to listen more. But it's also looking at the way that we have conversations over Zoom or in creative and unique ways. I think there's a frightening future, which is, someone is trying to sell you something and you don't know how your data is being used by that salesperson in order to sell you things.
Christopher Mims: Absolutely. Well, keep in mind that we live in that present. One of the most powerful AI's on earth is used by Facebook and has allowed all kinds of ad targeting. That gets us when we're at our most vulnerable and we're stuck in the loop of the infinite scroll on Instagram and advertises that mattress that our friends have been talking to us. Just at the moment when we're tipsy and tired enough to impulse buy it. If you want evidence that that works, Apple taking that ability away from Facebook to some extent by enacting new privacy controls is costing Facebook $10 billion a year in revenue and has a lot of advertisers, who are targeting people, crying foul. A lot of these direct to consumer advertisers that built their businesses on Instagram are freaking out because they can't reach people anymore. That AI is incredibly powerful. It knows us better than our own mothers and it is largely a black box in terms of what it knows about us and how it's using that information. As a result, it's this incredible engine of commerce. Every one of us, every day when we view that targeted advertising is but a single human mind up against the greatest hive intelligence humanity has ever concocted, and we're losing, and that's why we spend money there.
Ricky Mulvey: Do you think that Meta's artificial intelligence capabilities can essentially plow through Apple's privacy restrictions with the engine that it's built up? One of the things you wrote about is that it has this now open source code that can understand every language on earth. That might be able to plow over whatever Apple's throwing at it.
Christopher Mims: No intelligence artificial or otherwise can operate without its senses. Meta's algorithm has been partially blinded by Apple's privacy moves so it doesn't matter how smart it is, it doesn't have the information it needs, it can't function the way it was intended to. This is why you see the strategy of Facebook trying to get you to spend more time on its services. Because as long as you're in that walled garden and you're completing your purchase inside that walled garden, you're going to these shops that are now available to merchants on Instagram, then it has what's called first-party data and Apple can't touch that. All of these very unpopular changes that have just been rolled out for Instagram. Facebook is betting that as much as we hate them, that we're all mindless enough that the same thing that keeps us scrolling on TikTok will keep us scrolling in this very algorithmically determined TV-like environment that they're trying to turn Instagram into and don't forget, it does work for TikTok. A lot of people hate it, but it might work.
Ricky Mulvey: Final question. I know you spend a lot of time thinking about supply chains. What's a way that artificial intelligence is improving supply chains that you're excited about?
Christopher Mims: Well, there's a broad way and a narrow way. The broad way is predictive analytics keeps getting better and that makes ports more and more efficient and the rest of the logistics network, and that is exciting because it is a conservative industry. You'd be surprised how much of it has yet to adopt this AI. The other thing though is that we are seeing the rise of autonomous driving, especially in trucking potentially. Within a year or two, there could be fully autonomous trucks, no drivers in the cab on Americas roads. That could be tremendous because it allows those trucks to start competing with things like air freight. Because an autonomous truck doesn't have to take breaks, stops to get fuel and that's it.
Ricky Mulvey: Christopher Mims, he's the technology columnist for The Wall Street Journal, author of a wonderful book. It's called, Arriving Today: From Factory to Front Door. Why Everything Has Changed About How and What We Buy. Thanks for joining us again on Motley Fool Money.
Christopher Mims: Absolutely. Thank you for having me.
Chris Hill: As always, people on the program may have interest in the stocks they talk about and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. I'm Chris Hill, thanks for listening. We'll see you tomorrow.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Chris Hill has positions in Airbnb, Inc., Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Chipotle Mexican Grill, and Match Group. Ricky Mulvey has positions in Meta Platforms, Inc. Tim Beyers has positions in Alphabet (A shares), Alphabet (C shares), Amazon, Apple, and Chipotle Mexican Grill. The Motley Fool has positions in and recommends Airbnb, Inc., Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Bitcoin, Chipotle Mexican Grill, Match Group, and Meta Platforms, Inc. The Motley Fool recommends Bumble Inc. and recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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In this podcast, Motley Fool senior analyst Tim Beyers discusses: Airbnb's questionable decision to allocate $2 billion for a share buyback plan. Motley Fool producer Ricky Mulvey talks with Wall Street Journal tech columnist Christopher Mims about Meta Platforms, Apple, and how companies are using artificial intelligence. Tim Beyers: It remains to be seen if this move allows for the possibility of MicroStrategy broadening itself to take a look at the core operation that was developing analytics and business intelligence software and making that better because that's been widely ignored for a long time now.
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Motley Fool producer Ricky Mulvey talks with Wall Street Journal tech columnist Christopher Mims about Meta Platforms, Apple, and how companies are using artificial intelligence. Ricky Mulvey has positions in Meta Platforms, Inc. Tim Beyers has positions in Alphabet (A shares), Alphabet (C shares), Amazon, Apple, and Chipotle Mexican Grill. The Motley Fool has positions in and recommends Airbnb, Inc., Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Bitcoin, Chipotle Mexican Grill, Match Group, and Meta Platforms, Inc.
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Motley Fool producer Ricky Mulvey talks with Wall Street Journal tech columnist Christopher Mims about Meta Platforms, Apple, and how companies are using artificial intelligence. If you want to be nitpicky about something, let's be nitpicky about a thing that actually makes sense, which is why in God's name, if you're Airbnb, do you take two billion dollars off of a balance sheet that's getting better when you're generating honest-to-goodness real free cash flow and then throwing it at buying back shares when you don't need to do that? Chris Hill: As always, people on the program may have interest in the stocks they talk about and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear.
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All things look pretty good here, except for one thing I will point out that nobody's talking about. I don't think this is a company you want to own or at least let's say this, Chris, it's not a company that I want to go anywhere near right now. Chris Hill: Tim Beyers, always great talking to you.
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19835.0
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2022-08-09 00:00:00 UTC
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Which FAANG Stock Looks Promising at Current Levels?
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AAPL
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https://www.nasdaq.com/articles/which-faang-stock-looks-promising-at-current-levels
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nan
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nan
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Macro pressures have significantly hurt stocks in the technology sector, including the mighty FAANG stocks – Meta Platforms (META), previously called Facebook, Amazon (AMZN), Apple (NASDAQ: AAPL), Netflix (NASDAQ: NFLX), and Google’s parent company Alphabet (NASDAQ: GOOGL). Despite the year-to-date pullback, Wall Street analysts remain bullish on some of the FAANG stocks due to their long-term growth prospects and ability to navigate the ongoing challenges. Using the TipRanks Stock Comparison Tool, we placed Apple, Alphabet, and Netflix against each other to pick the best FAANG stock.
Apple
Apple’s earnings per share (EPS) fell nearly 8% to $1.20 for the third quarter of Fiscal 2022 (ended June 25, 2022) amid supply chain pressures, inflation, and currency headwinds. That said, the company surpassed analysts’ earnings and revenue expectations, driven by strong execution.
Apple’s revenue grew 1.9% to $82.96 billion, as higher iPhone sales and increased Services revenue more than offset lower sales of Mac computers, iPads, and wearables. Despite a tough operating environment, iPhone sales grew 2.8%, reflecting strong demand trends.
Looking ahead, Apple expects revenue growth to accelerate in Q4 FY22 despite forex headwinds. It anticipates supply constraints to persist in Q4 but expects the impact to be lower than in Q3. Also, Apple expects Services revenue to increase in Q4, but decelerate compared to the June quarter due to macro challenges and currency fluctuations.
Following the print, Raymond James analyst Melissa Fairbanks lowered her price target for Apple stock to $185 from $190 but maintained a Buy rating. Fairbanks highlighted Apple’s strong June quarter despite multiple headwinds, like currency movements, China lockdowns, macroeconomic challenges, and component shortages.
The analyst noted that while Apple didn’t issue a specific Q4 FY22 guidance, management’s outlook commentary seems better than what consumer trends suggest. Fairbanks remains optimistic that Apple would weather the storm better than other consumer device makers.
Overall, the Street is cautiously optimistic on Apple stock, with a Moderate Buy consensus rating based on 22 Buys, six Holds, and one Sell. At $180.11, the average price target implies 9.24% upside potential from current levels.
Alphabet
Alphabet’s second-quarter results lagged analysts’ expectations, but investors were still relieved as the company displayed resilience compared to its peers who are also dependent on online ad spending, like Snap (SNAP).
Alphabet’s Q2 revenue grew 13% to $69.7 billion, fueled by Google Search and Cloud businesses. However, EPS came in at $1.21, down 11% as increased costs and losses on certain investments weighed on the bottom line.
Alphabet is facing tough year-over-year comparisons. Also, competition from players like TikTok is impacting its YouTube revenues. However, the company’s Google Search business continues to display strength despite near-term pressures. Google Search and other advertising revenues grew 13.5% to $40.7 billion in Q2, thanks to travel and retail.
Recently, Tigress Financial analyst Ivan Feinseth raised his price target for Alphabet stock to $186 from $183, and maintained a Buy rating. The analyst noted that management’s Q2 earnings commentary emphasized the strength in ad spending as Alphabet’s “search model is not subject to privacy restrictions that limit app-embedded advertising.”
Feinseth believes that the company’s artificial intelligence investments are driving “increasingly focused and helpful experiences for users and businesses across all key product lines.”
Overall, Alphabet earns a Strong Buy consensus rating backed by 30 Buys and two Holds. The average price target of $142.63 implies 21.59% upside potential from current levels.
Netflix
Streaming giant Netflix delivered revenue of $7.97 billion in Q2, reflecting an increase of 8.6%. While the company’s revenue missed Wall Street’s expectations, EPS grew 7.7% to $3.20 and surpassed estimates.
Despite mixed results, investors reacted positively as Netflix lost fewer subscribers than it had earlier predicted. The company lost nearly 970,000 subscribers in the second quarter, lower than its guidance of a loss of 2 million subscribers. Netflix cited better content, mainly Stranger Things, and other efforts, as the reasons for the better-than-feared subscriber numbers.
For Q3, Netflix anticipates revenue to grow by 5% and the addition of one million net new subscribers. However, analysts were expecting 1.8 million new subscribers.
From working on better content to implementing a crackdown on password sharing, Netflix is taking several measures to ensure better performance. The company expects to launch its lower-cost, ad-supported tier in early 2023. Under a recently announced deal, Microsoft (MSFT) will be Netflix’s technology and sales partner for the launch of the ad-supported tier.
Oppenheimer analyst Jed Kelly believes that any near-term upside in Netflix stock could be quickly moderated by increased churn concerns due to streaming competition and inflationary pressures. However, the analyst views the ad-supported tier and the password-sharing crackdown as two catalysts to re-accelerate top-line growth. Kelly opines that these catalysts along with easing comparisons present an attractive set-up heading into next year. For now, Kelly reiterated a Hold rating on Netflix stock.
Overall, analysts are sidelined on Netflix stock, with a Hold consensus rating based on seven Buys, 19 Holds, and six Sells. The average price target of $229.30 implies a 1.79% possible downside from current levels. Netflix stock is down over 60% year-to-date.
Conclusion
FAANG stocks could continue to face macro pressures and currency headwinds over the near term. Despite near-term challenges, Wall Street analysts are highly bullish on Alphabet based on the dominant position of Google Search, tremendous growth opportunities in the Cloud, and strong cash flows that can support the company’s Other Bets division. Furthermore, Wall Street analysts estimate that Alphabet stock has higher upside potential than Apple and Netflix combined.
As per TipRanks Smart Score System, Alphabet scores a nine out of 10, indicating that the stock might outperform the broader market.
Disclosure
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Macro pressures have significantly hurt stocks in the technology sector, including the mighty FAANG stocks – Meta Platforms (META), previously called Facebook, Amazon (AMZN), Apple (NASDAQ: AAPL), Netflix (NASDAQ: NFLX), and Google’s parent company Alphabet (NASDAQ: GOOGL). Despite the year-to-date pullback, Wall Street analysts remain bullish on some of the FAANG stocks due to their long-term growth prospects and ability to navigate the ongoing challenges. Oppenheimer analyst Jed Kelly believes that any near-term upside in Netflix stock could be quickly moderated by increased churn concerns due to streaming competition and inflationary pressures.
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Macro pressures have significantly hurt stocks in the technology sector, including the mighty FAANG stocks – Meta Platforms (META), previously called Facebook, Amazon (AMZN), Apple (NASDAQ: AAPL), Netflix (NASDAQ: NFLX), and Google’s parent company Alphabet (NASDAQ: GOOGL). Apple’s revenue grew 1.9% to $82.96 billion, as higher iPhone sales and increased Services revenue more than offset lower sales of Mac computers, iPads, and wearables. Despite near-term challenges, Wall Street analysts are highly bullish on Alphabet based on the dominant position of Google Search, tremendous growth opportunities in the Cloud, and strong cash flows that can support the company’s Other Bets division.
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Macro pressures have significantly hurt stocks in the technology sector, including the mighty FAANG stocks – Meta Platforms (META), previously called Facebook, Amazon (AMZN), Apple (NASDAQ: AAPL), Netflix (NASDAQ: NFLX), and Google’s parent company Alphabet (NASDAQ: GOOGL). The analyst noted that management’s Q2 earnings commentary emphasized the strength in ad spending as Alphabet’s “search model is not subject to privacy restrictions that limit app-embedded advertising.” Feinseth believes that the company’s artificial intelligence investments are driving “increasingly focused and helpful experiences for users and businesses across all key product lines.” Overall, Alphabet earns a Strong Buy consensus rating backed by 30 Buys and two Holds. Furthermore, Wall Street analysts estimate that Alphabet stock has higher upside potential than Apple and Netflix combined.
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Macro pressures have significantly hurt stocks in the technology sector, including the mighty FAANG stocks – Meta Platforms (META), previously called Facebook, Amazon (AMZN), Apple (NASDAQ: AAPL), Netflix (NASDAQ: NFLX), and Google’s parent company Alphabet (NASDAQ: GOOGL). Using the TipRanks Stock Comparison Tool, we placed Apple, Alphabet, and Netflix against each other to pick the best FAANG stock. While the company’s revenue missed Wall Street’s expectations, EPS grew 7.7% to $3.20 and surpassed estimates.
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19836.0
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2022-08-09 00:00:00 UTC
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Stock Market News for Aug 9, 2022
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AAPL
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https://www.nasdaq.com/articles/stock-market-news-for-aug-9-2022
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nan
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nan
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Stocks failed to hold on to early gains on Monday and ended almost flat as investors anxiously await the consumer price index report for July this week that will help them gauge how aggressive the Fed might be in its rate-hike policy. The S&P and Nasdaq ended in negative territory, while the Dow managed to close in the green.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) gained 0.1% or 29.07 points to close at 32,832.54 points. The blue-chip index had added as much as 306.49 points at its session highs but ended up giving up almost all the gains.
The S&P 500 declined 0.1% or 5.13 points to finish at 4,140.06 points. The index also recorded its third-straight day of declines. Although real estate, materials and communication services stocks gained, the technology sector was a big drag.
The Technology Select Sector SPDR (XLK) fell 0.9%. However, the Communications Services Select Sector SPDR (XLC) gained 0.6%, while the Real Estate Services Select Sector SPDR (XLRE) gained 0.7%. Seven of the 11 sectors of the benchmark index ended in positive territory.
The tech-heavy Nasdaq slid 0.1% or 13.10 points to end at 12,644.46 points.
The fear-gauge CBOE Volatility Index (VIX) was up 0.66% to 21.29. Advancers outnumbered decliners on the NYSE by a 2.28-to-1 ratio. On Nasdaq, a 1.67-to-1 ratio favored advancing issues. A total of 11.01 billion shares were traded on Monday.
Investors Feel Jittery Ahead of Inflation Data
Markets opened in the green on Monday and stocks rallied initially but none of the three major indexes could not hold on to the gains as investors feel jittery ahead of the release of the consumer price index report for July later this week. Investors kept gauging if the Fed would continue with its steep rate hike policy in its September policy meeting.
Investors were hoping for a softer rate hike by the Fed in its September meeting after a slew of big companies announced their layoff plans, which gave them an impression that the labor market was softening and was evidence of a slowing economy.
However, the robust jobs report released last week has made it difficult for investors to digest the idea that the Fed could continue with its aggressive rate hike policy. This once again dented investors’ spirits, taking a toll on stocks. Tech stocks were the biggest sufferers. Shares of Apple, Inc. AAPL and Salesforce, Inc. CRM declined 0.3% and 0.2%, respectively.
Clean Energy Stocks Rally
Clean energy stocks were big gainers on Monday after the Senate passed the Inflation Reduction Act. The House is likely to pass the bill by the end of this week. The proposal includes billions of dollars reserved to combat climate change. On Monday, investors were also gauging the effects of this major healthcare, climate change, and tax package.
Shares of First Solar, Inc. FSLR gained 4.8%, while Ormat Technologies, Inc. ORA advanced 0.5%. First Solar carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Semiconductor Stocks Disappoint
Semiconductor stocks took a beating on Tuesday after NVIDIA Corporation NVDA announced weaker-than-expected revenues in its preliminary financial results for its second-quarter fiscal 2023. The company cited weaker-than-forecasted gaming revenue for the decline.
Shares of NVIDIA Corporation declined 6.3%. Other microchip stocks also took a hit following the announcement. Shares of Micron Technology, Inc. MU slid 1.6%, while Texas Instruments Incorporated TXN fell 0.8%.
No economic data was released on Monday.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Shares of Apple, Inc. AAPL and Salesforce, Inc. CRM declined 0.3% and 0.2%, respectively. Apple Inc. (AAPL): Free Stock Analysis Report Stocks failed to hold on to early gains on Monday and ended almost flat as investors anxiously await the consumer price index report for July this week that will help them gauge how aggressive the Fed might be in its rate-hike policy.
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Shares of Apple, Inc. AAPL and Salesforce, Inc. CRM declined 0.3% and 0.2%, respectively. Apple Inc. (AAPL): Free Stock Analysis Report However, the Communications Services Select Sector SPDR (XLC) gained 0.6%, while the Real Estate Services Select Sector SPDR (XLRE) gained 0.7%.
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Shares of Apple, Inc. AAPL and Salesforce, Inc. CRM declined 0.3% and 0.2%, respectively. Apple Inc. (AAPL): Free Stock Analysis Report Stocks failed to hold on to early gains on Monday and ended almost flat as investors anxiously await the consumer price index report for July this week that will help them gauge how aggressive the Fed might be in its rate-hike policy.
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Shares of Apple, Inc. AAPL and Salesforce, Inc. CRM declined 0.3% and 0.2%, respectively. Apple Inc. (AAPL): Free Stock Analysis Report Seven of the 11 sectors of the benchmark index ended in positive territory.
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19837.0
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2022-08-09 00:00:00 UTC
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3 Best Tech Stocks to Buy in August
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AAPL
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https://www.nasdaq.com/articles/3-best-tech-stocks-to-buy-in-august
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nan
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nan
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Technology stocks have rallied impressively over the past month, evident from the 16% jump in the Nasdaq-100 Technology Sector index. Solid earnings reports from some of the sector's top names are probably giving investors confidence once again in tech stocks, which have otherwise taken a big beating so far in 2022.
Today, we will take a closer look at three top tech stocks that are available at attractive valuations right now but have the potential to surge higher.
1. Microsoft
Microsoft (NASDAQ: MSFT) released its fiscal 2022 fourth-quarter results (for the period ended June 30) on July 26. In constant currency terms, the company's revenue increased 16% year over year to $51.9 billion while adjusted earnings were up 8% to $2.23 per share. The numbers were below Wall Street's expectations of $2.29 per share and $52.4 billion in revenue on account of a poor environment for personal computer (PC) sales.
However, the company's outlook saved the day. Microsoft expects $49.75 billion in revenue in the current quarter, or a 10% increase over the prior-year period. The company also expects double-digit revenue and operating income growth for the year, which is impressive considering it's facing weaker PC sales, a drop in advertising spending, and Russia's war with Ukraine.
Last quarter, Microsoft lost $400 million in revenue in the Windows as well as search and news advertising businesses due to these headwinds. But the company's outlook remains solid, given key growth drivers such as the cloud and its productivity business.
Microsoft's Intelligent Cloud business produced $20.9 billion in revenue last quarter, accounting for 40% of the top line. The segment's revenue was up 20% year over year, thanks to healthy demand for Microsoft's server products and cloud services. The cloud business has a lot of room for growth, and Microsoft is a leading player.
The company controlled 21% of the global cloud services market in the second quarter, according to Synergy Research Group. The public cloud market could generate $552 billion in revenue by 2027, according to estimates published by Statista -- a big jump over last year's outlay of $364 billion. So Microsoft's solid position in the cloud computing market should accelerate the company's growth ahead.
That's why investors looking to buy a tech stock right now should consider scooping up Microsoft, and it is trading at 29 times earnings, a sizable discount to its five-year average price-to-earnings (P/E) ratio of 37.
2. Cirrus Logic
Cirrus Logic (NASDAQ: CRUS) is a fast-growing company that investors can buy at an attractive valuation right now. The company, whose biggest customer is smartphone giant Apple (NASDAQ: AAPL), is trading at just 15 times trailing earnings. Cirrus reported $394 million in revenue for the first quarter of its fiscal 2023 (ended June 25, 2022). Its top line increased a whopping 42% year over year. Meanwhile, earnings jumped to $0.69 per share from $0.29 in the prior-year period.
Apple accounted for 79% of Cirrus' quarterly revenue, which is why the latter's impressive growth wasn't surprising. The chipmaker supplies power conversion chips and audio codecs used by Apple in such devices as the iPhone. Cirrus makes more money from each unit of the iPhone 13 lineup than earlier devices. That's because Apple started using its power conversion chips last year in addition to the audio codecs that it has been deploying for a long time.
The higher-dollar content, along with Apple's smartphone sales growth last quarter, explains why Cirrus recorded red-hot jumps in revenue and earnings. The company anticipates 19% sequential revenue growth this quarter to $470 million at the midpoint of its guidance range, helped by Apple's reported ramping up the production of its next-generation iPhone.
More importantly, Cirrus looks built for long-term growth as the company is sitting on two key growth drivers. First is the high-performance mixed-signal (HPMS) business, wherein Cirrus sees an addressable revenue opportunity worth $4.2 billion by 2026 compared to $1 billion in 2021. The HPMS business generated $139 million in revenue last quarter, a big jump from $60 million in the prior-year period.
Cirrus is just scratching the surface of a massive opportunity in this segment that could give its top and bottom lines a big boost in the long run. This makes Cirrus a top semiconductor stock to buy this month as it seems capable of sustaining its impressive growth.
3. Applied Materials
Applied Materials (NASDAQ: AMAT) is another company trading at a dirt-cheap valuation. It sports a P/E multiple of just 14.5 and a forward earnings multiple of 12.9. Those are way lower than the Nasdaq-100's earnings multiple of 27. Buying Applied Materials at its current valuation looks like a no-brainer.
That's because the company is built for long-term growth amid the semiconductor boom. Known for selling chip manufacturing equipment, Applied Materials is witnessing healthy demand for its offerings. This was evident from management's comments on the company's May earnings conference call when CFO Brice Hill remarked: "Our backlog continues to grow, and we have visibility from our customers extending into 2023 and beyond."
Though Applied Materials management didn't spell out the exact amount of the backlog in May, the company had a record backlog worth $8 billion in the first quarter of fiscal 2022 for the three months ended January 30. The second-quarter commentary indicates that the backlog has grown further. And that's not surprising, given the growing outlay on semiconductor manufacturing equipment.
An estimate by Allied Analytics indicates that global semiconductor equipment sales could hit $118 billion this year, an increase of nearly 15% over 2021. The market is expected to keep growing in the long run and hit nearly $260 billion in revenue by the end of the decade. This explains why analysts forecast Applied Materials' earnings to increase at nearly 14% annually for the next five years, making it a top tech stock to buy right now -- and considering its attractive valuation.
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Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Applied Materials, and Microsoft. The Motley Fool recommends Cirrus Logic and recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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The company, whose biggest customer is smartphone giant Apple (NASDAQ: AAPL), is trading at just 15 times trailing earnings. The company also expects double-digit revenue and operating income growth for the year, which is impressive considering it's facing weaker PC sales, a drop in advertising spending, and Russia's war with Ukraine. The company anticipates 19% sequential revenue growth this quarter to $470 million at the midpoint of its guidance range, helped by Apple's reported ramping up the production of its next-generation iPhone.
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The company, whose biggest customer is smartphone giant Apple (NASDAQ: AAPL), is trading at just 15 times trailing earnings. The higher-dollar content, along with Apple's smartphone sales growth last quarter, explains why Cirrus recorded red-hot jumps in revenue and earnings. The HPMS business generated $139 million in revenue last quarter, a big jump from $60 million in the prior-year period.
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The company, whose biggest customer is smartphone giant Apple (NASDAQ: AAPL), is trading at just 15 times trailing earnings. In constant currency terms, the company's revenue increased 16% year over year to $51.9 billion while adjusted earnings were up 8% to $2.23 per share. The higher-dollar content, along with Apple's smartphone sales growth last quarter, explains why Cirrus recorded red-hot jumps in revenue and earnings.
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The company, whose biggest customer is smartphone giant Apple (NASDAQ: AAPL), is trading at just 15 times trailing earnings. Microsoft expects $49.75 billion in revenue in the current quarter, or a 10% increase over the prior-year period. Though Applied Materials management didn't spell out the exact amount of the backlog in May, the company had a record backlog worth $8 billion in the first quarter of fiscal 2022 for the three months ended January 30.
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19838.0
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2022-08-09 00:00:00 UTC
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US STOCKS-Wall St set to open lower after chipmaker Micron's dour warning
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https://www.nasdaq.com/articles/us-stocks-wall-st-set-to-open-lower-after-chipmaker-microns-dour-warning
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By Bansari Mayur Kamdar and Aniruddha Ghosh
Aug 9 (Reuters) - Wall Street was set to open lower on Tuesday after a dismal forecast from Micron Technology dragged chip stocks lower, while investors remained cautious ahead of inflation data that will feed into the U.S. Federal Reserve's rate-hike plans.
A high inflation print on Wednesday, following last week's strong jobs numbers, will likely push the Fed to continue with jumbo rate hikes and weigh on a recent recovery in stocks.
Traders are expecting a 71.5% chance of the Fed raising interest rates by 75 basis points in September, its third such big hike. IRPR
Growth and technology stocks, whose valuations are sensitive to rising bond yields, slipped as U.S. Treasury yields climbed, with Alphabet Inc GOOGL.O and Apple Inc AAPL.O down 0.6% each.
Micron Technology Inc MU.O fell 4.1% as the memory-chip maker cut fourth-quarter revenue forecast and warned of a negative free cash flow in the following three months as demand for chips used in personal computers and smartphones drop.
Peers Nvidia NVDA.O and Advanced Micro Devices AMD.O fell 2.8% and 2.0%, respectively, extending the previous session's sharp declines after a revenue warning from Nvidia.
The Philadelphia Semiconductor Index .SOX is down 23.9% so far this year, lagging the broader tech-heavy Nasdaq index.
"Markets are still treating these things as companies specific. If you get enough similar warnings, investors will start to treat it as sector specific and if that goes on further then it will become market specific," said Michael Shaoul, chief executive officer at Marketfield.
Shaoul said trading volumes remained lower due to summer and "it really doesn't take a lot of capital to push over yields or the S&P".
Despite a choppy recovery since mid-June, the benchmark index .SPX is down 13% this year after hitting a record high in early January as surging prices, hawkish central banks, geopolitical tensions weigh on sentiment.
Stronger-than-expected earnings from corporate America have been a positive, with 77.5% of S&P 500 companies beating earnings estimates, according to the Refinitiv data as of Friday.
At 08:44 a.m. ET, Dow e-minis 1YMcv1 were down 2 points, or 0.01%, S&P 500 e-minis EScv1 were down 9.5 points, or 0.23%, and Nasdaq 100 e-minis NQcv1 were down 81.5 points, or 0.62%.
Novavax NVAX.O slumped 31.3% after the drugmaker halved its annual revenue forecast as it does not expect further sales of its COVID-19 shot this year in the United States in the face of a global supply glut and soft demand.
(Reporting by Bansari Mayur Kamdar and Aniruddha Ghosh in Bengaluru; Editing by Saumyadeb Chakrabarty and Arun Koyyur)
((BansariMayur.Kamdar@thomsonreuters.com; Twitter: @BansariKamdar))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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IRPR Growth and technology stocks, whose valuations are sensitive to rising bond yields, slipped as U.S. Treasury yields climbed, with Alphabet Inc GOOGL.O and Apple Inc AAPL.O down 0.6% each. Micron Technology Inc MU.O fell 4.1% as the memory-chip maker cut fourth-quarter revenue forecast and warned of a negative free cash flow in the following three months as demand for chips used in personal computers and smartphones drop. Despite a choppy recovery since mid-June, the benchmark index .SPX is down 13% this year after hitting a record high in early January as surging prices, hawkish central banks, geopolitical tensions weigh on sentiment.
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IRPR Growth and technology stocks, whose valuations are sensitive to rising bond yields, slipped as U.S. Treasury yields climbed, with Alphabet Inc GOOGL.O and Apple Inc AAPL.O down 0.6% each. By Bansari Mayur Kamdar and Aniruddha Ghosh Aug 9 (Reuters) - Wall Street was set to open lower on Tuesday after a dismal forecast from Micron Technology dragged chip stocks lower, while investors remained cautious ahead of inflation data that will feed into the U.S. Federal Reserve's rate-hike plans. ET, Dow e-minis 1YMcv1 were down 2 points, or 0.01%, S&P 500 e-minis EScv1 were down 9.5 points, or 0.23%, and Nasdaq 100 e-minis NQcv1 were down 81.5 points, or 0.62%.
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IRPR Growth and technology stocks, whose valuations are sensitive to rising bond yields, slipped as U.S. Treasury yields climbed, with Alphabet Inc GOOGL.O and Apple Inc AAPL.O down 0.6% each. By Bansari Mayur Kamdar and Aniruddha Ghosh Aug 9 (Reuters) - Wall Street was set to open lower on Tuesday after a dismal forecast from Micron Technology dragged chip stocks lower, while investors remained cautious ahead of inflation data that will feed into the U.S. Federal Reserve's rate-hike plans. If you get enough similar warnings, investors will start to treat it as sector specific and if that goes on further then it will become market specific," said Michael Shaoul, chief executive officer at Marketfield.
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IRPR Growth and technology stocks, whose valuations are sensitive to rising bond yields, slipped as U.S. Treasury yields climbed, with Alphabet Inc GOOGL.O and Apple Inc AAPL.O down 0.6% each. By Bansari Mayur Kamdar and Aniruddha Ghosh Aug 9 (Reuters) - Wall Street was set to open lower on Tuesday after a dismal forecast from Micron Technology dragged chip stocks lower, while investors remained cautious ahead of inflation data that will feed into the U.S. Federal Reserve's rate-hike plans. Traders are expecting a 71.5% chance of the Fed raising interest rates by 75 basis points in September, its third such big hike.
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19839.0
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2022-08-09 00:00:00 UTC
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Disney (DIS) to Post Q3 Earnings: Key Factors to Consider
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AAPL
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https://www.nasdaq.com/articles/disney-dis-to-post-q3-earnings%3A-key-factors-to-consider
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The Walt Disney Company’s DIS third-quarter fiscal 2022 results, set to be reported on Aug 10, are expected to have benefited from an expanding Disney+ subscriber base and revival in Parks, Experiences and Products businesses.
Disney+ has emerged as a key growth driver for Disney, primarily driven by its solid content portfolio. Disney’s focus on sports streaming, particularly live sports, is expected to drive growth for ESPN+.
Disney’s cheaper bundled services (Disney+, ESPN+ and Hulu) have been able to attract subscribers amid stiff competition from the likes of Netflix NFLX, Apple’s AAPL streaming service Apple TV+, Amazon Prime Video, HBO Max, Comcast’s CMCSA Peacock, Paramount+ and TikTok.
The Zacks Consensus Estimate for Disney+ is currently pegged at 148.703 million, indicating 28.2% growth from the figure reported in the year-ago quarter. The consensus mark for ESPN+ and Hulu is 23.986 million and 47.807 million, respectively, suggesting 61% and 11.7% growth from the figures reported in the year-ago quarter.
Our estimate for Disney+, ESPN+ and Hulu currently stands at 148.7 million, 23.8 million and 46.7 million, respectively.
The Walt Disney Company Revenue (TTM)
The Walt Disney Company revenue-ttm | The Walt Disney Company Quote
Streaming market leader Netflix reported better-than-expected second-quarter 2022 subscriber numbers. The streaming giant lost 0.97 million paid subscribers globally, lower than its estimate of losing two million users. Netflix had added 1.54 million paid subscribers in the year-ago quarter.
Apple’s streaming service, Apple TV+, continues to gain recognition with its critically acclaimed and popular shows like Ted Lasso. This year, Apple TV+ has earned 52 Emmy nominations, with the second season of Ted Lasso getting 20 nominations overall. Another show, Severance, has garnered 14 total nominations in its first season.
Click here to know how Disney’s overall third-quarter fiscal 2022 results are likely to be.
Theme Parks to Suffer from China Lockdowns
Disney’s domestic Theme Park business (Walt Disney World and Disneyland) is expected to have benefited from the availability of Star Wars: Galactic Starcruiser and Guardians of the Galaxy: Cosmic Rewind.
However, the closure of Asian parks (Shanghai and Hong Kong) is expected to have hurt profitability by roughly $300 million on a year-over-year basis.
Disney’s nearest peer, Comcast reported strong second-quarter 2022 results in its Theme Park business. Comcast generated Theme Park revenues of $1.8 billion, up 64.8% year over year, reflecting higher attendance and increases in guest spending at its parks in the U.S. and Japan.
The Zacks Consensus Estimate for Parks, Experiences & Consumer Products revenues is currently pegged at $6.73 billion, indicating growth of 54.6% year over year.
However, this Zacks Rank #3 (Hold) company’s advertising revenues are expected to have declined in the to-be-reported quarter. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The consensus estimates for advertising revenues – broadcasting and advertising revenues - cable is currently pegged at $854 million and $807 million, respectively, suggesting a 2.6% and 2.9% decline from the figure reported in the year-ago quarter.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Want to Know the #1 Semiconductor Stock for 2022?
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This year, companies that create and produce this essential material will have incredible pricing power. For a limited time, Zacks is revealing the top semiconductor stock for 2022. You'll find it in our new Special Report, One Semiconductor Stock Stands to Gain the Most.
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Apple Inc. (AAPL): Free Stock Analysis Report
Comcast Corporation (CMCSA): Free Stock Analysis Report
Netflix, Inc. (NFLX): Free Stock Analysis Report
The Walt Disney Company (DIS): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Disney’s cheaper bundled services (Disney+, ESPN+ and Hulu) have been able to attract subscribers amid stiff competition from the likes of Netflix NFLX, Apple’s AAPL streaming service Apple TV+, Amazon Prime Video, HBO Max, Comcast’s CMCSA Peacock, Paramount+ and TikTok. Apple Inc. (AAPL): Free Stock Analysis Report The Walt Disney Company’s DIS third-quarter fiscal 2022 results, set to be reported on Aug 10, are expected to have benefited from an expanding Disney+ subscriber base and revival in Parks, Experiences and Products businesses.
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Disney’s cheaper bundled services (Disney+, ESPN+ and Hulu) have been able to attract subscribers amid stiff competition from the likes of Netflix NFLX, Apple’s AAPL streaming service Apple TV+, Amazon Prime Video, HBO Max, Comcast’s CMCSA Peacock, Paramount+ and TikTok. Apple Inc. (AAPL): Free Stock Analysis Report The Walt Disney Company Revenue (TTM) The Walt Disney Company revenue-ttm | The Walt Disney Company Quote Streaming market leader Netflix reported better-than-expected second-quarter 2022 subscriber numbers.
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Disney’s cheaper bundled services (Disney+, ESPN+ and Hulu) have been able to attract subscribers amid stiff competition from the likes of Netflix NFLX, Apple’s AAPL streaming service Apple TV+, Amazon Prime Video, HBO Max, Comcast’s CMCSA Peacock, Paramount+ and TikTok. Apple Inc. (AAPL): Free Stock Analysis Report The Walt Disney Company Revenue (TTM) The Walt Disney Company revenue-ttm | The Walt Disney Company Quote Streaming market leader Netflix reported better-than-expected second-quarter 2022 subscriber numbers.
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Apple Inc. (AAPL): Free Stock Analysis Report Disney’s cheaper bundled services (Disney+, ESPN+ and Hulu) have been able to attract subscribers amid stiff competition from the likes of Netflix NFLX, Apple’s AAPL streaming service Apple TV+, Amazon Prime Video, HBO Max, Comcast’s CMCSA Peacock, Paramount+ and TikTok. Our estimate for Disney+, ESPN+ and Hulu currently stands at 148.7 million, 23.8 million and 46.7 million, respectively.
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19840.0
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2022-08-09 00:00:00 UTC
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Foxconn to build autonomous electric tractors at Ohio facility
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AAPL
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https://www.nasdaq.com/articles/foxconn-to-build-autonomous-electric-tractors-at-ohio-facility-0
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nan
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By Bianca Flowers
Aug 9 (Reuters) - Taiwan's Foxconn 2317.TW, the world's largest contract electronics maker, on Tuesday said it will build driverless electric tractors for California-based Monarch Tractor at its Lordstown, Ohio, facility starting in early 2023.
The announcement comes as heavy machinery manufacturers, including Deere & Co DE.N and Georgia-based AGCO AGCO.N, set their sights on the electric vehicle market as the U.S. agriculture industry shifts to smart farming.
The agreement with Monarch Tractor is the first manufacturing contract Foxconn, best known for assembling Apple Inc's AAPL.O iPhone, has entered since purchasing the Ohio facility that was formerly a General Motors GM.N Assembly plant last year.
Production for Monarch's battery powered MK-V series tractor is scheduled to begin in the first quarter of 2023, said Foxconn, formally known as Hon Hai Technology Group.
Monarch, which is based in Silicon Valley, debuted its first pilot series, autonomous electric tractor to a select group of farmers last year. The company has since entered into a multi-year licensing agreement with Italian-American vehicle manufacturer CNH Industrial CNH.MI.
CNH Industrial has a minority stake in Monarch Tractor.
With competition brewing among farm equipment manufacturers to expand product lines in precision agriculture technology and autonomous machinery, Monarch's chief executive, Praveen Penmetsa, told Reuters that the company's business model to target smaller farmers gives them unique opportunity to increase the marketshare while being on the same playing field with bigger manufacturers.
"Their technology is focused on the large farm operations and commodity crops. Fruits and vegetable farmers use much smaller tractors so we are focused on smaller farmers - that differentiates us a lot," Penmetsa said.
The company did not disclose the cost of the tractor but said the autonomous software will be sold separately and that farmers will have to pay a monthly fee to access the services.
FOCUS-Deere tapping into Apple-like tech model to drive revenue
Lordstown Motors signals need for more capital to boost production, shares drop
(Reporting by Bianca Flowers in Chicago; Editing by Jan Harvey and Lisa Shumaker)
((Bianca.Flowers@thomsonreuters.com;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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The agreement with Monarch Tractor is the first manufacturing contract Foxconn, best known for assembling Apple Inc's AAPL.O iPhone, has entered since purchasing the Ohio facility that was formerly a General Motors GM.N Assembly plant last year. The announcement comes as heavy machinery manufacturers, including Deere & Co DE.N and Georgia-based AGCO AGCO.N, set their sights on the electric vehicle market as the U.S. agriculture industry shifts to smart farming. Production for Monarch's battery powered MK-V series tractor is scheduled to begin in the first quarter of 2023, said Foxconn, formally known as Hon Hai Technology Group.
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The agreement with Monarch Tractor is the first manufacturing contract Foxconn, best known for assembling Apple Inc's AAPL.O iPhone, has entered since purchasing the Ohio facility that was formerly a General Motors GM.N Assembly plant last year. By Bianca Flowers Aug 9 (Reuters) - Taiwan's Foxconn 2317.TW, the world's largest contract electronics maker, on Tuesday said it will build driverless electric tractors for California-based Monarch Tractor at its Lordstown, Ohio, facility starting in early 2023. Monarch, which is based in Silicon Valley, debuted its first pilot series, autonomous electric tractor to a select group of farmers last year.
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The agreement with Monarch Tractor is the first manufacturing contract Foxconn, best known for assembling Apple Inc's AAPL.O iPhone, has entered since purchasing the Ohio facility that was formerly a General Motors GM.N Assembly plant last year. By Bianca Flowers Aug 9 (Reuters) - Taiwan's Foxconn 2317.TW, the world's largest contract electronics maker, on Tuesday said it will build driverless electric tractors for California-based Monarch Tractor at its Lordstown, Ohio, facility starting in early 2023. With competition brewing among farm equipment manufacturers to expand product lines in precision agriculture technology and autonomous machinery, Monarch's chief executive, Praveen Penmetsa, told Reuters that the company's business model to target smaller farmers gives them unique opportunity to increase the marketshare while being on the same playing field with bigger manufacturers.
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The agreement with Monarch Tractor is the first manufacturing contract Foxconn, best known for assembling Apple Inc's AAPL.O iPhone, has entered since purchasing the Ohio facility that was formerly a General Motors GM.N Assembly plant last year. The company has since entered into a multi-year licensing agreement with Italian-American vehicle manufacturer CNH Industrial CNH.MI. With competition brewing among farm equipment manufacturers to expand product lines in precision agriculture technology and autonomous machinery, Monarch's chief executive, Praveen Penmetsa, told Reuters that the company's business model to target smaller farmers gives them unique opportunity to increase the marketshare while being on the same playing field with bigger manufacturers.
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19841.0
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2022-08-09 00:00:00 UTC
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Taiwan security officials want Foxconn to drop stake in Chinese chipmaker - FT
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AAPL
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https://www.nasdaq.com/articles/taiwan-security-officials-want-foxconn-to-drop-stake-in-chinese-chipmaker-ft-0
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nan
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nan
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Adds details from FT report, context and background
Aug 10 (Reuters) - Taiwan's national security officials want to persuade Apple Inc's AAPL.O supplier Foxconn 2317.TW to unwind an $800 million investment in Chinese chipmaker Tsinghua Unigroup, the Financial Times reported on Wednesday.
The deal will definitely not go through, the report added, citing a senior Taiwanese government official involved in national security issues. (https://on.ft.com/3A8mzuM)
Taiwan, the world's largest contract electronics maker, has become increasingly cautious about China's ambition to boost its semiconductor sector. It has proposed new laws to prevent what it says is China stealing its chip technology, amid rising concerns in Taipei that Beijing is stepping up its economic espionage.
The island's government prohibits companies from building their most advanced foundries in China to ensure they do not offshore their best technology.
Taiwan faces mounting pressure from China, which considers the democratically governed island its own territory.
Taiwan's cabinet commission has yet to formally review the investments, the FT report on Wednesday quoted an unnamed person who was briefed on the matter as saying, adding that officials from the National Security Council and the Mainland Affairs Council believe the deal needs to be blocked.
Foxconn and Tsinghua Unigroup did not immediately respond to a Reuters request for comment.
It is clear that they have elevated this to the national security level and the prospects are getting dimmed, the FT report cited one person close to the company and added that the deal looks more difficult to pass through with increasing tensions in the Taiwan Strait.
Tensions have escalated in the Taiwan Strait after U.S. House of Representatives Speaker Nancy Pelosi visited the Chinese-claimed self-ruled island last week, a move that China condemned as a threat to peace and stability.
Last month, Foxconn said it was a shareholder in embattled chip conglomerate Tsinghua Unigroup via a $798 million investment by a subsidiary.
(Reporting by Anirudh Saligrama in Bengaluru; Editing by Sherry Jacob-Phillips)
((Anirudh.Saligrama@thomsonreuters.com; @journoanirudh on Twitter;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Adds details from FT report, context and background Aug 10 (Reuters) - Taiwan's national security officials want to persuade Apple Inc's AAPL.O supplier Foxconn 2317.TW to unwind an $800 million investment in Chinese chipmaker Tsinghua Unigroup, the Financial Times reported on Wednesday. It has proposed new laws to prevent what it says is China stealing its chip technology, amid rising concerns in Taipei that Beijing is stepping up its economic espionage. It is clear that they have elevated this to the national security level and the prospects are getting dimmed, the FT report cited one person close to the company and added that the deal looks more difficult to pass through with increasing tensions in the Taiwan Strait.
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Adds details from FT report, context and background Aug 10 (Reuters) - Taiwan's national security officials want to persuade Apple Inc's AAPL.O supplier Foxconn 2317.TW to unwind an $800 million investment in Chinese chipmaker Tsinghua Unigroup, the Financial Times reported on Wednesday. The deal will definitely not go through, the report added, citing a senior Taiwanese government official involved in national security issues. It is clear that they have elevated this to the national security level and the prospects are getting dimmed, the FT report cited one person close to the company and added that the deal looks more difficult to pass through with increasing tensions in the Taiwan Strait.
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Adds details from FT report, context and background Aug 10 (Reuters) - Taiwan's national security officials want to persuade Apple Inc's AAPL.O supplier Foxconn 2317.TW to unwind an $800 million investment in Chinese chipmaker Tsinghua Unigroup, the Financial Times reported on Wednesday. Taiwan's cabinet commission has yet to formally review the investments, the FT report on Wednesday quoted an unnamed person who was briefed on the matter as saying, adding that officials from the National Security Council and the Mainland Affairs Council believe the deal needs to be blocked. It is clear that they have elevated this to the national security level and the prospects are getting dimmed, the FT report cited one person close to the company and added that the deal looks more difficult to pass through with increasing tensions in the Taiwan Strait.
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Adds details from FT report, context and background Aug 10 (Reuters) - Taiwan's national security officials want to persuade Apple Inc's AAPL.O supplier Foxconn 2317.TW to unwind an $800 million investment in Chinese chipmaker Tsinghua Unigroup, the Financial Times reported on Wednesday. The deal will definitely not go through, the report added, citing a senior Taiwanese government official involved in national security issues. Taiwan's cabinet commission has yet to formally review the investments, the FT report on Wednesday quoted an unnamed person who was briefed on the matter as saying, adding that officials from the National Security Council and the Mainland Affairs Council believe the deal needs to be blocked.
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19842.0
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2022-08-09 00:00:00 UTC
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Taiwan security officials want Foxconn to drop stake in Chinese chipmaker - FT
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https://www.nasdaq.com/articles/taiwan-security-officials-want-foxconn-to-drop-stake-in-chinese-chipmaker-ft
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Aug 10 (Reuters) - Taiwan's national security officials want to force Apple Inc's AAPL.O supplier Foxconn 2317.TW to unwind an $800 million investment in Chinese chipmaker Tsinghua Unigroup, Financial Times reported on Wednesday.
The deal will definitely not go through, FT reported, citing a senior Taiwanese government official involved in national security issues. (https://on.ft.com/3A8mzuM)
(Reporting by Anirudh Saligrama in Bengaluru; Editing by Sherry Jacob-Phillips)
((Anirudh.Saligrama@thomsonreuters.com; @journoanirudh on Twitter;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Aug 10 (Reuters) - Taiwan's national security officials want to force Apple Inc's AAPL.O supplier Foxconn 2317.TW to unwind an $800 million investment in Chinese chipmaker Tsinghua Unigroup, Financial Times reported on Wednesday. The deal will definitely not go through, FT reported, citing a senior Taiwanese government official involved in national security issues. (https://on.ft.com/3A8mzuM) (Reporting by Anirudh Saligrama in Bengaluru; Editing by Sherry Jacob-Phillips) ((Anirudh.Saligrama@thomsonreuters.com; @journoanirudh on Twitter;)) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Aug 10 (Reuters) - Taiwan's national security officials want to force Apple Inc's AAPL.O supplier Foxconn 2317.TW to unwind an $800 million investment in Chinese chipmaker Tsinghua Unigroup, Financial Times reported on Wednesday. The deal will definitely not go through, FT reported, citing a senior Taiwanese government official involved in national security issues. (https://on.ft.com/3A8mzuM) (Reporting by Anirudh Saligrama in Bengaluru; Editing by Sherry Jacob-Phillips) ((Anirudh.Saligrama@thomsonreuters.com; @journoanirudh on Twitter;)) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Aug 10 (Reuters) - Taiwan's national security officials want to force Apple Inc's AAPL.O supplier Foxconn 2317.TW to unwind an $800 million investment in Chinese chipmaker Tsinghua Unigroup, Financial Times reported on Wednesday. The deal will definitely not go through, FT reported, citing a senior Taiwanese government official involved in national security issues. (https://on.ft.com/3A8mzuM) (Reporting by Anirudh Saligrama in Bengaluru; Editing by Sherry Jacob-Phillips) ((Anirudh.Saligrama@thomsonreuters.com; @journoanirudh on Twitter;)) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Aug 10 (Reuters) - Taiwan's national security officials want to force Apple Inc's AAPL.O supplier Foxconn 2317.TW to unwind an $800 million investment in Chinese chipmaker Tsinghua Unigroup, Financial Times reported on Wednesday. The deal will definitely not go through, FT reported, citing a senior Taiwanese government official involved in national security issues. (https://on.ft.com/3A8mzuM) (Reporting by Anirudh Saligrama in Bengaluru; Editing by Sherry Jacob-Phillips) ((Anirudh.Saligrama@thomsonreuters.com; @journoanirudh on Twitter;)) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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19843.0
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2022-08-09 00:00:00 UTC
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Foxconn to build autonomous electric tractors at Ohio facility
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AAPL
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https://www.nasdaq.com/articles/foxconn-to-build-autonomous-electric-tractors-at-ohio-facility
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By Bianca Flowers
Aug 9 (Reuters) - Taiwan's Foxconn 2317.TW, the world's largest contract electronics maker, on Tuesday said it will build driverless electric tractors for California-based Monarch Tractor at its Lordstown, Ohio facility starting in early 2023.
The announcement comes as heavy machinery manufacturers, including Deere & Co. DE.N and Georgia-based AGCO AGCO.N, set their sights on the electric vehicle market as the U.S. agriculture industry shifts to smart farming.
"This partnership reflects Foxconn's growing center of gravity for autonomous electric vehicle production and the potential that can emerge from forward-thinking collaborations," Young Liu, chairman of Hon Hai Technology Group, as Foxconn is formally known, said in a statement.
The agreement with Monarch Tractor is the first manufacturing contract Foxconn, best known for assembling Apple Inc's AAPL.O iPhone, has entered since purchasing the Ohio facility that was formerly a General Motors GM.N Assembly plant last year.
Production for Monarch's battery powered MK-V series tractor is scheduled to begin in the first quarter of 2023, Foxconn said.
Monarch, which is based in Silicon Valley, debuted its first autonomous electric tractor last year and has since entered into a multi-year licensing agreement with Italian-American vehicle manufacturer CNH Industrial CNH.MI.
CNH Industrial has a minority stake in Monarch Tractor.
(Reporting by Bianca Flowers in Chicago; Editing by Jan Harvey)
((Bianca.Flowers@thomsonreuters.com;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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The agreement with Monarch Tractor is the first manufacturing contract Foxconn, best known for assembling Apple Inc's AAPL.O iPhone, has entered since purchasing the Ohio facility that was formerly a General Motors GM.N Assembly plant last year. The announcement comes as heavy machinery manufacturers, including Deere & Co. DE.N and Georgia-based AGCO AGCO.N, set their sights on the electric vehicle market as the U.S. agriculture industry shifts to smart farming. Production for Monarch's battery powered MK-V series tractor is scheduled to begin in the first quarter of 2023, Foxconn said.
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The agreement with Monarch Tractor is the first manufacturing contract Foxconn, best known for assembling Apple Inc's AAPL.O iPhone, has entered since purchasing the Ohio facility that was formerly a General Motors GM.N Assembly plant last year. "This partnership reflects Foxconn's growing center of gravity for autonomous electric vehicle production and the potential that can emerge from forward-thinking collaborations," Young Liu, chairman of Hon Hai Technology Group, as Foxconn is formally known, said in a statement. Monarch, which is based in Silicon Valley, debuted its first autonomous electric tractor last year and has since entered into a multi-year licensing agreement with Italian-American vehicle manufacturer CNH Industrial CNH.MI.
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The agreement with Monarch Tractor is the first manufacturing contract Foxconn, best known for assembling Apple Inc's AAPL.O iPhone, has entered since purchasing the Ohio facility that was formerly a General Motors GM.N Assembly plant last year. By Bianca Flowers Aug 9 (Reuters) - Taiwan's Foxconn 2317.TW, the world's largest contract electronics maker, on Tuesday said it will build driverless electric tractors for California-based Monarch Tractor at its Lordstown, Ohio facility starting in early 2023. Monarch, which is based in Silicon Valley, debuted its first autonomous electric tractor last year and has since entered into a multi-year licensing agreement with Italian-American vehicle manufacturer CNH Industrial CNH.MI.
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The agreement with Monarch Tractor is the first manufacturing contract Foxconn, best known for assembling Apple Inc's AAPL.O iPhone, has entered since purchasing the Ohio facility that was formerly a General Motors GM.N Assembly plant last year. The announcement comes as heavy machinery manufacturers, including Deere & Co. DE.N and Georgia-based AGCO AGCO.N, set their sights on the electric vehicle market as the U.S. agriculture industry shifts to smart farming. Monarch, which is based in Silicon Valley, debuted its first autonomous electric tractor last year and has since entered into a multi-year licensing agreement with Italian-American vehicle manufacturer CNH Industrial CNH.MI.
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19844.0
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2022-08-09 00:00:00 UTC
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S.Korea to probe app store operators over suspected in-app payment violations
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AAPL
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https://www.nasdaq.com/articles/s.korea-to-probe-app-store-operators-over-suspected-in-app-payment-violations-0
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Adds companies not being available for comment in para 5
SEOUL, Aug 9 (Reuters) - South Korea's telecommunications regulator on Tuesday said it plans to launch an investigation into app store operators such as Apple Inc AAPL.O, Alphabet's GOOG.O Google and One Store over suspected violations of in-app payment law.
Last year, South Korea passed the law, an amendment to the Telecommunications Business Act, which bans major app store operators such as Google and Apple from forcing software developers to use their payment systems.
The rules have been in effect since March.
The Korea Communications Commissions said in a statement it had conducted an inspection since May 17 to determine whether Google, Apple and One Store had violated the revised Telecommunications Business Act. It determined that all three app operators might have violated the rules.
Google, Apple and One Store were not immediately available for comment when contacted by Reuters.
The KCC added that it plans to take strict measures such as correction orders or imposing fines if the probe finds barred activities.
Barred acts include app market operators unfairly delaying the review of mobile content, or refusing, delaying, restricting, deleting, or blocking the registration, renewal, or inspection of mobile content that uses third-party payment methods.
Potential fines for infractions will go as high as 2% of the average annual revenue from related business practices, the rules say.
(Reporting by Heekyong Yang; Editing by David Holmes and Louise Heavens)
((Heekyong.Yang@thomsonreuters.com;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Adds companies not being available for comment in para 5 SEOUL, Aug 9 (Reuters) - South Korea's telecommunications regulator on Tuesday said it plans to launch an investigation into app store operators such as Apple Inc AAPL.O, Alphabet's GOOG.O Google and One Store over suspected violations of in-app payment law. Last year, South Korea passed the law, an amendment to the Telecommunications Business Act, which bans major app store operators such as Google and Apple from forcing software developers to use their payment systems. The Korea Communications Commissions said in a statement it had conducted an inspection since May 17 to determine whether Google, Apple and One Store had violated the revised Telecommunications Business Act.
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Adds companies not being available for comment in para 5 SEOUL, Aug 9 (Reuters) - South Korea's telecommunications regulator on Tuesday said it plans to launch an investigation into app store operators such as Apple Inc AAPL.O, Alphabet's GOOG.O Google and One Store over suspected violations of in-app payment law. Last year, South Korea passed the law, an amendment to the Telecommunications Business Act, which bans major app store operators such as Google and Apple from forcing software developers to use their payment systems. The Korea Communications Commissions said in a statement it had conducted an inspection since May 17 to determine whether Google, Apple and One Store had violated the revised Telecommunications Business Act.
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Adds companies not being available for comment in para 5 SEOUL, Aug 9 (Reuters) - South Korea's telecommunications regulator on Tuesday said it plans to launch an investigation into app store operators such as Apple Inc AAPL.O, Alphabet's GOOG.O Google and One Store over suspected violations of in-app payment law. Last year, South Korea passed the law, an amendment to the Telecommunications Business Act, which bans major app store operators such as Google and Apple from forcing software developers to use their payment systems. The Korea Communications Commissions said in a statement it had conducted an inspection since May 17 to determine whether Google, Apple and One Store had violated the revised Telecommunications Business Act.
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Adds companies not being available for comment in para 5 SEOUL, Aug 9 (Reuters) - South Korea's telecommunications regulator on Tuesday said it plans to launch an investigation into app store operators such as Apple Inc AAPL.O, Alphabet's GOOG.O Google and One Store over suspected violations of in-app payment law. The Korea Communications Commissions said in a statement it had conducted an inspection since May 17 to determine whether Google, Apple and One Store had violated the revised Telecommunications Business Act. It determined that all three app operators might have violated the rules.
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19845.0
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2022-08-09 00:00:00 UTC
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Meta raises $10 billion in first-ever bond offering
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AAPL
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https://www.nasdaq.com/articles/meta-raises-%2410-billion-in-first-ever-bond-offering
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nan
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Aug 9 (Reuters) - Facebook-parent Meta Platforms Inc META.O said on Tuesday it had raised $10 billion in its first-ever bond offering, as it looks to fund share buybacks and investments to revamp its business.
