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2020-01-01
|
The Best Marijuana Stocks to Buy in 2020
|
OGI
|
Last year was supposed to be when marijuana stocks proved their worth, transcending from speculative investments to worthwhile long-term holds. However, this didn't even come close to happening.
Following a first quarter that saw more than a dozen pot stocks gallop higher by at least 70%, the industry entered a precipitous decline for the remaining nine months of the year. When the curtain closed, the vast majority of cannabis stocks ended the year lower by a double-digit percentage.
Image source: Getty Images.
In a year when a lot could have gone right, the reality is that very little did. Canada continues to struggle mightily with supply issues caused by an inadequate number of open marijuana dispensaries in Ontario. Additionally, regulatory agency Health Canada's inability to review and process licensing applications in a timely manner has led to significant delays in bringing product to market. Meanwhile, select U.S. states with recreationally legal pot have been taxing the daylights out of cannabis consumers. The collective end result being that black market marijuana thrived in North America, while most marijuana investments seemed to go up in smoke.
While many of these issues won't be resolved overnight, the expectation is that a more cost-focused cannabis industry will take the necessary steps forward in 2020, leading to a much better year.
But there are a handful of marijuana stocks that I don't believe will simply tread water or be part of the status quo in 2020. Rather, I see the following companies as the best pot stocks investors can buy in 2020. They're far from being brand-name companies, but they have the differentiating factors needed to stand out in what should still be a high-growth industry over the long run.
Image source: Getty Images.
OrganiGram Holdings
Canadian growers were certainly given the opportunity to be industry leaders, but a combination of regulatory issues and overzealous spending has made that nothing more than a pipe dream...except when discussing OrganiGram Holdings (NASDAQ: OGI).
OrganiGram is unique in a number of ways relative to its peers. For one, it's the only major grower (i.e., a cultivator that has peak production potential of at least 100,000 kilos per year) located in an Atlantic province. Being based in New Brunswick, OrganiGram has the natural ability to gobble up market share in Canada's eastern provinces. While less populated, these regions are known for cannabis-use rates that are higher than the national average. It's also worth mentioning that OrganiGram is one of five growers that have forged supply deals with every Canadian province, so it's certainly not stuck just servicing these less-populated markets.
Another factor that really stands out with OrganiGram is the company's production efficiency. According to its management team, it is capable of 113,000 kilos of peak yearly output, yet is working with less than 500,000 square feet of cultivating space. The secret is that it uses a three-tiered growing system in its licensed rooms, thereby pushing its projected yield per square foot to around 230 grams. Comparatively, this yield is about double that of its peers, and it should mean substantially higher margins.
But perhaps the most important thing to remember about OrganiGram is that it's the only Canadian grower to have produced a no-nonsense profit. In the fiscal third quarter, net sales of cannabis outpaced costs of goods and operating expenses by 1.17 million Canadian dollars ($895,000). Sure, it wasn't a huge operating profit, but it's the first real operating profit we've seen in the industry, without the aid of fair-value adjustments or other one-time benefits. This is a well-run company with the tools to outperform in 2020 as derivative sales pick up.
Image source: Getty Images.
Innovative Industrial Properties
It may not be a household name, but cannabis real estate investment trust (REIT) Innovative Industrial Properties (NYSE: IIPR) was one of the few bright spots for the marijuana investment world in 2019. That's a trend I'd expect to continue in 2020.
The basis for IIP's business model is pretty simple. The company acquires assets for growing and processing medical marijuana, then leases these properties out for an extended period of time (often 10 to 20 years), thereby reaping the rewards of rental income. Furthermore, it passes along annual rental increases to its tenants, allowing it to stay ahead of the inflationary curve, and charges a 1.5% property management fee that's based on the current rental rate. In other words, although IIP primarily grows by making acquisitions (the hallmark of most REITs), it does have a modest organic growth factor built in.
In 2019, Innovative Industrial Properties wound up nearly quadrupling its portfolio from 11 assets owned to 42 properties in 13 states. More important, IIP provides updates to its metrics following every acquisition. As of now, the company's weighted-average remaining lease is 15.5 years, and its average return on invested capital is a healthy 13.6%. Put in another context, Innovative Industrial Properties should see a complete payback on its $431.2 million in invested capital in just over five years, which means plenty of cash flow and cost predictability in an environment where little predictability now exists.
Also, this is the only pure-play cannabis stock that pays investors a dividend -- and a fat one at that! Having recently announced a fourth-quarter payout of $1 per share, IIP is now yielding 5.6%. What's more, the $1 payout is 567% higher than what the company was dishing out to shareholders just nine quarters ago. This fast-growing company is perfect for growth and income seekers alike.
Image source: Getty Images.
MediPharm Labs
Ancillary companies will continue to play a key role in the long-term development of the pot industry, but many are contending with the same supply or tax issues hurting direct players. That, however, is unlikely to be the case for extraction-service provider MediPharm Labs (OTC: MEDIF).
Extraction companies find themselves at the center of the hottest trend in the industry: the manufacture of derivative products. Derivatives (like edibles, vapes, concentrates, infused beverages, tinctures, and topicals) were launched in Canada about two weeks ago. They're a considerably higher-margin product than traditional dried cannabis, meaning it's not a matter of whether growers devote time and effort to creating derivatives, but a question of how much capacity and capital is allotted to make these high-margin products.
This is where MediPharm Labs comes into play. It takes hemp and cannabis biomass and processes it for the resins, distillates, concentrates, and targeted cannabinoids that growers use to make derivatives. MediPharm's fee-based contracts to perform these services are often 18 months or longer, meaning that, like IIP above, the company can deliver relatively predictable cash flow every single quarter. And with the company working on expanding its processing capacity to 500,000 kilos per year, the ceiling for sales and profitability continues to be raised.
Speaking of profits, MediPharm has delivered two consecutive quarters of no-nonsense operating profits despite the fact that it only began operations in November 2018. Mind you, these profits were achieved before derivatives even hit Canadian shelves. Now that we're actually seeing these products make their way to market, MediPharm's business, and its ability to secure processing contracts, should really heat up. This should make it one of the best marijuana stocks to buy in 2020.
The Planet 13 SuperStore in Las Vegas. Image source: Planet 13.
Planet 13 Holdings
Last, but not least, I'm a big fan of vertically integrated multistate operator (MSO) Planet 13 Holdings (OTC: PLNHF) in 2020 and feel you should be, too. While there are plenty of other, larger MSOs to choose from, none offers the differentiation of Planet 13.
The company's flagship store is just west of the Las Vegas Strip. When complete, the SuperStore will span 112,000 square feet (that's bigger than the average Walmart by 7,000 square feet) and will house a pizzeria, coffee shop, events stage, consumer-facing processing center, and the broadest selection of cannabis products a consumer could find. In essence, Planet 13 not only wants repeat cannabis users, but it's also quickly becoming a go-to destination for anyone fascinated by cannabis culture.
Having visited the SuperStore, I can say that Planet 13 has done a lot right. It has heavily incorporated technology into the buying experience, with self-pay kiosks interspersed throughout the store, and has the perfect, engaging layout. This is to say that the company's highest-margin product is nearest the registers and entrance, while the dozens upon dozens of various dried cannabis strains are toward the back of the store. A centrally located immersion station, as well as personal budtenders, also help make the experience unique.
Best of all, you get plenty of transparency with Planet 13. Every month since opening in November 2018, the company has provided customer traffic data, including numbers for visitors, paying customers, average ticket size, and the percentage of sales the SuperStore is doing in relation to all of Nevada. With expansionary spending on the SuperStore nearing an end, and the company focused on opening a second location in Santa Ana, California, in 2020, my expectation is that Planet 13 will push into profitability before year's end. That makes it one heck of a value in the marijuana space.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Sean Williams has no position in any of the stocks mentioned. The Motley Fool recommends Innovative Industrial Properties and OrganiGram Holdings. 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.
| 0.008379
| -0.04898
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2020-01-01
|
6 Retailers That Collapsed in the Last Decade
|
DISH
|
As 2009 came to a close, we were still surveying the wreckage of the financial markets' collapse and the worst economic recession the U.S. suffered since the Great Depression. While many industries were shaken, it was really only the beginning of the carnage that would spread across retail, a malaise that in many ways continues today.
Certainly the financial underpinnings of the market hurt the industry, but the rise of e-commerce to assume an essential role in how consumers shop would forever change the retail landscape. Below are six of the most notable retail failures that occurred over the last decade.
Image source: Getty Images.
1. Blockbuster (2010)
Because of the ubiquity of streaming video today, it seems hard to believe that 10 years ago, it was still possible to walk into a Blockbuster store and rent a movie on DVD. But the video rental chain was by that point creaking along to its demise as Netflix (NASDAQ: NFLX) flourished.
Blockbuster would be bought out of bankruptcy by DISH Network (NASDAQ: DISH), but two years later, it would close the remaining company-owned stores. The only Blockbuster that still exists is in Bend, Oregon.
2. Borders (2011)
Equally remarkable, there were still Borders bookstores operating a decade ago, though like Blockbuster, it was also crumbling fast. It had grown to become the second largest national bookstore chain behind Barnes & Noble, but the debut of the Amazon.com (NASDAQ: AMZN) Kindle e-reader in 2007 and the launch of Apple's iPad three years later were the beginning of the end.
Borders was slow to respond to the e-book phenomenon, and gave priority to brick-and-mortar stores instead of an effective e-commerce site. Barnes & Noble came out with the Nook in response to the Kindle, but it still struggled to fend off Amazon, and was taken private this past August.
3. RadioShack (2015)
The demise of the original electronics superstore was a painful, slow-motion decline. Its turnaround plans were thwarted by its own lenders, which feared they wouldn't be repaid if the retailer shrunk its store footprint as much as it needed to. Instead, they forced it into bankruptcy, although Sprint (NYSE: S) initially purchased about 1,700 stores before converting them into its own wireless stores.
4. Sports Authority (2016)
Once one of the largest sporting goods chains, Sports Authority was saddled with debt from its private-equity owners, which prevented it from responding appropriately to the changing retail landscape. The threat from Amazon in particular was too great a burden for a retailer too encumbered to make the necessary changes to its operations.
Its intellectual property was subsequently acquired by Dick's Sporting Goods (NYSE: DKS), which has gone on to its own reimagining by catering to team sports and by carrying private label brands.
5. Toys R Us (2017)
The bankruptcy of Toys R Us initially sent shock waves through the retail industry, since even at the end of its life it still accounted for nearly 14% of the entire toy market. Its filing sent toy makers like Hasbro and Mattel reeling from the loss of an outlet representing about 10% of sales.
Yet it also had the effect of leading other retailers to clear out shelf space to make room for more toys. Amazon even published a catalog to highlight where consumers could buy toys. It ended up not being the toy-pocalypse many had feared, and even now Toys R Us is trying to rebound with a new retail presence.
6. Sears (2018)
Sears (OTC: SHLDQ) is another bankrupt retailer, but it's not really gone from the marketplace (at least not yet). While many of its stores have been sold off, CEO Eddie Lampert continues to operate the retailer in a much smaller capacity.
Yet despite living on like some zombie retailer (much as it has from the beginning when Lampert first joined Sears with Kmart), the business has been on a long, slow decline into oblivion. The end remains on the horizon for the once venerable retailer, but it still survives at the moment.
10 stocks we like better than Walmart
When investing geniuses David and Tom Gardner have 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.*
David and Tom 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.
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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. Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon, Apple, Hasbro, and Netflix. The Motley Fool is short shares of Hasbro. 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.
| 0.008379
| 0.007612
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2020-01-01
|
Is Cronos the Cheapest Pot Stock to Buy?
|
ACB
|
Valuations are a touchy subject in the cannabis industry. That's because many pot stocks are wildly overvalued, and investors are still struggling to determine what they're worth today. One stock that could enter the discussion as one of the cheaper options is Cronos Group (NASDAQ: CRON). A stock that's trading at less than seven times its earnings and 1.4 times its book value would seem to tick many of the boxes Warren Buffett-type investors look for. That's where Cronos finds itself today but is the stock really an excellent value?
Profitable for three straight quarters
While many cannabis companies have struggled to turn a profit even once, Cronos has done so in three successive quarters. Over the past nine months, the company's net income totaled a cumulative 1.5 billion Canadian dollars. It's an incredible streak, but it warrants an asterisk next to it.
During those three quarters combined, Cronos incurred an operating loss of CA$75 million on net revenue of just CA$29 million. The company was able to stay out of the red thanks to its other income and expenses. Specifically, Cronos benefited from gains on the revaluation of its derivative liabilities to the tune of more than CA$1.5 billion. That line item has grossly inflated the company's profitability and allowed it to showcase a very attractive price-to-earnings ratio in the process.
Image Source: Getty Images.
It's a prime example of how misleading financial statements can be. The derivative liabilities relate to cigarette maker Altria's investment in the company. Cronos has classified Altria's warrants and pre-emptive rights as derivative liabilities. And since Cronos' share price has been falling for much of 2019, the value of those liabilities has been dropping as well, resulting in fair value gains for the company.
Very expensive when looking at sales
Gains and other income can easily distort a company's earnings and its price-to-earnings ratio. However, it's a lot more difficult for the price-to-sales ratio to mislead, since it reflects the sales a company has earned during a period. Cronos' top line has unfortunately not been a strong point; revenue was above CA$10 million in only two of its past four quarters.
That's a trivial amount given the stock's market cap of $2.5 billion. By comparison, Aurora Cannabis (NYSE: ACB) has a lower market cap of $2.1 billion, and the lowest its sales have reached in any of the past four quarters was CA$54 million; over the trailing 12 months, Aurora's sales topped nearly CA$300 million. Its price-to-sales multiple of 9.5 pales in comparison to that of Cronos, which trades at nearly 90 times its revenue.
Cronos has fallen around 40% in 2019, right in line with how the Horizons Marijuana Life Sciences ETF performed during that time. Remarkably, even though it generated much more in revenue, Aurora's stock price declined by more than 63%.
If not Cronos, then what?
By now it's clear that Cronos isn't the great value buy that it appears to be at first glance. While the temptation may be to say that Aphria is a better value buy, as it has also been profitable for consecutive periods, nonoperating items have been inflating its bottom line as well. However, its price-to-sales multiple of 4.6 looks like a bargain compared to both Aurora and Cronos. It could be one of the better buys in the industry today, but even Aphria is still a bit of a risky investment, at least until it can prove that it can stay in the black without needing assistance from items below its operating income.
It's still a delicate time in the industry, and investors might be well advised to wait a while before investing in cannabis companies, at least until they prove that they're able to produce consistent and sustainable profits.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
David Jagielski has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.
| 0.008379
| -0.064815
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2020-01-01
|
Are Aurora Cannabis, HEXO, and Tilray Ready to Rebound in 2020?
|
ACB
|
Many investors in marijuana stocks are probably breathing a sigh of relief that 2019 is over. The year brought dismal performances for most pot stocks. To put things in perspective, the two leading cannabis-focused exchange-traded funds (ETFs) both plunged by at least 30%.
When ETFs fall that much, it means there are plenty of individual stocks that dropped even more. Three well-known pot stocks that performed especially badly in 2019 were Aurora Cannabis (NYSE: ACB), HEXO (NYSE: HEXO), and Tilray (NASDAQ: TLRY). But are these beaten-down marijuana stocks ready to rebound in 2020?
Image source: Getty Images.
A common denominator
Aurora Cannabis, HEXO, and Tilray performed much worse than other big Canadian cannabis producers last year. Aurora's shares sank close to 60%. HEXO didn't fare much better, with the stock falling more than 50%. Tilray was the biggest loser of the three, with its shares tanking by over 75%.
There was one major common denominator behind all three stocks' horrible results in 2019: too few retail cannabis stores in Canada. This lack of an adequate retail infrastructure wasn't as problematic early in the year; pent-up demand for legal recreational marijuana initially led to big sales jumps for Aurora, HEXO, Tilray, and their peers. Later in the year, though, the retail bottleneck began to impact the volume of products that provinces were ordering for their adult-use recreational cannabis markets.
Ontario presented the biggest challenge of all. It's the most heavily populated province in Canada, home to nearly four out of 10 residents of the country. But by late November, only 24 retail cannabis stores were open in Ontario. That's one store for every 600,000 residents -- not nearly enough to serve the market.
It's not surprising that the management teams at Aurora and HEXO pointed the finger at Ontario when their quarterly updates later in 2019 disappointed investors. Tilray's executives didn't single out the province, although CEO Brendan Kennedy stated on the company's third-quarter conference call in November that "the challenges in the Canadian market are ongoing, with a limited number of retail locations and a supply-demand imbalance."
Company-specific problems
But Ontario wasn't the only reason that Aurora, HEXO, and Tilray stocks plunged in 2019. Each faced company-specific problems as well.
Aurora made the age-old mistake of overpromising and underdelivering with its fiscal 2019 fourth-quarter results. The company provided guidance for its Q4 revenue without having adequate visibility for its ancillary non-cannabis revenue. Its revenue miss ended up being an embarrassment. Aurora's fiscal 2020 Q1 results were even worse, and led to the company cutting its spending on capital projects. In addition, Aurora closed out the year by having its license to sell medical cannabis products in Germany temporarily suspended, causing the company to lose at least six weeks of sales in the key European market.
HEXO also overpromised and underdelivered. CEO Sebastien St-Louis predicted that net revenue would double in Q4 from Q3, but the company didn't come close to achieving that goal. HEXO's CFO departed unexpectedly in October. The company withdrew its fiscal 2020 outlook. And in late December, HEXO added more dilution to the list of reasons why investors soured on the stock.
While Aurora and HEXO at least enjoyed a few months of big gains earlier in the year, Tilray lost its steam quickly in 2019. The company routinely missed Wall Street estimates in its quarterly results. The acquisition of Manitoba Harvest, a maker of hemp-based foods, weighed on Tilray's margins. Probably the biggest issue for Tilray, though, was that it started out the year with a lofty valuation that simply wasn't sustainable.
Ready to rebound in 2020?
The good news for all three of these companies and their peers is that the retail environment in Canada should improve. Ontario is issuing around 20 licenses for new stores each month, beginning in March, following an initial wave of more than 40 new stores.
Another tailwind is that the Cannabis 2.0 derivatives market will ramp up in earnest in 2020. Aurora, HEXO, and Tilray are offering a range of products in this new market that should boost sales significantly in the new year.
My hunch is that these positive factors will spur many investors to jump back on the cannabis bandwagon, leading to solid rebounds for many Canadian marijuana stocks. I suspect that Aurora, HEXO, and Tilray will enjoy nice bounces.
However, the prospect of further dilution is likely to hover like a dark cloud over all three of these stocks in 2020. Unless the companies can demonstrate that they're clearly on a path to profitability, don't be surprised if the rebounds for their stocks fade.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Keith Speights has no position in any of the stocks mentioned. The Motley Fool recommends HEXO. 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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2020-01-01
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These 3 Tech Stocks Gained More Than 1,000% in the 2010s
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OLED
|
Show me an investor who wouldn't love to see his stocks gaining 1,000% in 10 years, and I'll show you a liar. The tech sector happens to be full of extreme growth stocks that actually achieved that extreme 10-year return, and I'm here to show you how it was done.
How good are these gains? The Dow Jones Industrial Average rose 170% over the same period and the S&P 500 market barometer posted a 10-year increase of 186%. The three tech stocks below fared much, much better.
COMPANY
MARKET CAP
10-YEAR SHARE PRICE GROWTH
Tucows (NASDAQ: TCX)
$647 million
2,130%
Universal Display (NASDAQ: OLED)
$9.7 billion
1,560%
NVIDIA (NASDAQ: NVDA)
$143 billion
1,150%
Data source: YCharts.com, Dec. 31, 2019.
Are any of these proven winners staring down another stretch of extreme growth in the years ahead?
Ting, Ting, Ting!
Tucows, a Canada-based provider of online tools and a reseller of cell-phone services, was a mere penny stock 10 years ago. The company's surge started with the announcement of subsidiary Ting Mobile's low-priced data sharing plans in 2012, as smartphones were starting to reshape the way we used our mobile phones.
Three years later, Ting had grown into a profitable business that contributed 29% of Tucows' total revenue and 41% of the company's operating profit. The company has grown by leaps and bounds, thanks to a combination of organic revenue growth from Ting Mobile and several plug-in acquisitions adding heft to Tucows' domain name service operations.
The next big idea out of Tucows' Toronto headquarters is a big investment in Ting Internet. This sister service to Ting Mobile provides fiber-based broadband service to customers in a hand-picked selection of hyperlocal markets. This effort requires a large up-front investment to pull fiber lines into new neighborhoods and lighting up data centers to provide services to these markets, so Ting Internet is a drag on Tucows' earnings at the moment. But customers are quick to sign up when Ting Internet services become available: The service was available to 34,000 addresses in the recently reported third quarter, and 9,500 of these potential clients are already paying customers.
The Ting Internet project will continue to expand for years to come, giving Tucows a predictable stream of incoming high-quality customers for the long haul. The next decade probably won't match the once-in-a-lifetime run from penny stock to respectable multi-service growth investment, but Tucows still looks promising enough that I had to buy a few shares for myself this fall.
Image source: Getty Images.
The future's so bright, I gotta wear shades
Back in 2009, I saw Universal Display's organic light-emitting diode (OLED) technology finally hitting store shelves after many years of quiet research and development behind the scenes. The ultra-efficient technology seemed to be primed for world domination at the time, and I could hardly conceal my excitement. "Universal Display is small and obscure and can easily multiply your investment many times over when catalysts like the TV revolution kick in," I wrote.
The company's trailing revenue has exploded from $16 million to $374 million over this 10-year period. CEO Steven Abramson believes this is just the start of a much larger long-term growth story.
These days, OLED screens are a standard feature on most flagship smartphones, and the technology is making inroads in the big-screen TV market as well. After that, we Universal Display investors will enjoy watching the world embrace power-efficient OLED panels for everyday lighting, flexible and transparent screens, and much more.
Do the math
NVIDIA's path to a thousand-percent gain was rather bumpy. The stock traded almost exactly sideways between 2010 and 2015, gaining just 7% over that five-year span. The last five years were a different story, where NVIDIA's shares posted a gain of 1,070% on 114% higher revenue and 365% stronger free cash flow.
After several missteps and failed product launches, NVIDIA finally got its act together with a popular lineup of graphics cards in 2015. A brand new graphics architecture, known as Pascal, followed in 2016 to even greater acclaim. These cards stayed hot in 2017, allowing NVIDIA to take advantage of that fall's massive cryptocurrency mining trend -- as it turns out, high-powered graphics cards were very well suited to doing exactly the kind of math that crypto-mining required at the time.
The cryptocurrency surge faded in 2018, dragging NVIDIA's sales and share prices down with it. But the stock is coming on strong again thanks to solid sales into new target markets such as data analysis, self-driving cars, and artificial intelligence systems. NVIDIA's chips are great at these tasks, too.
The stalled gaming market is looking for its next big hit, some market watchers expect another big rush of cryptocurrency gains, and NVIDIA's more recent growth drivers should stay valid for many years. NVIDIA looks like a solid buy today.
10 stocks we like better than NVIDIA
When investing geniuses David and Tom Gardner have 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.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and NVIDIA 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 December 1, 2019
Anders Bylund owns shares of Tucows and Universal Display. The Motley Fool owns shares of and recommends NVIDIA, Tucows, and Universal Display. 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.
| 0.008379
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2020-01-01
|
Validea John Neff Strategy Daily Upgrade Report - 1/1/2020
|
FULT
|
The following are today's upgrades for Validea's Low PE Investor model based on the published strategy of John Neff. This strategy looks for firms with persistent earnings growth that trade at a discount relative to their earnings growth and dividend yield.
T. ROWE PRICE GROUP INC (TROW) is a large-cap growth stock in the Investment Services industry. The rating according to our strategy based on John Neff changed from 60% to 79% based on the firm’s underlying fundamentals and the stock’s valuation. A score of 80% or above typically indicates that the strategy has some interest in the stock and a score above 90% typically indicates strong interest.
Company Description: T. Rowe Price Group, Inc. is a financial services holding company. The Company provides global investment management services through its subsidiaries to investors across the world. The Company provides an array of Company sponsored the United States mutual funds, other sponsored pooled investment vehicles, sub advisory services, separate account management, recordkeeping, and related services to individuals, advisors, institutions, financial intermediaries and retirement plan sponsors. The Company distributes its products in countries located within three geographical regions: North America, Europe Middle East and Africa (EMEA), and Asia Pacific (APAC). It also offers specialized advisory services, including management of stable value investment contracts and a distribution management service for the disposition of equity securities its clients receive from third-party venture capital investment pools. As of December 31, 2016, it serviced clients in 45 countries across the world.
The following table summarizes whether the stock meets each of this strategy's tests. Not all criteria in the below table receive equal weighting or are independent, but the table provides a brief overview of the strong and weak points of the security in the context of the strategy's criteria.
P/E RATIO: FAIL
EPS GROWTH: PASS
FUTURE EPS GROWTH: PASS
SALES GROWTH: PASS
TOTAL RETURN/PE: PASS
FREE CASH FLOW: PASS
EPS PERSISTENCE: FAIL
For a full detailed analysis using NASDAQ's Guru Analysis tool, click here
FULTON FINANCIAL CORP (FULT) is a mid-cap value stock in the Regional Banks industry. The rating according to our strategy based on John Neff changed from 62% to 81% based on the firm’s underlying fundamentals and the stock’s valuation. A score of 80% or above typically indicates that the strategy has some interest in the stock and a score above 90% typically indicates strong interest.
Company Description: Fulton Financial Corporation is a financial holding company. The Company is the bank holding company of Fulton Bank N.A. (the Bank). As of December 31, 2016, the Company's six subsidiary banks were located primarily in suburban or semi-rural geographic markets throughout a five-state region (Pennsylvania, Delaware, Maryland, New Jersey and Virginia). Each of the Company's subsidiary banks offers a range of consumer and commercial banking products and services in its local market area. Personal banking services include various checking account and savings deposit products, certificates of deposit and individual retirement accounts. The subsidiary banks offer a range of consumer lending products to creditworthy customers in their market areas. Commercial banking services are provided to small and medium sized businesses. It also offers investment management, trust, brokerage, insurance and investment advisory services to consumer and commercial banking customers in its market areas.
The following table summarizes whether the stock meets each of this strategy's tests. Not all criteria in the below table receive equal weighting or are independent, but the table provides a brief overview of the strong and weak points of the security in the context of the strategy's criteria.
P/E RATIO: PASS
EPS GROWTH: PASS
FUTURE EPS GROWTH: PASS
SALES GROWTH: PASS
TOTAL RETURN/PE: FAIL
FREE CASH FLOW: PASS
EPS PERSISTENCE: PASS
For a full detailed analysis using NASDAQ's Guru Analysis tool, click here
INGLES MARKETS, INCORPORATED (IMKTA) is a small-cap value stock in the Retail (Grocery) industry. The rating according to our strategy based on John Neff changed from 62% to 81% based on the firm’s underlying fundamentals and the stock’s valuation. A score of 80% or above typically indicates that the strategy has some interest in the stock and a score above 90% typically indicates strong interest.
Company Description: Ingles Markets, Incorporated (Ingles) is a supermarket chain in the southeast United States. The Company's segments include retail grocery and other. Its other segment consists of fluid dairy operations and shopping center rentals. As of September 24, 2016, the Company operated 201 supermarkets in Georgia, North Carolina, South Carolina, Tennessee, Virginia and Alabama. The Company locates its supermarkets primarily in suburban areas, small towns and rural communities. Ingles supermarkets offer customers a range of food products, including grocery, meat and dairy products, produce, frozen foods and other perishables and non-food products. Its non-food products include fuel centers, pharmacies, health and beauty care products and general merchandise. The Company focuses on selling products to its customers through the development of organic products, bakery departments and prepared foods, including delicatessen sections.
The following table summarizes whether the stock meets each of this strategy's tests. Not all criteria in the below table receive equal weighting or are independent, but the table provides a brief overview of the strong and weak points of the security in the context of the strategy's criteria.
P/E RATIO: PASS
EPS GROWTH: PASS
FUTURE EPS GROWTH: PASS
SALES GROWTH: FAIL
TOTAL RETURN/PE: PASS
FREE CASH FLOW: PASS
EPS PERSISTENCE: PASS
For a full detailed analysis using NASDAQ's Guru Analysis tool, click here
Since its inception, Validea's strategy based on John Neff has returned 333.14% vs. 191.46% for the S&P 500. For more details on this strategy, click here
About John Neff: While known as the manager with whom many top managers entrusted their own money, Neff was far from the smooth-talking, high-profile Wall Streeter you might expect. He was mild-mannered and low-key, and the same might be said of the Windsor Fund that he managed for more than three decades. In fact, Neff himself described the fund as "relatively prosaic, dull, [and] conservative." There was nothing dull about his results, however. From 1964 to 1995, Neff guided Windsor to a 13.7 percent average annual return, easily outpacing the S&P 500's 10.6 percent return during that time. That 3.1 percentage point difference is huge over time -- a $10,000 investment in Windsor (with dividends reinvested) at the start of Neff's tenure would have ended up as more than $564,000 by the time he retired, more than twice what the same investment in the S&P would have yielded (about $233,000). Considering the length of his tenure, that track record may be the best ever for a manager of such a large fund.
About Validea: Validea is aninvestment researchservice that follows the published strategies of investment legends. Validea offers both stock analysis and model portfolios based on gurus who have outperformed the market over the long-term, including Warren Buffett, Benjamin Graham, Peter Lynch and Martin Zweig. For more information about Validea, 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.
| 0.008379
| 0.006311
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2020-01-01
|
My Top Stock Pick and Biggest Holding for 2020 and Beyond
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ROKU
|
As a new decade begins, it's a great time for investors to review the stocks in their portfolio. This is especially the case after a year of strong returns for the market. The S&P 500 climbed nearly 30% in 2019, which has left some stocks less attractive -- and others overvalued.
One stock that could help balance out a portfolio after such a bullish run is Telaria (NYSE: TLRA) -- a high-quality company that has largely flown under the radar and is trading at a bargain valuation. The sub-$400 million digital advertising specialist has strong fundamentals and a massive addressable market.
Not only is Telaria my top stock pick for 2020, but I'm also putting my money where my mouth is: The stock is my largest holding by a wide margin.
Image source: Getty Images.
Telaria's business
Following a multiyear transformation process that included hiring a new CEO, the sale of its buy-side ad technology platform so it could focus solely on the supply side, and a move to double down on connected TV (CTV), Telaria has morphed into a leader in one of the fastest-growing areas of advertising: CTV programmatic advertising.
Telaria's trailing-nine-month results reflect its impressive momentum. Revenue over this time frame is up 36% year over year; gross profits climbed 24%; and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) narrowed from a loss of $4.4 million to a loss of $1.7 million. Yet even these figures don't fully appreciate how much Telaria's business has improved since they don't include the important holiday quarter -- a period when TV advertising spend ramps up significantly. Management expects full-year adjusted EBITDA to be between $2 million and $4 million, up from a loss of $400,000 in 2018.
A few other metrics highlight Telaria's sound financials, including its 82% trailing-12-month gross profit margin and its $15 million in free cash flow over that time frame. In addition, it has no debt on its balance sheet and boasts $66 million in cash and cash equivalents.
A powerful catalyst
But even Telaria's rapid revenue growth and improving profitability understate the tech company's momentum. To more clearly understand why its prospects are so strong, investors should take a closer look at its CTV revenue.
CTV revenue soared 115% year over year in Q3, and now represents 44% of the top line. It accounted for 25% of revenue in Q3 2018 and 6% of revenue in Q3 2017. Just over three years ago, the company didn't have any CTV revenue. This growth reflects the leadership position the company has carved out for itself when it comes to helping premium video distributors like Sling, Hulu, Fox News, MLB.tv, and ABC News optimize yield on their programmatic digital video ad inventory.
Despite the rapid growth Telaria has seen already in its CTV business, there's far more upside ahead. Of the more than $70 billion expected to be spent on TV ads in 2019, only around $7 billion is forecast to be spent on CTV -- and likely less than half of this CTV ad spend will be transacted programmatically -- Telaria's bread and butter.
We can expect that linear TV advertising spend will continue to shift to CTV, reflecting content companies' growing investments in streaming services they attempt to compensate for the cord-cutting trend. Total ad spend in CTV is forecast to exceed $10 billion by 2021.
More importantly for Telaria, the portion of CTV ad spend that is programmatic will likely rise much more rapidly than the total. Ad buyers and sellers will increasingly look for the same measurability and optimization they have become familiar with on desktop and mobile platforms. Unsurprisingly, it's already clear that a major shift toward programmatic is happening in CTV advertising. As Telaria VP of Product Marketing Steve Kondonijakos said in a recent blog post on the company's website, "growth of programmatic CTV has already outpaced the growth of programmatic spend on desktop and mobile."
A compelling valuation
Strong fundamentals, a powerful catalyst, and an attractive addressable market are great. But investors can't make an informed decision about an investment without also considering valuation. Fortunately, this may be where Telaria shines the most, particularly when compared to The Trade Desk (NASDAQ: TTD) and Roku (NASDAQ: ROKU) -- two other companies benefiting from the tailwinds of soaring ad spend in connected TV.
Telaria trades at just 6 times sales while The Trade Desk and Roku have price-to-sales ratios of 19 and 16, respectively. Similarly, Telaria's price-to-gross profit ratio of 7 is far lower than The Trade Desk's 25 and Roku's 35.
A game-changing merger
Anyone considering investing in Telaria should also be aware that on Dec. 19, it announced a deal to merge with sell-side ad tech company Rubicon Project (NYSE: RUBI). The result will be the world's largest independent sell-side advertising platform.
The deal, which is subject to shareholder votes, regulatory approval, and other customary closing conditions, is expected to close during the first half of 2020. The agreement stipulates that each Telaria share will be exchanged for 1.082 Rubicon Project shares, giving former Telaria shareholders approximately 47.1% of the combined company.
For the trailing-12-month period ending Sept. 30, the combined company would have reported $217 million in revenue -- a figure that was up 32% year over year. Further, it would have had $150 million in cash and no debt.
By combining, the two companies believe they can accelerate Telaria's CTV business, benefit from $15 to $20 million in annual cost savings, and better serve customers with a single supply-side platform and improved tools for publishers. The merger would also make Rubicon an indispensable partner to buyers, giving platforms like The Trade Desk access to quality, scaled inventory across all channels.
As one analyst recently put it, the combined company can become "the Trade Desk of the buy side."
Risks
Of course, there's always a chance that things may not play out as expected. Further, shares could trade erratically in the short term, even if Telaria's revenue and profitability improve significantly in the coming years. As famed investor Benjamin Graham has said, "In the short run, the market is a voting machine but in the long run, it is a weighing machine."
But there are several business-specific risks Telaria investors should keep an eye on as well.
The first is the company's ability to manage its non-CTV revenue. Though it seems to be doing everything right when it comes to CTV, revenue from desktop and mobile video still represent over half of the top line. Because of headwinds in desktop, Telaria's non-CTV revenue fell from about $10 million in Q3 2018 to $9.3 million in Q3 2019. If the deterioration of this non-CTV business worsens, this could weigh meaningfully on the company's consolidated results.
Fortunately, Telaria's merger with Rubicon could address this problem, as Rubicon is thriving in the channels where Telaria isn't. But this brings us to a second risk: While unlikely, it's always possible that Telaria's merger with Rubicon won't go through. If it fails, Rubicon may begin investing heavily in CTV -- an area where it only has a nascent offering. If Rubicon succeeds in growing its CTV business, the company could take share from Telaria.
Notably, Telaria currently has a major competitive advantage when it comes to competition. Its two biggest sell-side CTV competitors are FreeWheel and SpotX, both of which have compromised value propositions to content publishers since they are owned by cable companies (a content publisher generally doesn't want to partner with a platform that is funding a competing content publisher). But investors will still want to keep an eye on the competitive environment; mergers, spin-offs, and acquisitions could change things quickly.
A bet on programmatic adverting and connected TV
Long story short, I believe Telaria is the market's best avenue for investing in the confluence of two undeniable trends we will see in the new decade: the rise of programmatic advertising and the growth of connected TV.
Investors have aggressively bought up The Trade Desk shares in recent years because they've recognized the compelling economics in buy-side ad tech. But the market hasn't quite figured out who will come out on top on the sell side. Therefore, there's still time to profit from buying Telaria stock before the masses realize the scale of this opportunity.
10 stocks we like better than Telaria, Inc.
When investing geniuses David and Tom Gardner have 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.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Telaria, 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 December 1, 2019
Daniel Sparks owns shares of Telaria, Inc. The Motley Fool owns shares of and recommends Netflix, Roku, Telaria, Inc., and The Trade Desk. 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.
| 0.008379
| 0.023899
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2020-01-01
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Here's Why 2020 Is the Big Test for Canadian Cannabis Companies
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CGC
|
Canadian cannabis companies are still in the honeymoon phase of what's been rapid early growth for the new recreational marijuana market in Canada. However, in 2020 that's going to change in a hurry, and it could be a whole lot more difficult for cannabis companies to impress investors with their growth numbers. That could be bad news after what's already been a tough 2019 for the industry. Here's why things could get worse next year.
Prior-year results won't give companies an easy sales number to beat
One of the problems that Canopy Growth (NYSE: CGC) has been hit with this year has been a lack of profitability. It's been a sore spot for the company, and it's also dragged down the results of its key investor, Constellation Brands. The mounting losses have been a contributing reason, if not the main one, for the dismissal of Bruce Linton, who had long been the leader for Canopy Growth and a respected figure in the industry.
But many investors have ignored the lack of profitability in the industry because companies are still experiencing tremendous growth. For instance, in its Q2 results for fiscal 2020, released back in November, Canopy Growth's sales of 76.6 million Canadian dollars were up a whopping 229% from the CA$23.3 million it had generated in the prior-year quarter.
Image source: Getty Images.
However, it's not an apples-to-apples comparison because in the prior year the recreational market was not open in Canada, and so it was easy for the company to blow the comparative numbers out of the water. The recreational marijuana market opened for business in Canada on Oct. 17, 2018. And now that it's been more than a year since recreational pot has been legal, the upcoming quarterly results are going to have better prior-year numbers, and these significant growth rates will come down in a hurry.
In the company's Q3 results of fiscal 2019, which were released in February 2019, Canopy Growth's net revenue of CA$83 million was actually higher than net revenue earned this past quarter. The period didn't cover a full three months of the recreational market being open.
Whether it can beat these numbers when the company goes to report its earnings in February is going to be a big test for Canopy Growth. Other Canadian cannabis companies are going to be facing the same sorts of challenges.
Edibles should provide a boost
As for Canopy Growth, it should still come in ahead of prior-year results, as it will have the benefit of edibles and ingestible products, also known as the "Cannabis 2.0" market in Canada. The new cannabis products arrived on store shelves in December and will provide a new source of revenue for cannabis producers like Canopy Growth.
According to estimates Deloitte made in June, this new segment of the market could be worth CA$2.7 billion annually. That's nearly half of the near-CA$6 billion market size that Deloitte expects the recreational and medical market to be worth, which excludes the new products.
Canopy Growth's new products should help ensure that sales continue to grow. However, growth rates are unlikely to be as high as they've been in 2019, and that could put pressure on the stock.
What marijuana investors should watch out for
Canadian cannabis companies should continue to benefit in 2020 from a new segment of the market being open for business. But if there are any hiccups for edible or ingestible products, producing strong year-over-year sales growth numbers could be a big challenge.
And the problem for cannabis stocks is that with profitability being nowhere in sight for many companies, growth is all that investors will have to hang their hats on. If cannabis companies report sales numbers with only modest improvements from last year, that could lead to even more selling for pot stocks in 2020.
This past year has already been a tough one for marijuana stocks as the Horizons Marijuana Life Sciences ETF fell 40% in 2019 while Canopy Growth declined by 34%. As bad as the sell-off has been in the industry, it could get even worse in 2020.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
David Jagielski has no position in any of the stocks mentioned. The Motley Fool recommends Constellation Brands. 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.
| 0.008379
| -0.045519
|
2020-01-01
|
Better Buy: Trulieve vs. Curaleaf
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CGC
|
Curaleaf Holdings (OTC: CURLF) and Trulieve Cannabis (OTC: TCNNF) have been taking two very different approaches to expanding their cannabis businesses. Curaleaf's been focusing on expanding rapidly, while Trulieve has chosen a steadier approach. Their share prices are also going in opposite directions of late:
CURLF data by YCharts
By comparison, the Horizons Marijuana Life Sciences ETF has fallen 35% over the same period.
