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GDX, GOLD, FNV, WPM: Large Inflows Detected at ETF
Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the Gold Miners ETF (Symbol: GDX) where we have detected an approximate $152.6 million dollar inflow -- that's a 1.2% increase week over week in outstanding units (from 435,802,500 to 441,002,500). Among the largest underlying components of GDX, in trading today Barrick Gold Corp. (Symbol: GOLD) is up about 1.5%, Franco-Nevada Corp (Symbol: FNV) is up about 1.1%, and Wheaton Precious Metals Corp (Symbol: WPM) is up by about 0.7%. For a complete list of holdings, visit the GDX Holdings page » The chart below shows the one year price performance of GDX, versus its 200 day moving average:
Looking at the chart above, GDX's low point in its 52 week range is $20.14 per share, with $30.96 as the 52 week high point — that compares with a last trade of $29.69. 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.
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First Week of PCTY August 21st Options Trading
Investors in Paylocity Holding Corp (Symbol: PCTY) saw new options begin trading this week, for the August 21st expiration. One of the key inputs that goes into the price an option buyer is willing to pay, is the time value, so with 231 days until expiration the newly trading contracts represent a potential opportunity for sellers of puts or calls to achieve a higher premium than would be available for the contracts with a closer expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the PCTY options chain for the new August 21st contracts and identified one put and one call contract of particular interest.
The put contract at the $115.00 strike price has a current bid of $8.60. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $115.00, but will also collect the premium, putting the cost basis of the shares at $106.40 (before broker commissions). To an investor already interested in purchasing shares of PCTY, that could represent an attractive alternative to paying $124.87/share today.
Because the $115.00 strike represents an approximate 8% 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 68%. 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 7.48% return on the cash commitment, or 11.82% annualized — at Stock Options Channel we call this the YieldBoost.
Below is a chart showing the trailing twelve month trading history for Paylocity Holding Corp, and highlighting in green where the $115.00 strike is located relative to that history:
Turning to the calls side of the option chain, the call contract at the $130.00 strike price has a current bid of $11.80. If an investor was to purchase shares of PCTY stock at the current price level of $124.87/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $130.00. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 13.56% if the stock gets called away at the August 21st expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if PCTY shares really soar, which is why looking at the trailing twelve month trading history for Paylocity Holding Corp, as well as studying the business fundamentals becomes important. Below is a chart showing PCTY's trailing twelve month trading history, with the $130.00 strike highlighted in red:
Considering the fact that the $130.00 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 48%. 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 9.45% boost of extra return to the investor, or 14.93% annualized, which we refer to as the YieldBoost.
The implied volatility in the put contract example, as well as the call contract example, are both approximately 43%.
Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 252 trading day closing values as well as today's price of $124.87) 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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Apple TV+ Adds a Top Producer to Help Bolster Its Streaming Service
To say the debut of Apple's (NASDAQ: AAPL) nascent streaming service, Apple TV+, was underwhelming doesn't really convey the lack of interest the viewing public had for the iPhone maker's latest offering. While rival newcomer Disney made waves by announcing 10 million sign-ups for Disney+ by the time the service launched and landed rave reviews for its first original, The Mandalorian, Apple had a very different experience. Its flagship series, The Morning Show, one of only about a dozen shows total currently available on the service, got mixed reviews from critics, and the tech giant quietly dismissed its programming chief amid a lackluster streaming debut.
Apple just inked a landmark deal with one of the most successful names in entertainment in the hopes of getting its fledgling streaming service back on track.
Still from The Morning Show. Image source: Apple.
A bona fide hit-maker
Former HBO Chairman and CEO Richard Plepler, who left the cable giant in early 2019 after a 27-year stint, signed a five-year deal to produce feature films, television series, and documentaries for Apple. Plepler stepped down soon after HBO's parent company, Time Warner, was acquired by AT&T (NYSE: T) in early 2019. Eden Productions, Plepler's new venture, will create content exclusively for Apple TV+. Plepler will be working with Apple's heads of worldwide video, Zack Van Amburg and Jamie Erlicht, to bring his hit-making magic to Apple.
Plepler is known in the industry for his keen insight into potential blockbusters and for greenlighting such megahits as Game of Thrones and Westworld. He also presided over the move of HBO into the digital realm with the creation of HBO Now, the cable giant's streaming offering. During his tenure, HBO won more than 160 Emmy Awards for programming, led by Game of Thrones, as well as for other hits like Big Little Lies and Veep. In his statement regarding the deal, Plepler said:
I'm excited to work with Zack, Jamie, and the standout team at Apple who have been deeply supportive of my vision for Eden from day one. The shows that Zack and Jamie produced, The Crown and Breaking Bad, are among those I most admired. Apple is one of the most creative companies in the world, and the perfect home for my new production company and next chapter.
Richard Plepler is joining team Apple. Image source: HBO.
Billions invested already
Apple TV+ debuted in early November to mixed reviews and with only about a dozen programs for viewers. As early as 2017, reports emerged that Apple planned to throw its hat into the streaming ring and would allocate more than $1 billion to producing original content. While the tech titan has never revealed how much it has spent on programming, recent reports put the tally over $6 billion and climbing, which shows the company is continuing to build out its library.
Apple was writing big checks for its nascent streaming offering, hoping to increase its chances of success. The iPhone maker spent more for its two headline dramas -- The Morning Show and the Jason Momoa-led See -- than was spent on the final season of Game of Thrones, which reportedly topped $15 million per episode. At least part of that investment may have paid off in the end, as The Morning Show nabbed three Golden Globe nominations, including a nod for best drama.
Apple needs a hit
While the terms of the deal weren't disclosed, Apple likely spared no expense to bag Plepler, whose track record for spotting hit shows is well documented. He will join the ranks of other legendary Hollywood producers including Steven Spielberg, J.J. Abrams, and Oprah Winfrey, who have all inked deals with Apple TV+.
If Apple is going to justify the $4.99-per-month price of its streaming service, the technology company will need to build a library of popular shows. With a certified history of making hits, Plepler just might help Apple along its path to success.
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
Danny Vena owns shares of Apple and Walt Disney and has the following options: long January 2021 $190 calls on Apple, short January 2021 $195 calls on Apple, and long January 2021 $85 calls on Walt Disney. The Motley Fool owns shares of and recommends Apple 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.
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Friday's ETF Movers: XAR, MCHI
In trading on Friday, the SPDR— S&P— Aerospace & Defense ETF (XAR) is outperforming other ETFs, up about 1.3% on the day. Components of that ETF showing particular strength include shares of Kratos Defense & Security Solutions (KTOS), up about 9.4% and shares of Northrop Grumman (NOC), up about 4.9% on the day.
And underperforming other ETFs today is the iShares MSCI China ETF (MCHI), off about 1.6% in Friday afternoon trading. Among components of that ETF with the weakest showing on Friday were shares of Noah Holdings (NOAH), lower by about 3.9%, and shares of Qudian (QD), lower by about 3.6% on the day.
VIDEO: Friday's ETF Movers: XAR, MCHI
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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SLYG, ARWR, NEOG, CBU: ETF Outflow Alert
Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the SPDR— S&P— 600 Small Cap Growth ETF (Symbol: SLYG) where we have detected an approximate $420.5 million dollar outflow -- that's a 17.6% decrease week over week (from 37,000,000 to 30,500,000). Among the largest underlying components of SLYG, in trading today Arrowhead Pharmaceuticals Inc (Symbol: ARWR) is down about 0.4%, Neogen Corp (Symbol: NEOG) is up about 0.5%, and Community Bank System Inc (Symbol: CBU) is lower by about 1%. For a complete list of holdings, visit the SLYG Holdings page » The chart below shows the one year price performance of SLYG, versus its 200 day moving average:
Looking at the chart above, SLYG's low point in its 52 week range is $53.37 per share, with $65.08 as the 52 week high point — that compares with a last trade of $64.28. 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.
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Chipotle Adds Second New Menu Item In Four Months
(RTTNews) - Chipotle Mexican Grill said it is rolling out a Supergreens salad mix nation-wide this week.
This is the second new item to be added to the company's menu in the last four months, following the introduction of the Carne Asada in September 2019. Carne Asada was Chipotle's newest protein addition since it reintroduced Chorizo in September 2018.
The Mexican food chain noted that the Supergreens salad mix is made of hand-cut romaine, antioxidant-rich baby kale and crisp baby spinach. The new salad mix will replace the existing romaine-only salad base.
Chipotle also said its grilled, Adobo chicken is now compliant with the Whole30 diet after it switched the oil in its marinade. The company noted that guests with specific dietary goals are now provided more options.
In January 2019, Chipotle launched a new collection of Lifestyle Bowls to enable customers achieve their New Year's wellness resolutions.
The Lifestyle Bowls are intended to help consumers adhere to a variety of dietary choices, including Whole30, Keto, Paleo, high protein, vegan and vegetarian.
The new offerings were Chipotle's efforts to boost itself as a healthy choice as the Mexican food chain recovered from food-borne illness scandals at its restaurants.
According to the company, the LifeStyle Bowls has helped its digital sales growth to hit a $1 billion milestone recently.
Chipotle also said it is offering free delivery on its Lifesytle Bowls for the entire month of January when customers purchase a pre-configured Lifestyle Bowl via the Chipotle app or the company's website.
"The new year is a popular time for people to participate in Whole30, so we're excited that Chipotle's Lifestyle Bowls continue to take the stress out of healthy eating on-the-go," said Melissa Hartwig Urban, co-founder of Whole30.
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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Virtus Global Multi-Sector Income Fund (VGI) Ex-Dividend Date Scheduled for January 06, 2020
Virtus Global Multi-Sector Income Fund (VGI) will begin trading ex-dividend on January 06, 2020. A cash dividend payment of $0.126 per share is scheduled to be paid on January 09, 2020. Shareholders who purchased VGI prior to the ex-dividend date are eligible for the cash dividend payment. This marks the 20th quarter that VGI has paid the same dividend.
The previous trading day's last sale of VGI was $12.69, representing a -4.15% decrease from the 52 week high of $13.24 and a 15.15% increase over the 52 week low of $11.02.
For more information on the declaration, record and payment dates, visit the VGI Dividend History page. Our Dividend Calendar has the full list of stocks that have an ex-dividend today.
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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After Lackluster 2019, Pfizer Stock Could Rebound in 2020
This past year wasnâÂÂt a great one for Pfizer (NYSE:) stock. While the S&P 500àsoared 29%, shares in the pharma giant fell to $39.18 per share, making for a 9.1% loss. The reason? Wall Street isnâÂÂt so keen on its proposed restructuring. Pfizer is in the process of . This includes famous pharmaceutical brands such as Viagra and Lipitor.