The offering would help Meta, the only one among big technology companies without debt on its books, to build a more traditional balance sheet and fund some expensive initiatives, such as its metaverse virtual reality.
Other tech giants such as Apple Inc AAPL.O and Intel Corp INTC.O also issued bonds recently, raising $5.5 billion and $6 billion, respectively.
In late July, Meta posted a gloomy forecast and recorded its first-ever quarterly drop in revenue, with recession fears and competitive pressures weighing on its digital ads sales.
(Reporting by Tiyashi Datta in Bengaluru; Editing by Krishna Chandra Eluri)
((tiyashi.datta@thomsonreuters.com;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Other tech giants such as Apple Inc AAPL.O and Intel Corp INTC.O also issued bonds recently, raising $5.5 billion and $6 billion, respectively. Aug 9 (Reuters) - Facebook-parent Meta Platforms Inc META.O said on Tuesday it had raised $10 billion in its first-ever bond offering, as it looks to fund share buybacks and investments to revamp its business. The offering would help Meta, the only one among big technology companies without debt on its books, to build a more traditional balance sheet and fund some expensive initiatives, such as its metaverse virtual reality.
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Other tech giants such as Apple Inc AAPL.O and Intel Corp INTC.O also issued bonds recently, raising $5.5 billion and $6 billion, respectively. Aug 9 (Reuters) - Facebook-parent Meta Platforms Inc META.O said on Tuesday it had raised $10 billion in its first-ever bond offering, as it looks to fund share buybacks and investments to revamp its business. (Reporting by Tiyashi Datta in Bengaluru; Editing by Krishna Chandra Eluri) ((tiyashi.datta@thomsonreuters.com;)) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Other tech giants such as Apple Inc AAPL.O and Intel Corp INTC.O also issued bonds recently, raising $5.5 billion and $6 billion, respectively. Aug 9 (Reuters) - Facebook-parent Meta Platforms Inc META.O said on Tuesday it had raised $10 billion in its first-ever bond offering, as it looks to fund share buybacks and investments to revamp its business. In late July, Meta posted a gloomy forecast and recorded its first-ever quarterly drop in revenue, with recession fears and competitive pressures weighing on its digital ads sales.
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Other tech giants such as Apple Inc AAPL.O and Intel Corp INTC.O also issued bonds recently, raising $5.5 billion and $6 billion, respectively. Aug 9 (Reuters) - Facebook-parent Meta Platforms Inc META.O said on Tuesday it had raised $10 billion in its first-ever bond offering, as it looks to fund share buybacks and investments to revamp its business. The offering would help Meta, the only one among big technology companies without debt on its books, to build a more traditional balance sheet and fund some expensive initiatives, such as its metaverse virtual reality.
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19846.0
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2022-08-09 00:00:00 UTC
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Did You Miss What Microsoft Had to Say?
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https://www.nasdaq.com/articles/did-you-miss-what-microsoft-had-to-say
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In this podcast, Motley Fool analyst Bill Mann discusses:
Microsoft (NASDAQ: MSFT) having tough comps, with the cloud division shining once again.
Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) proving its resilience.
Chipotle (NYSE: CMG) continuing to raise prices and profits.
Motley Fool producer Ricky Mulvey talks with Motley Fool research analyst Jack Caporal about The Motley Fool's latest research into crypto scams and how you can avoid them.
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.
10 stocks we like better than Microsoft
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This video was recorded on July 27, 2022.
Chris Hill: Big tech bounces back and not a moment too soon. Motley Fool Money starts now. I'm Chris Hill joined by Motley Fool's Senior Analyst, Bill Mann. Thanks for being here.
Bill Mann: Hey Chris, how're you?
Chris Hill: There's green in the market, so I'm doing better than I was yesterday.
Bill Mann: Also still nice to see you in the studio.
Chris Hill: Yes.
Bill Mann: This is happening, isn't it?
Chris Hill: It is actually happening. Let's start with Microsoft because Microsoft's fourth-quarter revenue came in just shy of $52 billion. Not as high as Wall Street wanted. It was the slowest revenue growth in two years. However, the Cloud growth for Microsoft looked pretty strong, their guidance was upbeat. They basically reiterated the guidance they put out three months ago for the new fiscal year. So guidance tramps results, right?
Bill Mann: Well, kind of. I think some of this has to do with the fact, and we're going to talk about another company that this fits also, that Microsoft's, the news that they came out with even though they missed. We don't care that much about analysts' estimates whether they hit or miss, but it does in fact impact the stock. 2021 turns out to have been really hard comps for a lot of companies. Particularly because people were still inside. We were all pretty nervous, and we solved that by shopping. Microsoft's results, not only were they great, they were bonkers in certain ways. Five years ago, Microsoft's total revenues were $97 billion.
Chris Hill: For the entire fiscal year?
Bill Mann: Yeah. Now, for the quarter, if you take the quarter just for Cloud and put it on a run rate, which basically means you take the number, multiply it by four, it's $100 billion. They're making more in Cloud than they made in everything five years ago. Once again, we're talking about Microsoft, which five years ago was 12 years removed from the antitrust lawsuits in the US and Europe. This company is absolutely positively massive. Maybe that's not a great insight, but it is growing rather quickly in areas that really didn't exist as revenue streams for it even a couple of years ago.
Chris Hill: When the larger conversation around the economy, the potential for a recession, inflation, all of those things continues to take place, what should we take from Microsoft maintaining their guidance of three months ago? For they're looking out over the next 12 months and saying, yes, everything we believed three months ago, factoring, inflation, rate hikes, increased talk of recession, we're still of the same mindset in terms of what we see for this business. What should we take from that?
Bill Mann: I think it's important for companies, in terms of operators, to recognize that this may have been the hardest operating environment that companies have ever operated. Certainly in the last 50 years, given the fact that it seemed like the economy around the world was coming to a grinding halt in 2020. For better or for worse, our central banks around the world responded to that, which meant that they responded by making sure that growth came as quickly as possible. We were worried about deflation. Now we're worried about inflation is here. I think with a lot of companies, particularly ones that are huge like Microsoft, you have to keep in mind when you see a company that's operating in the way that they have, the environment that we're operating in is absolutely unprecedented.
Chris Hill: Let's move on to Alphabet. On last Friday's show, Jason Moser and Matt Argersinger and I were talking about the mindset going into this earning season. I'm paraphrasing what Matt said, but he basically said, "I feel like the message from Wall Street is just don't disappoint us too much."
Bill Mann: That's right. [laughs]. It's OK. That's right.
Chris Hill: Just don't disappoint us too much. I feel like that's what Alphabet has done with second-quarter profits and revenue coming in lower than expected. It's really across the board. It's their mainstay business, it's YouTube. But shares up four or five percent because essentially this is Alphabet saying, hey, we're not Snap.
Bill Mann: Yes, that's right again.
Chris Hill: Had last week with Snap, we're not them.
Bill Mann: That's on them, pal. That's on them, that's not on us. There's something really important to keep in mind when you're talking about Google, and you're talking about their results. Obviously, it was 16 percent growth in constant currency. But I don't know if you've heard about this, Chris, but the US dollar is up against almost every currency in the world a lot. If you take that currency factor out of the equation, they really did well. Importantly, their revenues for advertising, which is the area that blues snap out of the water because their revenues went down so much. Beat expectations at $56.3 versus 56.1, which you do that math backwards, that means they beat by $200 billion. This is a great business, and it is showing that in a very difficult environment and the companies that compete with it that are lower-quality are suffering in a way that Google or Alphabet is not.
Chris Hill: When Alphabet CEO, Sundar Pichai, talks about, as he did on the call, about this is a time where they are going to be focusing more, they're going to be looking more intensely at all of their business units, do you read anything into that with respect to the parts of Alphabet's business that doesn't really make much money? If you're part of the other bets division, are you nervous when you hear that or do you think, no this is just a little bit of extra focus and a little bit of extra color from the CEO?
Bill Mann: No, I think one of the things that's really important is that Alphabet came out a couple of weeks ago and said that they were pulling back on hiring basically. Their employee headcount quarter-over-quarter, going through the second quarter of 2022 was 10,000 additional employees. If you do the math backwards a little bit, there's about $300,000 in expenses per new employee per year. If you just ratchet that back, and this is not an entirely fair way to think about, it, but it's not a bad way to think about it, that's about six billion dollars in additional free cash flow that may fall to the bottom line. Alphabet hasn't said that they're cutting anywhere. They're simply removing some of the bets that weren't working out, they're simply ramping back a little bit in terms of hiring. I wouldn't be nervous at all if I was anywhere within that big weighted blanket that is Alphabet.
Chris Hill: Chipotle second-quarter revenue was a little lower than expected, but their profits were strong because amazingly, Chipotle continues to raise prices and it continues to work. When I saw this, I thought back to earlier this year when they were talking about how they had been raising prices up to that point. Brian Niccol, the CEO, saying, yeah we're going to continue to do this. I think I may have said on this show, this is going to be interesting to watch because I'm not sure how much higher they can go. Clearly they can go higher and it's working. The stock is up 15 percent, Bill.
Bill Mann: There was an amazing number in this report, and it is this, Chipotle's food cost as a percentage of sales dropped despite inflation, which just shows how much power they have had to go to their board and raise prices, and they've stuck. Now, at some point, they're going to come up on a natural limit. But the fact is they weren't raising prices at least 100 percent as a response to inflation, they were raising prices because they felt like they had capacity to go to the board and increase that way.
Chris Hill: I'm going to make the mistake of comparing Chipotle, which is a business that makes burritos to Apple, [laughs] which is a business that makes iPhone.
Bill Mann: One of which has a name like a food. It fits.
Chris Hill: But in the earlier days, you go back a decade, people would ask and it was a reasonable question at the time. Can Apple continue to do this? Can they continue to keep because the law of pricing when it came to consumer technology for the longest time was prices come down over time. Flat-screen TVs which used to cost a $1,000 now cost just a couple of $100. How much longer can Chipotle keep this up? Because if you'd asked me earlier this year, are they going to be able to do this in the summer? I would have bet no, and I would have been wrong.
Bill Mann: Our friend from Technomic, David Henkes made a really interesting point about Chipotle's earnings. It was observational versus anything else. It was that Chipotle is on a list of other businesses that are struggling with their in-store experience because of the lack of labor availability. I think if there is a risk for Chipotle, like being able to keep doing it, it's because they are, and it maybe it's not their fault because labor has been really tight, that they do have some labor costs that I think are latent at this point that fully staffed storage would, in fact, will increase that cost in a way that's not being measured now.
Chris Hill: Great point. Bill Mann, always great talking to you. Thanks for being here.
Bill Mann: Thank you, Chris. ...
Chris Hill: The cryptocurrency market may be crashing, but we are trending toward a record year for crypto scams. Ricky Mulvey caught up with Jack Caporal to talk about The Motley Fool's latest research on investment fraud and how you can avoid these scams.
Ricky Mulvey: 2022 will be a record year for investment fraud, and a lot of that money is going to come from cryptocurrencies joining us to talk about investment fraud and The Motley Fools' research on crypto scams is Jack Caporal analysts for the Ascent. Thanks for being here, Jack.
Jack Caporal: Thanks for having me.
Ricky Mulvey: What did you learn? What did you guys research on crypto and investment scams, what did you find out?
Jack Caporal: We used the combination of data from the FTC and survey data that we collected. As you said, we found out that 2022 is going to be a record year for losses both in terms of investment scams and then crypto scams in particular, most of which are a subset of investment scams and the numbers are pretty mind-boggling, especially in relation to the past five years. In the first quarter of 2022 alone, we're looking at a total of $672 million in losses from investment scams. 2017 for the entire year, there were $50 million lost and investment scams. In the first quarter of 2022, loan losses have already totalled more than a third of the total losses in 2021. In a quarter, you've done a third of all of the losses last year.
Ricky Mulvey: Quarters do it a third. That's way too much math for my head, Jack.
Jack Caporal: Basically, we're on track to potentially be like have 50 percent more losses from investments scams overall this year compared to last year. We're probably looking at a range of maybe two billion in losses reported. That's definitely an undercount. Our survey shows that not everybody reports losses. Then in terms of crypto fraud alone, 2021 there's about $680 million reported loss as a result of crypto fraud. We're going to smash through that this year in the first-quarter of 2022, there have been $329 million reported lost nearly half in a quarter.
Ricky Mulvey: I want to clarify something. You said 2018, there's about $12 million lost in investment fraud that was cryptocurrency fraud in 2018 where 12 million was lost. That's investment fraud has been around for a very long time. We're just now seeing a new flavour of it. What are these cryptocurrency scams looking like?
Jack Caporal: Crypto scams are just a new type of wrinkle in old scams. Instead of being contacted by phone or online, text message about some great investment opportunity or an investment manager that can take your money and guarantee you a 25 percent return in six months. They're just saying we can do that but with crypto. We're like a crypto fund manager. Or you'll see it as a play on a romance scam where you'll be tricked into online relationship and your alleged partner will say, hey, I've got a great investment opportunity, it's in crypto. Says how you can send me some crypto. Obviously, the victim never gets that money back. We're seeing scams of old use crypto as an investment opportunity and also as a method of payment or transaction.
Ricky Mulvey: It's just, it's like a little cayenne pepper into an old recipe where you got essentially that the classic romance scam, which is someone essentially what catfishing is someone else than saying, hey, I need money for X, Y, Z or hey, here's a cool, which by the way, I am shocked that these romance scam partners are not just shutting down the conversation once they start hearing about crypto. That doesn't seem like a good lead-in if you were trying to meet people online.
Jack Caporal: The way that I think about the romance scam thing in particular and also the investments scams where my experience, I'll get like a WhatsApp from a random number and they'll be like, hey, I'm a Bitcoin fund manager, click on this link and you can send I'll set you up with these crazy returns. The way I think about it is there are very few people in my life that I would be comfortable sending a significant amount of money to manage. Right. If I don't know you in-person and haven't known you for a very long time and trust you, there's like a zero percent chance I'm going to send you any money, any crypto, whatever. It's a huge red flag. If you get that type of message, you should really think twice before you send money or crypto to someone, to some number who you've never met in-person, or you just know online.
Ricky Mulvey: One interesting part of your research as you looked specifically at how much money people are losing on all these types of scams. I thought it was interesting that the investment fraudsters are netting an average of 575 bucks per scam. Meanwhile, the government impostors, I assume those are the folks calling me with information about my social security benefit, are only netting $40. What are the investment fraudsters doing right? It seems like that's a very little amount of money to get from a scam.
Jack Caporal: I think there are probably two things going on there. First is it's more attractive to send money or crypto to someone who says we can double that versus you owe me money. They're going to drag your feet on the person who says you owe me x amount of money or you need to pay this amount to get your social security unlocked or whatever, but the reward is enticing. The investment opportunity is enticing. Then second, this is another just like gut feeling. There are pretty hefty legal ramifications for impersonating government officials, and I think that type of risk probably makes that type of scam less attractive. It's much riskier proposition to impersonate a government official than it is to say I'm an alleged investment fund manager.
Ricky Mulvey: What's social media's role in the rise of these crypto scams? It does seem like I'm seeing a lot of those account takeovers on someone's Instagram where surprise now they're showing a crypto, but actually it's a hacker who got into their account and now they're running a scam.
Jack Caporal: Yeah. The data on this is pretty wild. In 2018, 11 percent of scams that use crypto as a payment method started on social media. More recently, that number has jumped up to nearly 50 percent. Scammers operating in the crypto space are leaning heavily on social media, and it's working. I think it's working for a couple of reasons. First is there's an insane amount of personal information that people put on social media that scammers can use to personalize scams or target certain individuals that they think are more likely to fall for the scam. It's way easier to gather information on potential targets over social media. Then second, I think there's so much FOMO originates from social media. You see folks who have allegedly made big gains on crypto over the past few years, and social media, you're just one or two DMs away from trying to get in on that game. It makes sense that see these big success stories, you're already on social media. Someone reaches out to you through social media. It's all in the same space.
Ricky Mulvey: To your point about the success stories, that was the story for maybe the past couple of years. Right now, the crypto market is down precipitously. Yet, according to your research, scams are still going to skyrocket. What do you think gives there where you have this very down market? You would think there's less interest in crypto and yet scams are going to skyrocket this year.
Jack Caporal: Yeah. I think it's two things. I think there's still quite a bit of that FOMO that I was talking about. 2020, the latter half, and 2021 were pretty insane unprecedented runs, especially for the crypto market. I think people still want to get it on that. If you're like a real believer in crypto, the thought is that it's going to go back up eventually and this is just a period where there's a downturn, but the true believers still think that it's going to go to the moon and all that. Then second, I don't know how much the average scam victim is taking into consideration the longer-term downturn trend. I think if someone approaches to you and they say, send us some crypto, we can manage it, I get you 25 percent in two months. That sounds pretty good. It might even sound better given that the crypto market is in a downturn. The idea of just making a quick buck is so attractive and history shows that it could be possible, so why not give it a shot.
Ricky Mulvey: One of the things you've found is that the average age or the most likely age to get caught by a crypto scam was 30-39. I thought that was particularly interesting. That it's millennials, especially getting hit with these people who you would think are more Internet savvy. For someone listening right now, you might think you're too good to get scammed, but it's always good to know the common signs. What are some of the common signs you would say of a crypto scam getting thrown at you?
Jack Caporal: Yeah. I mean, for any scam that's investment-related, if the opportunity seems too good to be true, it's usually a scam. No one can guarantee you outrageous returns over an extremely short period of time. It's just not going to happen. Do your own research. At The Fool, we said don't invest in something if you don't understand it or haven't heard of it. If you're approached by someone who's hocking token that's new to you, just throw that token in Google with scam or review or complaint next to it, and if it is a scam, it'll be very clear. Then if you're approached about investment opportunity that requires you to pay by crypto, by wire transfer, or by gift card, that's definitely a scam. Those three methods of payment once you've sent the money is extremely difficult, if not impossible, to get it back, and that's the reason why those are the most common forms of transactions in scams.
Ricky Mulvey: Full disclosure. I own a little bit of Solana on a little bit of Ethereum. Has your research on crypto scams affected the way you invest and do you invest in any cryptocurrencies personally?
Jack Caporal: I don't own any crypto. I wouldn't say that my research hasn't affected my thought process behind investing in crypto. Doesn't fit my risk profile, and I'd like to see more regulation in the space on par with how traditional equities are regulated. The research for me is just crystallized that this is a space where more education is needed. I think 47 percent of the folks that we surveyed said that financial institutions in the government and have done a poor or very poor job educating them about investment on crypto scams, and it's unfortunate because the amount of money that's being lost by just average Americans of all ages is really mind-boggling.
Ricky Mulvey: But not everybody. In separate research, you guys found that 62 percent of high net worth crypto owners say they're actually more interested in investigate cryptocurrency because of high-profile scams, something you did back in November, and that's a conversation for another time. Hey Jack Caporal, he's an Analyst for The Ascent to The Motley Fool, appreciate your time.
Jack Caporal: Thanks for having me.
Chris Hill: As always, people on the program may have interest in the stocks they talk about and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. I'm Chris Hill, thanks for listening. We'll see you tomorrow.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Bill Mann has positions in Alphabet (C shares). Chris Hill has positions in Alphabet (A shares), Alphabet (C shares), Apple, Chipotle Mexican Grill, and Microsoft. Jack Caporal has positions in Apple and Microsoft. Ricky Mulvey has positions in Ethereum and Solana. The Motley Fool has positions in and recommends Alphabet (A shares), Alphabet (C shares), Apple, Bitcoin, Chipotle Mexican Grill, Ethereum, Microsoft, and Solana. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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In this podcast, Motley Fool analyst Bill Mann discusses: Microsoft (NASDAQ: MSFT) having tough comps, with the cloud division shining once again. Bill Mann: There was an amazing number in this report, and it is this, Chipotle's food cost as a percentage of sales dropped despite inflation, which just shows how much power they have had to go to their board and raise prices, and they've stuck. In separate research, you guys found that 62 percent of high net worth crypto owners say they're actually more interested in investigate cryptocurrency because of high-profile scams, something you did back in November, and that's a conversation for another time.
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Motley Fool producer Ricky Mulvey talks with Motley Fool research analyst Jack Caporal about The Motley Fool's latest research into crypto scams and how you can avoid them. Ricky Mulvey: 2022 will be a record year for investment fraud, and a lot of that money is going to come from cryptocurrencies joining us to talk about investment fraud and The Motley Fools' research on crypto scams is Jack Caporal analysts for the Ascent. The Motley Fool has positions in and recommends Alphabet (A shares), Alphabet (C shares), Apple, Bitcoin, Chipotle Mexican Grill, Ethereum, Microsoft, and Solana.
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Motley Fool producer Ricky Mulvey talks with Motley Fool research analyst Jack Caporal about The Motley Fool's latest research into crypto scams and how you can avoid them. Ricky Mulvey: 2022 will be a record year for investment fraud, and a lot of that money is going to come from cryptocurrencies joining us to talk about investment fraud and The Motley Fools' research on crypto scams is Jack Caporal analysts for the Ascent. As you said, we found out that 2022 is going to be a record year for losses both in terms of investment scams and then crypto scams in particular, most of which are a subset of investment scams and the numbers are pretty mind-boggling, especially in relation to the past five years.
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Motley Fool producer Ricky Mulvey talks with Motley Fool research analyst Jack Caporal about The Motley Fool's latest research into crypto scams and how you can avoid them. Ricky Mulvey caught up with Jack Caporal to talk about The Motley Fool's latest research on investment fraud and how you can avoid these scams. Ricky Mulvey: 2022 will be a record year for investment fraud, and a lot of that money is going to come from cryptocurrencies joining us to talk about investment fraud and The Motley Fools' research on crypto scams is Jack Caporal analysts for the Ascent.
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19847.0
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2022-08-09 00:00:00 UTC
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S.Korea to probe app store operators over suspected in-app payment violations
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AAPL
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https://www.nasdaq.com/articles/s.korea-to-probe-app-store-operators-over-suspected-in-app-payment-violations
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SEOUL, Aug 9 (Reuters) - South Korea's telecommunications regulator on Tuesday said it plans to launch an investigation into app store operators such as Apple Inc AAPL.O, Alphabet's GOOG.O Google and One Store over suspected violations of in-app payment law.
Last year, South Korea passed the law, an amendment to the Telecommunications Business Act, which bans major app store operators such as Google and Apple from forcing software developers to use their payment systems.
The rules have been in effect since March.
The Korea Communications Commissions said in a statement it had conducted an inspection since May 17 to determine whether Google, Apple and One Store had violated the revised Telecommunications Business Act. It determined that all three app operators might have violated the rules.
The KCC added that it plans to take strict measures such as correction orders or imposing fines if the probe finds barred activities.
Barred acts include app market operators unfairly delaying the review of mobile content, or refusing, delaying, restricting, deleting, or blocking the registration, renewal, or inspection of mobile content that uses third-party payment methods.
Potential fines for infractions will go as high as 2% of the average annual revenue from related business practices, the rules say.
(Reporting by Heekyong Yang; Editing by David Holmes)
((Heekyong.Yang@thomsonreuters.com;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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SEOUL, Aug 9 (Reuters) - South Korea's telecommunications regulator on Tuesday said it plans to launch an investigation into app store operators such as Apple Inc AAPL.O, Alphabet's GOOG.O Google and One Store over suspected violations of in-app payment law. Last year, South Korea passed the law, an amendment to the Telecommunications Business Act, which bans major app store operators such as Google and Apple from forcing software developers to use their payment systems. The Korea Communications Commissions said in a statement it had conducted an inspection since May 17 to determine whether Google, Apple and One Store had violated the revised Telecommunications Business Act.
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SEOUL, Aug 9 (Reuters) - South Korea's telecommunications regulator on Tuesday said it plans to launch an investigation into app store operators such as Apple Inc AAPL.O, Alphabet's GOOG.O Google and One Store over suspected violations of in-app payment law. Last year, South Korea passed the law, an amendment to the Telecommunications Business Act, which bans major app store operators such as Google and Apple from forcing software developers to use their payment systems. The Korea Communications Commissions said in a statement it had conducted an inspection since May 17 to determine whether Google, Apple and One Store had violated the revised Telecommunications Business Act.
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SEOUL, Aug 9 (Reuters) - South Korea's telecommunications regulator on Tuesday said it plans to launch an investigation into app store operators such as Apple Inc AAPL.O, Alphabet's GOOG.O Google and One Store over suspected violations of in-app payment law. Last year, South Korea passed the law, an amendment to the Telecommunications Business Act, which bans major app store operators such as Google and Apple from forcing software developers to use their payment systems. Barred acts include app market operators unfairly delaying the review of mobile content, or refusing, delaying, restricting, deleting, or blocking the registration, renewal, or inspection of mobile content that uses third-party payment methods.
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SEOUL, Aug 9 (Reuters) - South Korea's telecommunications regulator on Tuesday said it plans to launch an investigation into app store operators such as Apple Inc AAPL.O, Alphabet's GOOG.O Google and One Store over suspected violations of in-app payment law. The Korea Communications Commissions said in a statement it had conducted an inspection since May 17 to determine whether Google, Apple and One Store had violated the revised Telecommunications Business Act. It determined that all three app operators might have violated the rules.
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19848.0
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2022-08-09 00:00:00 UTC
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Pre-Market Most Active for Aug 9, 2022 : NLSN, VRNA, BBBY, SQQQ, TQQQ, AMC, AAPL, GDRX, CCL, PLTR, AMTD, NCLH
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AAPL
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https://www.nasdaq.com/articles/pre-market-most-active-for-aug-9-2022-%3A-nlsn-vrna-bbby-sqqq-tqqq-amc-aapl-gdrx-ccl-pltr
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The NASDAQ 100 Pre-Market Indicator is down -87.75 to 13,071.41. The total Pre-Market volume is currently 51,945,890 shares traded.
The following are the most active stocks for the pre-market session:
Nielsen N.V. (NLSN) is +4.81 at $27.52, with 8,542,684 shares traded. NLSN's current last sale is 98.29% of the target price of $28.
Verona Pharma plc (VRNA) is +5.16 at $12.11, with 6,155,440 shares traded.VRNA is scheduled to provide an earnings report on 8/15/2022, for the fiscal quarter ending Jun2022. The consensus earnings per share forecast is -0.35 per share, which represents a -56 percent increase over the EPS one Year Ago
Bed Bath & Beyond Inc. (BBBY) is -0.11 at $11.30, with 4,405,921 shares traded. BBBY's current last sale is 282.5% of the target price of $4.
ProShares UltraPro Short QQQ (SQQQ) is +0.69 at $38.44, with 3,158,931 shares traded. This represents a 36.55% increase from its 52 Week Low.
ProShares UltraPro QQQ (TQQQ) is -0.63 at $34.30, with 2,770,546 shares traded. This represents a 60.88% increase from its 52 Week Low.
AMC Entertainment Holdings, Inc. (AMC) is -0.66 at $23.30, with 1,957,208 shares traded. Over the last four weeks they have had 3 up revisions for the earnings forecast, for the fiscal quarter ending Mar 2023. The consensus EPS forecast is $-0.19. AMC's current last sale is 466% of the target price of $5.
Apple Inc. (AAPL) is -1.0256 at $163.84, with 1,524,931 shares traded. Over the last four weeks they have had 5 up revisions for the earnings forecast, for the fiscal quarter ending Jun 2023. The consensus EPS forecast is $1.36. As reported by Zacks, the current mean recommendation for AAPL is in the "buy range".
GoodRx Holdings, Inc. (GDRX) is +2.06 at $9.82, with 1,316,259 shares traded. As reported in the last short interest update the days to cover for GDRX is 14.326451; this calculation is based on the average trading volume of the stock.
Carnival Corporation (CCL) is -0.32 at $9.69, with 1,297,853 shares traded. CCL's current last sale is 71.78% of the target price of $13.5.
Palantir Technologies Inc. (PLTR) is -0.16 at $9.66, with 954,268 shares traded. PLTR's current last sale is 74.31% of the target price of $13.
AMTD IDEA Group (AMTD) is +0.17 at $3.15, with 894,032 shares traded.
Norwegian Cruise Line Holdings Ltd. (NCLH) is -1.09 at $12.44, with 837,160 shares traded. NCLH's current last sale is 62.2% of the target price of $20.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Apple Inc. (AAPL) is -1.0256 at $163.84, with 1,524,931 shares traded. As reported by Zacks, the current mean recommendation for AAPL is in the "buy range". Verona Pharma plc (VRNA) is +5.16 at $12.11, with 6,155,440 shares traded.VRNA is scheduled to provide an earnings report on 8/15/2022, for the fiscal quarter ending Jun2022.
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Apple Inc. (AAPL) is -1.0256 at $163.84, with 1,524,931 shares traded. As reported by Zacks, the current mean recommendation for AAPL is in the "buy range". The total Pre-Market volume is currently 51,945,890 shares traded.
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Apple Inc. (AAPL) is -1.0256 at $163.84, with 1,524,931 shares traded. As reported by Zacks, the current mean recommendation for AAPL is in the "buy range". The total Pre-Market volume is currently 51,945,890 shares traded.
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Apple Inc. (AAPL) is -1.0256 at $163.84, with 1,524,931 shares traded. As reported by Zacks, the current mean recommendation for AAPL is in the "buy range". NLSN's current last sale is 98.29% of the target price of $28.
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19849.0
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2022-08-09 00:00:00 UTC
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The Off-the-Radar Stock Warren Buffett Has Bought $62 Billion of in 4 Years
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AAPL
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https://www.nasdaq.com/articles/the-off-the-radar-stock-warren-buffett-has-bought-%2462-billion-of-in-4-years
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When Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) CEO Warren Buffett makes a move, Wall Street wisely pays attention. That's because in his more than 57 years at the helm of Berkshire Hathaway, he's led his company's Class A shares (BRK.A) to a greater than 3,600,000% return and outperformed the benchmark S&P 500 by a factor of well over 100.
The great thing about riding the Oracle of Omaha's coattails is that it can be done with ease. Money managers with more than $100 million in assets under management are required to file Form 13F with the Securities and Exchange Commission (SEC) on a quarterly basis. A 13F is effectively an under-the-hood look at what the brightest money managers have been buying, selling, and holding in the most recently ended quarter. Berkshire Hathaway should be filing its 13F with the SEC after the market closes next Monday, Aug. 15, 2022.
Berkshire Hathaway CEO Warren Buffett. Image source: The Motley Fool.
Curious investors use 13F filings to ride Buffett's coattails
Investors have been able to use Berkshire's 13Fs to track and mirror Warren Buffett's trades, should they choose to do so.
For example, the Oracle of Omaha has been a big buyer of oil stocks in 2022. During the first three months of the year, Berkshire purchased almost 121 million shares of Chevron (NYSE: CVX) and has consistently been adding to Occidental Petroleum (NYSE: OXY). The latest SEC filing has Berkshire's position in Occidental at north of 181 million shares. Keep in mind Buffett's company also owns $10 billion worth of preferred stock in Occidental that's yielding 8% annually.
Warren Buffett's new-found love of energy stocks can be taken as a sign that he believes oil and natural gas prices will remain elevated for years to come. This isn't a far-fetched prognostication given that drilling and infrastructure investments were pared down significantly by major oil and gas companies during the pandemic. Add to that Russia's invasion of Ukraine, and there's a clear supply problem for the global energy complex that won't be easily remedied.
Investors have also seen the Oracle of Omaha continue to grow his company's position in Apple (NASDAQ: AAPL). Previously referred to by Warren Buffett as one of Berkshire Hathaway's "four giants," Apple accounted for 42.5% of Berkshire's $354 billion of invested assets as of this past weekend.
Apple has an extremely well-recognized brand, a loyal customer base, and has ridden a wave of innovation since the mid-2000s to become the largest publicly traded company in the United States. The company's iPhone dominates U.S. smartphone market share, and its CEO, Tim Cook, is overseeing a multiyear transition that focuses on subscription services.
Image source: Getty Images.
The "hidden" stock Warren Buffett has plowed $62 billion into since 2018
However, you might be surprised to learn that Berkshire Hathaway's 13F doesn't tell the full story about where Buffett and his investing team are putting the company's money to work. There's one stock Buffett has purchased more of over the past four years than any other holding in the company's investment portfolio -- and you won't find it in a 13F.
On Saturday, Aug. 6, 2022, Berkshire Hathaway filed its second-quarter operating results. Toward the end of the company's 10-Q filing with the SEC (page 44 of the filing) is listed its share buyback activity during the second quarter. All told, 2,397 Class A shares were repurchased, with 25,462 Class B shares bought back. The grand total for these buybacks in the second quarter came in at just over $1 billion.
But this marks just a fraction of the capital Warren Buffett and his right-hand man Charlie Munger have allocated for buying back their own company's stock over the past four years. Since July 17, 2018, this dynamic duo has overseen the repurchase of more than $62 billion of Berkshire Hathaway Class A and B stock. That's far more than Buffett's company has invested in Apple or Chevron.
Prior to July 17, 2018, the rules regarding buybacks stated that Buffett could only pull the trigger if his company's price-to-book value was 120% or lower (i.e., Berkshire Hathaway's share price was no higher than 20% above book value). At no point between 2012 and 2018 did Buffett's company's book value drop to this point -- ergo, no share repurchases.
But on July 17, 2018, the Berkshire board passed two new measures that gave Buffett and Munger more leeway to pull the trigger on buybacks. As long as the company has at least $30 billion in cash and U.S. Treasuries, and both Buffett and Munger believe shares are trading at a discount to intrinsic value, buybacks can be completed without any limitations. In four years, this dynamic duo has deployed about $62.1 billion to buy back Berkshire Hathaway stock.
Why buying back Berkshire Hathaway stock makes sense
You might be wondering why some of the smartest investors of our time are choosing to repurchase their own stock rather than deploying this capital into new investments and/or acquisitions.
To begin with, buying back shares of Berkshire Hathaway stock helps existing Class A and B shareholders become larger "owners" of the company. With fewer shares outstanding, shareholders have an increasingly larger stake in Berkshire's $354 billion investment portfolio and roughly five-dozen acquired businesses, such as insurer GEICO and railroad BNSF.
To build on this point, having fewer shares outstanding as a result of buybacks can help Berkshire Hathaway appear more attractive on a fundamental basis. For companies with steady or growing net income, buybacks help boost earnings per share, which can ultimately reduce the price-to-earnings ratio. This has the potential to attract buyers who'll bid up the share price of a perceived-to-be inexpensive stock.
Lastly, putting $62.1 billion to work via share buybacks sends a clear message to Wall Street and investors that Warren Buffett and Charlie Munger are extremely confident betting on themselves and their company. It implies that the value of the company's investment portfolio should continue to rise, and that the aggregate of companies owned by Berkshire Hathaway are expected to grow their profits over the long run.
10 stocks we like better than Berkshire Hathaway (B shares)
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They just revealed what they believe are the ten best stocks for investors to buy right now... and Berkshire Hathaway (B shares) wasn't one of them! That's right -- they think these 10 stocks are even better buys.
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*Stock Advisor returns as of July 27, 2022
Sean Williams has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Berkshire Hathaway (B shares). The Motley Fool recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), long March 2023 $120 calls on Apple, short January 2023 $200 puts on Berkshire Hathaway (B shares), short January 2023 $265 calls on Berkshire Hathaway (B shares), and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Investors have also seen the Oracle of Omaha continue to grow his company's position in Apple (NASDAQ: AAPL). Prior to July 17, 2018, the rules regarding buybacks stated that Buffett could only pull the trigger if his company's price-to-book value was 120% or lower (i.e., Berkshire Hathaway's share price was no higher than 20% above book value). With fewer shares outstanding, shareholders have an increasingly larger stake in Berkshire's $354 billion investment portfolio and roughly five-dozen acquired businesses, such as insurer GEICO and railroad BNSF.
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Investors have also seen the Oracle of Omaha continue to grow his company's position in Apple (NASDAQ: AAPL). When Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) CEO Warren Buffett makes a move, Wall Street wisely pays attention. Lastly, putting $62.1 billion to work via share buybacks sends a clear message to Wall Street and investors that Warren Buffett and Charlie Munger are extremely confident betting on themselves and their company.
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Investors have also seen the Oracle of Omaha continue to grow his company's position in Apple (NASDAQ: AAPL). The "hidden" stock Warren Buffett has plowed $62 billion into since 2018 However, you might be surprised to learn that Berkshire Hathaway's 13F doesn't tell the full story about where Buffett and his investing team are putting the company's money to work. To begin with, buying back shares of Berkshire Hathaway stock helps existing Class A and B shareholders become larger "owners" of the company.
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Investors have also seen the Oracle of Omaha continue to grow his company's position in Apple (NASDAQ: AAPL). Berkshire Hathaway CEO Warren Buffett. There's one stock Buffett has purchased more of over the past four years than any other holding in the company's investment portfolio -- and you won't find it in a 13F.
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19850.0
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2022-08-09 00:00:00 UTC
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Checking In on Caterpillar, Arista Networks, and Pinterest
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AAPL
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https://www.nasdaq.com/articles/checking-in-on-caterpillar-arista-networks-and-pinterest
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nan
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In this podcast, Motley Fool senior analyst Bill Mann discusses:
Global supply chain issues (understandably) affecting Caterpillar's (NYSE: CAT) results.
How dividend-seeking investors should think about Caterpillar.
Stellar results from Arista Networks (NYSE: ANET) and its longtime CEO Jayshree Ullal.
Pinterest (NYSE: PINS) shares popping on user numbers and the backing of activist investor Elliott Management.
Motley Fool host Alison Southwick and Motley Fool personal finance expert Robert Brokamp talk about the indicators commonly associated with recessions and which ones they're watching.
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.
10 stocks we like better than Caterpillar
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now... and Caterpillar wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of July 27, 2022
This video was recorded on August 2, 2022.
Chris Hill: We've got the latest in heavy equipment, cybersecurity, and social media. Motley Fool Money starts now. I'm Chris Hill, joined in studio by Motley Fool senior analyst, Bill Mann.
Bill Mann: How sweet does that sound?
Chris Hill: It certainly feels good to say.
Bill Mann: I mean, not the Bill Mann part, but the in studio part.
Chris Hill: It's pretty darn sweet. I got to tell you. Let's start with Caterpillar, shall we? Second quarter revenue lower than Wall Street was expecting due to supply chain issues and the company exiting Russia. This can't be a surprise. That was overwhelmingly my thought when I was reading through how Caterpillar did, and it's not terrible. The stock's down three percent about what you would expect for a company of their size and scope. But we're not really surprised by any of this, are we?
Bill Mann: We really shouldn't be. They had a miss. Their biggest miss came in the construction industry, which you could easily see why that would be the case. As you've said, there are supply chain issues, they've had a huge issue. One of Caterpillar's largest markets is China and things have ground to a stop in China in terms of housing construction, in terms of infrastructure construction. I guess to me, the surprise is that the consensus was as high as it was. This was a great quarter for Caterpillar, given that backdrop.
Chris Hill: Shares are outperforming the S&P 500 year to date, which is to say it's down but just not down as much as the overall market. I think of Caterpillar as being in the category of stocks that are big blue chip. They pay a dividend, they're not going to go anywhere. Am I missing something or is that how people should think about a company like Caterpillar? Like, hey, if you're looking to build out the dividend part of your portfolio, kick the tires on this one.
Bill Mann: Was that a joke?
Chris Hill: I didn't. [laughs] I really didn't mean it to be, I really didn't.
Bill Mann: Well done, though. Yes. Caterpillar is one of those companies that should behave about at the same level as global GDP growth, maybe a little bit ahead of it. It's a fine company. There are not that many competitors in most of Caterpillar's businesses at its size. But because it is so defined by how the economy is going, if the economy is not going well, for example, now their cost structures are really not going very well for them. As I said earlier, China's not going very well for them. They have supply chain issues. Yes. I mean, it is a great company to own. You are very unlikely to find yourself waking up one morning and Caterpillar has rugged you. But at the same time, it's not going to be a massive, massive grower.
Chris Hill: Thank you for using rug as a verb. Arista Networks, the cloud networking cybersecurity company posted second quarter profits and revenue that were higher than expected. They had upbeat guidance for the current quarter and yet shares are flat. Are we not entertained?
Bill Mann: We should be entertained. In fact, it's started this morning of up about 6.5 percent. By the time we actually end today, the trading day, it could be anywhere, was a great quarter for them. I mean, you could see why. Arista Networks is an absolutely necessary component in cloud computing and enterprise. They've grown very, very quickly, 49 percent revenue growth, which is if there was described as a little oasis of positivity in a market that doesn't show very much of it. They also talked about a supply chain environment that is troubling for them. Their quarter may have even been better, but their CEO, Jayshree Ullal, is one of the best in America. I mean, full stop. She is absolutely fantastic and managing their business at not getting too far ahead of their skis, and this is a company that is running on as many cylinders as you can be in the current environment.
Chris Hill: If you step back from Arista Networks, I don't want to say every company is going to be able to say this, but I feel like they're going to be a lot of companies this earnings season that we're going to have that to say about them like, hey, this was good and if they're doing this level of performance in this environment, the bull case is obviously, gosh, when things get better on a macro level, they're just going to tear the roof off of things.
Bill Mann: Have you ever seen one of those like word clouds?
Chris Hill: Yes.
Bill Mann: I think if you do a word cloud for earnings reports this time, the one that's going to be at the very center, gosh, it's two words, not one. One is supply chains. Supply chain is one that nearly every company will be able to credibly point to and say that this has been an impact on how they have done over the last quarter. Some of them will be using that as an excuse. But in a lot of cases it makes a ton of sense. Yes, for Arista to have come out and have been, as I said, this little oasis of positivity, I think that it's very credible to say that in a normal operating environment, whenever we got one of those, but in a normal operating environment, their results would have been even better.
Chris Hill: Jayshree Ullal, as Bill mentioned, the CEO of Arista Networks, she has been a guest of ours at Motley Fool investing conferences in the past. She is not going to be at this year's Fool Fest, which is our annual investing conference. It's a two-day event on August 29th and 30th, and there'll be breakout sessions featuring different investing strategies. We have a great lineup of speakers, including Trex CEO, Bryan Fairbanks, Motley Fool Co-founder, David Gardner, our friend Morgan Housel, Michael Mauboussin.
Bill Mann: Yes.
Chris Hill: Investor extraordinary Michael Mauboussin, who you're going to be interviewing on the main stage.
Bill Mann: I will and I can't wait. I'm glad that you actually got around to saying who was going to be there as opposed to who was because that's not good marketing. [laughs]
Chris Hill: I'm doing my best.
Bill Mann: I cannot wait.
Chris Hill: Yeah, it's going to be great. Fool Fest is free for Motley Fool members so. If you are not yet a member, that's easy to remedy. You can sign up for our Stock Advisor service and get a complimentary digital pass to the event. Just go to fool.com/foolfest. All one word for the details. I'll put the link in the show notes. That's fool.com/foolfest. The stock of the day is Pinterest. I don't even remember the last time I said that second-quarter results weren't great, guidance wasn't great, but shares are up more than 10 percent today after Pinterest user numbers showed some promise and activist investor Elliott Management confirmed that it is the company's biggest shareholder and has, "Conviction in the value creation opportunity that it sees," which I think is a fancy way of saying.
Bill Mann: It's cheap. [laughs]
Chris Hill: The stock is cheap and when these people get their monetization house in order, we think it can start ringing the cash register.
Bill Mann: Elliott Investment, they are no joke and they are specifically no joke within the social media segment. They've done great things at eBay. They were on their board, they've been on the board at Twitter. Maybe that's still a little bit of a work in progress, but they're not coming in. When you think of activist investors, you think of someone who's coming in and it's the Gordon Gekko, we're going to shake things up. They don't really have that opportunity to do so at Pinterest because the founder, Ben Silbermann, has the lion's share of the vote. He's got 37 percent of the total votes so they can't come in and push him around. Ben Silbermann decided to step away in June. Bill Ready is the new CEO, ex-[Alphabet's] Google guy. I would suspect that Elliott had a hand in having him come. It's going to be really interesting to see what they have to say as things progress at Pinterest. Pinterest is really the largest dataset that's out there for consumers that are not aligned with one of the big companies with [Meta's] Facebook, with Google, with Apple, so it's a great resource.
Chris Hill: It's going to be really interesting to see how this plays out because to this point, Bill Ready, who as you said, has been CEO for about an hour-and-a-half, nothing he has said and nothing that we've heard from Elliott Management points to pie in the sky aspirations both in terms of future guidance or in terms of levers that they can pull. They're talking about some pretty basic blocking and tackling ways to monetize the platform in a way that seems like it would be additive to the experience for people who use Pinterest and wouldn't drive them away. My hunch is that they are keenly observant of the language around Instagram and how people who have been on Instagram for a long time are talking about how the platform has changed and changed in a way that they don't really like. There is an opportunity here and you want to say, good luck. There's a way for you to do this without blowing it.
Bill Mann: Yeah, and so one of the things that they've pointed to was their international markets where on a per user basis they're only making a dime to about $0.15 per user. It should not be hard if you are at that level, and just to level set, Twitter makes a couple of dollars per user. Twitter again, is not even close to the best participant in this market. Pinterest has not done a great job in monetizing a huge amount of its members who show up and create their own material. They create their own content. They have a partnership with Shopify that they signed in 2020 that I think that they can lean on more, so you are not talking about an experience that should be that markedly different for its user base, which is always a risk. If you come in and you turn it, you go from being, this is something that is as helpful as possible to, it is as profitable as possible. Well, that's great, but you're going to be profiting off of a low or smaller user base by virtue of pushing people out. Pinterest, it's good news and bad news. They don't have to do much to be a much more profitable company.
Chris Hill: Let me ask you something about activist investors because you said, the image of Gordon Gekko coming in, we're going to shake things up. That's true in some cases. Is Elliott Management an activist investor that when you see they are involved in this company, the image, the reaction you have is positive, and if not, are there ones out there that you think, "Okay, this activist is getting involved all right, I'm going to pay a little bit more attention to this situation because these are serious people, these are not rabble-rousers?"
Bill Mann: It's a really good question and I would put Elliott at the top of the list along with Gotham Partners, with Bill Ackman, and Jana Partners, which are activists who aren't coming in looking for that quick hit. That's always the thought. Again, I brought up Gordon Gekko earlier, obviously in Wall Street, that's what he was trying to do to break up the company in profit anyway that he possibly could. These folks are long term investors now, they do come in with smiles but they are capable of going more hostile if they need to, but that's not their MO.
Chris Hill: As you said in the case of Pinterest, that's not going to work.
Bill Mann: Well, it could work. Yes.
Chris Hill: It's not going to work in the way that it would work with other companies where the founder is not there with the lion share votes.
Bill Mann: They can't vote anybody out by themselves. A proxy battle is not going to work out for them very well because at least 37 percent of the votes are already against them. But there are other levers that they could pull. You've seen it, you saw it with Uber where basically they embarrass Travis Kalanick out of the building. There are things that they could do, but I would not expect that to be the case with Elliott and Pinterest.
Chris Hill: Bill Mann, great talking to you as always, thanks for being here.
Bill Mann: Thanks, Chris.
Chris Hill: Are we in a recession right now? Are we headed toward one? Apparently, it's a little more debatable than we all thought. Alison Southwick and Robert Brokamp discuss the indicators commonly associated with recessions and which ones they're watching.
Alison Southwick: Here's something you're probably hearing in the news a lot lately. Key indicator falls fueling recession fears. Yes, the GDP decline for the second quarter in a row, and that is a big one. But what about the VIX, the Jolts, and someone named Sahm, who is making rules? As we've briefly explained before, recessions are officially declared by the National Bureau of Economic Research, which defines them as, "A significant decline in economic activity that is spread across the economy and that lasts more than a few months." While NBER is the final word, they tend to be more backwards looking like someone assessing a car accident, you know your car has been damaged, but you don't know the extent until you get an expert opinion. Today, we thought we'd talk about some of those numbers to watch that are perhaps a little bit more forward-looking, what they mean, and if they really are Harbingers of dark times ahead.
Robert Brokamp: We're going to take a look at four things that may or may not give you a hint about what the economy and the stock market is going to do. What's first up, Alison?
Alison Southwick: The VIX. What is it? Well, bro, the VIX is created by the Chicago Board Options Exchange or CBOE, and it's the Volatility Index or the VIX as it's efficiently and affectionately called. It's also known as the fear gauge, super not-for boating at all. It's a forward-looking benchmark for volatility over the coming 30 days. How? Well, they look at the prices of S&P 500 Index options with near-term expiration dates. Apparently, it's quite a complicated formula and you're welcome to google it yourself. Well, not always true, typically the VIX rises when stocks fall and declines when stocks rise. The higher the VIX, the more furiousness and uncertainty ahead. The highest the VIX has closed at has been in the low eighties, and that was back in March of 2020. The lowest it has closed is around nine and that was in November of 2017. Currently, the VIX is hanging out in the low twenties.
Robert Brokamp: It is right now at 21, which is the historical average. That's down from above 30 in mid-June. It came down because as you pointed out, it goes in the opposite direction of stocks and stocks went up. In fact, in July, the S&P 500 returned nine percent, and the NASDAQ returned 12 percent. Last July actually was the best month for stocks since 2020, so stocks went up, the VIX came down. You might ask, does any of this matter? I would say on most days, actually not really. I think the VIX is most interesting in the extreme. You probably have all heard that old Warren Buffett adage, "Be fearful when others are greedy and greedy when others are fearful." Readings in the low teens or even lower for the VIX, it could mean that investors have gotten greedy and maybe complacent. It generally happens after a few good years.
You pointed out the lowest rating was in 2017, another time when it got almost at low was 2007, and in both of those years, the following year, the market drops. We're not market timers at the Fool, so now saying that if the VIX is low, you should sell, but if the VIX gets real low, especially after a string of several good years, you might want to think about rebalancing your portfolio. Now, what about the other direction when the VIX has shot up? After all, there's another adage, "When the VIX is high, it's time to buy." According to Hartford Funds, there have been eight times when the VIX has been above 40 since 1990, and that was the year the VIX was launched.
There usually have been times when the market has either hit a blip or was in a full-blown bear market, so was that a good time to buy? While the S&P 500 posted a positive return a year later in six of those eight times. Basically a 75 percent success rate. That's actually about right in line with the historical average of stocks making money in three out of every four years since the 1920s. But I calculated the average one-year returns of the S&P 500 after the VIX hit 40, and I got 17 percent and that's well above the long-term average of 10 percent, though again, that did include a couple of down years. Three years after the VIX hit 40, the market was in positive territory every time. The jury is still out on the last time, which was during the pandemic panic of 2020, but we'll get the verdict on that in early 2023. There might be something to buying when the VIX is high, but during times when the VIX is just mosing around, not particularly high, not particularly low, like right now, I don't usually pay too much attention to it.
Alison Southwick: Let's move on to our next number to watch. The New York Times calls it Wall Street's most talked about recession indicator, and it's sounding, its loudest alarm in two decades. It's the yield curve. Yes, the yield curve compares the interest rates of various US government bonds, notably Three-month bills and two-year and 10-year treasury notes. Typically, investors expect to earn higher interest when their money is tied up longer. The 10-year pays more than the two-year and the two-year pay more than the bills that mature in three months. If you plot them on a chart with maturity time on the X-axis and the rate of return on the y-axis it makes a curve up to the right, just how we like our charts here at The Motley Fool.
But every now and then things get inverted and the interest rates for shorter-term US bonds are higher than the rates for longer-term bonds, and the curve bends the other way, and that way is down and we like grafts that go up. When the yield curve is inverted, it reflects the feelings of investors that the economy is going to tank and it's got some predictive power so you may be wondering, what is the yield curve up these days? But apparently the signal it is sending hasn't been this dire since late 2000, when the bubble in tech stocks have begun to burst and recession took hold. This is what I'm seeing in the headlines, Bro, is it really that dire?
Robert Brokamp: I would say this is actually one that I do pay attention to, so according to a reserve study published in 2018, the yield curve has inverted before every recession since 1955. That said, the timing is rather variable. The recessions have come within six months to as much as three years after the inversion, so it doesn't mean you have to panic immediately. According to Anu Gaggar of the Commonwealth Financial Network, the spread between the two year and 10 year notes has inverted 28 times since 1900 and 22 of these instances, a recession followed. There happens six false alarms over the 120 past years. But still, it's a pretty remarkable record, so where are we now? So the two year 10 year yield is inverted, the two year is yielding 2.9 percent, the 10 year is 2.6 percent. That 10 years come down pretty significantly since above 3.5 percent in June, so that's been a big drop. But the three-month and 10 year is not inverted in many people think that's the one you should pay most attention to, including Fed chair Jerome Powell. But the bottom line is, regardless of whether or not we enter a tactical recession, the yield curve is telling us to expect that the economy is going to be sluggish for awhile.
Alison Southwick: Next number to watch. The housing starts track how much residential housing was, started. It's a weird little phrase, but somehow it works. The census bureau releases the figures on the 12th business day of the month, they estimate housing starts from building permits issued by a sample of local permitting offices and then track those projects through completion and sale. Buying a new house is a big ticket item and then of course you have to fill it with stuff. If there are a lot of houses being built in response to demand, then that's a leading indicator of the health of the economy and future spending. It reflects the level of America's optimism and ability to even afford a house and all the things that go in it. How are we feeling America? Are we ready to go buy a house? New US homebuilding activity fell to a nine-month low in June. Not great, but with all the supply chain issues and rising interest rates, you're probably not too surprised to hear that.
Robert Brokamp: Because if we were to think about like all the parts of labour that go into building a house. There are all the materials and then there're all the workers, the plumbers, electricians, to turn it into a house and not to mention all of the sales team that gets together and sells the place. That's a lot of economic activity under one roof. A lot less activity when fewer walls and roofs get constructed and that's what's happening now, to new homes and also to existing homes but it's the decline in housing starts that can really weigh on the economy. Lance Lambert wrote a good article for Fortune.com in which he argues that this is what the Fed wants because it'll bring down inflation and here's one of the early paragraphs. "Historically speaking, the Federal Reserve's inflation-fighting playbook always starts with housing, it goes like this.
The Central Bank begins playing upward pressure on mortgage rates, not long afterwards, home sales sink and existing home inventory spikes then homebuilders begin to cut back. That causes demand for both commodities like lumber and steel and durable goods like windows or refrigerators to fall. Those economic contractions then quickly spread throughout the rest of the economy and in theory, helped to rein in runaway inflation." Frankly, so far it's working, sales are down inventory is up and an increasing number of people are cancelling their housing contracts. Housing starts or something to keep an eye on and right now they're not looking too good.
Alison Southwick: We talked about housing starts and then of course before that the yield curve and both of those seem to suggest that a recession is common around the mountain. But there's a reason why Harry Truman once said, "Give me a one-handed economist. All of my economists say 'on the one hand, but 'then on the other." These days the other hand is unemployment. Many experts argue that it's hard to say we're in or near a recession when unemployment is at 3.6 percent, the second lowest rate over the last 50 years. They're almost two openings for each person looking for a job which is historically very high. How will we know when things begin to change? You could look at the job openings and labour turnover survey, AKA the jolts put out every month by the Bureau of Labor Statistics. Job openings are indeed starting to fall as of the main numbers. But if you're looking for how we'll know if the job market is indicating we're in a recession, have you considered the Sahm rule developed by the former Federal Reserve and White House economist, Claudia Sahm. According to this indicator, when the three-month moving average of the national unemployment rate rises by 0.5 percent or more relative to its low during the previous 12 months, we're likely in a recession.
Robert Brokamp: The Sahm rules are relatively recent development. It was just announced to the world in 2019 and by the way, Sahm is spelt S-A-H-M in case you want to look it up. According to the original research paper, since 1970, there were no false alarms. Thus, it seems like a pretty good recession indicator from the job market. What is it saying today, while the current unemployment rate of 3.6 percent is the lowest we've seen over the past year. The Sahm rule would be triggered if the three-month average rose to 4.1 percent. Given how the job market looks, it seems like it would take several months to get to that point, but we'll keep an eye on it.
Alison Southwick: Now Bloomberg, they also do a monthly survey of economists, and they found that the probability of a downturn over the next 12 months stands at 47.5 percent and that's up from 30 percent odds in June. Bro, after we've finished talking about all these numbers in all the fields, the question is, does the fear of going into a recession, should that change how you invest and save today?
Robert Brokamp: It certainly makes sense to keep an eye on these things and if you are in or near retirement, once things start looking a little dicier, it might make sense to play it somewhat safer, maybe rebalance your portfolio, maybe have a little bit, but we're cash on the side. Of course, the market is already down, some of these indicators, like the flattening of the yield curve for giving a warning at the end of last year and if you paid attention, then that would have been a good time. If you're still working, the number one risk of a recession is job loss or maybe a pay cut. What you should be doing is really taking a look at your job and making sure you're demonstrating as much value as possible to your employers and your customers to ensure that you'll still be able to earn a paycheck regardless of what happens to the economy.