Both Curaleaf and Trulieve are among the most successful multistate operators in the country, but knowing which one to invest in today involves a closer look at their strategies. Let's separate these two cannabis stocks and assess which one is the better buy heading into 2020.
Curaleaf's pending acquisitions could propel it atop the industry
Curaleaf has been aggressive when it comes to acquisitions. It's taken a page out of Canopy Growth's book in not shying away from making big moves. In May, Curaleaf announced it was acquiring cannabis oil producer Cura Partners, which owns the popular Select brand, in an all-stock deal worth $948.8 million at the time of the announcement. However, as a result of worsening market conditions in the cannabis industry, the deal has since been adjusted, and it's now worth around $309 million, with the possibility of that rising if certain targets are met.
Image Source: Getty Images.
The acquisition will give Curaleaf a significant presence on the West Coast; at the time of the announcement, Select's products were sold in more than 900 retailers across the West Coast, including in California. Currently, Curaleaf has operations in 12 states with 50 dispensaries and 14 cultivation sites.
However, the company didn't stop there. Curaleaf made another big splash in July by announcing it would acquire Grassroots in a cash-and-stock deal worth $875 million. It's a strategic move for Curaleaf as the deal gives it access to new markets including Illinois and Oklahoma. It would give Curaleaf a presence in 19 states across the country. Curaleaf says the deal would make it "the world's largest cannabis company by revenue."
And that could indeed be true. In November, Curaleaf released its third-quarter 2019 earnings, which identified pro forma revenue totaling $129 million. Pro forma is essentially a what-if scenario, as it includes revenue from closed and pending acquisitions. For comparison's sake, Canopy Growth's sales totaled just $77 million Canadian dollars in its most recent quarter.
Has Trulieve focused too much on Florida?
On Dec. 18, Trulieve opened its 42nd dispensary in Florida as it continues expanding its operations in the state. However, there are more than 30 other states that have legalized medical marijuana; it's hard not to wonder if Trulieve has been too passive in its strategy.
The company did announce multiple acquisitions in the past year to expand into new markets, including Connecticut, California, and Massachusetts. But a presence in just four states still puts Trulieve well behind Curaleaf and other multistate operators in the country.
However, it's hard to argue with good results, which is what Trulieve's produced in recent quarters. In November, the company released its Q3 earnings; Trulieve posted a profit of $60 million. The cannabis producer has recorded a profit in each of its past four quarters. Even the company's operating income is consistently in the black.
And with revenue totaling $209 million over the trailing 12 months, the company has been doing just fine in Florida. With a strong business model that's focused on selling to one of the hottest markets in the country and then slowly expanding outward, an argument could be made that it doesn't need to rapidly expand the way Curaleaf has. Many cannabis companies are bleeding cash and recording mounting losses, and Trulieve is growing at a much more sustainable rate, one that won't incur as many expenses compared to if its expansion were rapid. That's allowed Trulieve to better control its costs, enabling it to record strong margins and profits, which is a rarity in the industry and that's why the stock stands out from its peers.
Why Trulieve is the better stock to buy today
An overly aggressive growth strategy can be a quick way for a company to spread itself thin, accumulate costs, and burn through cash. That's why, for all the potential and market-share opportunities that exist for Curaleaf, there are also some very big risks. It may have operations in more states than Trulieve, but with marijuana still illegal at the federal level, Curaleaf is not able to benefit from synergies across those locations and even transport marijuana products across state lines.
And that's why a rapid growth strategy may not be worth all the expenses and cash burn that will come with it. The simpler the business model, the easier it is to control. Trulieve is profitable, it's growing, and there's nothing wrong with the business to suggest that it needs to expand. Marijuana legalization may not happen in the U.S. for years, and expanding too early may do more harm than good.
There's still plenty of time for Trulieve to expand into more markets. It's a great marijuana stock to buy for both the short and long term.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
David Jagielski has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.
| 0.008379
| -0.045519
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2020-01-01
|
Breakingviews - A health craze for 2020: Chinese medicine
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AMGN
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Reuters
Reuters
HONG KONG (Reuters Breakingviews) - Move over, connected exercise bikes. There’s a new, more serious healthcare fad for investors: Chinese drugs. U.S. regulators in November approved the first-ever cancer therapy from the People's Republic. For global pharmaceutical companies, a made-in-China blockbuster drug may be within reach.
The world's most populous country is aging quickly. Despite overwhelming demand for treatments against cancer, diabetes, and cardiovascular disease, Chinese drugmakers have produced few innovative medicines so far. But there’s a new breed of biotechnology upstarts inspired by friendly policies, government research incentives, and the prospect of grabbing a slice of the world’s second-largest drugs market, at $137 billion in 2018 according to healthcare analytics group IQVIA.
Leading the charge is BeiGene. The Beijing-based company, valued at $12 billion as of early December, focuses on oncology treatments. China now accounts for more than a fifth of new cancer cases, according to the International Agency for Research on Cancer. And BeiGene's co-founders, John Oyler and Xiaodong Wang, have global ambitions. In November its lymphoma treatment won an accelerated approval from the U.S. Food and Drug Administration – a first for a Chinese company.
More such breakthroughs are probably on the way. One reason is the country's 2017 entry into the International Council for Harmonisation, which sets standards for developing new drugs. For China, a key benefit of adopting ICH guidelines is that other members of the coalition, including American and European regulators, will more readily accept local clinical trial results. BeiGene's landmark U.S. approval was also the first to be based partly on data from Chinese patients.
Big Pharma is noticing. Just weeks before the United States approved BeiGene's cancer drug, biotechnology giant Amgen splashed out $2.7 billion for a 20.5% stake in the company. The same month, AstraZeneca unveiled plans to partner with investment bank China International Capital Corp to launch a $1 billion healthcare fund in the country. These big-name endorsements will attract other potential investors.
Unfortunately, as with many health crazes, this one comes with small-print warnings. Most Chinese biotech firms don't have a long record, so it’s difficult to tell good from bad. BeiGene itself was subject to a short-seller attack earlier in 2019. Moreover, clinical trials in developing countries have often been plagued with fraud and other issues. Some unexpected side-effects are inevitable.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
| 0.008379
| -0.004024
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2020-01-01
|
Validea James P. O'Shaughnessy Strategy Daily Upgrade Report - 1/1/2020
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UL
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The following are today's upgrades for Validea's Growth/Value Investor model based on the published strategy of James P. O'Shaughnessy. This two strategy approach offers a large-cap value model and a growth approach that looks for persistent earnings growth and strong relative strength.
UNILEVER PLC (ADR) (UL) is a large-cap value stock in the Personal & Household Prods. industry. The rating according to our strategy based on James P. O'Shaughnessy changed from 80% to 100% based on the firm’s underlying fundamentals and the stock’s valuation. A score of 80% or above typically indicates that the strategy has some interest in the stock and a score above 90% typically indicates strong interest.
Company Description: Unilever PLC is a fast-moving consumer goods (FMCG) company. The Company's segments include Personal Care, which primarily includes sales of skin care and hair care products, deodorants and oral care products; Foods, which primarily includes sales of soups, bouillons, sauces, snacks, mayonnaise, salad dressings and margarines; Home Care, which primarily includes sales of home care products, such as powders, liquids and capsules, soap bars and a range of cleaning products, and Refreshment, which primarily includes sales of ice cream and tea-based beverages. The Company's geographical segments include Asia/AMET/RUB, The Americas and Europe. Its brands include Axe, Dirt is Good (Omo), Dove, Hellmann's, Knorr, Lipton, Lux, Magnum, Rexona, Sunsilk and Surf. The Company operates in more than 100 countries, selling its products in more than 190 countries. The Company operates approximately 310 factories in over 70 countries.
The following table summarizes whether the stock meets each of this strategy's tests. Not all criteria in the below table receive equal weighting or are independent, but the table provides a brief overview of the strong and weak points of the security in the context of the strategy's criteria.
MARKET CAP: PASS
CASH FLOW PER SHARE: PASS
SHARES OUTSTANDING: PASS
TRAILING 12 MONTH SALES: PASS
DIVIDEND: PASS
For a full detailed analysis using NASDAQ's Guru Analysis tool, click here
Since its inception, Validea's strategy based on James P. O'Shaughnessy has returned 310.72% vs. 225.00% for the S&P 500. For more details on this strategy, click here
About James P. O'Shaughnessy: Research guru and money manager James O'Shaughnessy forced many professional and amateur investors alike to rethink their investment beliefs when he published his 1996 bestseller, What Works on Wall Street. O'Shaughnessy back-tested 44 years ofstock market datafrom the comprehensive Standard & Poor's Compustat database to find out which quantitative strategies have worked over the years and which haven't. To the surprise of many, he concluded that price/earnings ratios aren't the best indicator of a stock's value, and that small-company stocks, contrary to popular wisdom, don't as a group have an edge on large-company stocks. Today O'Shaughnessy is the Chief Investment Officer of O'Shaughnessy Asset Management.
About Validea: Validea is aninvestment researchservice that follows the published strategies of investment legends. Validea offers both stock analysis and model portfolios based on gurus who have outperformed the market over the long-term, including Warren Buffett, Benjamin Graham, Peter Lynch and Martin Zweig. For more information about Validea, 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.
| 0.008379
| -0.002624
|
2020-01-01
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3 Ways to Prepare Your Stock Portfolio for a Recession
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AMT
|
Since the Great Recession enveloped the global economy back in 2008-09 related to a crisis with sub-prime mortgages, there has not been any real indication of a similar crippling economic downturn returning for over a decade now. But that doesn't mean a recession couldn't return.
And while no one should expect to invest with the looming fear of an impending recession, it's always good to position your portfolio to be ready for one. The key is not to over-prepare, but instead to ensure the portfolio is continually reviewed and positioned in case of unforeseen circumstances. Investors can view these practices as a form of insurance for their portfolios.
Here are three effective ways to prepare your investment portfolio for a recession.
Image Source: Getty Images
1. Buy growing companies with a strong competitive moat
Investors need to remember that investing is a marathon and not a sprint. Great companies need years or even decades to build their business, and the investor who remains vested with such companies will benefit from the "magic" of compounding interest. Companies with a track record of growth and strong competitive moats offer peace of mind to the investor, as recessions and downturns have only a limited effect on their long-term growth.
By buying companies that are the leaders in their fields, such as Starbucks (NASDAQ: SBUX), Apple (NASDAQ: AAPL), and Nike (NYSE: NKE), investors can enjoy a double benefit. Being the leaders in their respective industries, these companies have plans in place to continue to grow and innovate. They also have the resources and balance sheet strength to cope with any protracted downturn.
Apple, for example, has total cash and marketable securities of close to $245 billion, giving the company ample firepower to weather any downturn and also funds available to swoop in to purchase a distressed company it thinks could help it. Apple also has recurring revenue through its various services that is somewhat recession-resistant. Starbucks has a whopping 31,256 stores located around the world and it provides a product (caffeine) and services that many would continue to seek out, even in recessionary times. Nike has nearly $3.6 billion in cash on hand and continues to command a leading market share in the sports footwear and apparel industry. Its recent direct-to-consumer initiatives should help it weather any potential downturns in purchases that might occur at retail partners during a recession.
2. Ensure you have ample cash on hand
The second way to stay prepared as an investor is to always have available cash for deployment into the stock market. As investors will not know when a crash or recession will be coming, it's always useful to keep some cash set aside, rather than putting it all into the stock market. Should stock prices for companies you want to invest in suddenly become much more affordable (for whatever reason), investors will want to ensure they are able to take advantage. This can help average down the cost of their existing positions in a stock or initiate new positions at bargain prices for a stock on a wish list.
There is no universal agreement on the amount of cash to set aside for such potential portfolio injections, but a general rule of thumb is to have around 10% to 20% cash (as a proportion of your total portfolio value) on standby. Investors should also take note: do not eagerly pump all your cash in at the first signs of a potential recession. The average length of a U.S. recession historically has been around 22 months. Take your time to slowly allocate capital as share prices decline, all the while ensuring that the cash does not run out and that you don't need some of that cash for other non-investing reasons.
3. Rely on cash flow from dividends
Some portion of your portfolio should be invested in dividend-yielding stocks. Receiving regular dividends will help ensure you have a constant stream of passive income that adds to your cash stash. Dividend stocks provide a steady stream of (mostly) reliable cash flow for investors on a regular basis.
Though companies may reduce their dividend payments during tough times, very few companies will completely eliminate their dividends unless the business is facing major headwinds. This goes back to the first point about purchasing companies with a growing footprint and a strong moat. These are attributes that enable a company to withstand a downturn and maintain a dividend payout.
Investors may also consider real estate investment trusts (REIT) such as American Tower (NYSE: AMT) or Digital Realty Trust (NYSE: DLR), as these businesses own large portfolios of real estate that generate steady, dependable rental income that the companies are required by law to (mostly) pass through to their investors. Because American Tower locks in property leases for long periods, this provides cash flow stability in good times and bad and that helps the company weather downturns and continue to pay out a dividend. These entities offer an even stronger assurance that dividends will continue to be paid because they work with clients they feel have the financial strength to continue paying for the duration of the lease even in a downturn.
Another category of steady dividend payers is the business development company (BDC). BDCs focus on lending to middle-market companies in defensive industries (i.e., industries that are far less likely to be adversely affected by a recession) and receive steady cash flow from interest charges to such businesses. The BDC then returns that income to investors through an often high-yielding dividend. An example of a BDC is New Mountain Finance Corp. (NYSE: NMFC).
The current dividend yield of New Mountain Finance Corp is close to 10%, and the dividend is paid quarterly. The company has been paying out this level of dividends since at least 2014, while sometimes also throwing in a special dividend of $0.12 per share to boot. Management is adept at selecting less-risky middle-market companies to lend money to, as default risk is the biggest blow to cash flows for BDC. The fact that is can continue to maintain dividends at such consistent levels for so many years speaks volumes about the company's risk management policies.
Do not fear a recession
Recessions are a normal feature of a properly functioning economy, and though they may sound fearful and terrible, investors who have positioned their portfolios well and in accordance with the three points above should not be unduly worried. In fact, recessions may throw up juicy, once-in-a-lifetime opportunities to own great companies at marked-down valuations.
Find out why Apple is one of the 10 best stocks to buy now
Motley Fool co-founders Tom and David Gardner have 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.*
Tom and David 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 December 1, 2019
Royston Yang has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends American Tower, Apple, Nike, and 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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2020-01-01
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How to Actually Save Money in 2020
|
GOOG
|
Being better with money is always one of the most common New Year's resolutions -- money makes the world go round, and having more on hand is always helpful.
In this video from our YouTube channel, we break down how you can save your way to an extra $1,000 in 2020 and what you should do with the extra cash you'll have on hand.
10 stocks we like better than Walmart
When investing geniuses David and Tom Gardner have 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.*
David and Tom 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
{% render_component 'sa-returns-as-of' type='rg'%}
Dylan Lewis: Heading into the new year, it's impossible to avoid talk of goals and resolutions.
So what are some easy money resolutions you can knock out in the new year and set yourself up to be even better off in the future?
I'm Dylan Lewis from The Motley Fool and in this FAQ we're going to go through some of the easiest ways you can be better with money make future you very happy.
There are a ton of different surveys asking people what they are focusing on with their new year's resolution.
Next to dieting and exercising, being better with money is almost always one of the most common responses people offer.
We're going to split that out into two different categories:
Saving more
Putting your money to work
Let's start with the first one, keeping more money in your pocket.
The foundation of good personal finance practices is to build a budget and understand the money that is coming in and where it is going when it is heading out.
Budget-building sounds daunting, but it's actually pretty simple. Take your paycheck and subtract the major non-negotiable expenses you pay regularly like your rent or mortgage, utilities, groceries, your car bill, and healthcare costs.
Anything leftover is potential savings, and a negative number means there's more going out than coming in.
Now how do you save more? The personal finance space is full of articles telling you about the virtues of making your coffee instead of buying it from Starbucks, and it's true, that is a totally valid way to save. But the coffee purchase is a daily thing, which means to save several hundred dollars, you need to change a behavior every. single. day.
We're going to look at a couple one-time fixes that will immediately save you big.
Seemingly every company in the world has been transitioning to a subscription model over the past couple years -- cable, phone, granola bar companies.
Companies are pushing this model because it takes a purchase you actively have to make, and makes it automatic. Now maybe those purchases are truly things you need, but there are probably some you can either cut down or cut out altogether.
For example, in 2019 I looked into the wireless plan I was on. I had an unlimited data plan with one of the big 4 carriers, for all that I was paying $55 per month. That's not too bad, but there are far cheaper options out there.
After doing some research, I found an MVNO, or mobile virtual network operator -- basically a company that rents space on cell towers built by the big 4 companies.
This company offered a 12 GB monthly plan for $25 per month, so I tried it out.
I didn't notice a big drop-off in service, so I switched, and going from $55 per month for my phone plan to $25 means I'm saving over $350 per year. Like that, that's crazy.
The same is probably true for your cable bill. Most cable companies are happy to offer a nice low deal to get you in the door and then after that first year is up, all of a sudden your monthly bill starts creeping up. If you're in a market where you have options, look into the offers that other providers have, and if you don't actually watch that much TV, going down to an internet only plan can probably save you $40 per month -- or $480 per year.
Those are the common recurring payments, but there are plenty of others. If you're a house with multiple streaming accounts, consider having one at a time, watching the shows you care about, then closing the account and opening up another.
If you're looking for more ways to trim, take a close look at your credit card statements. Go through and circle all the recurring expenses. You might've totally forgotten that you signed up for cloud storage for $10/month, or that you're being charged monthly for access to a publication you never actually read.
And lastly, one of my favorite ways to save -- before you make any online purchase, go to Google Shopping and see if the product is available for less elsewhere, and once you've landed on where you'll buy it, search for promo codes for that website. I've easily saved $5 or $10 on purchases by taking the 30 seconds to do this.
Okay so if you're the average person, that's about $1000 in savings over the course of the year right there. And if you couple that with routine changes like cooking more and eating out less, you could save even more.
So with your pockets a little fuller, what should you do?
There's a bit of a hierarchy to how to approach having some extra change, here's a quick checklist:
Do you have some savings set aside in case something happens? We like to call this an "emergency fund" and the idea is to have enough money around to be able to cover a major expense if it pops up.
Ideally you build it up to 3-6 months of non-negotiable expenses, but $1000 is a great place to start.
With some money set aside, if you have a retirement account through work, focus on that. It's pretty common for employers to match contributions up to a specific amount. Make sure you're contributing at least enough to max out their match -- it's basically free money as long as you stay at the company long enough for it to vest.
Then, do you have high interest debt? We're talking credit card debt, or anything over 8-10%. If you do, use the extra money to pay that down as soon as possible.
After that, consider expanding that rainy day fund you've got from the $1,000 to 3 to 6 months of living expenses -- this is money you'll keep in your checking or savings account.
Next if you have other lower interest debt, you can consider paying it down or focusing on investing more of your money. If you go the investing route, you can either contribute more to your employer-sponsored retirement account, or open a Roth or standard IRA with a firm like Vanguard and buy index funds.
There's more you can do of course, but if you can make it to this step you're in pretty great shape and can start thinking about longer term goals, like whether buying a house might be in your future, or if you want to save up to send kids to college.
The path to being better with money will depend on your financial position. For some it will be saving up that $1,000, others will be focusing on destroying their high interest debt, and some folks will be ready to start investing. The big thing is to understand where you are and take action
This was kind of a dense video, so we actually have all of this and more in written form in our free starter kit -- it walks you through all things money and how you can save, invest, and be better off. Head over to Fool.com/Start and you can get the free kit there.
That'll do it for this FAQ video, if being better with money is one of your goals, go on and like the video with the thumbs up button, and if you have cool ways to save, drop them down in the comments section below!
And of course, subscribe to the channel to get more content like this from us, we're publishing new videos on how to be better with money each week.
Until our next video, thanks for tuning in and Fool on!
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Dylan Lewis owns shares of Alphabet (A shares). The Motley Fool owns shares of and recommends Alphabet (A shares) and Alphabet (C shares). 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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2020-01-01
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Perfect Dividends for the Roaring (or Recessionary?) 2020s
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MPW
|
By Brett Owens
Are we kicking off another episode of the aEURoeRoaring 20saEUR today?
Who knows. Nobody really predicted the 2010s would be an end-to-end bull market. Yet the most hated rally of all-time resulted in stocks nearly quadrupling:
The Epic Rally Few Investors Believed In
A million bucks that sat in a boring S&P 500 fund a decade ago would have grown to $3.5 million. Unfortunately, many experienced investors did not participate in this full rally, still being shell-shocked after 2008.
(Which illustrates why it is important to always be fully invested. Investors who slept through the aEURtm08 carnage quickly made their money back in the years to follow. And smart dividend investors slept particularly well, and made their money back even faster. WeaEURtmll talk income stocks for the 2020s in a minute.)
Fast-forward to today, and common sense might now indicate that we are aEURoedueaEUR for a pullback, a recession, or at least a breather. Then again, the stock market is hitting all-time highs, and true bear markets do not typically follow on the heels of records this closely.
So, what are we careful contrarians to do? If we flip to cash now, we are likely to miss many months (and perhaps years) worth of income and compounding opportunities. These are not easily made up soonaEUR"if ever. And besides, weaEURtmve talked about broader market timing before. The problem most permabears have is that, even if they know when to flip to cash, practically no one successfully gets back into the market (and that includes aEURoeprofessionals!aEUR).
LetaEURtms revisit January 2010 again. The market has been in furious rally mode for 10 straight months, and nobody really thought it was the start of a new bull market. aEURoeHead fake,aEUR aEURoedead cat bounce,aEUR or aEURoesuckeraEURtms bet?aEUR Sure! But new bull run? Nah, anyone suggesting aEURoehigher stock pricesaEUR was laughed off. The scoffersaEURtm million bucks then is barely over $1 million now after a decade of aEURoewaiting for the next shoe to drop.aEUR
But I get the worries. We hear the phrase aEURoelate cycleaEUR over and over when it comes to our economy, and itaEURtms tough to get it out of our heads. So IaEURtmm going to propose a compromise.
LetaEURtms buy safe aEURoedecade-long worthyaEUR dividend stocks that rally whether the market goes up or down.
HereaEURtms a little back-of-the-envelope backtest. LetaEURtms rewind January 1, 2010 two more years from the start of 2008. If weaEURtmd bought an S&P 500 index fund heading into this bear route, weaEURtmd still be OK today. All stock market wounds heal, given enough time. But we donaEURtmt have aEURoeenough time.aEUR Our goal here is not to be merely aEURoeOKaEURaEUR"it is to grow wealthy and retire on dividends.
So, letaEURtms rewind and instead look at what would have happened if we had bought three of our favorite dividend-paying stocks. WeaEURtmve owned all three in our Contrarian Income Report portfolio at various times, enjoying yields up to 10% with total returns up to 105% along the way.
Now CIR was a mere apple of my eye in aEURtm08 (weaEURtmd launch your favorite income stock service seven years later), so letaEURtms add perennial favorites Omega Healthcare Investors (OHI), Medical Properties Trust (MPW) and W.P. Carey (WPC) to the aEURoemost poorly timed income portfolio everaEUR on January 1, 2008:
Total Returns Up to 6X, Including Fat Dividends
Rather than make this another lame (but essential!) lesson about long-term investing, I use this illustration to show the importance of picking the right stocks. OHI, MPW and WPC all shared three key qualities that made them slam dunk holdings over the last twelve years.
First, they paid big dividends throughout the last dozen years, including the aEURoecry for your mamaaEUR crash. On average, these stocks yielded no less than 5% and they paid 10% or more during brief bouts of aEURoebleak outlooks.aEUR But these pessimistic periods turned out to be screaming buying opportunitiesaEUR"even better than buying and holding since aEURtm08!
Second, they raised their dividends consistently. Over the last five years, OHI, MPW and WPC boosted their payouts by 26%, 18% and 9% respectively. Nothing spectacular, sure, but hikes donaEURtmt have to be when the yields are already so high. Show me a high-paying stock with a climbing dividend and IaEURtmll show you shares that only have one way to goaEUR"up!
Third, all three firms had (and still have) well-positioned business models. OHI owns skilled-nursing facilities, which have higher demand from the greying of America. MPW provides financing to hospitals, a recession-proof business if there ever was one. And WPC is a landlord to industrial complexes, including warehouses, which have boomed with the online shopping (and shipping) world.
I realize that Amazon.com (AMZN) is a great disruptor of business models, and many aEURoebrand nameaEUR firms of yesteryear are suffering today. But there are still plenty of profitable niches being fulfilled by publicly-traded dividend payers, and these are the stocks we want to own for the next decade.
IaEURtmll get to my favorite 10-year ideas in a moment. First, what donaEURtmt we want to buy and hold through the 2020s? Probably, plain old bonds (not the lesser-known and better way we like to own bonds). While there will continue to be money making opportunities in fixed income (there always are), itaEURtms unlikely that 10-year Treasury yields are another 2% lower ten years from now. In fact, thataEURtmd put them at zero!
aEURoeLong BondaEUR Rates Cut in Half Last Decade
A Is it possible that bonds are the surprise this decade that stocks were last decade? That rates do go to zero and there is still money to be made off of bonds? Sure, anything is possible. But itaEURtms important to consider that the upside you may see from an increase in bond prices is capped, because a further decrease in rates is running out of room.
To be a perfect income play for the 2020s, I like to see:
Dividends powered by timeless business models,
With the potential to raise payouts steadily, which will
aEURoeUncapaEUR the upside in the attached stock price.
Bull or bear, we donaEURtmt really care because our big dividend payers will support our stock prices either way.
This is what IaEURtmm talking about when I say aEURoeperfect income buys.aEUR And as we kick off the new year and decade, there are three specific investments we should be considering right now for:
Maximum current income,
Stable prices, and even
Upside potential above and beyond what the broader income market is likely to return.
Can I share more? Please click here and let me explain my 2020 Perfect Income Portfolio in detail.
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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2020-01-01
|
3 Best U.S. Marijuana Stocks of 2019: Are They Buys Now?
|
SMG
|
Don't think for a second that just because many marijuana stocks performed miserably in 2019 that there weren't any big winners. One key to finding those winners is to focus on U.S.-based stocks rather than on the stocks of Canadian cannabis producers.
The three best U.S. marijuana stocks of 2019 delivered gains of 45% or more. Here's which stocks ranked at the top -- and whether they're smart picks to buy now.
Image source: Getty Images.
1. Scotts Miracle-Gro
Scotts Miracle-Gro (NYSE: SMG) went from falling nearly 43% in 2018 to becoming the best-performing U.S. marijuana stock of 2019 with an impressive gain of over 70%. The company achieved this remarkable turnaround the old-fashioned way by posting strong revenue and earnings growth.
Credit the booming U.S. cannabis industry for much of Scotts' tremendous performance this year. The company's Hawthorne Gardening subsidiary drove much of Scotts' revenue growth, with California's legal recreational marijuana market improving significantly and emerging cannabis markets in Florida, Ohio, Michigan, and Massachusetts picking up momentum.
However, Scotts Miracle-Gro's core U.S. consumer lawn and garden products business was also solid in 2019. In his comments about the company's overwhelmingly positive fiscal second-quarter results in May, CEO Scott Hagedorn said that "consumers came flying out of the gate compared with last year to get a head start on the lawn and garden season." They kept coming through that gate throughout the year, generating what Hagedorn referred to in November as "the strongest growth we've seen this decade."
2. Innovative Industrial Properties
Innovative Industrial Properties (NYSE: IIPR) was a big winner in 2018 with a gain of 40% and delivered an even better performance in 2019, with its shares soaring close to 70%. The cannabis-focused real estate investment trust (REIT) achieved this huge gain by sticking with its strategy of reinvesting capital into additional medical cannabis properties to lease to customers.
The company started out 2019 with only 11 properties in nine states. By the end of the year, that number was up to 46 properties in 14 states. All of the properties are leased for a weighted average of more than 15 years.
Investors were no doubt attracted to IIP's tremendous growth, with trailing 12-month revenue and earnings more than doubling in 2019. They were also almost certainly drawn to the stock's dividend, which currently yields nearly 5.5%.
3. Trulieve Cannabis
While Scotts Miracle-Gro and Innovative Industrial Properties are ancillary providers to the cannabis industry, one pure-play stock also ranked among the top three U.S. marijuana stocks of 2019 -- Trulieve Cannabis (OTC: TCNNF). Trulieve's shares jumped more than 45% higher, fueled by rapid growth in Florida's medical cannabis market.
Trulieve operated 23 medical cannabis dispensaries in Florida at the beginning of 2019. The company announced the opening of its 42nd dispensary in the state in December, only a few days after becoming the first medical cannabis license holder to top 40 retail locations. This retail expansion drove Trulieve's revenue and earnings significantly higher throughout last year.
There's no question that Trulieve reigns as the leader in Florida. The company claims a market share of close to 50% of medical cannabis flower sales. Trulieve is also expanding beyond Florida, with additional operations in California, Connecticut, and Massachusetts.
Are they buys now?
I think that the short answer to this question is "yes." All three of these top-performing U.S. marijuana stocks of 2019 can still deliver market-beating returns in the future, in my opinion.
Scotts Miracle-Gro should continue to reap the rewards from its string of acquisitions that have made Hawthorne the top gardening products supplier to the U.S. cannabis industry as the cannabis markets in multiple states mature. I also look for the company's consumer lawn and garden products business to continue growing in 2020 with the launches of new products on the way.
Expect Trulieve's growth trajectory to slow with fewer new stores opening in Florida. However, the stock could nonetheless perform well in 2020 as the overall market in Florida grows and as Trulieve builds its operations in other states.
My favorite of these three U.S. stocks, though, is Innovative Industrial Properties. I think that IIP will be able to repeat its successes achieved in 2019 by investing in more medical cannabis properties. And with its fantastic dividend, my view is that IIP ranks as one of the top marijuana stocks to buy for 2020.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 11 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
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Learn more
Keith Speights has no position in any of the stocks mentioned. The Motley Fool recommends Innovative Industrial Properties. 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.
| 0.008379
| -0.005086
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2020-01-01
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Is AbbVie's Stock a Buy?
|
ABBV
|
It's been a tough year for AbbVie (NYSE: ABBV) as the stock is closing 2019 not far from where it finished the year before. Question marks about the future of its business have made investors wary of investing in the company. However, given its poor performance in a year that's seen the Health Care Select SPDR Fund rise by 21% and the S&P 500 index produce returns of around 29%, AbbVie could be an underrated buy for 2020, especially given some exciting opportunities ahead.
Diversification could be key to long-term growth
One of AbbVie's strengths over the years has been its ability to continue to drive revenue growth. From $22.9 billion in sales in 2015 to $32.8 billion in 2018, the company's top line has risen by more than 43% in a span of just three years.
Acquisitions have played a key part of AbbVie's growth. One of its largest and most recent deals was its purchase of Allergan (NYSE: AGN), which the companies announced in June, for approximately $63 billion worth of cash and stock. Although investors didn't initially respond favorably to the deal, over the long term, AbbVie could enjoy significant benefits, the biggest of which is diversification. Although no specific date has been given, the two companies expect the deal to close "early 2020" which is when AbbVie's financials will begin including Allergan's results.
AbbVie is largely dependent on Humira, perhaps so much that it makes the stock slightly risky. According to the company's most recent earnings report, released in November, Humira accounted for 58% of AbbVie's top line over the past nine months. And while that's an improvement from 61% the year prior, it's clear that the company needs to become more diversified, especially with sales from Humira dropping by 5% so far this year.
Image Source: Getty Images.
To make matters worse, the company's Rinvoq drug, which was highly touted by AbbVie executives, received a disappointing review from the Institute for Clinical and Economic Review, which said the drug had only "marginal clinical benefit" compared to Humira. The good news is that AbbVie doesn't have all its eggs in one basket, as it still has Skyrizi, which could be a substitute for Humira, and it's an attractive alternative, as it needs to be injected fewer times. Nonetheless, these are important reminders as to why diversification and the deal with Allergan are vital to ensuring that AbbVie continues to grow and expand its sales mix.
Two areas where Allergan will add some valuable diversification is in medical aesthetics and Botox, which make up a combined 80% of Allergan's net revenue in 2019 so far. Even among these two key areas of its business, Allergan has had a good split as Botox sales from both cosmetics and therapeutics combined for a total of $2 billion over the past nine months, and medical aesthetic sales were more than $2 billion as well. With a good mix of revenue, AbbVie's numbers will not only get stronger as a result of the acquisition, but its product sales will also be much more diverse.
Allergan acquisition may not be the ideal solution
Although the deal for Allergan may provide opportunities for AbbVie, it's also likely to present some challenges. Over the past nine months, Allergan's sales have struggled, generating almost no growth.To make matters worse, Allergan has struggled with profitability, as the company is coming off a Q3 performance in November in which it incurred an operating loss of $596.6 million. Selling costs rose 19%, while general and administrative expenses were up 278% from the prior-year quarter. Despite the added overhead, Allergan's top line grew by just 3.6%.
The danger for AbbVie is that while the acquisition will add more revenue, it could also saddle the company with greater expenses that eat into its bottom line, which has been strong, with AbbVie posting a profit of more than $5.1 billion in each of the past four years.
Is the stock too expensive to own today?
AbbVie is currently trading at more than 40 times its earnings, but its forward price-to-earnings multiple, which factors in the company's future growth, and is expected by analysts to fall to just nine. The company's results this year have been weighed down by other expense items, including goodwill impairment. But with a PEG ratio of 2.7, there may not be enough long-term growth to convince investors that there's enough substance to justify an investment in the company today.
There's a great deal of uncertainty surrounding AbbVie's future, both with the drugs it has in development and its deal with Allergan, and that makes the healthcare stock too risky of a buy today, especially at its current valuation. Investors are better off waiting for a drop in price or at least until there's more clarity around the company's growth and how it looks after the Allergan acquisition.
10 stocks we like better than AbbVie
When investing geniuses David and Tom Gardner have 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.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and AbbVie 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 December 1, 2019
David Jagielski has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.
| 0.008379
| 0.011407
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2020-01-01
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Why Retirees Should Scoop Up This Dividend Stock Before the Next Recession
|
HES
|
All bull markets come to an end, and this past decade has been a remarkable one for investors who've escaped largely unscathed from any corrections. While no one knows when the next recession will hit, there's good reason to believe we're closer to the next one than the last one.
Now would be a good time, then, to clad your portfolio in armor to protect it from the inevitable downturn. One of the best ways is through investing in quality, dividend-paying stocks, a key attribute for investors living off their stocks in retirement.
Here's why global energy giant ExxonMobil (NYSE: XOM) may be one of the best stocks for income-loving investors girding themselves for the fall.
Image source: Getty Images.
On top of a production boom
We don't hear much about oil's impact on the stock market these days. It wasn't that long ago that every tick higher in the price of a barrel caused ripples across most markets. That hasn't really happened much in recent years, and that's thanks to the U.S. becoming the world's largest energy producer over the past decade.
According to the Federal Reserve, the impact from higher oil prices on the U.S. economy "is likely a small fraction of what it was a decade ago and should get smaller still if U.S. oil production continues to grow as projected."
Primarily because of fracking, the U.S. has accounted for virtually all of the increase in oil production and for half of all natural gas, which saw the largest increase for any country in history. Sitting atop that boom is Exxon, which itself is the world's largest energy company, and it may be ready to bring even more to market.
Along with Hess and China's CNOOC, Exxon owns the largest portion of a new oil field off the coast of Guyana that just began producing its first oil and is expected to hit full production of 120,000 barrels per day within a few months. Recoverable resources for the area are estimated to exceed 6 billion barrels of oil equivalent.
A new discovery in the area was also just reported by Exxon, and as many as 750,000 barrels per day could be produced by 2025. It will begin production within five years of having made the discovery, some four years ahead of the industry average, and generate a 10% return even if oil falls to $40 per barrel. It has similar returns on its Carcara project off the coast of Brazil, too, that should begin producing its first barrels in 2023 to 2024.
Oil is north of $60 per barrel now, but having spent the past few years preparing its business to run on lower oil prices, Exxon is among just a handful of producers that can still profit if a new bear market swamps the industry.
Not just production, but refining, too
While Exxon's production capabilities are prodigious, it has also structured itself beyond its upstream capabilities to have leading downstream refining projects. Earlier this year, it announced it was investing $9 billion in six major projects, including hydrofiners, hydrocrackers, and cokers, giving it the ability to break down heavier crudes containing longer hydrocarbon chains into higher-value products like diesel and gasoline.
Exxon also plans to invest $2 billion in the Permian Basin to support its logistics projects in coastal refining, terminal capacity, and marine export. The combination of investments upstream, downstream, and in chemicals allowed it to outline a path forward that it says will let it double its earnings by 2025 to $31 billion.
A consistent track record in all kinds of markets
Exxon is one of the more innovative leaders in the energy industry, yet it has been served well by a conservative management team that has paid dividends to investors for over 100 years and has consistently raised the payout each year for the last 37 years.
Even during the Great Recession, which sent shock waves through the oil industry, Exxon was financially stable enough to continue paying out its dividend.
The yield is almost 5%
Despite the superlatives, ExxonMobil stock has underperformed the market over the past year as investors avoided the sector, rising just 1% compared with the S&P 500's 30% gain. That low price represents an opportunity for retirees.
The yield on Exxon's dividend is now 5% as a result of the depressed share price, but without adding too much risk, even though it has substantial negative free cash flow at the moment. Because it is investing large amounts in its capital expenditures, it has relied upon debt to pay for it, but has committed to doubling its cash flows as well over the next few years.
A focus on the future
Finding secure, dividend paying stocks now means an investor can concentrate on locating the best payouts without concern about the market's volatility over what may be a tumultuous time. Your income will continue regardless of how the market performs.
There are a number of stocks that could fit the bill for retirees, but ExxonMobil may be one of the best suited for the task.
10 stocks we like better than ExxonMobil
When investing geniuses David and Tom Gardner have 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.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and ExxonMobil 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 December 1, 2019
Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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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| 0.013621
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2020-01-01
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Warren Buffett Bought These 9 Stocks in 2019
|
OXY
|
There's probably not an investor on the planet who's more closely followed by Wall Street than Berkshire Hathaway (NYSE: BRK-A)(NYSE: BRK-B) CEO Warren Buffett. That's because his long-term track record is unmatched.
Beginning with roughly $10,000 in seed capital in the mid-1950s, Buffett has bolstered his net worth to around $89 billion, which doesn't include the tens of billions of dollars he's donated to charity over the years. Berkshire Hathaway, which has acquired around five dozen companies and is currently invested in 48 securities, has also created more than $400 billion in shareholder value for investors over the years.
Suffice it to say that when Buffett buys a stock, Wall Street pays attention. According to Berkshire Hathaway's 13-F filings, Buffett bought the following nine stocks in 2019.
Berkshire Hathaway CEO Warren Buffett at his company's annual shareholder meeting. Image source: The Motley Fool.
1. Amazon
Easily the biggest eye-opener was Berkshire's purchase of Amazon (NASDAQ: AMZN) stock during the first and second quarters last year. Buffett has regretted overlooking Amazon's dominant business model, which may have been responsible for around 38% of all e-commerce sales in the U.S., per eMarketer.
Interestingly, though, Amazon's e-commerce and Prime membership may not be the leading driver for this company moving forward. Cloud-service provider Amazon Web Services (AWS) is growing at a much faster pace than e-commerce and is responsible for substantially higher margins than traditional retail sales. In other words, Amazon's future looks to be tied to AWS and not its online retail empire.
2. JPMorgan Chase
Considering that financials comprise close to half of Buffett's portfolio holdings in terms of invested assets, it really shouldn't be a surprise that the Oracle of Omaha chose to add to Berkshire's position in JPMorgan Chase (NYSE: JPM) during the first quarter. JPMorgan Chase has consistently been among the best money-center banks with regard to return on assets and return on equity, and Buffett tends to be a big fan of cyclical companies that are absolute cash machines. Buffett has even gone so far as to note that he keeps up on the happenings within the banking industry by reading JPMorgan CEO Jamie Dimon's annual letter to shareholders.
3. PNC Financial Services
Have I mentioned that Warren Buffett likes financials? Berkshire also added to its existing position in PNC Financial Services (NYSE: PNC) during the first quarter.
PNC Financial, which is a relatively recent addition to Berkshire's portfolio, generated $1.4 billion in net income on $4.5 billion in total revenue in the third quarter, all while returning $1.5 billion to shareholders through regular buybacks and a healthy dividend. Everything seemed to work as planned -- average deposits and average loans rose 2% and 1%, respectively, while nonperforming assets decreased slightly -- and now, Buffett can simply sit back and watch his investment dollars go to work.
Image source: Getty Images.