Source: photobyphm / Shutterstock.com
In addition, Pfizer stock is becoming less of a consumer products company. Last year, Pfizer to merge its over-the-counter unit with GlaxoSmithKlineâÂÂs (NYSE:) OTC business. Pfizer retains 32% ownership in this joint venture, which combines Pfizer brands like Advil with GSKâÂÂs consumer health brands like Sensodyne.
The reason behind PfizerâÂÂs restructuring moves? Growth, or the lack thereof. PfizerâÂÂs off-patent portfolio generates consistent cash flow. But it hasnâÂÂt moved the needle in terms of revenue growth. As a result, PFE stock has for years.
So, whatâÂÂs PfizerâÂÂs move post-divestiture? To drive shares upward, management is pursuing biotech acquisitions in order to bolster its pipeline. This move could improve both earnings growth and valuation. Is now the time to buy Pfizer stock? LetâÂÂs dive in, and see why this àmay be a great buy for 2020.
Divestiture Is the Best Move
HereâÂÂs a breakdown of the off-patent divestiture. The transaction is your classic a great move to avoid taxes. Pfizer will merge its off-patent business with generic drug maker Mylan (NASDAQ:). Pfizer will hold majority ownership of the merged entity (named Viatris). The company will then distribute Viatris shares to holders of Pfizer stock.
Last summer, the investment community gave their opinion on PfizerâÂÂs divestiture plans. PFE stock fell from above the $42.50 price level to as low as $33.97 per share. Shares have rebounded since, but as I mentioned above, the stock ended up in the red for the year.
Management believes shedding legacy assets could jump-start growth. Wall Street disagrees, discounting PfizerâÂÂs ability to improve its drug pipeline by pursuing biotech deals like its . PFE stock is trading its status as a staid âÂÂdividend-and-buybackâ stock for the uncertainty of becoming what InvestorPlaceâÂÂs Ian Bezek referred to as a âÂÂdynamic biopharma company.âÂÂ
I believe Pfizer is making the right move. Through the Viatris spinoff, holders of PFE stock retain exposure to the cash-generating off-patent business. By shedding low-growth assets, Pfizer could command a higher valuation multiple down the road.
On the other hand, whoâÂÂs to say PfizerâÂÂs strategy will pay off? The company is taking a big risk trading security for opportunity. If the companyâÂÂs acquisition spree fails to yield new blockbuster drugs, shares could fall further. Conversely, if the company wins with its current and upcoming drug slate, shares of PFE stock could soar past the $40 share price level.
Pfizer Stock Could Benefit From Multiple Expansion
Pfizer stock trades at a discount to peers. Shares trade at a . Compare this to Merck (NYSE:) or Johnson & Johnson (NYSE:), which trade for 23.9 and 22.3 times forward earnings, respectively.
However, post spinoff, shares could eventually trade at a higher multiple. Adjusted for the spinoff, PFE stock will trade for estimated 2020 earnings of $2.25 per share. If its valuation moves closer to that of MRK or JNJ, shares could be worth around $50, give or take a few bucks.
But thatâÂÂs not all. We need to factor in the Viatris shares holders of Pfizer stock will receive after the spinoff. Per the transaction agreement, Pfizer shareholders will receive about of Viatris for each share of PFE stock. Based on MylanâÂÂs recent closing price of $20.65, this implies a distribution around $2.47 per share.
Metamorphosis Offers Upside in 2020
Pfizer stock may have been a âÂÂDog of the Dowâ in 2019. But post-divestiture, shares could see a boost in 2020. However, there are some caveats. Post spinoff, PFE stock may end up not trading at multiples on par with MRK or JNJ. As BarronâÂÂs reported back in July, analysts Pfizer could command a high multiple even after the spinoff.
Yet, if the companyâÂÂs current slate of drugs (including ) continues to perform well, Pfizer stock may get the sales boost needed to push up valuation. But Pfizer faces patent expiration on Ibrance and other current drugs in a few years. The heat is on for the recent biotech acquisitions to produce new blockbuster drugs.
So, whatâÂÂs the call? Investor skepticism over the restructuring is already priced into shares. At the current valuation, PFE stock offers upside potential via multiple expansion. With quarterly earnings set to be released later this month, it may be safer to wait things out. But Pfizer stock is a buy at these levels, and a screaming buy if shares retreat back to their 52-week low.
As of this writing, Thomas Niel 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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EQT Corp. Appoints David Khani CFO - Quick Facts
(RTTNews) - EQT Corp. (EQT) announced its board has appointed David Khani as chief financial officer, effective January 3, 2020. Khani joins EQT from CONSOL Energy Inc., where he has been executive vice president and chief financial officer since 2013.
Kyle Derham, the company's interim chief financial officer, will remain with EQT in an executive advisory role before returning to his role as Partner of Rice Investment Group.
EQT Corp. also announced that the evolution committee has been disbanded and Derek Rice, an evolution committee member, has transitioned out of his role with the company as planned. Rice has returned to his role as Partner of Rice Investment Group.
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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7 Dividend Stocks to Buy to Kick Off the New Year
Yes, it is that time of the year again. When the calendar flips, everyone ponders what lies ahead, and resolutions for self-improvement are made; Often, to be broken later. Additionally, it is also a great time to re-examine your portfolio and consider adding in some new, income-oriented names â including dividend stocks.
While stocks overall are blasting to new highs, valuations are looking extended and things look vulnerable to a pullback. The catalyst will likely come when the Federal Reserve returns to a tightening bias, perhaps around March. When that happens, dividend stocks will provide a modicum of protection for equity investors when the volatility returns.
With that in mind, take a look at these seven names to consider as we begin the new decade.
Dividend Stocks to Buy: Macyâs (M)
Source: Chart courtesy of StockCharts.com
Dividend Yield: 9.1%
Itâs no secret that department stores are facing severe headwinds. However, retailers like Macyâs (NYSE:) are aggressively looking to revamp their value proposition to customers. This includes a new, second-hand thrift partnership with thredUP that provides lower cost options to bargain hunters searching for a deal.
The company pays a dividend yield of 9.1%, and is enjoying a share price challenge of recent highs near the $17 per share level. The company will next report earnings results on Feb. 25 before the bell, and earnings of $1.86 per share on revenues of around $8.3 billion.
Duke Energy (DUK)
Source: Chart courtesy of StockCharts.com
Dividend Yield: 4.2%
Duke Energy (NYSE:) shares are pushing above their 50-day moving average, continuing a steady rise along its 200-day moving average thatâs been in play since the summer of 2018. The stock pays a 4.2% dividend yield, and has enjoyed recent analyst upgrades from Goldman Sachs and Barclays. Watch for a return to the prior high near $96-$97, which would be worth a gain of roughly 7% from here.
The company will next report results on Feb. 13 before the bell, and earnings of 89 cents per share on revenues of around $6.6 billion.
Chemours Company (CC)
Source: Chart courtesy of StockCharts.com
Dividend Yield: 5.5%
Shares of the The Chemours Company (NYSE:) are rounding higher off of a six-month trading range, and look ready for a push above their 200-day moving average for the first time since last April. The chemical company is behind familiar products like Teflon and Freon, and pays a 5.5% dividend yield.
It will next report results on Feb. 13 after the close, and earnings of 46 cents per share on revenues of $1.4 billion.
Ford (F)
Source: Chart courtesy of StockCharts.com
Dividend Yield: 6.4%
Shares of Ford (NYSE:) are consolidating above their 200-day moving average as of late. The company looks ready for a rally to prior highs near $10.20, which would be worth a gain of roughly 10% from here. Ford has been in the news recently for its Mustang Mach-E First Edition electric vehicle, with reservations full. This seems like a sign that the company could take some electric vehicle market share away from Tesla.
The company will next report results on Feb. 4 after the close, and earnings of 17 cents per share on revenues of $36.7 billion. Shares pay a 6.4% dividend yield.
Exxon Mobil (XOM)
Source: Chart courtesy of StockCharts.com
Dividend Yield: 4.9%
Exxon Mobil (NYSE:) shares are rising up and out of a six-month consolidation pattern with a run towards its 200-day moving average. Oil prices have been on the move lately, with West Texas Intermediate rising from a low of $51-$52 per share to return to push towards $62 amid the rise of renewed tensions in the Middle East.
The company pays a 4.9% dividend yield and will next report results on Jan. 31 before the bell. earnings of 73 cents per share on revenues of $63.6 billion.
General Motors (GM)
Source: Chart courtesy of StockCharts.com
Dividend Yield: 4.1%
Shares of General Motors (NYSE:) are rising back up and over their 200-day moving average, and look ready to test the upper end of a three-year trading range. In early December, the company announced plans to mass-produce battery cells for electric vehicles in collaboration with LG Chem. Together, the companies intend to invest a total of $2.3 billion by 2023 to establish a new battery factory in northeast Ohio.
The company will next report results on Feb. 5 before the bell, and earnings of seven cents per share on revenues of $30.8 billion. The company pays a 4.1% dividend yield.
Kohlâs (KSS)
Source: Chart courtesy of StockCharts.com
Dividend Yield: 5.5%
Kohlâs (NYSE:) shares are in the midst of a sideways consolidation range going back to May, but look ready for an attempt to push up and over its 200-day moving average. That would open the door to a test of prior highs near $78, which would be worth a gain of roughly 60% from here.
The company pays a 5.5% dividend yield and will next report results on May 3 before the bell. for earnings of $1.97 per share on revenues of $6.6 billion.