Chris Hill: As always, people on the program may have interest in the stocks they talk about and The Motley Fool may have formal recommendations for or against them, so don't buy or sell stocks based solely on what you hear. I'm Chris Hill, thanks for listening. We'll see you tomorrow.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Alison Southwick has positions in Apple and Shopify. Bill Mann has positions in Alphabet (C shares) and Shopify. Chris Hill has positions in Alphabet (A shares), Alphabet (C shares), Apple, Pinterest, Shopify, Trex, and eBay. Robert Brokamp, CFP(R) has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet (A shares), Alphabet (C shares), Apple, Arista Networks, Meta Platforms, Inc., Pinterest, Shopify, Trex, and Twitter. The Motley Fool recommends Uber Technologies and eBay and recommends the following options: long January 2023 $1,140 calls on Shopify, long March 2023 $120 calls on Apple, short January 2023 $1,160 calls on Shopify, short March 2023 $130 calls on Apple, and short October 2022 $50 calls on eBay. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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In this podcast, Motley Fool senior analyst Bill Mann discusses: Global supply chain issues (understandably) affecting Caterpillar's (NYSE: CAT) results. Chris Hill: Jayshree Ullal, as Bill mentioned, the CEO of Arista Networks, she has been a guest of ours at Motley Fool investing conferences in the past. We have a great lineup of speakers, including Trex CEO, Bryan Fairbanks, Motley Fool Co-founder, David Gardner, our friend Morgan Housel, Michael Mauboussin.
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In this podcast, Motley Fool senior analyst Bill Mann discusses: Global supply chain issues (understandably) affecting Caterpillar's (NYSE: CAT) results. The Motley Fool has positions in and recommends Alphabet (A shares), Alphabet (C shares), Apple, Arista Networks, Meta Platforms, Inc., Pinterest, Shopify, Trex, and Twitter. The Motley Fool recommends Uber Technologies and eBay and recommends the following options: long January 2023 $1,140 calls on Shopify, long March 2023 $120 calls on Apple, short January 2023 $1,160 calls on Shopify, short March 2023 $130 calls on Apple, and short October 2022 $50 calls on eBay.
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Chris Hill: If you step back from Arista Networks, I don't want to say every company is going to be able to say this, but I feel like they're going to be a lot of companies this earnings season that we're going to have that to say about them like, hey, this was good and if they're doing this level of performance in this environment, the bull case is obviously, gosh, when things get better on a macro level, they're just going to tear the roof off of things. I don't even remember the last time I said that second-quarter results weren't great, guidance wasn't great, but shares are up more than 10 percent today after Pinterest user numbers showed some promise and activist investor Elliott Management confirmed that it is the company's biggest shareholder and has, "Conviction in the value creation opportunity that it sees," which I think is a fancy way of saying. Chris Hill: As always, people on the program may have interest in the stocks they talk about and The Motley Fool may have formal recommendations for or against them, so don't buy or sell stocks based solely on what you hear.
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The stock of the day is Pinterest. Chris Hill: As you said in the case of Pinterest, that's not going to work. Chris Hill: Bill Mann, great talking to you as always, thanks for being here.
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2022-08-09 00:00:00 UTC
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7 Stocks to Buy This Week
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AAPL
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https://www.nasdaq.com/articles/7-stocks-to-buy-this-week
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InvestorPlace - Stock Market News, Stock Advice & Trading Tips
The current market selloff has created an excellent buying opportunity for investors. Take a cue from the Oracle of Omaha, Warren Buffett, who has loaded up on more stocks this year than any time over the last decade. Plenty of stocks to buy are trading at attractive valuations and could have massive value to your portfolio.
The current conditions are ripe for investors to control their nerves and invest in some attractive stocks trading at multi-year lows. Several top growth, income, and value stocks are now trading at hefty discounts. However, it is imperative to do your due diligence and add the right combination of the stocks mentioned above to your portfolio.
Here are seven stocks to buy which you should invest in at this time.
Symbol Company Name Price
AAPL Apple $164.87
V Visa $213.32
CLF Cleveland-Cliffs $18.57
AMZN Amazon $139.41
F Ford $15.78
CVX Chevron $153.41
O Realty Income $73.26
Apple (AAPL)
Source: Moab Republic / Shutterstock
Shares of iPhone maker Apple (NASDAQ:AAPL) are on a post-earnings rally after reporting stellar results for its third quarter. Despite macro headwinds, the company set a new record for the June quarter, led by growth across all core segments. Moreover, with App Tracking Transparency (ATT), Apple senses an opportunity to spread its tentacles in the lucrative ad space.
Forex headwinds played spoilsport during the third quarter, but despite the challenges, AAPL was able to push through with record-breaking results. For instance, iPhone and services sales increased by healthy margins, while iPad and Mac sales declined due to supply chain issues. Nevertheless, the results were fantastic and have set the stage for a monster fourth quarter. Layer that up with its endeavors on the advertising side and you have an incredible bull case for the tech giant.
Visa (V)
Source: Kikinunchi / Shutterstock.com
Visa (NYSE:V) is a payments processing giant which has become a critical part of the modern economy. It’s been a solid performer for the past several years, generating double-digit revenue and EBITDA growth over the past five years. Additionally, it boasts a robust dividend profile, growing its payouts for the past 14 years.
The company once again proved its business is recession-proof with a comfortable revenue and earnings beat during the third quarter. Visa has posted a long string of consecutive earnings performances that have beat consensus estimates. Revenues across the board were highly encouraging, but its international transaction sales figure was perhaps the brightest spot, which increased by a remarkable 51% from the prior-year period. Moreover, payment volumes are well over pre-pandemic levels, which positions it brightly for the future.
Cleveland-Cliffs (CLF)
Source: Shutterstock
Steel maker Cleveland-Cliffs (NYSE:CLF) has seen its share price dip over the past three months. Investors are concerned over its near-term outlook, considering how tethered steel demand is to the economic climate. However, they seem to have turned a blind eye toward the firm’s leadership position in the automotive sector and how it will effectively shield it from seasonality. Nevertheless, the stock trades at just 0.40 times forward sales.
It recently posted its second-quarter revenues, where sales of $6.34 billion were 26% higher than last year. Additionally, it beat estimates by $226 million. Moreover, it has generated $2.6 billion through the first half of the year compared to $1.9 billion in the same period last year. Additionally, with the easing of supply chain troubles for its automotive customers, there should be greater stability in steel demand.
Amazon (AMZN)
Source: Tada Images / Shutterstock.com
Amazon (NASDAQ:AMZN) has spearheaded several profitable industries that have effectively shaped our lives. Despite recent headwinds, its core units continue to fire, pointing to the depth of its businesses. Moreover, the stock is more affordable than ever for individual investors after its stock split.
The company’s second-quarter results showed a 7% increase in revenues from the prior-year period to $121 billion. Moreover, its management expects things to pick up in the third quarter with a 13% to 17% bump in revenues. The crown jewel of products and services is its cloud offering, which accounts for a greater portion of total sales with every passing quarter.
Quarterly revenue for Amazon Web Services increased 33% over 2021 to $19.8 billion. Astonishingly, CFO Brian Olsavsky believes that most businesses are in the early adoption phase of cloud computing. Also, Amazon continues to spread its tentacles in other profitable verticals. Its planned acquisition of top healthcare company One Medical is a testament to that.
Ford (F)
Source: D K Grove / Shutterstock.com
Automotive giant Ford (NYSE:F) had a stellar second quarter, despite inflationary pressures and weakening consumer demand. It continues to push forward with its electric vehicle portfolio, offering healthy income yields following a 50% dividend hike. F stock is yielding a remarkable 3.92%, and with it trading at around 0.4 times forward sales, the stock is a highly attractive wager.
Ford saw its sales rise in the second quarter by 57% from the prior-year period, comfortably beating analyst estimates. Its traditional automotive business continues to prove naysayers wrong, but its future is linked to the success of its EV endeavors. It projects a 90% annual growth rate with its EV business and plans to produce roughly 2 million EVs by the conclusion of 2026. It sold an impressive 15,527 EVs during the second quarter, and the impetus is there for it to push the afterburners.
Chevron (CVX)
Source: Sundry Photography / Shutterstock.com
Oil and gas giant Chevron (NYSE:CVX) is in the news for posting its biggest-ever quarterly net earnings in its second quarter. It nearly quadrupled its earnings from $3.08 billion last year to a whopping $11.62 billion in the second quarter. Moreover, it generated sales worth $68.7 billion, an 83% improvement on a year-over-year basis, comfortably beating analyst estimates by $11 billion.
Low supply, coupled with a massive increase in demand after the pandemic fade, has rapidly increased prices for crude oil and natural gas. Moreover, there is the Ukraine effect as well, which has significantly impacted the supply outlook. The conducive conditions have helped Chevron expand its profits and generate massive year-over-year revenues of over 77.5%. It raised the upper-end of its stock buyback program recently, and its spectacular yield of over 3.50% is the cherry on top.
Realty Income (O)
Source: Vitalii Vodolazskyi / Shutterstock
Realty Income (NYSE:O) is among the most popular net lease real estate investment trust (or REIT). The majority of its portfolio is made up of 85% of retail properties. Typically these businesses are easy to re-lease or sell, so there isn’t a lot of risk. As a result, it delivered better-than-expected second-quarter earnings and sales, helped by increased occupancy rates. Additionally, it raised its guidance for the year, with normalized funds from operations per share to $3.92 to $4.05 compared to the prior guidance of $3.88 to $4.05.
Additionally, second quarter revenues increased to $810.4 million, comfortably ahead of the $776.2 million consensus. Moreover, it boosted its expectations for acquisition volume for the year to over $6 billion from its previous guidance of $5 billion. Its investment-grade balance sheet enables it to easily access debt financing at reasonable rates.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
The post 7 Stocks to Buy This Week appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Symbol Company Name Price AAPL Apple $164.87 V Visa $213.32 CLF Cleveland-Cliffs $18.57 AMZN Amazon $139.41 F Ford $15.78 CVX Chevron $153.41 O Realty Income $73.26 Apple (AAPL) Source: Moab Republic / Shutterstock Shares of iPhone maker Apple (NASDAQ:AAPL) are on a post-earnings rally after reporting stellar results for its third quarter. Forex headwinds played spoilsport during the third quarter, but despite the challenges, AAPL was able to push through with record-breaking results. The current conditions are ripe for investors to control their nerves and invest in some attractive stocks trading at multi-year lows.
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Symbol Company Name Price AAPL Apple $164.87 V Visa $213.32 CLF Cleveland-Cliffs $18.57 AMZN Amazon $139.41 F Ford $15.78 CVX Chevron $153.41 O Realty Income $73.26 Apple (AAPL) Source: Moab Republic / Shutterstock Shares of iPhone maker Apple (NASDAQ:AAPL) are on a post-earnings rally after reporting stellar results for its third quarter. Forex headwinds played spoilsport during the third quarter, but despite the challenges, AAPL was able to push through with record-breaking results. Cleveland-Cliffs (CLF) Source: Shutterstock Steel maker Cleveland-Cliffs (NYSE:CLF) has seen its share price dip over the past three months.
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Symbol Company Name Price AAPL Apple $164.87 V Visa $213.32 CLF Cleveland-Cliffs $18.57 AMZN Amazon $139.41 F Ford $15.78 CVX Chevron $153.41 O Realty Income $73.26 Apple (AAPL) Source: Moab Republic / Shutterstock Shares of iPhone maker Apple (NASDAQ:AAPL) are on a post-earnings rally after reporting stellar results for its third quarter. Forex headwinds played spoilsport during the third quarter, but despite the challenges, AAPL was able to push through with record-breaking results. F stock is yielding a remarkable 3.92%, and with it trading at around 0.4 times forward sales, the stock is a highly attractive wager.
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Symbol Company Name Price AAPL Apple $164.87 V Visa $213.32 CLF Cleveland-Cliffs $18.57 AMZN Amazon $139.41 F Ford $15.78 CVX Chevron $153.41 O Realty Income $73.26 Apple (AAPL) Source: Moab Republic / Shutterstock Shares of iPhone maker Apple (NASDAQ:AAPL) are on a post-earnings rally after reporting stellar results for its third quarter. Forex headwinds played spoilsport during the third quarter, but despite the challenges, AAPL was able to push through with record-breaking results. Quarterly revenue for Amazon Web Services increased 33% over 2021 to $19.8 billion.
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19852.0
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2022-08-09 00:00:00 UTC
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3 Reasons for Long-Term Investors to Love Amazon
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AAPL
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https://www.nasdaq.com/articles/3-reasons-for-long-term-investors-to-love-amazon
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nan
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nan
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Amazon's (NASDAQ: AMZN) share prices have surged by over 11.6% in response to the company's stellar second-quarter results (ended June 30). Now, the stock is down by 14.4% so far this year.
Investors and analysts have become impressed with the technology titan's execution capability. Let's review the three reasons why long-term investors can consider this stock as a great buying opportunity now.
AWS remains the undisputed crown jewel
Amazon has long been known for its e-commerce business and broad fulfillment network. However, industry-leading cloud infrastructure services business Amazon Web Services (AWS) has become the key growth driver. Despite the surging inflation and technical recession (two consecutive quarters of decline in gross domestic product) in the U.S., global enterprise spending on cloud infrastructure services grew year over year by 29% to $55 billion in the second calendar quarter. Management believes this is only the early stage of cloud adoption in the enterprise and public sector space and expects demand for cloud infrastructure to increase further in the coming quarters.
AWS accounted for 34% share of thisglobal marketin the second quarter, up sequentially by 1 percentage point. This cloud business raked in revenue of $19.7 billion, up year over year by 33%. Despite the impact of the increase in employee stock-based compensation expense due to rising wage inflation, AWS's operating margin rose year over year by 0.7 percentage points to 29%. AWS also reported a 65% year-over-year jump in backlog, which implies AWS will have a solid project pipeline for future quarters.
AWS is undoubtedly the most valuable business for Amazon, considering that it contributed only 16.28% to the company's top line, but accounted for almost all of its operating income. The company is focusing on investing in its sales force and infrastructure capacity expansions for AWS in new geographies. While this is expected to result in margin contraction for AWS in coming quarters, it will increase Amazon's revenue and margin exposure to the highly profitable AWS business in the long run.
The advertising business is gaining momentum
Amazon has been quite successful in targeted digital advertising since it is not only promoting products and services to people with high purchase intent but also at the point of purchase. The effectiveness and measurability of Amazon's ads have become even more relevant against the backdrop of Apple's privacy changes. In the second quarter, the company's advertising revenue was up 18% year over year to $8.8 billion.
The e-commerce business is showing strength
Despite a consumer slowdown, Amazon's e-commerce business has shown signs of strength. According to Insider Intelligence, Amazon accounts for 37.8% of the U.S. e-commerce business, a market estimated to be worth over $1 trillion in 2022.
Amazon has been working to reduce its labor costs and excess warehouse capacity, which resulted in over $6 billion of additional costs in the first quarter. These costs came down to $4 billion in the second quarter as the company focused on reducing headcount and improving its fulfillment network's productivity.
Despite macroeconomic tensions, Amazon managed to host its most successful Prime Day ever in July 2022. While a record Prime Day will not have a huge impact on the financials of this behemoth, it is expected to bring in more Amazon Prime subscription members (a recurring revenue source) in the coming quarters. In addition, the deal with Grubhub, which allows Prime members a free one-year membership to Grubhub+ service for free restaurant delivery, can also help expand the Prime member base.
Is Amazon a good investment?
In the second quarter, Amazon's revenue was up year over year by 7% to $121.2 billion, ahead of the company's revenue guidance as well as consensus estimates. While this single-digit growth pales in comparison to the company's historical double-digit top-line growth, it highlights the resilience of the company's business model in the current precarious economic environment. Amazon's operating income was down 57% year over year to $3.3 billion, significantly higher than the company's guidance range, which stretched from an operating loss of $1 billion to operating income of $3 billion.
Amazon is valued at 58.5 times forward earnings, the lowest the company has traded since January 2021. The reduced price point makes the stock even more attractive for retail investors.
However, it is not all sunshine and roses for Amazon. Although revenue has grown consistently, the company reported negative free cash flow of $23.5 billion in the last 12 months ending the second quarter. The company's over-dependence on AWS for profitability also exposes the company to business concentration risk.
Despite these risks, against the backdrop of a high-flying AWS business, resilient e-commerce business, and strengthening advertising business, Amazon can prove to be a solid buy-and-hold pick for long-term retail investors.
10 stocks we like better than Amazon
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Manali Bhade has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Apple. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Amazon's (NASDAQ: AMZN) share prices have surged by over 11.6% in response to the company's stellar second-quarter results (ended June 30). AWS is undoubtedly the most valuable business for Amazon, considering that it contributed only 16.28% to the company's top line, but accounted for almost all of its operating income. Although revenue has grown consistently, the company reported negative free cash flow of $23.5 billion in the last 12 months ending the second quarter.
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However, industry-leading cloud infrastructure services business Amazon Web Services (AWS) has become the key growth driver. Despite the impact of the increase in employee stock-based compensation expense due to rising wage inflation, AWS's operating margin rose year over year by 0.7 percentage points to 29%. While this is expected to result in margin contraction for AWS in coming quarters, it will increase Amazon's revenue and margin exposure to the highly profitable AWS business in the long run.
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In the second quarter, Amazon's revenue was up year over year by 7% to $121.2 billion, ahead of the company's revenue guidance as well as consensus estimates. Amazon's operating income was down 57% year over year to $3.3 billion, significantly higher than the company's guidance range, which stretched from an operating loss of $1 billion to operating income of $3 billion. Despite these risks, against the backdrop of a high-flying AWS business, resilient e-commerce business, and strengthening advertising business, Amazon can prove to be a solid buy-and-hold pick for long-term retail investors.
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Now, the stock is down by 14.4% so far this year. Despite the impact of the increase in employee stock-based compensation expense due to rising wage inflation, AWS's operating margin rose year over year by 0.7 percentage points to 29%. Despite these risks, against the backdrop of a high-flying AWS business, resilient e-commerce business, and strengthening advertising business, Amazon can prove to be a solid buy-and-hold pick for long-term retail investors.
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19853.0
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2022-08-09 00:00:00 UTC
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Netflix Stock Slump: Despite Recent Losses, This Streamer Still Dominates
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AAPL
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https://www.nasdaq.com/articles/netflix-stock-slump%3A-despite-recent-losses-this-streamer-still-dominates
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nan
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nan
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Increased streaming competition has hurt few companies as much as Netflix (NASDAQ: NFLX). Yet, while the company lost over a million subscribers in the first half of 2022, Netflix is still the most influential streaming service in the industry. Here's why.
The missing ingredient
Netflix released the documentary series Formula 1: Drive to Survive in March 2019 and has premiered new seasons of the show every year since. Each season consists of 10 episodes detailing the highs and lows of the Formula 1 (F1) racing season. The show's immense success has singlehandedly helped popularize a sport that has had trouble breaking into the U.S. market for decades.
Although Formula 1 has enjoyed high viewership abroad for over half a century, the sport has never caught on in the U.S., where NASCAR reigns supreme. The motorsport series has attempted to break into the U.S. numerous times, with American races held sporadically over the years. For instance, Formula 1 Grand Prix races were held in the U.S. from 1989 to 1991, but then no races took place in the country until 2000 as the sport's popularity remained dismal. Additionally, the U.S. recently missed out on hosting Formula 1 events from 2008 to 2011.
However, F1's popularity in the U.S. has risen significantly since the premiere of Netflix's Drive to Survive, with the company's influence seeming to be the missing ingredient the sport needed all along. The show's fourth season premiered in March and took the top spot for the most-watched show in the world with 29 million viewing hours. In addition to high viewing numbers for Netflix, the show's success has also led to a rise in U.S. viewership for F1 races. The 2021 season saw an average of 946,000 U.S. viewers per race, up 41% from 2019 -- the last normal season as 2020 was affected by COVID-19.
Netflix has had a lasting impact on Formula 1, with 2022 being the first year the U.S. held two of the season's races and the first time Miami hosted a Grand Prix, resulting in record attendance. The 2023 season will take that further by adding Las Vegas to the roster for the first time, with a record-breaking three races held in the U.S. in a single year.
Influencing the competition
While Netflix has helped boost the sport exponentially, its success with Drive to Survive has also affected the content lineup of its biggest competition. Streaming giants Apple (NASDAQ: AAPL), Disney (NYSE: DIS), and Amazon (NASDAQ: AMZN) have all recently released or announced projects themed as F1 in hopes of cashing in on the craze Netflix started.
Amazon launched its Prime Video docuseries Fernando in 2020, following the Formula 1 driver Fernando Alonso as he navigates the racing season; the show has received two seasons. Disney has also joined the competition by announcing an original Hulu series centered around F1 driver Daniel Ricciardo, easily the most-featured driver in Netflix's Drive to Survive and incredibly popular in the U.S. Another company to join the F1 takeover has been Apple, as it announced a Formula 1 film in the works starring Brad Pitt and a documentary following seven-time world champion Lewis Hamilton.
Few streaming companies have proven their power to influence the competition and pop culture like Netflix. Disney comes close with its push of the superhero genre, resulting in almost every streaming platform eventually offering a series based on a group of heroes. However, Disney grew Marvel into the juggernaut it is today with the help of comic characters that already had a fairly large fanbase. Netflix has proven a unique ability to grow brands with little to no fan bases and push them into the stratosphere. Its effect on Formula 1 is proof of that, along with the immense success of its original series, Stranger Things and Squid Game.
Utilizing its brands
In the future, Netflix will want to continue growing the content that has hit the hardest. For instance, if the company can offer more Formula 1 content for fans to turn to when they have finished the latest season of Drive to Survive, subscribers will be less likely to turn to the competition.
The company already has subsequent seasons of its biggest shows, Stranger Things and Squid Game, in the works, with the former even getting a spinoff show. The company is moving in the right direction, but subscriber retention will hang on what consumers watch once they complete the latest seasons of their favorite shows. Therefore, offering additional content in popular genres must be Netflix's focus with its upcoming content.
10 stocks we like better than Netflix
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*Stock Advisor returns as of July 27, 2022
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Dani Cook has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Apple, Netflix, and Walt Disney. The Motley Fool recommends the following options: long January 2024 $145 calls on Walt Disney, long March 2023 $120 calls on Apple, short January 2024 $155 calls on Walt Disney, and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Streaming giants Apple (NASDAQ: AAPL), Disney (NYSE: DIS), and Amazon (NASDAQ: AMZN) have all recently released or announced projects themed as F1 in hopes of cashing in on the craze Netflix started. Netflix has had a lasting impact on Formula 1, with 2022 being the first year the U.S. held two of the season's races and the first time Miami hosted a Grand Prix, resulting in record attendance. Disney has also joined the competition by announcing an original Hulu series centered around F1 driver Daniel Ricciardo, easily the most-featured driver in Netflix's Drive to Survive and incredibly popular in the U.S. Another company to join the F1 takeover has been Apple, as it announced a Formula 1 film in the works starring Brad Pitt and a documentary following seven-time world champion Lewis Hamilton.
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Streaming giants Apple (NASDAQ: AAPL), Disney (NYSE: DIS), and Amazon (NASDAQ: AMZN) have all recently released or announced projects themed as F1 in hopes of cashing in on the craze Netflix started. The missing ingredient Netflix released the documentary series Formula 1: Drive to Survive in March 2019 and has premiered new seasons of the show every year since. The Motley Fool has positions in and recommends Amazon, Apple, Netflix, and Walt Disney.
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Streaming giants Apple (NASDAQ: AAPL), Disney (NYSE: DIS), and Amazon (NASDAQ: AMZN) have all recently released or announced projects themed as F1 in hopes of cashing in on the craze Netflix started. The missing ingredient Netflix released the documentary series Formula 1: Drive to Survive in March 2019 and has premiered new seasons of the show every year since. Disney has also joined the competition by announcing an original Hulu series centered around F1 driver Daniel Ricciardo, easily the most-featured driver in Netflix's Drive to Survive and incredibly popular in the U.S. Another company to join the F1 takeover has been Apple, as it announced a Formula 1 film in the works starring Brad Pitt and a documentary following seven-time world champion Lewis Hamilton.
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Streaming giants Apple (NASDAQ: AAPL), Disney (NYSE: DIS), and Amazon (NASDAQ: AMZN) have all recently released or announced projects themed as F1 in hopes of cashing in on the craze Netflix started. The missing ingredient Netflix released the documentary series Formula 1: Drive to Survive in March 2019 and has premiered new seasons of the show every year since. In addition to high viewing numbers for Netflix, the show's success has also led to a rise in U.S. viewership for F1 races.
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19854.0
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2022-08-09 00:00:00 UTC
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US STOCKS-S&P 500, Nasdaq futures slip after chipmaker Micron's warning
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AAPL
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https://www.nasdaq.com/articles/us-stocks-sp-500-nasdaq-futures-slip-after-chipmaker-microns-warning
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nan
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nan
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For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window.
Futures: Dow flat, S&P off 0.21%, Nasdaq down 0.55%
Aug 9 (Reuters) - Nasdaq and S&P futures fell on Tuesday after a dismal forecast from Micron Technology dragged chip stocks lower, while investors remained cautious ahead of inflation data that will feed into the U.S. Federal Reserve's rate hike plans.
A high inflation print, following last week's strong jobs numbers, will likely push the Fed to continue with jumbo rate hikes and weigh on a recent recovery in stocks.
Traders are expecting a 67.5% chance of the Fed raising rates by 75 basis points in September, its third such hefty hike. IRPR
Bank stocks edged higher in trading before the bell, tracking a rise in U.S. Treasury yields on rate hike expectations. US/
Growth and technology stocks, whose valuations are sensitive to rising bond yields, slipped, with Tesla Inc TSLA.O and Apple Inc AAPL.O down 0.6% each.
Micron Technology Inc MU.O fell 4.6% as the memory chip maker said its free cash flow was expected to be negative for the fiscal first quarter and that it could see significant sequential declines in revenue and margins due to a fall in shipments.
Peers Nvidia NVDA.O and Advanced Micro Devices AMD.O fell 3.3% and 1.9%, respectively, extending the previous session's sharp declines after a similar revenue warning from Nvidia.
At 06:44 a.m. ET, Dow e-minis 1YMcv1 were down 3 points, or 0.01%, S&P 500 e-minis EScv1 were down 8.5 points, or 0.21%, and Nasdaq 100 e-minis NQcv1 were down 72 points, or 0.55%.
Despite a choppy recovery since mid-June, the benchmark S&P 500 index .SPX is still down 13% this year after hitting a record high in early January as surging prices, hawkish central banks, geopolitical tensions continue to weigh on investor sentiment.
Stronger-than-expected earnings from corporate America have been a positive, with 77.5% of S&P 500 companies beating earnings estimates, according to I/B/E/S data from Refinitiv on Friday.
Novavax NVAX.O, however, dropped 31.6% after the drugmaker halved its full-year revenue forecast as it does not expect further sales of its COVID-19 shot this year in the United States in the face of a global supply glut and soft demand.
(Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by Saumyadeb Chakrabarty)
((BansariMayur.Kamdar@thomsonreuters.com; Twitter: @BansariKamdar))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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US/ Growth and technology stocks, whose valuations are sensitive to rising bond yields, slipped, with Tesla Inc TSLA.O and Apple Inc AAPL.O down 0.6% each. Micron Technology Inc MU.O fell 4.6% as the memory chip maker said its free cash flow was expected to be negative for the fiscal first quarter and that it could see significant sequential declines in revenue and margins due to a fall in shipments. Despite a choppy recovery since mid-June, the benchmark S&P 500 index .SPX is still down 13% this year after hitting a record high in early January as surging prices, hawkish central banks, geopolitical tensions continue to weigh on investor sentiment.
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US/ Growth and technology stocks, whose valuations are sensitive to rising bond yields, slipped, with Tesla Inc TSLA.O and Apple Inc AAPL.O down 0.6% each. Futures: Dow flat, S&P off 0.21%, Nasdaq down 0.55% Aug 9 (Reuters) - Nasdaq and S&P futures fell on Tuesday after a dismal forecast from Micron Technology dragged chip stocks lower, while investors remained cautious ahead of inflation data that will feed into the U.S. Federal Reserve's rate hike plans. A high inflation print, following last week's strong jobs numbers, will likely push the Fed to continue with jumbo rate hikes and weigh on a recent recovery in stocks.
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US/ Growth and technology stocks, whose valuations are sensitive to rising bond yields, slipped, with Tesla Inc TSLA.O and Apple Inc AAPL.O down 0.6% each. Futures: Dow flat, S&P off 0.21%, Nasdaq down 0.55% Aug 9 (Reuters) - Nasdaq and S&P futures fell on Tuesday after a dismal forecast from Micron Technology dragged chip stocks lower, while investors remained cautious ahead of inflation data that will feed into the U.S. Federal Reserve's rate hike plans. A high inflation print, following last week's strong jobs numbers, will likely push the Fed to continue with jumbo rate hikes and weigh on a recent recovery in stocks.
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US/ Growth and technology stocks, whose valuations are sensitive to rising bond yields, slipped, with Tesla Inc TSLA.O and Apple Inc AAPL.O down 0.6% each. For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window. A high inflation print, following last week's strong jobs numbers, will likely push the Fed to continue with jumbo rate hikes and weigh on a recent recovery in stocks.
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19855.0
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2022-08-09 00:00:00 UTC
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2 Warren Buffett Stocks to Buy Hand Over Fist Right Now
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AAPL
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https://www.nasdaq.com/articles/2-warren-buffett-stocks-to-buy-hand-over-fist-right-now
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nan
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nan
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Following Warren Buffett'sinvestment advicehas been a very profitable strategy for many years now, and especially in a down market, investors want to know where the Oracle of Omaha is putting his cash. One of the great perks of Buffett's investment strategy is that he doesn't try to overcomplicate the process. If a company has a wide economic moat, generates a lot of cash, and operates an easy-to-understand, high-quality business, there's a good chance Buffett will like the stock.
And given that the S&P 500 and Nasdaq Composite have dropped 13% and 19% year to date, respectively, now is an optimal time to buy shares of first-class businesses. In the words of Buffett, investors should be "fearful when others are greedy, and greedy when others are fearful." Let's have a look at two Warren Buffett stocks that investors can turn to amid the latest market correction.
Image source: Getty Images.
1. Apple
Apple (NASDAQ: AAPL), one of the most prominent technology companies of our time, has shed 7% of its value since the start of the year. Talk about a wide economic moat -- the Tim Cook-led enterprise commands 50% of the U.S. smartphone market and 16% of the industry globally, second only to Samsung. In its fiscal third quarter of 2022, the company's total sales grew a modest 1.9% year over year to $83 billion and its diluted earnings per share declined 7.7% to $1.20. Its products segment, which fell 0.9%, was carried by strong iPhone sales, which increased 2.8% to $40.7 billion. Meanwhile, the Mac, iPad, and wearables, home, and accessories segments posted negative growth year over year.
Its services category -- which includes Apple Music, Apple TV+, advertising, and Apple Pay, among others -- rose 12.1% to $19.6 billion, as it continues to be the tech giant's catalyst for future growth. The company's services segment is also more profitable than its products business at the moment. In Q3, the products segment posted a gross margin of 34.5%, whereas services enjoyed a gross margin of 71.5%, equal to a 169 basis points increase from a year ago. This year, Wall Street analysts expect the company's top and bottom lines to expand 7.3% and 8.7% year over year, respectively, up to $392.4 billion and $6.10 per share.
During the quarter, Apple generated $20.8 billion in free cash flow (FCF), bringing its total over the past 12 months to a staggering $107.6 billion. Its unrivaled cash-flow generation not only opens the gate for share buybacks and dividend hikes, but it also comfortably allows the tech firm to invest in its long-term growth plans. Currently, Apple only pays a dividend of $0.23 per share, equal to a 0.56% dividend yield, so there's plenty of room for expansion in that region. Nonetheless, the tech behemoth still managed to return $28 billion to shareholders during its third-quarter outing.
2. Amazon
The next Warren Buffett stock on my list is Amazon (NASDAQ: AMZN). The world-class e-commerce company, which reigns over 38% of online retail sales in the U.S., has watched its stock price lower 16% year to date. In its second quarter of 2022, its total sales improved 7.2% year over year to $121.2 billion, while the e-commerce giant posted its second consecutive net loss with an earnings per share of negative $0.20.
Its online stores segment, which equaled 41.9% of sales during the quarter, dropped 4.3% to $50.9 billion, as the e-commerce industry continues to face an immense amount of pressure from high inflation and a reopening global economy. The patchy growth from its online retail business was partially offset by a strong performance out of its Amazon Web Services business, which soared 33.3% to $19.7 billion. Amazon Web Services, a cloud-computing platform, is the top dog in the cloud infrastructure arena, controlling one-third of the industry. According to Fortune Business Insights, the global cloud computing market is forecast to climb at a compound annual growth rate (CAGR) of 17.9% through 2028, implying that Amazon is advantageously positioned to benefit from the upward trend.
For 2022, analysts estimate the e-commerce mogul's total revenue will increase 11.2% year over year, up to $522.5 billion, and its earnings per share will drop to $0.04, a notable pullback from its $3.24 per share a year ago. Next year should be a different story for Amazon as the economic backdrop clears up -- the Street is forecasting its top line will grow another 15.6%, and its earnings per share will finish at $2.34, putting the e-commerce leader back on track. Even so, the company still possesses a cash and marketable securities position of $60.7 billion, which I think speaks for itself when it comes to Amazon being able to weather any economic storm.
10 stocks we like better than Amazon
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now... and Amazon wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of July 27, 2022
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Luke Meindl has positions in Apple. The Motley Fool has positions in and recommends Amazon and Apple. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Apple Apple (NASDAQ: AAPL), one of the most prominent technology companies of our time, has shed 7% of its value since the start of the year. Its online stores segment, which equaled 41.9% of sales during the quarter, dropped 4.3% to $50.9 billion, as the e-commerce industry continues to face an immense amount of pressure from high inflation and a reopening global economy. According to Fortune Business Insights, the global cloud computing market is forecast to climb at a compound annual growth rate (CAGR) of 17.9% through 2028, implying that Amazon is advantageously positioned to benefit from the upward trend.
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Apple Apple (NASDAQ: AAPL), one of the most prominent technology companies of our time, has shed 7% of its value since the start of the year. Meanwhile, the Mac, iPad, and wearables, home, and accessories segments posted negative growth year over year. In Q3, the products segment posted a gross margin of 34.5%, whereas services enjoyed a gross margin of 71.5%, equal to a 169 basis points increase from a year ago.
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Apple Apple (NASDAQ: AAPL), one of the most prominent technology companies of our time, has shed 7% of its value since the start of the year. This year, Wall Street analysts expect the company's top and bottom lines to expand 7.3% and 8.7% year over year, respectively, up to $392.4 billion and $6.10 per share. In its second quarter of 2022, its total sales improved 7.2% year over year to $121.2 billion, while the e-commerce giant posted its second consecutive net loss with an earnings per share of negative $0.20.
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Apple Apple (NASDAQ: AAPL), one of the most prominent technology companies of our time, has shed 7% of its value since the start of the year. In its second quarter of 2022, its total sales improved 7.2% year over year to $121.2 billion, while the e-commerce giant posted its second consecutive net loss with an earnings per share of negative $0.20. The patchy growth from its online retail business was partially offset by a strong performance out of its Amazon Web Services business, which soared 33.3% to $19.7 billion.
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19856.0
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2022-08-08 00:00:00 UTC
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US STOCKS-Wall St set for higher open after selloff on jobs data
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AAPL
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https://www.nasdaq.com/articles/us-stocks-wall-st-set-for-higher-open-after-selloff-on-jobs-data
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nan
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nan
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By Bansari Mayur Kamdar and Aniruddha Ghosh
Aug 8 (Reuters) - U.S. stock indexes were set to open higher on Monday after last week's blockbuster jobs data soothed some fears about an economic slowdown, but investors remained cautious as it also added to expectations of a hawkish Federal Reserve.
The focus this week will be on consumer prices data on Wednesday.
The S&P 500 has bounced back 13% from its mid-June lows, but investors fear that signs of persistent inflation this week could further bolster the Fed's case for aggressive monetary policy tightening.
"While it's clear the Fed needs to continue tightening policy, there are still about six weeks until the next meeting and we remind investors that economic data can change very quickly," said Robert Schein, chief investment officer, Blanke Schein Wealth Management.
"The CPI data will help to confirm if the Fed's tightening efforts have been successful in starting to tame inflation or if continued Fed tightening is needed."
U.S. rate futures have priced in a 68.5% chance of a 75-basis-point hike at the Fed's September meeting, up from about 41% before payrolls data on Friday beat market expectations. IRPR
Banks that tend to benefit from a higher interest rate environment extended their gains in trading before the bell.
Megacap growth and technology stocks edged higher, with Tesla TSLA.O up 2.3%. The U.S. electric-car maker signed contracts worth about $5 billion to buy materials for their batteries from nickel processing companies in Indonesia, according to a CNBC report.
Other high-growth stocks such as Apple Inc AAPL.O and Amazon.com Inc AMZN.O gained as U.S. Treasury yields pulled back from sharp highs in the previous session. The benchmark 10-year yield declined 1.6% in early trading.
Meanwhile, the U.S. Senate on Sunday passed a sweeping $430 billion bill intended to fight climate change, lower drug prices and raise some corporate taxes.
"All in all, it's a net positive. Biotech and pharma should rebound after some uncertainty because it (the bill) is less onerous than initially anticipated as it relates to negotiating drug prices," said Thomas Hayes, managing member, Great Hill Capital LLC, New York.
Hayes added that a lot of companies might accelerate their stock buybacks as they now have incentive to aggressively initiate buybacks before the 1% tax kicks in, helping the equity markets overall.
Nvidia Corp NVDA.O fell 7% on saying it expects second-quarter revenue of about $6.70 billion, down 19% from the prior quarter, largely hurt by weakness in its gaming business.
Signify Health Inc SGFY.N jumped 15.1% on a media report that CVS Health Corp CVS.N was looking to buy the health technology company.
Global Blood Therapeutics climbed 4.6% on Pfizer's PFE.N $5.4 billion deal for the blood disorder drugmaker.
At 08:50 a.m. ET, Dow e-minis 1YMcv1 were up 164 points, or 0.50%, S&P 500 e-minis EScv1 were up 25.75 points, or 0.62%, and Nasdaq 100 e-minis NQcv1 were up 102.25 points, or 0.77%.
Palantir Technologies Inc PLTR.N dropped 14.1% after the data analytics software company lowered its annual revenue forecast as the timing of some large government contracts remained uncertain.
Tyson Foods Inc TSN.N fell 3.4% on missing quarterly profit expectations.
(Reporting by Bansari Mayur Kamdar and Aniruddha Ghosh in Bengaluru; Editing by Shounak Dasgupta)
((BansariMayur.Kamdar@thomsonreuters.com; Twitter: @BansariKamdar))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Other high-growth stocks such as Apple Inc AAPL.O and Amazon.com Inc AMZN.O gained as U.S. Treasury yields pulled back from sharp highs in the previous session. By Bansari Mayur Kamdar and Aniruddha Ghosh Aug 8 (Reuters) - U.S. stock indexes were set to open higher on Monday after last week's blockbuster jobs data soothed some fears about an economic slowdown, but investors remained cautious as it also added to expectations of a hawkish Federal Reserve. Biotech and pharma should rebound after some uncertainty because it (the bill) is less onerous than initially anticipated as it relates to negotiating drug prices," said Thomas Hayes, managing member, Great Hill Capital LLC, New York.
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Other high-growth stocks such as Apple Inc AAPL.O and Amazon.com Inc AMZN.O gained as U.S. Treasury yields pulled back from sharp highs in the previous session. By Bansari Mayur Kamdar and Aniruddha Ghosh Aug 8 (Reuters) - U.S. stock indexes were set to open higher on Monday after last week's blockbuster jobs data soothed some fears about an economic slowdown, but investors remained cautious as it also added to expectations of a hawkish Federal Reserve. Meanwhile, the U.S. Senate on Sunday passed a sweeping $430 billion bill intended to fight climate change, lower drug prices and raise some corporate taxes.
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Other high-growth stocks such as Apple Inc AAPL.O and Amazon.com Inc AMZN.O gained as U.S. Treasury yields pulled back from sharp highs in the previous session. By Bansari Mayur Kamdar and Aniruddha Ghosh Aug 8 (Reuters) - U.S. stock indexes were set to open higher on Monday after last week's blockbuster jobs data soothed some fears about an economic slowdown, but investors remained cautious as it also added to expectations of a hawkish Federal Reserve. "While it's clear the Fed needs to continue tightening policy, there are still about six weeks until the next meeting and we remind investors that economic data can change very quickly," said Robert Schein, chief investment officer, Blanke Schein Wealth Management.
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Other high-growth stocks such as Apple Inc AAPL.O and Amazon.com Inc AMZN.O gained as U.S. Treasury yields pulled back from sharp highs in the previous session. By Bansari Mayur Kamdar and Aniruddha Ghosh Aug 8 (Reuters) - U.S. stock indexes were set to open higher on Monday after last week's blockbuster jobs data soothed some fears about an economic slowdown, but investors remained cautious as it also added to expectations of a hawkish Federal Reserve. The benchmark 10-year yield declined 1.6% in early trading.
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19857.0
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2022-08-08 00:00:00 UTC
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Buffett Goes on Buying Spree as Stock Market Reels
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https://www.nasdaq.com/articles/buffett-goes-on-buying-spree-as-stock-market-reels
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nan
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Warren Buffett went bargain hunting with both fists in the second quarter, scooping up billions of dollars worth of equities amid the broader market's steep selloff.
Berkshire Hathaway (BRK.B, $292.07) was a net buyer of stocks to the tune of $3.8 billion for the three months ended June 30. For good measure, Buffett, the conglomerate's chairman and CEO, also bought back $1 billion worth of Berkshire Hathaway's own stock.
SEE MORE Biden's Inflation Reduction Act: Investing Winners and Losers
The S&P 500 lost more than 16% of its value during the second quarter. Suffice to say that Buffett was once again greedy when others were fearful.
Although Buffett slowed his pace of purchases of shares in both other companies and his own compared with Q1, the buying stands in stark contrast to Q2 2021, when Berkshire was a net seller of equities.
We won't know the full details of which stocks Buffett bought and sold during Q2 until Berkshire releases its Form 13-F on Aug. 15. But we do know that a sizable portion of that $3.8 billion in net purchases went to Occidental Petroleum (OXY, $59.01).
In the latter part of June, Berkshire bought an additional 9.6 million shares – worth about $530 million – in the integrated oil and gas firm. The holding company added to its stake in July, buying another 4.3 million OXY shares worth $250 million.
Including warrants, Berkshire owns nearly a third of OXY's shares outstanding. Naturally, the conglomerate's large and growing position in OXY is fueling speculation that Buffett could be eyeing a buyout of Occidental Petroleum.
Remarkably, as enthusiastically as Buffett went shopping for stocks in Q2, all that spending barely made a dent in Berkshire's cash pile. The company ended the quarter with $105.4 billion in cash, equivalents and short-term investments. That's only $847 million less than what Berkshire held in its coffers at the end of Q1.
Second-quarter insurance-investment income of $1.9 billion helped fatten Berkshire's wallet even as it continued to splurge on stocks.
Berkshire Q2 Earnings Show Big Investing Loss
Although Buffett may have delighted in the market's Q2 swoon for serving up quality stocks on sale, the general drawdown in equities dinged Berkshire's bottom line in a big way.
The company was forced to record an investing loss of $53 billion on its portfolio of securities. It's a paper loss only, and something that no investor in Berkshire Hathaway should lose sleep over.
SEE MORE Are We in a Recession? Here's What the Experts Say
BRK.B's equity portfolio is highly concentrated, after all. Its top five holdings – Apple (AAPL), Bank of America (BAC), American Express (AXP), Chevron (CVX) and Coca-Cola (KO) – account for about 75% of the entire portfolio value.
AAPL, which alone accounts for more than 40% of Berkshire's portfolio, shed more than a fifth of its price value in Q2. BAC and AXP each fell by about a quarter. Chevron, for its part, lost 11% during the second quarter. Indeed, of BRK.B's top-five holdings, only KO (+1.5%) delivered a Q2 gain.
But these are long-term holdings, at the whim of the accounting rules. Buffett urged investors not to overreact to what is essentially just some short-term bookkeeping.
"The amount of investment gains/losses in any given quarter is usually meaningless and delivers figures for net earnings per share that can be extremely misleading to investors who have little or no knowledge of accounting rules," Buffett said in a statement.
Berkshire Operating Income Tops Estimates in Q2
What should be of importance to holders of Berkshire's Class B shares is that the company's operating income came in at $4.21 per share. That easily topped analysts' average estimate of $3.34 per share, according to S&P Global Market Intelligence.
"The outperformance came from higher dividend and interest income, and stronger results at BH Reinsurance, BNSF and the manufacturing division, partially offset by worse results in Berkshire Energy and Geico," writes UBS Global Research analyst Brian Meredith, who rates the stock at Buy.
SEE MORE 10 Best Low-Volatility Stocks to Buy Now
Meredith's bullishness is the mainstream view on the Street. Only four analysts cover BRK.B, per S&P Global Market Intelligence, but they give the stock a consensus recommendation of Buy.
Little wonder there. Not only has BRK.B been a strong defensive holding during the current bear market – shares were off 2.3% for the year-to-date ended Aug. 5 to beat the S&P 500 by nearly 11 percentage points – but it remains compellingly priced.
"BRK's shares are currently trading at around a 26% discount to its intrinsic value, which is more than the 22% average discount since BRK resumed share repurchases in the third quarter of 2018," Meredith writes.
If nothing else, the company's second-quarter results prove once again that when it comes to the best stocks to buy for a bear market, Berkshire Hathaway remains tough to beat.
SEE MORE 6 Sturdy Defensive Stocks to Buy for 2022
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Its top five holdings – Apple (AAPL), Bank of America (BAC), American Express (AXP), Chevron (CVX) and Coca-Cola (KO) – account for about 75% of the entire portfolio value. AAPL, which alone accounts for more than 40% of Berkshire's portfolio, shed more than a fifth of its price value in Q2. Although Buffett slowed his pace of purchases of shares in both other companies and his own compared with Q1, the buying stands in stark contrast to Q2 2021, when Berkshire was a net seller of equities.
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Its top five holdings – Apple (AAPL), Bank of America (BAC), American Express (AXP), Chevron (CVX) and Coca-Cola (KO) – account for about 75% of the entire portfolio value. AAPL, which alone accounts for more than 40% of Berkshire's portfolio, shed more than a fifth of its price value in Q2. In the latter part of June, Berkshire bought an additional 9.6 million shares – worth about $530 million – in the integrated oil and gas firm.
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Its top five holdings – Apple (AAPL), Bank of America (BAC), American Express (AXP), Chevron (CVX) and Coca-Cola (KO) – account for about 75% of the entire portfolio value. AAPL, which alone accounts for more than 40% of Berkshire's portfolio, shed more than a fifth of its price value in Q2. Although Buffett slowed his pace of purchases of shares in both other companies and his own compared with Q1, the buying stands in stark contrast to Q2 2021, when Berkshire was a net seller of equities.
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Its top five holdings – Apple (AAPL), Bank of America (BAC), American Express (AXP), Chevron (CVX) and Coca-Cola (KO) – account for about 75% of the entire portfolio value. AAPL, which alone accounts for more than 40% of Berkshire's portfolio, shed more than a fifth of its price value in Q2. Berkshire Hathaway (BRK.B, $292.07) was a net buyer of stocks to the tune of $3.8 billion for the three months ended June 30.
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19858.0
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2022-08-08 00:00:00 UTC
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The Key Technologies That Power the Metaverse and the Companies Creating Them
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https://www.nasdaq.com/articles/the-key-technologies-that-power-the-metaverse-and-the-companies-creating-them
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nan
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I
f you were around at the tail-end of the last century, you will remember hearing about this new thing called the internet, which started in the 1960s as a U.S. Department of Defense Advanced Research Projects Agency (ARPA) networking project (ARPANET). It has since blossomed from a California-based four-node network into a global system that exhausted its pool of approximately 4.3 billion IPv4 addresses back in 2019. It has also seen an over 30-fold increase in retail sales from 2000 to 2021 from $27.6 billion to $870.8 billion, not to mention the trillions of dollars of market cap the ecosystem has spawned.
In fact, every U.S. company with a market cap north of $1 trillion is tied directly to the internet, including Apple (AAPL), Microsoft (MSFT), Alphabet (GOOG) and Amazon (AMZN). If you asked many what they thought the “World Wide Web” would evolve into back in 1999 or even 2009, you might have gotten a Henry Ford attributed (incorrectly as it turns out) “faster horses” type of response. Essentially a “do what we’re doing now but make it easier and faster to do” type sentiment.
The last five or so years have seen a similar scenario start to emerge with what has been referred to simply as “the metaverse.” To be clear, the metaverse is a constantly evolving space and seems to be defined solely through the lens of what potential benefit can be wrangled from it. Research firm Grandview estimates the North American metaverse market at $15.1 billion in 2020 and forecasts a 39.4% compound annual growth rate through 2030 to $418.4 billion, a 26-fold increase in only 10 years as compared to the 30 times, 20-year growth of the broader internet.
Who Owns the Metaverse?
Just as no one owns the internet, no one person or company owns the metaverse. But there are companies that are creating the technologies and tools needed to build the metaverse.
The Front End
The one thing that differentiates the metaverse from the internet is its immersiveness. While we are decades, if not centuries away from having a Star Trek-like Holodeck experience, Hollywood special effects developer Industrial Light and Magic (ILM) has been offering an immersive environment dubbed Stagecraft. It brings greenscreen technology from a post-production process into the real world as discussed in this video. It is truly amazing stuff, and we highly recommend watching that video.
For the rest of us, immersive environments have traditionally been dependent on what budget you may have for monitors and surround sound systems. That has changed over the past few years, and what started as very clunky or poorly adopted headsets have now evolved into devices we fantasized about only a decade ago.
Reading through the specifications for the Meta (META) Quest 2 ($299) headset kit on the Oculus website really doesn’t get into any nuts and bolts of the device, but it does mention things like “3D positional audio,” 1832 x 1920 pixel resolution screen per eyeball, various screen refresh rates (60, 72, 90 Hz) and 6 Degrees of Freedom (DoF). This means the device captures movement along three axes: front/back, up/down and left/right. Additionally, the device has a three-axis gyroscope and a three-axis accelerometer that are manufactured by companies like STMicroelectronics (STM). A more detailed breakdown really gets into it and calls out items like Qualcomm (QCOM) manufactured Snapdragon processors and Western Digital (WDC) subsidiary SanDisk storage modules.
One thing that is interesting is that Oculus and other headset manufacturers are in the process of moving away from OLED screens to LCD screens which they are positioning as “Fast-Switch.” Despite the fact that OLED screens by all accounts provide better contrast, color gamut and uniformity, developers are counting on improved software to make up for any difference in quality in screen technology like lower power consumption and much better cost efficiency.
Reviewing a teardown of a Microsoft HoloLens 2 ($3,500 - $5,199) headset which was available only to corporations and developers until June 2020 again mentions Snapdragon processors. Another goes to great pains to find components manufactured by Microvision Inc (MVIS).
The Back End
Bandwidth, storage, processing power and increasingly, geography, all play into what we would describe as the back end of the metaverse. If we were to pinpoint one aspect of internet infrastructure that will benefit from the evolution of the metaverse, we would have to cheat a little because while headsets are becoming more powerful, that power has more to do with delivering positional telemetry, higher quality graphics and sound processing than it does generating gameplay or running applications. The devices and environments that do all the heavy lifting are still consoles, personal computers, and increasingly, data centers.
Data centers tie in all four items mentioned earlier. We have seen a growing trend of data centers providing not just storage but also processing power. Further, as users demand lower latency responses, data center developers are becoming more strategic about the geographic placement of these centers. Names in the data center space include Equinix (EQIX), Digital Realty Trust (DLR) and VNET Group (VNET). Component providers that are active in this space include names like Switch (SWCH), Broadcom (AVGO), Skyworks Solutions (SWKS) and Cambium Networks (CMBM).
Content
As much as the metaverse relies on the front- and back-end structures we’ve discussed, what good is an immersive environment if you don’t have anything in which to immerse yourself? To date, the bulk of content development has been focused on video games, which tie into the Sony Group (SONY) PlayStation and Microsoft Corp (MSFT) XBOX environments and individual game developers like Electronic Arts (EA). One company that is poised to continue to do very well is Roblox (RBLX), which provides a development platform for any user to create and monetize their own content. As we discussed in a recent piece on Virtual and Augmented Reality, there have been a number of advances made incorporating V/R and A/R technology in learning, both in academic and real-world situations from studying human anatomy to learning aircraft maintenance.
Conclusion (Virtuous Circle)
The metaverse is a great example of what we like to describe as the Virtuous Circle of digital infrastructure. The premise is that given a set amount of storage, bandwidth and processing power, developers and users alike will max out the system’s capacity, prompting growth and innovation in that system’s infrastructure. Once that buildout creates more headroom, the cycle repeats itself. What is happening in the metaverse is exciting in its own right, but our interest in this space is in those companies that are facilitating the future of the internet.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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In fact, every U.S. company with a market cap north of $1 trillion is tied directly to the internet, including Apple (AAPL), Microsoft (MSFT), Alphabet (GOOG) and Amazon (AMZN). The last five or so years have seen a similar scenario start to emerge with what has been referred to simply as “the metaverse.” To be clear, the metaverse is a constantly evolving space and seems to be defined solely through the lens of what potential benefit can be wrangled from it. While we are decades, if not centuries away from having a Star Trek-like Holodeck experience, Hollywood special effects developer Industrial Light and Magic (ILM) has been offering an immersive environment dubbed Stagecraft.
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In fact, every U.S. company with a market cap north of $1 trillion is tied directly to the internet, including Apple (AAPL), Microsoft (MSFT), Alphabet (GOOG) and Amazon (AMZN). The Back End Bandwidth, storage, processing power and increasingly, geography, all play into what we would describe as the back end of the metaverse. To date, the bulk of content development has been focused on video games, which tie into the Sony Group (SONY) PlayStation and Microsoft Corp (MSFT) XBOX environments and individual game developers like Electronic Arts (EA).
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In fact, every U.S. company with a market cap north of $1 trillion is tied directly to the internet, including Apple (AAPL), Microsoft (MSFT), Alphabet (GOOG) and Amazon (AMZN). Research firm Grandview estimates the North American metaverse market at $15.1 billion in 2020 and forecasts a 39.4% compound annual growth rate through 2030 to $418.4 billion, a 26-fold increase in only 10 years as compared to the 30 times, 20-year growth of the broader internet. One thing that is interesting is that Oculus and other headset manufacturers are in the process of moving away from OLED screens to LCD screens which they are positioning as “Fast-Switch.” Despite the fact that OLED screens by all accounts provide better contrast, color gamut and uniformity, developers are counting on improved software to make up for any difference in quality in screen technology like lower power consumption and much better cost efficiency.
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In fact, every U.S. company with a market cap north of $1 trillion is tied directly to the internet, including Apple (AAPL), Microsoft (MSFT), Alphabet (GOOG) and Amazon (AMZN). Just as no one owns the internet, no one person or company owns the metaverse. But there are companies that are creating the technologies and tools needed to build the metaverse.
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19859.0
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2022-08-08 00:00:00 UTC
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Biden's Inflation Reduction Act: Investing Winners and Losers
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AAPL
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https://www.nasdaq.com/articles/bidens-inflation-reduction-act%3A-investing-winners-and-losers
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nan
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The Inflation Reduction Act is now a reality. President Joe Biden signed the legislation into law on Tuesday, Aug. 16, after it was passed in both the Senate and the House of Representatives.
It remains to be seen whether the Inflation Reduction Act actually reduces inflation. It is, after all, first and foremost a spending bill, and new government spending tends to be inflationary. Ultimately, Federal Reserve policy, the untangling of the global supply chain, and increased energy production to offset the effects of Russian sanctions will have far more impact on inflation.
All the same, this is one of the most significant pieces of legislation in years, and it has major implications for American environmental policy and prescription drug prices.
SEE MORE The Inflation Reduction Act and Taxes: What You Should Know
We'll start with the two biggest talking points: green investment and Medicare pricing. The bill would plow $369 billion into renewable energy investment, including wind and solar projects, with a goal of reducing carbon emissions by 40% by 2030. It would also expand tax credits for electric vehicle (EV) purchases and promote U.S. energy independence.
The other big news is that Medicare would be able to negotiate drug prices for the first time, potentially lowering prescription costs for both patients and taxpayers.
Of course, nothing is free. To pay for all of this, the bill would levy a 1% tax on all corporate share buybacks and a 15% minimum corporate income tax on any company with more than $1 billion in revenues.
"We find the potential tax on share buybacks to be particularly interesting," says Sonia Joao, chief operating officer of Houston-based RIA Robertson Wealth Management. "Share buybacks have been a popular way for American companies, and particularly tech firms, to reward their shareholders. This may incentivize them to spend less on payouts and more on dividends or debt reduction. It's early, but we could see this having far-ranging implications for the U.S. market."
Stock buybacks have added trillions of dollars in buying pressure over the past decade. In fact, the companies of the S&P 500 bought back approximately $1 trillion in just the past four quarters alone, according to Yardeni Research. So, clearly, any significant change in buying patterns will potentially have an outsized impact on the market. It could mean higher dividends, but lower capital appreciation.
Today, we're going to look at some of the potential winners and losers of the Inflation Reduction Act.
SEE MORE 10 Best Low-Volatility Stocks to Buy Now
Data is as of Aug. 5.
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Winner: Tesla
Industry: Auto manufacturers
Market value: $903.0 billion
One of the most obvious winners of the Inflation Reduction Act is electric vehicle leader Tesla (TSLA, $864.51).