4. Delta Air Lines
Buffett piled into the airline industry during the second-half of 2016 and got even more aggressive with Delta Air Lines (NYSE: DAL) during the first quarter. Berkshire Hathaway added more than 5 million shares to its existing position.
Delta is lugging around far less net debt than key competitor American Airlines Group and has clearly benefited from West Texas Intermediate crude prices remaining in the $50s. A big stickler for value, Buffett is obviously still attracted to Delta's minuscule forward price-to-earnings ratio of just 8.
5. Red Hat
In both the first and second quarters, Berkshire Hathaway purchased stock in Red Hat, which was officially acquired by tech bellwether IBM (NYSE: IBM) on July 9 for $34 billion in an all-cash deal. IBM was late to the cloud-computing party and has seen sales from its legacy operations decline in nearly every quarter over the past six years. IBM's acquisition of Red Hat is designed to help narrow that gap. But having been burned by IBM before, Buffett was more than happy to take the cash and walk away.
6. Bank of America
File this under the "we're not surprised" tab, but Buffett purchased Bank of America (NYSE: BAC) stock on more than one occasion in 2019, adding to Berkshire's existing holdings. Bank of America is Berkshire's second-largest holding by market value and, like JPMorgan Chase, has been firing on all cylinders of late.
BofA has delivered substantive cost cuts by closing physical branches and focusing on digital banking. The company has also raised its quarterly payout back to $0.18 per quarter from the $0.01 per share it was paying out as recently as 2014. Bank of America has plans to return up to $37 billion to investors through dividends and buybacks over the course of the next year (as of late June 2019).
Image source: Getty Images.
7. US Bancorp
I know... shocker! Buffett bought more bank stocks. US Bancorp (NYSE: USB) has been a particularly sweet long-term holding for the Oracle of Omaha, given that it largely avoided the risky derivatives and toxic investments that sacked major money-center banks during the Great Recession. This is why US Bancorp's return on assets has consistently outpaced the industry over the past decade. This is a bank that's not doing anything fancy but still manages to grow average total loans and deposits by a low-to-mid single-digit percentage year after year.
8. RH
Another head-turner was the initiation of a position in RH (NYSE: RH), formerly Restoration Hardware, during the third quarter. What's unique about this purchase is that Buffett traditionally buys stakes in large, brand-name businesses with huge reach -- and RH doesn't fit the mold. This is a company selling higher-priced and oversized furniture and is primarily doing so by spurning online sales in favor of large paper catalogs.
Investors certainly can't argue with the results, as RH saw adjusted net sales grow 6% in the third quarter, with year-to-date free cash flow rocketing to $234 million from just $19 million last year. Still, with the U.S. economy likely in the later innings of its economic expansion, this purchase is a bit baffling.
9. Occidental Petroleum
Last but not least, Buffett opened a new position in Occidental Petroleum (NYSE: OXY) during the third quarter. Although Buffett doesn't devote a lot of his investments to the oil and gas sector, this move shouldn't be all that surprising. After all, Buffett committed to invest $10 billion in Occidental in late April to help with its acquisition of Anadarko. This investment was a bet on higher long-term oil prices, according to the Oracle of Omaha in an interview with CNBC's Becky Quick.
Now the question is: What will Buffett be buying in 2020?
10 stocks we like better than Bank of America
When investing geniuses David and Tom Gardner have 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.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Bank of America 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 December 1, 2019
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Sean Williams owns shares of Bank of America. The Motley Fool owns shares of and recommends Amazon, Berkshire Hathaway (B shares), and Delta Air Lines. The Motley Fool is short shares of IBM. The Motley Fool recommends RH and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short January 2020 $220 calls on Berkshire Hathaway (B shares). 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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| 0.033244
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2020-01-01
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Validea Motley Fool Strategy Daily Upgrade Report - 1/1/2020
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TSBK
|
The following are today's upgrades for Validea's Small-Cap Growth Investor model based on the published strategy of Motley Fool. This strategy looks for small cap growth stocks with solid fundamentals and strong price performance.
TIMBERLAND BANCORP, INC. (TSBK) is a small-cap value stock in the Regional Banks industry. The rating according to our strategy based on Motley Fool changed from 59% to 85% based on the firm’s underlying fundamentals and the stock’s valuation. A score of 80% or above typically indicates that the strategy has some interest in the stock and a score above 90% typically indicates strong interest.
Company Description: Timberland Bancorp, Inc. is the holding company for Timberland Savings Bank, SSB (the Bank). The Bank is a community-oriented bank, which offers a range of savings products to its retail customers while concentrating its lending activities on real estate mortgage loans and commercial business loans. The Bank offers personal banking solutions, business solutions, lending solutions and additional services. The Bank's principal lending activity consists of the origination of loans secured by first mortgages on owner-occupied, one- to four-family residences, or by commercial real estate and loans for the construction of one- to four-family residences. The Bank offers consumer loans and commercial business loans. The Bank originates both fixed-rate loans and adjustable-rate loans. The Bank also offers adjustable-rate mortgage loans. It originates three types of residential construction loans: custom construction loans, owner/builder construction loans and speculative construction loans.
The following table summarizes whether the stock meets each of this strategy's tests. Not all criteria in the below table receive equal weighting or are independent, but the table provides a brief overview of the strong and weak points of the security in the context of the strategy's criteria.
PROFIT MARGIN: PASS
RELATIVE STRENGTH: FAIL
COMPARE SALES AND EPS GROWTH TO THE SAME PERIOD LAST YEAR: PASS
INSIDER HOLDINGS: PASS
CASH FLOW FROM OPERATIONS: PASS
PROFIT MARGIN CONSISTENCY: PASS
R&D AS A PERCENTAGE OF SALES: NEUTRAL
CASH AND CASH EQUIVALENTS: PASS
"THE FOOL RATIO" (P/E TO GROWTH): PASS
AVERAGE SHARES OUTSTANDING: PASS
SALES: PASS
DAILY DOLLAR VOLUME: FAIL
PRICE: PASS
INCOME TAX PERCENTAGE: FAIL
For a full detailed analysis using NASDAQ's Guru Analysis tool, click here
Since its inception, Validea's strategy based on Motley Fool has returned 570.24% vs. 225.00% for the S&P 500. For more details on this strategy, click here
About Motley Fool: Brothers David and Tom Gardner often wear funny hats in public appearances, but they're hardly fools -- at least not the kind whose advice you should readily dismiss. The Gardners are the founders of the popular Motley Fool web site, which offers frank and often irreverent commentary on investing, the stock market, and personal finance. The Gardners' "Fool" really is a multi-media endeavor, offering not only its web content but also several books written by the brothers, a weekly syndicated newspaper column, and subscription newsletter services.
About Validea: Validea is aninvestment researchservice that follows the published strategies of investment legends. Validea offers both stock analysis and model portfolios based on gurus who have outperformed the market over the long-term, including Warren Buffett, Benjamin Graham, Peter Lynch and Martin Zweig. For more information about Validea, 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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2020-01-01
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These 3 Consumer Goods Stocks Gained More Than 1,000% in the 2010s
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DPZ
|
Past performance tells you nothing about the future gains or losses of any stock, but investors who bought into these three stocks 10 years ago have been smiling all the way to the bank.
The three consumer goods stocks below all returned more than 1,000% this decade. That's a tenfold boost, turning an original investment of $10,000 into $110,000 or more. How far ahead of the general market does that benchmark stand? You be the judge: The Dow Jones Industrial Average gained 170% over the same period while the S&P 500 index stopped at an increase of 186%.
COMPANY
MARKET CAP
10-YEAR SHARE PRICE GROWTH
Netflix (NASDAQ: NFLX)
$141 billion
3,940%
Domino's Pizza (NYSE: DPZ)
$12 billion
3,310%
MercadoLibre (NASDAQ: MELI)
$29 billion
1,010%
Data collected from YCharts.com on Dec. 31, 2019.
Have these three winners reached their respective peaks, or are they still good investments after the huge price increases listed above?
The streaming video market will grow much larger
Video-streaming veteran Netflix arguably created the industry in which it works. Ten years ago, the company was known as a DVD-by-mail rental service that just happened to offer a small selection of streaming titles as a free bonus. Now, Netflix runs a global streaming service with 158 million subscribers, powered by a multibillion-dollar annual investment in a wide variety of original content. The DVD service still has 2.3 million customers, but streaming sales accounted for 98.6% of total revenue in the third quarter of 2019.
There's plenty of fuel left for Netflix's growth engines. In the third quarter, earnings jumped 65% on 31% stronger revenue, measured against the year-ago period. The company saw a 6.4% increase in its domestic subscriber count while the number of paid international customers rose by 33%. Netflix's free cash flows are negative at the moment, but management expects to see a smaller cash burn in 2020 followed by positive cash flows in a few years.
The streaming video market is still small next to cable TV and over-the-air broadcasting, globally speaking. Digital streaming accounted for less than one-quarter of the worldwide market for pay-TV services in 2018, according to industry analyst Digital TV Research. Netflix leads the charge of a few global and many local streaming platforms, growing that market slice in a hurry.
Come back in five years and you'll see Netflix as a thriving media giant, whose value can be measured against its positive cash flows rather than top-line growth trends. This growth story is far from over.
Image source: Getty Images.
Can this pizza-flavored turnaround go any further?
In 2009, Domino's was tied with Chuck E. Cheese in a Brand Keys survey of America's favorite pizza parlors. Tied for last place, that is -- a result so adverse that Domino's revamped its pizza recipe to kick off a long-term turnaround story.
The company embraced social media marketing in a big way, placing CEO Patrick Doyle in omnichannel media streams next to both happy customers and obvious mistakes. That effort started to set Domino's apart from other pizza chains as an authentic company with a clear focus on good customer experiences.
And the relaunch of Domino's with better pizza recipes and a more approachable corporate brand paid dividends in the 2010s. The company's sales rose 150% over the last 10 years, and free cash flows more than quadrupled. Compare and contrast these gains over the same period to archrival Papa John's International (NASDAQ: PZZA), which won the 2009 taste survey mentioned above. That company's sales increased by a mere 40%, and its cash flows have turned negative. Papa John's stock gained a respectable 425% this decade, but that's nothing next to Domino's 34-bagger.
The company is still reporting sustainable growth, and management keeps a tight focus on long-term profitability. This pizza stock looks likely to stay hot and fresh for years to come.
More than just a Latin American e-commerce play
MercadoLibre has long been seen as the eBay of Latin America, but that's hardly the full story. This company is not only dominating the e-commerce sector in key markets such as Mexico and Brazil, but it also offers a plethora of ancillary services that effectively make allies out of potential rivals.
Besides the online marketplace, MercadoLibre also runs its own shipping and delivery network, an online payments platform akin to PayPal, and a plug-and-play merchant platform where small and medium businesses can set up shop online.
Revenue has grown tenfold over the last decade. Profits and cash flows come and go, as MercadoLibre is likely to reinvest any spare cash into heavier marketing and infrastructure ideas. This company is keeping the pedal to the metal, optimized for top-line growth for the foreseeable future. Profits will come later when MercadoLibre can take full advantage of a dramatically larger addressable market. The stock price should follow suit, making it one of the most exciting growth investments available today.
Find out why Netflix is one of the 10 best stocks to buy now
Motley Fool co-founders Tom and David Gardner have 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.*
Tom and David just revealed their ten top stock picks for investors to buy right now. Netflix 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 December 1, 2019
Anders Bylund owns shares of Netflix. The Motley Fool owns shares of and recommends MercadoLibre, Netflix, and PayPal Holdings. The Motley Fool recommends eBay and recommends the following options: long January 2021 $18 calls on eBay, short January 2020 $39 calls on eBay, and short January 2020 $97 calls on PayPal Holdings. 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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2020-01-01
|
The Many Ways to Invest in Brookfield Asset Management
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BAM
|
Brookfield Asset Management (NYSE: BAM) is "a leading global alternative asset manager." Over its 120 years, the company has developed a portfolio of real estate, infrastructure, renewable power, private equity, and credit assets. And it has done so in a way that allows investors to choose the areas to which they are exposed. Here is a quick guide that explains the options available to potential, Brookfield investors.
Image Source: Getty Images
Brookfield Asset Management (BAM)
BAM is the main business at the top of the organizational chart. BAM is an asset manager for many private funds and serves as the general partner for its several partnerships. BAM receives management and other fees from the accounts, funds, and partnerships that it manages. Also, the company invests its own capital into its partnerships and other investments. Owners of BAM receive exposure to and returns from everything done under the Brookfield umbrella.
As mentioned above, BAM has a diverse portfolio. As a result, the company has created several partnerships that allow investors to gain specific exposure to different areas of its portfolio. These partnerships are Brookfield Property Partners (NASDAQ: BPY), Brookfield Infrastructure Partners (NYSE: BIP), Brookfield Renewable Partners (NYSE: BEP), and Brookfield Business Partners (NYSE: BBU).
Brookfield Property Partners (BPY)
BPY is all about real estate. It "owns, operates and develops one of the largest portfolios of office, retail, multifamily, industrial, hospitality, triple net lease, self-storage, student housing, and manufactured housing assets." Investors of BPY receive exposure across the globe. While the majority of its assets are in the United States, the company also has assets in Canada, Brazil, Europe, Asia, and Australia. BPY itself is not a REIT; however, it does have a subsidiary that is.
Brookfield Infrastructure Partners (BIP)
BIP owns and operates various infrastructure assets in different parts of the world. These include:
Natural gas pipelines and storage in Australia and the Americas
Electricity transmission lines in North and South America
Rail, toll roads, and ports in multiple continents
Telecommunications towers in Europe
Data centers in several continents
A couple of BIP's specific holdings include a 50% stake in Natural Gas Pipeline Company of America (NGPL) and a "29% interest in AT&T's large-scale, multi-tenant data center portfolio."
Brookfield Renewable Partners (BEP)
BEP "operates one of the world's largest publicly traded renewable power platforms." The company has the capacity to generate 18,000 MW of power across multiple continents. To generate this power, it utilizes hydroelectric, wind, solar, and energy storage assets. As part of its portfolio, BEP owns a 51% stake in TerraForm Power (NASDAQ: TERP).
Brookfield Business Partners (BBU)
BBU is the private equity partnership. It was created to serve as BAM's "primary vehicle to own and operate business services and industrial operations." It is "focused on owning and operating high-quality businesses that are either low-cost producers and/or benefit from high barriers to entry." BBU has assets across the globe in various industries such as construction, energy, and mining among others. Among its holdings are Westinghouse Electric Company, Teekay Offshore, GrafTech International (NYSE: EAF), and Healthscope Limited.
Oaktree Capital Management
In addition to these partnerships, BAM acquired a majority stake in Oaktree Capital Management in 2019. To invest in BAM's Oaktree business, one can invest in one of Oaktree's two preferred stocks, or there are Oaktree's own brand of investment opportunities: Oaktree Specialty Lending Corporation (NASDAQ: OCSL) and Oaktree Strategic Income Corporation (NASDAQ: OCSI).
Brookfield has given investors many different ways to invest in its business. If they want to customize their basket of exposures, then investors can choose among the partnerships. If they want a little bit of everything, then BAM is available. Regardless of the mix, Brookfield has made it easy for investors to get just what they want.
10 stocks we like better than Brookfield Asset Management
When investing geniuses David and Tom Gardner have 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.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Brookfield Asset Management 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 December 1, 2019
John Dollen has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Brookfield Asset Management. The Motley Fool recommends Brookfield Infrastructure Partners. 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.
| 0.008379
| 0.001211
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2020-01-02
|
Health Care Sector Update for 01/02/2020: JNJ, PFE, ABT, MRK, AMGN, IPHA, ONTX, AERI
|
ABT
|
Top Health Care Stocks:
JNJ: +0.25%
PFE: +0.56%
ABT: -0.86%
MRK: +0.45%
AMGN: Flat
Most of the biggest stocks in the health care sector were gaining during pre-market trading hours on Thursday.
Among health care stocks moving on news:
(+) Innate Pharma (IPHA), which rose more than 23%, after announcing that the European Medicines Agency has accepted its marketing authorization application for Lumoxiti for the treatment of adult patients with relapsed or refractory hairy cell leukemia.
(+) Onconova Therapeutics (ONTX), which was up more than 6%, after announcing plans for a $10 million private placement, selling nearly 27.7 million common shares to two healthcare-focused institutional investors at 36.15 cents apiece.
In other sector news:
(=) Aerie Pharmaceuticals (AERI), meanwhile, was flat during pre-bell Thursday. The company said the European Medicines Agency has accepted for review its marketing authorization application for its eye treatment Roclanda.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
| -0.00706
| -0.012191
|
2020-01-02
|
GDXJ, SBGL, PAAS, KGC: Large Inflows Detected at ETF
|
KGC
|
Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the Junior Gold Miners ETF (Symbol: GDXJ) where we have detected an approximate $61.3 million dollar inflow -- that's a 1.2% increase week over week in outstanding units (from 120,637,446 to 122,087,446). Among the largest underlying components of GDXJ, in trading today Sibanye-Stillwater (Symbol: SBGL) is up about 1.9%, Pan American Silver Corp (Symbol: PAAS) is down about 0.2%, and Kinross Gold Corp. (Symbol: KGC) is higher by about 2.3%. For a complete list of holdings, visit the GDXJ Holdings page » The chart below shows the one year price performance of GDXJ, versus its 200 day moving average:
Looking at the chart above, GDXJ's low point in its 52 week range is $27.80 per share, with $43.10 as the 52 week high point — that compares with a last trade of $42.79. 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 ».
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.
| -0.00706
| -0.010504
|
2020-01-02
|
Notable Thursday Option Activity: V, ILMN, TGTX
|
TGTX
|
Among the underlying components of the Russell 3000 index, we saw noteworthy options trading volume today in Visa Inc (Symbol: V), where a total of 34,917 contracts have traded so far, representing approximately 3.5 million underlying shares. That amounts to about 45.4% of V's average daily trading volume over the past month of 7.7 million shares. Especially high volume was seen for the $190 strike call option expiring January 03, 2020, with 1,873 contracts trading so far today, representing approximately 187,300 underlying shares of V. Below is a chart showing V's trailing twelve month trading history, with the $190 strike highlighted in orange:
Illumina Inc (Symbol: ILMN) options are showing a volume of 3,496 contracts thus far today. That number of contracts represents approximately 349,600 underlying shares, working out to a sizeable 45.4% of ILMN's average daily trading volume over the past month, of 770,480 shares. Especially high volume was seen for the $325 strike call option expiring January 03, 2020, with 325 contracts trading so far today, representing approximately 32,500 underlying shares of ILMN. Below is a chart showing ILMN's trailing twelve month trading history, with the $325 strike highlighted in orange:
And TG Therapeutics Inc (Symbol: TGTX) options are showing a volume of 11,574 contracts thus far today. That number of contracts represents approximately 1.2 million underlying shares, working out to a sizeable 44.7% of TGTX's average daily trading volume over the past month, of 2.6 million shares. Particularly high volume was seen for the $16 strike call option expiring March 20, 2020, with 3,604 contracts trading so far today, representing approximately 360,400 underlying shares of TGTX. Below is a chart showing TGTX's trailing twelve month trading history, with the $16 strike highlighted in orange:
For the various different available expirations for V options, ILMN options, or TGTX options, visit StockOptionsChannel.com.
Today's Most Active Call & Put Options of the S&P 500 »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
| -0.00706
| -0.009149
|
2020-01-02
|
Does Visa Deserve Its Bullish Valuation?
|
V
|
Visa (NYSE: V) leads the global digital payment market with a secure payment network that is capable of processing over 65,000 payments per second. The company does not extend loans or credit but offers a technology platform that allows financial institutions and vendors to transact with credit, debit, and gift cards. The company has issued bullish guidance for next year, indicating internal optimism about the growth prospects in the near term. Is this war-on-cash stock worth buying at today's price?
Visa's valuation is bullish but in-line with peers
Visa stock currently trades at 30.3 times forward earnings and 35.5 times free cash flow, which are slightly lower than peers such as Paypal and Mastercard, but much higher than American Express. Visa's EV/EBITDA ratio of 26.9 follows a very similar pattern. Analysts are forecasting 15% annual earnings growth over the medium term, resulting in a PEG ratio of approximately two. This battery of valuation metrics suggests that Visa is priced in-line with peers based on multiple profitability measurements, even when adjusting for variations in growth outlook and capital structure.
Image Source: Getty Images
As a further kicker for investors, Visa pays a 0.55% cash dividend yield, which helps to deliver some income returns independent of market price performance. The company also has consistently returned value to shareholders with a stock repurchase program that has a buyback yield above 2%, which helps to augment market returns through anti-dilution. The overall dividend and repurchase activity is rather modest compared to companies in other sectors, but it is nonetheless a nice bonus to have some reliable upside along with the growth potential.
Visa has some very pleasing operational metrics
Visa leads its peer group with a stellar 67% operating margin and a 52.6% net profit margin. Only Mastercard approaches these figures but is still roughly ten percentage points lower. This is not an aberration, because the company's margins have been stable for the past five years, and its operating margin was still over 56% for each year of the past decade. This spread has allowed the company to deliver an excellent return on invested capital (ROIC) of 26.5%, which is double the industry average and far in excess of the company's 6.8% weighted average cost of capital. Visa's operating metrics indicate an efficiently run organization, with high-quality earnings that translate to cash flows.
Visa is a great position to capitalize on global trends
Financial technology is rapidly changing the ways that people transfer money and pay for goods and services. Digital transfers, blockchain, and other new solutions are quickly disrupting the market, creating new players and forcing incumbents to adapt through acquisition. The result is a fairly fragmented industry.
It is difficult to make long-term forecasts at a time with so much innovation and change on a global scale, but Visa is in a great position to benefit from market trends. The company has shown a willingness to participate in innovation through acquisitions, having purchased Verifi, Payworks, Earthport in 2019. These will provide solutions for issues related to disputed charges, cross-border transfers, and payment efficiency. Visa is participating in the benefits of blockchain, having announced its use of the technology to facilitate B2B payments with B2B Connect.
Visa has a massive market share, and there are switching costs associated with moving away from Visa's services. This is especially true for the largest providers of goods and services, which would require a substantial overhaul to completely revamp payment systems to a different competitor. The fact that it's hard for businesses to leave creates a moat that protects the company's fundamentals from rapid deterioration. Even in situations of rapid market shifts, such as the wide-spread adoption of Square's mobile payments platform, new solutions can actually function hand-in-hand with Visa, so some competitive innovations might even benefit the company's legacy business.
Overall, consumers are showing a declining preference for cash payments, and Visa is in an excellent position to capitalize on this evolving trend. Fintech and payment solutions will be buoyed fundamentally by strong tailwinds for the foreseeable future, and investors would be wise to gain some exposure to these trends. The nature of innovation makes it impossible to identify one clear winner in the group, especially if changes in blockchain and digital currency have even greater impacts than anticipated. However, Visa makes a clear case to be among the shares best-suited to provide exposure to the boom.
10 stocks we like better than Visa
When investing geniuses David and Tom Gardner have 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.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Visa 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 December 1, 2019
Ryan Patrick has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Mastercard, PayPal Holdings, Square, and Visa and recommends the following options: short January 2020 $70 puts on Square and short January 2020 $97 calls on PayPal Holdings. 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.
| -0.00706
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2020-01-02
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5 Top Stock Trades for Friday: The Dow’s Best of 2019
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V
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2019 was a banner year, as we saw record high after record high. What drove the indices higher? Letâs look the top stock trades from 2019, and specifically, the top five performers from the Dow.
Top Stock Trades for Tomorrow No. 1: United Technologies (UTX)
Source: Chart courtesy of
United Technologies (NYSE:) was the fifth-best performer in the group, up 41% in 2019. After struggling with the $142 area in late October, UTX gapped up over this mark in November.
Later in the month, it actually pulled back and retested this former resistance levels. This time, though, it acted as support, a clear sign that bulls were in control. Unlike some of the stronger performers on the list below, UTX does not have as well-defined of an uptrend.
Notably, though, buyers have been stepping in around the 50-day moving average, giving bulls one significant point of reference. With shares above $150 â resistance in November and support in December â itâs hard to be bearish on UTX, which hit a new high on Thursday.
Below the 50-day could send it back down to range support around $142.
Top Stock Trades for Tomorrow No. 2: Visa (V)
Source: Chart courtesy of
Up 42% in 2019, Visa (NYSE:) just barely nudged out UTX for No. 4 on the list. Unlike the rest of the market, Visa didnât begin barreling higher until just a few weeks ago.
After hitting a high of $183.50 in July, Visa slowly but surely plowed higher. In November and early December, it had a solid uptrend guiding it higher (blue line), before erupting over $184, then $186.
Itâs now in a steeper uptrend channel (purple lines) and continues to climb. Surprisingly, shares are not overbought like many others, so buyers could continue to push this name higher.
At this point, I would not bet against Visa if the stock is above the 20-day moving average. Below puts uptrend support, $184 and the 50-day moving average on the table.
Top Stock Trades for Tomorrow No. 3: JPMorgan (JPM)
Source: Chart courtesy of
Just one percentage point above Visa, JPMorgan (NYSE:) rang up gains of 43% in 2019. JPM had struggled with the $114 to $116 area for almost two years. In October, the bank burst over this mark, and hasnât looked back since.
Shares hit a new high on Thursday, breaching the $140 level. Now what?
JPMorgan is a buy-the-dips stock until bulls are proven wrong. This one has been very strong over the past few months and expecting it to continue forever is unrealistic. But for now, dips to the 20-day moving average have been bought aggressively.
Until this mark fails to buoy JPMorgan, bulls can continue to buy on pullbacks to it. Below the $137 to $138 area, and the tone will shift more cautious â note: not bearish, but cautious. Below the 20-day moving average and $137, and the 50-day moving average is next.
Top Stock Trades for Tomorrow No. 4: Microsoft (MSFT)
Source: Chart courtesy of
Up 55% on the year, Microsoft (NASDAQ:) was the second-best Dow stock this year.
After consolidating between $132 and $142 for about five months, shares gapped up and over the range, and have been trending higher since. Like JPM, dips to the 20-day moving average have been bought aggressively by the bulls.
Until that trend changes, we shouldnât bet against it. Flirting with $160 now, MSFT is trying to break out again. If it does, look for a continued run higher. If it canât muster the strength to hurdle $150, see that uptrend support (blue line) and the 20-day moving average support the stock.
Below puts the $152.50 area on watch, with the 50-day moving average just below that.
Top Stock Trades for Tomorrow No. 5: Apple (AAPL)
Source: Chart courtesy of
These last two are the most impressive to me. Not only do Microsoft and Apple (NASDAQ:) command $2.5 trillion worth of equity, but they are both up incredible amounts this year. The combined rally between the two of them added $1.13 trillion to their market caps!
Thatâs such a remarkable figure, itâs hard to comprehend. Letâs put it this way, AAPL and MSFTâs gains total more than the market caps of Amazon (NASDAQ:), Netflix (NASDAQ:) and Roku (NASDAQ:) ⦠combined.
Apple was the best performer in the Dow last year, up a resounding 86%. I love Apple, but if you took a pass at $150 in January 2018 or $190 in August, I would not suggest $290-plus as being the time to buy.
Shares sport an overbought condition (blue circle) and while they can continue higher from here, we need a better dip to buy before getting long. That starts with a correction down to the 20-day moving average and/or the $280 level. Below that and uptrend support (blue line), and the 50-day moving average should buoy the stock.
Bret Kenwell is the manager and author of and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long AAPL, AMZN, V and ROKU.
The post 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.
| -0.00706
| -0.007953
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2020-01-02
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S&P 500 Analyst Moves: FFIV
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FFIV
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The latest tally of analyst opinions from the major brokerage houses shows that among the components of the S&P 500 index, F5 Networks, is now the #357 analyst pick, moving up by 10 spots.
This rank is formed by averaging the analyst opinions for each component from each broker, and then ranking the 500 components by those average opinion values.
Looking at the stock price movement year to date, F5 Networks, is showing a gain of 0.6%.
VIDEO: S&P 500 Analyst Moves: FFIV
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
| -0.00706
| -0.005399
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2020-01-02
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Why General Electric Stock Popped 5% Today
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GE
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What happened
General Electric (NYSE: GE) stock had a great year in 2019 -- its best year since 1982, reports MarketWatch, with GE shares surging 53% through Tuesday's close.
But given that investors ordinarily want to buy stocks low, and sell them when they're priced high, here's a question: With GE's stock now setting new highs, why are investors buying more today, and bidding up GE stock by another 5.3% (as of 3:20 p.m. EST)?
Image source: Getty Images.
So what
Possibly, this is because investors think GE is poised to reap even greater gains in 2020 as the U.S. calls a truce in its trade war with China.
On New Year's Eve, President Trump announced that he plans to sign a "phase one" trade deal with China on Jan. 15. This would remove or reduce tariffs on some $275 billion or more in Chinese imports to the U.S., and open the doors to new agricultural products and other sales from the U.S. to China.
Now what
As it happens, General Electric does a lot of business with China already. Final figures for 2019 aren't in just yet, but according to data from S&P Global Market Intelligence, fully $22.9 billion of GE's revenue came from its "Asia" region, of which China is a big part, in 2018. That number was 19% of GE's total revenue in 2018, and it was up nearly 19% from three years earlier, a sizable growth rate for revenue.
Overall sales at GE dropped 2% year over year in the first three quarters of 2019. While we don't have all the data yet, I'd be willing to bet money that China, and the U.S.-China trade war, played a part in GE's overall revenue drop. Should a truce be declared later this month, and trade with China boom, American industrial bellwether GE would almost certainly be a beneficiary -- and that's why investors are bidding up GE stock today.
10 stocks we like better than General Electric
When investing geniuses David and Tom Gardner have 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 December 1, 2019
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.
| -0.00706
| 0.003353
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2020-01-02
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Noteworthy ETF Outflows: IWF, COST, NKE, UPS
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COST
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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 iShares Russell 1000 Growth ETF (Symbol: IWF) where we have detected an approximate $202.3 million dollar outflow -- that's a 0.4% decrease week over week (from 282,200,000 to 281,050,000). Among the largest underlying components of IWF, in trading today Costco Wholesale Corp (Symbol: COST) is off about 0.2%, Nike (Symbol: NKE) is up about 0.1%, and United Parcel Service Inc (Symbol: UPS) is lower by about 0.5%. For a complete list of holdings, visit the IWF Holdings page » The chart below shows the one year price performance of IWF, versus its 200 day moving average:
Looking at the chart above, IWF's low point in its 52 week range is $126.56 per share, with $177.52 as the 52 week high point — that compares with a last trade of $177.04. 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 ».
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 experienced notable outflows »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
| -0.00706
| 0.000823
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2020-01-02
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3 Top Retail Stocks to Watch in January
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COST
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January is a big month for investors in retail stocks. Not only are the businesses seeing elevated customer traffic tied to the holiday season crush, but the start of the year is when companies issue financial updates that cover the peak period around Christmas. That report often determines whether a company will reach its ambitious annual growth targets.
With those high stakes in mind, let's look at three major retail stocks that will issue their holiday season updates in the next few weeks.
Image source: Getty Images.
iRobot has a lot to prove
2019 was a brutal year for iRobot (NASDAQ: IRBT), which was slammed by tariffs on its robotic cleaning devices that ended up reshaping its entire industry. After soaring into the $1 billion annual sales club in the prior year, sales growth collapsed, with revenue even falling 7% in the fiscal third quarter.
CEO Colin Angle and his team responded by slashing prices just ahead of the holidays hoping to protect market share so that the company can be positioned for a rebound in 2020. But the major risks around that gamble mean investors will be closely watching for official updates from iRobot in January.
That update will likely happen on or before Jan. 14, when management holds a presentation at an investor conference. Shareholders can expect plenty of volatility in the stock around those mid-quarter comments, given the high stakes involved.
Costco keeps winning
Costco (NASDAQ: COST) is one of just a few major retailers that still issue monthly sales updates, and this next one could easily move the stock. On Jan. 8, the warehouse retailer will announce results for the all-important month of December that should set the tone for its fiscal second-quarter announcement in early March.
If recent history is any guide, Costco will likely have good news to report. The retailer's last quarterly update showed accelerating customer traffic and record renewal rates among its members. The chain's results have even been lifted by a few splashy single purchases, too, including a $400,000 diamond ring. These metrics reflect the increasing value that subscribers are getting from their memberships, which points to a likely record December haul for the warehouse shopping leader.
Target is ready
If you asked investors in late December last year which stocks might double over the next 12 months, Target (NYSE: TGT) probably wouldn't have made the list. Yet that's exactly what happened as the retailing chain announced some of its fastest sales growth in a decade. Target's transition to multichannel selling even helped push operating margin higher, since customers are showing a real willingness to pay up for the convenience of ultra-fast fulfillment options like same-day delivery and in-store pickup.
We'll find out on Jan.15, when Target announces its holiday season sales results, whether those wins allowed the company to continue capturing share against peers like Walmart during the ultra-competitive December weeks. That report will likely focus on revenue trends rather than profitability, so investors might want to withhold their judgment until seeing Target's full-year results in early March. But the soaring stock price suggests Wall Street is expecting good news to follow the retailer's blockbuster third-quarter earnings report from late November.
10 stocks we like better than Costco Wholesale
When investing geniuses David and Tom Gardner have 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.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Costco Wholesale 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 December 1, 2019
Demitrios Kalogeropoulos owns shares of Costco Wholesale. The Motley Fool owns shares of and recommends iRobot. The Motley Fool recommends Costco Wholesale. 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.
| -0.00706
| 0.000823
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2020-01-02
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Why Bilibili's Stock Jumped 17.6% This Morning
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BILI
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What happened
Shares of youth-oriented video-sharing specialist Bilibili (NASDAQ: BILI) rose as much as 17.6% in Thursday morning's trading, lifted by a new partnership with Tencent Music Entertainment's (NYSE: TME) QQ Music service. Tencent Music's stock also surged as much as 7.2% higher on the news. By noon EST, Bilibili's shares had settled down to a gain of 13.4%, while Tencent Music retreated to a 5.9% increase.
So what
Under the new partnership, Bilibili and QQ Music will cross-promote musicians and music content. The two companies will also work together to create new music content such as live online events, remixes of popular songs, and co-production of new albums.
"Bilibili is home to a large number of talented music creators and enthusiasts who are keen on secondary creation," Bilibili COO Li Ni said in a prepared statement. "As a leading domestic digital music platform, QQ Music has accumulated abundant experience in music copyright management, record distribution, as well as the support and promotion of musicians."
Image source: Getty Images.
Now what
This agreement involves two of the most popular online media services in China. Tencent Music boasts 661 million monthly active users across its three music services, while Bilibili sports 128 million active accounts. It makes sense to see Bilibili rising higher than Tencent Music on this particular agreement, since Bilibili is the smaller partner that arguably has more to win from tapping into QQ Music's massive user base.
10 stocks we like better than Bilibili
When investing geniuses David and Tom Gardner have 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.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Bilibili 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 December 1, 2019
Anders Bylund has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Bilibili. 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.
| -0.00706
| 0.053938
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2020-01-02
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February 14th Options Now Available For Dominos Pizza (DPZ)
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DPZ
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Investors in Dominos Pizza Inc. (Symbol: DPZ) saw new options begin trading today, for the February 14th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the DPZ options chain for the new February 14th contracts and identified one put and one call contract of particular interest.
The put contract at the $290.00 strike price has a current bid of $6.80. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $290.00, but will also collect the premium, putting the cost basis of the shares at $283.20 (before broker commissions). To an investor already interested in purchasing shares of DPZ, that could represent an attractive alternative to paying $293.75/share today.
Because the $290.00 strike represents an approximate 1% discount to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the put contract would expire worthless. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 100%. Stock Options Channel will track those odds over time to see how they change, publishing a chart of those numbers on our website under the contract detail page for this contract. Should the contract expire worthless, the premium would represent a 2.34% return on the cash commitment, or 19.90% annualized — at Stock Options Channel we call this the YieldBoost.
Below is a chart showing the trailing twelve month trading history for Dominos Pizza Inc., and highlighting in green where the $290.00 strike is located relative to that history:
Turning to the calls side of the option chain, the call contract at the $300.00 strike price has a current bid of $6.30. If an investor was to purchase shares of DPZ stock at the current price level of $293.75/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $300.00. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 4.27% if the stock gets called away at the February 14th expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if DPZ shares really soar, which is why looking at the trailing twelve month trading history for Dominos Pizza Inc., as well as studying the business fundamentals becomes important. Below is a chart showing DPZ's trailing twelve month trading history, with the $300.00 strike highlighted in red:
Considering the fact that the $300.00 strike represents an approximate 2% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 99%. On our website under the contract detail page for this contract, Stock Options Channel will track those odds over time to see how they change and publish a chart of those numbers (the trading history of the option contract will also be charted). Should the covered call contract expire worthless, the premium would represent a 2.14% boost of extra return to the investor, or 18.20% annualized, which we refer to as the YieldBoost.
Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 252 trading day closing values as well as today's price of $293.75) to be 29%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.
Top YieldBoost Calls of the S&P 500 »
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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| 0.004329
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2020-01-02
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Noteworthy ETF Outflows: RFG, SEDG, MTDR, OLED
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MTDR
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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 Invesco S&P MidCap 400— Pure Growth ETF (Symbol: RFG) where we have detected an approximate $222.1 million dollar outflow -- that's a 35.8% decrease week over week (from 4,050,000 to 2,600,000). Among the largest underlying components of RFG, in trading today SolarEdge Technologies Inc (Symbol: SEDG) is up about 1.9%, Matador Resources Co (Symbol: MTDR) is up about 0.5%, and Universal Display Corp (Symbol: OLED) is higher by about 0.7%. For a complete list of holdings, visit the RFG Holdings page » The chart below shows the one year price performance of RFG, versus its 200 day moving average:
Looking at the chart above, RFG's low point in its 52 week range is $128.348 per share, with $155 as the 52 week high point — that compares with a last trade of $153.15. 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 ».
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 experienced notable outflows »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
| -0.00706
| 0.060055
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2020-01-02
|
Why and Where You Buy Qualcomm Stock
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QCOM
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Now that itâÂÂs 2020 there will be challenges in the stock market to be certain. Still, when it comes to Qualcomm (NASDAQ:), off and on the price chart the rewards outweigh the threats for buying shares today. Let me explain.
Source: Akshdeep Kaur Raked / Shutterstock.com
No doubt the market has had an incredible 2019. A broad-based rally emerging from last yearâÂÂs fourth-quarter corrective meltdown has seen the large-cap, tech-heavy NASDAQ surge by 35% to all-time highs. And Qualcomm stock has been a beneficiary of that strength. Shares have returned an outsized 60% in 2019. But if you think QCOM is finished, think again.
As we enter 2020 the roll-out of a global 5G network is just underway. ItâÂÂs a game changer. Once unfathomable technologies like artificial intelligence or quantum computing will now have a platform capable of unleashing their full potential. Because of this crucial role, 5G is one of the leading next big things in investing. And Qualcomm stockâÂÂs wireless communication chips are at the forefront of this revolution. But thatâÂÂs not all QCOM has up its sleeve.
QCOM and 5G
As InvestorPlaceâÂÂs Josh Enomoto notes, than simply producing the chips to power the 5G network. The company is looking to cash in on how 5G changes our technological landscape by developing new applications for its chips such as facial recognition, which could prove a huge boon for its bottom-line in the years to come.
To be clear, risks exist in owning Qualcomm stock today. Shares of QCOM are historically expensive. Its lucrative 5G-driven modem business with Apple (NASDAQ:) could vanish, as could its relationship with ChinaâÂÂs Huawei. Licensing risks persist. Qualcomm is also facing intense competition in the space. WhatâÂÂs more, along the build-out of 5G could prove disastrous in capturing this technologyâÂÂs full profit potential on shares.
All of those worries and more regarding Qualcomm stock have been well-chronicled by my colleagues. Moreover, most of it is simply speculation, no matter how well-intentioned each warning might be. Bottom-line, right now QualcommâÂÂs business is in the in the as Mark Hake wrote last month. And now, so are QCOM shares.
Qualcomm Stock Weekly Chart
Source:
A bit more than a month ago, Qualcomm stock was discussed as ripe for profit-taking. Shares of QCOM were overbought and challenging monthly channel and Bollinger Band resistance. The observed takeaway was investors should wait to buy Qualcomm on weakness within the trend rather than attempt to chase shares following an overly-aggressive, earnings-related bid.
The caution in QCOM stock Less than a handful of weeks later a much more durable-looking weekly hammer tested key support from $75 â $80. QualcommâÂÂs price action then went on to confirm the bottoming candlestick within its uptrend. Now and following a fast bullish reaction out of the reversal pattern, QCOM stock is in position to be purchased.