As of this writing, William Roth 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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Notable Friday Option Activity: JPM, MPC, SLB
Among the underlying components of the S&P 500 index, we saw noteworthy options trading volume today in JPMorgan Chase & Co (Symbol: JPM), where a total of 184,045 contracts have traded so far, representing approximately 18.4 million underlying shares. That amounts to about 179.8% of JPM's average daily trading volume over the past month of 10.2 million shares. Particularly high volume was seen for the $110 strike call option expiring January 17, 2020, with 75,648 contracts trading so far today, representing approximately 7.6 million underlying shares of JPM. Below is a chart showing JPM's trailing twelve month trading history, with the $110 strike highlighted in orange:
Marathon Petroleum Corp. (Symbol: MPC) saw options trading volume of 45,827 contracts, representing approximately 4.6 million underlying shares or approximately 94.7% of MPC's average daily trading volume over the past month, of 4.8 million shares. Particularly high volume was seen for the $65 strike call option expiring January 17, 2020, with 11,180 contracts trading so far today, representing approximately 1.1 million underlying shares of MPC. Below is a chart showing MPC's trailing twelve month trading history, with the $65 strike highlighted in orange:
And Schlumberger Ltd (Symbol: SLB) options are showing a volume of 90,788 contracts thus far today. That number of contracts represents approximately 9.1 million underlying shares, working out to a sizeable 94.4% of SLB's average daily trading volume over the past month, of 9.6 million shares. Especially high volume was seen for the $42.50 strike call option expiring February 21, 2020, with 34,816 contracts trading so far today, representing approximately 3.5 million underlying shares of SLB. Below is a chart showing SLB's trailing twelve month trading history, with the $42.50 strike highlighted in orange:
For the various different available expirations for JPM options, MPC options, or SLB 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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3 IPO Stocks That Are Down But Not Out
A new calendar year can mean a fresh start. And when it comes to three of last yearâs bigger IPO stock disappointments, Lyft (NASDAQ:), Beyond Meat (NASDAQ:) and Pinterest (NYSE:), might be down right now, but donât count them out in 2020.
Some believe every dog has its day. And with investing thereâs more than a bit of truth in that conviction. Even better, on Wall Street rotations into underappreciated or vilified stocks can sometimes turn into very large profitable opportunities as overly bearish sentiment does a complete about face. Recent IPO stocks under technical pressure in 2019 are an interesting group with this type of more meaningful potential.
Buying an out-of-favor IPO stock may not result in owning the next Amazon (NASDAQ:), Netflix (NASDAQ:) or Costco (NASDAQ:). Still, younger, smaller capitalization companies typical of IPO stocks do hold this kind of longer-term possibility. Add in leadership in an emerging market with growth potential and the opportunity is increased. And combined with price action ripe for bottoming, you may not have an Apple (NASDAQ:) on your hands, but youâre off to a promising start.
IPO Stocks to Buy: Lyft (LYFT)
Source:
Rideshare operator Lyft is the first of our IPO stocks to buy. A late October earnings report drove home the point in this new growth market. The company delivered record-beating revenues, toppled consensus earnings forecasts and issued upwardly revised top and bottom-line guidance.
Now this IPO stock has pulled back into a technically supportive area for buying on weakness. Shares are currently testing the 62% retracement level after a post-earnings rally broke LYFT stockâs lifetime downtrend resistance line. But with stochastics in an overbought position, Iâm looking for a purchase near Lyftâs post-earnings doji-style hammer candlesticks.
LYFT Stock Strategy: Monitor this IPO stock for a weekly bottoming candlestick to form closer to the earnings low highlighted in yellow on the price chart. With support from the broken downtrend also coming into play around $40, setting a stop-loss beneath $39.40 to contain downside exposure on any future purchases makes sense.
Beyond Meat (BYND)
Source:
Beyond Meat is the next of our IPO stocks to buy. The faux-meat disruptor when it reported earnings in October. But an expiring lockup period and competition concerns got the better of investors and continues to hold its grip on shares. The good news entering 2020 is BYND stock looks ready to cook higher.
Technically, shares have worked their way into a solid-looking lateral price consolidation. The healthy congestion pattern is putting together a successful challenge of BYND stockâs opening week high and finishing price. This area could prove important as it preceded the IPO stockâs massive run-up in share price. My guess is there are now natural buyers residing in this area.
BYND Stock Strategy: Shares have just signaled a bullish stochastics crossover. Thatâs nice to see, however todayâs advice is to wait for price confirmation that endorses this price area for buying. Given BYNDâs volatile nature, my suggestion is to purchase this IPO stock above $81 and size the position to allow for a stop-loss beneath $64.50. And if BYND stock begins to really sizzle again, $120 â $125 is an initial price target for taking profits.
Pinterest (PINS)
Source:
Pinterest is the last of our IPO stocks to buy. The wildly popular web-based visual discovery had a tough time maintaining Wall Streetâs interest after a promising earnings-driven breakout this past summer. But with shares cut in half from their highs and modestly below their IPO stock price of $19, the PINS story is looking very attractive entering 2020.
At current prices this IPO stock now sports half the market capitalization of internet peers Twitter (NYSE:) and Snap (NYSE:). Moreover, PINS stock is still growing. Additionally, Pinterest has a similar active user base of more than 300 million, while offering a much stronger vertically integrated road map for sustainable growth.
As such, itâs time investors pay attention to PINS stock. And the price chart agrees. Technically, shares have put together a solid bottoming candle on heavier and above-average volume near a Fibonacci extension level and last quarterâs post-earnings drubbing. And with stochastics hinting at a bottom-in-the-making, Pinterest is nearly ready for buying.
PINS Stock Strategy: Buy this IPO stock on a move above $19.48, which confirms the weekly chartâs highlighted bottoming candlestick. Set a stop beneath $17.15 to prevent larger losses if new lows are in the cards. But if PINS finds Wall Streetâs favor once more, $26 â $27 looks like a respectable spot to show your appreciation for taking profits.
Disclosure: Investment accounts under Christopher Tylerâs management do not currently own positions in securities mentioned in this article. The information offered is based upon Christopher Tylerâs observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, 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.
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3 Stocks to Buy If You're Worried About a Recession
With the long bull run in stocks extending to a 10th year -- the S&P 500 index is up nearly 28% for 2019 and the tech-heavy Nasdaq Composite up nearly 35% -- it's no wonder people are worried about an impending recession. While there are no hard-and-fast rules on how long bull markets should last, people are also cognizant of the fact that valuations have been climbing steadily and optimism reigns high.
One important thing to note is that recessions are fairly common occurrences, but the duration and depth of each may vary widely. The global financial crisis of 2008-2009 was considered a deep recession, but the stock market only stayed at a depressed level for less than a year (October 2008 through March 2009) before rebounding strongly. In fact, recessions provide savvy investors with juicy opportunities to acquire great companies at bargain-basement valuations.
That said, there are many companies that investors can consider buying to buffer themselves against a recession. Here are three of them.
Image Source: Getty Images.
American Tower
American Tower Corporation (NYSE: AMT) is a real estate investment trust and an owner and operator of over 171,000 communication sites. Its portfolio of real estate is leased to tenants such as wireless service providers, broadcasters, and other communication-service companies. Around 98% of American Tower's revenues are derived from leasing income.
The company can remain resilient during a recession due to the long-term leases that it locks in with tenants. These leases have an initial non-cancellable term of between five to 10 years, and most also come with a fixed escalation percentage (of around 3%) to enable rentals to keep up with inflation rates. Even if we enter a recession, most of these leases will still be intact as the tenants are large corporations that have the ability to service the payments on these leases.
Investors can also look forward to growth in American Tower's business, and with growth in earnings, there would also be an increase in dividends paid. The company formerly paid quarterly dividends of around $0.20-plus per quarter back in 2012, but this has risen more than fourfold to $0.90-plus in 2019.
Apple
Apple (NASDAQ: AAPL) has morphed from a computer business to a smartphone-cum-software-platform company. Its growth has been nothing short of phenomenal since it released its first iPhone back in 2007. Fast forward 12 years later, and the 11th iteration of the iPhone has just been released, while the company has also broadened its product portfolio to include wearables, such as the Apple Watch, and its iPad tablet.
Apple's dominance in the technology space and its cutting-edge products make it an ideal stock to own in case of a recession. While other similar businesses may struggle during a downturn, Apple has a cash kitty of almost $100 billion on its latest FY 2019 balance sheet, providing it with a sufficient buffer to weather a downturn and make opportunistic acquisitions.
Mastercard
Mastercard (NYSE: MA) is a technology company in the global-payments business. The business connects financial institutions, consumers and merchants worldwide by enabling electronic forms of payment to be made, rather than using cash and checks. Mastercard is one of the leaders in electronic payments, along with Visa (NYSE: V) and American Express (NYSE: AXP).
The company is still managing to grow in double digits, with Q3 2019 net revenue up 15% year over year and net income up 11% year over year, an impressive feat considering it's a $300 billion business. The number of cash transactions continues to grow, too, at 10.3 billion worldwide for the first nine months for 2019, up from 9.45 billion over the previous corresponding period.
Mastercard's dominance in the payments space makes it a safe bet to own during a recession, as there is no reason for consumers to stop using their Mastercards during a downturn. Though the number of transactions and dollar value of an average transaction may fall, Mastercard should still remain resilient as a business due to its strong branding and track record. The company also had $5.1 billion worth of cash as of 30 September 2019 and generated more than $4 billion worth of free cash flow in the first nine months of 2019.
Buy the right stocks
Buying the right stocks enables investors to prepare their portfolios for a potential downturn. By investing in strong, well-run companies with strong competitive moats and rock-solid balance sheets, investors need not be fearful that a recession will decimate their holdings.
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.
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Royston Yang has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends American Tower, Apple, Mastercard, and Visa. 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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Bank of Nova Scotia (BNS) Ex-Dividend Date Scheduled for January 06, 2020
Bank of Nova Scotia (BNS) will begin trading ex-dividend on January 06, 2020. A cash dividend payment of $0.678 per share is scheduled to be paid on January 29, 2020. Shareholders who purchased BNS prior to the ex-dividend date are eligible for the cash dividend payment. This represents an -0.29% decrease from the prior dividend payment.
The previous trading day's last sale of BNS was $56.72, representing a -2.58% decrease from the 52 week high of $58.22 and a 14.87% increase over the 52 week low of $49.38.
BNS is a part of the Finance sector, which includes companies such as J P Morgan Chase & Co (JPM) and Bank of America Corporation (BAC). BNS's current earnings per share, an indicator of a company's profitability, is $5.02. Zacks Investment Research reports BNS's forecasted earnings growth in 2020 as 4.66%, compared to an industry average of 3.4%.
For more information on the declaration, record and payment dates, visit the BNS Dividend History page. Our Dividend Calendar has the full list of stocks that have an ex-dividend today.
Interested in gaining exposure to BNS through an Exchange Traded Fund [ETF]?
The following ETF(s) have BNS as a top-10 holding:
Franklin FTSE Canada ETF (FLCA)
iShares Trust (IPFF)
Xtrackers MSCI All World ex US High Dividend Yield Equity ETF (HDAW)
Invesco S&P International Developed Low Volatility ETF (IDLV)
VictoryShares International Volatility Wtd ETF (CIL).
The top-performing ETF of this group is HDAW with an increase of 11.93% over the last 100 days. FLCA has the highest percent weighting of BNS at 5.2%.