Tesla was an early beneficiary of federal taxpayer subsidies for EV purchases. But unfortunately, the company also became a victim of its own success. By 2018, Tesla had already sold more than 200,000 electric vehicles, which meant that they had exhausted their government allowance… and that buyers were no longer entitled to the $7,500 credit. This put Tesla at a major disadvantage to younger startups or to traditional automakers that had only recently dipped their toes into the EV market, as its products were effectively $7,500 more expensive.
The Inflation Reduction Act lifts the cap, thus making Tesla EVs eligible for the subsidy again.
Subsidies, or the lack thereof, wasn't Tesla's only issue, of course. The company faces an onslaught of new competition in both electric vehicles and in autonomous driving, two areas where Tesla had a major head start. Tesla also has both the blessing and the curse of being run by eccentric billionaire Elon Musk. Musk remains a visionary in the EV space, but his media antics – such as his attempted purchase of social media platform Twitter (TWTR) – have proven to be a distraction.
Still, the return of the subsidy is a big deal, as is the broader focus on clean, renewable energy. This may have been just the shot in the arm that Tesla's shares needed.
One caveat: The rebate only applies to cars priced under $55,000. So, Tesla might need to sell a cheaper model or a slimmed down version of its Model 3 if it is to take full advantage.
SEE MORE 10 Stocks to Buy When They're Down
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Winner: Albemarle
Industry: Specialty chemicals
Market value: $27.9 billion
A major investment in renewable energy and in electric vehicles can only mean one thing: a massive increase in demand for energy storage. EVs depend on large battery packs, and storage is a critical part of making solar and wind energy viable replacements for fossil fuels. After all, the sun doesn't shine at night, and the wind doesn't blow all the time.
Demand for battery storage means demand for lithium, and that's good news for major lithium producers like Albemarle (ALB, $237.99).
Founded in 1887, Albemarle is a leading global producer of lithium and bromine. Without the raw materials that ALB produces, there could be no Tesla or any other electric vehicle. But beyond that, there could be no iPhone or battery-powered laptop computer either. Virtually every wireless electronic gadget you own depends on a lithium ion battery. And those batteries depend on the mining and production of high-quality lithium.
Albemarle isn't a glitzy tech stock. It's a gritty materials stock. But it's the gritty materials stock that makes glitzy tech possible.
Demand for lithium was already strong long before the Inflation Reduction Act was dreamed up, and demand would continue to be strong even if the bill somehow died in the House of Representatives. But the potential increase in demand due to the bill's climate provisions will only turbocharge ALB even higher.
SEE MORE 12 Best Industrial Stocks to Buy for the Rest of 2022
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Surprising Winner: Energy Transfer
Industry: Oil & gas midstream
Market value: $33.4 billion
The Inflation Reduction Act is known mostly for its emphasis on renewable energy. After all, it pledged to reduce greenhouse gasses 40% by 2030. But given that West Virginia Senator Joe Manchin's vote was critical to the bill's passage – and given the importance of traditional fossil fuels to the Mountain State – there were a few sweeteners for energy and energy infrastructure companies.
At the heart of it is a revision of the permitting process for infrastructure, including pipelines, that would force the government to make a decision on whether or not to issue a permit within two years.
Major pipeline projects, including the Dakota Access and the Keystone pipelines, have been political hot potatoes over the past decade. Eliminating some of the uncertainty surrounding new projects – and forcing the government to give a straight answer in a reasonable timeline – is a major plus for pipeline operators and particularly serial growers like Energy Transfer (ET, $10.82).
ET operates over 120,000 miles of pipeline assets, and approximately 30% of all American natural gas flows through Energy Transfer assets.
Natural gas is considered a "bridge" energy source by many, or an interim step in transitioning away from dirty coal into clean renewable energy. But it's a bridge that we may be crossing for decades, and in the meantime, there is money to be made. At current prices, Energy Transfer yields over 8%.
SEE MORE 3 MLPs Throwing Off Massive 8%-9% Yields
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Winner: NextEra Energy
Industry: Utilities – regulated electric
Market value: $172.9 billion
The stated aim of the bill, apart from lowering inflation, is to make the U.S. energy grid greener. As such, $113 billion is earmarked to encourage the building of new renewable electricity plants. That should be boon to NextEra Energy (NEE, $87.98) and other utility operators with a major presence in renewable energy. NEE has ambitious plans in place to eliminate its carbon emissions entirely. Already, the company is the world's largest producer of wind and solar energy.
But the benefits to utilities go beyond the incentives to build more capacity. If the bill is successful in advancing the transition to electric vehicles, then demand for electricity will naturally rise as drivers substitute a trip to the gas station with an overnight charge in their garage.
And the same holds true for appliances, hot water heaters and home heating systems. While we will still be using natural gas in existing construction for decades, new construction will depend far more heavily on electricity.
SEE MORE Hydrogen Stocks: Unstable, But Potentially Explosive, Too
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Loser: Apple
Industry: Consumer electronics
Market value: $2.66 trillion
Whether or not Apple (AAPL, $165.35) is a winner or loser here will depend on how the company reacts to the tax on stock buybacks. Apple spent over $85 billion on repurchases last year, and in the past decade, that number is close to half a trillion. And this was before the company announced a new $90 billion buyback plan back in April.
Half a trillion dollars is a lot of money, even for a company as large as Apple. And while those buybacks are testament to the company's massive success and almost unbelievable ability to generate mountains of free cash flow, let's face it: This amount of buying pressure from Apple's treasury has clearly had an impact on the share price. This isn't a testable hypothesis, and we have no way to know what AAPL's value would be today in the absence of those repurchases. But it's not a stretch to say that its share price is significantly higher today than it would have been without all of that additional buying.
So, anything that curtails buybacks going forward would be a potential risk for Apple shareholders.
Now, Apple has options here. They can choose to plow some of that buyback money into higher dividends or even into a one-time special dividend. Or, they could further strengthen their already fortress-strong balance sheet by paying down debt.
And it's entirely possible that Apple just continues with its buyback plans and considers the tax a cost of doing business. The 1% levy really isn't going to make or break the company.
So, while Apple is a potential investing loser of the Inflation Reduction Act… it's not likely to lose all that much, and neither are its fellow buy-back hoovering tech competitors, such as Meta Platforms (META) and Alphabet (GOOGL).
SEE MORE The 15 Best Growth Stocks to Buy for the Rest of 2022
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Loser: Johnson & Johnson
Industry: Drug manufacturers – general
Market value: $449.9 billion
Big Pharma will have to negotiate with Medicare going forward. And since Medicare pricing tends to drive the pricing by private insurance companies as well, the impact on drug costs should be significant. This should be a major win for patients and taxpayers alike.
That said, we have to temper expectations here. The law phases in negotiation in stages, with only 10 drugs subject to negotiation in 2026. And newer drugs would not be eligible for negotiation until at least nine years after their release.
Further complicating this is the fact that we still don't know which drugs will make the first cut.
Still, a precedent is being set. And future acts of Congress will likely accelerate what the Inflation Reduction Act has started.
None of this is particularly good for Big Pharma giants like Johnson & Johnson (JNJ, $171.11). Given the phased nature of the negotiation, there will be no immediate impact on JNJ's profitability. But it's coming, so investors should be prepared.
SEE MORE 5 Best Dow Dividend Stocks to Buy Now
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Loser: Amazon.com
Industry: Internet retail
Market value: $1.43 trillion
Amazon.com (AMZN, $140.80) is a wonder of modern capitalism. Amazon essentially created the e-commerce economy from scratch and then followed that up by creating the cloud computing economy from scratch. It's fair to say that AMZN is the most influential company of the past 30 years, and it has done more to revolutionize the way we live than any other company of our lifetimes.
AMZN also happens to be a pioneer in legal tax avoidance. Despite generating $35.1 billion in U.S. profits in 2021, the company enjoyed a federal income tax rate of just 6.1%, according to the Institute on Taxation and Economic Policy.
Now, to be clear, Amazon did nothing "wrong" by avoiding taxes. We all do everything in our power to lower our tax bills, and AMZN simply took advantage of the opportunities presented. It would be doing a disservice to its investors to not take advantage.
Well, that landscape is now changing. Under the Inflation Reduction Act, companies with at least $1 billion in profits would be required to pay a minimum tax rate of 15% on their reported profits.
Amazon will continue to mint money. But going forward, it's going to have to share a bigger chunk of it with Uncle Sam, which means less for those invested in AMZN stock.
SEE MORE 65 Best Dividend Stocks You Can Count On in 2022
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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SEE MORE Hydrogen Stocks: Unstable, But Potentially Explosive, Too Getty Images Loser: Apple Industry: Consumer electronics Market value: $2.66 trillion Whether or not Apple (AAPL, $165.35) is a winner or loser here will depend on how the company reacts to the tax on stock buybacks. This isn't a testable hypothesis, and we have no way to know what AAPL's value would be today in the absence of those repurchases. Ultimately, Federal Reserve policy, the untangling of the global supply chain, and increased energy production to offset the effects of Russian sanctions will have far more impact on inflation.
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SEE MORE Hydrogen Stocks: Unstable, But Potentially Explosive, Too Getty Images Loser: Apple Industry: Consumer electronics Market value: $2.66 trillion Whether or not Apple (AAPL, $165.35) is a winner or loser here will depend on how the company reacts to the tax on stock buybacks. This isn't a testable hypothesis, and we have no way to know what AAPL's value would be today in the absence of those repurchases. SEE MORE 10 Stocks to Buy When They're Down Getty Images Winner: Albemarle Industry: Specialty chemicals Market value: $27.9 billion A major investment in renewable energy and in electric vehicles can only mean one thing: a massive increase in demand for energy storage.
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SEE MORE Hydrogen Stocks: Unstable, But Potentially Explosive, Too Getty Images Loser: Apple Industry: Consumer electronics Market value: $2.66 trillion Whether or not Apple (AAPL, $165.35) is a winner or loser here will depend on how the company reacts to the tax on stock buybacks. This isn't a testable hypothesis, and we have no way to know what AAPL's value would be today in the absence of those repurchases. SEE MORE 10 Stocks to Buy When They're Down Getty Images Winner: Albemarle Industry: Specialty chemicals Market value: $27.9 billion A major investment in renewable energy and in electric vehicles can only mean one thing: a massive increase in demand for energy storage.
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SEE MORE Hydrogen Stocks: Unstable, But Potentially Explosive, Too Getty Images Loser: Apple Industry: Consumer electronics Market value: $2.66 trillion Whether or not Apple (AAPL, $165.35) is a winner or loser here will depend on how the company reacts to the tax on stock buybacks. This isn't a testable hypothesis, and we have no way to know what AAPL's value would be today in the absence of those repurchases. SEE MORE 10 Stocks to Buy When They're Down Getty Images Winner: Albemarle Industry: Specialty chemicals Market value: $27.9 billion A major investment in renewable energy and in electric vehicles can only mean one thing: a massive increase in demand for energy storage.
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19860.0
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2022-08-08 00:00:00 UTC
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Why AMTD Idea Group Is Tumbling Again Today
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AAPL
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https://www.nasdaq.com/articles/why-amtd-idea-group-is-tumbling-again-today
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nan
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nan
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What happened
Shares of AMTD Idea Group (NYSE: AMTD) are still discovering gravity as the meme stock burns up on reentry from the stratosphere. Shares are tumbling 16.5% at 10:58 a.m. ET on Monday morning, continuing the plunge that began last week.
The Hong Kong–based company rocketed to fame on the success of one of its subsidiaries, another meme stock extraordinaire, AMTD Digital (NYSE: HKD), which went public in mid-July and saw its shares soar 1,000% as chatter from the WallStreetBets crowd on Reddit drove the stock higher.
AMTD Idea's own stock went from around $2 a share to almost $13 a share at the same time, but at $3.91 a stub, it's on track to make the full round trip in record time.
So what
There was never any reason for either stock to make the kind of moves it did, valuing the respective companies as it did, putting them among the most expensive stocks on the New York Stock Exchange. Even now its $1.6 billion valuation puts it ahead of many other companies on the NYSE with a better track record and financial position such as 3D Systems, Fiverr, or Warby Parker.
AMTD Digital was an even worse case, as its half-trillion-dollar valuation -- yes, trillion -- was among the top 10 of all stocks, behind the likes of Apple and Microsoft.
Now what
Both stocks still trade well above their starting points. AMTD Digital is still up 4,300%, despite having shed over three-quarters of its value.
What this does show, though, is the growing power of the retail investor to move stocks beyond all sense. While early investors in these names are sitting on hefty profits, many more are nursing serious losses.
10 stocks we like better than AMTD International Inc
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now... and AMTD International Inc wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of July 27, 2022
Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Fiverr International, and Microsoft. The Motley Fool recommends 3D Systems and recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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The Hong Kong–based company rocketed to fame on the success of one of its subsidiaries, another meme stock extraordinaire, AMTD Digital (NYSE: HKD), which went public in mid-July and saw its shares soar 1,000% as chatter from the WallStreetBets crowd on Reddit drove the stock higher. Even now its $1.6 billion valuation puts it ahead of many other companies on the NYSE with a better track record and financial position such as 3D Systems, Fiverr, or Warby Parker. AMTD Digital was an even worse case, as its half-trillion-dollar valuation -- yes, trillion -- was among the top 10 of all stocks, behind the likes of Apple and Microsoft.
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The Hong Kong–based company rocketed to fame on the success of one of its subsidiaries, another meme stock extraordinaire, AMTD Digital (NYSE: HKD), which went public in mid-July and saw its shares soar 1,000% as chatter from the WallStreetBets crowd on Reddit drove the stock higher. The Motley Fool has positions in and recommends Apple, Fiverr International, and Microsoft. The Motley Fool recommends 3D Systems and recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple.
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The Hong Kong–based company rocketed to fame on the success of one of its subsidiaries, another meme stock extraordinaire, AMTD Digital (NYSE: HKD), which went public in mid-July and saw its shares soar 1,000% as chatter from the WallStreetBets crowd on Reddit drove the stock higher. So what There was never any reason for either stock to make the kind of moves it did, valuing the respective companies as it did, putting them among the most expensive stocks on the New York Stock Exchange. 10 stocks we like better than AMTD International Inc When our award-winning analyst team has a stock tip, it can pay to listen.
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What happened Shares of AMTD Idea Group (NYSE: AMTD) are still discovering gravity as the meme stock burns up on reentry from the stratosphere. * They just revealed what they believe are the ten best stocks for investors to buy right now... and AMTD International Inc wasn't one of them! The Motley Fool has positions in and recommends Apple, Fiverr International, and Microsoft.
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19861.0
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2022-08-08 00:00:00 UTC
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US STOCKS-Nasdaq rises over 1% as dip in yields supports megacaps
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AAPL
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https://www.nasdaq.com/articles/us-stocks-nasdaq-rises-over-1-as-dip-in-yields-supports-megacaps
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nan
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nan
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For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window
U.S. Senate approves bill on climate change, drug costs
Nvidia drops as slump in gaming demand hits Q2 revenue
Tyson Foods down on quarterly profit miss
Palantir drops on forecast cut
Indexes up: Dow 0.78%, S&P 0.86%, Nasdaq 1.29%
Updates price, data to open
By Bansari Mayur Kamdar and Aniruddha Ghosh
Aug 8 (Reuters) - The Nasdaq led U.S. stock indexes higher on Monday as a pullback in Treasury yields boosted megacap growth stocks after last week's blockbuster jobs data sparked a tech selloff on expectations of sharp rate hikes by the Federal Reserve.
The focus this week will be on consumer prices data on Wednesday.
The S&P 500 has bounced back 13% from its mid-June lows, but investors fear that signs of persistent inflation this week could further bolster the Fed's case for aggressive monetary policy tightening.
"While it's clear the Fed needs to continue tightening policy, there are still about six weeks until the next meeting and we remind investors that economic data can change very quickly," said Robert Schein, chief investment officer, Blanke Schein Wealth Management.
"The CPI data will help to confirm if the Fed's tightening efforts have been successful in starting to tame inflation or if continued Fed tightening is needed."
U.S. rate futures have priced in a 68.5% chance of a 75-basis-point hike at the Fed's September meeting, up from about 41% before payrolls data on Friday beat market expectations. IRPR
Megacap growth and technology stocks rose in early trading, with Tesla TSLA.O up 5.2%. The U.S. electric-car maker signed contracts worth about $5 billion to buy materials for their batteries from nickel processing companies in Indonesia, according to a CNBC report.
High-growth stocks such as Apple Inc AAPL.O and Amazon.com Inc AMZN.O, whose valuations are vulnerable to rising bond yields, gained as U.S. Treasury yields pulled back from sharp highs in the previous session.
The benchmark 10-year yield declined to 2.77% as investors continued to assess an unexpectedly strong jobs report from Friday. US/
"Stocks don't need good data, they need softer yields, as softer yields push their valuations higher," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
The recovery in equities since July was mostly due to the easing of U.S. yields on the back of growing recession expectations and partly due to the better-than-feared earnings reports, Ozkardeskaya added.
Chipmaker Nvidia Corp NVDA.O fell 4.6% on saying it expects second-quarter revenue of about $6.70 billion, down 19% from the prior quarter, largely hurt by weakness in its gaming business.
Meanwhile, the U.S. Senate on Sunday passed a sweeping $430 billion bill intended to fight climate change, lower drug prices and raise some corporate taxes.
Signify Health Inc SGFY.N jumped 14.8% on a media report that CVS Health Corp CVS.N was looking to buy the health technology company.
At 9:50 a.m. ET, the Dow Jones Industrial Average .DJI was up 256.40 points, or 0.78%, at 33,059.87, the S&P 500 .SPX was up 35.81 points, or 0.86%, at 4,181.00, and the Nasdaq Composite .IXIC was up 163.05 points, or 1.29%, at 12,820.61.
Palantir Technologies Inc PLTR.N dropped 13.2% after the data analytics software company lowered its annual revenue forecast as the timing of some large government contracts remained uncertain.
Tyson Foods Inc TSN.N fell 8.9% on missing quarterly profit expectations.
Advancing issues outnumbered decliners for a 4.96-to-1 ratio on the NYSE and a 3.43-to-1 ratio on the Nasdaq.
The S&P index recorded seven new 52-week highs and 29 new lows, while the Nasdaq recorded 70 new highs and seven new lows.
(Reporting by Bansari Mayur Kamdar and Aniruddha Ghosh in Bengaluru; Editing by Shounak Dasgupta)
((BansariMayur.Kamdar@thomsonreuters.com; Twitter: @BansariKamdar))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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High-growth stocks such as Apple Inc AAPL.O and Amazon.com Inc AMZN.O, whose valuations are vulnerable to rising bond yields, gained as U.S. Treasury yields pulled back from sharp highs in the previous session. For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window U.S. Senate approves bill on climate change, drug costs Nvidia drops as slump in gaming demand hits Q2 revenue Tyson Foods down on quarterly profit miss Palantir drops on forecast cut Indexes up: Dow 0.78%, S&P 0.86%, Nasdaq 1.29% Updates price, data to open By Bansari Mayur Kamdar and Aniruddha Ghosh Aug 8 (Reuters) - The Nasdaq led U.S. stock indexes higher on Monday as a pullback in Treasury yields boosted megacap growth stocks after last week's blockbuster jobs data sparked a tech selloff on expectations of sharp rate hikes by the Federal Reserve. The S&P 500 has bounced back 13% from its mid-June lows, but investors fear that signs of persistent inflation this week could further bolster the Fed's case for aggressive monetary policy tightening.
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High-growth stocks such as Apple Inc AAPL.O and Amazon.com Inc AMZN.O, whose valuations are vulnerable to rising bond yields, gained as U.S. Treasury yields pulled back from sharp highs in the previous session. For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window U.S. Senate approves bill on climate change, drug costs Nvidia drops as slump in gaming demand hits Q2 revenue Tyson Foods down on quarterly profit miss Palantir drops on forecast cut Indexes up: Dow 0.78%, S&P 0.86%, Nasdaq 1.29% Updates price, data to open By Bansari Mayur Kamdar and Aniruddha Ghosh Aug 8 (Reuters) - The Nasdaq led U.S. stock indexes higher on Monday as a pullback in Treasury yields boosted megacap growth stocks after last week's blockbuster jobs data sparked a tech selloff on expectations of sharp rate hikes by the Federal Reserve. Meanwhile, the U.S. Senate on Sunday passed a sweeping $430 billion bill intended to fight climate change, lower drug prices and raise some corporate taxes.
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High-growth stocks such as Apple Inc AAPL.O and Amazon.com Inc AMZN.O, whose valuations are vulnerable to rising bond yields, gained as U.S. Treasury yields pulled back from sharp highs in the previous session. For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window U.S. Senate approves bill on climate change, drug costs Nvidia drops as slump in gaming demand hits Q2 revenue Tyson Foods down on quarterly profit miss Palantir drops on forecast cut Indexes up: Dow 0.78%, S&P 0.86%, Nasdaq 1.29% Updates price, data to open By Bansari Mayur Kamdar and Aniruddha Ghosh Aug 8 (Reuters) - The Nasdaq led U.S. stock indexes higher on Monday as a pullback in Treasury yields boosted megacap growth stocks after last week's blockbuster jobs data sparked a tech selloff on expectations of sharp rate hikes by the Federal Reserve. "While it's clear the Fed needs to continue tightening policy, there are still about six weeks until the next meeting and we remind investors that economic data can change very quickly," said Robert Schein, chief investment officer, Blanke Schein Wealth Management.
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High-growth stocks such as Apple Inc AAPL.O and Amazon.com Inc AMZN.O, whose valuations are vulnerable to rising bond yields, gained as U.S. Treasury yields pulled back from sharp highs in the previous session. For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window U.S. Senate approves bill on climate change, drug costs Nvidia drops as slump in gaming demand hits Q2 revenue Tyson Foods down on quarterly profit miss Palantir drops on forecast cut Indexes up: Dow 0.78%, S&P 0.86%, Nasdaq 1.29% Updates price, data to open By Bansari Mayur Kamdar and Aniruddha Ghosh Aug 8 (Reuters) - The Nasdaq led U.S. stock indexes higher on Monday as a pullback in Treasury yields boosted megacap growth stocks after last week's blockbuster jobs data sparked a tech selloff on expectations of sharp rate hikes by the Federal Reserve. The S&P 500 has bounced back 13% from its mid-June lows, but investors fear that signs of persistent inflation this week could further bolster the Fed's case for aggressive monetary policy tightening.
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19862.0
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2022-08-08 00:00:00 UTC
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3 Reasons You Should Own Individual Stocks Over ETFs
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AAPL
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https://www.nasdaq.com/articles/3-reasons-you-should-own-individual-stocks-over-etfs
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nan
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nan
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If you've ever stumbled into financial TikTok, you've likely come across all sorts of unsubstantiatedinvestment advice(among the occasional informative video). These videos are usually conveniently preluded with "this is not financial advice" right before they give you some terribleinvestment advice
Troves of influencers make the claim that there's no point investing in individual stocks when you can simply buy low-cost, exchange-traded funds (ETFs). While ETFs are certainly useful investment vehicles, I don't think they are compelling enough to abandon investing directly in stocks.
Here's three things the influencers won't tell you about investing in ETFs:
Image source: Getty Images.
ETFs are heavily indexed to a small number of companies
My main issue with ETFs is that most are market-weighted. This means the fund's holdings are weighted by each stock's market cap (the share price times the outstanding share count), so that the larger companies end up dominating the overall allocation.
Consider some of the top ETFs and their overall exposure to the five largest companies in the U.S -- Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), Alphabet (NASDAQ: GOOG), Amazon (NASDAQ: AMZN), and Tesla (NASDAQ: TSLA).
EXCHANGE-TRADED FUND
SECTOR/CATEGORY
EXPOSURE TO 5 LARGEST U.S. COMPANIES
SPDR® S&P 500® ETF Trust (NYSEMKT: SPY)
S&P 500
21.72%
Vanguard S&P 500 ETF (NYSEMKT: VOO)
S&P 500
21.00%
The Technology Select Sector SPDR® Fund (NYSEMKT: XLK)
Tech
45.34%
Vanguard Information Technology Index Fund (NYSEMKT: VGT)
Tech
41.48%
Vanguard ESG U.S. Stock ETF (NYSEMKT: ESGV)
ESG
22.69%
DATA SOURCE: INDEX FUND REPORTS. TABLE BY AUTHOR.
There are obviously other more specific funds you could invest in, such as energy or industrial sector ETFs that do not have exposure to these behemoths. But many investors think that by simply buying a basket of ETFs, they are diversifying. In reality, some or all of these funds will be heavily weighted to the same 5-10 companies.
In 2021, Citywire reported that the largest constituents in the S&P 500 have accounted for over 40% of the total return for the index over a five-year period.
The data indicated that about 1% of the stocks in most S&P 500 ETFs are driving the lion's share of the overall returns.
Don't get me wrong: I'm a fan of many of the big tech names, but I'd rather own them directly.
With broad-market ETFs, you're essentially buying the 5-10 largest companies on the market, but only getting a fraction of the potential upside.
Total Return Level data by YCharts
There are failing companies in the S&P 500
According to forecasts by consulting firm, Innosight, nearly 50% of the companies currently in the S&P 500 will be replaced over the next decade.
Companies get replaced in the S&P 500 when their stock prices fall enough to no longer be representative of the 500 largest U.S. companies by market cap. This means that nearly half of the stocks in the index today are likely future losers, and some of them are potentially headed for bankruptcy.
In fact, the Innosight report found that several energy and brick-and-mortar retail companies that have recently fallen out of the S&P 500 have done exactly that.
Obviously, you won't "own" these failing companies for long because they will be removed from the index, but if you believe in investing in a better future, you might not like the idea of allocating money to companies that are entering the final chapter of their corporate existence.
The diversification offered by S&P 500 ETFs (if even its heavily weighted to FAANG) can be comforting, but once you look under the hood, you realize you're buying a lot of losing companies.
Owning stocks makes you smarter
If I had a dollar for every financial influencer that has touted the advantages of buying low-cost S&P 500 index funds and ETFs over individual stocks, I'd be a much richer person.
The reasoning behind these claims is usually because you can "set it and forget it." There's no listening to earnings calls or keeping up with company filings. No research needed, just buy it and wait.
And for those that genuinely have zero interest in investment research, that is likely a smart move. After all, buying ETFs is certainly better than not investing at all.
But, one very important thing you'll miss out on when buying only ETFs is learning how businesses work. By foregoing the research process, you're also foregoing the opportunity to get smarter along the way.
Investing directly in stocks is certainly more work, and there's no guarantee that you'll beat the market. But it forces you to learn how companies make money, and over time you'll start to recognize patterns that separate great businesses from the average ones.
And in doing so, you'll become an exponentially better investor. Those that invest exclusively in ETFs do not experience this intellectual compounding effect because they are not diving into the details of the underlying businesses.
10 stocks we like better than Walmart
When our award-winning analyst team has an investing tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now... and Walmart wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
Stock Advisor returns as of 2/14/21
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Mark Blank has positions in Tesla. The Motley Fool has positions in and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Microsoft, Tesla, and Vanguard S&P 500 ETF. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Consider some of the top ETFs and their overall exposure to the five largest companies in the U.S -- Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), Alphabet (NASDAQ: GOOG), Amazon (NASDAQ: AMZN), and Tesla (NASDAQ: TSLA). The diversification offered by S&P 500 ETFs (if even its heavily weighted to FAANG) can be comforting, but once you look under the hood, you realize you're buying a lot of losing companies. But it forces you to learn how companies make money, and over time you'll start to recognize patterns that separate great businesses from the average ones.
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Consider some of the top ETFs and their overall exposure to the five largest companies in the U.S -- Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), Alphabet (NASDAQ: GOOG), Amazon (NASDAQ: AMZN), and Tesla (NASDAQ: TSLA). 21.00% The Technology Select Sector SPDR® Fund (NYSEMKT: XLK) Tech 45.34% Vanguard Information Technology Index Fund (NYSEMKT: VGT) Tech 41.48% Vanguard ESG U.S. Stock ETF (NYSEMKT: ESGV) The Motley Fool has positions in and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Microsoft, Tesla, and Vanguard S&P 500 ETF.
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Consider some of the top ETFs and their overall exposure to the five largest companies in the U.S -- Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), Alphabet (NASDAQ: GOOG), Amazon (NASDAQ: AMZN), and Tesla (NASDAQ: TSLA). These videos are usually conveniently preluded with "this is not financial advice" right before they give you some terribleinvestment advice Troves of influencers make the claim that there's no point investing in individual stocks when you can simply buy low-cost, exchange-traded funds (ETFs). 21.00% The Technology Select Sector SPDR® Fund (NYSEMKT: XLK) Tech 45.34% Vanguard Information Technology Index Fund (NYSEMKT: VGT) Tech 41.48% Vanguard ESG U.S. Stock ETF (NYSEMKT: ESGV)
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Consider some of the top ETFs and their overall exposure to the five largest companies in the U.S -- Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), Alphabet (NASDAQ: GOOG), Amazon (NASDAQ: AMZN), and Tesla (NASDAQ: TSLA). After all, buying ETFs is certainly better than not investing at all. That's right -- they think these 10 stocks are even better buys.
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19863.0
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2022-08-08 00:00:00 UTC
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Berkshire Stock: More Than Meets The Eye In Q2 Numbers
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AAPL
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https://www.nasdaq.com/articles/berkshire-stock%3A-more-than-meets-the-eye-in-q2-numbers
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nan
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nan
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At first glance, the $43.76 billion Q2 loss posted by Berkshire (BRK.A) might seem unnerving but a little digging indicates the well-oiled Berkshire machine continues to perform even in a difficult macro backdrop.
The insurance and energy to apparel and watches conglomerate reported an EPS of $4,860 versus the Street expectations of $4,740. Additionally, revenue grew 10.2% year-over-year to $76.18 billion. Importantly, operating earnings jumped 38.7% to $9.28 billion. This is a significant jump at a time when companies are reeling from cost pressures and inflation.
Berkshire is a holding company and keeps putting its cash pile to use by investing in names that the Oracle of Omaha favors. This means as the markets plummeted this year, many of these investments including Apple (AAPL) and American Express (AXP) (GB:0R3C) fell in value and impacted the paper profits of the company.
But indices have made a fair bit of recovery since then and needless to say, many of the paper losses have already been recouped. Additionally, Mr. Buffett’s buying spree of Occidental Petroleum (OXY) (GB:0KAK) stock came at a time when the company is churning out robust cashflows (Berkshire’s OXY stake is inching towards 20% now).
While investing gains can gyrate depending on market swings, Mr. Buffett favors operating earnings as a better yardstick for Berkshire. Geico, the company’s insurance unit saw an underwriting loss of almost half a billion dollars but growth in Berkshire’s other units more than offset this bump in Q2.
How Much Cash Does Berkshire Have in 2022?
Earlier this year, Mr. Buffett noted that good opportunities were getting difficult to spot, but since then, the company has put a sizable chunk of its cash pile to use in OXY stock, Alleghany, Chevron (CVX) (GB:0R2Q), and HP (HPQ). Despite these big-ticket splurges, Berkshire still had $105 billion in cash at the end of the second quarter.
Analyst’s Take
Wall Street, in the meantime, has a Hold consensus rating on the stock alongside a price target of $535,000. This implies a 21.72% potential upside in the stock on top of the 7% price gain over the past month.
Hedge Funds Remain Positive
Furthermore, our data dive at Tipranks reveals hedge funds are very positive about Berkshire and have scooped up 214,400 shares over the last quarter. Additionally, Ulambayar Bayansan’s Gobi Capital is betting big on the stock with a 100% increase in its Berkshire holdings.
Closing Note
Berkshire, a veteran of multiple market cycles, continues to deliver outperformance. Despite being one of the most expensive stocks globally by price, a price-to-earnings ratio of 7.9, a price-to-sales ratio of 1.04, and a price-to-free cash flow ratio of 40.40 make the stock attractive. Additionally, a TipRanks smart score of 8 means investors need to keep Berkshire on their radar for the long haul.
Read full Disclosure
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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This means as the markets plummeted this year, many of these investments including Apple (AAPL) and American Express (AXP) (GB:0R3C) fell in value and impacted the paper profits of the company. While investing gains can gyrate depending on market swings, Mr. Buffett favors operating earnings as a better yardstick for Berkshire. Earlier this year, Mr. Buffett noted that good opportunities were getting difficult to spot, but since then, the company has put a sizable chunk of its cash pile to use in OXY stock, Alleghany, Chevron (CVX) (GB:0R2Q), and HP (HPQ).
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This means as the markets plummeted this year, many of these investments including Apple (AAPL) and American Express (AXP) (GB:0R3C) fell in value and impacted the paper profits of the company. Importantly, operating earnings jumped 38.7% to $9.28 billion. Berkshire is a holding company and keeps putting its cash pile to use by investing in names that the Oracle of Omaha favors.
|
This means as the markets plummeted this year, many of these investments including Apple (AAPL) and American Express (AXP) (GB:0R3C) fell in value and impacted the paper profits of the company. At first glance, the $43.76 billion Q2 loss posted by Berkshire (BRK.A) might seem unnerving but a little digging indicates the well-oiled Berkshire machine continues to perform even in a difficult macro backdrop. Additionally, Mr. Buffett’s buying spree of Occidental Petroleum (OXY) (GB:0KAK) stock came at a time when the company is churning out robust cashflows (Berkshire’s OXY stake is inching towards 20% now).
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This means as the markets plummeted this year, many of these investments including Apple (AAPL) and American Express (AXP) (GB:0R3C) fell in value and impacted the paper profits of the company. Importantly, operating earnings jumped 38.7% to $9.28 billion. How Much Cash Does Berkshire Have in 2022?
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19864.0
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2022-08-08 00:00:00 UTC
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5 Stocks I'll Almost Certainly Still Own in 2030
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AAPL
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https://www.nasdaq.com/articles/5-stocks-ill-almost-certainly-still-own-in-2030
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nan
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nan
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Warren Buffett once said that his "favorite holding period is forever." However, there are plenty of stocks that he doesn't even hold for five years. Why doesn't the legendary investor always live up to his ideal? Things change.
I'm optimistic about all of the stocks in my portfolio over the long term. Otherwise, I would sell the ones that I didn't feel good about. Of course, my confidence level is much higher for some than for others. I won't predict that I'll hold any given stock forever. But here are five stocks I'll almost certainly still own in 2030 (listed in alphabetical order).
1. Alphabet
Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) ranks as my favorite of the FAANG stocks right now. I love the company's moat, especially with its core Google search business. It's hard for me to envision another search engine dethroning Google by 2030 or even by 2050.
I also think that Alphabet has a huge growth opportunity in artificial intelligence (AI). The most obvious one is with its Waymo self-driving car technology business. However, the company is also an AI leader in home technology, virtual assistants, and healthcare.
2. Apple
Buffett once referred to Apple (NASDAQ: AAPL) as "probably the best business I know in the world." I wouldn't argue the point. The company has built an incredible ecosystem around its iPhone that generates strong revenue year after year.
Apple should still have plenty of growth drivers for iPhone and its other products and services. CEO Tim Cook singled out low global 5G penetration as a reason for optimism in the company's recent quarterly conference call. Apple also continues to develop innovations on other potentially big fronts such as augmented reality/virtual reality.
This stock is currently my biggest holding. I doubt that will change over the next eight years.
3. Disney
Never underestimate The Walt Disney Company (NYSE: DIS). Several years ago, some pundits bemoaned the fact that Disney's broadcast and cable networks faced a serious threat from streaming services and missed out on its chance to acquire Netflix. Today, there are predictions that the Disney+ streaming service could soon overtake Netflix.
I fully intend to hold onto my shares of Disney at least through 2030 for three overriding reasons. First, the company has one of the most beloved brands on the planet. Second, it owns a massive and growing content library featuring many of the most popular movie and TV franchises ever. Third (and perhaps most important), Disney is exceptionally adept at monetizing its creative work. Underestimating a company with those advantages will almost always backfire over the long term.
4. Intuitive Surgical
I often call Intuitive Surgical (NASDAQ: ISRG) the 800-pound gorilla of the robotic surgical systems market. The company has a market share in the ballpark of 80%. Rivals can't come close to touching Intuitive's track record of more than 20 years. Neither can they top the company's impressive recurring revenue that made up 81% of total revenue in the latest quarter.
What I like the most about Intuitive Surgical, though, is its long-term growth prospects. The company's robotic systems will probably be used in a little under 2 million procedures this year. Intuitive estimates that there are roughly 20 million procedures performed annually for which its current technology and innovations already in development can address. I predict this big gorilla will still be beating its chest in 2030 and beyond.
5. Nvidia
Sure, Nvidia (NASDAQ: NVDA) is in a slump right now with declining demand for graphics cards. But the company operates in a cyclical industry. My view is that the future remains as bright as ever for Nvidia.
The company stands front and center in several markets that I expect will be much larger by 2030, including AI, gaming, and digital twins (simulated virtual models of real-world facilities). Nvidia could also have a significant opportunity down the road in powering quantum computers.
Despite the current malaise for the stock, Nvidia has delivered big gains for me through the years. I fully expect that it will return to its winning ways.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Keith Speights has positions in Alphabet (A shares), Apple, Intuitive Surgical, Nvidia, and Walt Disney. The Motley Fool has positions in and recommends Alphabet (A shares), Alphabet (C shares), Apple, Intuitive Surgical, Netflix, Nvidia, and Walt Disney. The Motley Fool recommends the following options: long January 2024 $145 calls on Walt Disney, long March 2023 $120 calls on Apple, short January 2024 $155 calls on Walt Disney, and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Apple Buffett once referred to Apple (NASDAQ: AAPL) as "probably the best business I know in the world." CEO Tim Cook singled out low global 5G penetration as a reason for optimism in the company's recent quarterly conference call. Several years ago, some pundits bemoaned the fact that Disney's broadcast and cable networks faced a serious threat from streaming services and missed out on its chance to acquire Netflix.
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Apple Buffett once referred to Apple (NASDAQ: AAPL) as "probably the best business I know in the world." Intuitive Surgical I often call Intuitive Surgical (NASDAQ: ISRG) the 800-pound gorilla of the robotic surgical systems market. The Motley Fool has positions in and recommends Alphabet (A shares), Alphabet (C shares), Apple, Intuitive Surgical, Netflix, Nvidia, and Walt Disney.
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Apple Buffett once referred to Apple (NASDAQ: AAPL) as "probably the best business I know in the world." Keith Speights has positions in Alphabet (A shares), Apple, Intuitive Surgical, Nvidia, and Walt Disney. The Motley Fool has positions in and recommends Alphabet (A shares), Alphabet (C shares), Apple, Intuitive Surgical, Netflix, Nvidia, and Walt Disney.
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Apple Buffett once referred to Apple (NASDAQ: AAPL) as "probably the best business I know in the world." However, there are plenty of stocks that he doesn't even hold for five years. The Motley Fool has positions in and recommends Alphabet (A shares), Alphabet (C shares), Apple, Intuitive Surgical, Netflix, Nvidia, and Walt Disney.
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19865.0
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2022-08-08 00:00:00 UTC
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Russia's SPB Exchange to resume full trading in foreign equities
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https://www.nasdaq.com/articles/russias-spb-exchange-to-resume-full-trading-in-foreign-equities
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Aug 8 (Reuters) - Russia's SPB Exchange SPBE.SBX will restart full trading in hundreds of foreign equities on Wednesday, the bourse said, expanding access for Russians to buy and sell international shares.
Russia's central bank moved in May to restrict trading in some foreign shares following sweeping sanctions that the West imposed after Moscow sent tens of thousands of troops into Ukraine on Feb. 24.
Foreign investors have also not had access to the Russian stock market since Feb. 25 under countermeasures introduced by Moscow designed to prevent a sharp fall in stock prices.
The SPB, Russia's second-largest bourse which specialises in foreign shares, has pushed back against the central bank's calls for brokers to block retail investors from being able to access foreign shares.
From 10:00 a.m. Moscow-time (0700 GMT) on Aug. 10, investors will be able to trade shares of around 200 foreign companies, including in Apple AAPL.O and Tesla TSLA.O, popular stock choices among Russian retail investors, the exchange said in a statement.
Previously, trading was restricted to the afternoon session.
Trading in another 1,500 foreign shares will start later in the day, at 3.30 p.m.(1230 GMT), it added.
Russians held around $14 billion in U.S.-listed shares as of the end of March, Russia's central bank said last week. It estimates that sanctions on Russia's National Settlement Depository froze access to around 320 billion roubles ($5.3 billion) in foreign shares.
(Reporting by Reuters; Editing by Emelia Sithole-Matarise)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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From 10:00 a.m. Moscow-time (0700 GMT) on Aug. 10, investors will be able to trade shares of around 200 foreign companies, including in Apple AAPL.O and Tesla TSLA.O, popular stock choices among Russian retail investors, the exchange said in a statement. Aug 8 (Reuters) - Russia's SPB Exchange SPBE.SBX will restart full trading in hundreds of foreign equities on Wednesday, the bourse said, expanding access for Russians to buy and sell international shares. Russia's central bank moved in May to restrict trading in some foreign shares following sweeping sanctions that the West imposed after Moscow sent tens of thousands of troops into Ukraine on Feb. 24.
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From 10:00 a.m. Moscow-time (0700 GMT) on Aug. 10, investors will be able to trade shares of around 200 foreign companies, including in Apple AAPL.O and Tesla TSLA.O, popular stock choices among Russian retail investors, the exchange said in a statement. Aug 8 (Reuters) - Russia's SPB Exchange SPBE.SBX will restart full trading in hundreds of foreign equities on Wednesday, the bourse said, expanding access for Russians to buy and sell international shares. Russia's central bank moved in May to restrict trading in some foreign shares following sweeping sanctions that the West imposed after Moscow sent tens of thousands of troops into Ukraine on Feb. 24.
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From 10:00 a.m. Moscow-time (0700 GMT) on Aug. 10, investors will be able to trade shares of around 200 foreign companies, including in Apple AAPL.O and Tesla TSLA.O, popular stock choices among Russian retail investors, the exchange said in a statement. Aug 8 (Reuters) - Russia's SPB Exchange SPBE.SBX will restart full trading in hundreds of foreign equities on Wednesday, the bourse said, expanding access for Russians to buy and sell international shares. The SPB, Russia's second-largest bourse which specialises in foreign shares, has pushed back against the central bank's calls for brokers to block retail investors from being able to access foreign shares.
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From 10:00 a.m. Moscow-time (0700 GMT) on Aug. 10, investors will be able to trade shares of around 200 foreign companies, including in Apple AAPL.O and Tesla TSLA.O, popular stock choices among Russian retail investors, the exchange said in a statement. The SPB, Russia's second-largest bourse which specialises in foreign shares, has pushed back against the central bank's calls for brokers to block retail investors from being able to access foreign shares. Russians held around $14 billion in U.S.-listed shares as of the end of March, Russia's central bank said last week.
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19866.0
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2022-08-08 00:00:00 UTC
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US STOCKS-Futures tick up after Wall St selloff on jobs data
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https://www.nasdaq.com/articles/us-stocks-futures-tick-up-after-wall-st-selloff-on-jobs-data
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For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window.
Futures up: Dow 0.38%, S&P 0.47%, Nasdaq 0.64%
Aug 8 (Reuters) - U.S. stock index futures rose on Monday after last week's blockbuster jobs data soothed some fears about an economic slowdown, but investors remained cautious as it also added to expectations of a hawkish Federal Reserve.
The main focus this week will be on consumer prices data on Wednesday.
U.S. rate futures have priced in a 68.5% chance of a 75-basis-point hike at the Fed's September meeting, up from about 41% before the payrolls data on Friday beat market expectations. IRPR
Megacap growth and technology stocks edged higher in trading before the bell, with Tesla TSLA.O up 1.9%. The U.S. electric-car maker signed contracts worth about $5 billion to buy materials for their batteries from nickel processing companies in Indonesia, according to a CNBC report.
Other high-growth stocks such as Apple Inc AAPL.O and Amazon.com Inc AMZN.O gained as U.S. Treasury yields pulled back from sharp highs in the previous session. The benchmark 10-year yield declined 1.6% in early trading.
Meanwhile, the U.S. Senate on Sunday passed a sweeping $430 billion bill intended to fight climate change, lower drug prices and raise some corporate taxes.
Signify Health Inc SGFY.N jumped 15.8% on a media report that CVS Health Corp CVS.N was looking to buy the health technology company.
At 07:09 a.m. ET, Dow e-minis 1YMcv1 were up 125 points, or 0.38%, S&P 500 e-minis EScv1 were up 19.5 points, or 0.47%, and Nasdaq 100 e-minis NQcv1 were up 84.75 points, or 0.64%.
Palantir Technologies Inc PLTR.N dropped 14.3% after the data analytics software company lowered its annual revenue forecast as the timing of some large government contracts remained uncertain.
Investors awaited a slew of earnings reports later in the day from the likes of insurer American International Group Inc AIG.N and Dominion Energy Inc D.N.
(Reporting by Bansari Mayur Kamdar and Aniruddha Ghosh in Bengaluru; Editing by Shounak Dasgupta)
((BansariMayur.Kamdar@thomsonreuters.com; Twitter: @BansariKamdar))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Other high-growth stocks such as Apple Inc AAPL.O and Amazon.com Inc AMZN.O gained as U.S. Treasury yields pulled back from sharp highs in the previous session. The U.S. electric-car maker signed contracts worth about $5 billion to buy materials for their batteries from nickel processing companies in Indonesia, according to a CNBC report. Meanwhile, the U.S. Senate on Sunday passed a sweeping $430 billion bill intended to fight climate change, lower drug prices and raise some corporate taxes.
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Other high-growth stocks such as Apple Inc AAPL.O and Amazon.com Inc AMZN.O gained as U.S. Treasury yields pulled back from sharp highs in the previous session. Futures up: Dow 0.38%, S&P 0.47%, Nasdaq 0.64% Aug 8 (Reuters) - U.S. stock index futures rose on Monday after last week's blockbuster jobs data soothed some fears about an economic slowdown, but investors remained cautious as it also added to expectations of a hawkish Federal Reserve. Signify Health Inc SGFY.N jumped 15.8% on a media report that CVS Health Corp CVS.N was looking to buy the health technology company.
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Other high-growth stocks such as Apple Inc AAPL.O and Amazon.com Inc AMZN.O gained as U.S. Treasury yields pulled back from sharp highs in the previous session. Futures up: Dow 0.38%, S&P 0.47%, Nasdaq 0.64% Aug 8 (Reuters) - U.S. stock index futures rose on Monday after last week's blockbuster jobs data soothed some fears about an economic slowdown, but investors remained cautious as it also added to expectations of a hawkish Federal Reserve. Signify Health Inc SGFY.N jumped 15.8% on a media report that CVS Health Corp CVS.N was looking to buy the health technology company.
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Other high-growth stocks such as Apple Inc AAPL.O and Amazon.com Inc AMZN.O gained as U.S. Treasury yields pulled back from sharp highs in the previous session. For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window. Futures up: Dow 0.38%, S&P 0.47%, Nasdaq 0.64% Aug 8 (Reuters) - U.S. stock index futures rose on Monday after last week's blockbuster jobs data soothed some fears about an economic slowdown, but investors remained cautious as it also added to expectations of a hawkish Federal Reserve.
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19867.0
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2022-08-08 00:00:00 UTC
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Japanese investors were big buyers of foreign equities in July
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https://www.nasdaq.com/articles/japanese-investors-were-big-buyers-of-foreign-equities-in-july
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Aug 8 (Reuters) - Japanese investors purchased heavily in foreign equities in July, as global stocks rebounded last month on the back of positive earnings and hopes of less aggressive monetary tightening measures from the U.S. Federal Reserves.
According to data from Japan's Ministry of Finance, Japanese investors accumulated a net 1.85 trillion yen worth of overseas equities in July, the biggest since at least 2005.
U.S. equities .SPX gained 9.1% in the last month, boosted by postive forecasts from Apple Inc AAPL.O and Amazon.com Inc AMZN.CO, which showed confidence in companies ability to weather an economic downturn.
The overseas equity buying was led by investment trusts, which purchased 755.4 billion yen, while trust banks bought 748.6 billion yen.
According to Refinitiv data, 66% of the MSCI World index constituents have beaten analysts' forecasts for their net income.
Meanwhile, due to a decline in U.S. yields, Japanese investors made net sales of 2.54 trillion yen worth of foreign bonds in July, making it a sixth straight month of net sales.
In June, domestic investors sold 3.88 trillion-yen worth of U.S. bonds and 926.8 billion-yen worth of European bonds, data from the Bank of Japan showed.
Japanese investments in overseas assetshttps://tmsnrt.rs/3zGKEHG
Japanese investments in US and European assetshttps://tmsnrt.rs/3bGuZzV
(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Simon Cameron-Moore)
((gaurav.dogra@thomsonreuters.com; +91(080) 67496197;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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U.S. equities .SPX gained 9.1% in the last month, boosted by postive forecasts from Apple Inc AAPL.O and Amazon.com Inc AMZN.CO, which showed confidence in companies ability to weather an economic downturn. Aug 8 (Reuters) - Japanese investors purchased heavily in foreign equities in July, as global stocks rebounded last month on the back of positive earnings and hopes of less aggressive monetary tightening measures from the U.S. Federal Reserves. According to data from Japan's Ministry of Finance, Japanese investors accumulated a net 1.85 trillion yen worth of overseas equities in July, the biggest since at least 2005.
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U.S. equities .SPX gained 9.1% in the last month, boosted by postive forecasts from Apple Inc AAPL.O and Amazon.com Inc AMZN.CO, which showed confidence in companies ability to weather an economic downturn. According to data from Japan's Ministry of Finance, Japanese investors accumulated a net 1.85 trillion yen worth of overseas equities in July, the biggest since at least 2005. The overseas equity buying was led by investment trusts, which purchased 755.4 billion yen, while trust banks bought 748.6 billion yen.
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U.S. equities .SPX gained 9.1% in the last month, boosted by postive forecasts from Apple Inc AAPL.O and Amazon.com Inc AMZN.CO, which showed confidence in companies ability to weather an economic downturn. According to data from Japan's Ministry of Finance, Japanese investors accumulated a net 1.85 trillion yen worth of overseas equities in July, the biggest since at least 2005. Meanwhile, due to a decline in U.S. yields, Japanese investors made net sales of 2.54 trillion yen worth of foreign bonds in July, making it a sixth straight month of net sales.
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U.S. equities .SPX gained 9.1% in the last month, boosted by postive forecasts from Apple Inc AAPL.O and Amazon.com Inc AMZN.CO, which showed confidence in companies ability to weather an economic downturn. Aug 8 (Reuters) - Japanese investors purchased heavily in foreign equities in July, as global stocks rebounded last month on the back of positive earnings and hopes of less aggressive monetary tightening measures from the U.S. Federal Reserves. According to data from Japan's Ministry of Finance, Japanese investors accumulated a net 1.85 trillion yen worth of overseas equities in July, the biggest since at least 2005.
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19868.0
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2022-08-07 00:00:00 UTC
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This Latest Move by Apple Should Have The Trade Desk Shaking in Its Boots
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https://www.nasdaq.com/articles/this-latest-move-by-apple-should-have-the-trade-desk-shaking-in-its-boots
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There's little question that The Trade Desk (NASDAQ: TTD) is the industry-leading incumbent in programmatic advertising. The company upended the status quo by pulling back the curtain on digital advertising, developing transparent pricing that made it the first choice among ad agencies and individual advertisers alike. In doing so, The Trade Desk carved out a lucrative niche for itself in the ad-tech space, one that seemed unassailable -- until now.
Enter Apple (NASDAQ: AAPL). Recent moves by the iPhone maker suggest the company has its sights set on establishing a beachhead in the digital-advertising space, which would be a natural extension of the company's existing business. Unfortunately, depending on which direction Apple takes, this could put the company in direct competition with The Trade Desk, which should have the company shaking in its boots.
Hidden in plain sight
A series of recent job postings by Apple provide keen insight into the company's plans. Apple is looking for a senior product manager for a demand-side platform (DSP), which allows ad agencies and advertisers to buy digital-advertising inventory. In true Apple fashion, however, the company is focusing on consumer privacy.
The successful candidate will "drive the design of the most privacy-forward, sophisticated demand side platform possible." Apple wants a DSP "that enables advertisers (sourced by Apple) to find opportunities to showcase their products and services via ad placements in Apple services."
It doesn't stop there, however. The ad-exec will "lead new product definition and business plans with partners across peer groups and organizations."
Furthermore, Apple is looking for a candidate with "experience with building a mobile demand side platform," as well as "experience optimizing mobile campaigns using measurement and attribution." The successful candidate will have "eight plus years experience in product management and technical architecture of mobile advertising platforms."
Apple is also looking for a senior manager to work for its ad-platforms project management team. The new hire will need at least 10 years' experience in project management, as well as three years background in the advertising technology.
Both job postings are dated Aug. 3, 2022, so Apple is still early in the process.
What it could mean
At this point, we don't know the extent of Apple's plan for its DSP. These postings come on the heels of a decision by Apple to expand its advertising business by increasing advertising in its App Store. These additional ad placements will help developers market their apps, though they'll have limited control about where those ads end up.
The further push into advertising could simply be a way for the company to expand advertising solely within the realm of Apple's ecosystem. It could also mean that Apple is following in the footsteps of Netflix and others in the streaming video space, and plans to develop a lower cost (or free) ad-supported version of its streaming offering, Apple TV+.
Of greater concern to The Trade Desk, however, would be if this is a stepping-off point for Apple into the broader realm of digital advertising. After developing a platform to suit its own needs, the company could eventually expand even further, becoming a de facto competitor to The Trade Desk.
Apple is always looking for ways to expand its services business. While the company has primarily focused on consumer-facing services, it isn't a stretch to believe it could one day reach further -- and a frontal assault on the ad-tech business could be on the horizon.
A history of disruption
This wouldn't be the first time Apple has disrupted digital advertising. In an update to iOS 14 last year, Apple required iPhone users to explicitly consent to being tracked across websites and apps they use, a move that caused problems for Facebook parent Meta Platforms. In its second-quarterearnings call CEO Mark Zuckerberg continued to bemoan the "signal loss from Apple's iOS changes."
At this point, it's all supposition and innuendo. The job postings don't provide enough information to support a conclusion one way or the other. We'll have to wait and see what develops from Apple's further foray into digital advertising.
That said, if I was an executive at The Trade Desk, I might be a little worried right now.
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*Stock Advisor returns as of July 27, 2022
Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Danny Vena has positions in Apple, Meta Platforms, Inc., Netflix, and The Trade Desk. The Motley Fool has positions in and recommends Apple, Meta Platforms, Inc., Netflix, and The Trade Desk. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Enter Apple (NASDAQ: AAPL). Apple is looking for a senior product manager for a demand-side platform (DSP), which allows ad agencies and advertisers to buy digital-advertising inventory. While the company has primarily focused on consumer-facing services, it isn't a stretch to believe it could one day reach further -- and a frontal assault on the ad-tech business could be on the horizon.
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Enter Apple (NASDAQ: AAPL). Apple is looking for a senior product manager for a demand-side platform (DSP), which allows ad agencies and advertisers to buy digital-advertising inventory. *Stock Advisor returns as of July 27, 2022 Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors.
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Enter Apple (NASDAQ: AAPL). Apple wants a DSP "that enables advertisers (sourced by Apple) to find opportunities to showcase their products and services via ad placements in Apple services." Of greater concern to The Trade Desk, however, would be if this is a stepping-off point for Apple into the broader realm of digital advertising.
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Enter Apple (NASDAQ: AAPL). After developing a platform to suit its own needs, the company could eventually expand even further, becoming a de facto competitor to The Trade Desk. The Trade Desk is on the list -- but there are nine others you may be overlooking.
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19869.0
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2022-08-07 00:00:00 UTC
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3 Stocks You Should Get to Know as Our Interns Say Goodbye
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https://www.nasdaq.com/articles/3-stocks-you-should-get-to-know-as-our-interns-say-goodbye
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Motley Fool senior analyst Maria Gallagher discusses:
Meta Platforms' latest results in the midst of its transition.
CEO Mark Zuckerberg's blunt comments on guidance.
Etsy's positive results (and stock reaction).
The Motley Fool's investing interns wrap up their summer by pitching senior analyst Jason Moser on the bull case for three different stocks.
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.
10 stocks we like better than Meta Platforms, Inc.
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
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*Stock Advisor returns as of July 27, 2022
This video was recorded on July 28, 2022.
Chris Hill: We've got retail, the social network, and three stock pitches you're going to want to hear. Get something to take notes with. Motley Fool Money starts now.
I'm Chris Hill. Joining me from the financial capital of the United States of America: Motley Fool Senior Analyst Maria Gallagher. Thanks for being here.
Maria Gallagher: Thanks for having me.
Chris Hill: Let's start with the Facebook. Meta Platforms' second-quarter profits and revenue came in lower than expected. The stock's getting hit. This seems a little odd to say about a company this big, but Meta Platforms seems like a company in transition right now, and it seems like a rough patch because they are investing in the metaverse while trying to fight off TikTok while also continuing to deal with Apple's increased privacy, which is affecting their ad targeting. Where do you want to start with Meta Platforms?
Maria Gallagher: I think that that's a pretty good overview. I'll start with just a direct quote from the conference call from Mark Zuckerberg that says, "It's always hard to predict how deep or how long these cycles would be. But I'd say the situation seems worse than it did a quarter ago." He really didn't come out with a lot of reassurance right off the bat. I feel like you see a lot of CEOs saying, here are all the things we're doing, it's going to get better, but Mark Zuckerberg really just was not mincing words.