After three weeks of consolidating its price gains, shares of Qualcomm are set up in a constructive-looking handle pattern. The small pullback is finding support at the 62% retracement level tied to QCOMâÂÂs all-time-high within a larger cup which has developed since earnings.
With stochastics backing up the bullish pattern, IâÂÂd recommend buying Qualcomm stock as shares stage a breakout of the handle above $90.46. If QCOM continues to cooperate, taking initial profits at the numerically-pleasing $100 level and possibly during overbought conditions makes ample sense. And to contain exposure on an adverse move, an exit marginally beneath the handleâÂÂs low is an equally smart-looking decision off and on the price chart.
Investment accounts under Christopher TylerâÂÂs management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher TylerâÂÂs observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional options-based strategies, related musings or to ask a question, you can find and follow Chris on Twitter and StockTwits.
The post 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.
| -0.00706
| -0.01883
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2020-01-02
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SPYV, RPG: Big ETF Outflows
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NOW
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Looking at units outstanding versus one week prior within the universe of ETFs covered at ETF Channel, the biggest outflow was seen in the SPDR— Portfolio S&P 500— Value ETF, where 33,100,000 units were destroyed, or a 18.8% decrease week over week. Among the largest underlying components of SPYV, in morning trading today Berkshire Hathaway is up about 0.1%, and Exxon Mobil is up by about 1.1%.
And on a percentage change basis, the ETF with the biggest outflow was the Invesco S&P 500— Pure Growth ETF, which lost 13,200,000 of its units, representing a 38.2% decline in outstanding units compared to the week prior. Among the largest underlying components of RPG, in morning trading today Servicenow is up about 1.9%, and Lam Research is higher by about 1.2%.
VIDEO: SPYV, RPG: Big ETF Outflows
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
| -0.00706
| -0.000481
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2020-01-02
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Purchase Qualcomm Stock Gradually Until Earnings Growth Heats Up
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QCOM
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Qualcomm (NASDAQ:) stock trended higher in the last quarter of 2019. However, QCOM still trades at flat levels compared to May 2019. Therefore, the last two quarters have been sideways in terms of stock movement. I believe that Qualcomm has priced in the near-term 5G opportunity. However, there is no doubt that QCOM stock is attractive from a 24-36 month investment horizon.
Source: nikkimeel / Shutterstock.com
I want to start with a quick note on the valuation. Qualcomm stock trades at $88 and based on 2019 earnings per share of $3.59, the price-to-earnings ratio is 24.7. For financial year 2020, . This implies a price-earnings-to-growth ratio of 1.5. Clearly, QCOM stock is not inexpensive. This is one reason to advise gradual accumulation on declines instead of a big plunge in the stock.
It is important to add here that analyst estimates suggest earnings growth of 48.5% for fiscal 2021. I believe that 2021 and beyond will be the time when real growth traction is witnessed related to 5G. This makes QCOM attractive when considering a 24-36 month horizon.
Qualcomm Makes 5G More Accessible
One of the challenges in the overall 5G launch is to keep costs affordable, be it mobile operator charges or the cost of handsets. The reason is that China and India have a combined population of 2.5 billion and represent a big long-term market.
In September, Qualcomm announced new chips to make . With several handset makers already on board to use the chip, there is potential for growth acceleration. The handsets with these chips will launch in the second half of 2020. This makes a strong case for earnings growth in 2021.
Qualcomm is also rolling out 5G in India in 2020. The initial focus is likely to be on . Therefore, be it emerging markets or developed markets, 5G has a much broader application. The true potential will be unleashed in the next three to five years.
I want to add here that Qualcomm has launched a . ItâÂÂs a venture capital fund to invest in 5G startups. The point I am making is that a focus on developing markets will be a potential long-term game changer.
Challenges Can Impact Growth Outlook
There is little doubt that Qualcomm is a leader when it comes to bringing innovative 5G technology. However, infrastructure concerns can impact the likely growth estimate.
Craig Moffett, a leading telecommunication analyst, is of the opinion that âÂÂspectrum â the range of frequencies an operator network is allowed to radiate â is mobile.â He further opined toàCNBC that 5G has zero chance of being a ubiquitous technology by 2021.
Similarly, Europe is lagging behind in 5G adoption due to challenges that include . Furthermore, Qualcomm is focused on non-telecom 5G deployment in India. For mobile deployment, India has challenges that include awaited allocation of 5G spectrum and the high cost of 5G spectrum for mobile operators.
The key point being that the total addressable market is significant, but it will be years before some markets reach inflection point.
My Final Thoughts on QCOM Stock
Qualcomm certainly has a big market opportunity when it comes to 5G.
However, in all probability, the near-term 5G earnings upside is priced in QCOM stock. Long-term investors can consider buying on dips, but I expect real earnings growth traction only in 2021 and beyond.
I therefore remain âÂÂneutralâ on QCOM stock for the foreseeable future.
As of this writing, Faisal Humayun did not hold a position in any of the aforementioned securities.
The post 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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| -0.01883
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2020-01-02
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Risk-Off After US Airstrike Ramps Up Middle East Tensions
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GLD
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FXEmpire.com -
The major global equity markets are trading sharply lower on Friday as investors reacted to an escalation in Middle East tensions. Consequently, investors are moving money into safe-haven assets for protection. The early price action indicates that today will be a “Risk-Off” day.
The catalyst behind the moves is the news that an Iranian military commander was killed in a Baghdad airstrike. The Pentagon later confirmed that he was killed by a U.S. drone strike. Crude oil prices jumped on speculation that further military action is likely, raising the possibility that supply will be affected.
Shares in Asia were mostly lower with stocks in Australia and South Korea bucking the trend.
In the U.S., pre-market futures were trading lower. At 04:24 GMT, Dow Jones Industrial Average futures were 180 lower, implying an opening drop of 181.00 for the index at Friday’s cash market opening. S&P 500 and NASDAQ 100 futures also pointed to opening losses for the two major indexes on Friday’s cash market opening.
February West Texas Intermediate crude oil is trading $62.92, up $1.74 or +2.83% and March Brent crude oil is at $68.20, up $1.95 or +2.94%. Traders are worried that retaliation from Iran will center on crude oil supply.
Treasury yields are down as investors sought protection in the safe-haven U.S. government debt markets. The drop in interest rates made gold a more attractive investment.
Gold hit its highest level since September 25 and is in a position to challenge the September 24 main top at $1549.90. The high in 2019 was $1571.70, reached on September 4.
The drop in yields also tightened the spread between U.S. Government bonds and Japanese Government bonds, making the Japanese Yen a desirable asset. The drop in stocks also triggered the carry trade, where investors sold dollars and bought Yen.
The higher-risk Australian and New Zealand Dollars are also under pressure. The British Pound and the Euro are flat and safe-haven buying is supporting the Swiss Franc.
Market Action Suggests Investors Anticipating Retaliation
The death of General Qassim Soleimani, the head of Iran’s elite Quds Force, Abu al-Muhandis, the deputy commander of Iran-backed militias known as the Popular Mobilization Forces, or PMF are a potential turning point in the Middle East and are expected to draw severe retaliation from Iran and the forces it backs in the Middle East against Israel and American interests.
This article was originally posted on FX Empire
More From FXEMPIRE:
Asian Shares Jump as Investors Await US-China Phase One Deal Signing
Global Markets Move Higher, Geopolitical Risk Is Rising, Earnings Season Begins
Crude Oil Price Update – Balance of Price Risks Has Shifted to Downside
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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| 0.013269
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2020-01-02
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February 14th Options Now Available For Infinera (INFN)
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INFN
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Investors in Infinera Corp (Symbol: INFN) saw new options begin trading today, for the February 14th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the INFN options chain for the new February 14th contracts and identified one put and one call contract of particular interest.
The put contract at the $8.00 strike price has a current bid of 45 cents. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $8.00, but will also collect the premium, putting the cost basis of the shares at $7.55 (before broker commissions). To an investor already interested in purchasing shares of INFN, that could represent an attractive alternative to paying $8.18/share today.
Because the $8.00 strike represents an approximate 2% discount to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the put contract would expire worthless. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 100%. Stock Options Channel will track those odds over time to see how they change, publishing a chart of those numbers on our website under the contract detail page for this contract. Should the contract expire worthless, the premium would represent a 5.62% return on the cash commitment, or 47.75% annualized — at Stock Options Channel we call this the YieldBoost.
Below is a chart showing the trailing twelve month trading history for Infinera Corp, and highlighting in green where the $8.00 strike is located relative to that history:
Turning to the calls side of the option chain, the call contract at the $8.50 strike price has a current bid of 40 cents. If an investor was to purchase shares of INFN stock at the current price level of $8.18/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $8.50. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 8.80% if the stock gets called away at the February 14th expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if INFN shares really soar, which is why looking at the trailing twelve month trading history for Infinera Corp, as well as studying the business fundamentals becomes important. Below is a chart showing INFN's trailing twelve month trading history, with the $8.50 strike highlighted in red:
Considering the fact that the $8.50 strike represents an approximate 4% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 99%. On our website under the contract detail page for this contract, Stock Options Channel will track those odds over time to see how they change and publish a chart of those numbers (the trading history of the option contract will also be charted). Should the covered call contract expire worthless, the premium would represent a 4.89% boost of extra return to the investor, or 41.51% annualized, which we refer to as the YieldBoost.
Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 252 trading day closing values as well as today's price of $8.18) to be 60%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.
Top YieldBoost Calls of the S&P 500 »
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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| -0.013382
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2020-01-02
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Thursday Sector Laggards: Utilities, Materials
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CF
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Looking at the sectors faring worst as of midday Thursday, shares of Utilities companies are underperforming other sectors, showing a 1.6% loss. Within the sector, NRG Energy Inc (Symbol: NRG) and Evergy Inc (Symbol: EVRG) are two large stocks that are lagging, showing a loss of 2.7% and 2.7%, respectively. Among utilities ETFs, one ETF following the sector is the Utilities Select Sector SPDR ETF (Symbol: XLU), which is down 1.5% on the day, and roughly flat year-to-date. NRG Energy Inc, meanwhile, is roughly flat on a year-to-date basis, and Evergy Inc, is roughly flat on a year-to-date basis. Combined, NRG and EVRG make up approximately 2.7% of the underlying holdings of XLU.
The next worst performing sector is the Materials sector, showing a 1.1% loss. Among large Materials stocks, CF Industries Holdings Inc (Symbol: CF) and Sealed Air Corp (Symbol: SEE) are the most notable, showing a loss of 3.3% and 2.4%, respectively. One ETF closely tracking Materials stocks is the Materials Select Sector SPDR ETF (XLB), which is down 1.1% in midday trading, and roughly flat year-to-date. CF Industries Holdings Inc, meanwhile, is roughly flat on a year-to-date basis, and Sealed Air Corp, is roughly flat on a year-to-date basis. Combined, CF and SEE make up approximately 2.4% of the underlying holdings of XLB.
Comparing these stocks and ETFs on a trailing twelve month basis, below is a relative stock price performance chart, with each of the symbols shown in a different color as labeled in the legend at the bottom:
Here's a snapshot of how the S&P 500 components within the various sectors are faring in afternoon trading on Thursday. As you can see, two sectors are up on the day, while six sectors are down.
SECTOR % CHANGE
Technology & Communications +0.8%
Industrial +0.5%
Energy -0.0%
Services -0.2%
Healthcare -0.3%
Financial -0.5%
Consumer Products -0.9%
Materials -1.1%
Utilities -1.6%
10 ETFs With Stocks That Insiders Are Buying »
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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| -0.006897
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2020-01-02
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February 14th Options Now Available For EOG Resources (EOG)
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EOG
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Investors in EOG Resources, Inc. (Symbol: EOG) saw new options become available today, for the February 14th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the EOG options chain for the new February 14th contracts and identified one put and one call contract of particular interest.
The put contract at the $83.50 strike price has a current bid of $3.25. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $83.50, but will also collect the premium, putting the cost basis of the shares at $80.25 (before broker commissions). To an investor already interested in purchasing shares of EOG, that could represent an attractive alternative to paying $83.95/share today.
Because the $83.50 strike represents an approximate 1% discount to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the put contract would expire worthless. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 100%. Stock Options Channel will track those odds over time to see how they change, publishing a chart of those numbers on our website under the contract detail page for this contract. Should the contract expire worthless, the premium would represent a 3.89% return on the cash commitment, or 33.04% annualized — at Stock Options Channel we call this the YieldBoost.
Below is a chart showing the trailing twelve month trading history for EOG Resources, Inc., and highlighting in green where the $83.50 strike is located relative to that history:
Turning to the calls side of the option chain, the call contract at the $84.50 strike price has a current bid of $3.05. If an investor was to purchase shares of EOG stock at the current price level of $83.95/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $84.50. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 4.29% if the stock gets called away at the February 14th expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if EOG shares really soar, which is why looking at the trailing twelve month trading history for EOG Resources, Inc., as well as studying the business fundamentals becomes important. Below is a chart showing EOG's trailing twelve month trading history, with the $84.50 strike highlighted in red:
Considering the fact that the $84.50 strike represents an approximate 1% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 99%. On our website under the contract detail page for this contract, Stock Options Channel will track those odds over time to see how they change and publish a chart of those numbers (the trading history of the option contract will also be charted). Should the covered call contract expire worthless, the premium would represent a 3.63% boost of extra return to the investor, or 30.84% annualized, which we refer to as the YieldBoost.
Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 252 trading day closing values as well as today's price of $83.95) to be 34%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.
Top YieldBoost Calls of Stocks Analysts Like »
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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| 0.010102
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2020-01-02
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Interesting NOV Put And Call Options For February 14th
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NOV
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Investors in National Oilwell Varco Inc (Symbol: NOV) saw new options begin trading today, for the February 14th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the NOV options chain for the new February 14th contracts and identified one put and one call contract of particular interest.
The put contract at the $24.50 strike price has a current bid of $1.04. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $24.50, but will also collect the premium, putting the cost basis of the shares at $23.46 (before broker commissions). To an investor already interested in purchasing shares of NOV, that could represent an attractive alternative to paying $24.85/share today.
Because the $24.50 strike represents an approximate 1% discount to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the put contract would expire worthless. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 100%. Stock Options Channel will track those odds over time to see how they change, publishing a chart of those numbers on our website under the contract detail page for this contract. Should the contract expire worthless, the premium would represent a 4.24% return on the cash commitment, or 36.03% annualized — at Stock Options Channel we call this the YieldBoost.
Below is a chart showing the trailing twelve month trading history for National Oilwell Varco Inc, and highlighting in green where the $24.50 strike is located relative to that history:
Turning to the calls side of the option chain, the call contract at the $25.00 strike price has a current bid of $1.20. If an investor was to purchase shares of NOV stock at the current price level of $24.85/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $25.00. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 5.43% if the stock gets called away at the February 14th expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if NOV shares really soar, which is why looking at the trailing twelve month trading history for National Oilwell Varco Inc, as well as studying the business fundamentals becomes important. Below is a chart showing NOV's trailing twelve month trading history, with the $25.00 strike highlighted in red:
Considering the fact that the $25.00 strike represents an approximate 1% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 99%. On our website under the contract detail page for this contract, Stock Options Channel will track those odds over time to see how they change and publish a chart of those numbers (the trading history of the option contract will also be charted). Should the covered call contract expire worthless, the premium would represent a 4.83% boost of extra return to the investor, or 40.99% annualized, which we refer to as the YieldBoost.
Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 252 trading day closing values as well as today's price of $24.85) to be 42%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.
Top YieldBoost Calls of the S&P 500 »
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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2020-01-02
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This CEF Soared 51.9% in 2019. Time to Sell?
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RQI
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By Michael Foster
If youaEURtmve been holding the Cohen & Steers Quality Income Realty Fund (RQI)aEUR"a fund I wrote about a lot in 2019aEUR"youaEURtmve done very well indeed. RQI has dominated, with its market-price return surging 51.9%, including gains and dividends, since the start of 2019.
So today weaEURtmre going to take a closer look at this superstar fund to see what lies ahead, and whether itaEURtms still worthy of your cash, even with its big 2019 gains.
If youaEURtmre not familiar with RQI, it owns real estate investment trusts (REITs), such as cell-tower owners Crown Castle International (CCI) and American Tower (AMT), warehouse landlord Prologis (PLD) and data-center REIT Equinix (EQIX).
To be sure, there are downsides to putting cash in RQI now, such as a dividend yield thataEURtms been whittled down as the fundaEURtms price has risen. RQI yields 6.5% today, behind the 7.1% average for all REIT funds and well below the 9.3% this fund yielded at the start of 2019.
WhataEURtms more, with a 50%+ return under its belt, itaEURtms fair to wonder if RQI can deliver another big gain in 2020 or if it might give some of its 2019 win back.
Top-Notch Management Team Wins Again
Before we get into what might lie ahead for this superstar REIT fund, letaEURtms talk about RQIaEURtms wonderful 2019.
The big market-price rise is just part of the story. We also need to look at the fundaEURtms total NAV return (or the performance of its underlying portfolio, including dividends) for 2019, because that tells us how RQIaEURtms fund managers performed with their picks. Did this beat the index, and does it come close to RQIaEURtms market returns?
On the first issue, thereaEURtms just no question.
RQIaEURtms Picks Crush the REIT Sector
With a 34% total NAV return, RQIaEURtms managers easily beat the broader REIT market, tracked above by the SPDR Dow Jones REIT ETF (RWR), which itself actually underperformed the S&P 500 (a rarity, as REITs tend to outperform the broader stock market). That RQI both beat the REIT index fund and the SPDR S&P 500 ETF (SPY) is a testament to how good RQIaEURtms managers are, and how well theyaEURtmve leveraged their skills into a great return.
RQIaEURtms return has also trounced the REIT CEF competition, although itaEURtms less impressive, compared to its performance versus the index, on this front.
Source: CEF Insider
As IaEURtmve written before, REITs are the kind of market where an active manager with an in-depth knowledge of real estate can easily crush an index fund like RWR, which uses an algorithm to make selections. As a result, all of the well-managed REIT CEFs have posted average returns above the index by a wide margin, yet RQI has beaten them all by a fair bit.
ThereaEURtms just one problem, as you can see from the bars on the right side of the chart above: investors have amply rewarded RQI for its huge returns. As a result, RQIaEURtms premium to NAV is near a 10-year high.
A Sudden Premium Appears
RQI consistently traded at a discount over the last decade until earlier in 2019, although its premium briefly disappeared as investors balked at this sudden change of fortune. If RQIaEURtms performance dips in 2020, they could balk again.
REITs in 2020: A Look Ahead
Of course, whether RQIaEURtms performance dips in 2020 or not depends a lot on what happens to REITs as a whole.
REITsaEURtm Solid 2019
As you can see above, even though RWR slightly underperformed the S&P 500 in 2019, it still posted a very strong return. You can also see that this huge return is an extreme outlier, which would seem to make a reversion to the mean more likely in 2020.
But thereaEURtms a big catch: there was a very good reason for 2019aEURtms tremendous return, and itaEURtms something we should consider, as well: the Federal Reserve.
At the end of 2018, REITs were particularly hard hit by the FedaEURtms continued interest-rate hikes, which went far beyond the marketaEURtms expectations and hurt many REITs, as investors worried this would raise their borrowing costs.
As a result, they overreacted to the downside, creating a real opportunity to snap up REITs at great prices when the Fed reversed course and said it would start cutting rates. Several cuts later, and REITs have returned to their long-term trend of about 7% to 8% annualized returns.
If the Fed doesnaEURtmt cut rates further in 2020, or cuts just once, like the market expects, then we could see an in-line trend of about 7% or 8% gains for REITs as a whole. (And I expect the discounted REIT CEFs in our CEF Insider portfolio to do even better than that.) If RQIaEURtms NAV returns beat that, expect investors to stay pretty happy, and for RQIaEURtms market price to follow along those lines.
4 Picks to Beat RQI in 2020 (and pay you 35% more income, too!)
So whataEURtms the bottom line? Simple: RQI is a good pick if you want to match the market in 2020. Heck, you might even beat it by a little bit.
But we can do better with the 4 CEF picks I have waiting for you right here. These funds yield far more than RQI right nowaEUR"an outsized 8.4% dividend, on averageaEUR"and trade at much bigger discounts, too.
How big?
IaEURtmm forecasting 20%+ price upside from each of these rock-solid picks in 2020. ThataEURtms in addition to their huge 8.4% dividends!
So you could be looking at a 30% total return in just one year here!
And because youaEURtmre diversifying across 4 funds here (which hold REITs, bonds, US and overseas stocks), youaEURtmre getting an extra margin of safety compared to an all-in wager on RQI, thanks to the diversification in this 4-fund aEURoemini-portfolio.aEUR
That, plus these fundsaEURtm wide discounts, nicely position you for big gains if 2020 is another boom yearaEUR"and help shield your nest egg if the market takes a header.
And now is the perfect time to buy them. Get everything you need to know about these 4 profitable income-and-growth picksaEUR"names, tickers, best buy prices and moreaEUR"right 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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| 0.001358
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2020-01-02
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Interesting AIG Put And Call Options For February 14th
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AIG
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Investors in American International Group Inc (Symbol: AIG) saw new options begin trading today, for the February 14th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the AIG options chain for the new February 14th contracts and identified one put and one call contract of particular interest.
The put contract at the $51.00 strike price has a current bid of $1.38. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $51.00, but will also collect the premium, putting the cost basis of the shares at $49.62 (before broker commissions). To an investor already interested in purchasing shares of AIG, that could represent an attractive alternative to paying $51.27/share today.
Because the $51.00 strike represents an approximate 1% discount to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the put contract would expire worthless. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 100%. Stock Options Channel will track those odds over time to see how they change, publishing a chart of those numbers on our website under the contract detail page for this contract. Should the contract expire worthless, the premium would represent a 2.71% return on the cash commitment, or 22.97% annualized — at Stock Options Channel we call this the YieldBoost.
Below is a chart showing the trailing twelve month trading history for American International Group Inc, and highlighting in green where the $51.00 strike is located relative to that history:
Turning to the calls side of the option chain, the call contract at the $52.00 strike price has a current bid of $1.25. If an investor was to purchase shares of AIG stock at the current price level of $51.27/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $52.00. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 3.86% if the stock gets called away at the February 14th expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if AIG shares really soar, which is why looking at the trailing twelve month trading history for American International Group Inc, as well as studying the business fundamentals becomes important. Below is a chart showing AIG's trailing twelve month trading history, with the $52.00 strike highlighted in red:
Considering the fact that the $52.00 strike represents an approximate 1% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 99%. On our website under the contract detail page for this contract, Stock Options Channel will track those odds over time to see how they change and publish a chart of those numbers (the trading history of the option contract will also be charted). Should the covered call contract expire worthless, the premium would represent a 2.44% boost of extra return to the investor, or 20.70% annualized, which we refer to as the YieldBoost.
Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 252 trading day closing values as well as today's price of $51.27) to be 23%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.
Top YieldBoost Calls of the S&P 500 »
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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| -0.007728
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2020-01-02
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Caterpillar Stock Will Be Boosted by Multiple Macro Trends in 2020
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CAT
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Multiple, positive macro factors look poised to meaningfully improve CaterpillarâÂÂs (NYSE: financial results in the first half of 2020. As a result, Caterpillar stock should rise meaningfully during that time.
Source: Shutterstock
For several reasons, the U.S.-China trade deal will be a huge positive for Caterpillar. ChinaâÂÂs economic recovery, which , will gather steam. As a result, the companyâÂÂs construction business in China, which accounts for 5%-10% of the companyâÂÂs total revenue, will accelerate.
Moreover, CaterpillarâÂÂs mining equipment business (the company is ) will benefit as ChinaâÂÂs revival leads to increased global demand for industrial metals like iron ore, copper, and silver. Already, iron ore prices have surged from about $80 in early November to around $92 recently. Similarly, copper prices have jumped from just over $2.50 .
CAT also sells a significant amount of oil and gas exploration equipment. As ChinaâÂÂs economy recovers, it will consume more oil, pushing oil prices higher and leading to increased demand for oil exploration equipment. CAT, which also sells farming equipment, should benefit as well from gigantic increases purchased by China.
In order to grow all of the crops that the Asian country has promised to buy, American farmers will need to cultivate much more land and buy a great deal more agricultural equipment. Finally, that China could import natural gas from the U.S. as part of the trade dealàIf that scenario materializes, CATâÂÂs natural gas equipment revenue would probably surge.
Dollar Weakness and Caterpillar Stock
The U.S. dollar is starting to weaken. That trend helps Caterpillar stock.
because it makes oil, natural gas, minerals, and even food more expensive in dollar terms. As a result, mining, drilling and farming become more lucrative, increasing demand for CaterpillarâÂÂs equipment.
In the last week, AmericaâÂÂs currency currencies, and it has declined 2.6% over the last three months. According to CNBC, the dollar, âÂÂis widely expected to be weaker in the coming year, as other economies do better and catch up to the U.S.âÂÂ
The business news site added that the dollar âÂÂis expected to see at least a single digit (percentage) lossâ in 2020. unlike a number of his predecessors, is actually very much in favor of a weaker dollar, so the Trump administration will not do anything to prevent the dollar from weakening and could even accelerate the process.
Infrastructure, Nonresidential Construction and Caterpillar Stock
Both Caterpillar and JPMorgan analyst Ann Dulgnan are upbeat on U.S. infrastructure spending trends, with Caterpillar CEO Jim Umpleby saying that he has seen âÂÂ.âÂÂ
BarronâÂÂs reporting that Dulgnan âÂÂisâ¦bullish on U.S. infrastructure spending.âÂÂ
Additionally, Chief Economist Anirban Basu is also upbeat on U.S. infrastructure spending. citing meaningful spending by states and municipalities to improve the countryâÂÂs infrastructure.
Meanwhile, the associationâÂÂs Construction Backlog Indicator increased to nine months in August. Although the association reported that construction spending and employment â two lagging indicators â eased,àI believe that the strength of the leading indicator indicates that spending on nonresidential construction will rise meaningfully in 2020.
Of course, easing tariffs will definitely boost that trend as well.
Valuation and Dividend
CaterpillarâÂÂs valuation of less than 14 times analystsâ average 2020 earnings per share estimate is a real bargain in this market, where so many stocks are overvalued. And its 2.8% will pay investors to wait in case the market takes a while to realize that many macro trends are moving in CaterpillarâÂÂs favor.
The Bottom Line on Caterpillar Stock
CaterpillarâÂÂs stocks will rise, boosted by the China trade deal, ChinaâÂÂs economic recovery, a weaker dollar, and favorable U.S. building and infrastructure trends. In 2020, CaterpillarâÂÂs shares should be able to reach at least $180, just $10 above its January 2108 high. Including dividends, that would give investors a total return of nearly 20%. Not bad for a stock that doesnâÂÂt pose very much risk.
As of this writing, the author did not own any of the aforementioned securities.
The post 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.
| -0.00706
| -0.013884
|
2020-01-02
|
Why MetLife's U.S. Segment Revenues Are Likely To Shrink $3 Billion In 2019
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AIG
|
Growth in MetLife’s (NYSE: MET) U.S. segment has been key to its intrinsic value over the years, as it is the highest contributing segment with an average revenue share of 51% over the last three years. The segment is expected to contribute $34 billion to the company’s 2019 revenues, which is $3 billion short of the previous year’s figure. While this will weigh on MetLife’s total revenue figure for the year, the company’s top line should expand thanks to expected growth of $4.1 billion in MetLife Holdings & Corporate division. Trefis details the key components of MetLife’s Revenues in an interactive dashboard, along with our forecast for 2019-2020.
Although MetLife Holdings & Corporate would drive growth in 2019, the U.S. segment will contribute 49% of the company’s $69.5 billion in revenues for the year – more than double the revenues for MetLife Holdings & Corporate segment of $15.3 billion. Additionally, you can make changes to our forecast for individual revenue streams in the dashboard to arrive at your forecast for MetLife’s Revenues.
What To Expect From MetLife’s Revenues Over Coming Years
MetLife’s Total Revenue has Jumped 12% from $60.8 billion in 2016 to almost $67.9 billion in 2018, mainly due to a 26% growth in U.S. Segment
The company is expected to add $1.52 billion in 2019 which would be driven by a $4.12 billion increase from MetLife Holdings & Corporate, $254 million from Asia Segment and $147 million from Latin America Segment, partially offset by an expected drop of $3 billion in the U.S Segment.
Thereafter, revenues are expected to decrease 3% y-o-y and cross $67.3 billion by 2020, mainly due to a decline in revenue from MetLife Holdings & Corporate division.
Details about how trends in MetLife revenues compare with peers AIG, Prudential Financial and Hartford Financial are available in our interactive dashboard.
(A) Although the U.S Segment has grown 26% over the last two years, we expect these revenues to drop by $3 billion in 2019.
This is the largest segment in terms of revenue which provides insurance coverage to both businesses and individuals. It could be divided into three businesses:
Group Benefits – offers solutions such as term, variable, and universal life insurance, disability coverage, and dental solutions
Retirement & Income Solutions – includes pension risk transfers, and stable value products
Property & Casualty – offers solutions for automobile, property, and small businesses
The segment premiums increased 31% over the last 2 years from $21.5 billion in 2016 to $28.2 billion in 2018. This includes a 19% growth in segment premiums in 2018 primarily due to higher sales in Retirement & Income Solutions.
However, we expect the revenues to decrease 12% in 2019 – a decrease of $3 billion in absolute terms.
Universal Life and Investment-Type Product Policy Fees is expected to remain at the same level as the previous year figure over 2019-2020.
Net Investment Income from investment of segment premiums has increased 12% over the last 2 years from $6.2 billion in 2016 to $7 billion in 2018. Further, it is expected to increase at an average annual rate of 3% and cross $7.4 billion by 2020.
Other revenues constitute a minority portion of the segment revenues. It is expected to increase 13% over 2019-20 from $0.82 billion in 2018 to $0.93 billion by 2020.
(B) MetLife Holdings & Corporates segment revenues are expected to grow 37% from $11.1 billion in 2018 to $15.3 billion in 2019.
It comprises of products such as term insurance, variable insurance, universal life insurance, and various annuities products that the company has stopped marketing actively.
This spike in 2019 will primarily be driven by Net Derivative Gains.
We expect segment revenues to normalize in the subsequent year and cross $10.9 billion – down 29% y-o-y.
(C) Asia Segment revenue have increased at an average annual rate of 3% over the last two years, which is expected to continue over 2019-2020.
This segment offers life insurance, accident & health insurance, and retirement & savings plan to businesses and individuals in 10 Asian markets along with Japan.
Segment revenues have grown 5% over the last two years from $11.2 billion in 2016 to $11.8 billion in 2018. Further, we expect it to continue its momentum and cross $12.6 billion by 2020.
Our interactive dashboard for MetLife details what is driving changes in revenues for MetLife’s Asia Segment.
(D) Latin America Segment revenues are expected to cross $5.4 billion by 2020.
It provides life insurance, accident & health insurance, retirement & savings, and credit insurance to businesses and individuals in 7 Latin American jurisdictions along with Mexico & Chile.
The segment revenues have grown 9% over the last 2 years from $4.7 billion in 2016 to $5.1 billion in 2018.
We expect the revenues to increase at an average annual rate of 3% over 2019-2020.
This would mainly be driven by growth in segment premiums.
(E) EMEA Segment is expected to add around $100 million over 2019-2020.
It offers life insurance, accident & health insurance, retirement & savings, and credit insurance to businesses and individuals and has its largest base in the Gulf region, Poland, the UK, and Turkey.
Although EMEA segment has grown at an average annual rate of 2% over 2016-2018, segment revenues in 2019 are expected to remain at the same level as the 2018 figure.
Thereafter, they are expected to record a slight growth in the subsequent year and cross the $3 billion mark.
Trefis estimates MetLife’s stock (shows cash and valuation analysis) to have a fair value of $51, which is slightly below the current market price (Our price estimate takes into account MetLife’s earnings release for the third quarter).
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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.
| -0.00706
| -0.007728
|
2020-01-02
|
Get Ready for 2020 to Be a Turnaround Year for Netflix Stock
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T
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Shares of streaming giant Netflix (NASDAQ:) are up 20% year-to-date. Ostensibly, that seems like a good year, but, it wasnâÂÂt a good year for the company. Instead, competition concerns turned Netflix stock from a must-own growth play with a ton of momentum, into a questionably overvalued stock treading water.
Source:
NFLX stock actually underperformed the broader market in 2019 (the S&P 500 is up 30% year-to-date), didnâÂÂt live up to standards in the big tech category (the Nasdaq-100 is up 40% year-to-date), and turned in its fourth-worst annual performance of the decade. Shares also presently sit more than 20% off their 2018 highs, whereas the rest of the market has surged to all-time highs.
In other words, NFLX stock rose in 2019, but it didnâÂÂt win â shares lost their shine thanks to Disney (NYSE:), AT&T (NYSE:), and many others entering the streaming game, and making for a much tougher competitive landscape for Netflix.
Calendar 2020 will much be different. If 2019 was the year that Netflix lost its momentum thanks to escalating competition concerns, 2020 will be the year that the company regains that momentum as those competition concerns prove to be overstated. NFLX stock will rock higher, out-perform the broader market and big tech peers, and surge to all-time highs. HereâÂÂs why.
Netflix Lost Momentum in 2019
ThereâÂÂs no denying the simple truth. Netflix lost its growth momentum in 2019 thanks to escalating competition concerns.
That is, in 2018, Netflix was essentially one of only three relevant streaming services in the world, with Amazon (NASDAQ:) and Hulu being the other two. But, in 2019, Disney â the worldâÂÂs largest media company â and Apple (NASDAQ:) â the worldâÂÂs second largest tech company â launched streaming services. AT&T announced intentions to launch an HBO streaming service. Comcast (NASDAQ:) announced similar intentions.
In other words, in 2019, the streaming landscape went from a three horse race, to an overly crowded market with a ton of viable, deep-pocketed players.
Naturally, that weighed on Netflix investor confidence, especially since the company turned in quarterly numbers in 2019 that showed slowing user growth. This trend, coupled with fears that growth will slow even more as the competition heats up, caused NFLX stock to have a sub-par showing in 2019.
Netflix Will Regain Momentum in 2020
Despite all of that, thereâÂÂs also another simple truth hiding in plain sight, and itâÂÂs a much more favorable truth for NFLX bulls: Netflix will regain all of its growth momentum in 2020.
The sum of non-Netflix streaming services â namely, Disney+ and Apple TV+ â are all great. But, none of them have the depth or breadth of original content that Netflix has. Disney+ has only had one big hit with The Mandalorian.àApple TV+ also only had one big original hit with The Morning Show. Meanwhile, in basically the past month alone, Netflix has released big original hits like Youà(season 2),àThe Witcher,àMarriage Story,àThe Irishman,àThe Two Popes, andà6 Underground.
In other words, Netflix is still killing the competition on the original content front. This will remain true for the foreseeable future, mostly because Netflix has more resources (they are spending way more than everyone else on developing original content for their streaming service) and more data (they have years of viewing habit data on 150 million global accounts).
There are two big implications here. First, current subscribers arenâÂÂt getting enough content elsewhere to warrant canceling Netflix, so they wonâÂÂt. Second, future potential subscribers will see Netflix as the superior option in streaming with the most bang for their buck, so they will continue to sign up for Netflix.
Consequently, throughout 2020, Netflix will report big growth quarter after big growth quarter, the sum of which will ease competition concerns surrounding NFLX stock. Investor sentiment will grow more optimistic, resulting in multiple expansion. Analyst sentiment will also grow more optimistic, resulting in upwards revisions to forward earnings estimates.
This combination of easing fears, multiple expansion, and rising forward estimates should spark a big-time performance from NFLX stock in 2020.
Bottom Line on NFLX Stock
Netflix had a rough 2019, characterized by escalating competition-related concerns. In 2020, Netflix will put those concerns to ease. As they do, Netflix will regain its growth momentum, and NFLX stock will have a blockbuster year.
As of this writing, Luke Lango was long NFLX, T, and AAPL.
The post 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.
| -0.00706
| 0.005147
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2020-01-02
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Is Navistar a Buy for 2020?
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CMI
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Trucking is a cyclical industry, and truck manufacturers like Navistar (NYSE: NAV) have certainly seen significant volatility in revenue and earnings over time. With 2020 set to be a down year for the industry -- the latest results from Navistar only served to confirm this expectation -- it's understandable if the market decides to take a dim view of prospects. That said, there's a strong case for the argument that stocks in the sector remain a good value. Here it is.
Image source: Getty Images.
Guidance for 2020
The uncertainty in the timing of the cycle of trucking demand makes guidance very hard to formulate. It's a common feature of investing in such stocks that guidance can turn out to be too optimistic on the way down and too pessimistic on the way up.
Unfortunately, the industry is heading down in 2020, and Navistar's updated guidance demonstrates how easy to is to overshoot on guidance when an industry is cyclically declining. Note that the guidance given on the investor day is from just three months ago.
METRIC
CURRENT GUIDANCE
INVESTOR DAY, SEPTEMBER 2019
Industry Retail Deliveries of Class 6-8 trucks and buses, U.S. and Canada (units)
"Low end of the range"
335,000 to 365,000
Revenue
$9.25 billion to $9.75 billion
$10 billion to $10.5 billion
Adjusted EBITDA
$700 million to $725 million
$775 million to $825 million
Data source: Navistar presentations. EBITDA = earnings before interest, tax, depreciation, and amortization.
Discussing the outlook for 2020 on the fourth-quarterearnings call Navistar CEO Troy Clarke painted a picture of lower economic growth in 2019 leading to a year of transition for the industry. However, he also noted that "recent industry orders have been running below replacement level, as I believe the industry is working through a period of transition and then orders will pick up and recover in the second half of the year."
In other words, a recovery in orders and ultimately a recovery in revenue should be in place by 2021. Discussing the matter further on theearnings call Clarke said that should the economy slip into something "that might look like a manufacturing recession in the first half of 2020" then "the recovery in orders in the market may be something that takes place late in 2020 or early in 2021."
Of course, the economy could slip into a deeper and more lasting recession, in which case all bets are off, but under Clarke's bad-case scenario the recovery in orders expected in the second half will merely be pushed out by a quarter or two.
The investment case for Navistar
It appears that the argument over truck demand, and Navistar earnings, isn't about whether a recovery will happen but rather about when. In other words, when the overall economy starts to grow at above 2% again, Clarke believes freight demand will exceed capacity and freight companies will start to order trucks again. In addition, truck prices will need to stabilize before companies buy new trucks again.
The good news is that the current analyst earnings estimates -- the 2020 EBITDA consensus is inside Navistar's range -- seem to suggest there is enough room for error in them to leave Navistar still looking like a good value.
The key figure to focus on in the table is the enterprise value (EV) or market cap plus net debt to EBITDA. The EV/EBITDA multiple is a commonly used valuation metric. I'll come back to that shortly, but first note that the modest recovery expected in 2021 and 2022 would still leave revenue below the level of the boom years of 2018 and 2019, and that Navistar's margin expansion plans are expected to result in high-single-digit earnings growth from the trough formed in 2020.
NAVISTAR
2016
2017
2018
2019
2020 (ESTIMATE)
2021 (ESTIMATE)
Revenue
$8,111 million
$8,570 million
$10,250 million
$11,251 million
$9,467 million
$9,753 million
EBITDA
$508 million
$582 million
$826 million
$882 million
$722 million
$774 million
EV/EBITDA*
13.5
11.8
8.3
7.8
9.5
8.9
Data sources: Navistar presentations and analyst estimates. *Based on the current enterprise value of $6.85 billion.
To put these figures into context, here's a look at Navistar's valuation during the last trough in heavy truck sales at the end of 2016 compared to those of industry peers PACCAR (NASDAQ: PCAR) and Cummins (NYSE: CMI). For reference, the forecast EV/EBITDA for PACCAR and Cummins at their trough in 2020 is for 13.4 times and 9.1 times, respectively. In addition, all three are expected to generate earnings significantly in excess of those generated in the last trough, in 2016.
NAV EV to EBITDA data by YCharts
Is Navistar a buy?
When you put it all together, the stock looks like a very good value, but anyone buying in will have to appreciate that it's not going to be a smooth ride, and it's possible that some downward revisions to earnings estimates could come along. It's not easy predicting the timing of a cycle.
Nevertheless, if you believe in the long-term prospects for the U.S. economy and trucking demand, trucking stocks are attractively priced right now and have a good margin of safety for what's likely to be a rough six months.