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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iShares Edge MSCI USA Quality Factor ETF Experiences Big Inflow
Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the iShares Edge MSCI USA Quality Factor ETF (Symbol: QUAL) where we have detected an approximate $127.3 million dollar inflow -- that's a 0.8% increase week over week in outstanding units (from 160,150,000 to 161,400,000). Among the largest underlying components of QUAL, in trading today Facebook Inc (Symbol: FB) is up about 0.1%, Mastercard Inc (Symbol: MA) is off about 0.6%, and 3M Co (Symbol: MMM) is lower by about 2%. For a complete list of holdings, visit the QUAL Holdings page » The chart below shows the one year price performance of QUAL, versus its 200 day moving average:
Looking at the chart above, QUAL's low point in its 52 week range is $75.53 per share, with $101.88 as the 52 week high point — that compares with a last trade of $101.25. 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.
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9 Boring Stocks to Buy You Should Never Let Go Of
With the holidays coming to a close and a new year (and decade) upon us, this is typically a period of change: just take a look at your friends and family writing up their new yearâÂÂs resolutions. And many times, change involves risks. As such, a temptation exists to load up our portfolios with exciting names, not boring stocks to buy.
Certainly, as a fan of several speculative industries, IâÂÂm in no position to lecture people about conservative investing habits. In order to grow your portfolio, you must take risks: thatâÂÂs the nature of the game. However, whether youâÂÂre a speculator or a by-the-numbers type of investor, boring stocks such as blue-chip giants offer significant value.
For one thing, boring stocks typically pay dividends, rewarding you simply for holding the equity. Usually, youâÂÂre not going to get rich off dividends, unless you purchase an ungodly amount of shares. However, passive-income generating companies tend to weather market storms better than high-flying growth names.
Second and on a related note, 2019 was a year full of drama. Much of that drama remains unresolved. Even something like a limited trade agreement between the U.S. and China can go awry, as prior negotiations have. Thus, boring stocks to buy may offer some confidence and stability should events not pan out as expected.
Finally, every portfolio, even for young investors, should have some exposure to boring stocks. YouâÂÂre simply not going to win them all, and these established names should provide some downside mitigation.
So, without further ado, here are nine boring stocks to buy.
IBM (IBM)
Source: JHVEPhoto / Shutterstock.com
Chances are, if youâÂÂre thinking about technology names, IBM (NYSE:) doesnâÂÂt come to mind; that is, unless you were discussing legacy names that were relevant in the pre-internet era. As a result, IBM stock has been among the most boring of boring stocks to buy.
Nevertheless, this is a situation where Big BlueâÂÂs (negative) reputation precedes it. True, IBM stock has failed to inspire investors despite many shifts in strategy. Further, more exciting tech firms have overshadowed the legacy company.
However, with IBMâÂÂs acquisition of Red Hat, management is making a credible push into cloud computing for large enterprises. Specifically, the company has invested heavily in Kubernetes, a that allows unprecedented scale and efficiency.
With this Alphabet (NASDAQ:, NASDAQ:GOOGL)-developed innovation, end-users can share applications in self-contained data packages, thus eliminating the need for everyone to download the same system architecture. ItâÂÂs a massive step forward in cloud technologies, thereby providing a long-term lift for IBM stock.
Crown Castle (CCI)
Source: Shutterstock
A real estate investment trust (REIT) specializing in communication towers and small cells, Crown Castle (NYSE:) and CCI stock represent a vital cog in our digitalization initiatives. But no matter what the industry, most folks rarely pay attention to the background players. Instead, they tend to focus on the front-facing action; in this case, smart device manufacturers.
Granted, the 5G rollout is a major paradigm shift in our telecommunications industries. Undoubtedly, those frontline companies will attract investor dollars. But for the astute buyer (thatâÂÂs you!), CCI stock offers steady and viable capital growth and passive income opportunities. Obviously, none of the innovations associated with 5G can happen without the small cells that harness the telecom spectrums.
In addition, the transition from 4G to 5G will not happen overnight. Therefore, the big cell towers that facilitate 4G waves will . Plus, additional technologies may open new applications for cell towers. Therefore, this is a time to consider loading up on CCI stock despite its less-than-exciting reputation.
Exxon Mobil (XOM)
Source: Michael Gordon / Shutterstock.com
Today, digital technologies donâÂÂt just impact internet speeds and device capacities. Increasingly, more people have expressed broader concerns about environmental sustainability. For instance, a Gallup poll earlier in 2019 stated that Millennialsâ has impacted business decisions. Under this context, Exxon Mobil (NYSE:) and XOM stock doesnâÂÂt seem like a great choice among boring stocks to buy.
Admittedly, XOM stock is a tough play. Based on stereotypes about young Americans, youâÂÂd expect them to protest Exxon rather than embrace its investment potential. Moreover, the rise of alternative sources of transportation like electric vehicles have steadily made big oil less relevant.
Yet I donâÂÂt think itâÂÂs quite time to give up on XOM stock. Sure, as one of the boring stocks of the Dow Jones, Exxon isnâÂÂt as exciting as a Tesla (NASDAQ:). However, EVs have yet to prove they can integrate into society beyond the rich yuppies.
Petroleum-based vehicles donâÂÂt impose on the electrical grid to the extent that EVs do. And theyâÂÂre cheaper and more accessible, making Exxon Mobil a viable investment.
Albemarle (ALB)
Source: Shutterstock
In many if not most cases, lectures on specialty chemicals and industrial metals will make eyes glaze over. By logical deduction, companies that focus on such elements can be relegated to a portfolio of boring stocks.
However, Albemarle (NYSE:) rightfully belongs among boring stocks to buy. One of the worldâÂÂs leading producers of lithium, ALB stock should move higher over the long run if EVs integrate more deeply into the mainstream. In some ways, Albemarle is a hedge against my bullish thesis for Exxon Mobil.
But even if the EV narrative doesnâÂÂt pan out as environmentalists hope, ALB stock still has upside potential. As you know, lithium plays a vital role in battery technology, particularly those optimized for electronic devices.
I donâÂÂt see this tailwind declining anytime soon. Therefore, despite the occasional , lithium and ALB stock should have a bright future.
Iron Mountain (IRM)
ÃÂ
Source: Shutterstock
A recognized brand in data storage and protection, Iron Mountain (NYSE:) is probably the most dry investment in this list of boring stocks to buy. Indeed, its physical paper-related businesses â including shredding services and document storage â seem anachronistic in this day and age. Ironically, though, digitalization makes IRM stock immeasurably viable.
Although companies like IBM are encouraging corporate clients to shift to the digital cloud, large enterprises will never stop using actual paper. ThatâÂÂs because digital data is too easy to exploit and compromise. And if something were to go wrong â data breach, infrastructural crisis, or an Act of God â a physical backup can help mitigate the overall damage. ItâÂÂs one of the understated reasons why astute investors love IRM stock.
Furthermore, as a company grows, their . Iron Mountain offers an easy solution, providing safe storage in an offsite location. Therefore, even if the target company is compromised, its documents will not be. Again, this is a huge, underappreciated catalyst for IRM stock.
Disney (DIS)
Source: spiderman777 / Shutterstock.com
While DisneyâÂÂs (NYSE:) vast content library is anything but tedious, DIS stock is at home among boring stocks to buy. HereâÂÂs the reality: if your equity shares are traded on the Dow, chances are, they didnâÂÂt get there by taking investors on the ride of their lives.
However, boring doesnâÂÂt necessarily have to equate with low growth. Despite its reputation as a slow-and-steady dividend bearer, DIS stock returned over 36% in 2019. Now, the question is, can prospective buyers expect continued gains in 2020 and beyond? I believe they can.
No matter the criticisms against the Magic Kingdom, the media giantâÂÂs acquisitions have been well worth the price of admission. For instance, DisneyâÂÂs Star Wars: The Rise of Skywalker was a cinematic disaster. Truly, it was a pathetic way to end the Skywalker saga. Nevertheless, at the box office â where it really counts for DIS stock â Rise of Skywalker is a hit.
If you can take a big steaming pile and turn it into , itâÂÂs official: Disney is a cash-printing machine!
Kellogg (K)
Source: DenisMArt / Shutterstock.com
Putting Kellogg (NYSE:) on a list of boring stocks to buy shouldnâÂÂt offend anyoneâÂÂs sensibilities. Aside from our breakfast table, we really donâÂÂt think too much about the company. As a largely secular company, K stock is good for solid dividends and for holding the fort in a downturn.
But thatâÂÂs not the reason why IâÂÂm interested in K stock this time around. Instead, itâÂÂs the hype machine surrounding Beyond Meat (NASDAQ:) and the rejuvenated plant-based meat industry. Supposedly, BYND is a transformative investment that can convert meat-eaters toward alternative meat. However, the problem is that real meat is almost universally flavorful to carnivores. Fake meat, though, has sharp critics.
But a bigger problem is scale and competition. Beyond Meat only produces fake meats. But Kellogg can disrupt this space through its subsidiary while not skipping a beat in its core markets.
Now, IâÂÂm not really sure how long this fake meat fad will last. But if you want a safer, boring bet, go with K stock.
Philip Morris International (PM)
Source: vfhnb12 / Shutterstock.com
For many years, electronic-cigarette smoking or vaping occurred as a niche practice. But in the latter half of 2019, everybody was talking about vaping, and not for good reasons. The public blamed a on flavored vape devices, creating a panic.
When the outbreak occurred, Philip Morris International (NYSE:) shares took a hit in the markets. Although PM stock is primarily levered to traditional tobacco products, the underlying company invested heavily in heat-not-burn devices called IQOS. Similar to vaporizers, IQOS mimics the experience of âÂÂanalogâ smoking but in a cleaner and arguably healthier platform.
Despite the ugliness of the vaping crisis, PM stock has skyrocketed since late September of 2019. I firmly believe that this was because the hysteria over vape devices was substantially exaggerated. In December, the Centers for Disease Control and Prevention pointed to as the main culprit.
Since vitamin E acetate is not a substance found in legal vaping products, the crisis was really about risky behaviors. This suggests PM stock has more upside growth potential.
CVS Health (CVS)
Source: Shutterstock
When e-commerce behemoth Amazon (NASDAQ:) wants to disrupt your industry, itâÂÂs almost always bad news for you. Retail pharmacy specialist CVS Health (NYSE:) learned this the hard way earlier in 2019. Combined with fiscal concerns such as a worrying debt load, CVS stock bled out in February.
However, in the second half of the year, CVS stock staged a remarkable comeback. Because of this surge, shares of the company returned double digits for investors in 2019. Not only that, CVS should have some juice in the tank to continue its promising recovery narrative.