Revenue was down about 1%. They lowered their guidance a bit. They still have monthly active users of 2.9 billion, up 1%. They're still the most dominant social media platform. As you said, he talks about two strategic areas for them, as they're shifting, as the AI and the metaverse.
With the metaverse investments, Reality Labs revenue decreased from $695 million to $452 million, with an operating loss of $2.8 billion. They lost $2.8 billion on an operating segment that brought in $452 million. What we're seeing is their ability to acquire these more companies within the segment. I also think it's going to be slower in the future. They're guiding for revenue to be slower in that segment as well. The FTC is suing them to block the purchase of Within, which is the developer behind Supernatural, which is a fitness app. They're in that investing phase with the metaverse, and they're not seeing the benefit yet, but they're saying this is the long game, this is what we're seeing. We're really trying to be strategic with our view of the metaverse.
Then the other strategic priority is increasing AI. I think that one is also pretty interesting. It's shifting Instagram from less friends and family to recommending content. Like you said, they're trying to more directly compete with TikTok with their Reels. People are complaining the platform is becoming less friendly to creators, people are spending less time on it.
From a strategy position, I think you're right, in that it's in a transition period. I personally don't love the strategic plans in either of these segments. I think that they're really important to keep watching and see how those shift in the next couple of quarters, especially that AI spending on Instagram. Because I feel like the past couple of weeks, couple of months have seen more creators and more users of the platform step up and say "Stop trying to be TikTok, this is a different platform. We utilize it differently. We can use multiple things." People can have different places they go for different things, and right now they're trying to directly compete. I don't think that it is getting the positive attention, maybe, that they want it to.
Chris Hill: All things considered -- and I don't own shares of Meta Platforms, but all things considered -- I would prefer that the CEO of my company doesn't whistle past the graveyard and tells it like it is. Hopefully, people at least appreciate Zuckerberg's bluntness in terms of the current state of things.
Unfortunately for him and for shareholders, this stands in contrast to another big tech company, which is Microsoft, which came out earlier this week and reiterated their guidance for the next 12 months saying, "Yeah, no. Our view from three months ago to now has not changed at all." I think when Zuckerberg comes out and says, "Yeah, things have gotten worse," unfortunately for him, it stands in contrast to Nadella's comments.
Was there any color on the VR headsets, which reportedly are going to cost north of a thousand dollars? Because it seems like, among other things, for years of saying "No, we don't want to get in the hardware business," it's like well, but now, "If we can start selling hardware for $1,000 a pop, maybe we do want to be in the hardware business." I'm curious if there's any sense of how quickly that's going to be coming.
Maria Gallagher: I think it's interesting. They're raising the price of the Oculus now $100. That's what they're doing now, from $299 to $399. Just a history of the Oculus is they started selling that, I think, at about $800, and now it's been heavily discounted. They're selling them at a loss to just get more people interested in them. They're saying, I think, maybe by the end of 2022 for this new $1,500 headset.
But based on that history of they come out with something really expensive and then there's not an interest, again, just going off of anecdata, I haven't heard anybody talk about wanting to buy that. It's not like the next iPhone that everyone seems they want to have. It's not, I think, garnering maybe the excitement they want it to, but I am not really in that world, so maybe it is in different circles than I'm currently in. But I'm going to be interested to see what the actual price point is and how well it sells when it finally premieres.
Chris Hill: For the first time in a long time, there was good news for Etsy shareholders. Second-quarter profits and revenue came in higher than expected. Shares of Etsy are up 10% today. What stood out to you?
Maria Gallagher: A bunch of things stood out to me. For some quick highlights, their gross merchandise sales were down about 0.4% to $3 billion. They acquired 6 million new buyers, but their revenue was up 10.6% to $585 million. That's with a higher take rate of 19.3%. I think we're really seeing the continued impact of that transaction fee that happened in April, which increased the transaction fee from 5% to 6.5%.
I don't know if you remember, but there was the whole pushback from the Etsy sellers. They tried to do a strike. It seems that that wasn't necessarily successful, even though I do think that they made some compelling points about the fee structure of Etsy and how it's changing. But Etsy has been talking about some of their investments, including they increase their employee headcount. They're working on improving search.
They're working on an Etsy purchase protection for items up to $250, so getting refunds. They're trying to enforce more of the handmade policy, so they've removed 50% more listings last quarter than they did in all of 2021. Trying to maintain the integrity of the platform and seeing more handmade items as opposed to the more manufactured things you might see on other platforms.
They did see some hit to their top categories, so home and living, which is about 30% of sales, was down double digits; craft supplies, which is about 10% of sales was about down on again double-digits.
I would say it was an OK quarter. They're maintaining their most profitable users. They seem to retain a lot of the buyers they got through COVID, but I am still pretty concerned about this friction between the platform and the sellers, and I hope that Josh Silverman takes more steps to reconcile that.
Chris Hill: Silverman is a CEO who seems like he's keenly aware of the challenge that he's facing here. Sometimes a company will come out with results and they're Rorschach test. If you're bullish on the company, you can find something in there that supports your bullishness. If you're bearish, you can find that as well.
As an Etsy shareholder, I'm not saying this was a great quarter and I share the concerns that you mentioned. There were a couple of things that I saw that I thought, all right, this is the thing that hopefully they can build on in the second half of the year. Adding 6 million buyers in the quarter. That's at a time when so much of the national economic conversation is around inflation. To me, that's a meaningful data point. Now, if it just stops there and the rest of the year, they flatline, well, then that's a problem. But hopefully as we think about the next half of the year, they can build on that.
This is an unfair question, but I'm going to ask it anyway: Where do you think this goes next? The tension you mentioned with the sellers, because Etsy is a business that, over the last few years, has made improvements. They have made investments to really appeal to sellers, to make the platform work, not just for the people who go to Etsy to buy stuff, but for the people who are there to set up shop to sell things. Where do you think it goes over the next 6 to 12 months?
Maria Gallagher: I think it's a really good question and I think it's the most important question for Etsy. I think for a long time, it was a symbiotic relationship. There was some friction when Silverman joined as CEO, but he, I think, really spent a lot of time working to improve the relationships with the sellers.
I think the problem is now, it's not just the transaction fee of 6.5% rate. It's that there's a listing fee, a transaction fee, a payment processing fee, an ad fee. By the time a lot of these sellers are done, Etsy is taking north of 30% to 40% of their profits. That's not including how much the sellers pay to get their supplies. It ends up being not worth it for a lot of sellers the way it was for a really long time.
For Etsy -- which is a platform that boasts that a lot of these sellers are women, a lot of representation within underrepresented communities, a lot of people this is their lone source of income -- I do think that that discrepancy has gotten larger in the past year or so. I think that it would be important to see Josh Silverman take some steps to reconcile that.
I think unfortunately, Etsy tries to say, "We're different than Amazon. We're really helping our sellers," and that hasn't been the reality. I think that there's two pathways. If it can get more like Amazon and lose some of those sellers, lose some of that ESG element that I think makes Etsy a really compelling company. Or it can try and work more with the sellers.
Honestly, I think there's kind of a 50-50 chance. I don't know which direction he's going to go in. I really admire him as a CEO and I've admired him, but the past years have been me personally, as both a shareholder and analyst, rethinking the way he is structuring it.
Chris Hill: We'll keep an eye on it. Maria Gallagher, always great talking to you. Thanks for being here.
Maria Gallagher: Thank you so much for having me.
Chris Hill: This summer, we've had three interns working with the Motley Fool investing team. Their internships wrap up this week, and they've each stock to pitch. Jason Moser joined them to discuss the companies they've been researching and why they could make for good investments.
Jason Moser: Today, we have three interns and three stock pitches for you. First up, it's Caitlin Choline, and Caitlin, you are bringing Tractor Supply to the table today for us. Tell us a little bit about Tractor Supply. What does this company do?
Caitlin Choline: Hi, Jason. Yes. Thank you so much for having me.
Tractor Supply. I see a lot of Tractor Supply stores where I come from, but I come from more of a more rural area. If you're from an urban area, I understand if you're not familiar with the Tractor Supply store.
Really, what Tractor Supply does they sell to people engaged in the more rural lifestyle or "out here" lifestyle, as Tractor Supply likes to call it. That really includes your farmers and your ranchers. If you're a farmer or rancher walking into a Tractor Supply store, you can really expect to find anything you need to upkeep your ranch or farm. However, ironically enough, they don't have tractors. If you are a farmer or rancher looking for a tractor, don't go to Tractor Supply.
Jason Moser: We'll get into risks in a minute. But boy, I hope that's not a false advertising risk that we have to deal with here. We'll worry about that in a minute. Well, let's not talk about risks. Let's talk about why you think this is a good investment. That's really what we're trying to do is figure out why these can be good investments. What makes Tractor Supply a good investment in your eyes?
Caitlin Choline: Yeah. Tractor Supply has been around for a long time. They were founded in 1938, and with that, they've developed a really large and extensive product line. Within that product line, there's a lot of products that are applicable to the rural lifestyle.
This is a huge differentiator for Tractor Supply, because you can walk into a Tractor Supply to maintain your farm. Say you need some chickens or some dog food for your dog, you can get both of those at Tractor Supply. It's hard to find this kind of variety of products at their closest competitors. Because if you're looking at who their closest competitors are, that's your Home Depot or your Lowe's or your Petco. If you walk into a Home Depot, you can't get a box of live chickens and a bag of dog food at the same time. Their extensive product line may seem random to us, but to a farmer or a rancher, it really is really relevant, and it's good at attracting that customer that they want.
Something else that's really interesting about Tractor Supply is they really attracted this new customer during COVID. During COVID, everyone was stuck at home and doing home things, and that includes home renovations or gardening or raising chickens. This really attracted people to what Tractor Supply provides and is selling. Increasingly during COVID, that person was the millennial, and that's typically not who you see as a farmer or rancher. Now, Tractor Supply has been introduced to this entirely new demographic, and it really provides a really interesting opportunity for Tractor Supply.
Jason Moser: Yeah, I guess what, 10, 15 years ago, it must have been virtual chickens via Facebook and FarmVille, graduating up to real chickens. I don't know, that sounds like a pretty fun lifestyle, actually, as I get a little bit older. I think I might have to consider getting some chickens in the mix as well.
Caitlin Choline: For sure.
Jason Moser: I like that. A very differentiated offering and separating themselves from their competition. That's always a great thing.
Of course, no investment comes without risk. What do you feel like is the standout risk for a business like this that investors need to be aware of?
Caitlin Choline: Yeah, I think the biggest risk with Tractor Supply is just to watch out for their acquisitions. In the past, they haven't made many. In 2016, they made the acquisition of Petsense, and since that acquisition, in my opinion, I haven't been seeing the most favorable performance from Petsense, especially compared to their Tractor Supply stores.
In 2021, they recently announced acquisition of Orscheln Farms, which hasn't yet settled. I would just keep an eye out for those acquisitions because this isn't something they're experienced with and they typically grow organically. As for risks, I would say that's the biggest one.
Jason Moser: I think that's great to point out. Acquisitions can be very beneficial, but they could be a very risky strategy, particularly for management teams that just don't have that experience. You definitely learn from doing, but a big risk, and I'm glad you called that one out. Caitlin, thanks so much. Great idea there.
Caitlin Choline: Thank you.
Jason Moser: Okay. Next up, we've got Mr. Mason Tyndall. Mason, football season is just around the corner. I don't know about you, I'm a big football fan. I like what you're pitching today: Penn Gaming. Tell us a little bit about what Penn Gaming does.
Mason Tyndall: Yeah, thanks, Jason. I'll try not to go on a segue about how my Cowboys are going to win the Super Bowl this year. I'll save that for another time. Penn Gaming, they're a casino operator with a market cap of about $5.5 billion. They operate 44 casinos in racetracks across 20 different states.
They've really actually transitioned over the past couple of years, to be an omnichannel provider of gaming entertainment and news, with their acquisitions of 36% stake in Barstool Sports in 2020, as well as the acquisition of the Canadian company to Score Media and Gaming. They really provide, through Barstool, some of the top sports podcasts in the world, which is probably my take, and then the Score Media's app as millions of users, and both are very attractive options. I really enjoyed getting to learn about the business.
Jason Moser: This is a little bit of a more difficult one to fully explain and understand in some ways. But you've done a good job of breaking down the business, and so talk a little bit about why you think Penn Gaming is a good investment.
Mason Tyndall: With legalization of online sports betting there and just sports betting in general in the past couple of years, company's management, so with their acquisition of Barstool, they gained the Barstool Sportsbook, and then the Score Media's just actually launched their betting app in Canada as well over the past couple of months.
With that being said, I'm very bullish on the business of sports betting. I guess you can say being a younger adult who follows sports, and then that mindset, combined with the, CEO Jay Snowden's, vision for disciplined growth, really hits home. They're making acquisitions that really drive value to the business and diversify from the traditional bricks-and-mortar gaming that they had to offer. Whereas a lot of the sports-only like online sports betting companies such as DraftKings that operate only online -- and DraftKings is losing money -- is able to use their cash cow profitable bricks-and-mortar business to really fund their online sports betting offering.
I guess the second reason why I really like them is I think the market is actually misvaluing them compared to what management sees as their growth heading forward. You compare price-to-sales ratio with DraftKings or even MGM for that matter; Penn trades price to sales of less than 1, which is DraftKings' price to sales were 4. I really think there's a potential misvalue by the market moving forward.
Jason Moser: Yeah, that's what strikes me with an investment like this. I generally like to believe the market gets it right on any given day, but it does feel like a business in a space that could be very easily misunderstood in such a nascent stage. This is a space that really is just developing, and so that does seem like a potential opportunity there.
Now with that said, this is probably a little bit of a riskier idea than some, but what stands out to you as the risk that investors should be aware of with an investment like this?
Mason Tyndall: Especially since Penn right now, at least they're an online sportsbook. In some markets, it's a near the top, but in most markets, it's that third-, fourth-, or fifth-ranked provider. The legalization does not necessarily mean access in a lot of states. In some states like Oregon, for example, with the legalization , you have to go through their state lottery system. In states like New York, where Penn isn't authorized to actually operate, their barriers of entry are higher. It doesn't always mean just because it's legal in the state, it means access.
That's a potential investment thesis breaker for some states moving forward. I'm in Texas right now, where it's not legal. They were to get legal, but then, what if Penn can't get access to it? That's something you definitely have to watch moving forward because it's hard to control the politics of that stuff.
Jason Moser: Thanks, Mason.
Last up, wrapping up the show for us this week, it's Disha Chalala. Disha, you have, I think, what is probably could be considered a favorite among certainly many investors here at Fool HQ. But I think a lot of investors in our Foolish universe really do... They're familiar with the business that you're pitching today. They like this business. It's Costco. Tell us a little bit about what Costco does.
Disha Chalala: Costco is a multinational chain of membership-only warehouses. They offer their members low prices on a limited selection of products within a wide range of categories.
Jason Moser: Are you a Costco member, Disha?
Disha Chalala: I am a Costco member, an executive member.
Jason Moser: You speak from experience. You're one of the boils.
Disha Chalala: One hundred percent.
Jason Moser: That's very good to hear. Clearly, you have an affinity for Costco, as many do from the consumer side, but what do you think makes this a good investment?
Disha Chalala: One of the main reasons that I think Costco is a good investment is their business model of selling items in bulk out of warehouses. Because not only does it allow Costco to sell things at a lower price point than their competitors, it also gives them the ability to reduce overhead costs and keep their shrinkage rates down. They have an average warehouse space of 146,000 square feet. They're able to stack their merchandise on the racks above their sales floor. It allows them to reduce costs associated with extra storage facilities.
Then they also have people checking your cards as soon as you walk in and your receipts as you walk out. You have shrinkage costs of about 1% of sales in comparison to major retailers like Walmart at 3%.
Then also just their consistency. They have nearly 62.5 million households as members and an average renewal rate of 91%. With membership fees making up 77% of their net income, they have a very consistent source of income. They've also been consistent with their earnings growth paying dividends to consumers.
Even their management, with their CEO being part of the company since 1984, they're very focused on long-term goals and just consistent with the way they treat their employees, their business model, all of it.
Jason Moser: I feel like I should hang my head in shame, because I'm not a Costco member. We've got a house full of kids and dogs and a cat. I've got every reason in the world to be going to a Costco, and yet I don't. I think part of that is because every time I drive by our local Costco, the parking lot is so full, it makes airports jealous. It's always so busy. But hey, I guess that's a nice problem to have.
I think one of the nice things about a business like this, and you've mentioned it, it's stable, it's consistent, it's reliable. But again, as with any investment, there is always some level of risk involved. What would you consider the standout risk for a business like Costco today that investors should keep in mind?
Disha Chalala: Just that the retail business is highly competitive, especially with the current economic conditions. Costco will have to continue to have the ability to adapt quickly to changes in the market as well as changes in customer expectations. Spending habits for consumers are changing currently. I think that's something they have to be aware of and take into account and make sure that they can keep those prices as low as possible, even in the current economic environment.
Jason Moser: That's great stuff, Disha. Thanks so much.
Disha Chalala: Thank you.
Chris Hill: As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear.
I'm Chris Hill. Thanks for listening. We'll see you tomorrow.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Chris Hill has positions in Amazon, Apple, Costco Wholesale, Etsy, Home Depot, Lowe's, and Microsoft. Jason Moser has positions in Amazon, Apple, Etsy, and Home Depot. Maria Gallagher has positions in Etsy. Mason Tyndall has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Apple, Costco Wholesale, Etsy, Home Depot, Meta Platforms, Inc., Microsoft, and Walmart Inc. The Motley Fool recommends Lowe's and Tractor Supply and recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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The Motley Fool's investing interns wrap up their summer by pitching senior analyst Jason Moser on the bull case for three different stocks. They seem to retain a lot of the buyers they got through COVID, but I am still pretty concerned about this friction between the platform and the sellers, and I hope that Josh Silverman takes more steps to reconcile that. The Motley Fool has positions in and recommends Amazon, Apple, Costco Wholesale, Etsy, Home Depot, Meta Platforms, Inc., Microsoft, and Walmart Inc.
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Mason Tyndall: With legalization of online sports betting there and just sports betting in general in the past couple of years, company's management, so with their acquisition of Barstool, they gained the Barstool Sportsbook, and then the Score Media's just actually launched their betting app in Canada as well over the past couple of months. The Motley Fool has positions in and recommends Amazon, Apple, Costco Wholesale, Etsy, Home Depot, Meta Platforms, Inc., Microsoft, and Walmart Inc. The Motley Fool recommends Lowe's and Tractor Supply and recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple.
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Chris Hill: All things considered -- and I don't own shares of Meta Platforms, but all things considered -- I would prefer that the CEO of my company doesn't whistle past the graveyard and tells it like it is. They have made investments to really appeal to sellers, to make the platform work, not just for the people who go to Etsy to buy stuff, but for the people who are there to set up shop to sell things. Chris Hill: As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear.
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Because I feel like the past couple of weeks, couple of months have seen more creators and more users of the platform step up and say "Stop trying to be TikTok, this is a different platform. By the time a lot of these sellers are done, Etsy is taking north of 30% to 40% of their profits. Because not only does it allow Costco to sell things at a lower price point than their competitors, it also gives them the ability to reduce overhead costs and keep their shrinkage rates down.
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When Work Isn't Working: How to Help Burnout
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Motley Fool senior analyst Jason Moser discusses:
Why more company CEOs are on the hot seat.
Expectations heading into a big week for big tech earnings.
Why the idea that "search is forever" should give Alphabet shareholders comfort.
Producer Ricky Mulvey talks with Jennifer Moss, author of The Burnout Epidemic, about one tech company that's nailing the hybrid transition.
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.
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This video was recorded on July 25, 2022.
Chris Hill: Another CEO is out, and we've got a preview of big tech earnings. Motley Fool Money starts now.
I'm Chris Hill, and I'm joined by Motley Fool Senior Analyst Jason Moser. Joining me here in studio, by the way. Good to see you.
Jason Moser: Hey, it's always nice to be in studio.
Chris Hill: You can add Chris Scherzinger to the list of CEOs heading for the exits. Scherzinger has been the CEO of Weber Grill for the past four years. He is out. Chief Technology Officer Alan Matula is going to be the interim CEO at Weber Grill.
You never like to see anyone lose their job, but my first stop when this news broke, Jason, was, oh, this is one of those things we talked about earlier this year. Expect to see more boards of directors keeping a shorter leash on their management teams, and in the case of Scherzinger, you look at the stock performance of Weber Grill. I'm not putting it all on him, it sounds like they're not either, [laughs] but a change had to be made here.
Jason Moser: Yeah. It happens, at least it's not Traeger, and I say this as a very happy Traeger Grill owner. I had the Traeger smoker, I don't own Traeger's stock, but Traeger's shares are down 73% for the year, whereas Weber down about 50% for the year. So it could be worse.
But the bigger problem I think is that when I say it could be worse, that really means actually, Chris, it is going to get worse. If you look at the way the business has been performing, clearly, it run to a lot of headwinds. It's very difficult economic climate for virtually any one trying to sell anything, much less a typically fairly expensive household item like a grill or a smoker or whatever you might be buying from Weber. If you look at the guidance that they have gotten out there just this quarter ending in June, they are pegging sales between $525 and $530 million. Now, that's down from $668 million a year ago.
I think that you look at these companies, Weber, Traeger, these are, again, sort of companies that played into that stay-at-home stock mania that we've witnessed over the past couple of years as we were spending more time at home, cooking at home, and I think a lot of people upgraded. That's great. I understand it. But these are not purchases that you make very frequently.
I don't necessarily put all the fault here on the CEO; it's a very difficult business to run, this kind of a business. It's a large-ticket purchase, and then you're probably not really going out and buying another grill for several years, hopefully. They make these grills really well now. They're very durable, they can last a long, long time. So they've got to figure out a way to go beyond just the grill, and they're selling things like wood pellets, or charcoal, or even potential food plans, recipe ideas and whatnot.
That really hasn't proven out yet. You still need to see over some time whether that actually can develop, and it doesn't look like the rest of the year is especially optimistic. I think they've suspended guidance for the full year fiscal 2022 basically due down certainly.
Now they're not the first ones to do that. But like I said on Twitter, maybe Scherzinger just felt like he was just sick of getting grilled on the calls. [laughs] Seriously, though, it's a very difficult job. I feel like he probably walks out of a job like this with some financial certainty. Maybe he's just happy to be done with it.
Chris Hill: It's possible. The stock at one point was down about 20% this morning, it's bounced back a little bit from that. But as you said, it's down about 50% for the year.
Jason Moser: Yeah.
Chris Hill: I understand anyone who looks at shares how much they've pulled back from when it went public less than a year ago and thinks, well, maybe this time, I would just point you to the comments from the board member who came out as part of this announcement and made it very clear like, look, this is not going to get solved quickly. This is a brand with some equity in it. There is a version of the future where things turn around.
But I think if you're looking at Weber Grill and it's on your watch list, I think you've got to wait and see who the next CEO is. You've got to see who are they bringing in and does he or she have a plan that resonates with you? Maybe then buy a couple of shares of the stock. But right now, everything about this situation to me says "stay away."
Jason Moser: Yeah, I fully agree. I say that just, again, from the perspective of the actual business model itself. I think you're right. They've got tremendous brand equity. They make great products. They have a status in this market. It just is one of those things where, and we've seen this before... good product doesn't always translate into good investment. It's the nature of the product, and you have to take that into consideration as to how a business monetizes that.
It's not to say there aren't ways for them to be able to come up with some more meaningful and recurring monetization down the line, but that is going to be dependent on leadership that takes this role, and there's a lot we just don't know yet. This is a corner that is very difficult to see around. So they're going to have to be very deliberate in the talent that they bring in here, because you got to be able to paint that picture, going forward, of how you take this business to the next level. Because again, great product, but that doesn't always translate into a good investment.
Chris Hill: We're in earnings season, and you never want to focus too much on any one earnings report for a business. We're long-term investors. So we try not to get hung up on a single earnings report or, for that matter, a single earning season.
Having said that, this seems like a pretty consequential week [laughs] for this particular earnings season, because we're going to get reports from Apple, and Amazon, and Meta Platforms, Shopify among others. How are you feeling? What, if any, expectations do you have about this week?
There is a level of trepidation that I'm feeling personally, and I take comfort in the fact that I see it in others walking gingerly into this earnings season. As Matt Argersinger said on the radio show last week, it's just like "we just don't want to disappoint." Just don't disappoint us too much [laughs] and we'll bid your stock up. It feels that way, although, look, some companies are just more important than others by virtue of their size. That's why I'm feeling a little bit of trepidation, particularly in the case of the big three: Apple, Amazon, and Meta Platforms.
Jason Moser: Yeah. It is obviously a very big quarter here, and it did seem like last quarter, no matter what a company reported, the market just wasn't having any of it. It's obviously been a very difficult year for investors, but you're looking at, what you got? Google tomorrow, on Tuesday. You got Meta on Wednesday. You got Amazon on Thursday. I think we're going to get an interesting look into the advertising market with all three of those businesses, actually.
Starting with Google, you look at Google revenue last year in the quarter, they're getting ready to announce $61.8 billion. Estimates this quarter just a tad under $70 billion. There's still a projection there that the company will be growing. Now, it remains to be seen whether they hit that or not.
But I think it's more noteworthy what Meta's going through right now. And this is a company that has really pivoted in its direction, and I don't know that it's necessarily going to work out. The metaverse is still something that really is not fully understandable by a lot of people on exactly how they're going to be able to monetize it. Is it something that the masses are going to buy into? What I think is really fascinating, you look at Meta in Q2 a year ago, they recorded revenue just north of $29 billion. The business is actually forecasted to contract this quarter, so it's actually going to shrink.
Now, they may surprise to the upside there, but the point remains, this is a business that's in transition, and growth has stalled, of course, and I think part of that has to do with this conscious transition they're making, this pivot into this metaverse idea, but it's also a very competitive industry.
We saw Snap, last week, report a quarter, the market was just having none of it. Growth slows down to 13%, guidance suspended. They can't see what's coming down the pike here.
I look at this market, I look at something like a Google versus a Meta and Snap and whatever else, TikTok, to me, I'd like to say that social is fleeting, but search is forever. I think that really holds true. Social faces these ongoing competitive pressures of people flocking to the next social platform. Today, it's TikTok. People are losing interest in Facebook, they're using Instagram more, but now they're losing in interest in Instagram, and they're flocking to TikTok. Something's going to come after TikTok. I don't know what it is, but it's going to be something. So it remains to be seen there.
Now, I think with search and what Google is doing, search is far more resilient because it's so much more essential. We just need search, and what necessarily disrupts search? I'm just not so sure. I don't know that that's necessarily as easy a hurdle to clear. So I like a business in this environment like Google far more than something like a Meta for all of those reasons right there.
Then Amazon, of course, building out its advertising business as well, which I think is operating on a $30-plus-billion run rate now, which is pretty fascinating. That's just a business with so many different moving parts and ways to make money, and now you're seeing that this is a nice little ad business that they've built there. But to me, it's going to be just fascinating.
Given the sentiment of mobile advertising market right now, it is obviously as low as it could be. I feel like maybe it's a little too low. I look at a business like Google in this environment, I think when you get a business like that trading south of a 20 earnings multiple, man, it just seems like that's a very shortsighted take on a business like that.
Chris Hill: It's going to be interesting to hear the Amazon call when you think about questions around Prime Day, the recent acquisition of One Health. It seems like, in terms of clues to the future, that, to me, is the call that I'm the most curious to see the results of.
Jason Moser: It definitely feels like you know more of what you're getting with a Meta and a Google versus an Amazon that is continually dipping its toe in all of these different waters and trying new things out. Whether it's retail, cloud, healthcare, and grocery, just a million different ways for that business to go. I think they're still really trying to figure out how to piece those puzzle pieces together.
Chris Hill: Is there a place where I can place a bet on the use of the word "only" [laughs] as it relates to Apple's earnings? I'm just imagining. It's such a big company, they put up such huge numbers quarter after quarter, and I feel like this is one of those quarters where the word "only" is going to get applied to some sum of money that is tens of billions of dollars.
Jason Moser: I tell you, Chris, the big focus out there on sports betting, man, you cannot let earnings season betting slip under the radar, because it just becomes more and more entertaining every quarter.
Chris Hill: Jason Moser, thanks so much for being here.
Jason Moser: Thank you. ...
Chris Hill: Mark Zuckerberg is raising expectations and hoping some of his employees self-select out of the company. One burnout expert sounds the alarm on Meta platforms and discusses as a tech company that's nailing the hybrid transition. Ricky Mulvey has more.
Ricky Mulvey: Feeling burned out? Well, that's not only a problem for you, but some of the companies you own as well. Joining us now is Jennifer Moss. She is the author of the book The Burnout Epidemic and a Harvard Business Review contributor. Welcome, Jennifer.
Jennifer Moss: Thanks for having me. I'm looking forward to this.
Ricky Mulvey: In a recent Harvard Business Review article, you wrote that "54% of workers left a previous job because their boss wasn't empathetic to their struggles at work, and 49% said employers were unsympathetic to their personal lives. This business-as-usual mentality caused a ripple effect that some experts believe may have contributed to the Great Resignation." How are you seeing the social contract with work? Or how has it changed over the course of the pandemic? And how is it continuing to change in your view?
Jennifer Moss: This has been an evolving topic of interest. For me, I've been writing for HBR on the topic of burnout, researching it prepandemic, started writing the book before the pandemic. So there is a lot to be discussed. But what happens in these types of crises is it tends to exacerbate issues that are just boiling up.
What we used to see, and this would be a few decades ago -- and this is pretechnology. Technology played a big role in creating this sort of always-on culture of work. So employers were asking more of employees to be working inside of work hours but at home. So this slow trickle-down of work being consumed 24 hours a day, this integration of life, made it so that employees said, well, if you're going to ask me to work at home and to integrate my whole life and to work, well, I expect different things of you.
What happened in the pandemic was that employers just felt like this is business as usual. They had the same demands, even higher demands. There were still growth expectations. As soon as we saw that one metric, that productivity was the same during COVID, working remote, it was like this big false measure, whereas people were working three more hours a day or 30% more of their day to hit those pre-COVID goals.
What's happening now is employees are saying, you know what? I'm not going to face my mortality for the last two years for a job that doesn't care at all about my mental health and well-being, and I am done.
It used to be that life was transactional and your relationship was transactional between employers and employees, but that's no longer the case. If employers are going to demand so much for their employees and to have them integrate their work and life so much, then there has to be more concern about how that's impacting their life overall.
Ricky Mulvey: Flexibility can be a double-edged sword, and workload seems to be almost a larger key than just hours at the desk.
One company that seemed to learn some lessons about workload for their employees was the company Okta, cybersecurity firm. You spoke with the CEO, Todd McKinnon. What did he learn about workload during the pandemic for employees, and what were some of your takeaways for other companies?
Jennifer Moss: I love that conversation with him because he was really demonstrating empathy. He got it, and he was measuring, he was gathering data and looking at the data. Because so often, we see our high performers going above and beyond, and we think that that's a really great thing to celebrate, but we're not checking in to see, are they still working at midnight every night? Are they working on weekends? They might seem to express a desire and a love and a passion for their job, but they're still at high risk of burning out.
So what Todd did was he was just analyzing when he gave people time off on Friday. It was supposed to be this meetingless Fridays or a little break where it was like a day off on Friday. He saw that when he did that, his employees would just come back in and work on Saturdays and Sundays to finish the project. What he came to understand is that it isn't about giving people these Fridays off or even just the big headlines of a lot of organizations. We gave a week off to our burnout employees, that's just such a band-aid solution. That's giving ice cream to people that need water.
What Todd is saying is that we need to be upstream. We need to recognize that workload is not sustainable, so how do I reduce workload so that I can give someone a Friday off and they don't need to compensate for that Friday off by working on Saturday and Sunday? That is really that switch.
There's perks and there's optimization for people, then that's about 20% of our global workforce that really does benefit from that. But 80% of our global workforce needs to have more upstream interventions so that they can then actually enjoy a lot of what employers are spending their money on, which is those optimization perks, sort of downstream tactics.
Ricky Mulvey: Not every upstream intervention is helping their employees work less. Putting that in opposition, you've now got Mark Zuckerberg at Meta Platforms writing in an internal memo,
Part of my hope by raising expectations and having more aggressive goals and just turning up the heat a little bit is that I think some of you might decide that this place isn't for you, and that self-selection is OK with me.
I'd say Sundar Pichai, CEO of Alphabet, said something similar-ish in an email to Googlers saying,
Moving forward, we need to be more entrepreneurial, working with greater urgency, sharper focus, and more hunger than what we've shown on sunnier days. In some cases, that means consolidating where investments overlap and streamlining the process. In other cases, that means pausing development and redeploying resources to higher priority areas.
I'll end the quote there.
What goes through your mind when you're hearing these statements from, in some cases, beaten down tech companies, essentially cracking the whip on employees saying we need to work harder now in this remote-first hybrid environment?
Jennifer Moss: Well, it's frustrating for me as someone who has been sounding the alarm on burnout for a long time. I get that there is a fear that we're going to have some malaise or people are going to ask too much. We've already defined burnout for a long time as this whiny millennial problem --they're just complaining about work-life balance -- which has been so disingenuous and unhelpful.
When you actually look at the definition of burnout, it's institutional stress left unmanaged, and it's showing up in signs like high levels of depletion and exhaustion. We're seeing people feeling like they have no value at work. They're feeling disconnected from their job. They feel like they're no good at what they do anymore. They're uninspired. They feel this high level of cynicism, which, then, cynicism breeds into our communities where we don't see people in that same sort of level of optimism and hopefulness. That is a very dangerous thing.
And there's catastrophic impacts to burnout. It can lead to PTSD. It can lead to chronic illness and anxiety and depression and even suicide. It's not that we can just turn around and say, "Oh, that thing didn't happen. Let's ignore it." There's a massive hangover for people right now. They have been dealing in this macro-stress surge-capacity level. They're experiencing all these different impacts from that. What we're going to see is, yeah, you're going to see people leave.
But I think what we're also going to see is some sort of revolt. I am seeing that when you look at how many people are actually leaving jobs and not going into jobs... We talk about this Great Reshuffling, people are actually leaving and they're taking time off. We're also seeing the highest level of mental health disability claims in the U.S. and Canada right now. So you might think that you're saving money, but really, you're just putting a whole bunch of people in your organization on mental health disability leave.
What you did see from some of these large firms, these firms that you're talking about, their highest-level people, their highest-performing people are exiting the company. It sounds like this is really great for them, but they are losing a massive amount of wisdom and talent and an innovative thinking inside their organization. So all of this downstream ends up being bad financially for organizations overall.
Ricky Mulvey: What are some companies that are handling the hybrid transition in a healthier way, in your view? I know you've done some research on Hewlett Packard.
Jennifer Moss: Here's the thing. I want to backtrack because HP has been doing this work for a while. They went into the pandemic with high resiliency because they were already doing a lot of upstream interventions. They were thinking about more equitable paternity and maternity leave so they didn't see this mass exodus of women. They cared about care leave and family leave and have protections around that. So you didn't have to see that kind of struggle with making choices about staying home and caring for your child or working.
There's these fundamental burnout-prevention mentality around their wellness that made them more effective inside of the pandemic, made their customers happy, but also their employees had high trust scores, trust in leadership, and they felt like their employers, whether they got it right or wrong, had their best interests at heart. You saw less attrition within that organization, but they were doing things, like I said, those fundamentals, equity fairness pieces. They were also moved to a hybrid situation that didn't feel so jarring.
Some companies, all of a sudden, they're remote, and they never had worked remote before and never even considered it. A lot of financial institutions, insurance companies, and others were really hit hard by this transition, but Hewlett Packard wasn't. Even now as we go back, what we're seeing is they're doing things like listening to their employees, which was something they did in the pandemic, too. They had more of this ask-me-anything-style conversation where senior leaders, C-level leaders would go into these conversations every single day for months, and they would have their employees just ask their burning questions of them, which created this certainty.
Now as they're transitioning, they've offered a full hybrid mindset, and their campuses even, they're thinking more around this idea of "This is not life on site." I'm going to give you meals to take home to your family because you've told us that that's more important than us doing your laundry for you on site and making you eat the chef's food here and coming home to your family at 10 o'clock at night.
This is that shift that we need to think of, and the most competitive companies I see and who I've seen, like Unilever and others, are taking on this mindset about listening empathetic and actively listening to what their employees need and then figuring out how to make it mutually beneficial.
Ricky Mulvey: Maybe you're listening to this, maybe you're having a little trouble getting out of bed. You might be feeling cynical, you're feeling burned out. Can't fix the whole problem in a final question of a podcast interview. But what's maybe one or two things you can do as an employee, just as a worker, you're feeling a little burned out, to make today a little bit better?
Jennifer Moss: You're right. It's a systemic issue with lots of root causes. It's not going to be solved overnight. But there are some things that we as individuals can do, and there's certain individuals that are more at risk of burnout: those that have high levels of perfectionism; those that look at their work as their identity; they maybe self-describe as a workaholic. These are all things that are definitely going to lead to burnout.
One of the things that we have to recognize both as leaders and as individual employees is that we've been living in this emergency state for a really long time. By definition, emergencies are unexpected. Now we know what this is. It is still stressful in some environments. We have different protocols around things, but still, we have been living with this macro stress for a long time and it's making us feel like everything is urgent.
Every time we get an email, every time we get a request to do anything, any type of action that is work related and then it's trickling into our life, too, we have to deal with it right away. We have to ask ourselves constantly, "Is this urgent or am I creating false urgencies around this? How do I create some boundaries around what is worth it?" I created this schematic in my life, a priority scale, and I say, "Is this a deathbed regret if I don't do this thing?"
Sometimes it has to get as basic as Maslow's hierarchy of needs, kind of basic level of understanding around what matters. If we're putting false urgencies on things, we're also disconnecting from the things that make us well.
One of the most important things that we need to do is create margins, create space so that we can spend time on things that give us joy and pleasure, like spending time with our friends, being around our family, having dinner with other people, seeing people eye to eye and actually going and having coffee with them in person and reconnecting to that part of our community. All of those things, eventually, if we start to practice them in small, micro habits, will eventually start to feel better.
Ricky Mulvey: Jennifer Moss. She is the author of The Burnout Epidemic. Thank you so much for your time.
Jennifer Moss: It was a real pleasure. Thank you.
Chris Hill: As always, people on the program may have interest in the stocks they talk about and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear.
Chris Hill. thanks for listening. We'll see you tomorrow.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Chris Hill has positions in Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Okta, and Shopify. The Motley Fool has positions in and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Meta Platforms, Inc., Okta, and Shopify. The Motley Fool recommends the following options: long January 2023 $1,140 calls on Shopify, long March 2023 $120 calls on Apple, short January 2023 $1,160 calls on Shopify, and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Chris Hill: I understand anyone who looks at shares how much they've pulled back from when it went public less than a year ago and thinks, well, maybe this time, I would just point you to the comments from the board member who came out as part of this announcement and made it very clear like, look, this is not going to get solved quickly. Ricky Mulvey: In a recent Harvard Business Review article, you wrote that "54% of workers left a previous job because their boss wasn't empathetic to their struggles at work, and 49% said employers were unsympathetic to their personal lives. Putting that in opposition, you've now got Mark Zuckerberg at Meta Platforms writing in an internal memo, Part of my hope by raising expectations and having more aggressive goals and just turning up the heat a little bit is that I think some of you might decide that this place isn't for you, and that self-selection is OK with me.
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Producer Ricky Mulvey talks with Jennifer Moss, author of The Burnout Epidemic, about one tech company that's nailing the hybrid transition. The Motley Fool has positions in and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Meta Platforms, Inc., Okta, and Shopify. The Motley Fool recommends the following options: long January 2023 $1,140 calls on Shopify, long March 2023 $120 calls on Apple, short January 2023 $1,160 calls on Shopify, and short March 2023 $130 calls on Apple.
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I think that you look at these companies, Weber, Traeger, these are, again, sort of companies that played into that stay-at-home stock mania that we've witnessed over the past couple of years as we were spending more time at home, cooking at home, and I think a lot of people upgraded. So this slow trickle-down of work being consumed 24 hours a day, this integration of life, made it so that employees said, well, if you're going to ask me to work at home and to integrate my whole life and to work, well, I expect different things of you. Chris Hill: As always, people on the program may have interest in the stocks they talk about and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear.
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I don't necessarily put all the fault here on the CEO; it's a very difficult business to run, this kind of a business. I don't know what it is, but it's going to be something. We're seeing people feeling like they have no value at work.
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19871.0
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2022-08-07 00:00:00 UTC
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Should You Really Follow Warren Buffett's Lead on Apple Stock?
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https://www.nasdaq.com/articles/should-you-really-follow-warren-buffetts-lead-on-apple-stock
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It's hard to argue with the idea Warren Buffett is the greatest living investor. His Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) has generated a 20.1% compounded annual return since he took over the company in 1965, compared to a 10.5% return by the S&P 500 index.
There's a reason he's called the Oracle of Omaha, and it's why many investors follow his every stock move, but often Buffett's investing advice is more one of "do as I say, not as I do." For example, he once derided derivatives as weapons of financial mass destruction, yet invested in them himself. He also said he hated the railroad and airline industries, but invested heavily in both himself.
Image source: The Motley Fool.
An apple a day
Buffett is also not a fan of a diversified portfolio, telling Berkshire shareholders in 1996, "diversification is, as practiced generally, makes very little sense for anyone that knows what they're doing. It is a protection against ignorance." He said investing in just three stocks is probably all anyone needs to do.
While Berkshire Hathaway does own dozens of companies because of the vast sums of money he invests, Buffett has put most of his eggs into one basket: Apple (NASDAQ: AAPL).
The conglomerate owns almost a billion shares of the tech stock (another sector he once said he wouldn't invest in), which amounts to a 5.6% stake in the company, but its $147.2 billion market valuation means it represents 41.8% of Berkshire's own total portfolio.
But that raises the question of whether you should follow his lead. Should you sink almost half of your portfolio's value into Apple stock, or for that matter, should you make any stock that large of a position in your portfolio?
A unique business
Apple is probably a stock that everyone could own. Few companies are as iconic and possess as loyal a following as the tech giant does. Dip a toe into the Apple ecosystem and you immediately feel the pull of the undertow dragging you deeper in.
Consumers willingly pay a hefty premium for Apple products because of their quality, interconnectedness, and styling. It's why it was just able to report rising sales in its second quarter despite the headwinds impacting its business and industry.
Revenue rose to a record $83 billion for the period, up 2% year over year, as product revenue rose 7% to $77.5 billion and service revenue reached a record $20 billion, a 17% increase. While product margins contracted, mostly due to unfavorable currency exchange rates, Apple continues to produce significant operating cash flows, some $23 billion for the quarter. It enables Apple to easily pay its quarterly dividend of $0.28 per share, which yields a modest 0.6% annually.
With that amount of cash available to it, not only is the payout quite sustainable, but also has room for growth in the years to come.
Product and service feed off each other
Apple, of course, is best known for its consumer electronic products, initially its Mac computers, which are still a big seller, but lately for the iPhone, which manages to regularly surpass analyst expectations for growth.
While it does not break out sales anymore for the iPhone, CFO Luca Maestri did note the device achieved an all-time high for installed base of active devices, and CEO Tim Cook noted, "On iPhone, there was no obvious evidence of macroeconomic impact during the June quarter."
In fact, Strategy Analytics says Apple had its best second-quarter market share for smartphones in 10 years, as shipments swelled to 47.5 million, giving Apple a 16.3% share.
Yet much of Apple's future is in services and how well it's able to monetize its customers. So far, business is booming. As Maestri pointed out, "The record level of performance of our services portfolio during the June quarter reflects the strength of our ecosystem on many fronts."
Apple now has more than 860 million paid subscriptions across the services on all of its platforms, up over 160 million -- 23% -- over the last 12 months.
Too much of a good thing
So it's clear why Buffett (and many others) loves Apple so much, but it's not intuitive that you should make as large of a bet on it as he did, even if you do want to buy in. Even a company as good as Apple is going to go through rough times periodically, and such concentration means any hiccup could obliterate years of work to save and invest.
Diversification provides a buffer against your entire portfolio cratering. Also, having billions of dollars at your disposal to put into the market makes it easier to recoup if your bet goes south. Putting almost half your retirement portfolio into one stock is a lot riskier, and one most investors shouldn't take.
Following Buffett's stock moves is fine up to a point. Hedging your bets on a market crash by diversifying your investments still makes the most sense.
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Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Berkshire Hathaway (B shares). The Motley Fool recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), long March 2023 $120 calls on Apple, short January 2023 $200 puts on Berkshire Hathaway (B shares), short January 2023 $265 calls on Berkshire Hathaway (B shares), and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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While Berkshire Hathaway does own dozens of companies because of the vast sums of money he invests, Buffett has put most of his eggs into one basket: Apple (NASDAQ: AAPL). An apple a day Buffett is also not a fan of a diversified portfolio, telling Berkshire shareholders in 1996, "diversification is, as practiced generally, makes very little sense for anyone that knows what they're doing. While product margins contracted, mostly due to unfavorable currency exchange rates, Apple continues to produce significant operating cash flows, some $23 billion for the quarter.
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While Berkshire Hathaway does own dozens of companies because of the vast sums of money he invests, Buffett has put most of his eggs into one basket: Apple (NASDAQ: AAPL). Revenue rose to a record $83 billion for the period, up 2% year over year, as product revenue rose 7% to $77.5 billion and service revenue reached a record $20 billion, a 17% increase. The Motley Fool has positions in and recommends Apple and Berkshire Hathaway (B shares).
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While Berkshire Hathaway does own dozens of companies because of the vast sums of money he invests, Buffett has put most of his eggs into one basket: Apple (NASDAQ: AAPL). The conglomerate owns almost a billion shares of the tech stock (another sector he once said he wouldn't invest in), which amounts to a 5.6% stake in the company, but its $147.2 billion market valuation means it represents 41.8% of Berkshire's own total portfolio. Should you sink almost half of your portfolio's value into Apple stock, or for that matter, should you make any stock that large of a position in your portfolio?
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While Berkshire Hathaway does own dozens of companies because of the vast sums of money he invests, Buffett has put most of his eggs into one basket: Apple (NASDAQ: AAPL). There's a reason he's called the Oracle of Omaha, and it's why many investors follow his every stock move, but often Buffett's investing advice is more one of "do as I say, not as I do." He said investing in just three stocks is probably all anyone needs to do.
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19872.0
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2022-08-07 00:00:00 UTC
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4 Key Traits Warren Buffett Uses to Pick the Best Stocks
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https://www.nasdaq.com/articles/4-key-traits-warren-buffett-uses-to-pick-the-best-stocks
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Warren Buffett has a knack for finding high-return equity investments. Between 1965 and 2020, the holding company Buffett runs, Berkshire Hathaway, delivered a compound annual gain of 20%. That's nearly double the S&P 500's annual growth of 10.2% in the same timeframe.
Fortunately for the investment community, Buffett likes to share his methods with the masses. In early 2008, he outlined four traits he and his fellow Berkshire leader Charlie Munger use to identify investable companies:
Charlie and I look for companies that have a) a business we understand; b) favorable long-term economics; c) able and trustworthy management; and d) a sensible price tag.
Below is a closer look at those four traits and how you can apply them to your own investing.
Image source: Getty Images.
1. A business we understand
Buffett has long expressed the importance of investing within your circle of competence. Investing in a company you understand has these advantages:
You have a better sense of that company's strengths and weaknesses.
You can make better, faster decisions and judgments when you receive new information.
You are more connected to the investment. Your position is more than something you hope will be profitable; it's a business you enjoy following.
2. Favorable long-term economics
Favorable long-term economics boil down to strong returns on invested capital today, plus a hefty competitive advantage to protect those returns over time. The advantage could be the industry's most efficient cost structure or a brand that's beloved by consumers around the world.
Whatever the advantage, it must be lasting. A competitive advantage that's easily copied or dismantled fails the long-term test.
This is one reason Buffett prefers stable industries over industries in flux. Change, whether in regulations, demand, or technology, can weaken competitive advantages in ways that are hard to predict.
3. Able and trustworthy management
In the absence of scandal, it's hard for individual investors to evaluate the trustworthiness of corporate leaders. But you can evaluate a leadership team's ability, often by way of the company's results and culture. Questions to research include:
Has management been consistent and disciplined with respect to growth initiatives?
Have they executed on stated strategic priorities?
How has the company performed in economic downturns?
How does the leadership team protect and enhance the company's competitive advantage?
How has leadership addressed the company's weaknesses?
What do the employees say about their leaders?
4. Sensible price tag
Buffett is a value investor. He invests in quality businesses when the price tag is lower than the company's intrinsic value.
As an example, as tech stock prices were falling in the first quarter of 2022, Buffett snatched up 3.7 million shares of Apple. The iPhone maker was already the largest position in Berkshire Hathaway's portfolio.
Notably, Berkshire Hathaway's cash on hand had reached $144 billion before the tech sell-off. So Buffett could have easily bought more Apple shares last year, but he chose not to.
In an interview with CNBC, Buffett admitted he'd made the buy after Apple dipped -- presumably because it fell into "sensible" territory. He also said he would've bought more if the share price hadn't rebounded.
This aspect of Buffett's approach is particularly relevant now, as the S&P 500 flirts with a 14% decline on the year. The downturn has likely ushered in lower share prices for some of your favorite stocks, too.
Keep it simple
Buffett likes investing in great companies with good leaders at low prices. Notably, he can also explain what makes a company investable in one sentence. His clarity is as inspiring as his methods.
There's value in defining your own investment approach in clear, simple terms. It'll help you stay focused and make more aligned decisions. You'll need that focus if you're hoping to make like Buffett and outpace the long-term returns of the S&P 500.
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Catherine Brock has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Berkshire Hathaway (B shares). The Motley Fool recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), long March 2023 $120 calls on Apple, short January 2023 $200 puts on Berkshire Hathaway (B shares), short January 2023 $265 calls on Berkshire Hathaway (B shares), and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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In an interview with CNBC, Buffett admitted he'd made the buy after Apple dipped -- presumably because it fell into "sensible" territory. Keep it simple Buffett likes investing in great companies with good leaders at low prices. 10 stocks we like better than Walmart When our award-winning analyst team has an investing tip, it can pay to listen.
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Favorable long-term economics Favorable long-term economics boil down to strong returns on invested capital today, plus a hefty competitive advantage to protect those returns over time. The Motley Fool has positions in and recommends Apple and Berkshire Hathaway (B shares). The Motley Fool recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), long March 2023 $120 calls on Apple, short January 2023 $200 puts on Berkshire Hathaway (B shares), short January 2023 $265 calls on Berkshire Hathaway (B shares), and short March 2023 $130 calls on Apple.
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In early 2008, he outlined four traits he and his fellow Berkshire leader Charlie Munger use to identify investable companies: Charlie and I look for companies that have a) a business we understand; b) favorable long-term economics; c) able and trustworthy management; and d) a sensible price tag. Keep it simple Buffett likes investing in great companies with good leaders at low prices. The Motley Fool recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), long March 2023 $120 calls on Apple, short January 2023 $200 puts on Berkshire Hathaway (B shares), short January 2023 $265 calls on Berkshire Hathaway (B shares), and short March 2023 $130 calls on Apple.
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In early 2008, he outlined four traits he and his fellow Berkshire leader Charlie Munger use to identify investable companies: Charlie and I look for companies that have a) a business we understand; b) favorable long-term economics; c) able and trustworthy management; and d) a sensible price tag. How does the leadership team protect and enhance the company's competitive advantage? So Buffett could have easily bought more Apple shares last year, but he chose not to.
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19873.0
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2022-08-07 00:00:00 UTC
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Buying Cheap Stocks Isn't the Same as Value Investing -- It Pays to Know the Difference
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AAPL
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https://www.nasdaq.com/articles/buying-cheap-stocks-isnt-the-same-as-value-investing-it-pays-to-know-the-difference
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nan
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nan
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There are many different types of investors: some focus on growth stocks, while others prefer dividend-paying stocks, and some look for value.
Value investors seek out stocks trading at a lower price than their intrinsic (or true) value. By finding companies whose stock price doesn't reflect their business or financials (like revenue and earnings), value investors hope to profit from the broader market underappreciating certain stocks. In other words, if a company's true value is $100 per share and it's trading at $80, value investors will invest, hoping that eventually the market will price it correctly at $100 and they'll make money (a 25% gain).
Investors must be careful not to confuse a cheap stock with a value stock because doing so could be costly. It could very well be the case that a $1,000 stock is undervalued and a $3 stock is overpriced. You always want to avoid a value trap, which is a stock that seems cheap but isn't. You'd regret buying lots of shares because they're inexpensive, only for it to turn out you're investing in a failing or stagnant business.
Image source: Getty Images.
Using the P/E ratio to find undervalued stocks
A great way to determine whether a stock is under- or overvalued is by looking at the price-to-earnings (P/E) ratio, which tells you how much you're paying for each dollar of the company's earnings. You can find a company's P/E ratio by dividing its current stock price by its earnings per share (EPS). For example, if a stock is $100 and has an EPS of $4, its P/E ratio would be 25, meaning you're paying $25 for each $1 of earnings.
You can't look at the P/E ratio by itself to determine if a stock is undervalued; you need to compare it to similar companies within its industry. You wouldn't compare Apple (NASDAQ: AAPL) to ExxonMobil (NYSE: XOM) or Bank of America (NYSE: BAC) to Tesla (NASDAQ: TSLA), but you could compare Apple to Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) or Bank of America to Wells Fargo (NYSE: WFC).
If you're looking at a company's P/E ratio and it's noticeably lower than other companies in its industry, that could be a sign it's undervalued. The opposite is also true. If a company's P/E ratio is in the 20s while the others in its industry are in the single digits, it's likely overvalued.
Finding value stocks isn't that simple
You'd be hard-pressed to find someone who doesn't like a good discount -- that's what makes value investing appealing to many people. But if value investing were simple, everyone would be finding value stocks and making good investments. Unfortunately, that's not the case.
Value investing takes time and research. After all, you don't know if a stock is undervalued by just looking at its price; you need to research the company itself, as well as compare it to similar businesses to make that decision.
Value investing is a great way to minimize some of your risks and increase your chances of good returns, but it takes time to become a good value investor. If you're willing to put in the effort, it can pay off handsomely.
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Bank of America is an advertising partner of The Ascent, a Motley Fool company. Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Stefon Walters has positions in Apple. The Motley Fool has positions in and recommends Alphabet (A shares), Alphabet (C shares), Apple, and Tesla. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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You wouldn't compare Apple (NASDAQ: AAPL) to ExxonMobil (NYSE: XOM) or Bank of America (NYSE: BAC) to Tesla (NASDAQ: TSLA), but you could compare Apple to Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) or Bank of America to Wells Fargo (NYSE: WFC). In other words, if a company's true value is $100 per share and it's trading at $80, value investors will invest, hoping that eventually the market will price it correctly at $100 and they'll make money (a 25% gain). You can't look at the P/E ratio by itself to determine if a stock is undervalued; you need to compare it to similar companies within its industry.
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You wouldn't compare Apple (NASDAQ: AAPL) to ExxonMobil (NYSE: XOM) or Bank of America (NYSE: BAC) to Tesla (NASDAQ: TSLA), but you could compare Apple to Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) or Bank of America to Wells Fargo (NYSE: WFC). See the 10 stocks Stock Advisor returns as of 2/14/21 Bank of America is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool has positions in and recommends Alphabet (A shares), Alphabet (C shares), Apple, and Tesla.
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You wouldn't compare Apple (NASDAQ: AAPL) to ExxonMobil (NYSE: XOM) or Bank of America (NYSE: BAC) to Tesla (NASDAQ: TSLA), but you could compare Apple to Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) or Bank of America to Wells Fargo (NYSE: WFC). By finding companies whose stock price doesn't reflect their business or financials (like revenue and earnings), value investors hope to profit from the broader market underappreciating certain stocks. Using the P/E ratio to find undervalued stocks A great way to determine whether a stock is under- or overvalued is by looking at the price-to-earnings (P/E) ratio, which tells you how much you're paying for each dollar of the company's earnings.
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You wouldn't compare Apple (NASDAQ: AAPL) to ExxonMobil (NYSE: XOM) or Bank of America (NYSE: BAC) to Tesla (NASDAQ: TSLA), but you could compare Apple to Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) or Bank of America to Wells Fargo (NYSE: WFC). You can find a company's P/E ratio by dividing its current stock price by its earnings per share (EPS). But if value investing were simple, everyone would be finding value stocks and making good investments.
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19874.0
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2022-08-06 00:00:00 UTC
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Taiwan-based Apple supplier challenged by investor over $4 billion cash pile- FT
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AAPL
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https://www.nasdaq.com/articles/taiwan-based-apple-supplier-challenged-by-investor-over-%244-billion-cash-pile-ft
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nan
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nan
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Aug 6 (Reuters) - Catcher Technology Co Ltd 2474.TW, an Apple AAPL.Osupplier based in Taiwan, is being challenged by a Hong Kong-based investment firm Argyle Street Management to improve its governance and return some of its $4.2 billion of net cash to shareholders, the Financial Times reported on Saturday citing people familiar with discussions.
Argyle holds about 1% of Catcher's shares, the FT report added.