10 stocks we like better than Navistar International
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Lee Samaha has no position in any of the stocks mentioned. The Motley Fool owns shares of Paccar. The Motley Fool recommends Cummins. 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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| -0.013997
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2020-01-02
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RRC February 14th Options Begin Trading
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RRC
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Investors in Range Resources Corp (Symbol: RRC) saw new options become available today, for the February 14th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the RRC options chain for the new February 14th contracts and identified one put and one call contract of particular interest.
The put contract at the $4.50 strike price has a current bid of 35 cents. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $4.50, but will also collect the premium, putting the cost basis of the shares at $4.15 (before broker commissions). To an investor already interested in purchasing shares of RRC, that could represent an attractive alternative to paying $4.69/share today.
Because the $4.50 strike represents an approximate 4% discount to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the put contract would expire worthless. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 100%. Stock Options Channel will track those odds over time to see how they change, publishing a chart of those numbers on our website under the contract detail page for this contract. Should the contract expire worthless, the premium would represent a 7.78% return on the cash commitment, or 66.02% annualized — at Stock Options Channel we call this the YieldBoost.
Below is a chart showing the trailing twelve month trading history for Range Resources Corp, and highlighting in green where the $4.50 strike is located relative to that history:
Turning to the calls side of the option chain, the call contract at the $5.00 strike price has a current bid of 30 cents. If an investor was to purchase shares of RRC stock at the current price level of $4.69/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $5.00. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 13.01% if the stock gets called away at the February 14th expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if RRC shares really soar, which is why looking at the trailing twelve month trading history for Range Resources Corp, as well as studying the business fundamentals becomes important. Below is a chart showing RRC's trailing twelve month trading history, with the $5.00 strike highlighted in red:
Considering the fact that the $5.00 strike represents an approximate 7% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 99%. On our website under the contract detail page for this contract, Stock Options Channel will track those odds over time to see how they change and publish a chart of those numbers (the trading history of the option contract will also be charted). Should the covered call contract expire worthless, the premium would represent a 6.40% boost of extra return to the investor, or 54.30% annualized, which we refer to as the YieldBoost.
Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 252 trading day closing values as well as today's price of $4.69) to be 71%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.
Top YieldBoost Calls of the S&P 500 »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
| -0.00706
| 0.018141
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2020-01-02
|
February 14th Options Now Available For AT&T (T)
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T
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Investors in AT&T Inc (Symbol: T) saw new options become available today, for the February 14th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the T options chain for the new February 14th contracts and identified one put and one call contract of particular interest.
The put contract at the $38.50 strike price has a current bid of $1.09. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $38.50, but will also collect the premium, putting the cost basis of the shares at $37.41 (before broker commissions). To an investor already interested in purchasing shares of T, that could represent an attractive alternative to paying $38.87/share today.
Because the $38.50 strike represents an approximate 1% discount to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the put contract would expire worthless. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 100%. Stock Options Channel will track those odds over time to see how they change, publishing a chart of those numbers on our website under the contract detail page for this contract. Should the contract expire worthless, the premium would represent a 2.83% return on the cash commitment, or 24.03% annualized — at Stock Options Channel we call this the YieldBoost.
Below is a chart showing the trailing twelve month trading history for AT&T Inc, and highlighting in green where the $38.50 strike is located relative to that history:
Turning to the calls side of the option chain, the call contract at the $39.50 strike price has a current bid of 61 cents. If an investor was to purchase shares of T stock at the current price level of $38.87/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $39.50. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 3.19% if the stock gets called away at the February 14th expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if T shares really soar, which is why looking at the trailing twelve month trading history for AT&T Inc, as well as studying the business fundamentals becomes important. Below is a chart showing T's trailing twelve month trading history, with the $39.50 strike highlighted in red:
Considering the fact that the $39.50 strike represents an approximate 2% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 99%. On our website under the contract detail page for this contract, Stock Options Channel will track those odds over time to see how they change and publish a chart of those numbers (the trading history of the option contract will also be charted). Should the covered call contract expire worthless, the premium would represent a 1.57% boost of extra return to the investor, or 13.32% annualized, which we refer to as the YieldBoost.
Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 252 trading day closing values as well as today's price of $38.87) to be 18%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.
Top YieldBoost Calls of S.A.F.E. Dividend Stocks »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
| -0.00706
| 0.005147
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2020-01-02
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Why Did We Increase Verizon’s Stock Price Estimate By 15% Within 6 Months?
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T
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Trefis raised its stock price estimate for Verizon (NYSE: VZ) by almost 15% in less than six months. Trefis currently has a stock price estimate of $62 per share for Verizon’s stock, which is an increase from an estimate of $54/share in July 2019 and $59/share in November 2019. This increase in price estimate is driven by a rise in the company’s valuation multiple (forward P/E) from 12x to 15x, which is a reflection of the increase in dividend pay-out and the expected strong take-off in the 5G market. Verizon increased its dividend per share from $0.6025 at the end of Q2 2019 to $0.6150 in Q3 2019.
5G Services
Along with higher dividends, the most important factor in Verizon’s increased valuation is its bet on 5G service.
Ericsson, the Swedish telecom company that provides networking equipment to wireless carriers, predicts that by the end of 2025, 5G internet will cover 65% of the world’s population and will handle 45% of all the mobile data traffic globally. 5G is also expected to drive an increase in average monthly consumption of mobile data, to 24GB from 7.2GB today, something Verizon is banking on.
As of November 2019, Verizon’s 5G Ultra Wideband service is available in select parts of several cities, including Boston, Houston, Dallas, Washington, D.C., Atlanta, and New York City.
With growing competition from AT&T and T-Mobile, Verizon has inked deals to bring 5G to 13 NFL stadiums this season, with plans to expand further. The NFL stadium deals are an important part of Verizon’s 5G rollout strategy, given many of these stadiums are located in dense urban areas and draw a lot of interest from the surrounding communities, meaning potential customers for Verizon’s 5G network.
We break down the stock price estimate into 4 drivers – revenue, net income margin, number of shares, and P/E multiple. To see how each of these drivers are performing, view our interactive dashboard analysis – Verizon Valuation: Expensive or Cheap?
Total Revenue
Verizon’s total revenues have increased from $126 billion in 2016 to $131 billion in 2018.
We expect revenues to grow to over $133 billion by 2020.
Revenue growth is likely to be led by healthy growth in the wireless segment, due to rising user count and higher ARPU.
To see how each operating division of Verizon is performing and what is the outlook, and also how Verizon’s revenue growth trend compares with its major peers, view our dashboard analysis.
Profitability
Net Income grew from $13.1 billion in 2016 to $15.5 Billion in 2018, with it being unusually high at $30 billion in 2017.
The sharp jump in 2017 was due to one-time tax benefits realized with the implementation of the TCJ Act.
We expect net income to be around $17 billion in 2020.
This growth will likely be led by higher margins and an elevated revenue level.
EPS
EPS has grown from $3.21 in 2016 to $3.76 in 2018. The sharp jump to $7.36 in 2017 was due to higher net income on the back of tax benefits recorded. We estimate EPS to be $4.15 in 2020.
EPS growth from 2018 can be attributed to higher Net Income, partly offset by a higher share count.
Price Estimate
Trefis has a price estimate of $62 per share for Verizon’s stock. The price estimate is arrived at by using the discounted cash flow valuation technique, which you can find in Verizon’s detailed financial model here. Based on projected EPS of $4.15 per share and stock price estimate of $62 per share, Verizon’s forward price-to-earnings multiple stands at 15x.
To understand how Verizon’s P/E multiple compares with its major peers, view our dashboard analysis.
What’s behind Trefis? See How it’s Powering New Collaboration and What-Ifs
For CFOs and Finance Teams | Product, R&D, and Marketing Teams
More Trefis Data
Like our charts? Explore example interactive dashboards and create your own.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
| -0.00706
| 0.005147
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2020-01-02
|
Interesting KEY Put And Call Options For February 14th
|
KEY
|
Investors in KeyCorp (Symbol: KEY) saw new options become available today, for the February 14th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the KEY options chain for the new February 14th contracts and identified one put and one call contract of particular interest.
The put contract at the $19.50 strike price has a current bid of 27 cents. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $19.50, but will also collect the premium, putting the cost basis of the shares at $19.23 (before broker commissions). To an investor already interested in purchasing shares of KEY, that could represent an attractive alternative to paying $20.06/share today.
Because the $19.50 strike represents an approximate 3% discount to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the put contract would expire worthless. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 100%. Stock Options Channel will track those odds over time to see how they change, publishing a chart of those numbers on our website under the contract detail page for this contract. Should the contract expire worthless, the premium would represent a 1.38% return on the cash commitment, or 11.75% annualized — at Stock Options Channel we call this the YieldBoost.
Below is a chart showing the trailing twelve month trading history for KeyCorp, and highlighting in green where the $19.50 strike is located relative to that history:
Turning to the calls side of the option chain, the call contract at the $20.50 strike price has a current bid of 40 cents. If an investor was to purchase shares of KEY stock at the current price level of $20.06/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $20.50. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 4.19% if the stock gets called away at the February 14th expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if KEY shares really soar, which is why looking at the trailing twelve month trading history for KeyCorp, as well as studying the business fundamentals becomes important. Below is a chart showing KEY's trailing twelve month trading history, with the $20.50 strike highlighted in red:
Considering the fact that the $20.50 strike represents an approximate 2% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 99%. On our website under the contract detail page for this contract, Stock Options Channel will track those odds over time to see how they change and publish a chart of those numbers (the trading history of the option contract will also be charted). Should the covered call contract expire worthless, the premium would represent a 1.99% boost of extra return to the investor, or 16.93% annualized, which we refer to as the YieldBoost.
Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 252 trading day closing values as well as today's price of $20.06) to be 26%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.
Top YieldBoost Calls of the S&P 500 »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
| -0.00706
| -0.017275
|
2020-01-02
|
3 Healthcare Stocks Primed for 2020 Gains
|
ARAV
|
Not all stocks are equal. Some will generate returns, while others will harvest losses. Some will soar magnificently, while others will crash and find it hard to reignite. The eternal question for the intrepid investor remains unchanged, though; which are the ones bound for fortune and, conversely, which are the ones to avoid.
While nothing is certain, there are ways to help make the right decision. TipRanks’ Best Stocks to Buy tool tracks 8 key metrics and uses the results to score stocks accordingly. The tool displays the most compelling investments and gives them a Smart Score; from 1, down in the doldrums, all the way up to a “Perfect 10” at the peak of the summit.
In this case, the data crunching tool recognized 3 healthcare stocks, which not only display Strong Buy status but also earned a “Perfect 10” Smart Score. Let’s take a closer look at the data at hand.
Horizon Therapeutics (HZNP)
In the rollercoaster world of healthcare so much hinges on the FDA’s approval or rejection of a new drug. Of course, it’s imperative to look at the bigger picture, and realize what these companies are trying to achieve in terms of their respective therapies. There is no doubt, though, that especially in this sector, the market reacts dramatically to both good and bad news.
One such company looking forward to an FDA decision in the new year is biopharma Horizon Therapeutics. The company’s focus is on rare and rheumatic conditions, and a PDUFA date of March 8 will determine the future of Horizon’s teprotumumab drug, a treatment for active thyroid eye disease (TED). The disease can potentially lead to loss of vision and the drug could be the first treatment for TED to gain approval from the FDA.
Clinical trials in both Phases 2 and 3 have displayed positive data, and an approval will add the treatment to a portfolio that the company thinks will generate between $1.28 billion and $1.31 billion in net sales in 2019.
Piper Jaffray’s David Amsellem believes Horizon is "on the cusp of a seminal milestone." The analyst reveals in a note to clients that a recent physician survey indicated positive feedback for the drug and the approval of teprotumumab will lead to a "relatively high probability of wide adoption." Amsellem sees "ample room for significant further value creation” and thinks Horizon shares are set for multiple expansion.
Unsurprisingly, then, Amsellem reiterated his Overweight rating and raised his price target from $36 to $49, which represents a potential upside of 36% from current levels. (To watch Amsellem’s track record, click here)
The rest of the Street backs the Piper Jaffray analyst unanimously; all the analysts, 7 to be precise, tracked over the last 3 months, rate the biopharma a Buy; Therefore, Horizon has a Strong Buy consensus rating. The average price target of $40.57 indicates upside potential of 12%. (See Horizon stock analysis on TipRanks)
Aravive Inc (ARAV)
While the market has provided plentiful returns in 2019, not many have performed better than biotech Aravive. The micro-cap, which is focused on treatments for life threatening diseases, has added almost 300% to its share price throughout the year.
Aravive’s lead candidate is AVB-500, a treatment for ovarian cancer and IgA nephropathy (kidney fibrosis). Recent data from a Phase 1b clinical trial of the drug in platinum-resistant recurrent ovarian cancer patients displayed positive results, with the study showing that women taking the drug exhibited higher rates of progression free survival. It is still early, though, and the trial was small, with only 31 patients.
The company recently began a Phase IIa study of AVB-500 in IgA nephropathy patients, and Piper Jaffray’s Edward Tenthoff noted the predictive modeling shows that AVB-500 "should provide sufficient exposure for therapeutic efficacy and may support a pivotal trial start next year.”
The 5-star analyst reiterated an Overweight rating, alongside a price target of $31. This implies upside potential of an excellent 125%. (To watch Tenthoff’s track record, click here)
Further adding to the bull’s case is Cantor Fitzgerald’s Louise Chen, who believes “positive data readouts from Aravive's pipeline will drive shares higher.” Chen rates ARAV an Overweight alongside a $30 price target. (To watch Chen’s track record, click here)
Over the last three months, two other analysts have joined the bullish pair with an opinion on Aravive. Both also rate the biotech a Buy, which grants Aravive a Strong Buy consensus rating. The average price target of $28.50 implies upside potential of 109%. (See Aravive stock analysis on TipRanks)
DexCom Inc (DXCM)
The synergy between technology and healthcare is constantly on the rise. The development of new tech enables treatment focused companies to break new ground and solve people’s day to day issues in ways not possible only a few years ago.
This brings us to DexCom, the maker of the CGM (continuous glucose monitoring) system. The system enables diabetics to track and manage sugar levels by inserting a small sensor underneath the skin. The sensor measures glucose levels and through a transmitter which is fastened on top, wirelessly sends the data to a smart device.
Statistics have shown that over 30 million people had diabetes in 2015 (over 9% of the population) and a further 84 million adults have had prediabetes, which if not treated, is a possible gateway to full blown diabetes. Although the numbers are alarming, they present significant market opportunity for Dexcom’s sugar monitoring products.
The company has had an excellent 2019 and its share price skyrocketed over 80%. The recent third-quarter report helped continue the upward trend, with revenue of $396 million exhibiting growth of 49% from the previous year’s same period.
Merrill Lynch’s Travis Steed thinks Dexcom’s 2019 performance is set to continue in the new year and rates the stock a “top idea for 2020.” The 5-star analyst highlights the company’s “competitive moat” and thinks DexCom is undervalued by the Street.
Therefore, Steed reiterated a Buy rating on DXCM and raised his price target to $250 from $220. This conveys the analyst’s confidence in the company’s ability to add 14% to its share price over the next 12 months. (To watch Steed’s track record, click here)
Steed is not alone in his bullish thesis, as 12 Buys and a single Hold bestow Strong Buy status on the groundbreaking glucose tracker. The average price target of $220.82, though, implies only small upside of 1%. This could mean that the analysts haven’t updated their models yet to reflect its 2019 gain. (See DexCom stock analysis on TipRanks)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
| -0.00706
| -0.058999
|
2020-01-02
|
February 14th Options Now Available For Aurora Cannabis (ACB)
|
ACB
|
Investors in Aurora Cannabis Inc (Symbol: ACB) saw new options begin trading today, for the February 14th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the ACB options chain for the new February 14th contracts and identified one put and one call contract of particular interest.
The put contract at the $1.50 strike price has a current bid of 2 cents. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $1.50, but will also collect the premium, putting the cost basis of the shares at $1.48 (before broker commissions). To an investor already interested in purchasing shares of ACB, that could represent an attractive alternative to paying $2.06/share today.
Because the $1.50 strike represents an approximate 27% discount to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the put contract would expire worthless. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 100%. Stock Options Channel will track those odds over time to see how they change, publishing a chart of those numbers on our website under the contract detail page for this contract. Should the contract expire worthless, the premium would represent a 1.33% return on the cash commitment, or 11.32% annualized — at Stock Options Channel we call this the YieldBoost.
Below is a chart showing the trailing twelve month trading history for Aurora Cannabis Inc, and highlighting in green where the $1.50 strike is located relative to that history:
Turning to the calls side of the option chain, the call contract at the $2.50 strike price has a current bid of 3 cents. If an investor was to purchase shares of ACB stock at the current price level of $2.06/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $2.50. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 22.82% if the stock gets called away at the February 14th expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if ACB shares really soar, which is why looking at the trailing twelve month trading history for Aurora Cannabis Inc, as well as studying the business fundamentals becomes important. Below is a chart showing ACB's trailing twelve month trading history, with the $2.50 strike highlighted in red:
Considering the fact that the $2.50 strike represents an approximate 21% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 74%. On our website under the contract detail page for this contract, Stock Options Channel will track those odds over time to see how they change and publish a chart of those numbers (the trading history of the option contract will also be charted). Should the covered call contract expire worthless, the premium would represent a 1.46% boost of extra return to the investor, or 12.36% annualized, which we refer to as the YieldBoost.
The implied volatility in the call contract example above is 230%.
Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 252 trading day closing values as well as today's price of $2.06) to be 72%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.
Top YieldBoost Calls of the S&P 500 »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
| -0.00706
| -0.009901
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2020-01-02
|
5-Year Returns for 5 Dow Jones Stocks Entering 2020
|
DIS
|
IâÂÂm of the view that for the average investor, buy-and-hold investing may be one of the best ways to grow personal wealth. And, when it comes to financial returns, numbers speak louder than words. So, to demonstrate how successful long-term investing strategy can be, I like to look at a number of large cap, Dow Jones stocks every so often to see how much a single, $1,000 investment five years ago would be worth today.
This time around, I have picked out five stocks from the coveted Dow Jones Industrial Average. In 2019, the index was up about 22%. As our readers may well remember, many stocks started 2019 from a point of weakness. Therefore, most of the blue chip, Dow Jones stocks became strong performers during the year.
So, by taking a longer view that extends to five years, we can better gauge the importance of investing for the long-run. LetâÂÂs take a closer look.
What the numbers mean
Under each company name, I state how the price has changed over the past five years and what this change equates to in terms of the compound annual growth rate (CAGR). Then, I show how $1,000 would have fared since late 2014.
Please note that all of these companies pay regular dividends that can also be reinvested. However, the calculation below does not take into consideration the actual dividend or the reinvestment of that income.
Past prices are as of late-December 2014. Current prices are as of this writing at close on Dec. 24.
Finally, I have not factored in any brokerage commissions or taxes.
5-Year Returns for 5 Dow Jones Stocks: Apple (AAPL)
Source: View Apart / Shutterstock.com
Apple (NASDAQ:) stock price has increased from $113.99 to $284.27.
CAGR: 20.05%
$1,000 would have become $2,493.51.
AAPL is expected to report earnings in early February. In 2019, the company overall released strong quarterly results and launched a number of services, such as Apple News+, Apple Card, Apple Arcade and Apple TV+. Nonetheless, is still its bread and butter business. If the recent trade truce between the U.S. and China continues well into 2020, the stock is likely to see increased iPhone demand in China â something that could easily boost earnings.
In 2019, broader markets performed quite well, and Apple stock â which is up about 89% over the past year â clearly many of its large cap peers. Therefore, there may be some volatility and short-term profit taking, especially prior to the earnings release date. Long-term investors may consider buying AAPL dips; Its current dividend yield stands at just under 1.1%.
Disney (DIS)
Source: Divina Epiphania / Shutterstock.com
DisneyÃÂ (NYSE:) stock price has increased from $95.03 to $145.29.
CAGR: 8.86%
$1,000 would have become $1,528.77.
DIS is expected to report earnings in February. As its streaming business is just getting started, analysts are likely to pay special attention to Disney+ metrics. For many viewers, content quality is extremely important when it comes to entertainment. The Disney brand, coupled with its powerful and unparalleled intellectual property (IP), will likely be the magnet that draws viewers to its streaming service.
IâÂÂd be a buyer of the shares, especially if the price drops to $130 or below. Also, its current dividend yield of Disney stock stands at 1.2%.
McDonaldâÂÂs (MCD)
Source: 8th.creator / Shutterstock.com
McDonaldâÂÂsà(NYSE:) stock price has increased from $94.78 to $196.67.
CAGR: 15.72%
$1,000 would have become $2,075.11.
McDonaldâÂÂs will likely report earnings in late January. In terms of customer loyalty â a crucial metric in the restaurant business â McDonaldâÂÂs is among the top-scoring chains. In addition to its food and drinks revenue, the group also has an impressive real estate portfolio. And that is partly why IâÂÂm always interested in MCD shares.
Last quarter of 2019 has seen the MCD stock price pullback from a 52-week high of $221.93 on Aug. 9 to the current $199 level. In early November, CEO Steve Easterbrook resigned as a result of a personal relationship with another McDonaldâÂÂs employee â a factor that weighed in the the fall in the stock price. Now, investors have a better entry point into MCD stock. Its current dividend yield stands at 2.5%.
Microsoft (MSFT)
Source: The Art of Pics / Shutterstock.com
MicrosoftÃÂ (NASDAQ:) stock price has increased from $47.88 to $157.38.
CAGR: 26.87%
$1,000 would have become $3,286.96.
Earlier in the month, the Financial TimesàMicrosoft CEO Satya Nadella its âÂÂPerson of the Year.â He has been credited with recognizing the growing importance of the cloud business, especially at the enterprise level.
MSFT will likely report earnings in late January, and many analysts are expecting the company to gain further market share in the cloud space. Long-term investors looking for robust capital gains should consider buying the stock at every weakness. Its current dividend yield stands at 1.3%.
Walmart (WMT)
Source: Jonathan Weiss / Shutterstock.com
Walmart (NYSE:) stock price has increased from $86.91 to $119.51
CAGR: 6.58%
$1,000 would have become $1,375.24.
WMT is expected to report earnings in February. The groupâÂÂs recent robust third quarter earnings report showed growth in its domestic operations as well as e-commerce. Therefore, the Street will analyze these key metrics closely to see if they have accelerated in the holiday season, too. With a late Thanksgiving, retailers have had a shorter shopping season in 2019. So, the Street will be watching fourth quarter sales numbers, not just from Walmart, but from its competitors, too.
In the past few weeks, Walmart stock has been trading near all-time highs. The run up in price since August, as well as its forward price-earnings ration (P/E) of 23.7, are making me wonder if there may be some profit-taking around the corner. Finally, its current dividend yield stands at 1.8%.
End-of-year takeaway
Over the past five years, all five of these Dow Jones stocks have been good investments. Shareholders in any one of them would have also received dividends, and that passive income would have increased the returns â especially if those dividends were reinvested.
It would also be correct to say that AAPL and MSFT have especially been growth stocks leading the market higher.
If you are new to investing or do not feel comfortable analyzing individual stocks, then you could also buy into an ETF that tracks the Dow Jones Industrial Average.
While past performance may not exactly repeat in the months ahead, the indexâÂÂs track record highlights its growth potential. It is home to many well-managed conglomerates that have robust earnings and are bellwethers of our economy. Thus, an ETF such as theàSPDR Dow Jones Industrial Averageà(NYSEARCA:) oràiShares Dow Jones US ETF (NYSEARCA:) may be appropriate for many portfolios.
Understandably, investors are wondering how much longer the rally in broader markets and individual names can last. I believe the numbers from many blue-chip companies indeed show that robust, long-run returns are likely to be achieved in the future, too. It would take a brave contrarian to bet against the positive trend not continuing over the next decade.
As of this writing, Tezcan Gecgil did not hold a position in any of the aforementioned securities.
The post 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.
| -0.00706
| -0.011471
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2020-01-02
|
Does Medtronic's Current P/E Ratio Offer Any Opportunity To Investors?
|
ABT
|
The market currently estimates Medtronic’s (NYSE:MDT) revenue growth to be around 3%, whereas the S&P 500’s expected revenue growth is about 7% in 2020. As we discuss below, Medtronic’s margins have been consistently higher than the S&P 500. If you think that Medtronic can grow revenues by more than 3% in 2020, beating expectations, while maintaining its expected margins, Medtronic’s stock should gain – especially versus the S&P 500, assuming no change in revenue and margin expectation for S&P500. Also, Medtronic’s P/E Ratio is lower when compared with Boston Scientific and Abbott. Medtronic’s lower P/E with respect to Boston Scientific makes sense, though when compared to Abbott, it appears to be low, as discussed in the sections below. You can look at our interactive dashboard analysis ~ Does Medtronic’s P/E Ratio Make Sense? ~ for more details.
Medtronic’s P/E Ratio At About 14.7, Is Largely In Line With Historical Average
Improvement in revenue growth with margins remaining relatively steady has helped.
Slight improvement in the P/E ratio for fiscal 2019 was due to revenue growth as well as an uptick in margins for that fiscal, and higher expected revenues going forward, as demonstrated in the charts below.
Medtronic’s jump in revenues in fiscal 2016 can be attributed to the Covidien acquisition.
Look at our analysis on Medtronic’s revenues and expenses for more details.
Medtronic vs. S&P 500: Higher 2020 Revenue Growth For Medtronic Could Present Opportunity
Medtronic’s P/E has been consistently lower than the S&P 500, explained by Medtronic’s smaller revenue growth for the most part.
However, Medtronic’s 2x higher margins versus the S&P 500 lends support to a higher multiple, especially if Medtronic shows higher revenue growth in 2020, when compared to historical years.
Medtronic vs. Boston Scientific: Compared to Boston Scientific, Medtronic’s P/E Ratio is much lower
This is expected given that Medtronic’s Revenue Growth has been consistently lower than Boston Scientific’s, even though margins are comparable.
Boston Scientific’s P/E ratio expanded in 2018, amid upbeat revenue and margins guidance by the company for 2019.
Medtronic vs. Abbott: Compared to Abbott as well, Medtronic’s P/E Ratio is much lower
Medtronic’s Revenue Growth has largely been lower than Abbott’s, even though Medtronic’s margins are slightly higher.
Abbott acquired St. Jude Medical in 2016, and that explains the jump in revenues in 2017, and a decline in share price in 2016 explains the lower P/E multiple, again due to the acquisition news.
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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.
| -0.00706
| -0.012191
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2020-01-02
|
Down Over 30% Since August, Is Recent IPO Fastly a Buy for 2020?
|
FSLY
|
Our demand for data is insatiable. Driven by smartphones and the rise of streaming video, the amount of information being transported via the internet has boomed in recent years, and network hardware giant Cisco still sees traffic growing over 20% annually through 2022.
That made cloud-based edge computing company Fastly (NYSE: FSLY) an intriguing stock when it had its IPO in the spring of 2019. After surging in its debut and eventually doubling from its IPO price in early fall, shares are down over 35% from their highs in the fourth quarter -- putting many post-IPO investors in the red. It will most definitely be a bumpy ride, but now looks like a good time to pick up a few shares with a new year upon us.
Image source: Getty Images.
What happened in year one
First off, as Fastly disclosed in its prospectus ahead of its public debut, edge computing and CDNs (content delivery networks) are a crowded space. All of the data moving around the world can't be handled by any one player, and Fastly is an upstart going against well-established legacy CDNs like Akamai and other aspiring disruptors like Cloudflare, not to mention the biggest cloud computing providers like Amazon, Microsoft, and Alphabet investing in their own edge computing platforms.
Nevertheless, the market is massive and still growing by mammoth numbers -- especially CDNs, which Cisco says will carry 72% of all global web traffic by 2022 compared with just 56% in 2017. Plus, with mobile-based traffic growing twice as fast as the average and an increasingly diverse set of devices making requests -- from smartphones to smart watches, laptops to smart sensors -- that gives Fastly plenty of room to scoop up some market share. Its non-centralized delivery network at the "edge," which the company defines as the moment data leaves a company's control and moves to a user's device or network, is also well-suited to today's needs. Spending on cloud-based "edge" computing is expected to pick up some serious steam in the next few years, garnering tens of billions of dollars spent every year in short order.
And scoop up market share it has. In addition to picking up new customers (total customer count was 274 in the third quarter of 2019 compared with 213 a year ago), Fastly's net dollar-based expansion rate was 135% in the third quarter, implying existing users of its platform spent an average of 35% more than in the same period in 2018. Here's what that equated to in the way of business results.
METRIC
Q3 2019
Q3 2018
CHANGE
Revenue
$49.8 million
$36.8 million
35.3%
Gross profit margin
55.2%
54.6%
0.6 pp
Operating expenses
$40.3 million
$27.8 million
45.0%
Adjusted net profit (loss)
($8.3 million)
($7.1 million)
N/A
PP = percentage point. Data source: Fastly.
The only downside is that revenue growth does appear to be slowing, even though Fastly is still so small. The 35% revenue growth rate in its third quarter compares to 40% in the first quarter. That could account for some of the stock's recent tumble, as does the lockup period on insider shareholder ownership that expired in November. Net losses do keep adding up as well, though Fastly did have $54.7 million in cash on the books at the end of the last quarter.
What Fastly thinks happens next
Fastly hasn't yet provided numbers for its 2020 expectations, but the small internet experience delivery company sees shifts in business and consumer thinking ahead. With cloud infrastructure investment already having reduced costs substantially in the last decade, Fastly thinks that customer experience will be more important than price in the years ahead. With its software-defined network at the edge, the company thinks it is primed to pick up new business at the expense of legacy web CDN technology.
Management thinks it will be able to improve its profitability, too. As demonstrated in the third quarter, gross profit margin on services rendered is ticking up as it adds more clients to the list, and rising usage of its newer product launches (like internet security and edge computing tools) should help revenue begin to outpace growth in operating expenses. Simply put, 2019 was a year of investment after the IPO, and Fastly will focus on more profitable expansion going forward.
Nevertheless, expect a bumpy ride ahead. Shares look like a reasonable enough buy with a price-to-sales ratio currently at 9.6, but that will depend on the company being able to maintain its top-line growth trajectory and ability to start narrowing losses. The opportunity is substantial, though, and Fastly should be able to maneuver enough of the massive web traffic market to keep momentum rolling. I'm thus a nibbler on the stock right now, with plans to pick up a few shares here or there on a monthly basis while building up a larger position over time.
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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. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Nicholas Rossolillo and his clients own shares of Alphabet (C shares) and Microsoft. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Fastly, and Microsoft and recommends the following options: long January 2021 $85 calls on Microsoft and short January 2021 $115 calls on Microsoft. 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.
| -0.00706
| 0.012093
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2020-01-02
|
How Does Abbott's Revenue And Other Key Metrics Compare With That of Boston Scientific?
|
ABT
|
Abbott (NYSE:ABT) and Boston Scientific (NYSE:BSX) are both engaged in the medical devices business. Abbott generates 3x the revenue when compared to Boston Scientific. For both the companies, revenue over the past few years has been impacted by acquisitions. Also, both the companies generate a significant portion of their revenues from the U.S. When it comes to profitability, Boston Scientific beats Abbott on gross profit. In this note we compare both the companies’ revenues and other key metrics. You can look at our interactive dashboard analysis ~ Abbott vs. Boston Scientific: How Have Revenues & Other Key Metrics Changed Over Recent Years? ~ for more details.
Abbott’s Revenues of $31 Billion Are Much Higher Than $10 Billion For Boston Scientific
Abbott and Boston Scientific are both engaged primarily in the Medical Devices business.
Abbott’s revenues grew from $20.2 billion in 2014 to $30.6 billion in 2018. Look at our analysis on Abbott’s revenues for more details.
Boston Scientific’s revenues have grown from $7.4 billion in 2014 to $9.8 billion in 2018, led by its MedSurg business. Look at our interactive dashboard analysis for more details on Boston Scientific’s revenues.
Abbott’s Revenues Grew At A Higher Pace On Average When Compared To Boston Scientific
Both Abbott and Boston Scientific saw growth in revenues in the recent years. And for both there was some impact of acquisitions in the sales growth.
Boston Scientific’s revenue grew at a CAGR of 7.5% between 2014 and 2018, while the figure was 11.5% for Abbott over the same period.
While Abbott’s growth in 2017 was aided by the St Jude acquisition, Boston Scientific’s growth in 2016 was bolstered by AMS portfolio and the Endochoice acquisition.
U.S. Accounts For A Significant Portion of Total Sales For Both The Companies
Abbott generated 35% of its total sales from the U.S. in 2018.
For Boston Scientific, the figure stood at 56% in 2018.
Gross Profit Margin For Boston Scientific Is Better Than That For Abbott
Abbott’s Gross Profit Margin grew from 54.5% in 2014 to 58.4% in 2018.
Gross Profit Margin for Boston Scientific grew from 70.1% in 2014 to 71.4% in 2018.
Boston Scientific’s Adjusted Net Income Margin Has Been Trending Higher, And It Is Better Than That of Abbott
Boston Scientific’s adjusted net income margin grew from 15.3% in 2014 to 21.0% in 2018.
Abbott’s adjusted net income margin grew from 15.0% to 16.8% over the same period.
What’s behind Trefis? See How it’s Powering New Collaboration and What-Ifs
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More Trefis Data
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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.
| -0.00706
| -0.012191
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2020-01-02
|
3 of the Best Biotech ETFs on the Market
|
ARKG
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In non-technical terms, 2019 was a weird year for biotechnology stocks and the related exchange traded funds (ETFs). For instance, the iShares Nasdaq Biotechnology ETF (NASDAQ:) joined its healthcare peers in scuffling through much of the first nine months of the year, trailing broader benchmarks like the S&P 500.
The fourth quarter has been a different story. IBB, the largest biotech ETF by assets, was up 16.65% since Oct. 1, pushing its 2019 year-to-date gain to 25%. That after months of investors pulling money from actively managed biotech funds. That situation is starting to correct as well, as data out last month indicated investors are .
There are other reasons to consider biotech ETFs with 2020 looming. âÂÂApprovals from the Food & Drug Administration are coming through above the average annual rate, the valuation of large-cap biotechs are attractive, and there have been significant mergers and acquisitions in past years,â .
With those factors in mind, letâÂÂs have a look at a trio of the best biotech ETFs on the market today.
ARK Genomic Revolution ETF (ARKG)
Source: Shutterstock
Expense ratio: 0.75% per year, or $75 on a $10,000 investment.
The ARK Genomic Revolution ETF (NYSEARCA:) has been immune to the aforementioned healthcare sector lethargy in 2019 as the fund went higher by almost 40%. This isnâÂÂt a one-off event, either. Over the past three years, the actively managed ARKG is higher by 106.4% compared to 37.2% for the aforementioned IBB. In other words, ARKG does an excellent job of justifying its high fee.
As its name implies, ARKG isnâÂÂt a standard biotech ETF. Rather, it focuses on the fast-growing genomics market, including CAR-T, CRISPR and other spaces where stock picking can be tricky for ordinary investors.
âÂÂGeenomic sequencing is changing the way biological information is collected, processed, and applied. ARKG is focused on the disruptive innovations that are increasing precision, restructuring health care, agriculture, pharmaceuticals, and enhancing the quality of life,â .
ARKG can hold 30 to 50 stocks and currently is home to 38, including plenty of winners, some of the very recent variety, such as Organovo (NASDAQ:).
Last Monday, Organovo jumped 24.1% âÂÂafter announcing it will merge with and operate as a division of Tarveda Therapeutics,â said ARK. âÂÂThe transaction will combine OrganovoâÂÂs proprietary 3D printingàtechnology with TarvedaâÂÂs proprietary Pentarin miniature drug conjugates and two clinical programs for the treatment of solid tumor malignancies.âÂÂ
Virtus LifeSci Biotech Clinical Trials ETF (BBC)
Source: Shutterstock
Expense ratio: 0.79%
The Virtus LifeSci Biotech Clinical Trials ETF (NYSEARCA:) is an under-appreciated story among biotech ETFs, but thatâÂÂs not preventing it from delivering jaw-dropping returns. On the back of a 28.31% gain in December, BBC closed 2019 higher by more than 62% year-to-date.
âÂÂThe fund benefited from a busy month for biotech companies,â . âÂÂWhile NovartisâÂÂs $9.7 billion takeover of Medicines Co. boosted overall sentiment, stakes in ChemoCentryx Inc. and Karyopharm Therapeutics Inc. helped BBC outperform. ChemoCentryâÂÂs shares soared on positive data regarding a drug to treat an inflammation disease, while Karyopharm reported better-than-expected sales.âÂÂ
This biotech ETF tracks the LifeSci Biotechnology Clinical Trials Index, âÂÂwhich tracks the performance of select clinical trials stage biotechnology companies,â .
Bottom line: BBC isnâÂÂt for the faint of heart, but it is one of the best biotech ETFs for aggressive, risk-tolerant investors.
Invesco Dynamic Biotechnology & Genome ETF (PBE)
Source: Shutterstock
Expense ratio: 0.57%
For investors who want access to some of the biggest biotech names with a weighting methodology beyond market cap, the Invesco Dynamic Biotechnology & Genome ETF (NYSEARCA:) is a practical idea.
PBE, one of the older biotech ETFs on the market, follows the Dynamic Biotech and Genome Intellidex Index. That benchmark weights its 30 components by price momentum, earnings momentum, quality, management action, and value. PBE has been effective in limiting volatility relative to legacy, equal-weight and some cap-weighted biotech ETFs.
PBEâÂÂs overlap with competing funds, such as IBB, is relatively light so investors should expected substantial differences between this biotech ETF and rival products over long holding periods.
Overall, PBEâÂÂs surprising lineup (itâÂÂs home to pharmaceuticals stocks residing in the ) make this is a biotech ETF for conservative investors.
As of this writing, Todd Shriber did not own any of the aforementioned securities.
The post 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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2020-01-02
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February 14th Options Now Available For Mosaic (MOS)
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MOS
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Investors in Mosaic Co (Symbol: MOS) saw new options become available today, for the February 14th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the MOS options chain for the new February 14th contracts and identified one put and one call contract of particular interest.
The put contract at the $21.00 strike price has a current bid of 78 cents. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $21.00, but will also collect the premium, putting the cost basis of the shares at $20.22 (before broker commissions). To an investor already interested in purchasing shares of MOS, that could represent an attractive alternative to paying $21.27/share today.
Because the $21.00 strike represents an approximate 1% discount to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the put contract would expire worthless. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 100%. Stock Options Channel will track those odds over time to see how they change, publishing a chart of those numbers on our website under the contract detail page for this contract. Should the contract expire worthless, the premium would represent a 3.71% return on the cash commitment, or 31.53% annualized — at Stock Options Channel we call this the YieldBoost.
Below is a chart showing the trailing twelve month trading history for Mosaic Co , and highlighting in green where the $21.00 strike is located relative to that history:
Turning to the calls side of the option chain, the call contract at the $21.50 strike price has a current bid of 81 cents. If an investor was to purchase shares of MOS stock at the current price level of $21.27/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $21.50. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 4.89% if the stock gets called away at the February 14th expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if MOS shares really soar, which is why looking at the trailing twelve month trading history for Mosaic Co , as well as studying the business fundamentals becomes important. Below is a chart showing MOS's trailing twelve month trading history, with the $21.50 strike highlighted in red:
Considering the fact that the $21.50 strike represents an approximate 1% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 99%. On our website under the contract detail page for this contract, Stock Options Channel will track those odds over time to see how they change and publish a chart of those numbers (the trading history of the option contract will also be charted). Should the covered call contract expire worthless, the premium would represent a 3.81% boost of extra return to the investor, or 32.33% annualized, which we refer to as the YieldBoost.
Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 252 trading day closing values as well as today's price of $21.27) to be 38%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.
Top YieldBoost Calls of the S&P 500 »
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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2020-01-02
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Brookfield Infrastructure Partners Dives Deeper Into Data to Keep Growing Its 4% Dividend
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BIP
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In late 2017, Brookfield Infrastructure Partners (NYSE: BIP) identified the data infrastructure sector as one that it planned to focus on in the coming years. At the time, CEO Sam Pollock stated that "data is the fastest-growing commodity in the world, with global usage growing exponentially, which requires massive investment in networks to store and transmit it, like fiber and telecom." Because of that, the company had already started investing in the sector by acquiring communications towers in France. However, it aimed to build out a much more robust portfolio of data infrastructure businesses so that it could benefit from the sector's growth.
It has since acquired several data infrastructure businesses, including recently agreeing to buy a portfolio of communications towers in India and Cincinnati Bell (NYSE: CBB), which operates a leading fiber-optic network in North America. These deals will not only provide an immediate boost to its cash flow but also enhance its growth prospects. As a result, Brookfield should have no problem continuing to grow its 4.1%-yielding dividend.