Though AmazonâÂÂs encroachment is a serious challenge, CVS stock may have a moat. Like many other boring stocks to buy, CVS has a . Additionally, the pharmacy has a vast physical footprint, with many locations open 24 hours.
Unless Amazon can offer immediate shipment, it simply canâÂÂt compete with CVS without investing onerous amounts of money. Therefore, the underlying company likely has many years to mount a counteroffensive.
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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Daily Dividend Report: LSI, OZK, ALG, CVS
Life Storage (LSI) announced an increase in the Company's quarterly common stock dividend from $1.00 per share to $1.07 per share or $4.00 to $4.28 annualized. The increase is effective with the quarterly dividend to be paid on January 27, 2020 to shareholders of record on January 14, 2020.
Bank OZK (OZK) has approved a regular quarterly cash dividend of $0.26 per common share payable January 24, 2020 to shareholders of record as of January 17, 2020. The dividend of $0.26 per common share represents an increase of $0.01 per common share, or 4.0%, over the dividend paid in the previous quarter.
Alamo Group (ALG) has declared its quarterly dividend of $0.13 per share, approving an increase in the Company's quarterly dividend, from $0.12 per share to $0.13 per share. Payment will be made on January 29, 2020 to shareholders of record at the close of business on January 16, 2020.
CVS Health Corporation (CVS) announced that its board of directors has approved a quarterly dividend of $0.50 (50 cents) per share on the corporation's common stock. The dividend is payable on February 3, 2020, to holders of record on January 23, 2020.
VIDEO: Daily Dividend Report: LSI, OZK, ALG, CVS
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Richard Plepler's Eden Productions To Produce Content For Apple TV+
(RTTNews) - Richard Plepler, former HBO CEO, has signed a five year deal with Apple (AAPL), under which he will produce entertainment content for Apple TV+ streaming service. This will include TV series, feature films and documentaries. Financial terms of the agreement were not disclosed.
Plepler resigned from HBO as Chief Executive Officer and Chairman in early 2019. He served nearly 28 years for the company, and was responsible for many of the hit series at HBO including, Game of Thrones. Later, Plepler launched his own production company, Eden Productions.
Apple, in November, launched Apple TV+ on the Apple TV app, featuring new, exclusive original shows, movies and documentaries. The Apple TV app is already on iPhone, iPad, iPod touch, Mac and Apple TV as well as other streaming platforms and boxes.
Apple TV+, the most broadly available Apple service, is also available on the Apple TV app on all 2018, 2019 and newer Samsung smart TVs , Roku and Amazon Fire TV devices, as well as on the web for audiences in over 100 countries and regions. The Apple TV app will come to LG, Sony and VIZIO platforms in the future.
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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Pig Ebola Might Make Tyson’s Stock Price Go Hog-Wild
Pestilence stalking the world's commercial swine herd, plus a breakthrough in trade talks with China, could spell strong profits for Tyson Foods (NYSE: TSN), major producer of pork, beef, and chicken. With the vast Asian market feeling the ongoing pig die-off's impact, Tyson, famous Spam maker Hormel Foods (NYSE: HRL), Archer Daniels Midland (NYSE: ADM) and others might win big in the coming months. But lingering risks could still prevent some companies from living too high off the hog.
African swine fever and world food supply
The potential for big profits (and rising stock prices) for Tyson and other American processed meat producers comes from a porcine disease outbreak of unprecedented scale. African swine fever virus or ASFV is a viral hemorrhagic fever, which originates in populations of warthogs and other wild pigs in Africa. With symptoms similar to the dreaded Ebola virus, ASFV fortunately only infects pigs – humans are immune. Like Ebola, though, it's extremely contagious and spreads like wildfire among domestic pigs, through contact with even trace amounts of contaminants.
ASFV, or "pig Ebola" as some have dubbed it, is cutting a swath through the world's domestic pig population. The virus apparently kills nearly 100% of infected domestic swine, though warthogs, its natural host, seemingly don't even show symptoms. The porcine plague wiped out a startling 25% of the world's entire domestic pig population by early October. The appearance of ASFV in one pig prompts the entire herd's slaughter in an effort to contain its advance. ASFV has spread to more than 50 countries worldwide despite these measures. On Dec. 19, it was confirmed to have spread to yet another country, Indonesia, killing 27,000 pigs in North Sumatra province.
IMAGE SOURCE: GETTY IMAGES
The impact of ASFV on economic conditions and food supply is already tremendous. Pork is a dietary staple of China's 1.1 billion people, with the same holding true across Asia. In the enormous Chinese market, 150 million pigs – or half of the country's entire domestic pig population – have already died, with another 15 million projected to perish by year's end.
Chinese National Bureau of Statistic Figures indicate the scope of the crisis. 70% of all meat eaten in China is pork, and the price of pork has shot up 70%. Pork imports are up 44% and beef imports by 50% in the first nine months of 2019, and a shortfall of 10 million tons of pork is still expected by year's end. Some analysts believe that China's pig stock won't recover to pre-ASFV levels until four to six years after widespread vaccination – and a vaccine has not yet been invented.
American meat companies move up to the trough
So far, ASFV hasn't appeared in the United States, giving American meat companies like Hormel the opportunity to export the highly desired meat profitably to China – along with chicken and beef. The United States and China reached a partial trade deal in the second week of December, postponing key tariffs. Additionally, the Chinese agreed to open up part of their agricultural market to American imports again – including, predictably enough, meat to reduce the shortfall resulting from "pig Ebola's" inroads.
Of course, a lot depends on the ability of America's biosecurity measures to keep Africa swine fever virus out of the States. With ASFV already in Poland, Latvia, and other Eastern European countries, it's probably too late to prevent its spread throughout Europe. However, Australia has successfully kept the disease out to date despite outbreaks in nearby countries, using methods as diverse as human inspectors and sniffer dogs. America's oceanic isolation and the pig-free desert on its southern border will likely help to maintain similar levels of security for some time.
Prominent independent research firm CFRA projected up to 100% growth in Chinese agricultural imports from the USA in 2020 during their December "2020 Foresight" discussion. This could amount to $20 billion in total.
Tyson's strong position for 2020
Among American meat producers, Tyson enjoys some advantages that may allow it to springboard ahead of the competition when it comes to profiting from ASFV's food market impact. On Sept. 16, China specifically greenlighted Tyson to begin shipping to the Chinese market from all three dozen of its American plants.
Tyson already showed strong share price growth during 2019, with roughly 70% gains. While some companies in the sector did even better – Pilgrim's Pride (NASDAQ: PPC), for instance, enjoyed more than 110% share price growth over the same period – Tyson far outpaced its rival Hormel, which grew only an anemic 9%. The massive Chinese meat sales will help to make up for the inroads made by plant protein competing with chicken producer profits.
Compared to Tyson's Q4 2018 results, the company shows strong growth even before the full impact of China's eased tariffs and intense meat demand arrives at the start of 2020. Tyson's Q4 2019 results showed 11% revenue growth year over year in the company's chicken segment, and similar 11% year-over-year revenue growth in its pork segment.
Tyson's one-year return on investment is currently 76.5%, far exceeding the US food industry's average 22.5% one-year return. Its approximate 13 P/E ratio for the current fiscal year beats the food industry's average 17 P/E ratio for the same period, and surpasses those of major competitors Pilgrim's Pride (with a fiscal-year P/E around 18) and Hormel (around 25) by an even larger margin. Given these factors, the company's new access to the meat-hungry Chinese market, and its historical performance, until and unless ASFV makes a significant appearance in America's commercial porker population, Tyson is likely undervalued despite its strong 2019 gains -- and may offer excellent investment possibilities for the new year.
10 stocks we like better than Tyson Foods
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 Tyson Foods wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
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Rhian Hunt 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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Amazon Aims for All-Time Highs in the New Year
Kicking off the first day of the new decade yesterday, Amazon (NASDAQ:) stock was positive up 2.72%. This will hopefully be an omen that AMZN stock is done underperforming the markets â especially its technology sector. For the last 12 months, itâÂÂs only up 23% while Alphabet (NASDAQ:, NASDAQ:GOOGL), Facebook (NASDAQ:) and Apple (NASDAQ:) are up 35%, 55% and 90%, respectively, for the same period.
Source: Mike Mareen / Shutterstock.com
In spite of Amazon having some catchup rallying to do, I suspect that there will be better entry point than now. So, new investors should wait for a dip or buy the breakout above $1,920 per share. This is definitely not a knock against the companyâÂÂs prospects, as I am a big fan of it.
However, two things are true at the moment. First, from the timing perspective, the first few days of the year are carrying huge âÂÂSanta rallyâ momentum. This was fueled by extremely positive rhetoric from China, as they injected more cash into their economy by ; This will wear off, though.
Second, from the level perspective, I wrote about an upside opportunity in AMZN stock . I noted that it was basing to rally into new highs, and the idea there was to go long while most experts hated it. Consensus on Wall Street is that Amazon is in spending mode, so they avoided it. My thesis was the opposite because when the Bezos team spends, they usually come up with huge benefits soon thereafter.
After my write up, the stock rallied through the end of the year to 9%, which is great. However, from a trading perspective, I worry a little. When so much green comes this fast, I prefer to lock the profits. For the investors that are still looking to chase AMZN stock, it will probably be better to snipe an entry on a pull back.
Amazon Stock Will Still Set New Highs
DonâÂÂt let my cautious note fool you, because I still think that Amazon is a long term hold. If the stock markets are higher in the future, then AMZN stock is leading it up! But for now, I want to see what happens around $1,900 and $1,920 per share.
This was my immediate target from December, and $1,980 was my secondary one. If the bulls can fill the gap to $1,975 per share, then the momentum could carry them to new, all-time highs.
Source: Charts by TradingView
Central banks are still very big on quantitative easing (QE), so investors feel safe and they lower their standards when picking stock levels. They usually overlook potential pitfalls and over commit. This will eventually reach a breaking point, and markets will need to rectify the imbalance so they can continue rising.
In short, a lot has happened since December. I do still think AMZN stock is one to own for a long while, but for the short term, there may be potholes.
This is not a dis against the company, nor have I changed my mind about its prospects. My concern is that the whole equity market is extended and we could trip up. If we do, Amazon will be vulnerable for fast falls. The recent profits came too fast, which puts it in weak hands. Therefore, the bulls need a drop to shake a few of them out so theyâÂÂd have a better base to continue higher.