(Reporting by Akanksha Khushi in Bengaluru; Editing by Lisa Shumaker)
((Akanksha.Khushi@thomsonreuters.com;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Aug 6 (Reuters) - Catcher Technology Co Ltd 2474.TW, an Apple AAPL.Osupplier based in Taiwan, is being challenged by a Hong Kong-based investment firm Argyle Street Management to improve its governance and return some of its $4.2 billion of net cash to shareholders, the Financial Times reported on Saturday citing people familiar with discussions. Argyle holds about 1% of Catcher's shares, the FT report added. (Reporting by Akanksha Khushi in Bengaluru; Editing by Lisa Shumaker) ((Akanksha.Khushi@thomsonreuters.com;)) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Aug 6 (Reuters) - Catcher Technology Co Ltd 2474.TW, an Apple AAPL.Osupplier based in Taiwan, is being challenged by a Hong Kong-based investment firm Argyle Street Management to improve its governance and return some of its $4.2 billion of net cash to shareholders, the Financial Times reported on Saturday citing people familiar with discussions. Argyle holds about 1% of Catcher's shares, the FT report added. (Reporting by Akanksha Khushi in Bengaluru; Editing by Lisa Shumaker) ((Akanksha.Khushi@thomsonreuters.com;)) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Aug 6 (Reuters) - Catcher Technology Co Ltd 2474.TW, an Apple AAPL.Osupplier based in Taiwan, is being challenged by a Hong Kong-based investment firm Argyle Street Management to improve its governance and return some of its $4.2 billion of net cash to shareholders, the Financial Times reported on Saturday citing people familiar with discussions. Argyle holds about 1% of Catcher's shares, the FT report added. (Reporting by Akanksha Khushi in Bengaluru; Editing by Lisa Shumaker) ((Akanksha.Khushi@thomsonreuters.com;)) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Aug 6 (Reuters) - Catcher Technology Co Ltd 2474.TW, an Apple AAPL.Osupplier based in Taiwan, is being challenged by a Hong Kong-based investment firm Argyle Street Management to improve its governance and return some of its $4.2 billion of net cash to shareholders, the Financial Times reported on Saturday citing people familiar with discussions. Argyle holds about 1% of Catcher's shares, the FT report added. (Reporting by Akanksha Khushi in Bengaluru; Editing by Lisa Shumaker) ((Akanksha.Khushi@thomsonreuters.com;)) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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19875.0
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2022-08-06 00:00:00 UTC
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Apple: Is Advertising the Next Big Revenue Generator? Analyst Weighs In
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AAPL
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https://www.nasdaq.com/articles/apple%3A-is-advertising-the-next-big-revenue-generator-analyst-weighs-in
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nan
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nan
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The Apple (AAPL) empire might be spearheaded by its flagship product, the iPhone, but along with plenty of other hardware offerings, its Services segment has been growing at a fast pace. There’s also talk of a “game changing” AV/VR headset and even of an Apple Car at some point.
But Needham analyst Laura Martin thinks there’s also the prospect of another big revenue stream.
“We believe AAPL is in the early stages of building a new mobile advertising platform,” says Martin, who thinks ad revenue could be a “material upside value driver” for the tech giant for several reasons.
For one, there’s the offensive element. Apple being the largest company in the world, to keep on growing it must focus on big global TAMs (total addressable markets). As eMarketer expects the global digital advertising market to reach $600 billion this year, it certainly qualifies as one.
There’s also a defensive element, as explained by Martin: “Creating a privacy-first ad platform would solve a problem for AAPL's ad-driven apps which have seen their ad revs fall after iOS replaced IDFA with ATT in 3Q21.”
It also amounts to a clever tactical move. Apple operates as a “Walled Garden” and its user data is “best-in-class.” All the while, it is also reducing the tracking and transparency data accessible to other companies. This gives the company’s “pricing power” a boost.
Martin is not just speculating on the matter. There’s evidence of Apple's advertising ambitions, as the company's recent job postings imply a new AdTech platform is being built. Since the early months of the year, there has been a notable increase in the company’s recruiting activity for its Ad Platform unit. Just recently, Apple put up a job opening for "a senior manager for its DSP in its ads platforms business who will drive the design of the most privacy-forward, sophisticated demand side platform possible." Moreover, Apple made its presence felt during June’s Cannes Lions advertising festival. This suggests to Martin, the company is trying to “drive awareness among marketers that it is in the advertising business.”
So, down to the nitty-gritty, what does it all mean for investors? Martin reiterated a Buy rating on Apple shares, backed by a $170 price target, suggesting shares are fairly valued right now. (To watch Martin’s track record, click here)
The Street’s average target is a touch higher; at $180.11, the figure leaves room for a 9% upside from current levels. All told, based on 22 Buys, 6 Holds and 1 Sell, the stock claims a Moderate Buy consensus rating. (See Apple stock forecast on TipRanks)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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The Apple (AAPL) empire might be spearheaded by its flagship product, the iPhone, but along with plenty of other hardware offerings, its Services segment has been growing at a fast pace. “We believe AAPL is in the early stages of building a new mobile advertising platform,” says Martin, who thinks ad revenue could be a “material upside value driver” for the tech giant for several reasons. There’s also a defensive element, as explained by Martin: “Creating a privacy-first ad platform would solve a problem for AAPL's ad-driven apps which have seen their ad revs fall after iOS replaced IDFA with ATT in 3Q21.” It also amounts to a clever tactical move.
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“We believe AAPL is in the early stages of building a new mobile advertising platform,” says Martin, who thinks ad revenue could be a “material upside value driver” for the tech giant for several reasons. The Apple (AAPL) empire might be spearheaded by its flagship product, the iPhone, but along with plenty of other hardware offerings, its Services segment has been growing at a fast pace. There’s also a defensive element, as explained by Martin: “Creating a privacy-first ad platform would solve a problem for AAPL's ad-driven apps which have seen their ad revs fall after iOS replaced IDFA with ATT in 3Q21.” It also amounts to a clever tactical move.
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“We believe AAPL is in the early stages of building a new mobile advertising platform,” says Martin, who thinks ad revenue could be a “material upside value driver” for the tech giant for several reasons. There’s also a defensive element, as explained by Martin: “Creating a privacy-first ad platform would solve a problem for AAPL's ad-driven apps which have seen their ad revs fall after iOS replaced IDFA with ATT in 3Q21.” It also amounts to a clever tactical move. The Apple (AAPL) empire might be spearheaded by its flagship product, the iPhone, but along with plenty of other hardware offerings, its Services segment has been growing at a fast pace.
|
“We believe AAPL is in the early stages of building a new mobile advertising platform,” says Martin, who thinks ad revenue could be a “material upside value driver” for the tech giant for several reasons. The Apple (AAPL) empire might be spearheaded by its flagship product, the iPhone, but along with plenty of other hardware offerings, its Services segment has been growing at a fast pace. There’s also a defensive element, as explained by Martin: “Creating a privacy-first ad platform would solve a problem for AAPL's ad-driven apps which have seen their ad revs fall after iOS replaced IDFA with ATT in 3Q21.” It also amounts to a clever tactical move.
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19876.0
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2022-08-06 00:00:00 UTC
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Snap's Struggles Set It Apart, and Streaming "Coopetition"
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AAPL
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https://www.nasdaq.com/articles/snaps-struggles-set-it-apart-and-streaming-coopetition
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nan
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nan
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Motley Fool senior analysts Matt Argersinger and Jason Moser discuss:
Snap's incredible fall over the past year.
How worried shareholders of Alphabet and Meta Platforms should be.
Intuitive Surgical's latest results.
The latest from Twitter, Amazon, and Johnson & Johnson.
The latest results from Netflix.
A wide-ranging discussion of the connected-TV landscape.
The "coopetition" that exists among major players like Disney, Apple, The Trade Desk, and Roku.
Domino's Pizza's streak of global growth is ending.
Whether Shopify is a buy.
Two stocks on their radar: Etsy and Berkshire Hathaway.
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.
Find out why Amazon is one of the 10 best stocks to buy now
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*Stock Advisor returns as of June 2, 2022
This video was recorded on July 22, 2022.
Chris Hill: Social media, streaming media, healthcare stocks. Investors, assemble. Motley Fool Money starts now.
It's the Motley Fool Money radio show. I'm Chris Hill, joining me in studio Motley Fool Senior Analyst Jason Moser and Matt Argersinger. Good to see you as always, gentlemen.
Matt Argersinger: It's great to be in.
Chris Hill: It's great to be in the studio. We've got the latest headlines from Wall Street. We will dip into the Fool mailbag, and as always, we've got a couple of stocks on our radar.
But we begin with a chaotic end to the week for social media stocks. Shares of Snap fell nearly 40% on Friday after second-quarter results for the social media company came in lower than expected. Snap also said it plans to slow hiring. The reaction also sent shares of Pinterest, Meta Platforms, and Google lower.
Matt, we will get to the ripple effects in a minute. But first, how bad is this for Snap?
Matt Argersinger: Well, bad enough to send the stock down to the market cap of around $17 billion, and I think what's remarkable is less than a year ago, September 2021, Snap's market cap was over $130 billion. I think that just shows you some of the insanity we're seeing in the market last year.
But I can't argue with the market's reaction. If you look at the earnings, user growth slowing, we know the ad market is softening. That tends to happen. But I think what I'm focusing on is that if you look at Snap's five-year history as a public company, it's never had positive earnings, not once, not in a single year, it's never even had any meaningful cash flow, especially just for the stock-based compensation, which is out of this world egregious.
But it also worries me, I think in the second paragraph, they lay out the bad news. But the next thing they say is we're going to do a $500 million share repurchase. I don't think that's a great use of capital. [laughs] I just think if you're losing hundreds of millions dollars every quarter in earnings -- and by the way, keep in mind, Jason actually pointed this out before the show, it's not like they have $5 billion in cash. As they've stated, it's $500 million, but they can cover it. They actually have over $4 billion in debt. Laying out all that cash to buy back shares when your business isn't even on an even keel, especially after five years of being a public company, when your users are at the highest they've ever been and you still can't make a profit, it has me concerned.
Jason Moser: Yeah, I think they explicitly stated, too, those repurchases are to offset that dilution. They frame it as "we're trying to protect shareholders," and I guess I appreciate their honesty. But the bottom line is, we talked about this I think last week maybe just we were talking about metrics that maybe fly under the radar. I had mentioned share repurchases looking one step further into the share count outstanding, because those repurchases are meant to bring that share count down.
In the case of Snap, that obviously isn't going to be the case. It's not like that's unique to them. This is part and parcel for the tech industry, but still it's worth noting. I agree that it just doesn't feel like the most ideal use of that capital at this point when the company clearly have [...].
Matt Argersinger: Well, yeah, exactly. That's your go-to. Your go-to is, can we stop the bleeding? So let's announce this what seemingly is a massive buyback. But even at the market cap today, again, around $17 billion, $500 million is not -- and you just said it, it's not going to be accretive to shareholders anyway. So it's not going to move the needle really.
Jason Moser: Yeah.
Chris Hill: In fairness to Snap, we have seen much larger and much more profitable companies like Microsoft come out and say, hey, we're slowing hiring. Let's put that aside for a second.
I want to go back to something you said, Matt, about the ad market softening. We're seeing so many companies pulling back on the marketing lever because that's a lever they can control. Is it warranted that what we're seeing with shares of Meta and Alphabet, if I'm a shareholder of either of those companies, how concerned should I be about a pullback in ad spending?
Matt Argersinger: I don't think if you're a long-term shareholder of those, you should be concerned at all. To me, Google especially -- you made this point, Jason, earlier before the show, which is just search-based advertising is such a different model, I think. Meta, I could see, they're going to have some ripple effects. But even then, beyond Snap, they're so much more diversified. I think of Meta as with all the things they have going, it's not just messaging like Snap. It's Facebook, it's Instagram, it's Stories, Reels. It's a wider ecosystem around social media that they can play into.
I tend to think Snap as a little unique. It's a very narrow niche among users. It's a very narrow experience as far as I know. I'm not a Snap user, but that seems to be the case. I can understand why it's having a little bit of an effect on the other players, but it shouldn't be meaningful in my view.
Jason Moser: You're right. Snap, fairly niche. I think Twitter falls in that same category. Look at those two businesses -- let's just put the Musk Twitter drama side for a second. Twitter is just its own stand-alone business. You look at those as very niche plays that they're going to be the first to go. Advertisers are going to say, we just don't realize the same return on our investment that we do on something like a Google, for example.
I would put Google above Meta in this case just because I think search is so resilient and Meta is in a bit of transition. I see Meta down or I see Google down 5% today on this news. To me, that represents an opportunity, because while the ad market maybe softens, Google's still going to get the lion's share of the dollars going into that market, and when things do recover, they're going to continue to get the lion's share, and that price is going to recover.
Chris Hill: Later in the show, we're going to get into the latest from Netflix and really dig into the connected-TV market. But do you think we are now entering a period of, let's just call it the rest of 2022, where we as investors aren't going to see the proverbial wheat separated from the chaff when it comes to advertising businesses? Because if companies across the board are cutting their marketing spends, then the competition becomes even fiercer across every platform, doesn't it? Are we entering a period now where we're just going to see the fight becomes much harsher?
Jason Moser: I think so. I think we talk about it often, when you enter these periods of tough times and headwinds or companies have to weigh investments they're making, it feels to me like the strongest companies usually come out of these periods even stronger. You look to the market leaders in this case, again, going back to companies like Meta, Google, you could probably throw Microsoft in there to an extent of this point, given the investments they're making in their advertising business. It really just feels like these are the times when the strongest businesses come out of these stretches even stronger. It's just difficult to see at the time because everything is taking a shellacking. [laughs]
Matt Argersinger: I throw Amazon in there as well.
Jason Moser: Yeah, another one.
Matt Argersinger: Companies that obviously have sustainable business models, produce cash flow, all the companies you named, and that's not Snap at all.
Chris Hill: Before we go to break, Jason, you mentioned Twitter. I should point out Twitter's second-quarter results were lower than expected. The company blamed the drop in ad revenue on the "uncertainty" -- I'm using air quotes because that's the word they used -- surrounding the company's future regarding the takeover by Elon Musk. You think that's bigger news? Or the fact that in the first round of the legal fight, round 1 went to Twitter? Because Elon Musk and his attorneys were looking to push the trial out to next year and the judge came out and said, nope, we're doing an expedited trial starting in October, and it's going to last five days.
Jason Moser: Yeah. Twitter just seems like a completely uninvestable company at this point, regardless of the outcome. I think it's pretty fascinating that they're really pushing hard for this acquisition to go through. That tells you they really see that as the best outcome. And I don't disagree. I think we've seen enough of a track record here in regard to Twitter over the last several years to understand it's hit its potential. As a matter of fact, I think its potential is way in the rearview mirror. Maybe if Musk ends up with this thing, perhaps there's the opportunity to realize some unfulfilled potential there.
If I were a shareholder, which I'm not, I would be rooting for that, because I think that the status quo clearly isn't cutting it there. To me, this is just such a mess in every regard. Investors are getting screwed, employees are getting it worse. Wow, hats off to the judge for kicking in this expedited trial, because it really does feel like this is something that doesn't need to drag out any longer than it already has.
Matt Argersinger: Well, I am a Twitter shareholder, unfortunately, and I do view it as, unfortunately, the best outcome because this is a business that, its influences always belied its valuation. I always thought at some point that would connect a little bit.
Jason Moser: We all did, I think.
Matt Argersinger: They'd find the model, and they would create the value that I think their platform actually creates for a lot of people, for millions. But it hasn't been the case. I think, unfortunately, this $54.20, I guess that's what I'm rooting for, is probably the best outcome if that happens.
Chris Hill: It was a big week for the healthcare industry. We will break down the latest right after the break. Stay right here. You're listening to Motley Fool Money. ...
Welcome back to Motley Fool Money. Chris Hill here in studio with Matt Argersinger and Jason Moser. Shares of Intuitive Surgical up for the overall week but down a bit on Friday after second-quarter profits came in lower than expected for the surgical robot company.
Jason, what's going on here? Are hospitals just not buying the da Vinci Surgical System as much as they used to?
Jason Moser: Well, yes and no. They continue to invest in the da Vinci, but they continue to invest in the latest iteration of the da Vinci. It feels like we've hit a saturation point there in that regard. That probably is contributing a little bit to these results. It's another business that had a tough start to the year. I think shares are down close to 40%.
It is a much more competitive environment than ever before. So this is a company that continually needs to innovate. But the numbers, they were OK. Second-quarter revenue, $1.5 to $2 billion, was up 4% from a year ago. Earnings per share fell $0.16 from a year ago. When you look at the da Vinci setup there, they placed 279 surgical systems, which was down from 328 a year ago.
Now, it's not because folks don't like them. It's just because as they said in the call, they say as our customers have standardized on generation-four da Vinci systems, the installed base of third-generation systems has declined. That's lowering the trade-in population. Ultimately, a lot of people have already gone ahead and traded up to that new generation four system, which is a good thing. If you look at procedures, procedures grew 14% from a year ago. Now, if you compare that to a year ago, a year ago, that was 68%.
But it can be argued there was a coiled-spring effect there, given the headwinds in the healthcare space for obvious reasons. If you go back to 2019, that procedure growth was 17%. So a little bit more in line with what we just saw this most recent quarter.
And they are slowly but surely installing more of the Ion clinical bases there. That is the bronchoscopy system that helps in regard to lung cancer diagnoses. I think that'll be something that continues to offer a little incremental growth.
The installed base totals 7,135 systems. That's up 13% from a year ago. They actually did raise procedure guidance modestly for the year. That's all pointing to signs that the business is doing well, but hospitals are absolutely facing headwinds on spending, and they're tightening up a little bit there.
Chris Hill: Shares of Intuitive Surgical down 40% year to date. It's obviously cheaper. How cheap is it? I'm wondering if this is a buying opportunity.
Jason Moser: I feel like it is given the market position this company holds today. That installed base is really difficult to combat when you're a competitor. We go back to share repurchases, we were talking about Snap. I will ding them on this: They repurchased $500 million in shares for the quarter. Right, you know what? Share count is up since 2017. I don't like seeing that.
Now the flip side, they've got a very strong balance sheet: $8 billion in cash and equivalents with no debt. This is a well-run business in a very resilient market. I think if you're a long-term shareholder, you got to feel like the future looks pretty bright for these guys.
Chris Hill: Amazon is getting deeper into the healthcare industry. This week, the tech giant bought 1Life Healthcare, a primary-care practice that operates under the name One Medical. The price tag is $3.9 billion. It is an all-cash deal, Matty, and when you look at shares of Amazon rising this week, that seems like a nice thumbs-up from investors.
Matt Argersinger: I think there's something to this. I mean, $3.9 billion, it's not a small acquisition. But for Amazon, it's a small bet. I think what it gives them, it gives them something that they haven't had as they build out this approach to healthcare, which is 188 medical offices. It's got that brick-and-mortar element that comes with it.
I'll point out, they're buying the business for less than what One Medical came public at in early 2020 and about a 70% discount to its high. So I feel like it's Amazon being a little opportunistic here. They made the acquisition of PillPack several years ago, and I think a lot of us thought, wow, OK, Amazon's big step here.
I don't think that's reached the potential yet. It hasn't been a game changer a lot of us thought. They launched Amazon Care, but I think this is a bigger step. If you add all those three things together, you've got the pharmacy element. You've got this brick-and-mortar medical office, personal healthcare service, you've got Amazon Care, the telehealth, you start to see the makings of what is an ecosystem here. If they can test it out with their tens of thousands of employees, roll it out nationwide, small bet becomes a big bet.
This is a part of Amazon's strategy, and maybe we're not far off from a year or two now from Amazon Prime offering some kind of basic medical insurance plan or healthcare services you can subscribe to.
Chris Hill: I was just going to say, is that where this is going, whether it's part of Amazon Prime or it becomes a subscription service from the company?
Matt Argersinger: I could see that. It'd be interesting to see if it's all rolled into one Amazon Prime subscription. But I could see something like Amazon Prime Plus. Oh gosh, that sounds terrible. [laughs] Something beyond that where it's greater and it includes healthcare and as well as maybe an NFL ticket, too.
Chris Hill: I was just going to say the waiting rooms only playing Amazon Prime Video.
Matt Argersinger: [laughs] There we go.
Jason Moser: How far are we? I'm the biggest advocate of the Amazon Prime, it's the cost of living in our house. I cannot tell you everything you get with it. At this point, it just feels like they add something on. I just don't know everything that you get with it anymore. It feels like you run that risk. You have this Prime benefit, but you don't fully understand everything that you get for it. Maybe they could do a little bit of a better job of like [inaudible 00:16:09] front.
Matt Argersinger: If you've ordered from Amazon lately and you go to your orders in your account, the menu that you bring, drop-down menu, is like 30 things long.
Jason Moser: It's like their earnings release. [laughs] It takes an hour to read just all their accomplishments. You're like, wow, that's great, but just give me the bottom line. [laughs]
Chris Hill: Business as usual for Johnson & Johnson. Third-quarter profits were higher than expected. They raised guidance for the full fiscal year.
Jason, nothing spectacular, just J&J doing what they've been doing for a while now.
Jason Moser: Slow and steady wins the race, Chris. This is exactly the thesis I think with a company like Johnson & Johnson. Been a very good performer this year in the face of a difficult market. Back in April, that marked their 60th consecutive year of a dividend increase. That makes them a Dividend King, not just a Dividend Aristocrat.
This is one I've said it before, it's just the longer you own it, the more sense it makes. The performance for the business, operational sales, that excludes currency effects, were up 8%, earnings per share up 8.5%, and they maintained the midpoint of their guidance, which is encouraging. Saw strong performance in pharmaceutical division. That was up 12.3% for the quarter, but they saw growth in all three segments: consumer health, pharmaceutical, and MedTech.
I think the big story with Johnson & Johnson really, and we won't know until this actually happens, is when this business actually splits out into two separate entities. They're going to split the consumer side of the business out and let the pharmaceutical and MedTech do their own thing as the Johnson & Johnson brand. That is one of the main priorities here for a relatively new CEO Joaquin Duato.
You look at this business on the whole, you look at the MedTech side of the business, 11 MedTech platforms each delivered over $1 billion in revenue annually. You look at the consumer side of the business to their four segments of the business, they're delivering $1 billion better in revenue. Altogether, very strong business. I feel like it will be a strong two businesses once they actually execute the separation, but that won't happen until later on in 2023.
Chris Hill: What happens to the dividend next year?
Jason Moser: That's the big question. I feel like if you're the ongoing Johnson & Johnson business, that's the MedTech and the pharmaceutical side, that's, I feel like you have to maintain that dividend increase. You got to maintain that reputation. Who knows exactly what they'll do with the consumer health side of business? But those are questions that we'll have to ask as this gets closer.
Chris Hill: I feel like both sides want to keep that streak going.
Jason Moser: [laughs] Yeah, absolutely.
Chris Hill: Coming up after the break, we've got the latest from Netflix and a much closer look at the connected-TV landscape. Don't go anywhere. You're listening to Motley Fool Money. ...
Later in the show, we've got radar stocks. But first, a message from our friends at BiggerPockets.
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Chris Hill: Welcome back to Motley Fool Money. Chris Hill here in studio with Matt Argersinger and Jason Moser.
Netflix had previously warned it would lose 2 million subscribers in the second quarter. But when Netflix reported after the closing bell on Tuesday, the streaming leader shared that it only lost 970,000 subscribers.
Jason, I'm poking fun at them. On a more serious side, shares of Netflix up 17% this week.
Jason Moser: Beat expectations, man.
Chris Hill: Yes, that all it takes.
Jason Moser: "Less bad" is the new good. Feels like we've hit a new chapter of the Netflix story here. I don't think that's necessarily a bad thing. We knew it was coming at some point. Subscribers just don't grow to the moon, and they're dealing with a much more competitive landscape than ever before. It is interesting to see the slowdown. If you exclude currency effects, they grew revenue 13% for the quarter.
I think more noteworthy, they're forecasting just 4.7% growth for the current quarter and ultimately targeting getting subscribers back to where they were at the end of the first quarter this year. It remains to be seen exactly what kind of investment this is going forward. It is something to remember. Now, nearly 60% of their revenue comes from outside of the U.S. So they are going to be more subject to those exchange-related impacts as time goes on.
But really I think the big story is clearly the advertising tier. That is something that they're going to be focused on here in the coming quarters, and they hope to roll that out in 2023. I'm torn here. It is for a long time -- The key for them, and they mentioned this in the letter, in the near-term, a key priority to reaccelerate revenue is to evolve and improve their monetization, and they see doing that three different ways. One of them is the ad-supported tier. Fully agree with that.
Another one, they're going to continue to work on figuring out how to crack down on password sharing. Fully agree with that too.
The one that I'm like, they better keep an eye on this. They want to keep an eye, they're looking to figure out a way to keep the service simple. I agree, but I think the problem is that Netflix, as time goes on, is becoming less and less simple. That was a big selling point in the early days. It was just one pricing tier. Then it became three. Now it's going to become who knows, three plus an ad-supported tier, and exactly how they roll that ad to your app remains to be seen.
I think they're doing the right thing in actually rolling that tier out, but it is just worth remembering. I mean, Hastings, for the longest time, we viewed him as the smartest guy in the room when it comes to streaming. I think that's spot-on. I think he is the smartest guy in the room when it comes to streaming. But that was a much different business than what we're seeing going forward.
I don't know that that necessarily applies when we're talking about an ad-supported streaming service. He's got a lot to learn, I think, in that regard. Hopefully that's what they're doing, is taking some notes and figuring this out because I think that's going to be a point of uncertainty. We're going to see a lot come of this in the next couple of years as to whether they can really execute.
Matt Argersinger: I think Netflix was really the only kid on the block, if you think about it, going back seven or eight years ago, and a competition ... what I always felt, same with you, I like Netflix's simplicity and something Reed Hastings talked about all the time. We're simple and you pay us once a month. We're delivering great content. Not many multiple tiers, not advertising, not live sports. We're going to just focus on main content.
But the competition I think has pushed them. I think they've seen competition be successful with ad tiers. They've seen success with other platforms that roll-out content slower, episodes come out not all at once but over weeks or over months, and that's pushed them to do some things.
But I want to go back to the very first thing you said, which is I think Netflix is the first notable earnings announcement, guidance, etc., for this earnings season. It really is about "just don't disappoint me too much." [laughs]
Like last quarter, you said it, Chris, before the show, last quarter was like any hint of like you could have had blowout earnings, didn't matter; your stock was getting crushed. Now for every company it's like, "Well, we understand things are bad. Investors know that, just don't disappoint us anymore and we'll reward the stock." I think that might be the way going forward.
Jason Moser: But I think a good thing, too, for this business, just to note this, they expect to be free cash flow positive from here on out. I think that's a big deal because we've been targeting this or a while, and when you look at the obligations this company has, they've got content obligations now of just under $23 billion, and they've got just under $18 billion worth of debt on the balance sheet.
That's just fuel for this engine. That's going to be in perpetuity, I think, for a business like this, to a degree, but that free cash flow should help them I think going forward. Not only improve their financial position, but also keep that content coming out.
Matt Argersinger: They should announce a buyback. I mean, come on.
Jason Moser: There's the answer.
Chris Hill: We got a question from Bill in Seattle, who wrote, "Is there any concern about an ad-based system causing more Netflix subscribers to leave? If that happens, what will be the revenue impact, if any?"
A great question, but my assumption is that is front and center in their thinking is "we got to do this in a way that brings in more revenue and brings more people onto the platform, not less."
Jason Moser: Yeah, it's going to be interesting to see how that nets out because, in theory, it really does feel like it should bring more people into the fold than ever before. Now the counter to that is, there are likely going to be some subscribers that say, "You know what, we just don't use Netflix as much as we used to. We have other services that we use now. So we downgrade our subscription from like the mid-tier down to the ad-supported tier."
I think the good thing for Netflix, at least there, is they don't see those subscribers leaving in full. You're keeping the subscriber in your universe, and we know those acquisition costs are just really expensive over long periods of time. If it can ultimately enable them to just keep subscribers in their universe, even if they're just downgrading to a cheaper subscription, I think that's a net win for Netflix.
Chris Hill: Our email address is podcasts@fool.com.
Related to all this, we got an email from Tsai, who writes, "I'm interested in the connected-TV and over-the-top advertising market, especially around The Trade Desk and Roku. My question is, how are they differentiated against the competition? How does Roku stack up against Amazon Fire and Apple TV? How does Trade Desk stack up against Google, Amazon, and Facebook?"
Great questions. And a reminder, among other things, of just how intertwined this entire industry is. When we talk about streaming entertainment, you have all of these businesses that are simultaneously competing with one another and, in a lot of cases, having to work with one another.
Jason Moser: There are a lot of dots to connect in space, and the word that always comes to mind here is "coopetition." There are companies that are partnering up and yet competing with each other to a certain degree. You look at something like The Trade Desk, which is the industry leader in programmatic advertising and ultimately just an independent provider of that demand side platform, and that's great. A very disruptive force in adtech.
You look at something like Roku, far more consumer facing, a streaming platform, and they've done a great job pivoting from being that hardware company that we knew so long ago to ultimately being more or less a software company. It's about the operating system. You buy a TV, say, it doesn't matter whether it's a Samsung or LG or whatever, but it's got that Roku operating system where you can then subscribe to all of your channels in that operating system. Roku's getting a slice of the subscription revenue, but mostly, it's the ad-supported revenue that Roku is benefiting from.
Two different businesses, but they play in the same sandbox, and it feels like there's plenty of room to own both of those. Now, they're higher-risk ideas when you put them in the context of your businesses like Microsoft, Amazon, and whatnot.
Matt Argersinger: I struggle with this, too, and it's a great question by Tsai. I think there's a lot to unpack. I have a question, though. Am I a dinosaur? I live on a farm now, and we recently got Xfinity finally. They dug the hole, so I have Internet, and it came with an Xfinity Flex device, which has basically given us all the connections to Netflix and Amazon and HBO that I had before, either via smart TV or some other device. I feel like there's another player there.
You're right. They all have to work together. I just feel like it comes down to what is the customer experience and what makes it easiest for someone to connect to all their different apps? I can't tell you. They all seem really great and easy to me.
Chris Hill: Well, Comcast was not part of the question, but they're absolutely a leader when it comes to cable. They own Xfinity. They have a lot of content. They're the parent company of Peacock.
This is one of those things, we were talking about this before the show, that so often as investors, it's almost like our brains are wired to think in terms of binary outcomes. It's like, who's the leader here? Who do I think is going to win? As much as any industry, this seems like one where I just want to say to anyone who's asking these types of questions, like, please don't try and pick one winner.
Jason Moser: Yeah.
Chris Hill: Which is one of the great things about being a stock investor. You can take a diversified-portfolio approach, not just to your portfolio but to individual industries, and this seems like one where like, I don't know, I'm a Trade Desk shareholder. Are they going to be the big winner in this? Maybe. But I would hate to have 100% of my exposure in this industry just riding on one single company.
Jason Moser: I think you can really just adjust one word in what you just said there and say it's going to be "a" big winner instead of "the" big winner. I would just encourage you to look at it from that perspective, because we mentioned a lot of companies in there that, interestingly enough, are also playing in this sandbox, as I said before.
I mean, NBC Universal, for example, they have their own adtech. NBC Universal was actually in the running as a potential partner for Netflix. Now, Netflix obviously chose Microsoft. Most people, if not everybody, never saw that coming, because most people don't even realize the investments that Microsoft has been making in their advertising business until now, when we've been able to dig into it a little bit more.
So now you bring Microsoft into the fold. You see NBC Universal, which is owned by Comcast. They've got an adtech business. You see Disney, obviously, securing what a record $9 billion in advertising commitments here recently, 40% of those are devoted to streaming. Now, obviously, that is a big win for The Trade Desk, because The Trade Desk is going to be handling Disney's advertising.
But it just goes to show you, as you said, there's so many different companies out there serving so many different roles. It's like the payments industry. It can be difficult to connect all of the dots and, Chris, you know we're famous for talking about the war on cash here because it just doesn't seem prudent to pick a winner when there are going to be so many.
Chris Hill: The last thing before we go to break, lost in all of this is early in the week, Disney comes out and says, "We're raising the price of ESPN Plus," and they really jacked it up. This was not, oh, "We're bumping it up by a dollar a month." They went from $7 a month to $10 a month, but they kept the price of the Disney bundle exactly the same. So you get Disney Plus, ESPN Plus, and Hulu for I think it's $14 a month, which signals to me that they are completely focused on getting people into that basically saying, hey, we're jacking up ESPN Plus, but for just a couple of bucks more, Matt, you can get an enormous amount of content. And it'll be interesting to see how compelling that is because on the surface, it's a strategy that seems like it should work.
Matt Argersinger: It should absolutely work. My only question with all this, though, is there are only a certain number of hours in a day that someone has to consume content. I know that, especially when I have a three-year-old son at home. They're going to be, like I said, the basket approach is the right approach. There are going to be so many winners in this space, and it's an exciting industry to watch.
Jason Moser: Amazon's got their own demand-side platform that basically competes with The Trade Desk.
Matt Argersinger: See, Jason just keeps confusing me, because he keeps throwing out new companies in this space.
Jason Moser: Yet The Trade Desk has a partnership to some degree with Amazon. So again, back to that coopetition. I mean, it's a really difficult one to parse, and that's why you got to be willing to take a look at a lot of different names.
Chris Hill: This is why stock investing is not for everyone. [laughs]
Jason Moser: That's also why it's a lot of fun.
Chris Hill: Absolutely.
Up next, an impressive streak comes to an end for one of the best-performing stocks of the past decade. Plus, we've got a couple of stocks on our radar. Stay right here. This is Motley Fool Money. ...
As always, people on the program may have interest in the stocks they talk about and the Motley Fool may have formal recommendations for or against. So don't buy or sell stocks based solely on what you hear.
Welcome back to Motley Fool Money. Chris Hill here in studio with Jason Moser and Matt Argersinger.
Second-quarter revenue for Domino's Pizza came in higher than expected, but international same-store sales fell 2%, which is noteworthy, Jason, because it's the first time international same-store sales have fallen since 1993.
Jason Moser: [laughs] Yes, that is a shame. I mean, they are in good company, because U.S. same-store sales fell as well, 2.9%, but just a difficult quarter all the way around for Domino's, but not terribly surprising. Revenue up 3.2%, but earnings per share down 7.8% as they continue to witness inflationary costs. They saw an average of 6% price increases for the quarter, but labor remains a very difficult issue for the business. The carryout business actually performed very well; comps were up 14.6%. Delivery fell 11.7%. They're just having some trouble locking down drivers.
Management set goals of hitting 25,000 stores and $25 billion in global retail sales by 2025, they're just over 19,000 stores today. The trailing four quarters of store growth is just over 1,200. So I'm not sure they'll be hitting those targets, but it is a very resilient business nonetheless. They've done a lot in building out the technology side of the business as well. So I suspect they'll be OK.
Matt Argersinger: So it's DiMaggio's streak and then Domino's streak. [laughs]
Chris Hill: There you go.
Once again, our email address is podcasts@fool.com.
Question from Sean Williams: "Is it time to buy Shopify or wait? I would love to hear where the thesis stands on this one."
What do you think, Matty?
Matt Argersinger: Yeah. If you look at Shopify, it's down 75% from its highest, you're thinking, there's an opportunity her. But if you look at the, I'm just looking at consensus earnings estimates, not this year, let's forget this year. Let's look at next year: $0.25 a share. Even after the downturn, the split in the stock, and adjusting for all that, it still trades for about 150 times earnings. You can look at cash flow, and that's great. They do about $500 million in operating cash flow, maybe normalized, but that's still 90 times that based on their market cap.
Again, Shopify is an exciting business, growing like gangbusters. I'm actually a shareholder as well. You got to be fearful of the valuation even after this big downturn they've had this year.
Chris Hill: Let's get to the stocks on our radar. Our man behind the glass, Dan Boyd, is actually behind the glass this week. He's going to hit you with a question. Jason Moser, you're up first. What are you looking at?
Jason Moser: Well, earning season is underway. So next week, Etsy reports on July 27th, ticker is ETSY. Business had benefited clearly from the stay-at-home stock mania that has since come back to Earth, but Etsy is doing OK. Last quarter, they acquired over 7 million new buyers, that was almost 60% up from Q1 2020. They also continue to see reactivation of lapsed buyers. They saw 5 million reactivations in the first quarter a year ago as well.
I think the big question for Etsy, the headline over the past couple of quarters here, has just been the fee change. They're raising fees for their merchant customers, and we saw a vocal minority make a lot of noise about that. In reality, though, based on management's comments from a quarter ago, they say they saw less than 1% of sellers actually go into temporary vacation mode and take a little bit of time off from the actual business. They saw active listings just drop a little bit less than 1% during that week as well, and that has returned back to previous levels.
Again, it seems like a vocal minority in regard to those increases, and it does sound like they're using those increases to reinvest in the business and provide more for their merchant customers in the way of ads and payments and whatnot. But I'll be paying attention to that language here in this call.
Chris Hill: Dan, question about Etsy?
Dan Boyd: Etsy is a terrifying business, Chris, because I'll look at it and I'll be like, I'll spend $15 on hobby supplies or painting supplies or something, and then my wife looks at it and says, man, this $900 handmade wooden cabinet sure would be nice to have. It's a terrifying business, Chris, which probably means it's a good business.
Chris Hill: As a shareholder, I appreciate both of you contributing. It didn't sound like there was actually a question in there, Jason.
Jason Moser: No. I'll just wholeheartedly agree and move on to Matty. [laughs]
Chris Hill: Matty, what are you looking at?
Matt Argersinger: I'm actually looking at Berkshire Hathaway, ticker BRK.B, unless you're Jason and can afford the A-share.
Jason Moser: [laughs] Fake news.
Matt Argersinger: But this is astounding to me. In less than three months, Berkshire's stock price went from an all-time high of around $360 to a 52-week low in less than three months. For that size of a company and for Berkshire itself, that seemed remarkable to me. Now it's up a bit over the past few weeks, but you can still buy the stock today at roughly one and a quarter times book value, which is right at the threshold where Warren Buffett has said in the past he'd be buying back the stock.
Other than Chevron, I think that's where Buffett is probably buying these days. So it's one of those few companies I think in the market right now that you can say, you know what, there's probably limited downside to it.
Chris Hill: Dan, question about Berkshire Hathaway?
Dan Boyd: Does anybody have any A-shares they want to gift me? [laughs] My birthday is in September, but we could do it a little early. It's cool.
Jason Moser: You could do a GoFundMe. Let's all contribute to a GoFundMe.
Dan Boyd: You are going to buy one.
Chris Hill: Just one. Dan, two very different businesses. You got one you want to add to your watch list?
Dan Boyd: Well, interestingly enough, Chris, I am a Berkshire B shareholder already. So I'm going to be adding Etsy to the watchlist because I think it's a very interesting stock. Terrifying.
Chris Hill: Terrifying in a good way though.
Dan Boyd: That's right.
Chris Hill: Jason Moser, Matt Argersinger, great having you in the studio.
Jason Moser: Thanks.
Matt Argersinger: Thank you, Chris.
Chris Hill: That's going to do it for this week's Motley Fool Money radio show. The show is mixed by Dan Boyd. I'm Chris Hill. Thanks for listening. We'll see you next time.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Chris Hill has positions in Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Etsy, Johnson & Johnson, Microsoft, Pinterest, Shopify, The Trade Desk, and Walt Disney. Dan Boyd has positions in Amazon, Berkshire Hathaway (B shares), and Walt Disney. Jason Moser has positions in Alphabet (C shares), Amazon, Apple, Etsy, Shopify, The Trade Desk, and Walt Disney. Matthew Argersinger has positions in Alphabet (C shares), Amazon, Etsy, Netflix, Pinterest, Roku, Shopify, The Trade Desk, Twitter, and Walt Disney and has the following options: short July 2022 $2,000 puts on Alphabet (A shares). The Motley Fool has positions in and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Berkshire Hathaway (B shares), Domino's Pizza, Etsy, Intuitive Surgical, Meta Platforms, Inc., Microsoft, Netflix, Pinterest, Roku, Shopify, The Trade Desk, Twitter, and Walt Disney. The Motley Fool recommends Comcast and Johnson & Johnson and recommends the following options: long January 2023 $1,140 calls on Shopify, long January 2023 $200 calls on Berkshire Hathaway (B shares), long January 2024 $145 calls on Walt Disney, long March 2023 $120 calls on Apple, short January 2023 $1,160 calls on Shopify, short January 2023 $200 puts on Berkshire Hathaway (B shares), short January 2023 $265 calls on Berkshire Hathaway (B shares), short January 2024 $155 calls on Walt Disney, and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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But I think what I'm focusing on is that if you look at Snap's five-year history as a public company, it's never had positive earnings, not once, not in a single year, it's never even had any meaningful cash flow, especially just for the stock-based compensation, which is out of this world egregious. [laughs] I just think if you're losing hundreds of millions dollars every quarter in earnings -- and by the way, keep in mind, Jason actually pointed this out before the show, it's not like they have $5 billion in cash. You look to the market leaders in this case, again, going back to companies like Meta, Google, you could probably throw Microsoft in there to an extent of this point, given the investments they're making in their advertising business.
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Chris Hill has positions in Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Etsy, Johnson & Johnson, Microsoft, Pinterest, Shopify, The Trade Desk, and Walt Disney. The Motley Fool has positions in and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Berkshire Hathaway (B shares), Domino's Pizza, Etsy, Intuitive Surgical, Meta Platforms, Inc., Microsoft, Netflix, Pinterest, Roku, Shopify, The Trade Desk, Twitter, and Walt Disney. The Motley Fool recommends Comcast and Johnson & Johnson and recommends the following options: long January 2023 $1,140 calls on Shopify, long January 2023 $200 calls on Berkshire Hathaway (B shares), long January 2024 $145 calls on Walt Disney, long March 2023 $120 calls on Apple, short January 2023 $1,160 calls on Shopify, short January 2023 $200 puts on Berkshire Hathaway (B shares), short January 2023 $265 calls on Berkshire Hathaway (B shares), short January 2024 $155 calls on Walt Disney, and short March 2023 $130 calls on Apple.
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Laying out all that cash to buy back shares when your business isn't even on an even keel, especially after five years of being a public company, when your users are at the highest they've ever been and you still can't make a profit, it has me concerned. The Motley Fool has positions in and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Berkshire Hathaway (B shares), Domino's Pizza, Etsy, Intuitive Surgical, Meta Platforms, Inc., Microsoft, Netflix, Pinterest, Roku, Shopify, The Trade Desk, Twitter, and Walt Disney. The Motley Fool recommends Comcast and Johnson & Johnson and recommends the following options: long January 2023 $1,140 calls on Shopify, long January 2023 $200 calls on Berkshire Hathaway (B shares), long January 2024 $145 calls on Walt Disney, long March 2023 $120 calls on Apple, short January 2023 $1,160 calls on Shopify, short January 2023 $200 puts on Berkshire Hathaway (B shares), short January 2023 $265 calls on Berkshire Hathaway (B shares), short January 2024 $155 calls on Walt Disney, and short March 2023 $130 calls on Apple.
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Chris Hill: It was a big week for the healthcare industry. Chris Hill: Which is one of the great things about being a stock investor. Chris Hill: Jason Moser, Matt Argersinger, great having you in the studio.
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The Streaming Wars Heat Up With NFL+ Launch; Which Stock Will Win?
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As the streaming industry expands with new companies entering the market, platforms are striving to stand out. Multiple streaming giants have tried to acquire the rights to different live sports broadcasts as they try to draw fans to their platforms.
Now, the launch of NFL+ has shaken up the industry once again and could leave out live sports as a growth tactic for streamers.
A lost asset
The National Football League launched its own streaming service, NFL+, on July 25, giving subscribers access to hundreds of games a year for $4.99 a month, exclusively on mobiles and tablets. The service comes as multiple streaming companies are fighting over the rights to add live sports to their platforms.
Just this year, Apple (NASDAQ: AAPL) secured the rights to stream Friday Night Baseball and all Major League Soccer games on Apple TV+. Amazon's (NASDAQ: AMZN) Prime Video is now home to Thursday Night Football in a deal worth $11 billion. Disney (NYSE: DIS) is also in the fight with its sports streamer ESPN+, which offers subscribers a variety of live sports like UFC matches, golf content, tennis, and more.
Some of the biggest names in streaming have homed in on live sports in the hope of drawing subscribers, but their efforts could be in vain if more sports leagues launch their own platforms with competitive pricing.
At about $5 a month, NFL+ has made it easy for football fans to add yet another streaming platform, and it has also created competition for any companies that get the rights to stream NFL games through a TV. For instance, Amazon may have Thursday Night Football, but consumers could still be inclined to subscribe to NFL+ to ensure they don't miss out on any other games. And if the most prominent sporting league in the U.S. has decided to stream its content independently, it could push other leagues to do the same, leaving fewer sports available for streaming giants to add to their content catalogs.
Consumer-friendly
The majority of fans tend to favor a few select sports rather than keeping up with many, making league-specific platforms optimal for consumers. Rather than paying for an expensive cable package or even a service like ESPN+ with access to dozens of sports that subscribers don't necessarily watch, consumers can save money by only paying for the content they want.
Along with NFL+, Formula 1, the increasingly popular motorsports series, has launched the streaming service F1 TV, offering subscriptions for as low as $2.99 a month. If other leagues stuck to pricing similar to NFL+ and F1 TV, consumers could choose specific leagues to subscribe to, potentially having access to two or more platforms for a competitively low price.
Moreover, while ESPN+ will increase the cost of its memberships by 43%, from $6.99 a month to $9.99 in August, because of added content and licensing deals, league-specific streaming services are unlikely to have many price hikes. Services such as NFL+ don't need to worry about content creation or expensive licensing agreements since their subscribers are most interested in keeping up with the live games, which leagues own. Without the price increases and losses in content that some streaming services suffer, subscriber retention and satisfaction for NFL+ should be higher.
The one caveat to NFL+ is that its content can only be viewed on mobile and tablet devices, although this is not the case with F1 TV. While this could be a deal-breaker for many NFL fans, giving a leg up to the competition, consumers are increasingly spending more time on portable devices rather than watching TV. In 2014, media researchers Frank N. Magid Associates found that 60% of Americans aged 8 to 64 preferred watching TV on a computer or smartphone. Then, in 2019, eMarketer found that the average American adult spends more time on a phone or tablet each day than watching TV.
As mobile streaming technology has developed further since the studies were done, there's a good chance consumers are continuing to choose handheld devices over a TV. Regardless, NFL+'s content and competitive price still have the ability to steal subscribers from any companies eyeing the TV streaming rights to NFL games. Time will tell whether the NFL's strategy of targeting mobile and tablet users will pay off.
A new focus
As NFL+ and F1 TV have begun a trend of low-priced, league-specific streaming services, companies such as Amazon, Apple, and Disney will need an alternative plan for gaining subscribers. Fortunately, despite removing a potentially lucrative avenue for growth, the rise of sport-specific streamers does not pose a significant threat to most services. League-specific platforms can be low-priced, making them easily stackable with other subscriptions.
Streaming investors will want to note the success of NFL+ as it develops to better understand how its launch affects the market and if it prompts other leagues to offer similar services.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Dani Cook has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Apple, and Walt Disney. The Motley Fool recommends the following options: long January 2024 $145 calls on Walt Disney, long March 2023 $120 calls on Apple, short January 2024 $155 calls on Walt Disney, and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Just this year, Apple (NASDAQ: AAPL) secured the rights to stream Friday Night Baseball and all Major League Soccer games on Apple TV+. A lost asset The National Football League launched its own streaming service, NFL+, on July 25, giving subscribers access to hundreds of games a year for $4.99 a month, exclusively on mobiles and tablets. A new focus As NFL+ and F1 TV have begun a trend of low-priced, league-specific streaming services, companies such as Amazon, Apple, and Disney will need an alternative plan for gaining subscribers.
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Just this year, Apple (NASDAQ: AAPL) secured the rights to stream Friday Night Baseball and all Major League Soccer games on Apple TV+. A lost asset The National Football League launched its own streaming service, NFL+, on July 25, giving subscribers access to hundreds of games a year for $4.99 a month, exclusively on mobiles and tablets. A new focus As NFL+ and F1 TV have begun a trend of low-priced, league-specific streaming services, companies such as Amazon, Apple, and Disney will need an alternative plan for gaining subscribers.
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Just this year, Apple (NASDAQ: AAPL) secured the rights to stream Friday Night Baseball and all Major League Soccer games on Apple TV+. Some of the biggest names in streaming have homed in on live sports in the hope of drawing subscribers, but their efforts could be in vain if more sports leagues launch their own platforms with competitive pricing. At about $5 a month, NFL+ has made it easy for football fans to add yet another streaming platform, and it has also created competition for any companies that get the rights to stream NFL games through a TV.
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Just this year, Apple (NASDAQ: AAPL) secured the rights to stream Friday Night Baseball and all Major League Soccer games on Apple TV+. If other leagues stuck to pricing similar to NFL+ and F1 TV, consumers could choose specific leagues to subscribe to, potentially having access to two or more platforms for a competitively low price. The one caveat to NFL+ is that its content can only be viewed on mobile and tablet devices, although this is not the case with F1 TV.
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19878.0
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2022-08-06 00:00:00 UTC
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Top Stocks To Buy Now? 4 Warren Buffett Stocks To Watch
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AAPL
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https://www.nasdaq.com/articles/top-stocks-to-buy-now-4-warren-buffett-stocks-to-watch
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nan
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nan
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Could These Top 4 Warren Buffett Stocks Be On Watch This Week?
Many people consider Warren Buffett to be the greatest stock market investor of all time. Over the course of his career, he has amassed a fortune estimated to be worth over $85 billion. A large part of his success can be attributed to his savvy investments in stocks. Buffett is known for carefully researching companies before investing in them, and his portfolio is full of well-chosen stocks that have performed exceptionally well over time.
In recent years, Buffett has been particularly successful with his investments in energy stocks. For example, he bought a stake in Exxon Mobil in 2007, just before the price of oil began to rise sharply. As a result, his investment proved to be extremely profitable, and Buffett was able to pocket billions of dollars in profits. While not every stock pick will be as successful as Exxon Mobil (NYSE: XOM), Buffett’s track record shows that he knows how to pick winning stocks. That said, here are four Warren Buffett stocks to watch in the stock market today.
Top Warren Buffet Stocks To Buy [Or Avoid] Right Now
Bank Of America (NYSE: BAC)
Coca-Cola (NYSE: KO)
Kraft Heinz (NASDAQ: KHC)
Occidental Petroleum (NYSE: OXY)
Bank Of America (BAC Stock)
First up, let’s take a look at Bank Of America Corporation (BAC). The financial company is one of the biggest financial institutions with business operations in Consumer Banking, Global Wealth & Investment Management, Global Banking, and Global Markets. Its Consumer Banking segment offers choices of credit, banking, and investment products to consumers and small and medium businesses. Next, its Global Markets segment provides sales and trading services and research services to institutional clients across fixed-income, credit, currency, commodity, and equity businesses.
Last month, Bank Of America reported its quarterly earnings fiscal results. In detail, the company reported earnings per share of $0.73 on revenue of $25.2 billion. This is compared to the consensus estimates were at $0.77 per share on revenue of $22.8 billion. T, that although BAC reported weaker-than-expected earnings per share, they posted stronger-than-expected revenue estimates.
[Read More] What Are The Best Stocks To Invest In? 4 Lithium Stocks To Know
Coca-Cola (KO Stock)
Next, we have consumer giant Coca-Cola (KO). The company focuses on selling its products in more than 200 countries and territories globally. Its multiple billion-dollar brands can be found across a variety beverage categories. Notably, these this includes Coca-Cola, Sprite, and Fanta to name a few. Aside from soft drinks, Coca-Cola also offers sports, coffee, and tea brands. Also, Coca-Cola has greater than 700,000 employees gobally. Moving on, the company has a dividend yield of 2.74%.
Last month, the company announced its second quarter fiscal earnings. In it, Coca-Cola posted earnings per share of $0.70 on revenue of $11.3 billion. For context, Wall Street’s consensus earnings estimate was earnings per share of $0.67 on revenue of $10.6 billion. Next, Coca-Cola projects full-year 2022 fiscal earnings of $2.44 to $2.46 a share. Previously, the company showed a guidance range for earnings per share of $2.51 to $2.55. With that, Wall Street’s consensus earnings estimate is $2.46 per share for 2022 full-year fiscal earnings.
[Read More] Top Wheat Stocks To Buy Amidst Potential Shortages? 3 In Focus
Kraft Heinz (KHC Stock)
Lastly, let’s dive into the consumer company Kraft Heinz Company (KHC Stock). For starters, the consumer company manufactures and markets products like condiments, dairy, meats, coffee, and other grocery products across the globe. In fact, its portfolio brands include brands like Kraft, Heinz, Velveeta, Jell-O, Grey Poupon, and Philadelphia just to point out a few. For. sense of scale, KHC is one of the largest food and beverage companies across North America.
Last month, the company announced its 2022 Q2 fiscal results. In it, Kraft Heinz reported earnings per share of $0.70 on revenue of $6.6 billion. In comparion, consensus earnings estimate was $0.67 per share on revenue of $6.4 billion. Next, the company reported a 0.9% fall in revenue, compared to the same quarter the previous year. Furthermore, the consumer company provided guidance in the report. Kraft Heinz projected a 2022 revenue of almost $28.0 billion. Lastly, the company announced previous guidance of revenue of approximately $27.34 billion. While, the current consensus revenue estimate is $25.62 billion.
Occidental Petroleum (OXY Stock)
Lastly, Occidental Petroleum is an international energy company that has assets mainly in the United States, Middle East, and North Africa. Also, Occidental is one of the biggest oil producers trhroughout the United States and a leading producer in the Permian and DJ basins, and the offshore Gulf of Mexico. Furthermore, it’s midstream and marketing segment permits flow assurance and maximizes the value of its oil and gas products. Next, Occidental has its Oxy Low Carbon Ventures subsidiary that is enhancing leading-edge technologies and business solutions that economically advance its business.
Last month, the oracle of Omaha, Warren Buffett’s Berkshire Hathaway (NYSE: BRK.A) purchased additonal 9.6 million shares of OXY stock. With this, they now raised its stake in OXY to 16.3%. Specifically, the purchases amounted in July cost about $529 million. This comes on the heels of a $336 million share purchase by Berkshire in June and $7 billion earlier in 2022. As a result, Berkshire now owns nearly 152.7 million shares in OXY. With that, is OXY a stock to watch right now.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Buffett is known for carefully researching companies before investing in them, and his portfolio is full of well-chosen stocks that have performed exceptionally well over time. Last month, the oracle of Omaha, Warren Buffett’s Berkshire Hathaway (NYSE: BRK.A) purchased additonal 9.6 million shares of OXY stock. If you enjoyed this article and you’re interested in learning how to trade so you can have the best chance to profit consistently then you need to checkout this YouTube channel.
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Top Warren Buffet Stocks To Buy [Or Avoid] Right Now Bank Of America (NYSE: BAC) Coca-Cola (NYSE: KO) Kraft Heinz (NASDAQ: KHC) Occidental Petroleum (NYSE: OXY) Bank Of America (BAC Stock) First up, let’s take a look at Bank Of America Corporation (BAC). The financial company is one of the biggest financial institutions with business operations in Consumer Banking, Global Wealth & Investment Management, Global Banking, and Global Markets. Last month, Bank Of America reported its quarterly earnings fiscal results.
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Top Warren Buffet Stocks To Buy [Or Avoid] Right Now Bank Of America (NYSE: BAC) Coca-Cola (NYSE: KO) Kraft Heinz (NASDAQ: KHC) Occidental Petroleum (NYSE: OXY) Bank Of America (BAC Stock) First up, let’s take a look at Bank Of America Corporation (BAC). In detail, the company reported earnings per share of $0.73 on revenue of $25.2 billion. 3 In Focus Kraft Heinz (KHC Stock) Lastly, let’s dive into the consumer company Kraft Heinz Company (KHC Stock).
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In recent years, Buffett has been particularly successful with his investments in energy stocks. Top Warren Buffet Stocks To Buy [Or Avoid] Right Now Bank Of America (NYSE: BAC) Coca-Cola (NYSE: KO) Kraft Heinz (NASDAQ: KHC) Occidental Petroleum (NYSE: OXY) Bank Of America (BAC Stock) First up, let’s take a look at Bank Of America Corporation (BAC). In it, Coca-Cola posted earnings per share of $0.70 on revenue of $11.3 billion.
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19879.0
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2022-08-06 00:00:00 UTC
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Why Apple Stock Jumped 18.9% in July
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AAPL
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https://www.nasdaq.com/articles/why-apple-stock-jumped-18.9-in-july
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nan
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nan
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What happened
July shined on Apple (NASDAQ: AAPL) as its stock climbed 18.9% over the month, according to data from S&P Global Market Intelligence.
The stock rallied as investors looked forward to a positive third-quarter earnings report and its streaming service, Apple TV+, saw success amid awards season.
So what
Ahead of Apple's earnings report for its fiscal 2022 third quarter, three senior analysts gave positive recommendations for the stock. In the second week of July, KeyBanc's John Vinh gave his equivalent of a buy recommendation, despite decreasing his price target.
On July 8, Bank of America's Wamsi Mohan endorsed the stock, saying, "We are getting a lot of data points supporting a pretty decent quarter for Apple." Cowen's Krish Sankar then reiterated their sentiments by agreeing that the company's earnings would likely meet expectations.