Image source: Getty Images.
Betting big on data
Brookfield Infrastructure has announced a string of data-related deals over the past year and a half:
In June of 2018, it formed a strategic alliance with AT&T (NYSE: T) to acquire several data centers in the U.S., investing about $160 million in the transaction.
A few months later, it formed a joint venture with Digital Realty (NYSE: DLR) to operate Ascenty, which is a leading data center in Brazil that Digital Realty acquired, investing about $200 million in the business.
The company also completed a smaller $50 million deal to buy an Asia Pacific data center business.
It formed another strategic partnership earlier this year to acquire an integrated data communications provider in New Zealand, investing about $200 million in the deal.
As a result of these transactions, the company's data infrastructure business now consists of about 7,000 multipurpose towers and active rooftop sites and around 6,200 miles of fiber optic cable in France and New Zealand and 50 data centers in the U.S., Brazil, and Australia.
That portfolio, however, will soon expand now that Brookfield has secured deals to buy two more data infrastructure companies. The first deal is the acquisition of a telecom tower company in India. Brookfield and its partners are paying about $3.7 billion -- with Brookfield investing $375 million -- for 130,000 sites. These towers support the operations of leading mobile operator Reliance Jio, which signed a 30-year contract to anchor the portfolio. As such, it will generate predictable cash flow for the company.
Brookfield, along with its partners, is also buying Cincinnati Bell for about $2.6 billion. That company operates a leading data transmission and distribution network in Cincinnati, Ohio, and Hawaii backed by more than 17,000 miles of fiber. This business enables Cincinnati Bell to provide "utility-like services for broadband and data, generating stable and growing cash flows," according to Brookfield.
Image source: Getty Images.
High-speed growth
Thanks to the stable cash flow these two companies produce, they'll provide an immediate boost to Brookfield's earnings when it closes the two transactions over the next year. However, that initial increase is only part of the draw. The other attraction is that both businesses come with visible organic expansion opportunities, which will enhance Brookfield's growth profile.
The Indian tower portfolio, for example, has two notable growth drivers. First, Brookfield expects to build another 45,000 towers to support Reliance Jio's growth as it benefits from India's rapidly expanding data industry. In addition to that, Brookfield plans to add more tenants to the towers, which currently only carry Jio's equipment. Most towers can hold multiple tenants, which gives Brookfield lots of running room.
Cincinnati Bell, meanwhile, has upgraded about 50% of its network in recent years to support growing data demand as well as the coming transition to 5G. The company expects to continue enhancing its system over the next few years so that it can support growing data demand.
These organic expansion opportunities will enable Brookfield to continue growing its earnings at an above-average rate. In 2020, for example, the company expects to deliver organic growth toward the top end of its 6% to 9% annual range thanks to the acquisitions it completed in the past year. That high-end pace will likely continue in future years thanks to the upcoming additions of Cincinnati Bell and Reliance's tower portfolio. As such, Brookfield could deliver dividend growth near the top end of its 5% to 9% annual target range.
An exciting way to invest in data
Brookfield Infrastructure has invested heavily in building out a global data infrastructure business and has put itself in an excellent position to benefit from the rapid growth of data usage in the coming years. That should enable the company to grow its cash flow and dividend toward the top end of its forecast range, setting it up to potentially generate higher total returns for its investors.
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Matthew DiLallo owns shares of Brookfield Infrastructure Partners. The Motley Fool recommends Brookfield Infrastructure Partners. 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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2020-01-02
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Sol-Gel Technologies Gets Makeover, Stock More Than Doubled In A Month
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SLGL
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(RTTNews) - Shares of Sol-Gel Technologies Ltd. (SLGL) have more than doubled over the last one month, thanks to positive data from its acne trials.
Sol-Gel Technologies is a clinical-stage dermatology company.
On December 30, 2019, the Company reported positive top-line results from two phase III trials of Twyneo for the treatment of acne vulgaris.
The primary endpoints for both trials included the proportion of patients who succeeded in achieving at least a two-grade reduction from baseline and Clear (grade 0) or Almost Clear (grade 1) at Week 12. Both the trials achieved the primary endpoints. Twyneo was also found to be well tolerated.
Twyneo is an investigational, combination of microencapsulated tretinoin 0.1% and microencapsulated benzoyl peroxide 3% cream. The Company is planning to submit the NDA for Twyneo in the second half of 2020. If approved, Twyneo has the potential to be the first acne vulgaris treatment to bring together benzoyl peroxide and a potent retinoid, tretinoin, in a once-daily cream.
Sol-Gel's lead drug candidate is Epsolay for papulopustular rosacea for which a New Drug Application is expected to be filed in the first half of 2020.
Papulopustular rosacea is a subtype of rosacea, a chronic inflammatory skin condition. It is characterized by persistent redness with transient papules and pastules (bumps and pimples). (Source: NCBI).
The Company's branded pipeline is supplemented by a portfolio of generic product candidates.
A bioequivalence study comparing Sol-Gel Technologies' 5-FU Cream with the marketed Efudex Cream in the treatment of actinic keratosis is underway. The results from this study, due by the end of 2019, are yet to be reported. This study is part of a collaboration with Douglas Pharmaceuticals.
Besides Douglas Pharmaceuticals, Sol-Gel also has a collaboration with Perrigo Company plc (PRGO) for generic product candidates.
Sol-Gel has seven collaborations with Perrigo and one with Douglas Pharmaceuticals for its generics portfolio with 50/50 gross profit sharing.
In January 2018, Perrigo received tentative approval from the FDA for Ivermectin cream, 1%, developed in collaboration with Sol-Gel, for the treatment of rosacea. In February 2019, Perrigo received approval from the FDA and launched the sale of acyclovir cream, 5%, developed in collaboration with Sol-Gel, for herpes.
Balance Sheet…
Sol-Gel reported a loss of $7.4 million or $0.35 per share for the third quarter of 2019 compared to a loss of $7.7 million or $0.40 per share for the same period in 2018.
Revenue from sales of a generic product from the collaboration arrangement with Perrigo in the third quarter of 2019 was $4.7 million compared to $38 thousand in the year-ago quarter and $7.8 million in the second quarter of 2019. The decrease in revenue from the previous quarter follows the entry of an authorized generic product to the market.
As of September 30, 2019, Sol-Gel had $7.6 million in cash, cash equivalents and deposits and $50.1 million in marketable securities for a total balance of $57.7 million. Based on current assumptions, the existing cash resources are expected to be sufficient to fund operational and capital expenditure requirements into the first quarter of 2021.
SLGL has traded in a range of $5.71 to $21.00 in the last 1 year. The stock closed Tuesday's (Dec.31, 2019) trading at $17.15, up 17.47%.
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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2020-01-02
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That Nike Store You Walked By Made $34 Million For Nike’s Stock
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NKE
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Nike (NYSE: NKE) is the largest athletic apparel company in the world. The company has achieved unparalleled growth in the apparel industry and is still going strong. This growth has been driven by upbeat performance for the retail (store) as well as direct to consumer (DTC) channels. Nike has been able to adapt to changing market dynamics quickly, with the company’s DTC (e-commerce as well as direct stores) segment witnessing tremendous growth over the last couple of years – helping Nike’s average store revenue cross $34 million in 2018.
Trefis compares average revenue per store for athletic apparel companies Nike, Under Armour and Lululemon in its interactive dashboard and concludes that Nike’s average per store revenue of $34 million in 2018 is more than 3 times the figure for competitor, Under Armour.
How Does The Average Revenue Per Store Of Athletic Apparel Companies Compare To Each Other?
*Includes total revenues for calculation of per-store revenues
Athletic apparel companies refers to those companies that primarily sell sports apparel and footwear products. Although a large percentage of the products are worn for casual or leisure purposes, the focus of these companies is to develop sportswear products.
Among the athletic apparel companies, Nike has the highest average revenue per store of $34 million.
On the flip side, other athletic apparel companies are way behind, with Under Armour generating sales of $10.4 million per store while Lululemon was further behind at $7.5 million.
How Does The Store Count Of Athletic Apparel Companies Compare To Each Other?
Notably, Nike has the largest store count among the athletic apparel companies. Nike’s store count of 1,150 at the end of 2018 was more than double to that of Under Armour’s 498. Lululemon was further behind at 440.
However, over 2015-2018, Under Armour has been rapidly adding to its store count, with the company opening more than 150 new stores (net of closure).
How Has Nike’s Average Revenue Per Store Trended Over The Last Few Years?
Nike’s average revenue per store has increased 10% over 2015-18 – going up from $31 million in 2015 to $34 million in 2018.
Although Nike has opened 154 new stores over this time-frame, Nike’s revenue growth has comfortably outpaced new store openings.
Nike’s revenue has witnessed a growth of 21% over the last four years led by growth across NIKE Direct and wholesale, key categories including Sportswear and the Jordan Brand, and continued growth across footwear and apparel.
Under Armour Average Revenue Per Store Has Steadily Declined Over The Last Couple of years
Lululemon’s Average Revenue Per Store Has Seen Robust Growth Over The Years
Additional details about how average store revenues for Lululemon and Under Armours have changed over recent years are available in our interactive dashboard.
Conclusion: Nike is the market leader and has done well to consolidate its position over the years
Nike has achieved robust growth over the years and is showing no signs of slowing down.
Despite having a larger number of stores, Nike’s average revenue per store is significantly ahead of its peers.
Although Lululemon is growing at a faster pace than Nike, it has a smaller scale than Nike.
Given Nike’s outreach among the consumers and geographical penetration, it is highly unlikely that any other athletic apparel company would be able to match Nike’s position in the apparel market.
What’s behind Trefis? See How it’s Powering New Collaboration and What-Ifs
For CFOs and Finance Teams | Product, R&D, and Marketing Teams
More Trefis Data
Like our charts? Explore example interactive dashboards and create your own.
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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2020-01-02
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Interesting KKR Put And Call Options For February 14th
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KKR
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Investors in KKR & CO Inc Class A (Symbol: KKR) saw new options begin trading today, for the February 14th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the KKR options chain for the new February 14th contracts and identified one put and one call contract of particular interest.
The put contract at the $29.00 strike price has a current bid of 70 cents. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $29.00, but will also collect the premium, putting the cost basis of the shares at $28.30 (before broker commissions). To an investor already interested in purchasing shares of KKR, that could represent an attractive alternative to paying $29.25/share today.
Because the $29.00 strike represents an approximate 1% discount to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the put contract would expire worthless. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 100%. Stock Options Channel will track those odds over time to see how they change, publishing a chart of those numbers on our website under the contract detail page for this contract. Should the contract expire worthless, the premium would represent a 2.41% return on the cash commitment, or 20.49% annualized — at Stock Options Channel we call this the YieldBoost.
Below is a chart showing the trailing twelve month trading history for KKR & CO Inc Class A, and highlighting in green where the $29.00 strike is located relative to that history:
Turning to the calls side of the option chain, the call contract at the $29.50 strike price has a current bid of 65 cents. If an investor was to purchase shares of KKR stock at the current price level of $29.25/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $29.50. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 3.08% if the stock gets called away at the February 14th expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if KKR shares really soar, which is why looking at the trailing twelve month trading history for KKR & CO Inc Class A, as well as studying the business fundamentals becomes important. Below is a chart showing KKR's trailing twelve month trading history, with the $29.50 strike highlighted in red:
Considering the fact that the $29.50 strike represents an approximate 1% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 99%. On our website under the contract detail page for this contract, Stock Options Channel will track those odds over time to see how they change and publish a chart of those numbers (the trading history of the option contract will also be charted). Should the covered call contract expire worthless, the premium would represent a 2.22% boost of extra return to the investor, or 18.86% annualized, which we refer to as the YieldBoost.
Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 252 trading day closing values as well as today's price of $29.25) to be 28%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.
Top YieldBoost Calls of the S&P 500 »
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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2020-01-02
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NKE February 14th Options Begin Trading
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NKE
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Investors in Nike (Symbol: NKE) saw new options begin trading today, for the February 14th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the NKE options chain for the new February 14th contracts and identified one put and one call contract of particular interest.
The put contract at the $97.00 strike price has a current bid of 77 cents. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $97.00, but will also collect the premium, putting the cost basis of the shares at $96.23 (before broker commissions). To an investor already interested in purchasing shares of NKE, that could represent an attractive alternative to paying $101.36/share today.
Because the $97.00 strike represents an approximate 4% discount to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the put contract would expire worthless. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 100%. Stock Options Channel will track those odds over time to see how they change, publishing a chart of those numbers on our website under the contract detail page for this contract. Should the contract expire worthless, the premium would represent a 0.79% return on the cash commitment, or 6.74% annualized — at Stock Options Channel we call this the YieldBoost.
Below is a chart showing the trailing twelve month trading history for Nike, and highlighting in green where the $97.00 strike is located relative to that history:
Turning to the calls side of the option chain, the call contract at the $102.00 strike price has a current bid of 29 cents. If an investor was to purchase shares of NKE stock at the current price level of $101.36/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $102.00. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 0.92% if the stock gets called away at the February 14th expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if NKE shares really soar, which is why looking at the trailing twelve month trading history for Nike, as well as studying the business fundamentals becomes important. Below is a chart showing NKE's trailing twelve month trading history, with the $102.00 strike highlighted in red:
Considering the fact that the $102.00 strike represents an approximate 1% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 99%. On our website under the contract detail page for this contract, Stock Options Channel will track those odds over time to see how they change and publish a chart of those numbers (the trading history of the option contract will also be charted). Should the covered call contract expire worthless, the premium would represent a 0.29% boost of extra return to the investor, or 2.43% annualized, which we refer to as the YieldBoost.
Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 252 trading day closing values as well as today's price of $101.36) to be 21%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.
Top YieldBoost Calls of the Dow »
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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2020-01-02
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Under Armour Stock Appears Balanced Heading Into 2020
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NKE
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In early December, I highlighted Under Armour (NYSE:, NYSE:UAA) stock as a , saying that valuation and operational tailwinds could breathe life back into shares of the athletic apparel maker.
Source: 2p2play / Shutterstock.com
But, there is now one problem with that 2020 bull thesis: UAA stock rallied nearly 15% in December 2019. ThatâÂÂs a big rally in a short amount of time. And, it has entirely changed the bull thesis on the stock. A month ago, UAA was trading at a discounted valuation. Today, though, the valuation appears full. With the discounted valuation part of the bull thesis now gone, Under Armour stock doesnâÂÂt look all that compelling in 2020 anymore.
In other words, a big portion of the 2020 rebound has already been realized in December 2019. That leaves shares with minimal upside potential over the next year.
All else equal, then, I think now is a good time to take profits on Under Armour stock.
Under ArmourâÂÂs Fundamentals Will Improve
Calendar 2019 was a messy year for Under Armour. Sure, UAA stock rose more than 20%, which by itself, constitutes a good year. But, Nike (NYSE:) rose more than 30%, Adidas (OTCMKTS:) rose nearly 60%, and Skechers (NYSE:) and Lululemon (NASDAQ:) both rose about 90%. Thus, relative to peer athletic apparel names, Under Armour was a big underperformer in 2019.
This underperformance was the byproduct of three things. First, revenue growth rates slipped, as the companyâÂÂs international business meaningfully slowed. Second, slowing revenue growth caused margins to slip, as positive operating leverage turned into negative operating leverage. Third, negative optics from a federal investigation into the companyâÂÂs accounting practices as well as C-Suite turnover weighed on investor sentiment.
Those three headwinds will reverse course in 2020, paving the way for Under ArmourâÂÂs fundamentals to materially improve.
Revenue growth rates should rebound, led by stabilization in the international business as geopolitical tensions ease and consumer spending trends pick back up. A weaker dollar should also help boost sales in 2020. This revenue growth rebound will once again drive positive operating leverage, as expense growth rates should not change heading into the new year. At the same time, the into the companyâÂÂs accounting practices could very likely come to an end over the next few quarters.
Big picture â the things which caused underperformance in UAA stock in 2019 will reverse course in 2020, and the fundamentals underlying this company will go from bad to much better.
Under Armour Stock Is Fully Priced
Fundamental improvements alone do not make a stock a strong buy. Instead, fundamental improvements and a discounted valuation are the necessary ingredients for a strong buy stock.
A month ago, Under Armour stock had both of those. Today, it only has one.
In early December 2019, Under Armour stock was trading at $18. That was a sizable discount to , which was based on a few long-term assumptions. First, steady 3%-4% revenue growth over the next few years thanks to sustained athletic apparel market tailwinds, offset somewhat by slight market share erosion because the brand continues to emphasize performance over fashion. Second, continued margin expansion from gross margin improvements and consistent positive operating leverage. Third, earnings per share growth to $1.50 by 2025, driven by low single-digit revenue growth and significant margin improvements.
My long-term assumptions for Under ArmourâÂÂs growth trajectory have not changed over the past month. The price tag on UAA stock has. A month ago, this was an $18 stock, with 25% upside potential in 2020. Today, it is a $21.50 stock, with much less compelling 5% upside potential in 2020.
Because of this, UAA stock no longer looks that great heading into 2020. Yes, fundamental improvements will drive shares higher. But, a full valuation will limit the magnitude and challenge the sustainability of those gains.
Bottom Line on UAA Stock
A month ago, UAA stock looked like a great rebound candidate for 2020, with 20%-plus upside potential over the next 12 months. But, it has since rallied 15% in a month. Yet, the long-term fundamentals underlying shares have not changed.
Thus, the big 2020 rebound in UAA stock has mostly played out in late 2019. Over the next 12 months, UAA stock will likely be choppy, with fundamental improvements being offset by valuation friction.
As of this writing, Luke Lango was long NKE.ÃÂ
The post 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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| -0.00274
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2020-01-02
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February 14th Options Now Available For CME Group
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CME
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Investors in CME Group (Symbol: CME) saw new options begin trading today, for the February 14th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the CME options chain for the new February 14th contracts and identified one put and one call contract of particular interest.
The put contract at the $200.00 strike price has a current bid of $4.60. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $200.00, but will also collect the premium, putting the cost basis of the shares at $195.40 (before broker commissions). To an investor already interested in purchasing shares of CME, that could represent an attractive alternative to paying $201.35/share today.
Because the $200.00 strike represents an approximate 1% discount to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the put contract would expire worthless. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 100%. Stock Options Channel will track those odds over time to see how they change, publishing a chart of those numbers on our website under the contract detail page for this contract. Should the contract expire worthless, the premium would represent a 2.30% return on the cash commitment, or 19.52% annualized — at Stock Options Channel we call this the YieldBoost.
Below is a chart showing the trailing twelve month trading history for CME Group, and highlighting in green where the $200.00 strike is located relative to that history:
Turning to the calls side of the option chain, the call contract at the $202.50 strike price has a current bid of $4.90. If an investor was to purchase shares of CME stock at the current price level of $201.35/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $202.50. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 3.00% if the stock gets called away at the February 14th expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if CME shares really soar, which is why looking at the trailing twelve month trading history for CME Group, as well as studying the business fundamentals becomes important. Below is a chart showing CME's trailing twelve month trading history, with the $202.50 strike highlighted in red:
Considering the fact that the $202.50 strike represents an approximate 1% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 99%. On our website under the contract detail page for this contract, Stock Options Channel will track those odds over time to see how they change and publish a chart of those numbers (the trading history of the option contract will also be charted). Should the covered call contract expire worthless, the premium would represent a 2.43% boost of extra return to the investor, or 20.66% annualized, which we refer to as the YieldBoost.
Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 252 trading day closing values as well as today's price of $201.35) to be 19%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.
Top YieldBoost Calls of the S&P 500 »
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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2020-01-02
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Interesting GOLD Put And Call Options For February 14th
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GOLD
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Investors in Barrick Gold Corp. (Symbol: GOLD) saw new options become available today, for the February 14th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the GOLD options chain for the new February 14th contracts and identified one put and one call contract of particular interest.
The put contract at the $18.50 strike price has a current bid of 54 cents. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $18.50, but will also collect the premium, putting the cost basis of the shares at $17.96 (before broker commissions). To an investor already interested in purchasing shares of GOLD, that could represent an attractive alternative to paying $18.71/share today.
Because the $18.50 strike represents an approximate 1% discount to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the put contract would expire worthless. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 100%. Stock Options Channel will track those odds over time to see how they change, publishing a chart of those numbers on our website under the contract detail page for this contract. Should the contract expire worthless, the premium would represent a 2.92% return on the cash commitment, or 24.78% annualized — at Stock Options Channel we call this the YieldBoost.
Below is a chart showing the trailing twelve month trading history for Barrick Gold Corp., and highlighting in green where the $18.50 strike is located relative to that history:
Turning to the calls side of the option chain, the call contract at the $19.00 strike price has a current bid of 50 cents. If an investor was to purchase shares of GOLD stock at the current price level of $18.71/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $19.00. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 4.22% if the stock gets called away at the February 14th expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if GOLD shares really soar, which is why looking at the trailing twelve month trading history for Barrick Gold Corp., as well as studying the business fundamentals becomes important. Below is a chart showing GOLD's trailing twelve month trading history, with the $19.00 strike highlighted in red:
Considering the fact that the $19.00 strike represents an approximate 2% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 99%. On our website under the contract detail page for this contract, Stock Options Channel will track those odds over time to see how they change and publish a chart of those numbers (the trading history of the option contract will also be charted). Should the covered call contract expire worthless, the premium would represent a 2.67% boost of extra return to the investor, or 22.68% annualized, which we refer to as the YieldBoost.
Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 252 trading day closing values as well as today's price of $18.71) to be 31%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.
Top YieldBoost Calls of the S&P 500 »
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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2020-01-02
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Will Wheaton Precious Metals’ Silver Division See A Turnaround?
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GOLD
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Wheaton Precious Metals (NYSE: WPM) has seen its silver revenue continuously decrease from $480 million in 2016 to $344 million in 2018, on the back of lower output and a fall in prices. 2019 is expected to be no different, with segment revenue likely to decrease further, with a marginal turnaround likely to take place only in 2020. Silver revenue is expected to increase slightly from $292 million in 2019 (projected) to $302 million in 2020.
Takeaway
Wheaton Precious Metals’ silver business, the sale of silver that is mined, is expected to contribute $292 million to WPM’s 2019 revenues, making up 33% of WPM’s $881 million in revenues for 2019.
The silver segment contribution is almost half that of the gold mining business.
WPM’s silver business is set to see a cumulative decline of $189 million between 2016 and 2019, whereas the company as a whole is likely to see only a marginal cumulative decline of $11 million in revenues for the same period.
The silver revenue growth trend has been a drag on the company’s stock, which witnessed a lot of volatility in the last 3 years, with >30% of cumulative stock appreciation during this period being almost wholly driven by strong performance of the gold segment, further helped by improving margins, and strong expansion in WPM’s valuation multiple. We discuss Wheaton Precious Metals’ Valuation analysis in full, separately.
In our interactive dashboard Wheaton Precious Metals Revenues: How Does WPM Make Money?, we discuss WPM’s business model, followed by sections that review past performance and 2020 expectations for WPM’s revenue drivers, including volume and price trends for all segments, and competitive comparisons with Newmont-Goldcorp, Barrick Gold, and Freeport-McMoRan.
Total Revenue
WPM’s total revenue steadily decreased from $892 million in 2016 to $794 million in 2018.
Total revenue is expected to increase by 11% to $881 million in 2019 and further by 8.4% to reach over $955 million by 2020.
Higher revenue is likely to be driven by healthy growth in the gold and palladium divisions, partially offset by a decline in silver sales.
Segment-wise Revenue Breakup
Silver
Segment revenues have seen a continuous decline due to lower production and fall in global silver prices.
The trend is likely to continue in the near term with WPM expected to lose about $52 million of its silver revenue in 2019, led by volume decline and a drop in global price levels.
Silver volume sales are likely to go down from 22 million ounces in 2018 to 18 million ounces in 2019, following the New San Dimas agreement under which silver production that was attributable to the company under the old agreement would now be converted to the equivalent gold volume.
Silver price realization is expected to gradually increase from $15.81/ounce in 2018 to $16.20/ounce in 2019, due to an increase in prices of precious metals with an expected global economic slowdown.
With volume expected to remain stable and prices being on an upswing, silver revenues are set to increase to $302 million in 2020.
To understand 10-year silver price performance and production-demand-GDP analysis, view our dashboard analysis.
Gold and Palladium
Gold and Palladium are the two fast-growing segments of the company which drive most of the company’s value. To understand how gold and palladium divisions have performed and what is the outlook, view our interactive dashboard analysis.
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For CFOs and Finance Teams | Product, R&D, and Marketing Teams
More Trefis Data
Like our charts? Explore example interactive dashboards and create your own.
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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2020-01-02
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February 14th Options Now Available For ArcelorMittal SA (MT)
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MT
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Investors in ArcelorMittal SA (Symbol: MT) saw new options become available today, for the February 14th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the MT options chain for the new February 14th contracts and identified one put and one call contract of particular interest.
The put contract at the $16.50 strike price has a current bid of 21 cents. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $16.50, but will also collect the premium, putting the cost basis of the shares at $16.29 (before broker commissions). To an investor already interested in purchasing shares of MT, that could represent an attractive alternative to paying $17.79/share today.
Because the $16.50 strike represents an approximate 7% discount to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the put contract would expire worthless. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 100%. Stock Options Channel will track those odds over time to see how they change, publishing a chart of those numbers on our website under the contract detail page for this contract. Should the contract expire worthless, the premium would represent a 1.27% return on the cash commitment, or 10.80% annualized — at Stock Options Channel we call this the YieldBoost.
Below is a chart showing the trailing twelve month trading history for ArcelorMittal SA, and highlighting in green where the $16.50 strike is located relative to that history:
Turning to the calls side of the option chain, the call contract at the $19.00 strike price has a current bid of 22 cents. If an investor was to purchase shares of MT stock at the current price level of $17.79/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $19.00. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 8.04% if the stock gets called away at the February 14th expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if MT shares really soar, which is why looking at the trailing twelve month trading history for ArcelorMittal SA, as well as studying the business fundamentals becomes important. Below is a chart showing MT's trailing twelve month trading history, with the $19.00 strike highlighted in red:
Considering the fact that the $19.00 strike represents an approximate 7% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 99%. On our website under the contract detail page for this contract, Stock Options Channel will track those odds over time to see how they change and publish a chart of those numbers (the trading history of the option contract will also be charted). Should the covered call contract expire worthless, the premium would represent a 1.24% boost of extra return to the investor, or 10.50% annualized, which we refer to as the YieldBoost.
Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 252 trading day closing values as well as today's price of $17.79) to be 44%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.
Top YieldBoost Calls of the S&P 500 »
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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2020-01-02
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Stock Alert: Will NRG Energy Be Stronger In 2020?
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NRG
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(RTTNews) - Shares of NRG Energy, Inc. (NRG) closed Tuesday's trading 1.33% higher at $39.75. The stock has been trading in a range of $32.63 to $43.66 for the past one year.
NRG Energy is a power manufacturer and distributor that serves approximately 3.7 million customers. In August last year, NRG added more than 600,000 customer equivalents by acquiring Stream Energy's retail electricity and natural gas businesses.
The company's "Transformation Plan " which was launched in 2017, to lower its debt is on track. It had sold its South Central business to Cleco Corporate Holdings LLC in February last year. In September, the company had paid off $95 million debt associated with NRG Energy and JX Nippon's joint venture Petra Nova carbon capture project. NRG also issued a $12 million letter of credit to cover certain project debt reserve requirements, which makes the remaining project debt non-recourse to NRG.
The company had a target of $590 million cost savings in FY2019, out of which $401 million was achieved by the end of the third quarter ended September 30, 2019. Starting 2020, the company has decided to increase its annual dividend to $1.20 per share from $0.12 per share in 2019.
In the third quarter, income from continuing operations was $374 million, or $1.46 per share compared with $287 million or $0.88 per share a year ago. Analysts were expecting $2.1 per share.
Revenue for the quarter rose to $2.996 billion from $2.960 billion in the corresponding quarter last year.
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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2020-01-02
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Why 5G – Not Memory Pricing – is Key Driver for Micron Stock
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MU
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For technology and semiconductor firms like Micron Technology (NASDAQ:), the recent thaw in U.S.-China relations couldnâÂÂt have come at a better time. Despite strong ideological differences, China has emerged as an unprecedented market for various industries. Therefore, the upside credibility of Micron stock depended in large part on geopolitical factors.
Source: Charles Knowles / Shutterstock.com
Better yet, optimistic signs have sprouted in the companyâÂÂs core NAND and DRAM memory chip businesses. Notably, Susquehanna Financial Group analyst Mehdi Hosseini upgraded his outlook on MU stock to âÂÂpositiveâ from âÂÂneutral.â Central to HosseiniâÂÂs thesis is a for 2020 and 2021.
This view isnâÂÂt at all unreasonable. To quickly summarize, DRAM memory is typically found in personal computers and data servers. On the other hand, NAND chips are utilized by smartphone manufacturers, as well as solid-state drives. Both memory types have ample demand, particularly as computing moves into the cloud and the introduction of 5G technologies become more widespread. Therefore, the upside potential for Micron stock appears bright and viable.
However, the NAND and DRAM markets are notoriously volatile. For instance, NAND flash memory prices for various capacities following a rebound in 2016 and 2017. While a rebound seems reasonable based on prior historical pricing trends, hereâÂÂs the kicker: thereâÂÂs no guarantee that history will repeat or resemble itself.
And if pricing doesnâÂÂt improve, that puts MU stock in a quandary.
During the heated portion of the Beijing-Washington trade war, the international semiconductor industry had no incentive to create a balanced supply-demand ecosystem. As such, a huge supply glut still exists, presenting a cloud over hot-running Micron stock.
Can investors still trust this name, or should they move on to more credible opportunities?
Catalysts for Micron Stock Stronger than the Pitfalls
Although underlying events appear positive for MU stock, itâÂÂs hard not to think that the glass might be half-empty this time around. Since Christmas Eve, shares have dipped nearly 4%. Those are losses that you canâÂÂt ignore. They also suggest a return to the wildness that has characterized semiconductor stocks over the last few years.
That said, I believe investors can take a more optimistic approach to Micron stock. For starters, memory chip prices will eventually fall because they are essentially designed to. Technology expert John C. McCallum created a very useful chart regarding the . Over a long enough time horizon, memory chips either fall to zero (because theyâÂÂre irrelevant) or get pretty darn close.
Thus, the pricing debate already has an inevitable victor. Arguably, though, computer chips are about as small as theyâÂÂre ever going to be. Therefore, the real debate isnâÂÂt necessarily about size and capacity but rather, functionality.
Here, the underlying fundamentals are unambiguously positive for MU stock (and to be fair, the competition). Thanks to the 5G rollout, many innovations, such as artificial intelligence and automated transportation, can now be actualized because of the 5G networkâÂÂs incredible speed and data capacity.
Appropriately, Micron laid out its to the 5G network, which involves mobile, automotive, the Internet of Things, networking, and cloud computing. And this is also where Micron stock has a distinction: the tech firm isnâÂÂt just about pumping out chips but rather, developing platforms that maximize various innovationsâ full potential.
Geopolitically, it doesnâÂÂt hurt MU stock that the Chinese tech industry has a . As Micron would know, trust is a valuable commodity in tech. TheyâÂÂre able to provide it far better than most Chinese counterparts.
Expect Nearer-term Turbulence
From a longer-term perspective, then, IâÂÂm not terribly worried about the memory pricing issues. As I mentioned, prices will eventually fall due to advancements in technology. What matters more is the opportunity for revenue growth that 5G provides.
However, IâÂÂd be remiss not to mention the technical situation for Micron stock. Currently, shares are a bit overheated. Plus, in the near term, memory pricing matters quite a bit. As things stand, MU could possibly fall to at least its 50-day moving average (around $49).
Once the turbulence fades, though, I believe MU stock offers a solid opportunity. In my view, Micron isnâÂÂt just participating in the 5G revolution; itâÂÂs actively leading it. So, donâÂÂt let the memory chip market be the ultimate deciding factor.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.
The post 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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2020-01-02
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Interesting MU Put And Call Options For February 14th
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MU
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Investors in Micron Technology Inc. (Symbol: MU) saw new options become available today, for the February 14th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the MU options chain for the new February 14th contracts and identified one put and one call contract of particular interest.
The put contract at the $54.00 strike price has a current bid of $2.17. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $54.00, but will also collect the premium, putting the cost basis of the shares at $51.83 (before broker commissions). To an investor already interested in purchasing shares of MU, that could represent an attractive alternative to paying $54.70/share today.
Because the $54.00 strike represents an approximate 1% discount to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the put contract would expire worthless. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 100%. Stock Options Channel will track those odds over time to see how they change, publishing a chart of those numbers on our website under the contract detail page for this contract. Should the contract expire worthless, the premium would represent a 4.02% return on the cash commitment, or 34.11% annualized — at Stock Options Channel we call this the YieldBoost.
Below is a chart showing the trailing twelve month trading history for Micron Technology Inc., and highlighting in green where the $54.00 strike is located relative to that history:
Turning to the calls side of the option chain, the call contract at the $56.00 strike price has a current bid of $2.00. If an investor was to purchase shares of MU stock at the current price level of $54.70/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $56.00. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 6.03% if the stock gets called away at the February 14th expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if MU shares really soar, which is why looking at the trailing twelve month trading history for Micron Technology Inc., as well as studying the business fundamentals becomes important. Below is a chart showing MU's trailing twelve month trading history, with the $56.00 strike highlighted in red:
Considering the fact that the $56.00 strike represents an approximate 2% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 99%. On our website under the contract detail page for this contract, Stock Options Channel will track those odds over time to see how they change and publish a chart of those numbers (the trading history of the option contract will also be charted). Should the covered call contract expire worthless, the premium would represent a 3.66% boost of extra return to the investor, or 31.04% annualized, which we refer to as the YieldBoost.
Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 252 trading day closing values as well as today's price of $54.70) to be 43%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.
Top YieldBoost Calls of the Nasdaq 100 »
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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2020-01-02
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5 Semiconductor Stocks to Buy for Big Gains In 2020
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MU
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If thereâÂÂs one group of stocks that has been pretty volatile over the last year, it has to be semiconductor stocks. The chip makers have seen their fortunes rise on growing tech demand, only to see them fade away as the trade war waged on. It has truly been a wild ride for the iShares PHLX Semiconductor ETF (NYSEArca:) and stocks in the space.
But the new year could be full of gains for the semiconductor stocks.
For one thing, the announcement of the phase one deal between China and the U.S. is a major positive and removes arguably the biggest headache facing the sector. With the two nations now cooperating on trade, the chip makers should she their stars shine. According to the Semiconductor Industry Association, computer chips are the U.S.âÂÂs third-largest export. So, the deal is a net positive for the sector. Secondly, the semis are benefiting from rising tech adoption across all industries. With data centers, 5G and new gadgets becoming he norm even at your local burger joint, thereâÂÂs plenty of runway left.
With that, semiconductor stocks could be one of the best plays for the new year. Investors looking for plenty of growth potential need to consider the major players.
Here are five semiconductor stocks that could be great picks in 2020.
Semiconductor Stocks to Buy: Nvidia (NVDA)
Source: Pe3k / Shutterstock.com
ItâÂÂs easy to choose sector leader Nvidia (NASDAQ:) as a top semiconductor stock to own for the new year. ThatâÂÂs because NVDA continues to operate in some of the biggest trends and themes in tech. WeâÂÂre talking about artificial intelligence and data center demand.
NVDA has long been a maker of graphics cards (GPUs) and processors. It turns out those chips are perfect for the rapid-fire computing power to make A.I. and data centers run fast and actually process all the needed information. After a slight slowdown â thanks to a large customer cutting spending due to the trade war â NVDA has once again started to see revenues for data center chips rise.
, NVDA saw data chip demand jump nearly 11%. Meanwhile, continued advances in conventional A.I. are set to push those revenues further over the next few years as data centers are forced to upgrade. We canâÂÂt forget NvidiaâÂÂs purchase of Mellanox (NASDAQ:). That smart buy will add a hefty dose of interconnected technology to its offerings and make it a powerful player as overall data center demand picks up.
All of this â plus continued advances in self-driving cars and other uses for fast GPUs should help NVDA be a revenue machine over the new year. Next quarter alone, the firm expects to pull in roughly $2.95 billion in revenue, a year-over-year increase of over 34%.
ItâÂÂs no wonder why the semiconductor stock recently and new price target of over $270 per share. With so many ways to win, NVDA stock could be one of the top picks for investors.
Micron Technology (MU)
Source: Piotr Swat / Shutterstock.com
The last few quarters have not been so kind for Micron Technology (NASDAQ:). MU makes so-called analog chips. These are the boring semiconductors that are found in countless common household items. The problem is these analog chips are so standard, they actually trade like commodities. ThereâÂÂs a spot market for these chips just like a bushel of corn or barrel of crude oil. Thanks to a glut of these DRAM chips, prices have plunged and its crushed MicronâÂÂs bottom line.
But these days, itâÂÂs a different story for MU and that comes courtesy of 5G.
It turns out that the ramp-up to 5G devices will require a lot of both DRAM and NAND flash memory chips â the other specialty that Micron produces. Up to 50% more NAND memory than a 4G phone and an average of , in fact. This is a huge tailwind for Micron and could seriously reverse its fortunes in 2020. Right now, 5G device adoption is only getting started. ThereâÂÂs a long runway for its chips.
Meanwhile, the semiconductor stock has continued to expand into other higher-margin specialty chips, including those perfect for autonomous cars and A.I. Those chips allowed to see a during he last reported quarter.
In the end, Micron may finally get its mojo back as 5G and its advanced semis start to win.
Texas Instruments (TXN)
Source: Katherine Welles / Shutterstock.com
Given the overall volatility of the semiconductor space, going with a proven stalwart could be the best way to play the sector in 2020. And you canâÂÂt go wrong with Texas Instruments (NASDAQ:).
The beauty for TXN lies within its dual operating model. The firm is an analog chip superstar and produces tons of different basic chips for other manufacturers/end-users. Given its size, this produces plenty of cash flows for Texas Instruments â . And it uses those cash flows smartly to help develop other more advanced chips. These days, T.I. has its hands in everything from self-driving cars, cloud computing and internet of things (IoT) applications. These advanced and higher-margin chips have continued to provide a boost to TXNâÂÂs bottom line and balance out issues with analog chip pricing.
The balance has helped investors as well. TXN has quickly become a dividend machine. Over the last 15 years, the semiconductor stock has ThatâÂÂs not a typo. Moreover, it has managed to increase its buyback programs and reduce its total share count by over 24%.
And while the issues with the trade war have hurt TXNâÂÂs revenues in the near term, the longer term is still rosy. The chipmaker recently reaffirmed its focus on higher-margin chips, manufacturing and IoT, which will benefit it over the next year or so. That could help keep its cash flows humming and its dividend growing.
With its near-3% yield, TXN could be a major bargain for the new year, especially if the volatility of the sector persists.
NXP Semiconductors NV (NXPI)
Source: Lukassek / Shutterstock.com
The new year could finally be the year that many new tech themes finally become mainstream. And that could seriously benefit Netherlands-based NXP Semiconductors NV (NASDAQ:).
NXPI is all about specialty chips and specifically it dabbles in a few of the biggest tech trends of all time. WeâÂÂre talking chips for automotive, IoT, mobile and communications infrastructure. NXP is one of the biggest producers of chips needed for radar systems in cars for adaptive cruise control, self-guided parking and quickly self-driving vehicles. At the same time, the firm helped create near field communication chips (NFC) that are used in mobile-to-mobile payments. Add in all its efforts to connect devices like your fridge to the web and NXPI is the leading âÂÂfutureâ semiconductor manufacturer.
The problem for NXPI is that sales have slumped in the face of the trade war and global economic slowdown. pretty much all segments saw a decline in revenues and the firm saw an overall profit dip.
However, with the trade war ending, management and analysts are bullish on NXPIâÂÂs prospects for the new year. Sales are expected to increase across several of its lines and the firm remains a top draw for many of the major tech trends. Meanwhile, NXPI stock can be had for a cheap 16x forward earnings and the firm continues to buyback stock and .
In the end, NXPI could be a top bet among the semiconductor stocks to play 2020 and the future.
Skyworks Solutions (SWKS)
Source: madamF / Shutterstock.com
The beauty of the 5G mega-trend is that there will be a lot of winners across all the equipment, devices and computing power needed to get it going. As such, Skyworks Solutions (NASDAQ:) is one of the biggest winners among semiconductor stocks so far that could keep going in 2020.
SWKS makes all sorts of chips and RF technology products that are needed for 5G to take hold.