Nicolas Chahine is the managing director ofÃÂ . As of this writing, he did not hold a position in any of the aforementioned securities. Join his live chat room for freeÃÂ 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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3 Things That Can Go Right for Roku Stock in 2020
We may as well start with a toast to Roku (NASDAQ: ROKU) for its monster gain in 2019. The video-streaming specialist saw its shares more than quadruple -- up 337% -- last year. Investors scored a lifetime of gains in a single year, but what if the party isn't over just yet?
I recently went over some of the things that can go wrong for Roku investors in 2020. Let's take a more bullish approach and consider the things that can go right for the high-flying market darling.
Image source: Roku.
1. Streaming trends can keep improving
We're spending a lot of time steaming video in general -- and with Roku in particular. Roku has seen its audience of active accounts soar 36% over the past year to 32.3 million, but that's just one ingredient of the hot company's super sundae. The cherry on top is consumption, as the average account is spending nearly 3.5 hours a day on the platform. The 10.3 billion hours spent streaming through Roku's hub in its latest quarter represented an increase of 68%, and it's naturally great to see that metric growing even faster than the platform's audience.
Engagement is a beautiful thing, but some may start to wonder if an average of 3.47 hours is nearing the ceiling for a company that now earns the majority of its revenue from consumption. Can active users become even more active? The good news is that the trends keep pointing in that direction, particularly with the launch of a couple of buzz-generating premium streaming services during the fourth quarter. A lot of these Roku accounts are also shared family registrations, so this is not just about a single person's viewing habits.
2. New services can grow in popularity
There are many components going into the perpetually rising average revenue per user that Roku is generating. It sells advertising on its hub, and it also scores ongoing referral fees when viewers sign up for new offerings through Roku.
Roku doesn't generate a lot of money from the biggest services because most of those subscribers were already registered members. The real payday here should come from new services and the hungry upstarts that are willing to pay a lot to stand out in a crowd of what is now thousands of available apps on Roku. The future is bright on that front. There was a big one-two punch in November of high-profile launches, but the next few months will find other media giants introducing new offerings. Standing out on Roku is now an important component of any launch's promotional strategy.
3. An economic slowdown may actually help
The largely buoyant economy has been good for most consumer-facing companies, and Roku has clearly benefited from a rise in folks feeling comfortable enough to upgrade to smart TVs or pay up for Roku-branded hardware. Something that isn't really being noted these days is that Roku is also positioned well for investors in the event of a recession.
Roku's platform is free to use. It's the default operating system for a growing number of smart TV manufacturers, and even if you have to go out and buy a Roku plug-in stick or box, it will set you back as little as $30. An economic slowdown will drive even more people away from pricey diversions like going out to restaurants and the corner multiplex. Budgeting will also lead more consumers to cut the cord on their cable and satellite television plans. Roku will be there to fill the void, getting consumers up to speed on cheaper streaming TV options.
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Rick Munarriz owns shares of Roku. The Motley Fool owns shares of and recommends Roku. 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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Why Baidu Is a Better AI Stock Than Google
Baidu (NASDAQ: BIDU) and Alphabet's (NASDAQ: GOOG) (NASDAQ: GOOGL) Google both develop artificial intelligence technologies like machine learning, deep learning, and neural networks. Both companies use those AI technologies to crunch data from their similar ecosystems, which include market-leading search engines, cloud services, streaming media platforms, voice assistants, and smart speakers.
Yet Baidu's ecosystem is mostly limited to China, while Google dominates most other markets. In terms of diversification, growth, scale, profitability, and resilience to macro headwinds, Google easily beats Baidu as a long-term investment. But if we only focus on the AI market, Baidu could actually be the stronger play. Here are three reasons why:
Image source: Getty Images.
1. Its CEO is euphoric about AI
Unlike tech pundits who issue bleak warnings about AI, Baidu's founder and CEO Robin Li is a self-described "optimist" in regards to AI technologies.
Last October, Li told the South China Morning Post that AI "will not destroy human beings but will give people eternal life," since "everything every person has said and done, even people's memories, emotions and consciousness" can be stored on the cloud.
Li claims that accumulating all that data would enable machines to "learn people's way of thinking" and allow generations to communicate "across time and space" to solve problems. Li also doesn't seem concerned about privacy issues. At the China Development Forum in early 2018, Li predicted that most Chinese citizens would be willing to "exchange privacy for safety, convenience, or efficiency."
Alphabet CEO Sundar Pichai is less optimistic. In 2018, Pichai decided against renewing Project Maven, an AI image recognition contract for the Pentagon and dropped out of the running for the Pentagon's $10 billion JEDI cloud contract. Pichai cited ethical concerns in both cases and published "ethical" guidelines for Google's AI technologies that same year.
In late 2018, Pichai told The Washington Post that the public's concerns about AI were "very legitimate," and tech companies needed to monitor AI technologies with an "agency of its own." Those statements strongly indicate that Google will take more measured steps into the AI market than Baidu.
2. Its relationship with the government
Chinese and American tech companies have very different relationships with their home countries' governments. The Chinese government keeps its tech companies on a short leash and frequently dictates their censorship practices.
Image source: Getty Images.
However, the Chinese government also encourages companies like Baidu, Alibaba (NYSE: BABA), and Tencent (OTC: TCEHY) to accelerate the development of their AI technologies -- which China considers crucial infrastructure tools and key ways to reduce its dependence on American technologies.
Back in 2017, China's Ministry of Science and Technology actually split the first wave of open AI technologies between Baidu, Alibaba, Tencent, and iFlytek. It assigned Baidu to the development of self-driving cars, Alibaba to smart cities, Tencent to digital healthcare, and iFlyTek to voice recognition. Baidu also launched a state-backed engineering laboratory for deep learning technologies like computer vision, machine hearing, biometric identification, and human-computer interactions.
Google doesn't enjoy a comparable relationship with the U.S. government. The Federal Trade Commission previously fined Google over privacy violations on YouTube, and the Department of Justice launched an antitrust probe into the tech giant last year. The House Judiciary Committee also recently grilled Pichai over allegations of political bias in Google's search results.
Simply put, Google and the U.S. government won't be on the same page anytime soon. Meanwhile, the Chinese government clearly wants Baidu to strengthen its AI technologies -- and that support could give it an edge against its western rival.
3. It just beat Google in one of the toughest AI fields
Baidu's aggressive investments in AI -- which include its driverless platform Apollo, DuerOS voice assistant, and Xiaodu smart speakers -- are clearly paying off.
In a recent head-to-head contest in natural language processing -- which requires 10-100 times as many parameters as image-based learning models -- Baidu's Ernie (Enhanced Representation through Knowledge Integration) model beat Google's Bert (Bi-directional Encoder Representations from Transformers) model.
That's just one test, but it strongly indicates that Baidu's optimistic, aggressive, and state-supported AI strategy is turning it into a "best in breed" player as Google grapples with ethical conflicts, a suspicious public, and an uncooperative government.
The bottom line
For now, the softness of Baidu's core advertising business in China makes it a weaker overall investment than Google. However, the expansion of its AI ecosystem could eventually diversify its top line away from ads and ensure its long-term survival. Google needs to clearly define its AI strategy soon, otherwise the business could simply tread water and suffer the same fate as its listless cloud business.
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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. Leo Sun owns shares of Baidu and Tencent Holdings. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Baidu, and Tencent 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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3 Top Fintech Stocks to Buy in January
2019 is in the books, and it was a great year for fintech investors. The biggest names in the business, Visa (NYSE: V) and Mastercard (NYSE: MA), ran up 42% and 58%, respectively, and small but important financial data analytics outfit Fair Isaac (NYSE: FICO) doubled in value. Rebounding from the first negative calendar year return for U.S. stocks in a decade, 2019 was simply a great time to be invested.
There's a good chance that won't change in 2020. Annual spending on fintech is expected to grow in the low 20% range for the next few years, so buying some proven winners for the long haul at the start of the new year could be a great move. I think LendingTree (NASDAQ: TREE), Euronet Worldwide (NASDAQ: EEFT), and PayPal (NASDAQ: PYPL) look like especially timely additions in January.
Image source: Getty Images.
Using the web to find the best banking services
First up is LendingTree, a leader in the online loan marketplace and one of the best-performing stocks of the last decade with an over 4,500% return. Even after that epic run, the company is still small, with a market cap of just $3.94 billion, as shares were in penny stock territory during the Great Recession of 2008-09.
In the last couple of years, though, LendingTree has run into some bumpy trails. While shares have rebounded nicely since the last time I caught up with the financial services aggregator, the stock is still down some 30% from all-time highs.
The reason has a lot to do with the company's transition from high growth to a strategy that balances new revenue with increasing the bottom line. 2019 should be the first year LendingTree exceeds $1 billion in revenue, with an expected $1.10 to $1.115 billion representing a 45% year-over-year increase at the midpoint of guidance provided at the end of the third quarter. Adjusted EBITDA (earnings before interest, tax, depreciation, and amortization, the company's preferred method for measuring profits) is expected to be at least $197 million, up from $153 million in 2018.
Some of those gains are driven by the company's acquisitions, including $105 million paid for insurance and credit card site ValuePenguin and $370 million for insurance policy finder QuoteWizard in late 2018. As LendingTree laps the revenue bumps from its takeovers, 2020 is expected to yield just a 13% to 18% revenue growth rate and 12% to 17% adjusted EBITDA growth rate in 2020. If the company can keep delivering on its expectations, the stock's price to free cash flow (money left after operating and capital expenses are paid) ratio of 31.7 looks like a reasonable price to pay for this long-term winner.
Electronic payments with big bottom-line payoff
Euronet Worldwide has been a bumpy ride for investors in the last year as well. Though it's sporting a 54% gain in 2019, the stock is down from its all-time highs set early in the year by nearly 8%. With a price to free cash flow ratio of only 19.9, though, this fintech company looks like a real value.
The global operator of ATMs, money transfer locations (like its partnership with Walmart (NYSE: WMT) via its subsidiary Ria), and digital payments cloud software has delivered big gains in operating profit margins in the last few years. As a result, continued revenue growth has translated into even higher bottom-line returns for shareholders. During Q3 2019, a 10% increase in revenue translated into a 31% increase in adjusted earnings per share.
That trend is expected to keep rolling in the fourth quarter, which should be released in late January. Management's forecasted adjusted earnings per share of $1.61 represent an 18% increase over the same period a year ago. In the longer term, Euronet is being driven by its ATM and currency conversion business, which makes up about half of all its revenue. The war on cash continues to make advances, but the fact is that cash remains the preferred method of transacting business around the globe by far. Thus, Euronet's ATM network updates and steady expansion could have some legs under it for some time.