Bullish investors were rewarded on July 29 when Apple reported its net sales grew by 2% in the third quarter, an increase of $83 billion. The company enjoyed a positive quarter even while inflation soared and led many consumers to cut spending, and supply constraints resulted in component shortages.
Apple's iPhone appeared to thrive in a less-than-ideal quarter, with sales increasing by 3% to $40.7 billion. However, the company's other products were not as lucky. Mac sales dropped 10% to $7.4 billion, while iPad sales fell 2% to $7.2 billion.
The company's services business continued to blossom, growing 12% to $19.6 billion, with paid subscriptions topping 860 million. The Apple TV+ streaming platform fared particularly well in July, earning 52 Emmy nominations. Apple's series Ted Lasso added to its success with 20 nominations, while newcomer Severance had 14 nominations.
Now what
During a conference call with analysts in July, CEO Tim Cook said, "The latest survey of U.S. consumers from 451 Research indicates iPhone customer satisfaction of 98%."
Cook added, "We also attracted a record number of switchers for the June quarter, with strong double-digit year-over-year growth." Like clockwork, Apple tends to stick to a September release schedule with new iPhones. So positive iPhone sales in a quarter without such a launch could portend a favorable fourth quarter.
While Cook has not forecast fourth-quarter earnings, the CEO said in a CNBC interview, "We expect revenue to accelerate in the September quarter despite seeing some pockets of softness." Investors will want to watch Apple's likely iPhone 14 launch in September and consumer reaction to the smartphone's updates to better gauge how well the company will do in its fiscal fourth quarter.
Find out why Apple is one of the 10 best stocks to buy now
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Bank of America is an advertising partner of The Ascent, a Motley Fool company. Dani Cook has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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What happened July shined on Apple (NASDAQ: AAPL) as its stock climbed 18.9% over the month, according to data from S&P Global Market Intelligence. The stock rallied as investors looked forward to a positive third-quarter earnings report and its streaming service, Apple TV+, saw success amid awards season. On July 8, Bank of America's Wamsi Mohan endorsed the stock, saying, "We are getting a lot of data points supporting a pretty decent quarter for Apple."
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What happened July shined on Apple (NASDAQ: AAPL) as its stock climbed 18.9% over the month, according to data from S&P Global Market Intelligence. The stock rallied as investors looked forward to a positive third-quarter earnings report and its streaming service, Apple TV+, saw success amid awards season. So what Ahead of Apple's earnings report for its fiscal 2022 third quarter, three senior analysts gave positive recommendations for the stock.
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What happened July shined on Apple (NASDAQ: AAPL) as its stock climbed 18.9% over the month, according to data from S&P Global Market Intelligence. So what Ahead of Apple's earnings report for its fiscal 2022 third quarter, three senior analysts gave positive recommendations for the stock. Bullish investors were rewarded on July 29 when Apple reported its net sales grew by 2% in the third quarter, an increase of $83 billion.
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What happened July shined on Apple (NASDAQ: AAPL) as its stock climbed 18.9% over the month, according to data from S&P Global Market Intelligence. So what Ahead of Apple's earnings report for its fiscal 2022 third quarter, three senior analysts gave positive recommendations for the stock. So positive iPhone sales in a quarter without such a launch could portend a favorable fourth quarter.
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19880.0
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2022-08-06 00:00:00 UTC
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3 Warren Buffett Stocks to Buy Now
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AAPL
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https://www.nasdaq.com/articles/3-warren-buffett-stocks-to-buy-now
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nan
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nan
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Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) CEO Warren Buffett has inspired a generation of investors to follow in his footsteps. His investment record delivered a 20% annualized return to Berkshire shareholders over the last 57 years. Buffett did it through patiently holding shares of great companies through thick and thin, which is a good reminder in these challenging market conditions.
Berkshire's portfolio is full of investment ideas. Here's why three Motley Fool contributors selected Kraft Heinz (NASDAQ: KHC), Amazon (NASDAQ: AMZN), and Apple (NASDAQ: AAPL) as three great picks right now.
Invest in pricing power to beat inflation
John Ballard (Kraft Heinz): One of Berkshire Hathaway's largest holdings is Kraft Heinz. The stock has underperformed over the last five years, but true to form, Buffett has demonstrated extreme patience, and the reluctance to sell might be finally paying off.
After plunging in value leading up to the pandemic, the stock has slightly outperformed the broader stock market over the last year. Kraft Heinz's sales performance has started to show resiliency amid the economic headwinds hitting consumers. In the second quarter, adjusted sales grew 10% year over year, driven by price increases.
No one likes price increases, but for investors, it's a good quality to identify in a business. A business that can raise prices, as Kraft Heinz just did, and still post revenue growth is a sign of a strong brand that can generate satisfactory returns for shareholders.
Warren Buffett loves investing in companies with strong brands. It's the reason for Berkshire's investments in Apple and Coca-Cola, and it's the reason Buffett continues to hold shares of Kraft Heinz, which owns many grocery store staples like Philadelphia, Jell-O, Velveeta, and the famous ketchup brand.
Investors can buy Kraft Heinz stock at a modest valuation of 13.9 times expected earnings this year. Kraft Heinz also pays a high dividend yield of 4.31%. Investors could do a lot worse in a tough economy than owning shares of a company that sells products people buy every day, while paying out a steady stream of dividend payments.
Holding on through tough times
Jennifer Saibil (Amazon): Warren Buffett's investment in Amazon stock is fairly recent. Berkshire Hathaway began nibbling at the stock in 2019, which means it didn't benefit from the colossal stock gains that Amazon gave shareholders for two decades. It did, however, reap the rewards of ownership over the past three years as the company handled the enormous pandemic demand. In those three years, the stock has only gained about 47%, although that low number is partially due to a dramatic price drop along with the market earlier this year.
AMZN data by YCharts
Buffett isn't likely to be fazed by short-term drops. He's a long-term investor, and his investing philosophy has made him into a living investing legend. And there are many reasons to believe that Amazon's winning streak is far from over.
One of them is Amazon Web Services (AWS). The company's cloud-computing division keeps pumping out revenue, profits, and growth opportunities. It posted another excellent performance in the 2022 second quarter, generating a 33% year-over-year increase in revenue and a 36% increase in operating income. It cemented new deals and upgraded its infrastructure to handle more volume and achieve greater efficiency. Despite pressure in retail, Amazon can count on AWS to post reliably high results.
Beyond AWS, Amazon has been expanding into many new areas, including healthcare. It already offers some telehealth services, and its acquisition of One Medical solidifies its entry into that area. This could be an explosive growth opportunity for Amazon as it searches for new ways to disrupt old practices.
After decelerating to single-digit growth for three straight quarters, Amazon is expecting double digits in the 2022 third quarter, which includes Prime Day. Amazon stock has made a bit of a recent comeback along with a rising market, so even though it's down 20% in 2022, it's up 22% over the past month, and investors who have been on the fence might want to hop on for the ride.
Apple has built trust with consumers, and it's paying off
Parkev Tatevosian (Apple): Apple is one of Warren Buffett's top holdings and is an excellent stock to buy in August. For decades Apple has proven its ability to create innovative electronic products that people love. That skill has enabled Apple to grow into a massive international business that boasted $366 billion in sales in 2021. And fortunately for potential investors, the stock is not trading expensively right now.
More impressively than Apple's $366 billion in revenue in 2021 was that it grew from $157 billion in 2021. That's a compounded annual growth rate of 12.9%. It's difficult for any company to achieve that expansion rate, let alone one that started at a revenue of $157 billion. It's another notch on its belt for serving customers well enough that they keep coming back for the latest technology.
Apple is not giving away these products. Not in the least. Its operating income rose from $55 billion to $109 billion in the time mentioned above. Customers are willing to pay a premium price for Apple's products partly because it has earned that trust. The electronics that Apple sells (smartphones, smart watches, laptop computers, desktop computers) cost consumers from a few hundred to a few thousand dollars. Customers are more likely to choose a trusted brand when parting with significant sums of money.
AAPL Price to Free Cash Flow data by YCharts
There are few people who will argue that Apple is not an excellent business. But it's hard to make a good return on investment if you pay too high a price. However, Apple is not trading expensively. Investors can purchase shares in this high-quality business at a price to earnings of 27 and a price to free cash flow of 25.
10 stocks we like better than Kraft Heinz
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now... and Kraft Heinz wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of July 27, 2022
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jennifer Saibil has no position in any of the stocks mentioned. John Ballard has positions in Amazon. Parkev Tatevosian has positions in Apple. The Motley Fool has positions in and recommends Amazon, Apple, and Berkshire Hathaway (B shares). The Motley Fool recommends Kraft Heinz and recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), long January 2024 $47.50 calls on Coca-Cola, long March 2023 $120 calls on Apple, short January 2023 $200 puts on Berkshire Hathaway (B shares), short January 2023 $265 calls on Berkshire Hathaway (B shares), and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Here's why three Motley Fool contributors selected Kraft Heinz (NASDAQ: KHC), Amazon (NASDAQ: AMZN), and Apple (NASDAQ: AAPL) as three great picks right now. AAPL Price to Free Cash Flow data by YCharts There are few people who will argue that Apple is not an excellent business. A business that can raise prices, as Kraft Heinz just did, and still post revenue growth is a sign of a strong brand that can generate satisfactory returns for shareholders.
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Here's why three Motley Fool contributors selected Kraft Heinz (NASDAQ: KHC), Amazon (NASDAQ: AMZN), and Apple (NASDAQ: AAPL) as three great picks right now. AAPL Price to Free Cash Flow data by YCharts There are few people who will argue that Apple is not an excellent business. Holding on through tough times Jennifer Saibil (Amazon): Warren Buffett's investment in Amazon stock is fairly recent.
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Here's why three Motley Fool contributors selected Kraft Heinz (NASDAQ: KHC), Amazon (NASDAQ: AMZN), and Apple (NASDAQ: AAPL) as three great picks right now. AAPL Price to Free Cash Flow data by YCharts There are few people who will argue that Apple is not an excellent business. Holding on through tough times Jennifer Saibil (Amazon): Warren Buffett's investment in Amazon stock is fairly recent.
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Here's why three Motley Fool contributors selected Kraft Heinz (NASDAQ: KHC), Amazon (NASDAQ: AMZN), and Apple (NASDAQ: AAPL) as three great picks right now. AAPL Price to Free Cash Flow data by YCharts There are few people who will argue that Apple is not an excellent business. Invest in pricing power to beat inflation John Ballard (Kraft Heinz): One of Berkshire Hathaway's largest holdings is Kraft Heinz.
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19881.0
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2022-08-06 00:00:00 UTC
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Berkshire Hathaway posts massive $43.8 bln loss; operating results improve
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AAPL
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https://www.nasdaq.com/articles/berkshire-hathaway-posts-massive-%2443.8-bln-loss-operating-results-improve
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nan
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nan
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(Adds financial details throughout)
Aug 6 (Reuters) - The slide in U.S. stock prices punished Berkshire Hathaway Inc's bottom line in the second quarter as the company run by billionaire Warren Buffett posted a $43.8 billion loss.
Berkshire nevertheless posted better operating results, as improved results from reinsurance and the BNSF railroad offset a loss from the Geico car insurer, where car parts shortages and higher vehicle prices boosted losses on accident claims.
Rising interest rates helped Berkshire's insurance units generate more money from investments, while the strengthening U.S. dollar boosted profit from the company's European and Japanese debt investments.
Investors closely watch Berkshire because of Buffett's reputation, and because results from its dozens of operating units in the insurance, railroad manufacturing, energy and retail sectors often mirror broader economic trends.
Berkshire's net loss was equal to $29,754 per Class A share, and compared with a net profit of $28.1 billion, or $18,488 per Class A share, a year earlier.
Quarterly operating profit rose 39% to $9.28 billion, or about $6,326 per Class A share, from $6.69 billion, or $4,424 per Class A share, a year earlier.
Berkshire slowed repurchases of its own stock, buying back $1 billion in the quarter and $4.2 billion so far this year.
It also bought more than $6.1 billion of stocks, down from $51.1 billion in the first quarter, when it took major stakes in oil companies Chevron Corp and Occidental Petroleum Corp .
Berkshire ended June with $105.4 billion of cash and equivalents. It expects to complete its $11.6 billion takeover of insurance company Alleghany Corp in the fourth quarter.
Net results swing wildly because the Omaha, Nebraska-based conglomerate must report investment gains and losses on its stock holdings even if it buys and sells nothing.
That proved a drag in the second quarter, as Berkshire recorded $53 billion of losses from investments and derivatives.
The stocks of three major holdings -- Apple Inc , Bank of America Corp and American Express Co -- each fell more than 21%.
Buffett urges investors to ignore the fluctuations, and Berkshire will make money if stocks rise over time.
In 2020, for example, Berkshire lost nearly $50 billion in the first quarter as the COVID-19 pandemic took hold, but made $42.5 billion for the full year.
Berkshire owns dozens of businesses that also include its namesake energy operations, several manufacturing companies, and consumer companies such as Duracell batteries, Fruit of the Loom underwear and See's Candies.
The company's shares have outperformed the broader U.S. market in 2022, falling 2% compared with a 13% drop in the Standard & Poor's 500. (Reporting by Jonathan Stempel in New York; editing by Jason Neely and Diane Craft) ((jon.stempel@thomsonreuters.com; +1 646 223 6317; Reuters Messaging: jon.stempel.thomsonreuters.com@reuters.net)) Keywords: BERKSHIRE RESULTS/ (UPDATE 2, PIX)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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(Adds financial details throughout) Aug 6 (Reuters) - The slide in U.S. stock prices punished Berkshire Hathaway Inc's bottom line in the second quarter as the company run by billionaire Warren Buffett posted a $43.8 billion loss. Investors closely watch Berkshire because of Buffett's reputation, and because results from its dozens of operating units in the insurance, railroad manufacturing, energy and retail sectors often mirror broader economic trends. Net results swing wildly because the Omaha, Nebraska-based conglomerate must report investment gains and losses on its stock holdings even if it buys and sells nothing.
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Investors closely watch Berkshire because of Buffett's reputation, and because results from its dozens of operating units in the insurance, railroad manufacturing, energy and retail sectors often mirror broader economic trends. Berkshire's net loss was equal to $29,754 per Class A share, and compared with a net profit of $28.1 billion, or $18,488 per Class A share, a year earlier. Quarterly operating profit rose 39% to $9.28 billion, or about $6,326 per Class A share, from $6.69 billion, or $4,424 per Class A share, a year earlier.
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(Adds financial details throughout) Aug 6 (Reuters) - The slide in U.S. stock prices punished Berkshire Hathaway Inc's bottom line in the second quarter as the company run by billionaire Warren Buffett posted a $43.8 billion loss. Berkshire's net loss was equal to $29,754 per Class A share, and compared with a net profit of $28.1 billion, or $18,488 per Class A share, a year earlier. Quarterly operating profit rose 39% to $9.28 billion, or about $6,326 per Class A share, from $6.69 billion, or $4,424 per Class A share, a year earlier.
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Investors closely watch Berkshire because of Buffett's reputation, and because results from its dozens of operating units in the insurance, railroad manufacturing, energy and retail sectors often mirror broader economic trends. Quarterly operating profit rose 39% to $9.28 billion, or about $6,326 per Class A share, from $6.69 billion, or $4,424 per Class A share, a year earlier. It also bought more than $6.1 billion of stocks, down from $51.1 billion in the first quarter, when it took major stakes in oil companies Chevron Corp and Occidental Petroleum Corp .
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19882.0
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2022-08-06 00:00:00 UTC
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3 Reasons I'm Getting More Bullish About Stocks
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AAPL
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https://www.nasdaq.com/articles/3-reasons-im-getting-more-bullish-about-stocks
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nan
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nan
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Like many investors, I haven't been optimistic about the near-term prospects for the stock market in quite a while. It's hard to be cheerful when the Nasdaq Composite Index has been in a bear market for months and the S&P 500 briefly entered bear market territory.
To be clear, my positive view of stocks as a long-term investment hasn't changed at all. However, I've been generally gloomy about the market over the shorter term. Until now. Here are three reasons why I'm getting more bullish about stocks.
1. The possibility we're in a recession
You might be surprised by my first reason for increased optimism. My newfound bullishness is based in part on the likelihood that the U.S. economy is now in a recession.
Granted, a recession isn't official until the National Bureau of Economic Research says so. However, two consecutive quarterly declines in GDP usually mean that a recession is underway.
So why does this make me more enthusiastic about stocks over the near term? A recession could mean good news for investors is on the way. The stock market often begins to rebound well before a recession ends. And in the 12 months following a recession, the market generated positive returns 91% of the time, since 1953, based on an analysis conducted by Darrow Wealth Management.
2. Surprisingly positive quarterly updates from leaders
Another reason behind my change in outlook comes from recent news from several giant companies. Just three stocks make up nearly 17% of the S&P 500: Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), and Amazon (NASDAQ: AMZN). And all three delivered positive quarterly updates.
Apple beat the consensus earnings estimate in its latest results. More importantly, though, the company's management was also bullish about the future. Apple looks for accelerating growth in the next quarter. CEO Tim Cook also said that the company isn't seeing "obvious evidence of macroeconomic impact" on iPhone demand.
Microsoft missed Wall Street expectations on both the top and bottom lines. The stock nonetheless jumped after its quarterly update in July because Microsoft projected double-digit growth for revenue and operating income in the coming fiscal year.
Meanwhile, Amazon delivered stellar Q2 results. The company's digital ad business continues to grow. Its Amazon Web Services cloud unit remains a huge winner. There were also signs that the overcapacity issues affecting the e-commerce segment are improving.
For the most part, as the leaders go, so goes the broader market. When Apple, Microsoft, and Amazon please investors, there's usually a good reason to be optimistic about the overall stock market.
3. Positive signs that inflation could be waning
Last, but certainly not least, there are some positive signs that inflation could be waning. No, the inflation rate hasn't come down yet. But I won't be surprised if it does in the near future.
The most visible hint that inflation could have already peaked is the decrease in gas prices. After hitting sky-high levels earlier this year, gas prices have tumbled over the past seven weeks. Much of the rise in prices of other products was due to higher transportation costs.
The housing market also appears to be cooling off. Sales of both new and existing homes have declined. Applications for mortgages have dropped to the lowest level in more than two decades.
If these trends for gas and housing continue, the inflation rate will almost certainly fall as well. If that happens, the Federal Reserve wouldn't need to continue raising interest rates. In this scenario, investors would have a lot more confidence about the economy and the near-term prospects for companies.
Cautious optimism
I'm in no way proclaiming that another bull market is imminent. Stocks could quite possibly go down more before they begin a sustained rebound. Big companies could report much worse results in the next quarter. Inflation could remain a serious problem, especially if gas prices go up again.
However, I'm cautiously optimistic about the near-term prospects for stocks for the first time in months. Even better, I'm unabashedly optimistic about the long-term prospects for top-tier stocks.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Just three stocks make up nearly 17% of the S&P 500: Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), and Amazon (NASDAQ: AMZN). And in the 12 months following a recession, the market generated positive returns 91% of the time, since 1953, based on an analysis conducted by Darrow Wealth Management. The stock nonetheless jumped after its quarterly update in July because Microsoft projected double-digit growth for revenue and operating income in the coming fiscal year.
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Just three stocks make up nearly 17% of the S&P 500: Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), and Amazon (NASDAQ: AMZN). Surprisingly positive quarterly updates from leaders Another reason behind my change in outlook comes from recent news from several giant companies. When Apple, Microsoft, and Amazon please investors, there's usually a good reason to be optimistic about the overall stock market.
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Just three stocks make up nearly 17% of the S&P 500: Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), and Amazon (NASDAQ: AMZN). Like many investors, I haven't been optimistic about the near-term prospects for the stock market in quite a while. When Apple, Microsoft, and Amazon please investors, there's usually a good reason to be optimistic about the overall stock market.
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Just three stocks make up nearly 17% of the S&P 500: Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), and Amazon (NASDAQ: AMZN). When Apple, Microsoft, and Amazon please investors, there's usually a good reason to be optimistic about the overall stock market. Inflation could remain a serious problem, especially if gas prices go up again.
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19883.0
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2022-08-06 00:00:00 UTC
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Prediction: These Will Be the 10 Largest Stocks by 2030
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AAPL
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https://www.nasdaq.com/articles/prediction%3A-these-will-be-the-10-largest-stocks-by-2030
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nan
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nan
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For more than a century, Wall Street has been a wealth-building machine for those who are patient. Over long periods, high-quality companies and the indexes they're a part of tend to increase in value.
Something else that's commonplace on Wall Street is change. It's perfectly normal for innovation, acquisitions, competitive advantages, and other factors to shake up the world's largest publicly traded companies on a fairly regular basis.
Just 18 years ago, companies like General Electric, AIG, and Intel were among the 10 largest publicly traded companies by market cap. As of Aug. 4, Intel wasn't even in the top 50 any longer, while GE and AIG had fallen out of the top 125 and top 250, respectively. Eight years from now, in 2030, the stock market's 10 largest stocks could look vastly different than they do today.
Image source: Getty Images.
While absolutely nothing is set in stone, I predict that the following 10 stocks will have the largest market caps by 2030. Note that these 10 companies aren't listed in any particular order.
1. Berkshire Hathaway
The first stock, conglomerate Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B), should retain its spot in the top 10, even if billionaire CEO Warren Buffett isn't at the helm come 2030. After overseeing an average annual return on the company's Class A shares (BRK.A) of 20.1% since 1965, Buffett has clearly shown he's set his company up for long-term success.
One factor that makes Berkshire Hathaway such an incredible company is the mountain of passive income it collects every year. Over the next 12 months, Buffett's company is expected to bring in well over $6 billion in dividend income, with $4.25 billion coming from just a handful of companies. Because dividend stocks have a long history of outperforming nondividend payers, holding these time-tested companies for years or decades provides an added boost.
2. Apple
Perhaps the least-surprising prediction is that the largest publicly traded company in the U.S., Apple (NASDAQ: AAPL), will remain in the top 10 largest stocks by market cap by 2030.
Aside from an easily recognized brand name and faithful customer base, Apple's innovation is key to its success. Introducing a 5G-capable iPhone quickly pushed up its market share in the U.S., while CEO Tim Cook is busy leading a multiyear transition that emphasizes subscription services. Ultimately, subscriptions should boost Apple's operating margins and lessen the sales volatility witnessed during product replacement cycles.
Apple has also repurchased $520 billion worth of its own common stock since the beginning of 2013. If this aggressive buyback program continues, value investors are likely to continue plowing into Apple.
3. Visa
Payment processor Visa (NYSE: V) currently finds itself on the outside looking in (No. 11). By the turn of the decade, I expect it to firmly find itself as one of the 10 largest companies by market cap.
Visa's opportunity for expansion is enormous. Most global transactions are still being conducted in cash, which means it can expand organically into underbanked regions, such as the Middle East, Africa, and Southeastern Asia, or lean on acquisitions to grow (e.g., the Visa Europe buyout in 2016). Sustained double-digit annual growth should be the expectation throughout the decade.
What's more, Visa strictly sticks to payment processing. Although the company would probably do just fine as a lender, it would also expose Visa to potential loan delinquencies and losses during recessions. By avoiding lending, Visa is able to bounce back from economic downturns faster than its peers and maintain a profit margin above 50%.
4. Alphabet
Another FAANG stock that has an exceptionally high likelihood of retaining its top-10 ranking by market cap come 2030 is Alphabet (NASDAQ: GOOGL)(NASDAQ: GOOG), the parent company of internet search engine Google and streaming platform YouTube.
Google has long been Alphabet's foundational operating segment. Over the past two years, it's handled no less than 91% of global internet search share, a big reason why Alphabet sports such incredible ad-pricing power. As traffic acquisition costs decline over time, Google should continue to be a cash cow for the company.
But Alphabet's future is about its higher-growth initiatives like YouTube and Google Cloud. YouTube has grown into the second-most-visited social site in the world, while Google Cloud has gobbled up 8% of global cloud infrastructure spending.
Image source: Getty Images.
5. Salesforce
Cloud-based customer relationship management (CRM) software provider Salesforce (NYSE: CRM) could make one of the biggest leaps (currently No. 43) in terms of market cap by 2030. CRM software is what's used to help businesses enhance customer relationships and boost sales.
Global CRM software sales are expected to sustain double-digit growth through at least mid-decade, which is great news for the industry's unquestioned leader. According to IDC, Salesforce commanded a 23.8% share of CRM software spending in 2021 (over four times its next-closest competitor).
In addition to its commanding market share, co-CEO and co-founder Marc Benioff has a penchant for making earnings-accretive acquisitions. These deals broaden the Salesforce ecosystem and help with the company's cross-selling opportunities.
6. Amazon
E-commerce stock Amazon (NASDAQ: AMZN) is another really strong bet to retain its spot in among the 10 largest stocks by the turn of the decade.
Most folks know Amazon for its industry-leading online marketplace. In 2022, eMarketer projects that Amazon will account for 39.5% of all U.S. online retail sales. But the real crown jewel is the more than 200 million Prime members who've signed up as a result of its leading marketplace. The fees collected from Prime members help Amazon expand its logistics network and reinvest in high-growth initiatives.
There's also Amazon Web Services (AWS), which is the global No. 1 in cloud infrastructure spending with 33% market share. Corporate cloud spending is still in its early innings, which means Amazon's operating cash flow could skyrocket in the years ahead.
7. PayPal Holdings
The company I predict will make the biggest leap into the top 10 stocks by market cap is fintech giant PayPal Holdings (NASDAQ: PYPL). PayPal is currently No. 88, with a $112 billion market cap.
Digital payments are still in their infancy, which bodes well for fee-based payment platforms. Even with U.S. gross domestic product declining in back-to-back quarters, PayPal's total payment volume on its network continues to grow by a double-digit percentage on a constant-currency basis.
Arguably even more important, active users are more engaged than ever. At the end of 2020, active users were completing 40.9 transactions over the trailing 12 months (ttm). This figure is up to 48.7 transactions per active account on a ttm basis through June 2022, and it continues to climb.
8. Microsoft
Software kingpin Microsoft (NASDAQ: MSFT), the only company from the 10 largest stocks by market cap in 1999 to still have a top-10 position today, has a good shot at sustaining its dominance throughout the decade.
Microsoft's success is a function of raking in mammoth amounts of cash flow from its legacy operations and funneling this cash into faster-growing projects. For instance, even though its high-margin Windows franchise is generally a slow grower, it still accounts for a 76% share of global desktop operating systems.
Microsoft is utilizing this cash flow to reinvest in a variety of cloud initiatives -- Azure is the global No. 2 in cloud infrastructure spending and grew sales by 46% on a constant-currency basis in the June-ended quarter -- and fuel acquisitions. For instance, Microsoft offered $68.7 billion to acquire gaming company Activision Blizzard in January.
9. Chevron
Despite a feverish renewable energy push by most developed countries, I predict oil and gas major Chevron (NYSE: CVX) will find its way into 10 largest publicly traded companies by market cap in 2030.
The biggest reason for this push is the expectation that oil and natural gas prices will remain elevated for many years to come. The pandemic resulted in multiple years of reduced domestic and international drilling and pipeline investment. Couple this with Russia's invasion of Ukraine, and you'll see there's a clear risk to global energy supply.
Chevron is also in excellent financial shape compared to most other integrated oil stocks. By prudently deploying its capital and minimizing debt, Chevron has been able to maintain its superior dividend, repurchase its own stock, and fund key natural gas projects in the Asia-Pacific region.
10. Meta Platforms
Lastly, social media stock Meta Platforms (NASDAQ: META), the company formerly known as Facebook, should find itself as one of the 10 largest stocks in 2030. You'll note that current top-10 stocks Tesla (NASDAQ: TSLA), UnitedHealth Group (NYSE: UNH), Nvidia (NASDAQ: NVDA), and Johnson & Johnson (NYSE: JNJ), didn't make the cut.
Although social media usage statistics can be extremely fickle to project one year in advance, let alone in eight years, Meta has four of the most downloaded apps in the world. On a combined basis, Facebook, Instagram, WhatsApp, and Facebook Messenger attracted 3.65 billion monthly active users in the June-ended quarter. That's over half the global adult population and a big reason why Facebook's ad-pricing power is exceptionally strong more often than not.
The wild card is the company's metaverse ambitions, the "metaverse" being the next iteration of the internet that allows connected users to interact with each other and their surroundings in a 3D virtual environment. It will be years before the necessary infrastructure is in place to support the metaverse. But once there, Meta's hefty investments could make it a key player in this potentially $30 trillion opportunity.
10 stocks we like better than Berkshire Hathaway (B shares)
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Sean Williams has positions in Alphabet (A shares), Amazon, Meta Platforms, Inc., and PayPal Holdings. The Motley Fool has positions in and recommends Activision Blizzard, Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Berkshire Hathaway (B shares), Intel, Meta Platforms, Inc., Microsoft, Nvidia, PayPal Holdings, Salesforce, Inc., Tesla, and Visa. The Motley Fool recommends Johnson & Johnson and UnitedHealth Group and recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), long January 2023 $57.50 calls on Intel, long March 2023 $120 calls on Apple, short January 2023 $200 puts on Berkshire Hathaway (B shares), short January 2023 $265 calls on Berkshire Hathaway (B shares), short January 2023 $57.50 puts on Intel, and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Apple Perhaps the least-surprising prediction is that the largest publicly traded company in the U.S., Apple (NASDAQ: AAPL), will remain in the top 10 largest stocks by market cap by 2030. Most global transactions are still being conducted in cash, which means it can expand organically into underbanked regions, such as the Middle East, Africa, and Southeastern Asia, or lean on acquisitions to grow (e.g., the Visa Europe buyout in 2016). Even with U.S. gross domestic product declining in back-to-back quarters, PayPal's total payment volume on its network continues to grow by a double-digit percentage on a constant-currency basis.
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Apple Perhaps the least-surprising prediction is that the largest publicly traded company in the U.S., Apple (NASDAQ: AAPL), will remain in the top 10 largest stocks by market cap by 2030. You'll note that current top-10 stocks Tesla (NASDAQ: TSLA), UnitedHealth Group (NYSE: UNH), Nvidia (NASDAQ: NVDA), and Johnson & Johnson (NYSE: JNJ), didn't make the cut. The Motley Fool has positions in and recommends Activision Blizzard, Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Berkshire Hathaway (B shares), Intel, Meta Platforms, Inc., Microsoft, Nvidia, PayPal Holdings, Salesforce, Inc., Tesla, and Visa.
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Apple Perhaps the least-surprising prediction is that the largest publicly traded company in the U.S., Apple (NASDAQ: AAPL), will remain in the top 10 largest stocks by market cap by 2030. Meta Platforms Lastly, social media stock Meta Platforms (NASDAQ: META), the company formerly known as Facebook, should find itself as one of the 10 largest stocks in 2030. The Motley Fool has positions in and recommends Activision Blizzard, Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Berkshire Hathaway (B shares), Intel, Meta Platforms, Inc., Microsoft, Nvidia, PayPal Holdings, Salesforce, Inc., Tesla, and Visa.
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Apple Perhaps the least-surprising prediction is that the largest publicly traded company in the U.S., Apple (NASDAQ: AAPL), will remain in the top 10 largest stocks by market cap by 2030. Visa Payment processor Visa (NYSE: V) currently finds itself on the outside looking in (No. Amazon E-commerce stock Amazon (NASDAQ: AMZN) is another really strong bet to retain its spot in among the 10 largest stocks by the turn of the decade.
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19884.0
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2022-08-05 00:00:00 UTC
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Wall Street set to fall as solid jobs data fuels rate hike worries
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AAPL
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https://www.nasdaq.com/articles/wall-street-set-to-fall-as-solid-jobs-data-fuels-rate-hike-worries
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nan
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nan
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By Devik Jain and Anisha Sircar
Aug 5 (Reuters) - Wall Street's main indexes were set to open sharply lower on Friday as a solid jobs report bolstered the case for the Federal Reserve to continue on its aggressive policy tightening path.
Data showed U.S. employers hired far more workers than expected in July, with the unemployment rate falling to a pre-pandemic low of 3.5%, the strongest evidence yet that the economy was not in recession.
"What we have heard from the various Fed governors this week about it being too early to pivot away from a tightening policy is definitely in place with the jobs report that is 'this hot'," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.
"It gives the Fed reason to continue to raise rates and that is what got the market on edge."
A bevy of policymakers have this week near uniformly flagged the central bank remains determined to press ahead with rate hikes until it sees strong and long-lasting evidence that inflation is trending lower towards the Fed's 2% goal.
Markets are now pricing in a 65.5% chance of a 75-basis-point interest rate hike in September, up from 40% before the data. The central bank has already increased rates by 2.25 percentage points so far this year.
U.S. Treasury yields extended their rise after the report, likely putting pressure on high-growth stocks such as Apple AAPL.O and Alphabet GOOGL.O.
Worries about an aggressive rise in borrowing costs, the war in Ukraine, Europe's energy crisis and COVID-19 flare-ups in China have rattled equities this year and prompted investors to adjust their earnings expectations for corporate America.
However, the second-quarter earnings season has showed companies were far more resilient than estimated. Of the 410 S&P 500 companies that have reported earnings so far, 77.1% reported above analyst expectations, according to Refinitiv data.
At 8:46 a.m. ET, Dow e-minis 1YMcv1 were down 203 points, or 0.62%, S&P 500 e-minis EScv1 were down 39.75 points, or 0.96%, and Nasdaq 100 e-minis NQcv1 were down 169 points, or 1.27%.
Lyft Inc LYFT.O rose 6.6% in premarket trading as the ride-hailing firm forecast an adjusted operating profit of $1 billion for 2024 after posting record quarterly earnings.
DoorDash Inc DASH.N gained 5.1% after the food delivery firm raised annual target for a key industry metric, saying it does not expect a slowdown in demand as consumers continue to order in despite decades-high inflation.
Block Inc SQ.N fell 7.1% as the digital payments company slowed hiring and said it will slash 2022 investment target by $250 million, after a slump inbitcoin pricesdrove the Jack Dorsey-led firm to a loss in the second quarter.
(Reporting by Devik Jain, Anisha Sircar and Aniruddha Ghosh in Bengaluru; Editing by Aditya Soni)
((Devik.Jain@thomsonreuters.com;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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U.S. Treasury yields extended their rise after the report, likely putting pressure on high-growth stocks such as Apple AAPL.O and Alphabet GOOGL.O. By Devik Jain and Anisha Sircar Aug 5 (Reuters) - Wall Street's main indexes were set to open sharply lower on Friday as a solid jobs report bolstered the case for the Federal Reserve to continue on its aggressive policy tightening path. A bevy of policymakers have this week near uniformly flagged the central bank remains determined to press ahead with rate hikes until it sees strong and long-lasting evidence that inflation is trending lower towards the Fed's 2% goal.
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U.S. Treasury yields extended their rise after the report, likely putting pressure on high-growth stocks such as Apple AAPL.O and Alphabet GOOGL.O. By Devik Jain and Anisha Sircar Aug 5 (Reuters) - Wall Street's main indexes were set to open sharply lower on Friday as a solid jobs report bolstered the case for the Federal Reserve to continue on its aggressive policy tightening path. ET, Dow e-minis 1YMcv1 were down 203 points, or 0.62%, S&P 500 e-minis EScv1 were down 39.75 points, or 0.96%, and Nasdaq 100 e-minis NQcv1 were down 169 points, or 1.27%.
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U.S. Treasury yields extended their rise after the report, likely putting pressure on high-growth stocks such as Apple AAPL.O and Alphabet GOOGL.O. By Devik Jain and Anisha Sircar Aug 5 (Reuters) - Wall Street's main indexes were set to open sharply lower on Friday as a solid jobs report bolstered the case for the Federal Reserve to continue on its aggressive policy tightening path. A bevy of policymakers have this week near uniformly flagged the central bank remains determined to press ahead with rate hikes until it sees strong and long-lasting evidence that inflation is trending lower towards the Fed's 2% goal.
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U.S. Treasury yields extended their rise after the report, likely putting pressure on high-growth stocks such as Apple AAPL.O and Alphabet GOOGL.O. By Devik Jain and Anisha Sircar Aug 5 (Reuters) - Wall Street's main indexes were set to open sharply lower on Friday as a solid jobs report bolstered the case for the Federal Reserve to continue on its aggressive policy tightening path. "It gives the Fed reason to continue to raise rates and that is what got the market on edge."
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19885.0
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2022-08-05 00:00:00 UTC
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Apple Stock: Advertisement Expansion Seems Heavily Discounted
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AAPL
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https://www.nasdaq.com/articles/apple-stock%3A-advertisement-expansion-seems-heavily-discounted
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nan
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nan
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Apple's (AAPL) latest quarter was solid, showing evidence that it's managing well through supply issues. Hardware and services demand remains robust, and with new cutting-edge products (think a VR or AR headset) on the horizon, the lofty (27.4x trailing earnings) price tag seems more than warranted. Looking past known catalysts, Apple seems to be stealthily inching its way into new markets, most notably advertisements.
Such an advertising push could be a significant source of long-term growth for the legendary company that's keeping its foot on the gas. I am staying bullish on AAPL stock.
Undoubtedly, Apple has a hand in many pies, and it's done a great job of jumping into parallel markets.
CEO Tim Cook is a legendary manager responsible for incredible services growth and the considerable multiple expansion enjoyed by the stock in recent years. Looking ahead, Cook likely sees opportunity in ads, a market where Apple's FAANG rivals have excelled. Apple looks like a top contender to take meaningful share away from its peers as it continues to leverage the power of its network of loyal customers.
As a result of the company's dominance, shares of Apple have been incredibly resilient through this broader market sell-off. The stock has led the way for other FAANG companies and is now up more than 26% off its June bottom while down less than 10% from its all-time high of around $180 per share.
Apple isn't Taking Shots at Meta Platforms Just for Fun
Apple's disruption of Meta's ad business put some power back in the hands of its users by giving them the option of preventing cross-site ad tracking. However, it wasn't just a jab to protect the privacy of its users. Though Apple is viewed as a good guy in the tech space, given its privacy focus, the firm may have the opportunity to squeeze firms out of the ad markets to set up its own push. Undoubtedly, Apple will do ads ethically, and this privacy focus could set a new standard for the industry.
Apple's privacy-focused iOS updates pressured the top and bottom lines of social-media firms like Meta Platforms (META). Indeed, the single move wiped out billions off Meta's market cap. To date, the firm doesn't yet have an effective solution, though Meta is keen on outdoing Apple in VR en route to the metaverse.
Last week, Apple shed light on its App Store Search Ads program. Reportedly, the company has been hiring quite a few high-level employees on the ad side of its business. Indeed, this could indicate the beginning of an ad push that could challenge the likes of Meta Platforms and even Alphabet (GOOG)(GOOGL).
The ad market is ripe for disruption. With one of the best reputations in the big-tech scene, I think Apple's ad business could be a force to be reckoned with. Toni Sacconaghi, an analyst at Bernstein, sees Apple's ad business hitting up to $10 billion in revenue by Fiscal Year 2023 or 2024.
Looking further out, I think the ad business could become even more influential, especially if Apple dominates the metaverse in the latter part of the decade.
Selling Ads in the Metaverse Could Prove Lucrative
The digital worlds of tomorrow could see advertisements augmented over the real world. This is similar to how various ads are displayed to television viewers during live sports broadcasts. Many big-tech firms are making sizeable investments to take command of the metaverses.
Currently, Meta is a leader with its line of Oculus headsets. Though there are rivals, it's really hard to match the dominance of Oculus' new headsets and its $10 billion commitment to building out its version of the metaverse.
That said, Meta's metaverse won't be the only one, and it may not even be the most popular one, as I suggested in a prior piece covering Meta's metaverse pivot. As rivals aim for the metaverse, Meta faces a real fight, given how much of the ad market could be at stake.
Apple has been rumored to be working on its own mixed-reality headset for quite some time. Its library of augmented reality apps on iOS is already quite sizeable. With Apple rumored to lift the curtain on its much-anticipated headset as soon as the first half of 2023, we could see a shift of the tides in Apple's favor.
Whether or not augmented or virtual reality becomes the new go-to medium for ads, the winners (yes, there can be more than one, as Meta doesn't own the metaverse as we know it) of the metaverse race may also wind up as the largest share-takers within the evolving ad market.
Wall Street's Take on AAPL
Turning to Wall Street, AAPL has a Moderate Buy consensus rating based on 22 Buys, six Holds, and one Sell assigned in the past three months. The average AAPL price target of $180.11 implies 9.4% upside potential. Analyst price targets range from a low of $136.00 per share to a high of $210.00 per share.
Takeaway - Apple is a Growing Threat to Advertising Industry Competitors
Apple is innovating at a rapid pace. There's a lot of exciting new stuff slated to come out of the pipeline over the next year! As the firm looks to make a huge push into ads, I think Meta and other rivals could have a growing problem on their hands.
Apple's network is unmatched, and with so much transparency surrounding user privacy, I'd be unsurprised if a majority of Apple users give the company the green light to serve them up personalized ads.
Disclosure
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Apple's (AAPL) latest quarter was solid, showing evidence that it's managing well through supply issues. I am staying bullish on AAPL stock. Wall Street's Take on AAPL Turning to Wall Street, AAPL has a Moderate Buy consensus rating based on 22 Buys, six Holds, and one Sell assigned in the past three months.
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Apple's (AAPL) latest quarter was solid, showing evidence that it's managing well through supply issues. I am staying bullish on AAPL stock. Wall Street's Take on AAPL Turning to Wall Street, AAPL has a Moderate Buy consensus rating based on 22 Buys, six Holds, and one Sell assigned in the past three months.
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Apple's (AAPL) latest quarter was solid, showing evidence that it's managing well through supply issues. I am staying bullish on AAPL stock. Wall Street's Take on AAPL Turning to Wall Street, AAPL has a Moderate Buy consensus rating based on 22 Buys, six Holds, and one Sell assigned in the past three months.
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Apple's (AAPL) latest quarter was solid, showing evidence that it's managing well through supply issues. I am staying bullish on AAPL stock. Wall Street's Take on AAPL Turning to Wall Street, AAPL has a Moderate Buy consensus rating based on 22 Buys, six Holds, and one Sell assigned in the past three months.
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19886.0
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2022-08-05 00:00:00 UTC
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Why I Own Qualcomm Stock
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AAPL
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https://www.nasdaq.com/articles/why-i-own-qualcomm-stock
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nan
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nan
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Motley Fool writer Willy Healy joins the channel to discuss why he owns Qualcomm (NASDAQ: QCOM). Check out his thesis in this video!
*Stock prices used were the midday prices of August 2, 2022. The video was published on August 4, 2022.
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Connor Allen has positions in Apple. Will Healy has positions in Qualcomm. The Motley Fool has positions in and recommends Apple and Qualcomm. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy. Connor is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Motley Fool writer Willy Healy joins the channel to discuss why he owns Qualcomm (NASDAQ: QCOM). After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market. If you choose to subscribe through his link, he will earn some extra money that supports his channel.
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After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market. The Motley Fool has positions in and recommends Apple and Qualcomm. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple.
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See the 10 stocks *Stock Advisor returns as of July 27, 2022 Connor Allen has positions in Apple. The Motley Fool has positions in and recommends Apple and Qualcomm. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple.
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The video was published on August 4, 2022. See the 10 stocks *Stock Advisor returns as of July 27, 2022 Connor Allen has positions in Apple. The Motley Fool has positions in and recommends Apple and Qualcomm.
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19887.0
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2022-08-05 00:00:00 UTC
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Warren Buffett's Secret Portfolio Has 95% of Its Assets in These 2 Sectors
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AAPL
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https://www.nasdaq.com/articles/warren-buffetts-secret-portfolio-has-95-of-its-assets-in-these-2-sectors
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nan
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nan
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Few investors have a more impressive track record than Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) CEO Warren Buffett. In the 57 years he's held the reins at Berkshire, he's led his company's Class A shares (BRK.A) to an average annual return of 20.1%, which equates to an aggregate return of more than 3,600,000%.
Buffett's success as an investor is due to myriad factors, including a willingness to hold investments for long periods of time, as well as his love of cyclical companies and dividend stocks.
Berkshire Hathaway CEO Warren Buffett.
But something you may not know about the Oracle of Omaha is that he has a secret portfolio containing $6.3 billion in assets under management, as of March 31, 2022. While it's relatively easy to follow Buffett's trading activity via 13F filings with the Securities and Exchange Commission, you won't find these holdings in Berkshire's 13F filing.
In 1998, Buffett's company acquired insurer General Re for $22 billion. While the prized asset of the General Re buyout was the company's reinsurance operations, General Re also controlled specialty investment firm New England Asset Management (NEAM).
To be perfectly clear, Warren Buffett and the investing team making the decisions for Berkshire Hathaway's more than $350 billion investment portfolio don't oversee NEAM's $6.3 billion investment portfolio. Nevertheless, New England Asset Management is an owned entity of Buffett's company. This means the assets held in NEAM's investment portfolio are, ultimately, "owned" by the Oracle of Omaha.
With $6.3 billion in assets under management, New England Asset Management is required to file a 13F just like its parent company. But unlike Berkshire Hathaway, NEAM has its fingers in more than three times as many securities as Berkshire (52 for Berkshire, compared to more than 160 for NEAM).
What's similar is that Buffett's secret portfolio has invested the vast majority of its assets into a small concentration of sectors. In New England Asset Management's case, 95% of its assets are invested in just the following two sectors.
Technology: 57.49% of invested assets
The sector Warren Buffett's secret portfolio unquestionably favors the most is information technology. In total, NEAM has positions in 17 different tech stocks, including software behemoth Microsoft, semiconductor solutions-specialist Broadcom, payroll solutions-provider Paychex, and legacy stalwarts like HP and IBM.
But here's the jaw-dropping stat that really defines New England Asset Management's "love of tech." Out of the 57.49% of assets invested in information technology at the end of March, virtually all of it (56.62%) was tied up in Apple (NASDAQ: AAPL). This means the other 16 tech stocks held by NEAM make up just 0.87% of invested assets, on a combined basis!
There's certainly something to be said about Berkshire Hathaway and New England Asset Management sharing their largest positions. Then again, Apple has given investors an abundance of reasons to trust in the company over the long run.
To begin with, Apple is arguably the most valuable and recognized brand in the world. Earlier this year, Brand Finance labeled Apple as the world's most valuable brand for a second consecutive year. Brand Finance cited the company's range of services, its bolstered privacy and environmental push, and its diversified product line as reasons for hanging onto the top spot among global brands.
Innovation is another reason Apple has been such a superstar for the investing community. Since Apple introduced a 5G-capable version of its iPhone in the fourth quarter of 2020, its U.S. smartphone market share has held at 50% or above in 5 out of 6 quarters, according to Counterpoint Research.
But it's not just product innovation that's driving results. Apple CEO Tim Cook is overseeing an ongoing transition of his company to a service-oriented business. A subscription-driven model should help boost long-term operating margins and lessen the bumpiness often associated with product-replacement cycles. Keep in mind that Apple isn't abandoning the product line that brought it fame. The company is simply evolving in order to grow.
Apple is also in a league of its own when it comes to capital-return programs. In addition to returning more than $14 billion a year to investors in the form of a dividend, the company has repurchased close to $520 billion worth of its common stock since initiating a buyback program in 2013. That's not pocket change, and it's an easy way to get the attention of Warren Buffet and New England Asset Management's investment-portfolio managers.
Image source: Getty Images.
Financials: 37.45% of invested assets
The second sector that New England Asset Management has absolutely piled into is (drum roll) financials! Did you expect anything else from a company with an insurance-based background?
As a whole, NEAM holds stakes in 51 financial securities. I say "securities," because NEAM invests in stocks, exchange-traded funds, and preferred stock. But once again, only a small handful of these investments account for the lion's share of the 37.45% of invested assets tied up in financial stocks. This includes U.S. Bancorp (NYSE: USB), Bank of America (NYSE: BAC), the SPDR S&P 500 ETF, and the Bank of New York Mellon.
Together, these four securities account for 32.98% of the 37.45% in financial sector-invested assets. You might note that Berkshire Hathaway has stakes in all four of these financial securities, too, in its portfolio.
Regional bank U.S. Bancorp and money-center giant Bank of America each make up about 14.9% of invested assets (29.8% on a combined basis). When held for long periods of time, bank stocks benefit from the disproportionately longer period of time the U.S. economy spends expanding, relative to contracting.
Although downturns are inevitable, the U.S. economy naturally expands over time. That allows U.S. Bancorp and Bank of America to grow their loans and deposits.
Bank of America and U.S. Bancorp are also benefiting from a combination of rising interest rates and digitization investments. The former noted in its June-ended quarterly investor presentation that a 100 basis-point parallel shift in the interest-rate yield curve would generate an estimated $5 billion in added net-interest income over 12 months.
Meanwhile, U.S. Bancorp has set the standard for digital engagement. It ended June with 82% of its active customers banking digitally and had 64% of total sales completed online or via its app. Since digital transactions cost a fraction of what in-person or phone-based transactions do, this digital push is helping boost U.S. Bancorp's efficiency.
Financials may not be the sexiest place to put your money to work, but they have all the tools to take advantage of a steadily growing economy over the long term.
Find out why Apple is one of the 10 best stocks to buy now
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*Stock Advisor returns as of July 27, 2022
Bank of America is an advertising partner of The Ascent, a Motley Fool company. Sean Williams has positions in Bank of America. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway (B shares), HP, and Microsoft. The Motley Fool recommends Broadcom Ltd and recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), long March 2023 $120 calls on Apple, short January 2023 $200 puts on Berkshire Hathaway (B shares), short January 2023 $265 calls on Berkshire Hathaway (B shares), and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Out of the 57.49% of assets invested in information technology at the end of March, virtually all of it (56.62%) was tied up in Apple (NASDAQ: AAPL). Buffett's success as an investor is due to myriad factors, including a willingness to hold investments for long periods of time, as well as his love of cyclical companies and dividend stocks. In total, NEAM has positions in 17 different tech stocks, including software behemoth Microsoft, semiconductor solutions-specialist Broadcom, payroll solutions-provider Paychex, and legacy stalwarts like HP and IBM.
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Out of the 57.49% of assets invested in information technology at the end of March, virtually all of it (56.62%) was tied up in Apple (NASDAQ: AAPL). Few investors have a more impressive track record than Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) CEO Warren Buffett. To be perfectly clear, Warren Buffett and the investing team making the decisions for Berkshire Hathaway's more than $350 billion investment portfolio don't oversee NEAM's $6.3 billion investment portfolio.
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Out of the 57.49% of assets invested in information technology at the end of March, virtually all of it (56.62%) was tied up in Apple (NASDAQ: AAPL). While the prized asset of the General Re buyout was the company's reinsurance operations, General Re also controlled specialty investment firm New England Asset Management (NEAM). To be perfectly clear, Warren Buffett and the investing team making the decisions for Berkshire Hathaway's more than $350 billion investment portfolio don't oversee NEAM's $6.3 billion investment portfolio.
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Out of the 57.49% of assets invested in information technology at the end of March, virtually all of it (56.62%) was tied up in Apple (NASDAQ: AAPL). Berkshire Hathaway CEO Warren Buffett. You might note that Berkshire Hathaway has stakes in all four of these financial securities, too, in its portfolio.
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19888.0
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2022-08-05 00:00:00 UTC
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TSMC is China’s trump card against U.S. and Taiwan
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AAPL
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https://www.nasdaq.com/articles/tsmc-is-chinas-trump-card-against-u.s.-and-taiwan
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nan
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nan
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Reuters
Reuters
WASHINGTON (Reuters Breakingviews) - It’s possible that Americans will start to care about U.S. House Speaker Nancy Pelosi’s visit to Taiwan once they find out the production of their new Toyota is risk. If strains between China and Taiwan continue to worsen, the People’s Republic has a trump card: threatening to cut off the island’s exports, which include products from pivotal chipmaker TSMC https://www.cnn.com/videos/tv/2022/07/31/exp-gps-0731-mark-liu-taiwan-semiconductors.cnn, formally known as Taiwan Semiconductor Manufacturing. That company plays an outsized role in the global economy, supplying Apple, Qualcomm, and other industrial giants with key components. It should be enough to make even Americans - who otherwise remain largely uninterested - nervous.
Pelosi’s trip earlier this week was the first time a U.S. House speaker has gone to the region since 1997. Beijing, which is in a much stronger position now, responded by launching its largest military drills ever in the Taiwan Strait on Thursday, which included firing missiles and dispatching aircraft to the area. The People’s Republic could threaten to retaliate further. A naval blockade and a no-fly zone, for example, could in theory keep Taiwan’s main products from heading around the world.
China, too, would face consequences if it were to make life difficult for TSMC. Mainland chipmakers, handset brands, electric vehicles and more rely on the $447 billion company’s cutting-edge technology just as much as their U.S. rivals. That makes it less likely that the People’s Republic will follow through.
Still, the strength of TSMC puts U.S. companies, who have many friends in Washington, on the back foot. The company’s chip factories, which are mostly in Taiwan, supply more than half of the contract chip-making market, including 80% of microcontrollers used in cars and 90% of the most advanced semiconductors, according to Bain & Company. U.S. companies are just coming out of a global chip shortage spurred by the pandemic, which already shut down production at auto factories across the globe. With the threat of a recession and war in Ukraine, American chieftains are highly resistant to any other potential curveballs.
Isolating or disrupting TSMC would be a fresh disaster for the global economy. As tensions rise to threats that can cause real consequences, China holds a big chip in its hand.
Follow @GinaChon https://twitter.com/GinaChon on Twitter
CONTEXT NEWS
China fired multiple missiles near Taiwan on Aug. 4, a day after U.S. House of Representatives Speaker Nancy Pelosi visited the island claimed by Beijing. It was the largest military drills in the Taiwan Strait.
Separately, TSMC Chair Mark Liu told CNN that the company’s advanced chip factory would become inoperable if China invaded Taiwan, according to an interview aired on July 31. TSMC has more than 50% share of theglobal marketfor contract chip-making, according to Bain & Company.
(Editing by Lauren Silva Laughlin)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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WASHINGTON (Reuters Breakingviews) - It’s possible that Americans will start to care about U.S. House Speaker Nancy Pelosi’s visit to Taiwan once they find out the production of their new Toyota is risk. Beijing, which is in a much stronger position now, responded by launching its largest military drills ever in the Taiwan Strait on Thursday, which included firing missiles and dispatching aircraft to the area. Separately, TSMC Chair Mark Liu told CNN that the company’s advanced chip factory would become inoperable if China invaded Taiwan, according to an interview aired on July 31.
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WASHINGTON (Reuters Breakingviews) - It’s possible that Americans will start to care about U.S. House Speaker Nancy Pelosi’s visit to Taiwan once they find out the production of their new Toyota is risk. Beijing, which is in a much stronger position now, responded by launching its largest military drills ever in the Taiwan Strait on Thursday, which included firing missiles and dispatching aircraft to the area. China fired multiple missiles near Taiwan on Aug. 4, a day after U.S. House of Representatives Speaker Nancy Pelosi visited the island claimed by Beijing.
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If strains between China and Taiwan continue to worsen, the People’s Republic has a trump card: threatening to cut off the island’s exports, which include products from pivotal chipmaker TSMC https://www.cnn.com/videos/tv/2022/07/31/exp-gps-0731-mark-liu-taiwan-semiconductors.cnn, formally known as Taiwan Semiconductor Manufacturing. The company’s chip factories, which are mostly in Taiwan, supply more than half of the contract chip-making market, including 80% of microcontrollers used in cars and 90% of the most advanced semiconductors, according to Bain & Company. Separately, TSMC Chair Mark Liu told CNN that the company’s advanced chip factory would become inoperable if China invaded Taiwan, according to an interview aired on July 31.
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That makes it less likely that the People’s Republic will follow through. The company’s chip factories, which are mostly in Taiwan, supply more than half of the contract chip-making market, including 80% of microcontrollers used in cars and 90% of the most advanced semiconductors, according to Bain & Company. China fired multiple missiles near Taiwan on Aug. 4, a day after U.S. House of Representatives Speaker Nancy Pelosi visited the island claimed by Beijing.
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19889.0
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2022-08-05 00:00:00 UTC
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3 Warren Buffett Stocks to Buy in August Without Any Hesitation
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AAPL
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https://www.nasdaq.com/articles/3-warren-buffett-stocks-to-buy-in-august-without-any-hesitation
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nan
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nan
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It's completely understandable why many investors could be reluctant to buy stocks right now. Inflation remains high. We could already be in a recession. There's admittedly a lot of uncertainty.
However, Warren Buffett isn't letting any of this get in his way. He has done quite a bit of buying this year for Berkshire Hathaway's (NYSE: BRK.A) (NYSE: BRK.B) portfolio. There's no need to try to imitate everything that the legendary investor is doing. But here are three Buffett stocks to buy in August without any hesitation.
1. Amazon
Sure, the first half of 2022 wasn't a great one for Amazon (NASDAQ: AMZN). The company faced supply chain challenges and overcapacity. Its share price sank. However, Amazon began a solid comeback in July.
Amazon benefited from a streak of good news. Its recent Prime Day posted record sales. Investors applauded the company's planned acquisition of primary care provider One Medical. Amazon delivered surprisingly strong second-quarter results.
These positive developments haven't prompted Buffett to scoop up more shares of Amazon (as far as we know). However, the underlying factors behind them should make investors quite comfortable buying this stock.