This includes a hefty dose of chips for smartphones. Already having a huge supply deal with Apple (NASDAQ:), Skyworks is poised to make some serious bank as AAPL is set to launch three new 5G phones in 2020. And while, SWKS does rely on Apple for about half of its revenues, it has plenty of deals with other phone makers for 5G products. Unfortunately, in the near term, many of them are Chinese manufacturers like OPPO, Vivo, Xiaomi and even embattled Huawei. But as mentioned earlier, with the trade war thawing, SWKS could see its stars shine.
IDC estimates that total global 5G phone sales will clock in . And Skyworks should get some of that action. Given that its sales have suffered because of the trade war, any boost will be seen as a boon for the stock.
Now, shares of SWKs have surged this year based on this potential. However, shares of the semiconductor stock are still cheap, with a forward price-to-earnings ratio of 17. That still leaves plenty of growth potential as 5G ramps up in the new year.
For investors, Skyworks could be one of the best pure 5G plays among the semiconductor stocks.
At the time of writing, Aaron Levitt did not have a position in any stock mentioned.
The post 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.
| -0.00706
| -0.015526
|
2020-01-02
|
Analysts Expect BBH To Hit $157
|
ALNY
|
Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, we have compared the trading price of each holding against the average analyst 12-month forward target price, and computed the weighted average implied analyst target price for the ETF itself. For the Biotech ETF (Symbol: BBH), we found that the implied analyst target price for the ETF based upon its underlying holdings is $156.86 per unit.
With BBH trading at a recent price near $139.42 per unit, that means that analysts see 12.51% upside for this ETF looking through to the average analyst targets of the underlying holdings. Three of BBH's underlying holdings with notable upside to their analyst target prices are United Therapeutics Corp (Symbol: UTHR), Alnylam Pharmaceuticals Inc (Symbol: ALNY), and Ionis Pharmaceuticals Inc (Symbol: IONS). Although UTHR has traded at a recent price of $88.08/share, the average analyst target is 37.88% higher at $121.44/share. Similarly, ALNY has 21.00% upside from the recent share price of $115.17 if the average analyst target price of $139.36/share is reached, and analysts on average are expecting IONS to reach a target price of $68.00/share, which is 12.56% above the recent price of $60.41. Below is a twelve month price history chart comparing the stock performance of UTHR, ALNY, and IONS:
Combined, UTHR, ALNY, and IONS represent 6.55% of the Biotech ETF. Below is a summary table of the current analyst target prices discussed above:
NAME SYMBOL RECENT PRICE AVG. ANALYST 12-MO. TARGET % UPSIDE TO TARGET
Biotech ETF BBH $139.42 $156.86 12.51%
United Therapeutics Corp UTHR $88.08 $121.44 37.88%
Alnylam Pharmaceuticals Inc ALNY $115.17 $139.36 21.00%
Ionis Pharmaceuticals Inc IONS $60.41 $68.00 12.56%
Are analysts justified in these targets, or overly optimistic about where these stocks will be trading 12 months from now? Do the analysts have a valid justification for their targets, or are they behind the curve on recent company and industry developments? A high price target relative to a stock's trading price can reflect optimism about the future, but can also be a precursor to target price downgrades if the targets were a relic of the past. These are questions that require further investor research.
10 ETFs With Most Upside To Analyst Targets »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
| -0.00706
| 0.000519
|
2020-01-02
|
Why Antares Pharma's Sliding 10% Today
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TEVA
|
What happened
After a big run-up in its share price following better-than-expected earnings and guidance in November, Antares Pharma (NASDAQ: ATRS) shares are down 10% at 3:30 p.m. EDT on Thursday. The company didnt reportany news, so today's drop could be a simple case of profit-taking following a nearly 40% gain since October 31.
So what
The company reported it's first quarterly operating profit in history in November, thanks to nearly triple-digit revenue growth following the launch of Xyosted -- a weekly testosterone product -- and Teva Pharmaceutical's (NYSE: TEVA) launch of a generic alternative to Mylan's EpiPen.
IMAGE SOURCE: GETTY IMAGES.
Overall, revenue was up 92% year over year, to $34.3 million in the third quarter of 2019, which resulted in net income of $1 million, or $0.01 per share. Wall Street's industry watchers were expecting sales and earnings per share (EPS) to clock in at $7 million and $0.03 lower, respectively.
Xyosted sales accounted for much of the improvement in sales and profit. An alternative option to using messy gels daily, Xyosted is dosed through an auto-injector once per week. Sales of Xyosted totaled $7 million last quarter. Sales of Otrexup (a subcutaneous formulation of methotrexate) improved to $4.4 million in the quarter from $4.1 million in the same quarter one year ago.
Revenue from Teva Pharmaceutical associated with its epinephrine product also contributed to sales significantly, lifting partnered-products revenue to $13.2 million from $7.5 million in the year-ago period. The epinephrine product also generated royalties that boosted Antares' companywide royalty revenue 126% year over year, to $8.4 million for the three months ended Sept. 30, 2019.
Now what
The sell-off may offer investors an opportunity to buy shares on sale. The company's third-quarter performance prompted management to boost its full year 2019 sales guidance to a range of between $115 million to $120 million, up from $100 million to $110 million previously.
A tight lid on expenses, an ongoing ramp up in Xyosted, and the potential for Teva Pharmaceutical's generic EpiPen to win more market share could all help Antares Pharma deliver better-than-expected results in 2020. Additionally, Antares Pharma could benefit from a potential launch of Teva Pharmaceutical's generic version of the blockbuster drug Forteo later this year if regulators cooperate, providing yet another important revenue stream.
10 stocks we like better than Antares Pharma
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*Stock Advisor returns as of December 1, 2019
Todd Campbell owns shares of Mylan. His clients may have positions in the companies mentioned. The Motley Fool recommends Mylan. 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.
| -0.00706
| -0.049163
|
2020-01-02
|
3 Things That Sent Baidu Stock Soaring to Start 2020
|
BIDU
|
Last year was a difficult one for Baidu (NASDAQ: BIDU) investors, with a trifecta of issues hitting the Chinese internet search leader, driving its stock down as much as 40% at one point in the year. Increasing competition, a struggling economy in China, and the trade war with the U.S. weighed on the stock for much of 2019.
Things started looking up toward year-end, however, as Baidu returned to growth. Excluding divested business segments, revenue grew by 3% year over year in the third quarter, helping the stock recoup half of its losses to close out 2019 down about 20%.
Baidu has started the year on a high note, as two announcements related to its artificial intelligence (AI) program and one related a long-awaited trade agreement sent the stock soaring nearly 8% on the first day of trading in 2020.
Baidu's Apollo self-driving car program is gearing up. Image source: Baidu.
1. Autonomous cars "driving" the stock
Word emerged on Tuesday that Baidu had been granted a license to test its Apollo driverless cars in Beijing, one of the most traffic-congested cities in the country. Baidu was issued 40 licenses to test its self-driving cars while carrying passengers on specially designated roads around China's capital city -- making it the first Chinese company to do so.
The company also announced its self-driving cars had traversed more than 3 million kilometers (about 1.8 million miles) across 23 cities in China to date, adding more than 1 million kilometers and 10 additional cities to its tally since July. Baidu has been granted a total of 120 permits across China, by far the most of any autonomous driving system in the country.
2. Beating the competition in an AI language test
While Alphabet's (NASDAQ: GOOGL) (NASDAQ: GOOG) Google and Microsoft (NASDAQ: MSFT) have been battling for bragging rights in the realm of AI, Baidu has surprised both by winning a competition that tests the ability of AI-based algorithms to understand human language.
Baidu recorded the record-breaking score of 90.1 on the General Language Understanding Evaluation (GLUE), which is widely regarded as the key benchmark for AI language understanding. The company's ERNIE [Enhanced Representation through kNowledge IntEgration] model beat out both Microsoft and Google, which achieved scores of 89.9 and 89.7, respectively. Baidu became one of only 10 AI systems thus far that have been able to surpass the human understanding baseline score of 87.1 and the first to ever top a score of 90.
3. A cooling of trade tensions
President Donald Trump announced the long-awaited signing of a trade deal with China on Tuesday, with the event scheduled in Washington, D.C., for Jan. 15. The first part of the deal, titled "phase one," marks a significant turning point in a trade war that has raged for more than 18 months. Trump recently halted new tariffs that were scheduled to go into effect in December, while removing some levies that had already been placed on a wide range of goods manufactured in China.
The ongoing trade war has dented China's economy, as the country's gross domestic product grew by just 6.2% in the second half of 2019, marking its slowest rate of growth in more than 25 years. This has hurt China stocks and helped pinch Baidu's results, which caused the company to report a loss in the first quarter, its first since debuting on U.S. markets in August 2005. An easing of the trade war will undoubtedly help boost China's declining growth rate -- and improve Baidu's fortunes in the process.
10 stocks we like better than Baidu
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David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Baidu 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 December 1, 2019
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Danny Vena owns shares of Alphabet (A shares) and Baidu. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Baidu, and Microsoft and recommends the following options: long January 2021 $85 calls on Microsoft and short January 2021 $115 calls on Microsoft. 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.
| -0.00706
| -0.031978
|
2020-01-02
|
SPDR Portfolio S&P 500 Growth ETF Experiences Big Outflow
|
ABT
|
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— Growth ETF (Symbol: SPYG) where we have detected an approximate $1.0 billion dollar outflow -- that's a 15.8% decrease week over week (from 152,050,000 to 128,000,000). Among the largest underlying components of SPYG, in trading today Salesforce.com Inc (Symbol: CRM) is up about 1.3%, Broadcom Inc (Symbol: AVGO) is up about 1.1%, and Abbott Laboratories (Symbol: ABT) is lower by about 0.8%. For a complete list of holdings, visit the SPYG Holdings page » The chart below shows the one year price performance of SPYG, versus its 200 day moving average:
Looking at the chart above, SPYG's low point in its 52 week range is $31.55 per share, with $42.30 as the 52 week high point — that compares with a last trade of $42.18. 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 ».
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 experienced notable outflows »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
| -0.00706
| -0.012191
|
2020-01-02
|
3 Things Momo Does Better Than Match Group
|
MOMO
|
Momo (NASDAQ: MOMO), the top online dating company in China, is frequently compared to Match Group (NASDAQ: MTCH), which owns Tinder, OKCupid, Hinge, and other popular dating apps across the world.
I compared these two stocks last September, and concluded that Momo's lower valuation made it a more compelling investment. Match slightly outperformed Momo since that article was published, but I still think Momo is worth buying.
Image source: Getty Images.
Momo is often called the "Tinder of China", but the company doesn't use the same business strategies as Match. Today, I'll focus on three things Momo actually does better than Match, and how Match could follow Momo's lead, instead of the other way around.
1. Live videos
Match generates most of its revenue from paid subscriptions for its dating apps. Momo generates most of its revenue from live video streams on its namesake app.
Momo's app was originally a social network that let users find each other based on their locations and interests. But in 2015, it started letting users broadcast live videos, and encouraged viewers to buy virtual gifts for their favorite broadcasters.
After that platform launched, Momo's revenue surged 199% in 2015, 313% in 2016, 138% in 2017, and 51% in 2018. Momo's growth also inspired myriad companies to launch their own live video platforms and sell virtual gifts.
Momo rebooted its app last August to categorize live streams by social activities like chat rooms, karaoke performances, and talent shows. Its smaller app, Tantan, also launched "flash chats", a speed dating feature that lets users jump straight into video chats with strangers.
Match hasn't launched any live video chat features for its core apps yet, but it's taking baby steps into the market. It launched Loops, which integrate short video profiles into Tinder, in 2018. It's also incubating a new video chat app, Ablo, which offers real-time voice translation for 2.5 million registered users.
Those strategies indicate that Match is interested in building a live streaming ecosystem, especially since Tinder's female-oriented rival Bumble already launched in-app video chats last year.
Image source: Getty Images.
2. Gamifying the dating experience
Tinder "gamified" the dating experience with its swiping features. However, Momo took that strategy further with its innovative Parking Lot and Farm mini games.
Its Parking Lot game lets a user park a virtual car in another user's parking lot to get their attention. The driver can also buy a virtual car as a gift for the parking lot owner. The parking lot owner can then choose to start a conversation with the parked drivers or reject them with parking tickets.
The Farm game works with similar mechanics, and encourages users to visit other users' virtual farms. Momo stated that 50% of its daily active users regularly played the two ice-breaking games last quarter.
Match has been dabbling with social gaming features in its apps as well. It launched its interactive Swipe Night videos for Tinder, a "choose your own adventure" scripted program, last year. Users' choices during those viewing sessions are added to their Tinder profiles.
Match claims that its Swipe Night videos can help break the ice between potential matches, but producing full-length original videos is a more capital-intensive -- and arguably less elegant -- solution than Momo's mini games.
3. Superior ARPU growth
Match's subscriber base grew 19% annually to 9.6 million last quarter. Its average revenue per user (ARPU) -- calculated by dividing its direct revenue (from subscriptions and a la carte services) by its number of subscribers, then dividing it again by the number of calendar days -- rose 4% to $0.59.
Momo's number of paying users, including Tantan, grew 7% to 13.4 million last quarter. If we divide that figure by all of Momo's non-advertising revenue (from subscriptions and value-added services), then divide that figure again by its number of calendar days, we get an ARPU of $0.49, which marks 15% growth from the previous year.
Momo has a lower APRU than Match, but its higher growth rate indicates that it could overtake Match in the near future. Furthermore, Momo disclosed that its number of highest spending users -- those who spend over 5,000 yuan ($718) each month -- grew 20% annually last quarter. Momo also notably rewards high-spending users with regal titles, and it recently stated that "nobility system" convinces its users to maintain their monthly spending levels.
If Match wants to generate stronger ARPU growth and secure higher-paying customers, it can consider mimicking some of Momo's video streaming and mini-game strategies. It will definitely need to tweak some of those ideas, since some of them are culturally specific to Chinese users, but they could help Match expand its ecosystem, widen its moat, and lock in more users.
10 stocks we like better than Match Group
When investing geniuses David and Tom Gardner have 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.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Match Group 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 December 1, 2019
Leo Sun has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Match Group. The Motley Fool recommends Momo. 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.
| -0.00706
| -0.004961
|
2020-01-02
|
3 Marijuana Stocks to Avoid Like the Plague in 2020
|
ACB
|
There's no doubt that the marijuana industry has a bright future. We know this because tens of billions of dollars in annual sales are being conducted in the black market each year. As countries/states continue to legalize cannabis, legal-channel sales have an opportunity to soar. This is why varied Wall Street estimates have called for between $50 billion and $200 billion in annual sales by 2030, up from $10.9 billion worldwide in 2018.
But the fact remains that 2019 was not a good year for marijuana stocks. Supply issues in Canada, high tax rates in select U.S. states, and a resilient black market made life incredibly difficult for cannabis companies, and it was investors who paid the price.
Although the shellacking marijuana stocks took in 2019 has opened the door to some intriguing value within the industry, there are three well-known cannabis stocks you'd be wise to avoid like the plague in 2020.
Image source: Getty Images.
Aurora Cannabis
Alberta-based Aurora Cannabis (NYSE: ACB) is an absolute favorite among investors. But they quickly learned in 2019 that popularity is no guarantee of profitability.
Though Aurora does have a number of factors that are seemingly working in its favor, including the highest peak production potential of all growers, the broadest international reach, and landing billionaire activist investor Nelson Peltz as a strategic advisor in March 2019, the company's balance sheet is a complete disaster, and the supply issues impacting Canada are a long way from being resolved.
One aspect of Aurora's balance sheet that's concerning is the company's cash on hand. Even with access to $400 million in at-the-market funding (i.e., dilutive common stock offerings) and a credit line with the Bank of Montreal, there's real concern that Aurora may have bitten off more than it can chew on the expansion front. One Wall Street analyst believes Aurora could go belly up due to its lack of cash.
Perhaps a bigger problem is that Aurora grossly overpaid for its acquisitions, and the company has 3.17 billion Canadian dollars in goodwill on its balance sheet. This represents 57% of the company's total assets and is considerably higher than its current market cap. I find it highly unlikely that Aurora Cannabis will recoup a significant portion of this goodwill in the future, making a massive writedown likely.
And, of course, there are the supply issues in Canada that will take numerous quarters to resolve. These problems have led to a bottleneck of supply in Ontario, the country's most populous province. Meanwhile, most international markets are still formulating their medical marijuana regulations and are, thus, not importing a lot of pot at the moment. That means Aurora's hefty overseas investments are unlikely to pay dividends anytime soon.
Even with construction on two of its largest cultivation farms now idled (Aurora Sun and Aurora Nordic 2) to lower capital expenditures, Aurora looks doomed to lose money in fiscal 2020. That makes it a popular pot stock to avoid in my book.
Image source: Getty Images.
MedMen Enterprises
Another popular cannabis stock that was an utter train wreck in 2019 and should continue to crash and burn in 2020 is vertically integrated multistate operator (MSO) MedMen Enterprises (OTC: MMNFF).
The idea behind owning MedMen seemed simple. This was a company with a big focus on California, the largest cannabis market by sales in the world. With some of its locations in the Golden State generating more sales per square foot than Apple's stores, its branding seemed to be clearly resonating with consumers. Unfortunately, what could go wrong has gone wrong for MedMen.
The biggest worry for MedMen moving forward is financing. Although MedMen has secured up to $280 million from private equity firm Gotham Green Partners, there's little assurance that this'll be enough to see MedMen survive over the long run. Management has made strides in reducing general and administrative expenses by roughly 30%, but that didn't stop the company from losing $53.3 million in the fourth quarter and $231.7 million in 2019.
MedMen also went so far as to completely shelve its acquisition of privately held MSO PharmaCann in October, just three days before the one-year anniversary of announcing what was then a $682 million all-stock deal. MedMen justified terminating the acquisition as a means of not having to push into noncore markets, but it's blatantly apparent that the issue is MedMen doesn't have the capital to take on the operating expenses of PharmaCann's existing network of dispensaries and grow farms.
The icing on the cake for MedMen is that California's pot industry has been overrun by black-market producers. The Golden State is taxing the daylights out of consumers, which, when coupled with its Swiss-cheese-like legalization process throughout the state's nearly 500 jurisdictions, has constrained legal sales. In short, I genuinely question MedMen's ability to survive.
Image source: Getty Images.
Canopy Growth
Finally, it'd be a good idea for investors to keep their distance from Canopy Growth (NYSE: CGC), the largest marijuana stock in the world by market cap.
Similar to Aurora Cannabis, Canopy Growth appeared to have a laundry list of competitive advantages that would seemingly make it the pot stock to own. It's the second-largest producer by peak annual output, has operations in the second-most foreign countries (behind Aurora), has the best-known brand in Tweed, and is rolling in the dough following an equity investment from Constellation Brands. And yet the company is a mess.
There isn't a cannabis company out there that's losing more money on an operating basis than Canopy Growth. Even excluding a number of one-time costs, Canopy's operating loss hit a staggering CA$265.8 million in the fiscal second quarter. Mind you, this includes a more than CA$13 million benefit from fair-value adjustments. Aside from more employees leading to higher expenses, Canopy's share-based compensation has soared. Now-former co-CEO Bruce Linton believed that offering long-term-vesting stock was a smart move to keep employees loyal and motivated. Unfortunately, it's ballooned costs and made it virtually impossible for the company to get anywhere near operating profitability.
Like Aurora, Canopy Growth is also lugging around a lot of goodwill on its balance sheet. The company clearly overpaid for its acquisitions: Canopy's CA$1.91 billion in goodwill accounts for 23% of total assets. This looks to be a writedown just waiting to happen.
But the big question mark for 2020 is, what happens when incoming CEO David Klein takes over in January? Though it's a certainty we'll see some belt tightening, Klein doesn't have any experience in the cannabis industry. This leaves the company's future as a market share leader very much in limbo.
With profits nowhere in sight, I'd suggest avoiding Canopy Growth like the plague in 2020.
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Sean Williams has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple. The Motley Fool recommends Constellation Brands. 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.
| -0.00706
| -0.009901
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2020-01-02
|
Netflix Is Still Thriving, Just as Management Predicted
|
DIS
|
During the months that preceded the launch of two much-hyped streaming platforms, Walt Disney's (NYSE: DIS) Disney+ and Apple's Apple TV+, many pundits declared the imminent fall from grace of the current top streaming services providers, namely Netflix (NASDAQ: NFLX). These new streaming services -- particularly Disney+ and its lineup of blockbuster movies and TV shows loaded with A-list celebrities -- threatened to lure viewers away from Netflix. However, Netflix itself didn't seem to be particularly worried. In its third-quarter letter to shareholders, Netflix's management had the following to stay about the increasingly stiff competition in the streaming services industry:
The launch of these new services will be noisy. There may be some modest headwind to our near-term growth, and we have tried to factor that into our guidance. In the long-term, though, we expect we'll continue to grow nicely given the strength of our service and the large market opportunity.
As if to back up this claim, Netflix recently released some data showing that its platform is making some serious strides in international markets.
Image Source: Getty Images.
Netflix's growth abroad
According to a recent SEC filing, Netflix's growth in international markets is outpacing its growth in North America. During the third quarter, the company recorded 3.1 million net additions in Europe, the Middle East, and Africa (EMEA), and the company ended the quarter with 47.4 million paying subscribers in these regions, a 40% increase year over year. Further, Netflix's net additions in Asia-Pacific were 1.5 million, and the company's end-of-quarter paying subscriber count was 14.5 million for this region, 53% higher than it was during the year-ago period. Lastly, in Latin America, Netflix added 1.5 million subscribers during the third quarter, and the company ended the quarter with 29.4 million subscribers, a 22% increase year over year. Note that by comparison, Netflix only added 613,000 subscribers in North America during the third quarter.
Disney+ isn't the end of Netflix
Now, it is important to give credit where credit is due. Disney+ has been hugely successful thus far, much more so than many people expected. The streaming service managed to land 10 million subscribers right out of the gate, and it has already surpassed the 20-million-subscriber mark, which is quite an impressive feat. However, Disney+ doesn't look likely to be the end for Netflix after all. First, Netflix obviously recognizes the "large market opportunity" found abroad, and the company is still looking to grow in these markets.
In its third-quarter letter to shareholders, Netflix vowed to "expand" its non-English original shows and movies, because "they continue to help grow our penetration in international markets." Second, it turns out most Disney+ subscribers -- an estimated 80%, to be exact -- also have a Netflix subscription. So it isn't the case that Disney+ is stealing all -- or even most -- of Netflix's customers. And although Netflix will likely suffer some losses in its core market as a result of competition from Disney+, its gains in international markets could offset these losses.
In other words, for Netflix's shareholders, it isn't time to push the panic button, at least not yet. And although Netflix probably won't repeat the performance it delivered during the last decade -- with its shares soaring by more than 4,100% since 2010 -- during this decade, it is still, in my view, a growth stock worth buying.
Find out why Netflix is one of the 10 best stocks to buy now
Motley Fool co-founders Tom and David Gardner have 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.*
Tom and David just revealed their ten top stock picks for investors to buy right now. Netflix 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 December 1, 2019
Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple, Netflix, and Walt Disney and recommends the following options: long January 2021 $60 calls on Walt Disney and short April 2020 $135 calls on Walt Disney. 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.
| -0.00706
| -0.011471
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2020-01-02
|
Consumer Sector Update for 01/02/2020: WMT, MCD, DIS, CVS, KO, JMEI, AXE, FAMI
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DIS
|
Top Consumer Stocks:
WMT: +0.51%
MCD: +0.30%
DIS: +0.62%
CVS: +0.55%
KO: +0.13%
Top consumer stocks were gaining before markets open on Thursday.
Among consumer stocks moving on news:
(-) Jumei International Holding (JMEI), which dropped less than 1% before markets open. The China-based online retailer of beauty products recently said that it will delay the release of its financial results for the first half of 2019.
In other sector news:
(=) Anixter International (AXE) was flat after announcing that it has agreed to an upwardly revised merger agreement with private equity manager Clayton, Dubilier & Rice in a transaction now valued at approximately $4.3 billion.
(=) Farmmi (FAMI), a China-based agriculture products supplier, was also flat before markets open on Tuesday. The company earlier reported a loss of $0.03 per share for the fiscal year ended Sept. 30, 2019, compared with earnings of $0.29 per share last year.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
| -0.00706
| -0.011471
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2020-01-02
|
Jeff Clark’s Market Minute: A Mickey Mouse Tax Plan to Save America
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DIS
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MikeâÂÂs note:àMike Merson here, JeffâÂÂs managing editor. With our offices closed for the holidays, weâÂÂre bringing you some of the best essays JeffâÂÂs written throughout his career.
Source: ilikeyellow / Shutterstock.com
TodayâÂÂs essay, originally published back in 2012, happens to be one of his most popularâ¦
It involves a radical tax plan to fix the U.S. governmentâÂÂs deficit problem. And as youâÂÂll see, it applies just as well today as it did back then.
The United States of America could be the happiest place on Earth.
We just need to change our income-tax structure.
After filing and paying my 2011 taxes, there was still a little money left in my checking account. So I decided to splurge a bit and take the wife and kids on a mini-vacation to Disneyland.
As I stood in the ticket line outside âÂÂthe happiest place on Earth,â I noticed the wide variety of people standing in line with me. There were tall people⦠short people⦠fat people⦠skinny people⦠people of every ethnic background imaginable. There were kids, teenagers, young adults, mid-lifers, and senior citizens. Every genetic and chromosomal background possible was represented, as was â I think â every income class.
Certainly, the gentleman in front of me â with the tapered slacks, the Façonnable pullover shirt, and the Cole Haan walking shoes â earned a decent living. In front of him, though, was a man wearing oversized denim shorts, a âÂÂBattle of the Bands 2009â t-shirt, and a stained baseball cap. He probably wasnâÂÂt doing as well financially.
But hereâÂÂs the thing⦠we all paid the same price for our admission tickets.
It doesnâÂÂt matter how young or old you are. It doesnâÂÂt matter where you come from or what nationality your ancestors were. And it doesnâÂÂt matter how much or how little money you make. Everyone pays the same price to gain access to all the rides and attractions at Disneyland.
And Disney (NYSE:) is a hugely profitable corporation. Just look at the stock over the past 10 yearsâ¦
ItâÂÂs up 175%.
Still, I had to wonder⦠If the best country on Earth operates with a progressive tax policy â where higher-income earners pay more for the privilege of living within its borders â why doesnâÂÂt Disney charge higher-income earners more to enjoy its theme parks?
I called DisneyâÂÂs shareholder services department to get an answer. After being transferred about five times, I was finally able to convince the lady on the other end of the line that this wasnâÂÂt a joke⦠and I was a serious financial analyst.
She agreed to answer my questions on the condition of anonymity. So, letâÂÂs just call her âÂÂSnow White.âÂÂ
HereâÂÂs how the interview wentâ¦
Me:àWhy doesnâÂÂt Disney charge different admission prices based on the income level of the people visiting its theme parks?
Snow White:àUm⦠because thatâÂÂs a stupid idea.
Me:ÃÂ Are you saying the tax policy of the United States of America is stupid?
Snow White:àAlright⦠if youâÂÂre asking this as a serious question, maybe âÂÂstupidâ is too strong a word.
At Disney, we charge everyone the same admission rate because once inside the park, everyone has equal access to all the rides and attractions. We do have discount tickets for young children, since they may not be permitted on some of the rides because of safety concerns. And we do offer a small discount to organizations that purchase a large number of tickets all at once. For the most part, though, everyone pays the same price to enjoy our parks.
Me:àOK. Everyone pays the same because everyone has the same opportunity. But letâÂÂs say someone has an unfair advantage to the rides, would he have to pay more?
Snow White:ÃÂ There are no unfair advantages at Disney.
Me:àOh, sure there are. For example, my favorite ride is the Indiana Jones Adventure â which is located all the way over at the north side of the park. If I enter the park from the south side, I donâÂÂt have the same opportunity to ride the ride as someone who enters from the north. He should have to pay more.
Snow White:àWell⦠no⦠You can always just enjoy the rides that are closer to where you enter the park. Or you can walk over to the north side to ride Indiana Jones Adventure.
Me:àBut heâÂÂs closer⦠And thatâÂÂs an advantage.
Snow White:ÃÂ Walk faster.
Me:àNever mind⦠Can you tell me how you decide what to charge for admission?
Snow White:ÃÂ Yes. Admission prices are set to ensure a good value for the consumer, enable us to keep the park in excellent condition, allow us to pay our employees a competitive rate, and provide a reasonable return to our shareholders.
Me:àBut what if I canâÂÂt afford your admission price? Can you just charge some rich guy in line in front of me for two tickets and then just give one to me?
Snow White:àThatâÂÂs not really a serious question, is it? Of course we couldnâÂÂt do that.
Me:àBut what if IâÂÂm out of work? Or if I just spent my extra money on a new set of headphones? Or if there are just other things I need to pay for first, and I donâÂÂt have the money for a ticket to Disneyland? What am I supposed to do then?
Snow White:àWell⦠I guess like anything else you might want out of life, youâÂÂre going to have to work hard and save for it.
Me:ÃÂ Thank you for your time, Snow White.
Snow White:àYouâÂÂre welcome⦠I think.
As I hung up on Snow White, it occurred to me that I shouldnâÂÂt be asking Disney why it doesnâÂÂt have an admissions rate similar to the United States progressive tax policy. The company is doing great. Go back and take another look at the DIS chart.
Instead⦠we should be asking the U.S. government why it doesnâÂÂt have a tax policy similar to DisneyâÂÂs admissions rate.
Think about it⦠Just take a look at the âÂÂstockâ of the United States of America over the past 10 yearsâ¦
The U.S. dollar has lost one-third of its value in the last 10 years. Our debt level is exploding. We canâÂÂt balance our budget. And weâÂÂre about to tumble over the fiscal cliff.
Maybe we should take a page out of the Disney playbook⦠and see if we can adjust our tax policy to turn America into the âÂÂhappiest place on EarthâÂÂâ¦
Forty years ago, Disneyland had a âÂÂprogressiveâ ticket structure. Different rides cost different amounts of money depending on the âÂÂthrillâ of the attraction.
I remember fighting with my brothers over who would get the rare and valuable âÂÂEâ tickets that allowed us to ride the Matterhorn⦠and who would get stuck with the cheap âÂÂAâ tickets and have to hang out on King ArthurâÂÂs Carousel.
Disney doesnâÂÂt operate that way anymore. It ditched the progressive ticket policy in favor of a flat-rate plan.
Everybody pays the same price to get into Disneyland. It doesnâÂÂt matter if you spend the entire day riding Space Mountain⦠or park yourself on a bench in the shade and wait all day for the character parade. Everyone pays the same amount to spend time in the happiest place on Earth.
The United States should adopt a similar policy.
Forget about taxing people on a percentage of their income. The rich guy shouldnâÂÂt have to pay more for an admission ticket than the poor guy. Instead, everybody should pay the same price for the chance to enjoy all the rides, attractions, and opportunities available in the United States of America.
The tax amount should be based on the same principles Disney uses to set its admission prices. As âÂÂSnow Whiteâ told me when I called up DisneyâÂÂs shareholder services department, those principles are: âÂÂTo ensure a good value for the consumer, enable us to keep the park in excellent condition, allow us to pay our employees a competitive rate, and provide a reasonable return to our shareholders.âÂÂ
For example, the U.S. government plans to spend a total of $3.8 trillion in 2013. Since we have roughly 315 million people who call America âÂÂhome,â each person would be required to pay $12,060 to stay here. That means a family of four would pay taxes of just over $48,000.
ThatâÂÂs an obscene amount. But it reflects the current spending habits of the U.S. government. So thatâÂÂs the ticket price. ThatâÂÂs what you need to pay if you want to take advantage of any or all of the opportunities available in America.
If itâÂÂs too expensive, remember what Snow White told me yesterday: âÂÂWell⦠I guess like anything else you might want out of life, youâÂÂre going to have to work hard and save for it.âÂÂ
If youâÂÂre unwilling or unable to do that, leave. Nobody is required to stay at Disneyland.
If enough people leave because they canâÂÂt afford the admission ticket, the government will have to adjust the price â which means itâÂÂll have to adjust its spending plans.
Maybe it scraps the plans to build Mr. ObamaâÂÂs Wild Health Care Ride. Maybe it stops subsidizing Solar-Powered Fantasyland. Maybe â like any well-run corporation or household â the government starts paying better attention to where it wastes its money.
Then it can lower the price of admission and everyone can enjoy the happiest place on Earth.
It sure worked well for Disney.
Best regards and good trading,
Jeff Clark
In Case You Missed Itâ¦
Teeka Tiwari made the BIGGEST crypto prediction of his career.
Five tiny coins have the potential to transform $500 into a $5 million fortune â in as little as 10 months. That means 300 days from now you could be a crypto multi-millionaire. And all you have to do is take $500 and put it in five cryptocurrencies.
If you want to know what the names of the 5 coins areâ¦
More From InvestorPlace
The post 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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2020-01-02
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Dow Jones Today: A Roaring Start to 2020
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DOW
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Itâs too early to tell if the new decade will be this centuryâs equivalent of the âRoaring â20s,â but stocks started the new year in much the same way they ended 2019: on an upbeat note.
Source: Provided by Finviz
Weâre just one day into 2020, so itâs too early to tell what themes from last year will persist, what laggards will morph into leaders and which winners from last year will disappoint this year. But in late trading, 21 of 30 Dow Jones stocks were higher.
On a related note, much of the ebullience to start the new year was attributable to familiar leadership fare as all of the Dowâs technology stocks were trading higher today.
Speaking of familiar themes, on a day when news flow was light in the U.S., China helped global equities higher after the central bank there said it would increase access to cheap financing for the countryâs financial institutions. On a related note, President Trump remains optimistic that the U.S. and China will sign Phase I of the this month and perhaps start discussions on the next phase.
Apple Doing Apple Things
Thereâs obviously a long way to go in 2020, but Apple (NASDAQ:), 2019âs best-performing Dow stock, is off to an excellent, gaining 2.2% on the first trading day of the new year.
Conventional wisdom often dictates that a prior leaderâs usually donât retain that status in the following year, but that Apple may not be conventional in that regard. The stock gained 86.16% last year and asking for repeat performance in 2020 may be asking a lot, but Apple certainly has the ingredients and leadership to make .
For today, Appleâs gains were largely attributable to the aforementioned liquidity injection in China and news that of the imminent trade deal signing.
Speaking of Repeat Winnersâ¦
Disney (NYSE:) gained a tidy 32% last year and was back at it today, jumping more than 2%. Last yearâs familiar catalyst of Disney +, the companyâs newly minted streaming service, greased the stockâs wheels today.
Specifically, Rosenblatt Securities analyst Bernie McTernan said in a note out today that a recent survey indicates Disney+ has acquired a massive number of subscribers in a short amount of time.
âMcTernan estimated that Disney+ had 25 million subscribers as the first quarter of its 2020 fiscal year closed on Tuesday, up from his previous call of 21 million. Disney will likely report its results for the quarter in early February,â .
Remember This Name?
It has been awhile since industrial conglomerate United Technologies (NYSE:) was highlighted in this space, but the stock was one of the top performers in the Dow today. As has been widely noted, there are lot of moving parts with UTX stock, including previously announced spinoffs of its non-core segments, including Otis (elevators and escalators) and Carrier (HVAC) as well as the Raytheon (NYSE:) merger.
It took investors a while to digest all those moves, but there a couple of important reasons why UTX could be a winner in 2020: earnings are expected to grow and the stock trades at a tempting 17x earnings, indicating itâs not richly valued despite strong EPS growth forecasts.
Along For The Ride
Advanced Micro Devices (NASDAQ:), one of last yearâs best-performing names from the hot semiconductor space, hit a record high and dragged rival and Dow component Intel (NASDAQ:INTC) along for the ride.
Waiting on the Dogs
Several of the Dowâs 2019 disappointments, a.k.a. The Dogs of the Dow, such as Dow Inc. (NYSE:) and Verizon (NYSE:), were among the indexâs losers today, indicating it could take awhile for the Dogs of the Dow theory to kick in this year.
Bottom Line on the Dow Jones Today
One thing to consider, and itâs relevant because weâll soon be treated to the last major economic data points of 2019, is that economic growth in the U.S. is likely to cool this year, but that doesnât dent the case for equities.
âWhile the odds of a near-term recession appear to have diminished, growth is projected to slow in the coming quarters due to a weaker global outlook and reduced global trade flows,â . âU.S. economic growth is expected to continue to slow into 2020, with analysts surveyed by FactSet projecting 2.3% annual growth in 2019 followed by 1.8% in 2020.â
As of this writing, Todd Shriber did not own any of the aforementioned securities.
The post 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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2020-01-02
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February 14th Options Now Available For NRG Energy (NRG)
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NRG
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Investors in NRG Energy Inc (Symbol: NRG) saw new options become available today, for the February 14th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the NRG options chain for the new February 14th contracts and identified one put and one call contract of particular interest.
The put contract at the $39.00 strike price has a current bid of 80 cents. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $39.00, but will also collect the premium, putting the cost basis of the shares at $38.20 (before broker commissions). To an investor already interested in purchasing shares of NRG, that could represent an attractive alternative to paying $39.27/share today.
Because the $39.00 strike represents an approximate 1% discount to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the put contract would expire worthless. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 100%. Stock Options Channel will track those odds over time to see how they change, publishing a chart of those numbers on our website under the contract detail page for this contract. Should the contract expire worthless, the premium would represent a 2.05% return on the cash commitment, or 17.41% annualized — at Stock Options Channel we call this the YieldBoost.
Below is a chart showing the trailing twelve month trading history for NRG Energy Inc, and highlighting in green where the $39.00 strike is located relative to that history:
Turning to the calls side of the option chain, the call contract at the $39.50 strike price has a current bid of 80 cents. If an investor was to purchase shares of NRG stock at the current price level of $39.27/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $39.50. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 2.62% if the stock gets called away at the February 14th expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if NRG shares really soar, which is why looking at the trailing twelve month trading history for NRG Energy Inc, as well as studying the business fundamentals becomes important. Below is a chart showing NRG's trailing twelve month trading history, with the $39.50 strike highlighted in red:
Considering the fact that the $39.50 strike represents an approximate 1% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 99%. On our website under the contract detail page for this contract, Stock Options Channel will track those odds over time to see how they change and publish a chart of those numbers (the trading history of the option contract will also be charted). Should the covered call contract expire worthless, the premium would represent a 2.04% boost of extra return to the investor, or 17.29% annualized, which we refer to as the YieldBoost.
Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 252 trading day closing values as well as today's price of $39.27) to be 21%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.
Top YieldBoost Calls of Stocks Analysts Like »
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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2020-01-02
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Noteworthy Thursday Option Activity: RETA, CRM, TWTR
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CRM
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Looking at options trading activity among components of the Russell 3000 index, there is noteworthy activity today in Reata Pharmaceuticals Inc (Symbol: RETA), where a total volume of 1,585 contracts has been traded thus far today, a contract volume which is representative of approximately 158,500 underlying shares (given that every 1 contract represents 100 underlying shares). That number works out to 49.2% of RETA's average daily trading volume over the past month, of 321,970 shares. Especially high volume was seen for the $240 strike call option expiring January 17, 2020, with 1,216 contracts trading so far today, representing approximately 121,600 underlying shares of RETA. Below is a chart showing RETA's trailing twelve month trading history, with the $240 strike highlighted in orange:
Salesforce.com Inc (Symbol: CRM) options are showing a volume of 25,634 contracts thus far today. That number of contracts represents approximately 2.6 million underlying shares, working out to a sizeable 49.1% of CRM's average daily trading volume over the past month, of 5.2 million shares. Particularly high volume was seen for the $170 strike call option expiring January 17, 2020, with 2,747 contracts trading so far today, representing approximately 274,700 underlying shares of CRM. Below is a chart showing CRM's trailing twelve month trading history, with the $170 strike highlighted in orange:
And Twitter Inc (Symbol: TWTR) saw options trading volume of 63,037 contracts, representing approximately 6.3 million underlying shares or approximately 48.4% of TWTR's average daily trading volume over the past month, of 13.0 million shares. Particularly high volume was seen for the $30 strike call option expiring March 20, 2020, with 5,856 contracts trading so far today, representing approximately 585,600 underlying shares of TWTR. Below is a chart showing TWTR's trailing twelve month trading history, with the $30 strike highlighted in orange:
For the various different available expirations for RETA options, CRM options, or TWTR options, visit StockOptionsChannel.com.
Today's Most Active Call & Put Options of the S&P 500 »
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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2020-01-02
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3 Reasons Why GE Stock Could Rally Another 20% in 2020
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GE
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After several years of declines, General Electric (NYSE:) stock finally bounced back in 2019, posting a huge gain of over 50% as new management appropriately executed on cost-cutting and debt-reduction measures, against the backdrop of a steadily improving industrial economic outlook.