Betting on a better year for a digital money movement leader
Speaking of the war on cash, PayPal has continued its relentless global expansion this year, putting up 14% top-line growth through three-quarters of 2019 (which includes loss of revenue from the sale of its consumer credit business to Synchrony Financial (NYSE: SYF) earlier in the year) and 34% growth in earnings per share.
As a result, it's been a pretty good run for PayPal shareholders, with the stock up 28% in 2019 alone -- though it too is down about 11% from all-time highs. However, the company recently made a few moves that could set it up for continued growth in the decade ahead. It just closed on its acquisition of Chinese digital payment company GoPay, making PayPal the first foreign entity allowed to process payments in the world's most populous country. It is also purchasing digital shopping and rewards outfit Honey Science for $4 billion in a bid to deepen its presence in e-commerce.
Granted, PayPal will be bumping into new competitors with its entrance into China -- namely, tech giants Alibaba (NYSE: BABA) and Tencent (OTC: TCEHY) -- as it will in the e-retail world when it assumes control of Honey. But PayPal already has deep roots in the digital payments industry and should be able to make headway in both of its new strategic pushes. Along the way, the company should continue to benefit from a steadily rising account base and transactions processed on its platform, which will translate into higher revenue and earnings.
Meanwhile, ahead of Q4 results due out the end of January, the stock trades for 30.9 times one year forward earnings. With earnings growing in double digits, I therefore conclude PayPal is a timely buy for the next year and for the long term.
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*Stock Advisor returns as of December 1, 2019
Nicholas Rossolillo and his clients own shares of Alibaba Group Holding Ltd., Mastercard, PayPal Holdings, Tencent Holdings, and Visa. The Motley Fool owns shares of and recommends Fair Isaac, Mastercard, PayPal Holdings, Tencent Holdings, and Visa. The Motley Fool recommends Euronet Worldwide and recommends the following options: 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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Has Occidental Petroleum Suffered Enough?
Occidental Petroleum (NYSE: OXY) entered 2019 with loads of upside potential. The energy giant was coming off a transitional year during which it completed its cash-flow breakeven plan. As a result, it only needed oil to average $40 a barrel to support its operations and its high-yielding dividend. With crude starting the year well above that level, Occidental appeared poised to generate lots of excess cash. Indeed, it looked to me like the top oil stock to buy heading into 2019.
However, instead of sitting back and watching the cash flow in as oil prices rose during the year, Occidental went on the offensive and paid a pretty penny to wrestle rival Anadarko Petroleum away from Chevron (NYSE: CVX). It was a move that infuriated shareholders as it added a substantial amount of debt to Occidental's balance sheet. That weight caused the stock to tumble 33% on the year.
In the wake of that slump, the question now is whether Occidental has suffered enough, or if further declines could still be ahead.
Image source: Getty Images.
Why the worst could be over
Occidental Petroleum laid out a whopping $55 billion for Anadarko, outbidding Chevron by $5 billion. However, in a relatively unusual move for a megamerger, Occidental didn't issue a lot of stock to finance the deal. To do that would have required a shareholder vote that it likely would have lost. Instead, it funded the majority of the transaction with cash -- $31.8 billion overall -- which meant taking on a substantial amount of debt.
Occidental aims to pay down that debt burden by selling between $10 billion and $15 billion in assets, and it has made significant progress on that front. "We are highly confident that the actions we already have in progress will allow us to exceed the upper end of our original $10 [billion] to $15 billion divestiture goal by the middle of 2020," said CEO Vicki Hollob in a mid-November update. If everything goes according to plan, Occidental will significantly reduce its balance sheet issues, which should help lift the main weight holding down its stock.
In addition to that, oil prices have risen considerably over the past year. Crude ended 2019 up more than 35%, with U.S. benchmark WTI closing above $61 per barrel. If crude oil remains in its current neighborhood, the company should generate significantly more cash flow in the coming year, which it can use to support its dividend as well as further pay off debt.
Finally, the main reason Occidental bought Anadarko is that it believed that there were significant synergies to be found in combining the two companies' operations. Management expects to be able to cut out $3.5 billion of annual expenses by 2021. Progress toward that goal would help prove to skeptical investors that it made the right move.
Image source: Getty Images.
Why rough seas could still be ahead
While Occidental Petroleum still asserts that it can hit the high-end of its asset-sales target, the process has proved more complicated than initially expected. One major piece of the puzzle is the planned sale of Anadarko's African assets to French energy giant Total (NYSE: TOT). While the companies completed one part of the transaction, Occidental ran into a roadblock with the deal for Anadarko's Algerian assets; that country's national oil company is trying to block the transaction.
In addition to that, Occidental wanted to monetize some of its stake in Anadarko's former midstream arm, Western Midstream (NYSE: WES). However, a slump in Western's valuation forced Occidental to put the process on hold. While Western Midstream's valuation has bounced back a bit, it's still down 29% over the past year. This leaves Occidental with a dilemma -- either sell Western shares at a fire sale price, or fail to hit its assets-sales target. If it's the second option, investors' concerns over Occidental's financial profile would likely intensify, which could lead to a further slide in its share price.
Also, Occidental's fortunes naturally are tied to the price of oil. While crude was red hot last year, it could give back some of its gains in 2020 as new supply enters the market.
Either headwind would be bad for this energy company. But if both occur, it might need to slash its 7.7%-yielding dividend to shore up its finances. Add it all up, and more suffering could be ahead for Occidental's shareholders.
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Matthew DiLallo 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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5 Dividend Growth Stocks With Upside To Analyst Targets
To become a "Dividend Aristocrat," a dividend paying company must accomplish an incredible feat: consistently increase shareholder dividends every year for at least 20 consecutive years. Companies with this kind of track record tend to attract a lot of investor attention — and furthermore, "tracking" funds that follow the Dividend Aristocrats Index must own them. With all of this demand for shares, dividend growth stocks can sometimes become "fully priced," where there isn't much upside to analyst targets.
But we here at ETF Channel have looked through the underlying holdings of the SPDR S&P Dividend ETF (which tracks the S&P High Yield Dividend Aristocrats Index), and found these five dividend growth stocks that actually still have fairly substantial upside to the average analyst target price 12 months out. Which means, if the analysts are correct, these are five dividend growth stocks that could produce capital gains in addition to their growing dividend payments.
In the first table below, we present the five stocks. The recent share price, average analyst 12-month target price, and percentage upside to reach the analyst target are presented.
STOCK RECENT PRICE AVG. ANALYST 12-MO. TARGET % UPSIDE TO TARGET
CDK Global Inc (Symbol: CDK) $55.41 $61.00 10.09%
J.M. Smucker Co. (Symbol: SJM) $102.14 $110.62 8.31%
Johnson & Johnson (Symbol: JNJ) $145.97 $155.00 6.19%
Nucor Corp. (Symbol: NUE) $55.12 $58.50 6.13%
Ecolab Inc (Symbol: ECL) $190.23 $200.47 5.38%
The average 12-month analyst targets are only targets for the share price however, and each of these stocks are expected to pay dividends during that holding period — so the expected total return if these stocks reach their analyst targets is actually the share price upside seen by the analysts plus the dividend yield shareholders can expect. To ballpark that total return potential, we have added the current yield to the analyst target price upside, in order to arrive at the 12-month total return potential:
STOCK DIVIDEND YIELD % UPSIDE TO ANALYST TARGET IMPLIED TOTAL RETURN POTENTIAL
CDK Global Inc (Symbol: CDK) 1.08% 10.09% 11.17%
J.M. Smucker Co. (Symbol: SJM) 3.45% 8.31% 11.76%
Johnson & Johnson (Symbol: JNJ) 2.60% 6.19% 8.79%
Nucor Corp. (Symbol: NUE) 2.92% 6.13% 9.05%
Ecolab Inc (Symbol: ECL) 0.99% 5.38% 6.37%
Another consideration with dividend growth stocks is just how much the dividend is growing. We looked up the trailing twelve months worth of dividends shareholders of each of the above five companies have collected, and then also looked up the same number for the prior trailing twelve months. This gives us a rough yardstick to see how much the dividend has grown, from one trailing twelve month period to another.
STOCK PRIOR TTM DIVIDEND TTM DIVIDEND % GROWTH
CDK Global Inc (Symbol: CDK) $0.6 $0.6 0.00%
J.M. Smucker Co. (Symbol: SJM) $3.26 $3.46 6.13%
Johnson & Johnson (Symbol: JNJ) $3.54 $3.75 5.93%
Nucor Corp. (Symbol: NUE) $1.54 $1.603 4.09%
Ecolab Inc (Symbol: ECL) $1.69 $1.85 9.47%
These five stocks are part of our full Dividend Aristocrats List. The average analyst target price data upon which this article was based, is courtesy of data provided by Zacks Investment Research via Quandl.com.
Get the latest Zacks research report on NUE — FREE
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Dividend Growth Stocks: 25 Aristocrats »
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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Bruker Reaches Analyst Target Price
In recent trading, shares of Bruker Corp (Symbol: BRKR) have crossed above the average analyst 12-month target price of $51.00, changing hands for $51.36/share. When a stock reaches the target an analyst has set, the analyst logically has two ways to react: downgrade on valuation, or, re-adjust their target price to a higher level. Analyst reaction may also depend on the fundamental business developments that may be responsible for driving the stock price higher — if things are looking up for the company, perhaps it is time for that target price to be raised.
There are 9 different analyst targets contributing to that average for Bruker Corp, but the average is just that — a mathematical average. There are analysts with lower targets than the average, including one looking for a price of $43.00. And then on the other side of the spectrum one analyst has a target as high as $57.00. The standard deviation is $5.809.
But the whole reason to look at the average BRKR price target in the first place is to tap into a "wisdom of crowds" effort, putting together the contributions of all the individual minds who contributed to the ultimate number, as opposed to what just one particular expert believes. And so with BRKR crossing above that average target price of $51.00/share, investors in BRKR have been given a good signal to spend fresh time assessing the company and deciding for themselves: is $51.00 just one stop on the way to an even higher target, or has the valuation gotten stretched to the point where it is time to think about taking some chips off the table? Below is a table showing the current thinking of the analysts that cover Bruker Corp:
RECENT BRKR ANALYST RATINGS BREAKDOWN
» Current 1 Month Ago 2 Month Ago 3 Month Ago
Strong buy ratings: 5 5 5 5
Buy ratings: 0 0 0 0
Hold ratings: 4 4 3 3
Sell ratings: 0 0 0 0
Strong sell ratings: 0 0 0 0
Average rating: 1.89 1.89 1.75 1.75
The average rating presented in the last row of the above table above is from 1 to 5 where 1 is Strong Buy and 5 is Strong Sell. This article used data provided by Zacks Investment Research via Quandl.com. Get the latest Zacks research report on BRKR — FREE.