The banner Prime Day event showed that Amazon's e-commerce business is alive and kicking. The OneMedical deal underscores Amazon's growth prospects in new markets. The great Q2 results were made possible by the continued momentum for Amazon Web Services. With all of this going for it, Amazon seems poised to remain a big winner for long-term investors.
2. Apple
Buffett loves Apple (NASDAQ: AAPL). His main complaint in the first half of this year was that the stock didn't keep going down so he could buy more of it.
At first glance, you might question just how strong Apple's recent quarterly results were. The company reported year-over-year revenue growth of only around 2%. Keep in mind, though, that this improvement was achieved despite currency headwinds, supply chain issues, and skyrocketing inflation affecting consumers.
Apple's success depends largely on its iPhone ecosystem. The latest survey showed an astounding 98% customer satisfaction rate with the iPhone. There were also more switches from other phones to the iPhone in the June quarter than ever before. This bodes well for Apple's future prospects.
5G should continue to drive higher demand for newer iPhones. So should future innovations from Apple, including a rumored foldable iPhone and new augmented reality capabilities.
3. Markel
Buffett has been a longtime fan of insurers. Berkshire's own insurance businesses include GEICO and General Re. The only thing surprising about Berkshire's purchase of specialty insurer Markel (NYSE: MKL) earlier this year is that it hasn't happened earlier.
But Markel isn't just an insurance company. Like Berkshire, it also invests in other companies. Markel Ventures includes an assortment of businesses. Markel also owns stakes in dozens of publicly traded companies, including Amazon, Apple, and Berkshire Hathaway (its largest holding).
Unlike most of Buffett's stocks, Markel has risen year to date. It's also in a good position to thrive even with high inflation because it can pass higher costs along to customers.
Markel arguably ranks among the best stocks that Buffett owns right now. The company has solid growth prospects. It provides a level of diversification with its external investments in multiple other businesses. The stock is also attractively valued, with a price-to-earnings-growth (PEG) ratio of only 0.9.
10 stocks we like better than Markel
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now... and Markel wasn't one of them! That's right -- they think these 10 stocks are even better buys.
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*Stock Advisor returns as of July 27, 2022
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Keith Speights has positions in Amazon, Apple, and Berkshire Hathaway (B shares). The Motley Fool has positions in and recommends Amazon, Apple, Berkshire Hathaway (B shares), and Markel. The Motley Fool recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), long March 2023 $120 calls on Apple, short January 2023 $200 puts on Berkshire Hathaway (B shares), short January 2023 $265 calls on Berkshire Hathaway (B shares), and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Apple Buffett loves Apple (NASDAQ: AAPL). The banner Prime Day event showed that Amazon's e-commerce business is alive and kicking. Keep in mind, though, that this improvement was achieved despite currency headwinds, supply chain issues, and skyrocketing inflation affecting consumers.
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Apple Buffett loves Apple (NASDAQ: AAPL). Markel also owns stakes in dozens of publicly traded companies, including Amazon, Apple, and Berkshire Hathaway (its largest holding). The Motley Fool has positions in and recommends Amazon, Apple, Berkshire Hathaway (B shares), and Markel.
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Apple Buffett loves Apple (NASDAQ: AAPL). Markel also owns stakes in dozens of publicly traded companies, including Amazon, Apple, and Berkshire Hathaway (its largest holding). The Motley Fool has positions in and recommends Amazon, Apple, Berkshire Hathaway (B shares), and Markel.
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Apple Buffett loves Apple (NASDAQ: AAPL). But Markel isn't just an insurance company. Like Berkshire, it also invests in other companies.
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19890.0
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2022-08-05 00:00:00 UTC
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Apple asks suppliers to follow China customs rules - Nikkei
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AAPL
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https://www.nasdaq.com/articles/apple-asks-suppliers-to-follow-china-customs-rules-nikkei
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nan
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nan
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Aug 5 (Reuters) - Apple Inc AAPL.O has asked suppliers to ensure that shipments from Taiwan to China comply with the latter's customs regulations to avoid them from being held for scrutiny, according to a Nikkei report on Friday.
Sino-U.S. trade tensions have escalated following U.S. House of Representatives Speaker Nancy Pelosi and a congressional delegation's visit to Taiwan.
The iPhone maker told suppliers that China had started enforcing a long-standing rule that Taiwanese-made parts and components must be labeled as made either in "Taiwan, China" or "Chinese Taipei", the report added, citing sources familiar with the matter.
Apple did not immediately respond to a Reuters request for comment.
Apple iPhone assembler Pegatron Corp 4938.TW said its mainland China plant is operating normally, in response to a media report that shipments to Pegatron's factory in China were being held for scrutiny by Chinese customs officials.
Taiwanese supply and assembly partners Foxconn 2317.TW and Pegatron are ramping up manufacturing efforts as Apple is set to launch its new iPhone in September.
(Reporting by Tiyashi Datta in Bengaluru; Editing by Vinay Dwivedi)
((tiyashi.datta@thomsonreuters.com;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Aug 5 (Reuters) - Apple Inc AAPL.O has asked suppliers to ensure that shipments from Taiwan to China comply with the latter's customs regulations to avoid them from being held for scrutiny, according to a Nikkei report on Friday. Sino-U.S. trade tensions have escalated following U.S. House of Representatives Speaker Nancy Pelosi and a congressional delegation's visit to Taiwan. Taiwanese supply and assembly partners Foxconn 2317.TW and Pegatron are ramping up manufacturing efforts as Apple is set to launch its new iPhone in September.
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Aug 5 (Reuters) - Apple Inc AAPL.O has asked suppliers to ensure that shipments from Taiwan to China comply with the latter's customs regulations to avoid them from being held for scrutiny, according to a Nikkei report on Friday. The iPhone maker told suppliers that China had started enforcing a long-standing rule that Taiwanese-made parts and components must be labeled as made either in "Taiwan, China" or "Chinese Taipei", the report added, citing sources familiar with the matter. Apple iPhone assembler Pegatron Corp 4938.TW said its mainland China plant is operating normally, in response to a media report that shipments to Pegatron's factory in China were being held for scrutiny by Chinese customs officials.
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Aug 5 (Reuters) - Apple Inc AAPL.O has asked suppliers to ensure that shipments from Taiwan to China comply with the latter's customs regulations to avoid them from being held for scrutiny, according to a Nikkei report on Friday. The iPhone maker told suppliers that China had started enforcing a long-standing rule that Taiwanese-made parts and components must be labeled as made either in "Taiwan, China" or "Chinese Taipei", the report added, citing sources familiar with the matter. Apple iPhone assembler Pegatron Corp 4938.TW said its mainland China plant is operating normally, in response to a media report that shipments to Pegatron's factory in China were being held for scrutiny by Chinese customs officials.
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Aug 5 (Reuters) - Apple Inc AAPL.O has asked suppliers to ensure that shipments from Taiwan to China comply with the latter's customs regulations to avoid them from being held for scrutiny, according to a Nikkei report on Friday. Sino-U.S. trade tensions have escalated following U.S. House of Representatives Speaker Nancy Pelosi and a congressional delegation's visit to Taiwan. The iPhone maker told suppliers that China had started enforcing a long-standing rule that Taiwanese-made parts and components must be labeled as made either in "Taiwan, China" or "Chinese Taipei", the report added, citing sources familiar with the matter.
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19891.0
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2022-08-04 00:00:00 UTC
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Apple Has Been Dethroned as the Most Held Robinhood Stock: Here's What Replaced It
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AAPL
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https://www.nasdaq.com/articles/apple-has-been-dethroned-as-the-most-held-robinhood-stock%3A-heres-what-replaced-it
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nan
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nan
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Last year, retail investors made their presence known to Wall Street like never before. Online trading platforms like Robinhood (NASDAQ: HOOD), which have been especially popular among the retail crowd, rolled out the red carpet for everyday investors to put their money to work on Wall Street. When that happened, retail rocked the boat and sent a number of heavily short-sold stocks rocketing higher.
Robinhood offers commission-free trading on the major U.S. exchanges, allows its customers to make fractional-share purchases, and gifts free shares of stock (at random) to new members.
Image source: Getty Images.
Apple has been Robinhood investors' top holding for quite some time
Although Robinhood's retail faithful have demonstrated that they love chasing momentum plays, penny stocks, and heavily short-sold companies, there has been one consistency: tech kingpin Apple (NASDAQ: AAPL) has regularly been the most held stock on the platform.
There is no shortage of reasons why investors love Apple. For starters, it's easily one of the most-recognized brands in the world. In fact, a report from Brand Finance has pegged Apple as the most valuable brand in the world in back-to-back years. The report cited Apple's diversification on the product front, its subscription-driven push, and the "bolstering of its privacy and environmental credentials," as reasons for it taking the top spot, once again.
Apple's innovation has also been a key driver of its share-price outperformance. For instance, Apple's introduction of a 5G-capable iPhone during the fourth quarter of 2020 sent its share of the U.S. smartphone market soaring. Since the release of 5G iPhones, Apple's domestic smartphone share has dipped below 50% during only one quarter.
But this innovation can be seen beyond just the company's successful product line. CEO Tim Cook is overseeing the ongoing transition of Apple into a services-oriented business. By promoting subscription services, Apple has an opportunity to further boost its already impressive brand loyalty, as well as increase its long-term operating margins. Perhaps most importantly, as subscription sales grow into a larger percentage of net revenue, the sales vacillations often witnessed with product replacement cycles should lessen.
Even Apple's capital return program gives investors more than enough reason to buy. Since initiating a share buyback program in 2013, Apple has bought back in the neighborhood of $520 billion worth of its common stock. To boot, it parses out more than $14 billion a year in annual dividends to its shareholders.
Move over, Apple! There's a new No. 1 in town
However, change is a foundational part of Wall Street; and there's been a big change atop Robinhood's leaderboard (the list of the 100 most held stocks on the platform). As of the beginning of August 2022, electric-vehicle (EV) manufacturer Tesla (NASDAQ: TSLA) had dethroned Apple as the most held stock on Robinhood.
Before digging into the fundamental aspects behind retail investors' love of Tesla, I'd be remiss if I didn't point out that its shares have rocketed higher by more than 1,800% in the trailing three-year period and over 17,100% for the trailing decade. Robinhood investors love momentum stocks, and Tesla has certainly demonstrated it fits the definition.
Another reason for investors to be excited about Tesla is the company's success in building itself from the ground up. While other auto companies have tried a ground-up approach, Tesla was the first in more than five decades to reach and sustain mass production. Even with semiconductor chip shortages and parts challenges tied to the COVID-19 pandemic, Tesla looks to be on pace to crack the 1-million-vehicle production mark in 2022.
Tesla has also, decisively, pushed into the profit column. In each of the past five quarters, Tesla has generated between $1.14 billion and $3.32 billion in generally accepted accounting principles (GAAP) profit. This appears to have further allayed fears about the company's long-term viability.
And let's face it: retail investors are big fans of CEO Elon Musk. The outspoken CEO has promised a number of innovative technologies are on the way, including more-encompassing full self-driving, as well as Tesla Bot, a robotic humanoid currently under development by the company. Musk also own tokens of popular cryptocurrency Dogecoin and has begun accepting DOGE coins for a small handful of Tesla merchandise.
A Tesla Model S charging. Image source: Tesla.
Robinhood investors could be headed for a breakdown
When examined with a wide lens, there's plenty of basis for investors to be excited about the EV industry and its long runway of growth. But when that lens is focused solely on Tesla and its $942 billion market cap, a number of red flags emerge.
To start with, Tesla's valuation has exploded higher on the premise that its competitive advantages are sustainable. Although it does have a sizable head start when it comes to battery capacity, range, and power, we're already witnessing a number of new and legacy automakers catching up on range.
For example, Nio's recently introduced sedans, the ET7 and ET5, have battery upgrades buyers can purchase that increase their range to 621 miles, according to the company. That's far and away better than Tesla's affordable Model 3 and premium Model S. In other words, the deep pockets of legacy auto companies and the innovative capacity of new auto companies like Nio could quickly chip away at Tesla's "competitive edge."
Whereas Elon Musk is a big reason why retail investors have bought into Tesla, he could just as easily be the primary reason for investors to avoid it like the plague. That's because Musk has a habit of overpromising and underdelivering on projects. Remember the conceptual all-electric Tesla Semi that was unveiled in late 2017? The first production model isn't expected until 2023. Recall when Elon Musk promised to have 1 million robotaxis without a steering wheel or pedals on the roads by the end of 2020? That promise has been pushed back to 2024. This isn't to say that Musk doesn't eventually deliver what he set out to achieve. Rather, it demonstrates that Tesla's CEO is rarely ever able to make good on his promises in a timely manner.
Tesla's income statements are yet another cause to pause. Although automotive gross margin had improved until the latest quarter, Tesla has still relied on selling regulatory credits to other automakers to boost its profits. With semiconductor chip shortages persisting, inflation soaring, and China's provincial COVID-19 lockdowns adversely impacting the Shanghai gigafactory, it's not clear how Tesla will buoy its automotive gross margin going forward.
In an industry where single-digit forward-year price-to-earnings (P/E) ratios are the norm, Tesla stands out like a sore thumb with a forward P/E ratio of 57.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Apple has been Robinhood investors' top holding for quite some time Although Robinhood's retail faithful have demonstrated that they love chasing momentum plays, penny stocks, and heavily short-sold companies, there has been one consistency: tech kingpin Apple (NASDAQ: AAPL) has regularly been the most held stock on the platform. Online trading platforms like Robinhood (NASDAQ: HOOD), which have been especially popular among the retail crowd, rolled out the red carpet for everyday investors to put their money to work on Wall Street. Robinhood offers commission-free trading on the major U.S. exchanges, allows its customers to make fractional-share purchases, and gifts free shares of stock (at random) to new members.
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Apple has been Robinhood investors' top holding for quite some time Although Robinhood's retail faithful have demonstrated that they love chasing momentum plays, penny stocks, and heavily short-sold companies, there has been one consistency: tech kingpin Apple (NASDAQ: AAPL) has regularly been the most held stock on the platform. That's far and away better than Tesla's affordable Model 3 and premium Model S. In other words, the deep pockets of legacy auto companies and the innovative capacity of new auto companies like Nio could quickly chip away at Tesla's "competitive edge." The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple.
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Apple has been Robinhood investors' top holding for quite some time Although Robinhood's retail faithful have demonstrated that they love chasing momentum plays, penny stocks, and heavily short-sold companies, there has been one consistency: tech kingpin Apple (NASDAQ: AAPL) has regularly been the most held stock on the platform. That's far and away better than Tesla's affordable Model 3 and premium Model S. In other words, the deep pockets of legacy auto companies and the innovative capacity of new auto companies like Nio could quickly chip away at Tesla's "competitive edge." Whereas Elon Musk is a big reason why retail investors have bought into Tesla, he could just as easily be the primary reason for investors to avoid it like the plague.
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Apple has been Robinhood investors' top holding for quite some time Although Robinhood's retail faithful have demonstrated that they love chasing momentum plays, penny stocks, and heavily short-sold companies, there has been one consistency: tech kingpin Apple (NASDAQ: AAPL) has regularly been the most held stock on the platform. There is no shortage of reasons why investors love Apple. In each of the past five quarters, Tesla has generated between $1.14 billion and $3.32 billion in generally accepted accounting principles (GAAP) profit.
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19892.0
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2022-08-04 00:00:00 UTC
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Facebook parent Meta makes first-ever bond offering
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AAPL
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https://www.nasdaq.com/articles/facebook-parent-meta-makes-first-ever-bond-offering
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nan
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nan
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By Nivedita Balu and Shankar Ramakrishnan
Aug 4 (Reuters) - Facebook-parent Meta Platforms META.O said on Thursday it would make its first-ever bond offering, at a time when the social media company is making massive investments to fund its virtual reality projects.
Meta did not disclose the size of the offering but said it would use the proceeds for capital expenditures, share repurchases, acquisitions or investments.
The company received an 'A1' rating from Moody's and an 'AA- rating' and a 'stable' outlook from S&P. Meta is selling four tranches of bonds with maturities ranging from five years to 40 years.
Among big technology companies, Meta is the only one that does not have any debt on its books. Tapping the market now would give it more financial room as it tries to fund some expensive overhauls, including a bet on augmented and virtual reality technology, investors who heard its presentation for the bond offering on Tuesday said.
It might also be a rare opportunity to do so relatively cheaply in the current market environment. Corporate bonds have rebounded in the past month after a rout earlier this year, as investors hoped the U.S. Federal Reserve's fight against inflation through rapid rate increases was starting to have some impact.
This week the U.S. investment grade primary bond markets have rebounded, with companies raising more than $38 billion, making it the eighth busiest week of the year, according to Informa Global Markets data.
Other tech giants such as Apple Inc AAPL.O and Intel Corp INTC.O also issued bonds earlier this week, raising $5.5 billion and $6 billion, respectively.
Bankers and investors said such issuance windows may be rare in coming months. One banker in charge of a bond syndicate desk at a U.S. bank said credit spreads could widen later this year, increasing funding costs.
Meta's bond issuance will come after the company issued a gloomy forecast and recorded its first-ever quarterly drop in revenue, with recession fears and competitive pressures weighing on its digital ads sales.
Its free-cash flow has been depleting as it charges ahead with its metaverse plans, which led the change in its name to Meta Platforms from Facebook last year.
In the second quarter ended June 30, Meta had $4.45 billion in free cash flow, compared with $8.51 billion a year ago and $8.53 billion in the prior quarter.
Chief Financial Officer Dave Wehner said on a post-earnings conference call that company had a "substantial amount" in its buyback program and expects to continue with buybacks as part of its capital allocation strategy.
(Reporting by Nivedita Balu in Bengaluru and Shankar Ramakrishnan; Editing by Saumyadeb Chakrabarty and Paritosh Bansal)
((Nivedita.Balu@thomsonreuters.com; Twitter: @niveditabalu;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Other tech giants such as Apple Inc AAPL.O and Intel Corp INTC.O also issued bonds earlier this week, raising $5.5 billion and $6 billion, respectively. Tapping the market now would give it more financial room as it tries to fund some expensive overhauls, including a bet on augmented and virtual reality technology, investors who heard its presentation for the bond offering on Tuesday said. Corporate bonds have rebounded in the past month after a rout earlier this year, as investors hoped the U.S. Federal Reserve's fight against inflation through rapid rate increases was starting to have some impact.
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Other tech giants such as Apple Inc AAPL.O and Intel Corp INTC.O also issued bonds earlier this week, raising $5.5 billion and $6 billion, respectively. Tapping the market now would give it more financial room as it tries to fund some expensive overhauls, including a bet on augmented and virtual reality technology, investors who heard its presentation for the bond offering on Tuesday said. This week the U.S. investment grade primary bond markets have rebounded, with companies raising more than $38 billion, making it the eighth busiest week of the year, according to Informa Global Markets data.
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Other tech giants such as Apple Inc AAPL.O and Intel Corp INTC.O also issued bonds earlier this week, raising $5.5 billion and $6 billion, respectively. By Nivedita Balu and Shankar Ramakrishnan Aug 4 (Reuters) - Facebook-parent Meta Platforms META.O said on Thursday it would make its first-ever bond offering, at a time when the social media company is making massive investments to fund its virtual reality projects. This week the U.S. investment grade primary bond markets have rebounded, with companies raising more than $38 billion, making it the eighth busiest week of the year, according to Informa Global Markets data.
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Other tech giants such as Apple Inc AAPL.O and Intel Corp INTC.O also issued bonds earlier this week, raising $5.5 billion and $6 billion, respectively. By Nivedita Balu and Shankar Ramakrishnan Aug 4 (Reuters) - Facebook-parent Meta Platforms META.O said on Thursday it would make its first-ever bond offering, at a time when the social media company is making massive investments to fund its virtual reality projects. Corporate bonds have rebounded in the past month after a rout earlier this year, as investors hoped the U.S. Federal Reserve's fight against inflation through rapid rate increases was starting to have some impact.
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19893.0
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2022-08-04 00:00:00 UTC
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S&P 500 flat as Apple, energy shares weigh
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AAPL
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https://www.nasdaq.com/articles/sp-500-flat-as-apple-energy-shares-weigh
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nan
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nan
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By Aniruddha Ghosh and Devik Jain
Aug 4 (Reuters) - The S&P 500 index was flat on Thursday as losses in Apple and energy firms dampened the bullish sentiment that had fueled a rally in the previous session, with investors awaiting monthly jobs data for cues on the path of future interest rate hikes.
Apple AAPL.O weighed the most on the benchmark index, shedding 0.3%, a day after surging 3.8%. The energy sector .SPNY dipped 2.3%, tracking lower oil prices on fears of a slowdown in demand. O/R
After a dull start to August, Wall Street's main indexes rallied on Wednesday as a slew of strong results from companies including PayPal Inc PYPL.O and CVS Health CVS.N added to an upbeat sentiment about the second-quarter reporting season.
"We are in this honeymoon period where past earnings have been good, including the ones just reported, and inflation looks like it is moderating," said Christopher Grisanti, chief equity strategist at MAI Capital Management.
"The battle right now is how serious concerns about recession will become and so far the market seems less concerned that there is a recession coming."
That view was echoed by a batch of data that showed services activity unexpectedly rebounded in July and supply and price pressures eased, while the U.S. trade deficit narrowed sharply in June as exports surged to a record high.
Focus is now on Friday's employment report, which is expected to show nonfarm payrolls likely increased by 250,000 jobs last month, after rising by 372,000 jobs in June. The data is crucial as the U.S. Federal Reserve attempts to cool labor demand to tame inflation.
"If you get a somewhat weak number, the market will take that as good news because the Fed's tightening is beginning to work and maybe they will not have to do quite as much," Grisanti said.
The benchmark index .SPX has gained nearly 13.8% from its mid-June lows, but is still in a bear market and down 13% for the year on concerns around the fallout of the Ukraine war, soaring inflation, COVID-19 flare-ups in China and an aggressive rise in borrowing costs.
At 12:13 p.m. ET on Thursday, the Dow Jones Industrial Average .DJI was down 52.68 points, or 0.16%, at 32,759.82, the S&P 500 .SPX was up 1.40 points, or 0.03%, at 4,156.57, and the Nasdaq Composite .IXIC was up 36.65 points, or 0.29%, at 12,704.81.
Tesla Inc TSLA.O rose 0.3% ahead of an investor vote on a variety of matters including a three-for-one stock split that would make the company's shares more accessible.
Health insurer Cigna Corp CI.N gained 3.8% after raising its annual profit forecast.
Drugmaker Eli Lilly and Co LLY.N slipped 3% as it cut annual profit view for the second time.
Declining issues outnumbered advancers for a 1.04-to-1 ratio on the NYSE. Advancing issues outnumbered decliners by a 1.26-to-1 ratio on the Nasdaq.
The S&P index recorded one new 52-week high and 29 new lows, while the Nasdaq recorded 39 new highs and 25 new lows.
(Reporting by Aniruddha Ghosh and Devik Jain in Bengaluru; Editing by Arun Koyyur and Aditya Soni)
((Aniruddha.Ghosh@thomsonreuters.com; 91 83 83 81 2416;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Apple AAPL.O weighed the most on the benchmark index, shedding 0.3%, a day after surging 3.8%. By Aniruddha Ghosh and Devik Jain Aug 4 (Reuters) - The S&P 500 index was flat on Thursday as losses in Apple and energy firms dampened the bullish sentiment that had fueled a rally in the previous session, with investors awaiting monthly jobs data for cues on the path of future interest rate hikes. O/R After a dull start to August, Wall Street's main indexes rallied on Wednesday as a slew of strong results from companies including PayPal Inc PYPL.O and CVS Health CVS.N added to an upbeat sentiment about the second-quarter reporting season.
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Apple AAPL.O weighed the most on the benchmark index, shedding 0.3%, a day after surging 3.8%. Declining issues outnumbered advancers for a 1.04-to-1 ratio on the NYSE. Advancing issues outnumbered decliners by a 1.26-to-1 ratio on the Nasdaq.
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Apple AAPL.O weighed the most on the benchmark index, shedding 0.3%, a day after surging 3.8%. By Aniruddha Ghosh and Devik Jain Aug 4 (Reuters) - The S&P 500 index was flat on Thursday as losses in Apple and energy firms dampened the bullish sentiment that had fueled a rally in the previous session, with investors awaiting monthly jobs data for cues on the path of future interest rate hikes. The benchmark index .SPX has gained nearly 13.8% from its mid-June lows, but is still in a bear market and down 13% for the year on concerns around the fallout of the Ukraine war, soaring inflation, COVID-19 flare-ups in China and an aggressive rise in borrowing costs.
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Apple AAPL.O weighed the most on the benchmark index, shedding 0.3%, a day after surging 3.8%. By Aniruddha Ghosh and Devik Jain Aug 4 (Reuters) - The S&P 500 index was flat on Thursday as losses in Apple and energy firms dampened the bullish sentiment that had fueled a rally in the previous session, with investors awaiting monthly jobs data for cues on the path of future interest rate hikes. The benchmark index .SPX has gained nearly 13.8% from its mid-June lows, but is still in a bear market and down 13% for the year on concerns around the fallout of the Ukraine war, soaring inflation, COVID-19 flare-ups in China and an aggressive rise in borrowing costs.
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19894.0
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2022-08-04 00:00:00 UTC
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Zacks Investment Ideas feature highlights: Apple, Exxon Mobil, and Microsoft
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AAPL
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https://www.nasdaq.com/articles/zacks-investment-ideas-feature-highlights%3A-apple-exxon-mobil-and-microsoft
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nan
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nan
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For Immediate Release
Chicago, IL – August 4, 2022 – Today, Zacks Investment Ideas feature highlights Apple AAPL, Exxon Mobil XOM, and Microsoft MSFT.
3 S&P 500 Companies Generating Substantial Cash
A common metric focused on when selecting stocks is free cash flow. In its simplest form, free cash flow is the total amount of cash a company has left over after paying for operating costs and any capital expenditures.
It’s a great indicator of a company’s financial health. A high free cash flow provides more growth opportunities, a higher potential for share buybacks, stable dividend payouts, and the ability to wipe out any debt with ease.
A few titans within the S&P 500 have unbelievably strong free cash flow, such as Apple, Exxon Mobil, and Microsoft. The chart below illustrates the year-to-date performance of all three companies.
Let’s take a closer glance at each company’s free cash flow metrics and projected growth.
Exxon Mobil
Exxon Mobil has massively benefitted from soaring energy costs in 2022, causing analysts to significantly up their earnings outlook and push the stock into the highly-coveted Zacks Rank #1 (Strong Buy).
As mentioned above, soaring energy prices have significantly benefitted the company, and especially its free cash flow – XOM reported quarterly free cash flow of a mighty $16.1 billion in its latest earnings report, good enough for a sizable 48% uptick from the prior quarter and a massive 133% year-over-year increase.
Top and bottom-line estimates reflect substantial growth. For the current fiscal year (FY22), the Zacks Consensus EPS Estimate resides at $12.24, reflecting a 130% triple-digit uptick in earnings year-over-year.
Of course, the growth doesn’t stop there – Exxon Mobil is forecasted to generate a sizable $418 billion in revenue in FY22, reflecting a steep 46% increase year-over-year.
Apple
Apple has revolutionized the mobile phone landscape and has been one, if not the most, popular stock of the last decade. Analysts have primarily been bearish over the past 60 days, reflecting the harsh macroeconomic backdrop we’ve landed in. The company is a Zacks Rank #3 (Hold).
Apple is the king of free cash flow - the company is on track to achieve the highest free cash flow of any S&P 500 company in 2022. Just in its latest quarter, free cash flow was reported at a spectacular $20.8 billion, good enough for a solid 9.4% uptick from year-ago quarterly free cash flow of $19 billion.
Even in the face of a harsh macroeconomic backdrop, Apple is still projected to grow at a rock-solid pace. For the company’s current fiscal year, earnings are projected to climb a notable 8.7%, reflecting annual EPS of $6.10.
In addition, Apple’s top-line looks to remain supercharged, with the FY22 sales estimate of $392 billion penciling in a strong 5.4% year-over-year uptick.
Microsoft
Microsoft has been a cornerstone in many portfolios over the last decade, with shares rewarding investors handsomely. Analysts have dialed back their earnings outlook over the last 60 days, similar to what we’ve seen with Apple. The company is a Zacks Rank #3 (Hold).
Microsoft has repeatedly impressed with its free cash flow and is one of the biggest cash generators within the S&P 500. In its latest quarter, free cash flow was reported at a mighty $17.8 billion, good enough for a solid 9.2% uptick from the year-ago quarter.
Consistent growth is the name of the game for Microsoft. The Zacks Consensus EPS Estimate for the company’s current fiscal year (FY23) resides at $10.14, notching an impressive 10% double-digit year-over-year uptick.
Of course, MSFT’s top-line is also in excellent shape – annual revenue is forecasted to climb 9.7% in FY23, reflecting annual sales of $220 billion.
Bottom Line
Many investors seek high free cash flow when selecting stocks. Simply put, it proves that a company is making money with extra to spare for future endeavors.
In addition, it gives them flexibility amid downturns – a vital aspect that instills confidence within investors. After all, if a company can’t adapt, the consequences can be severe.
All three companies above are cash cows and members of the S&P 500 – undoubtedly a pairing that reflects serious success.
For investors looking for companies with substantial cash-generating abilities, Apple, Exxon Mobil, and Microsoft all precisely fit the parameters.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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For Immediate Release Chicago, IL – August 4, 2022 – Today, Zacks Investment Ideas feature highlights Apple AAPL, Exxon Mobil XOM, and Microsoft MSFT. Apple Inc. (AAPL): Free Stock Analysis Report A high free cash flow provides more growth opportunities, a higher potential for share buybacks, stable dividend payouts, and the ability to wipe out any debt with ease.
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For Immediate Release Chicago, IL – August 4, 2022 – Today, Zacks Investment Ideas feature highlights Apple AAPL, Exxon Mobil XOM, and Microsoft MSFT. Apple Inc. (AAPL): Free Stock Analysis Report Exxon Mobil Exxon Mobil has massively benefitted from soaring energy costs in 2022, causing analysts to significantly up their earnings outlook and push the stock into the highly-coveted Zacks Rank #1 (Strong Buy).
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For Immediate Release Chicago, IL – August 4, 2022 – Today, Zacks Investment Ideas feature highlights Apple AAPL, Exxon Mobil XOM, and Microsoft MSFT. Apple Inc. (AAPL): Free Stock Analysis Report As mentioned above, soaring energy prices have significantly benefitted the company, and especially its free cash flow – XOM reported quarterly free cash flow of a mighty $16.1 billion in its latest earnings report, good enough for a sizable 48% uptick from the prior quarter and a massive 133% year-over-year increase.
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For Immediate Release Chicago, IL – August 4, 2022 – Today, Zacks Investment Ideas feature highlights Apple AAPL, Exxon Mobil XOM, and Microsoft MSFT. Apple Inc. (AAPL): Free Stock Analysis Report A few titans within the S&P 500 have unbelievably strong free cash flow, such as Apple, Exxon Mobil, and Microsoft.
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19895.0
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2022-08-04 00:00:00 UTC
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Wall Street ends mixed as investors eye payrolls data
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AAPL
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https://www.nasdaq.com/articles/wall-street-ends-mixed-as-investors-eye-payrolls-data
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nan
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nan
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By Sruthi Shankar and Medha Singh
Aug 4 (Reuters) - Wall Street's main indexes ended mixed on Thursday as gains in high-growth stocks offset losses in energy shares, with investors looking ahead to monthly jobs report for clues on the pace of interest rate hikes by the Federal Reserve.
The tech-heavy Nasdaq hit a fresh three-month high, led by Amazon.com Inc AMZN.O and Advanced Micro Devices AMD.O, while losses in Apple Inc AAPL.O and energy stocks including Exxon Mobil XOM.N weighed on the S&P 500.
Worries about a slowing global economy pushed oil prices to their lowest since before Russia's February invasion of Ukraine and U.S. bond yields slipped after the Bank of England warned of a long recession. O/R
Strong earnings reports and data showing a surprise pick up in services sector activity sent the main indexes sharply higher in the previous session.
"The market is looking for direction after a strong bounce that relieved the deep pessimism that had permeated the markets," Yung-Yu Ma, chief investment strategist at BMO Wealth Management.
"Many signs indicate that inflation has peaked, and the question now turns to how quickly it will come down or whether stickier components will keep it higher than the Fed is comfortable with."
Focus will be on Friday's closely watched U.S. employment report, which is expected to show nonfarm payrolls increased by 250,000 jobs last month, after rising by 372,000 jobs in June.
Any signs of strength in the labor market could into feed fears of aggressive measures by the Fed.
Cleveland Fed President Loretta Mester, a voting member of the rate-setting panel, reiterated the need to see several months of inflation coming back down toward the Fed's 2% target before policymakers feel they can let up on tightening monetary policy.
The S&P 500 has gained about 14% from its mid-June lows, but is still down about 13% for the year on concerns around the fallout of the Ukraine war, soaring inflation, COVID-19 flare-ups in China and an aggressive rise in interest rates.
According to preliminary data, The Dow Jones Industrial Average .DJI fell 85.31 points, or 0.26%, to 32,727.19, the S&P 500 .SPX lost 3.15 points, or 0.08%, to 4,152.02 and the Nasdaq Composite .IXIC added 52.42 points, or 0.41%, to 12,720.58.
Shares of crypto exchange Coinbase Global Inc COIN.O jumped after it announced a tieup with BlackRock BLK.N to provide its institutional clients access to crypto trading and custody services.
Health insurer Cigna Corp CI.N gained after raising its annual profit forecast.
Drugmaker Eli Lilly and Co LLY.N slipped as it cut annual profit view for the second time.
Facebook-parent Meta Platforms META.O said it would make its first-ever bond offering.
(Reporting by Sruthi Shankar, Medha Singh, Aniruddha Ghosh and Devik Jain in Bengaluru; Editing by Arun Koyyur)
((Aniruddha.Ghosh@thomsonreuters.com; 91 83 83 81 2416;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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The tech-heavy Nasdaq hit a fresh three-month high, led by Amazon.com Inc AMZN.O and Advanced Micro Devices AMD.O, while losses in Apple Inc AAPL.O and energy stocks including Exxon Mobil XOM.N weighed on the S&P 500. By Sruthi Shankar and Medha Singh Aug 4 (Reuters) - Wall Street's main indexes ended mixed on Thursday as gains in high-growth stocks offset losses in energy shares, with investors looking ahead to monthly jobs report for clues on the pace of interest rate hikes by the Federal Reserve. Worries about a slowing global economy pushed oil prices to their lowest since before Russia's February invasion of Ukraine and U.S. bond yields slipped after the Bank of England warned of a long recession.
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The tech-heavy Nasdaq hit a fresh three-month high, led by Amazon.com Inc AMZN.O and Advanced Micro Devices AMD.O, while losses in Apple Inc AAPL.O and energy stocks including Exxon Mobil XOM.N weighed on the S&P 500. By Sruthi Shankar and Medha Singh Aug 4 (Reuters) - Wall Street's main indexes ended mixed on Thursday as gains in high-growth stocks offset losses in energy shares, with investors looking ahead to monthly jobs report for clues on the pace of interest rate hikes by the Federal Reserve. The S&P 500 has gained about 14% from its mid-June lows, but is still down about 13% for the year on concerns around the fallout of the Ukraine war, soaring inflation, COVID-19 flare-ups in China and an aggressive rise in interest rates.
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The tech-heavy Nasdaq hit a fresh three-month high, led by Amazon.com Inc AMZN.O and Advanced Micro Devices AMD.O, while losses in Apple Inc AAPL.O and energy stocks including Exxon Mobil XOM.N weighed on the S&P 500. By Sruthi Shankar and Medha Singh Aug 4 (Reuters) - Wall Street's main indexes ended mixed on Thursday as gains in high-growth stocks offset losses in energy shares, with investors looking ahead to monthly jobs report for clues on the pace of interest rate hikes by the Federal Reserve. Cleveland Fed President Loretta Mester, a voting member of the rate-setting panel, reiterated the need to see several months of inflation coming back down toward the Fed's 2% target before policymakers feel they can let up on tightening monetary policy.
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The tech-heavy Nasdaq hit a fresh three-month high, led by Amazon.com Inc AMZN.O and Advanced Micro Devices AMD.O, while losses in Apple Inc AAPL.O and energy stocks including Exxon Mobil XOM.N weighed on the S&P 500. By Sruthi Shankar and Medha Singh Aug 4 (Reuters) - Wall Street's main indexes ended mixed on Thursday as gains in high-growth stocks offset losses in energy shares, with investors looking ahead to monthly jobs report for clues on the pace of interest rate hikes by the Federal Reserve. Any signs of strength in the labor market could into feed fears of aggressive measures by the Fed.
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19896.0
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2022-08-04 00:00:00 UTC
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Wall Street struggles for direction as slowdown worries weigh
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AAPL
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https://www.nasdaq.com/articles/wall-street-struggles-for-direction-as-slowdown-worries-weigh
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nan
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nan
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By Sruthi Shankar and Medha Singh
Aug 4 (Reuters) - Wall Street's main indexes wobbled on Thursday as gains in high-growth stocks offset losses in energy shares, with investors looking ahead to monthly jobs report for clues on the pace of interest rate hikes by the Federal Reserve.
The tech-heavy Nasdaq .IXIC hovered near a three-month high that it hit in the previous session, led by Amazon.com Inc AMZN.O and Advanced Micro Devices AMD.O, while losses in Apple Inc AAPL.O and energy stocks weighed on the S&P 500.
Worries about the global outlook sent oil prices to their lowest since before Russia's February invasion of Ukraine and U.S. bond yields slipped after the Bank of England warned of a long recession. O/R
"There is a continued battle between the bulls and the bears and whether this rally has more room to run," said Eric Schiffer, chief executive of private equity firm the Patriarch Organization in Los Angeles.
"It is likely that we will go into another downturn next year, but the question is how deep and that will depend on the Fed. The market at this point is leaning in the direction the Fed will go lighter and you're seeing stocks anticipate that."
As the Fed attempts to cool labor demand to tame inflation, focus is on Friday's employment report, which is expected to show nonfarm payrolls increased by 250,000 jobs last month, after rising by 372,000 jobs in June.
Cleveland Fed President Loretta Mester, a voting member of the rate-setting panel, reiterated the need to see several months of inflation coming back down toward the Fed's 2% target before policymakers feel they can let up on tightening monetary policy.
Economically sensitive stocks slipped, with the S&P 500 energy sector .SPNY shedding 1.8%, while the banks index .SPXBK lost 1.4%.
The S&P 500 has gained nearly 13.8% from its mid-June lows, but is still down 13% for the year on concerns around the fallout of the Ukraine war, soaring inflation, COVID-19 flare-ups in China and an aggressive rise in interest rates.
At 02:06 p.m. ET, the Dow Jones Industrial Average .DJI was down 69.78 points, or 0.21%, at 32,742.72, the S&P 500 .SPX was down 1.74 points, or 0.04%, at 4,153.43, and the Nasdaq Composite .IXIC was up 33.56 points, or 0.26%, at 12,701.72.
Shares in crypto exchange Coinbase Global Inc COIN.O jumped 12.9% after it announced a tieup with BlackRock BLK.N to provide its institutional clients access to crypto trading and custody services.
Tesla Inc TSLA.O rose 0.2% ahead of an investor vote on a variety of matters including a three-for-one stock split that would make the company's shares more accessible.
Health insurer Cigna Corp CI.N gained 3.6% after raising its annual profit forecast.
Drugmaker Eli Lilly and Co LLY.N slipped 3.2% as it cut annual profit view for the second time.
Facebook-parent Meta Platforms META.O said it would make its first-ever bond offering. Its shares edged higher.
Advancing issues outnumbered decliners by a 1.01-to-1 ratio on the NYSE and 1.37-to-1 ratio on the Nasdaq.
The S&P index recorded one new 52-week highs and 29 new lows, while the Nasdaq recorded 51 new highs and 28 new lows.
(Reporting by Sruthi Shankar and Medha Singh, Aniruddha Ghosh and Devik Jain in Bengaluru; Editing by Arun Koyyur)
((Aniruddha.Ghosh@thomsonreuters.com; 91 83 83 81 2416;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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The tech-heavy Nasdaq .IXIC hovered near a three-month high that it hit in the previous session, led by Amazon.com Inc AMZN.O and Advanced Micro Devices AMD.O, while losses in Apple Inc AAPL.O and energy stocks weighed on the S&P 500. By Sruthi Shankar and Medha Singh Aug 4 (Reuters) - Wall Street's main indexes wobbled on Thursday as gains in high-growth stocks offset losses in energy shares, with investors looking ahead to monthly jobs report for clues on the pace of interest rate hikes by the Federal Reserve. Worries about the global outlook sent oil prices to their lowest since before Russia's February invasion of Ukraine and U.S. bond yields slipped after the Bank of England warned of a long recession.
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The tech-heavy Nasdaq .IXIC hovered near a three-month high that it hit in the previous session, led by Amazon.com Inc AMZN.O and Advanced Micro Devices AMD.O, while losses in Apple Inc AAPL.O and energy stocks weighed on the S&P 500. By Sruthi Shankar and Medha Singh Aug 4 (Reuters) - Wall Street's main indexes wobbled on Thursday as gains in high-growth stocks offset losses in energy shares, with investors looking ahead to monthly jobs report for clues on the pace of interest rate hikes by the Federal Reserve. The S&P index recorded one new 52-week highs and 29 new lows, while the Nasdaq recorded 51 new highs and 28 new lows.
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The tech-heavy Nasdaq .IXIC hovered near a three-month high that it hit in the previous session, led by Amazon.com Inc AMZN.O and Advanced Micro Devices AMD.O, while losses in Apple Inc AAPL.O and energy stocks weighed on the S&P 500. By Sruthi Shankar and Medha Singh Aug 4 (Reuters) - Wall Street's main indexes wobbled on Thursday as gains in high-growth stocks offset losses in energy shares, with investors looking ahead to monthly jobs report for clues on the pace of interest rate hikes by the Federal Reserve. Cleveland Fed President Loretta Mester, a voting member of the rate-setting panel, reiterated the need to see several months of inflation coming back down toward the Fed's 2% target before policymakers feel they can let up on tightening monetary policy.
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The tech-heavy Nasdaq .IXIC hovered near a three-month high that it hit in the previous session, led by Amazon.com Inc AMZN.O and Advanced Micro Devices AMD.O, while losses in Apple Inc AAPL.O and energy stocks weighed on the S&P 500. By Sruthi Shankar and Medha Singh Aug 4 (Reuters) - Wall Street's main indexes wobbled on Thursday as gains in high-growth stocks offset losses in energy shares, with investors looking ahead to monthly jobs report for clues on the pace of interest rate hikes by the Federal Reserve. Drugmaker Eli Lilly and Co LLY.N slipped 3.2% as it cut annual profit view for the second time.
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19897.0
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2022-08-04 00:00:00 UTC
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EU antitrust regulators quiz developers on Google app payments - sources
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AAPL
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https://www.nasdaq.com/articles/eu-antitrust-regulators-quiz-developers-on-google-app-payments-sources
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nan
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nan
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By Foo Yun Chee
BRUSSELS, Aug 4 (Reuters) - EU antitrust regulators have asked app developers whether Alphabet GOOGL.O unit Google's threat to remove apps from its Play Store if they use other payment options instead of its own billing system has hurt their business, two people familiar with the matter told Reuters.
Critics say fees charged by Google and Apple AAPL.O at their mobile app stores are excessive and cost developers collectively billions of dollars a year, a sign of the two companies' monopoly power.
Questionnaires were sent to developers last month, the people said.
Of the 16 questions in the document, some covered the period 2017-2021 and others 2019-2021. The European Commission declined to comment. Google did not respond to an emailed request for comment.
The U.S. tech giant has said apps would be removed from its app store starting June this year if developers do not use its billing system.
Respondents were asked whether Google's policy change this year impacted the distribution of their goods or services on Google Play Store, which apps were affected and if it affected their ability to acquire users on Android devices, the people said.
Regulators wanted to know if the change has forced developers to drop other payment options in favour of Google Billing and whether migrating users to another payment option affected the number of pre-existing users and the developers' access to data.
Developers were asked whether they believed they could offer a better service or product if they have the option of another payment system.
The EU competition enforcer also wanted to know if Google allowed them to use an alternative payment system, charged a service fee for this or complained about the security of their payment method.
App developers were asked if U.S. payments giant Stripes, Dutch payment system Adyen ADYEN.AS and PayPal PYPL.O unit Braintree are seen as alternative payment systems.
Last month, Google said non-gaming app developers can switch to rival payment systems with a lower fee of 12% instead of 15%, with the move applying to European users, in order to comply with EU rules that will come into force next year.
Politico first reported about the Commission's query.
(Reporting by Foo Yun Chee; Editing by Kirsten Donovan)
((foo.yunchee@thomsonreuters.com; +32 2 287 6844; Reuters Messaging: foo.yunchee.thomsonreuters.com@reuters.net))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Critics say fees charged by Google and Apple AAPL.O at their mobile app stores are excessive and cost developers collectively billions of dollars a year, a sign of the two companies' monopoly power. By Foo Yun Chee BRUSSELS, Aug 4 (Reuters) - EU antitrust regulators have asked app developers whether Alphabet GOOGL.O unit Google's threat to remove apps from its Play Store if they use other payment options instead of its own billing system has hurt their business, two people familiar with the matter told Reuters. Last month, Google said non-gaming app developers can switch to rival payment systems with a lower fee of 12% instead of 15%, with the move applying to European users, in order to comply with EU rules that will come into force next year.
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Critics say fees charged by Google and Apple AAPL.O at their mobile app stores are excessive and cost developers collectively billions of dollars a year, a sign of the two companies' monopoly power. By Foo Yun Chee BRUSSELS, Aug 4 (Reuters) - EU antitrust regulators have asked app developers whether Alphabet GOOGL.O unit Google's threat to remove apps from its Play Store if they use other payment options instead of its own billing system has hurt their business, two people familiar with the matter told Reuters. Regulators wanted to know if the change has forced developers to drop other payment options in favour of Google Billing and whether migrating users to another payment option affected the number of pre-existing users and the developers' access to data.
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Critics say fees charged by Google and Apple AAPL.O at their mobile app stores are excessive and cost developers collectively billions of dollars a year, a sign of the two companies' monopoly power. By Foo Yun Chee BRUSSELS, Aug 4 (Reuters) - EU antitrust regulators have asked app developers whether Alphabet GOOGL.O unit Google's threat to remove apps from its Play Store if they use other payment options instead of its own billing system has hurt their business, two people familiar with the matter told Reuters. Regulators wanted to know if the change has forced developers to drop other payment options in favour of Google Billing and whether migrating users to another payment option affected the number of pre-existing users and the developers' access to data.
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Critics say fees charged by Google and Apple AAPL.O at their mobile app stores are excessive and cost developers collectively billions of dollars a year, a sign of the two companies' monopoly power. By Foo Yun Chee BRUSSELS, Aug 4 (Reuters) - EU antitrust regulators have asked app developers whether Alphabet GOOGL.O unit Google's threat to remove apps from its Play Store if they use other payment options instead of its own billing system has hurt their business, two people familiar with the matter told Reuters. The European Commission declined to comment.
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19898.0
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2022-08-04 00:00:00 UTC
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Tesla stock-split proposal to headline annual meeting in Texas
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AAPL
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https://www.nasdaq.com/articles/tesla-stock-split-proposal-to-headline-annual-meeting-in-texas-0
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nan
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nan
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By Akash Sriram
Aug 4 (Reuters) - Tesla Inc TSLA.O will host its annual general meeting on Thursday, with the world's most valuable automaker's proposal for a second stock split in as many years set to take center stage for investors gathered in Austin, Texas.
Also on the agenda are shareholder proposals for corporate governance-related items, including endorsing the right of employees to form a union and asking the company to report its efforts in preventing racial discrimination and sexual harassment annually. (https://bit.ly/3oT7yGU)
The meeting comes as Tesla chief Elon Musk and Twitter Inc TWTR.N are slugging it out in a legal battle after the world's richest person said last month that he was abandoning a $44 billion takeover offer for the company.
Musk owns 15.6% of Tesla, according to data from Refinitiv, after selling millions of shares over much of the last year.
Tesla first announced its plan to seek investor approval to increase its number of shares in March, two years after a five-for-one split helped bring down the price of the high-flying stock within the reach of ordinary investors. Tesla is now proposing a three-for-one split.
Tesla shares, which debuted at $17 apiece in 2010, rose to more than $1,200 late last year after the 2020 stock split, taking the company's market capitalization above $1 trillion.
While a split does not affect a company's fundamentals, it could buoy the share price by making it easier for a wider range of investors to own the stock.
Tech heavyweights Alphabet Inc GOOGL.O, Amazon.com Inc AMZN.O and Apple Inc AAPL.O have also announced stock splits in the recent past.
Tesla shareholders will also vote on the board's proposals to reduce the term of its directors to two years from three as well as re-elect Ira Ehrenpreis and Kathleen Wilson-Thompson.
Proxy advisory firm Institutional Shareholder Services (ISS) last month recommended Tesla investors to vote against the two nominees.
A shareholder proposal, asking the board to enable large and long-term stockholders or groups with at least 3% of the company's shares to put competing director candidates on the company ballot will be put to vote at the meeting.
Tesla in its proxy filing said this may create an opportunity for special interests that seek only short-term returns rather than having the company's long-term interests in mind.
In a board proposal, the company asked shareholders to approve removing some supermajority voting requirements, saying that it would give its "stockholders a greater voice".
Proxy advisory firms Glass Lewis and ISS recommended stockholders to vote for both proposals.
The annual meeting is due to start at 5.30 pm ET (2130 GMT).
UPDATE 10-Tesla profit tops target; Musk says high prices could hurt demand
UPDATE 4-Tesla to seek shareholder approval for stock split; shares surge
UPDATE 1-Musk's Tesla stock sale windfall dwarfs Twitter loss
(Reporting by Ankur Banerjee and Akash Sriram in Bengaluru; Editing by Anil D'Silva)
((ankur.banerjee@thomsonreuters.com;; Mobile - +919591691912; Twitter: @AnkurBanerjee17;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Tech heavyweights Alphabet Inc GOOGL.O, Amazon.com Inc AMZN.O and Apple Inc AAPL.O have also announced stock splits in the recent past. By Akash Sriram Aug 4 (Reuters) - Tesla Inc TSLA.O will host its annual general meeting on Thursday, with the world's most valuable automaker's proposal for a second stock split in as many years set to take center stage for investors gathered in Austin, Texas. Also on the agenda are shareholder proposals for corporate governance-related items, including endorsing the right of employees to form a union and asking the company to report its efforts in preventing racial discrimination and sexual harassment annually.
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Tech heavyweights Alphabet Inc GOOGL.O, Amazon.com Inc AMZN.O and Apple Inc AAPL.O have also announced stock splits in the recent past. Proxy advisory firm Institutional Shareholder Services (ISS) last month recommended Tesla investors to vote against the two nominees. Proxy advisory firms Glass Lewis and ISS recommended stockholders to vote for both proposals.
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Tech heavyweights Alphabet Inc GOOGL.O, Amazon.com Inc AMZN.O and Apple Inc AAPL.O have also announced stock splits in the recent past. By Akash Sriram Aug 4 (Reuters) - Tesla Inc TSLA.O will host its annual general meeting on Thursday, with the world's most valuable automaker's proposal for a second stock split in as many years set to take center stage for investors gathered in Austin, Texas. A shareholder proposal, asking the board to enable large and long-term stockholders or groups with at least 3% of the company's shares to put competing director candidates on the company ballot will be put to vote at the meeting.
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Tech heavyweights Alphabet Inc GOOGL.O, Amazon.com Inc AMZN.O and Apple Inc AAPL.O have also announced stock splits in the recent past. By Akash Sriram Aug 4 (Reuters) - Tesla Inc TSLA.O will host its annual general meeting on Thursday, with the world's most valuable automaker's proposal for a second stock split in as many years set to take center stage for investors gathered in Austin, Texas. In a board proposal, the company asked shareholders to approve removing some supermajority voting requirements, saying that it would give its "stockholders a greater voice".
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19899.0
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2022-08-04 00:00:00 UTC
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Wall Street slips on losses in Apple, energy shares
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AAPL
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https://www.nasdaq.com/articles/wall-street-slips-on-losses-in-apple-energy-shares
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nan
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nan
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By Aniruddha Ghosh and Devik Jain
Aug 4 (Reuters) - Wall Street edged lower on Thursday in choppy trading as losses in Apple Inc and energy companies dampened the bullish resolve of the major indexes that had rallied in the previous session to its best in a week.
Apple AAPL.O weighed the most on the S&P 500 and the Nasdaq, shedding 0.4%, a day after surging 3.8%, while the energy sector .SPNY fell 1.6%, tracking lower oil prices on fears of a slowdown in demand.
"It is really just a reflection of the strong gains that we had yesterday and so the market is digesting that," said Robert Pavlik, senior portfolio manager at Dakota Wealth Management.
After a dull start to August, the markets had roared back to life on Wednesday on a boost from a slew of strong results from companies including PayPal Inc PYPL.O and CVS Health CVS.N.
The benchmark index .SPX has gained nearly 13.8% from its mid-June lows, but is still in a bear market and down 13% for the year.
The second-quarter earnings season has helped markets bounce back from concerns around the fallout of the Ukraine war, soaring inflation, flare-up in China COVID-19 cases and an aggressive rise in borrowing costs.
While an unexpected rebound in July services activity allayed recessions fears, market participants are now keeping a close eye on data related to the labor market.
The July employment report, due on Friday, is expected to show nonfarm payrolls likely increased by 250,000 jobs in last month after rising by 372,000 in June. The data is crucial as the U.S. Federal Reserve attempts to cool labor demand to tame inflation.
"Investors are aware that we are in a soft landing for the economy... what will shake up the market is if we end up seeing substantial cuts in growth expectations, meaning if we end up with a lot of companies that are actually just getting rid of employees that could be a problem," Sam Stovall, Chief Investment Strategist at CFRA said.
A media report overnight said Walmart Inc WMT.N was cutting hundreds of corporate roles in a restructuring effort.
At 10:20 a.m. ET, the Dow Jones Industrial Average .DJI was down 97.65 points, or 0.30%, at 32,714.85, the S&P 500 .SPX was down 8.51 points, or 0.20%, at 4,146.66, and the Nasdaq Composite .IXIC was down 8.23 points, or 0.06%, at 12,659.93.
Tesla Inc TSLA.O rose 0.7% ahead of an investor vote on a variety of matters including a three-for-one stock split that would make the company's shares more accessible.
Health insurer Cigna Corp CI.N gained 3.7% after raising its annual profit forecast.
Drugmaker Eli Lilly and Co LLY.N slipped 2.9% as its cut annual profit view for the second time.
Declining issues outnumbered advancers for a 1.02-to-1 ratio on the NYSE. Advancing issues outnumbered decliners by a 1.24-to-1 ratio on the Nasdaq.
The S&P index recorded one new 52-week highs and 29 new lows, while the Nasdaq recorded 28 new highs and 14 new lows.
(Reporting by Aniruddha Ghosh and Devik Jain in Bengaluru; Editing by Arun Koyyur)
((Aniruddha.Ghosh@thomsonreuters.com; 91 83 83 81 2416;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Apple AAPL.O weighed the most on the S&P 500 and the Nasdaq, shedding 0.4%, a day after surging 3.8%, while the energy sector .SPNY fell 1.6%, tracking lower oil prices on fears of a slowdown in demand. By Aniruddha Ghosh and Devik Jain Aug 4 (Reuters) - Wall Street edged lower on Thursday in choppy trading as losses in Apple Inc and energy companies dampened the bullish resolve of the major indexes that had rallied in the previous session to its best in a week. After a dull start to August, the markets had roared back to life on Wednesday on a boost from a slew of strong results from companies including PayPal Inc PYPL.O and CVS Health CVS.N.
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Apple AAPL.O weighed the most on the S&P 500 and the Nasdaq, shedding 0.4%, a day after surging 3.8%, while the energy sector .SPNY fell 1.6%, tracking lower oil prices on fears of a slowdown in demand. Drugmaker Eli Lilly and Co LLY.N slipped 2.9% as its cut annual profit view for the second time. Advancing issues outnumbered decliners by a 1.24-to-1 ratio on the Nasdaq.
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Apple AAPL.O weighed the most on the S&P 500 and the Nasdaq, shedding 0.4%, a day after surging 3.8%, while the energy sector .SPNY fell 1.6%, tracking lower oil prices on fears of a slowdown in demand. While an unexpected rebound in July services activity allayed recessions fears, market participants are now keeping a close eye on data related to the labor market. "Investors are aware that we are in a soft landing for the economy... what will shake up the market is if we end up seeing substantial cuts in growth expectations, meaning if we end up with a lot of companies that are actually just getting rid of employees that could be a problem," Sam Stovall, Chief Investment Strategist at CFRA said.
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Apple AAPL.O weighed the most on the S&P 500 and the Nasdaq, shedding 0.4%, a day after surging 3.8%, while the energy sector .SPNY fell 1.6%, tracking lower oil prices on fears of a slowdown in demand. By Aniruddha Ghosh and Devik Jain Aug 4 (Reuters) - Wall Street edged lower on Thursday in choppy trading as losses in Apple Inc and energy companies dampened the bullish resolve of the major indexes that had rallied in the previous session to its best in a week. "It is really just a reflection of the strong gains that we had yesterday and so the market is digesting that," said Robert Pavlik, senior portfolio manager at Dakota Wealth Management.
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