Source: Carsten Reisinger / Shutterstock.com
Now, on the heels of its best annual performance since 1982, GE stock looks positioned to add to this record rally in 2020.
Specifically, there are three big catalysts which should power sustained gains in GE stock over the next twelve months. First, the industrial economic backdrop will continue to improve amid easing global trade tensions. Second, management will continue to execute on cost-cutting and debt-reduction measures, and profit margin and leverage trends will continue to improve. Third, the valuation underlying GE stock remains cheap, and there is ample room for further fundamentally supported share price gains.
Put together, those three catalysts should provide enough firepower for General Electric stock to rise another 20% or more in 2020.
The Backdrop Will Improve
The first big catalyst which will help power GE stock higher in 2020 is a sustained rebound in the global industrial economy.
Throughout 2018 and for most of 2019, the industrial economy tumbled amid escalating global trade tensions, which sparked geopolitical and economic uncertainty and curtailed capital investment. Over the past few months, however, those escalating global trade tensions have meaningfully de-escalated. As they have, uncertainty has turned into certainty, capital investment levels have rebounded, and the industrial economy has bounced backâ¦.
This rebound will persist in 2020. U.S. President Donald Trump doesnâÂÂt want to upset the egg carton in an election year, because doing so would harm his chances at re-election (citizens like stability). China doesnâÂÂt want to upset the egg carton, either, because they want their economy to keep rebounding, which it is doing in the absence of trade volatility. As such, for the next few quarters, trade tensions between the U.S. and China will continue to de-escalate.
As they do, capital investment levels will continue to rebound, and industrial economic activity will continue to perk up. This sustained rebound in the industrial economy will provide a meaningful tailwind for GE stock.
Management Will Remain on Track
Second, throughout 2020, GE management will continue to cut costs, sell unrelated business units and reduce leverage, the sum of which will help keep GE stock on a winning path.
A big part of the 2019 rebound in General Electric stock was new management, led by CEO Larry Culp, doing everything right to get the business back on track. Specifically, Culp shed non-core business units, and used the proceeds to pay down debt and streamline investments into the core businesses. At the same time, he cut back on operating expenses in order to create a viable pathway to sustainable profitability.
All of this will continue in 2020. GE still has a lot of moving parts. Culp will continue to sell some of those moving parts in 2020 and use the proceeds to pay down debt. Leverage reduction will have a positive impact on investor sentiment and the stockâÂÂs multiple. At the same time, cost-cutting initiatives will start to bear fruit in 2020, at the same time that streamlined investments into the core airline and power businesses should bring revenue growth back into the picture.
Altogether, GEâÂÂs balance sheet and revenue and profit trends will improve in 2020. As they do, GE stock should continue to move higher.
The Valuation Remains Discounted
The third big idea behind the 2020 bull thesis in GE stock is that shares remain discounted relative to the companyâÂÂs intermediate profit growth prospects.
Thanks to the improving economic backdrop and management maintaining disciplined cost control, General Electric should be able to stabilize and potentially even grow sales at a mild pace over the next few years, while margins should improve as revenues rise on a falling expense base. Assuming this dynamic continues to play out, Wall StreetâÂÂs consensus 2021 earnings per share estimate of 86 cents seems entirely doable for this industrial conglomerate.
The average forward earnings multiple in the industrials sector is about 16.5. Based on that industry average multiple, 86 cents in 2021 EPS reasonably equates to a 2020 price target for General Electric stock of over $14.
GE stock trades hands around $11 today. Thus, the fundamentals say that shares could rise another 20%-plus over the next twelve months.
Bottom Line on GE Stock
General Electric has its groove back, in that: 1) the industrial economy is back to expanding, and 2) General Electric is doing everything right to maintain healthy and profitable positioning in that expanding industrial economy. As long as those two things remain true â and so long as GE stock remains reasonably valued, which it does today â then this record rally in GE stock will live on.
As of this writing, Luke Lango did not hold a position in any of the aforementioned securities.
The post 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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2020-01-02
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Amazon Shows Why It’s Investing So Much In Logistics
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FDX
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Investors punished Amazon's (NASDAQ: AMZN) stock when it reported a decline in profit for its third quarter, the first time in more than two years. The e-commerce giant blamed investments in logistics and higher shipping and fulfillment expenses for the decline.
As shares declined, bulls urged investors to ignore the short-term results and focus on the bigger picture: Amazon is on its way to becoming a shipping powerhouse delivering customers packages in one day or less.
The more products it can offer Prime customers that are eligible for free same-day and one-day delivery, the more sales will grow. It was the case for the 2019 holiday shopping season. Driven by Prime Free One-Day Delivery and Free Same-Day Delivery, it was another year in which Amazon was able to set shipping records. That was rewarded with a 4% surge in its stock. It now sports a market capitalization of $927 billion.
For the holiday period, the tech giant set records for the number of people who tried Prime. In one week alone, Amazon said five million new customers either began a Prime membership or started a trial. The number of items delivered via Prime Free One-Day and Prime Free Same-Day Delivery nearly quadrupled compared to a year ago.
Image source: Getty Images.
Amazon wants to rid itself of FedEx and UPS
Amazon delivered more than 3.5 billion packages around the globe. To put that in comparison, FedEx (NYSE: FDX) shipped 6 billion packages in all of 2018. Customers also used Amazon's pickup points at an increasing rate during the holidays, with 60% more customers shipping to a pickup location than last year. As it stands, Amazon handles shipping and delivery for most of the products sold on the website, pushing UPS (NYSE: UPS), FedEx, and United States Postal Service to the backburner.
Amazon has made logistics a top priority ever since shipping snafus by the likes of UPS and FedEx muddied its reputation during the 2013 holiday season. With packages failing to arrive on time, Amazon vowed to prevent that from happening again. Since then, it has poured billions of dollars into logistics.
It wants to control everything from shipping out of the warehouses to delivery to customers' porches. That requires large upfront investments. In the second quarter of 2019 alone it spent $800 million to expand its one-day delivery for Prime Members. It's also investing $1.5 billion to develop an air hub in Kentucky that's slated to open in 2021 and will be home to fifty aircraft. Amazon announced its Delivery Service Partner program in May, enabling entrepreneurs to create delivery networks to handle last-mile deliveries for Amazon . The company is also investing tons of money into drone technology and, in June, debuted its Prime Air Drone design.
All of these efforts are designed to reduce its reliance on FedEx, UPS, and United States Postal Service and ensure it offers the speediest delivery, giving consumers little reason to shop elsewhere. Amazon is also betting all these efforts will eventually lower the costs of packaging and delivery.
Stock poised to rise as Amazon wins in shipping
By controlling all of the aspects of shipping and delivery, Amazon stands to benefit in a lot of ways that should send the stock even higher. For one thing, expanding speedy delivery should drive growth in its Prime subscriptions as customers sign up to take advantage of free same-day delivery. That means more subscription revenue for Amazon.
It's also likely to translate into more spending on the platform. Studies have shown that Prime customers spend more on average than those who aren't members. Consumers won't think twice about buying low-ticketed items if they know they can have them the same day without having to pay shipping fees. Then there's the ability for Amazon to sell its logistics services to other businesses, expanding its revenue streams.
A big growth area for Amazon is advertising, and same-day shipping can help there too. If Amazon sells more products, advertisers will be inclined to pay higher rates. It's still a distant rival to Facebook and Alphabet's Google, but it's carving out a growing position in the advertising market.
All of these opportunities could result in a huge windfall for Amazon. Piper Jaffray pegs it at as much as $50 billion, predicting spending on Amazon could increase by about 30% because of speedier delivery. If that proves true, investors could be in store for more growth out of Amazon's stock in 2020 and beyond.
10 stocks we like better than Alphabet (A 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 its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Donna Fuscaldo has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Facebook, and FedEx. 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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2020-01-02
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3 Chip Stocks to Trade in 2020
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AMD
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Last year turned out great for equity investors as the S&P 500 rose 30%. However, for much of the year it was rough sailing as there were panic moments over headlines. Some spaces like semiconductors were especially exposed to China, and therefore particularly vulnerable to trade war headlines. But despite all the challenges that chip stocks had in 2019, Wall Street investors bought every dip.
The setup for 2020 resembles that of last yearâs. The bulls are still in charge and the favorable macroeconomic conditions are looking like they will persist. The central banks are still committed to easy lending conditions, and mega caps are delivering strong results. So in order for the bears to overwhelm this bullish market they will need new scenarios to emerge. So past winners like Advanced Micro Devices (NASDAQ:), Intel (NASDAQ:) and Nvidia (NASDAQ:) will continue to win.
So after a great 2019, the idea is to roll the profits into 2020 inside a bullish sentiment for business. Last year, the markets struggled with global headlines about tariffs and more. Yet, companies still managed to deliver great results; therefore, it will take a black swan event to derail this bullish market.
Chip Stocks to Trade: Advanced Micro Devices (AMD)
Source: Charts by TradingView
AMD was the best performing stock in the S&P two years straight. The odds for repeating once are low, so a third time is almost impossible to pull off. Meaning that from this perspective, AMD stock is the least likely to outperform in 2020.
But I also like to bet on winners. So until AMD shows me weakness, I stick with it as a great choice for 2020. This is a strong stock because Wall Street strongly believes in its CEO Lisa Su. If this situation changes, then the selling will happen very fast.
So, the stock ascent being this fast, I can argue that there will be better entry points into AMD. Meaning new entries into it here are vulnerable to losses in the next two months. If it falls to the areas around $39 and $36 per share it would shake out enough people to make a much better new entry point. The base after a very steep rally is usually shaky and makes for a poor springboard.
I am not saying that AMD stock is a good short because it is not. In 2018 when the equity markets were falling into an abyss, AMD closed the year up 50%. This year was even better. So the easy trade on AMD is to stay long it into 2020 but from better starting points.
Fundamentally, AMD is not cheap. But value is not very important for a stock like this. It gets a pass on valuation for as long as its thesis is that management is setting it up for awesome profits in the long run.
Nvidia (NVDA)
Source: Charts by TradingView
For a long while and coming into Fall 2018, NVDA stock could do no wrong. Consensus then was that it had to be in every portfolio. The experts drooled over its forays into several areas, including bitcoin. But then, as the crypto craze faded, Nvidia stock corrected hard as it fell almost 60% before it bottomed at $125 per share on Christmas of 2018.
This past Christmas was the opposite result. NVDA rallied 80% from its May lows to salvage a great year. So barring a management flub, the momentum could carry it on higher still from here. Indeed, the Wall Street experts are back on the Nvidia stock band wagon and perhaps too much once more. And therein lies reason for caution.
This recent increase in conviction should make the bulls nervous. At least until they shake out a few weak hands. So donât confuse my point here with disliking its fundamentals. I just am leery of the speed by which consensus swung from one extreme to the other. Somewhere in the middle lies a better slope.
Intel (INTC)
Source: Charts by TradingView
Of the three stocks today, Intel has the clearest technical opportunity. All year long it has played catch up. This was probably the result of the churn in leadership. But now it is in sync and trading well.
Intelâs chart now resembles AMDâs back in October just before it broke out from $34 per share. The rally was massive for AMD and it could be just as impressive for INTC soon.
If the bulls can breakout and establish $60 per share as a base then the measured move would be to reach $69 per share area. But the first step is to solidify this breakout and retest the neckline for footing. This task will be easier to accomplish if the whole market starts the year with greens.
Nicolas Chahine is the managing director of . As of this writing, he did not hold a position in any of the aforementioned securities. Join his live chat room for free here.
The post 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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| -0.010183
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2020-01-02
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Consumer Sector Update for 01/02/2020: DAR,UAL,EROS
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DAR
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Top Consumer Stocks
WMT -0.05%
MCD +0.95%
DIS +1.38%
CVS -0.79%
KO -0.86%
Consumer stocks were broadly mixed, with the shares of consumer staples companies in the S&P 500 dropping almost 1% this afternoon while the shares of consumer discretionary firms in the S&P 500 were ahead nearly 0.5%.
Among consumer stocks moving on news:
(-) Darling Ingredients (DAR) declined fractionally. The company Thursday said it purchased the 50% equity interest it didn't already own in the EnviroFlight joint venture from Intrexon (XON) for an undisclosed amount. All 62 EnviroFlight employees are expected to continue with the Kentucky-based company, which can grow up to 900 tons of dried black soldier larvae each year to produce environmentally-friendly, high-value nutrients.
In other sector news:
(+) United Airlines (UAL) rose 1.3% after an Evercore ISI upgrade of the air carrier to outperform from in-line along with a $20 increase in its price target for the company's stock to $125.
(+) Eros International (EROS) climbed more than 1% after the Indian streaming video company said it has partnered with telecom provider Ooredoo Qatar to provide its Eros Now entertainment platform to Ooredoo subscribers.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
| -0.00706
| 0.022639
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2020-01-02
|
Semiconductor Stocks: Year In Review; Where to Place Your Chips in 2020
|
AMD
|
W
ith high-flying names such as Cirrus Logic (CRUS), Advanced Micro Devices (AMD) and Lam Research (LRCX) leading the way with each posting more than 100% returns, semiconductor stocks ended 2019 as one of best-performing sectors, as evidenced by the 61% rise in the iShares PHLX Semiconductor ETF (SOXX). But things didn’t start off so rosy. And can they remain that way in 2020?
In 2019 the industry experienced tons of volatility and enormous pressure stemming from the U.S.-China trade conflict. Given that computer chips are the U.S.’s third-largest export, the resolve of semiconductor investors was consistently tested. Still, the fact that the SOXX outperformed the 22% rise in the Dow Jones Industrial Average and the 29% return in the S&P 500 Index underscores the not only the popularity of the group, but also the high expectation investors have for chip stocks entering the new year. Take a look at the chart.
With returns of 146%, Advanced Micro Devices was arguably the best-performer among the group. AMD’s popularity has been driven by several factors, namely improving business conditions and its diverse range of products for growing markets such as client CPUs, server CPUs and GPUs for data centers and gamers. The recent entry in the realm of gaming by Apple (AAPL) and Google (GOOG , GOOGL) have magnified the company’s growth potential. And there’s more where that came from.
Citing improving datacenter demand and optimism on margin expansion through 2020, RBC analysts Mitch Steves, who has an Outperform rating on the stock, last week raised his AMD price target on from $50 to $53. Next on the list is Lam Research, which has returned 115% in 2019. The global supplier of wafer fabrication equipment/services for the semiconductor industry is not only seeing strong growth in the internet of things and cloud computing, Lam is also benefiting from increased demand 3D design solutions. KeyBanc analysts, who has an Overweight on the stock, recently raises its Lam Research price target from $261 to $313.
Micron (up 67%) is another stock that surprised the market. Driven by improved DRAM pricing Micron shares have surged some 55% in six months. The chip giant is also seeing better inventory conditions in various end-markets, which analysts see as a means for improved demand for DRAM during the upcoming fourth quarter in terms of shipments for the cloud, graphics and PC markets. All told, Micron is operating on its stated objectives and better-diversifying the business, which — in my opinion — effectively removes the threat of what has been a highly cyclical industry for DRAM and NAND memory chip pricing.
As with Micron, Qualcomm — evidenced by its 55% return — is benefiting from improved business conditions. The investment thesis in Qualcomm continues to be the industry shift towards 5G, which has considerable upside as the wireless giant. Given its breadth of IP, licensing revenue and the fact that Qualcomm’s chips are well ahead of competitors when it comes to speed and other features, it’s hard to imagine another company having more exposure to not only 5G but with the ability to capture more content per smartphone.
Texas Instruments’ 35% rise would seem to come out of nowhere, but the world’s largest producer of analog semiconductor products has transformed its business to become a leader in analog and embedded processing. These products take signals such as sound, temperature, pressure and images and turn them into digital data that can be processed by other chips. These qualities also makes them incredibly profitable, producing gross margins over 50%.
And with the growing adoption of smart and connected devices being more important in our lives, not to mention component for self-driving cars, Texas Instruments’ sensors and controllers will remain in high demand. With gains of 23%, Broadcom wasn’t a high-flyer but the semiconductor giant didn’t disappoint. The wireless giant, which has chip placement in both Apple and Samsung (SSNLF) products, gives it an advantage over competitors. And I expect Broadcom, which pays a solid yield of 4.09%, to be a top-performer in 2020.
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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| -0.010183
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2020-01-02
|
Did F5 Networks Overpay To Acquire Shape Security?
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BABA
|
F5 Networks (NYSE: FFIV) recently announced that it has entered into an agreement to acquire Shape Security – a security company that protects the websites and mobile apps of some of the world’s largest enterprises from various types of fraud and cybercrime. Notably, F5 will shell out $1 billion to acquire Shape Security – a figure that represents a Price-to-Sales (P/S) multiple of 14.3x for the target company, which is nearly 4 times F5’s estimated FY’20 P/S multiple of 3.6x. The deal is expected to close in March 2020, and F5 is expected to fund the transaction through cash on its balance sheet and a $400 million unsecured term loan.
This is the most expensive acquisition in F5’s history and we believe the acquisition will weigh on the company’s earnings in the near term but is likely to boost F5’s growth in the long term. Trefis quantifies the impact of the Shape acquisition on F5’s operating metrics in the scenario-based dashboard How Much Could F5 Networks Be Worth Post It’s Shape Security Acquisition? Besides detailing the rationale behind the acquisition, we arrive at the potential upside to F5’s stock as a direct result of the acquisition.
#1. F5’s Acquisition of Shape Could Add Additional $140 Million To F5’s Application Revenues By FY’21
Shape is a leader in fraud and abuse prevention and is likely to add a new dimension to F5’s portfolio of application services which is helpful in protecting customers’ digital experiences.
The acquisition will accelerate F5’s growth momentum and is likely to double F5’s addressable market in the security business.
Post its completion in March 2020, Shape Security will be integrated with F5’s software’s business under the Application Delivery Network segment.
Notably, Software revenues are approximately 25% ($250 million) of the company’s Application delivery revenues.
We assume that the acquisition will boost the company’s software revenues by 35% and 60% in 2020 and 2021, respectively. As a result, Shape is expected to add around $140 million to F5’s software business over 2020-2021, helping F5’s application revenues to cross $1.16 billion in FY’21.
#2. However, Additional Expenses of ~$115 Million Are Expected To Be Incurred Due To Shape Integration
Purchase accounting adjustments and anticipated one-time expenses related to the transaction and integration are likely to weigh on the company’s earnings in the near term. Moreover, the company is funding 40% ($400 million) of the transaction through debt which is likely to further impact the company’s earnings.
As a result, we expect the division’s net income margin to contract by 4 percentage points and 2 percentage points in 2020 and 2021, respectively.
Notably, this translates into an increase in expenses for F5 by $115 million by the end of FY21.
#3. Additional expenses are likely to weigh on the company’s earnings resulting in erosion of $0.49 per share in FY’21
Additional revenue of $140 million is likely to be offset by additional expenditures of $145 million over 2020-2021.
We expect the company’s net income to decline to $534 million as opposed to our existing forecast of $561 million. Our analysis also takes into account the fact the company will be funding a part of the transaction through debt which will result in additional costs.
Assuming shares outstanding of around 55 million, this translates to a reduction in EPS by around $0.49 per share.
#4. This reduces our price estimate for F5’s shares by 5%
In our base case (pre-acquisition) scenario, we estimate a price estimate of $182 for F5’s Stock.
This figure reduces to $173 after factoring in the impact of the acquisition.
However, we remain optimistic about F5’s growth prospects over coming years, and maintain a price estimate that is almost 25% ahead of its current market price
Details about our forecast for F5’s EPS for FY21 are available in our interactive dashboard.
To sum things up, the acquisition of Shape will help F5 to become an end-to-end application protection company that would protect the applications from the development stage all the way to when end users interact with them. However, the price tag of $1 billion looks a bit steep for the company that has just around $70 million of revenues. Moreover, the means of financing the deal will likely be a drag on the earnings in the near future. In fact, the reduction in the company’s projected valuation as detailed above indicates that F5 paid roughly $500 million more than it should have for Shape Securities.
What’s behind Trefis? See How it’s Powering New Collaboration and What-Ifs
For CFOs and Finance Teams | Product, R&D, and Marketing Teams
More Trefis Data
Like our charts? Explore example interactive dashboards and create your own
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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| -0.012604
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2020-01-02
|
IEMG, WFIG: Big ETF Inflows
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BABA
|
Comparing units outstanding versus one week ago at the coverage universe of ETFs at ETF Channel, the biggest inflow was seen in the iShares Core MSCI Emerging Markets ETF, which added 5,400,000 units, or a 0.5% increase week over week. Among the largest underlying components of IEMG, in morning trading today Alibaba Group Holding is up about 3.2%, and Baidu is up by about 5.6%.
And on a percentage change basis, the ETF with the biggest increase in inflows was the WisdomTree U.S. Corporate Bond Fund, which added 100,000 units, for a 33.3% increase in outstanding units.
VIDEO: IEMG, WFIG: Big ETF 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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| -0.012604
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2020-01-02
|
Is Alphabet Undervalued?
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BABA
|
No, as per Trefis Price estimate Alphabet‘s (NASDAQ:GOOG) stock has a fair value of $1299, which is lower than its current Market price. Alphabet is a collection of businesses – the largest of which is Google. It also includes businesses far away from the company’s main internet products in areas such as self-driving cars, life sciences, internet access, and TV services. Google has a chain of internet products designed for work, email, time management, cloud storage, instant messaging and conferencing, mapping and navigation, video sharing, payment interface, web browser, and various other services.
In this note we discuss our stock price valuation for Alphabet. You can look at our interactive dashboard analysis ~ Alphabet’s Valuation: Expensive or Cheap? ~ for more details, and also modify our forecasts for the company’s key metrics to understand how changes impact the company’s stock price.
#1. Estimating Alphabet’s Total Revenues:
Total Revenue increased from $90.3 billion in 2016 to $136.8 billion in 2018, and is expected to increase by 25% to $171 Billion in 2019
Our Interactive Dashboard Analysis, How Does Alphabet Make Money?, provides an in depth view of Alphabet’s Revenues.
#2. Deriving Alphabet’s Net Income:
Net Income increased from $19.5 billion in 2016 to $30.7 billion in 2018, and is expected to be around $30.5 billion in 2019.
This fall will likely be led by a decrease in margins partially offset by higher revenues.
#3. Determining Alphabet’s EPS:
EPS has risen from $26.06 in 2016 to $43.70 in 2018, and we estimate it to be $43.38 in 2019.
EPS rise in 2018 can be attributed to higher Net Income and lower Shares outstanding.
#4. Estimating Alphabet’s Share Price:
Our Price Estimate of $1299 for Alphabet’s Stock is based on our Detailed Valuation Model, and implies a 30x P/E Multiple on expected 2019 EPS of $43.38
Our interactive dashboard captures how Alphabet compares with its competitors Amazon and Facebook in terms of Revenue and P/E multiple.
What’s behind Trefis? See How it’s Powering New Collaboration and What-Ifs
For CFOs and Finance Teams | Product, R&D, and Marketing Teams
More Trefis Data
Like our charts? Explore example interactive dashboards and create your own.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
| -0.00706
| -0.012604
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2020-01-02
|
Dow Jones News: Microsoft, Intel Hit the Ground Running in 2020
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AMD
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The Dow Jones Industrial Average (DJINDICES: ^DJI) soared on the first trading day of 2020, up 0.6% at 11:30 a.m. EST. The Dow was up around 22% in 2019.
Helping to drive Thursday's gains were two tech giants, Microsoft (NASDAQ: MSFT) and Intel (NASDAQ: INTC). Both stocks performed well in 2019, but each company will face some challenges in 2020 that could jeopardize an encore performance.
Microsoft starts 2020 on a strong note
Microsoft had a great 2019. Revenue and earnings soared, thanks to the resilience of Office and the incredible growth of the company's cloud business. Microsoft secured the JEDI cloud contract from the U.S. Department of Defense, worth potentially $10 billion over 10 years. And the stock gained 55%, pushing the company's market capitalization well above $1 trillion.
Image source: Getty Images.
Shares of Microsoft were up another 1.1% Thursday morning, a solid start to 2020.
While there's every reason to believe Microsoft will continue to thrive in the cloud this year, Alphabet's (NASDAQ: GOOG) (NASDAQ: GOOGL) Google is doubling down on its efforts to relieve Microsoft of its No. 2 position in the cloud infrastructure market. While Google has reportedly toyed with abandoning the market entirely, the company now has eyes on being a top 2 cloud infrastructure provider by 2023.
If Google is serious about winning in the cloud, the company will likely need to dramatically expand its sales and marketing headcount while getting aggressive on price to close deals. This could trigger a price war, cutting into Microsoft's profits as it's forced to reduce prices.
After an epic rally in 2019, Microsoft stock is far from cheap. Based on the average analyst estimate for fiscal 2020, shares of the software giant trade for just shy of 30 times earnings. That premium might be justified by the company's growth prospects, but any sign of trouble could send the stock tumbling.
Intel rises despite AMD optimism
For many years, chip giant Intel faced little competition in its core PC and server chip businesses. But rival Advanced Micro Devices (NASDAQ: AMD) started an assault on Intel's empire when it launched chips based on its Zen architecture in 2017. AMD's Ryzen PC chips and EPYC server chips are now whittling away at Intel's market share, forcing Intel to slash prices on some of its chips to remain competitive.
Optimism for AMD continues to build. On Thursday, Nomura reiterated a buy rating on the stock and boosted its price target to $58. Nomura expects AMD's competitive position to continue to strengthen in 2020.
While Intel is facing intense competitive pressure, the stock hasn't missed a beat. Shares surged 27.5% in 2019, and they were up another 1.5% Thursday morning. This performance is despite Intel's years-long delay getting its 10nm manufacturing process up and running for volume production. This delay has allowed AMD to erase its manufacturing disadvantage -- AMD's latest Ryzen and EPYC chips are built using TSMC's 7nm process.
Intel will be aiming to protect its market share in 2020, which likely means more aggressive pricing, which could cut into margins. But Intel will also be opening a new front in its battle with AMD. Intel is working on its own discrete graphics cards, with a planned launch in 2020. The graphics card market is currently a duopoly, with NVIDIA the leader and AMD in the No. 2 position. Intel could shake things up if its graphics cards are competitive, creating a new revenue stream for the company.
While Intel stock has largely shaken off the AMD threat so far, that could change in 2020 if Intel can't blunt AMD's momentum.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Timothy Green has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Microsoft, and NVIDIA. The Motley Fool recommends Intel and Taiwan Semiconductor Manufacturing and recommends the following options: long January 2021 $85 calls on Microsoft, short January 2020 $50 calls on Intel, and short January 2021 $115 calls on Microsoft. 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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| -0.010183
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2020-01-02
|
Interesting SWK Put And Call Options For February 14th
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SWK
|
Investors in Stanley Black & Decker Inc (Symbol: SWK) saw new options become available today, for the February 14th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the SWK options chain for the new February 14th contracts and identified one put and one call contract of particular interest.
The put contract at the $165.00 strike price has a current bid of $5.30. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $165.00, but will also collect the premium, putting the cost basis of the shares at $159.70 (before broker commissions). To an investor already interested in purchasing shares of SWK, that could represent an attractive alternative to paying $166.00/share today.
Because the $165.00 strike represents an approximate 1% discount to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the put contract would expire worthless. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 100%. Stock Options Channel will track those odds over time to see how they change, publishing a chart of those numbers on our website under the contract detail page for this contract. Should the contract expire worthless, the premium would represent a 3.21% return on the cash commitment, or 27.27% annualized — at Stock Options Channel we call this the YieldBoost.
Below is a chart showing the trailing twelve month trading history for Stanley Black & Decker Inc, and highlighting in green where the $165.00 strike is located relative to that history:
Turning to the calls side of the option chain, the call contract at the $167.50 strike price has a current bid of $5.50. If an investor was to purchase shares of SWK stock at the current price level of $166.00/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $167.50. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 4.22% if the stock gets called away at the February 14th expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if SWK shares really soar, which is why looking at the trailing twelve month trading history for Stanley Black & Decker Inc, as well as studying the business fundamentals becomes important. Below is a chart showing SWK's trailing twelve month trading history, with the $167.50 strike highlighted in red:
Considering the fact that the $167.50 strike represents an approximate 1% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 99%. On our website under the contract detail page for this contract, Stock Options Channel will track those odds over time to see how they change and publish a chart of those numbers (the trading history of the option contract will also be charted). Should the covered call contract expire worthless, the premium would represent a 3.31% boost of extra return to the investor, or 28.12% annualized, which we refer to as the YieldBoost.
Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 252 trading day closing values as well as today's price of $166.00) to be 33%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.
Top YieldBoost Calls of the S&P 500 »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
| -0.00706
| -0.005357
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2020-01-02
|
February 14th Options Now Available For Yelp
|
YELP
|
Investors in Yelp Inc (Symbol: YELP) saw new options begin trading today, for the February 14th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the YELP options chain for the new February 14th contracts and identified one put and one call contract of particular interest.
The put contract at the $33.50 strike price has a current bid of 2 cents. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $33.50, but will also collect the premium, putting the cost basis of the shares at $33.48 (before broker commissions). To an investor already interested in purchasing shares of YELP, that could represent an attractive alternative to paying $34.73/share today.
Because the $33.50 strike represents an approximate 4% discount to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the put contract would expire worthless. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 100%. Stock Options Channel will track those odds over time to see how they change, publishing a chart of those numbers on our website under the contract detail page for this contract. Should the contract expire worthless, the premium would represent a 0.06% return on the cash commitment, or 0.51% annualized — at Stock Options Channel we call this the YieldBoost.
Below is a chart showing the trailing twelve month trading history for Yelp Inc, and highlighting in green where the $33.50 strike is located relative to that history:
Turning to the calls side of the option chain, the call contract at the $35.00 strike price has a current bid of 37 cents. If an investor was to purchase shares of YELP stock at the current price level of $34.73/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $35.00. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 1.84% if the stock gets called away at the February 14th expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if YELP shares really soar, which is why looking at the trailing twelve month trading history for Yelp Inc, as well as studying the business fundamentals becomes important. Below is a chart showing YELP's trailing twelve month trading history, with the $35.00 strike highlighted in red:
Considering the fact that the $35.00 strike represents an approximate 1% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 99%. On our website under the contract detail page for this contract, Stock Options Channel will track those odds over time to see how they change and publish a chart of those numbers (the trading history of the option contract will also be charted). Should the covered call contract expire worthless, the premium would represent a 1.07% boost of extra return to the investor, or 9.04% annualized, which we refer to as the YieldBoost.
Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 252 trading day closing values as well as today's price of $34.73) to be 36%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.
Top YieldBoost Calls of the S&P 500 »
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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| -0.001438
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2020-01-02
|
Haemonetics Breaks Below 200-Day Moving Average - Notable for HAE
|
HAE
|
In trading on Thursday, shares of Haemonetics Corp. (Symbol: HAE) crossed below their 200 day moving average of $114.21, changing hands as low as $113.62 per share. Haemonetics Corp. shares are currently trading down about 0.1% on the day. The chart below shows the one year performance of HAE shares, versus its 200 day moving average:
Looking at the chart above, HAE's low point in its 52 week range is $80.235 per share, with $140.36 as the 52 week high point — that compares with a last trade of $114.83.
Click here to find out which 9 other stocks recently crossed below their 200 day moving average »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
| -0.00706
| -0.003644
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2020-01-02
|
Where Is Philip Morris Spending Most Of Its Money?
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PM
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Philip Morris’ (NYSE: PM) total expenses have trended steadily higher from around $67.7 billion in 2016 to about $71.5 billion in 2018. As a percentage of revenues, expenses have remained around 90% during the same period. Company’s expenses are largely driven by excise taxes and cost of sales. The two expense heads together account for about 76% of revenues as of 2018, reflecting a drop from 77% in 2016, primarily due to lower cigarettes sold and higher revenue driven by the company resorting to price increase per unit and higher heated tobacco sales. This decline from 77% to 76% has added about $450 million to the company’s profits, which translates into additional earnings of $0.29 per share. Excise and cost of sales is further expected to drop to about 74% of revenues by 2020, as cigarette volumes decline further and a large part of revenue growth would continue to be driven by price rise and phasing out of discounts. This drop from 76% in 2018 to 74% in 2020, is expected to lead to additional profit of over $1.9 billion, translating into incremental earnings of $1.27/share over the next two years on account of better management of excise and cost of sales. In our dashboard How Does Philip Morris Spend Its Money?, we discuss the trend in all major expense items and what is driving the change.
Total Expenses
Philip Morris’ total expenses have grown from $67.7 billion in 2016 to about $71.5 billion in 2018. For 2019, we expect total expenses to stand at $72.2 billion, which comprises of-
Excise Duty: $50.1 billion
Cost of Sales: $11.0 billion
Operating Expenses: $8.0 billion
Non-Operating Expense (Income): $0.6 billion
Income Taxes: $2.5 billion
Philip Morris’ Net Income Margins decreased to 8.1% in 2017 due to a sharp rise in tax expense, as the company reported one-time transition tax before TCJ Act came into force. Margin increased to 10.4% in 2018 due to a lower tax rate and decrease in interest outgo. Net income margin is likely to continue to increase to 12% by 2020, led by higher revenues, lower excise tax as cigarette volume sales decline, and declining interest expense on the back of lower rates and deleveraging.
Breakdown of Philip Morris’ Total Expenses
Excise
Excise tax has increased from $48.3 billion in 2016 to $50.2 billion in 2018, driven by continuous hike in excise tax on combustible tobacco products. It is expected to go further up to $50.5 billion by 2020.
However, as a % of Revenues, Excise has steadily decreased from 64.4% in 2016 to 62.9% in 2018, as revenues grew at a faster rate and this revenue rise was driven by price increases per unit rather than volume growth.
It is likely to go further down to 60.5% of revenues by 2020, as cigarette volumes continue to decline and revenue growth would come from higher pricing and heated tobacco.
Cost of Sales
Cost of sales has increased from $9.4 billion in 2016 to $10.8 billion in 2018, driven by unfavorable volume mix and foreign exchange headwinds, along with a sharp rise in heated tobacco volume sold. It is expected to move up to $11.3 billion by 2020.
As a % of revenue, cost of sales increased from 12.5% in 2016 to 13.5% in 2018, as the company continued to offer incentives/discounts on heated tobacco products, due to which revenue growth did not match up to volume growth.
The metric is expected to remain flat at 13.5% in the near term with the gradual phasing out of discounts, and cost of sales and revenues, both seeing an upswing.
Marketing, Administration & Research Cost
Marketing, Administration & Research (MAR) cost has continuously increased from $6.4 billion in 2016 to $7.5 billion in 2018, driven by increased investment behind heated tobacco products across all regions, predominantly the European Union and East Asia & Australia.
This cost is expected to move further up to $8.3 billion by 2020, as the company is expected to push its heated tobacco offerings more aggressively, on the back of dropping cigarette demand and regulatory crackdown on e-cigarettes.
As a % of revenue, MAR cost has increased from 8.5% in 2016 to 9.4% in 2018, and is expected to reach about 10% by 2020.
Non-Operating Expenses
Philip Morris’ Non-Operating Expense has decreased from $885 million in 2016 to $646 million in 2018, driven by a drop in interest expense on the back of lower interest rates and debt repayment, along with a drop in employee-related pension costs.
Going forward, interest cost would be the primary driver of non-operating expenses.
To understand how Philip Morris’ non-operating expenses are expected to move in the near term, view our dashboard analysis.
Effective Tax Rate
Philip Morris’ effective tax rate increased sharply from 28% in 2016 to 41% in 2017 due to the one-time transition tax recorded prior to the implementation of the TCJ Act.
The rate dropped to about 23% in 2018 and in the near term it is expected to be around the same level, which would be slightly more than the US statutory tax rate, as it operates in various geographies.
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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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2020-01-02
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Markets Rise In 2020, Trade Deal Still In Focus, China Manufacturing Expands
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DAX
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FXEmpire.com -
The U.S. Futures Are Up On The First Trading Day Of 2020
The U.S. futures are up on the first trading day of 2020. The Dow Jones Industrial Average, S&P 500, and NASDAQ Composite are up 0.55% to 0.75% in the premarket session. The move is driven by momentum and hope the Phase One Trade Deal will be signed soon. According to reports from Washington, Chinese officials will be in Washington the second full week of January to do just that. Trump has also indicated he will be traveling to China to visit with Xi Jinping once the Phase Two negotiations get underway. Despite the optimism, there is still come concern due to a lack of clarity on the Phase One details. The risk for markets is the deal will fall short of hopes.
Instock news shares of Ford are moving lower in early trading. The iconic car-maker was downgraded by Evercore ISI based on its high valuation and limited upside potential. Shares of Tesla are moving higher in early trading. The electric car maker says it will start the second round of deliveries from its Shanghai facility soon. Tesla also received an upgrade from Cannacord Genuity that came with a Wall Street-High price target.
On the economic front, initial jobless claims came in at 224,000. This is 2,000 more than expected and on top of an upward revision to the previous week. The previous week’s data was revised up by 2,000 but remains within trend at near the historic lows set last year.
Europe Moves Higher On Trade Hopes
European markets are moving higher on trade hopes despite weak economic data. The French CAC is in the lead at midday with a gain of 1.35% while the FTSE and DAX trade just shy of +1.0%. The banks are in the lead with an average gain of 1.9%, German banks lead the group with gains between 5% and 6%. On the economic front, EU manufacturing PMI shows the 11th straight month of contraction.
Instock news Airbus became the world’s largest airplane maker in 2019 due to Boeing’s issues with the 737-Max. With the 737-Max issues far from resolved it is clear Airbus will be the winner in 2020 as well. Shares of Tullow Oil are down more than -6.5% in early trading. The struggling energy company released disappointing results for its Carapa-1 well.
Asia Starts New Year With Mixed Results
Asian markets started the New Year with mixed results. Most markets are higher at the end of the first trading day of the year, South Korea’s Kospi index is the only to post a loss and that -1.02%. The Japanese Nikkie is closed for a holiday. Elsewhere in the region, markets advanced 0.10% (the ASX) to 1.25% (China’s Shanghai Composite). In China, the Caixin Manufacturing PMI came in at 51.5 for December showing expansion in the economy. The data is good but slower than the previous month and slightly below expectations.
This article was originally posted on FX Empire
More From FXEMPIRE:
EUR/USD Bearish Bounce Indicates Wave 4 Pullback
Asian Shares Jump as Investors Await US-China Phase One Deal Signing
USD/CHF 0.9754 is Interim Resistance
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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2020-01-02
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February 14th Options Now Available For Deutsche Bank (DB)
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DB
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Investors in Deutsche Bank AG (Symbol: DB) saw new options become available today, for the February 14th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the DB options chain for the new February 14th contracts and identified one put and one call contract of particular interest.
The put contract at the $8.00 strike price has a current bid of 14 cents. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $8.00, but will also collect the premium, putting the cost basis of the shares at $7.86 (before broker commissions). To an investor already interested in purchasing shares of DB, that could represent an attractive alternative to paying $8.11/share today.
Because the $8.00 strike represents an approximate 1% discount to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the put contract would expire worthless. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 100%. Stock Options Channel will track those odds over time to see how they change, publishing a chart of those numbers on our website under the contract detail page for this contract. Should the contract expire worthless, the premium would represent a 1.75% return on the cash commitment, or 14.85% annualized — at Stock Options Channel we call this the YieldBoost.
Below is a chart showing the trailing twelve month trading history for Deutsche Bank AG, and highlighting in green where the $8.00 strike is located relative to that history:
Turning to the calls side of the option chain, the call contract at the $8.50 strike price has a current bid of 7 cents. If an investor was to purchase shares of DB stock at the current price level of $8.11/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $8.50. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 5.67% if the stock gets called away at the February 14th expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if DB shares really soar, which is why looking at the trailing twelve month trading history for Deutsche Bank AG, as well as studying the business fundamentals becomes important. Below is a chart showing DB's trailing twelve month trading history, with the $8.50 strike highlighted in red:
Considering the fact that the $8.50 strike represents an approximate 5% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 63%. On our website under the contract detail page for this contract, Stock Options Channel will track those odds over time to see how they change and publish a chart of those numbers (the trading history of the option contract will also be charted). Should the covered call contract expire worthless, the premium would represent a 0.86% boost of extra return to the investor, or 7.33% annualized, which we refer to as the YieldBoost.
The implied volatility in the call contract example above is 44%.
Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 252 trading day closing values as well as today's price of $8.11) to be 37%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.
Top YieldBoost Calls of the S&P 500 »
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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