The Top 25 Broker Analyst Picks 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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SON Crosses Below Key Moving Average Level
In trading on Friday, shares of Sonoco Products Co. (Symbol: SON) crossed below their 200 day moving average of $60.61, changing hands as low as $59.89 per share. Sonoco Products Co. shares are currently trading down about 0.8% on the day. The chart below shows the one year performance of SON shares, versus its 200 day moving average:
Looking at the chart above, SON's low point in its 52 week range is $51.65 per share, with $66.5742 as the 52 week high point — that compares with a last trade of $60.34.
Click here to find out which 9 other dividend 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.
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Why The Trade Desk Should Have a Strong Performance in 2020
As we head into a new decade with stocks sprinting to all-time highs, everyone is looking for the best stocks to buy in 2020. Wall Street firm Needham thinks theyâÂÂve found one in programmatic advertiser leader The Trade Desk (NASDAQ:).
Source: Shutterstock/ Bella Melo
In a recent note, Needham analyst Laura Martin called The Trade Desk the firmâÂÂs top stock pick for 2020 thanks to three big tailwinds: improving digital ad market dynamics, continued robust adoption of programmatic advertising and out-sized growth in the âÂÂopen internetâ thanks to big tech titans like Facebook (NASDAQ:), Amazon (NASDAQ:) and Alphabet (NASDAQ:, NASDAQ:GOOGL) being distracted by regulatory issues.
The call on The Trade Desk from Needham is notable because MartinâÂÂs was streaming device maker Roku (NASDAQ:). ROKU stock rose about 350% in 2019. Will The Trade Desk follow suit in 2020?
Yes and no. I couldnâÂÂt agree more that The Trade Desk will have a great year in 2020, and that the stock will out-perform its peers. But, it wonâÂÂt pull a ROKU and quadruple. It wonâÂÂt even double, or rise by more than 50%. Instead, itâÂÂs far more likely that the stock posts something like a 20% return year in 2020.
Still, thatâÂÂs good enough return to warrant buying and holding shares of The Trade Desk over the next 12 months. As such, IâÂÂm with Needham here â the stock is a top pick for 2020.
The Trade Desk Will Have a Great 2020
Most trends support the notion that The Trade Desk will have a great 2020.
First, ad spend trends globally will re-accelerate in 2020 as companies across the globe up their ad budgets against an improving economic backdrop. Second, U.S. ad spends trends will get a double boost from this economic rebound, and from upped political ad spend in an election year. Third, the digital consumption shift will accelerate, thanks to the mainstream roll-out of 5G, the introduction of multiple new streaming services, and the launch of cloud gaming platforms. This will lead to digital ad spend acceleration, because ad dollars always chase consumption. Fourth, automation technology will continue to gain mainstream traction, and as it does, programmatic advertising adoption uptake rates will remain robust.
On top of all that, the âÂÂopen internetâ will continue to gain momentum in 2020. Sustained regulatory pressures on Big Tech will force many of these companies to open up their walled gardens. Part of this opening will be in the digital ad world, where they will be forced to relinquish complete control of the ad transaction process. Amazon has already done this in part, allowing for third-party demand side platforms to buy and sell ads in its ecosystem. Facebook and Alphabet will likely follow suit, leading to healthy growth in ad spend through third-party demand side platforms.
Connecting all the dots, 2020 looks like a great year to be invested in U.S.-focused, third-party demand side platforms in the programmatic digital ad world. In that category, who reigns supreme? You guessed it. The Trade Desk.
As such, The Trade DeskâÂÂs underlying fundamentals should materially improve in 2020. As they do, The Trade Desk stock should move higher.
The Trade Desk Stock Will Rise
The long-term profit growth potential of The Trade Desk implies that the stock is positioned to run above $300 in 2020.
At present, this is a 30%-plus revenue growth company in a ~20% growth global digital ad market. The global digital ad market will continue to grow at a double-digit rate over the next several years, thanks to sustained digital consumption shifts in verticals like streaming TV, cloud gaming and mobile. At the same time, programmatic advertising and open internet tailwinds imply that The Trade Desk will gain share in the digital ad market. Therefore, the company should grow revenues at a 20%-plus rate over the next few years.
Gross margins at the company are up near 80%, and stable. That leaves plenty of room for 20%-plus revenue growth to drive positive operating leverage. ThatâÂÂs exactly what will happen. Expense growth rates will moderate as the company gains share and leverages size and reputation (not marketing spend) to win over more clients. Revenue growth rates wonâÂÂt moderate. That combination will drive healthy margin expansion.
Assuming 20%-plus revenue growth on top of steady margin expansion, my modeling puts The Trade DeskâÂÂs earnings-per-share potential at $12.50 by fiscal 2025. Based on a 35-times forward earnings multiple, which is average for application software stocks with low capital spending rates, that equates to a 2024 price target for the stock of nearly $440. Discounted back by 10% per year, that yields a 2020 price target of almost $300.
As we all know, stocks that are firing on all cylinders often tend to trade above their fair value. In 2020, The Trade Desk will be firing on all cylinders. Thus, by the end of the year, I fully expect to see its stock trading at prices well above $300, and probably closer to $325.
Bottom Line on The Trade Desk
Digital ad fundamentals will improve in 2020. Programmatic ad fundamentals will improve in 2020. Open internet fundamentals will improve in 2020.
The Trade Desk is at the convergence of all three of those industries. Consequently, the company is in a great position to report strong numbers over the next twelve months. As they do, the stock should continue to climb, up to and potentially even above the $300 level.
As of this writing, Luke Lango was long TTD and FB.
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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PACCAR Reaches Analyst Target Price
In recent trading, shares of PACCAR Inc. (Symbol: PCAR) have crossed above the average analyst 12-month target price of $79.20, changing hands for $79.51/share. When a stock reaches the target an analyst has set, the analyst logically has two ways to react: downgrade on valuation, or, re-adjust their target price to a higher level. Analyst reaction may also depend on the fundamental business developments that may be responsible for driving the stock price higher — if things are looking up for the company, perhaps it is time for that target price to be raised.
There are 10 different analyst targets contributing to that average for PACCAR Inc., but the average is just that — a mathematical average. There are analysts with lower targets than the average, including one looking for a price of $62.00. And then on the other side of the spectrum one analyst has a target as high as $92.00. The standard deviation is $9.624.
But the whole reason to look at the average PCAR price target in the first place is to tap into a "wisdom of crowds" effort, putting together the contributions of all the individual minds who contributed to the ultimate number, as opposed to what just one particular expert believes. And so with PCAR crossing above that average target price of $79.20/share, investors in PCAR have been given a good signal to spend fresh time assessing the company and deciding for themselves: is $79.20 just one stop on the way to an even higher target, or has the valuation gotten stretched to the point where it is time to think about taking some chips off the table? Below is a table showing the current thinking of the analysts that cover PACCAR Inc.:
RECENT PCAR ANALYST RATINGS BREAKDOWN
» Current 1 Month Ago 2 Month Ago 3 Month Ago
Strong buy ratings: 5 5 2 3
Buy ratings: 0 0 0 0
Hold ratings: 6 6 7 9
Sell ratings: 0 0 0 0
Strong sell ratings: 2 2 2 2
Average rating: 2.48 2.48 2.94 2.81
The average rating presented in the last row of the above table above is from 1 to 5 where 1 is Strong Buy and 5 is Strong Sell. This article used data provided by Zacks Investment Research via Quandl.com. Get the latest Zacks research report on PCAR — FREE.
The Top 25 Broker Analyst Picks of the S&P 500 »
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PNR Crosses Above Average Analyst Target
In recent trading, shares of Pentair PLC (Symbol: PNR) have crossed above the average analyst 12-month target price of $46.18, changing hands for $46.42/share. When a stock reaches the target an analyst has set, the analyst logically has two ways to react: downgrade on valuation, or, re-adjust their target price to a higher level. Analyst reaction may also depend on the fundamental business developments that may be responsible for driving the stock price higher — if things are looking up for the company, perhaps it is time for that target price to be raised.
There are 11 different analyst targets contributing to that average for Pentair PLC, but the average is just that — a mathematical average. There are analysts with lower targets than the average, including one looking for a price of $35.00. And then on the other side of the spectrum one analyst has a target as high as $52.00. The standard deviation is $5.056.
But the whole reason to look at the average PNR price target in the first place is to tap into a "wisdom of crowds" effort, putting together the contributions of all the individual minds who contributed to the ultimate number, as opposed to what just one particular expert believes. And so with PNR crossing above that average target price of $46.18/share, investors in PNR have been given a good signal to spend fresh time assessing the company and deciding for themselves: is $46.18 just one stop on the way to an even higher target, or has the valuation gotten stretched to the point where it is time to think about taking some chips off the table? Below is a table showing the current thinking of the analysts that cover Pentair PLC:
RECENT PNR ANALYST RATINGS BREAKDOWN
» Current 1 Month Ago 2 Month Ago 3 Month Ago
Strong buy ratings: 4 4 4 4
Buy ratings: 0 0 0 0
Hold ratings: 8 7 7 7
Sell ratings: 1 1 1 1
Strong sell ratings: 0 0 0 0
Average rating: 2.46 2.42 2.42 2.42
The average rating presented in the last row of the above table above is from 1 to 5 where 1 is Strong Buy and 5 is Strong Sell. This article used data provided by Zacks Investment Research via Quandl.com. Get the latest Zacks research report on PNR — FREE.
10 ETFs With Most Upside To Analyst Targets »
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IBB, GILD, VRTX, BIIB: ETF Outflow Alert
Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the iShares Nasdaq Biotechnology ETF (Symbol: IBB) where we have detected an approximate $185.8 million dollar outflow -- that's a 2.5% decrease week over week (from 62,850,000 to 61,300,000). Among the largest underlying components of IBB, in trading today Gilead Sciences Inc (Symbol: GILD) is off about 0.5%, Vertex Pharmaceuticals, Inc. (Symbol: VRTX) is down about 0.5%, and Biogen Inc (Symbol: BIIB) is lower by about 0.7%. For a complete list of holdings, visit the IBB Holdings page » The chart below shows the one year price performance of IBB, versus its 200 day moving average:
Looking at the chart above, IBB's low point in its 52 week range is $96.03 per share, with $123.68 as the 52 week high point — that compares with a last trade of $118.74. 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.
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3 Mystifyingly Cheap Stocks
By conventional valuation measure shares in roofing, insulation, and composite materials manufacturer Owens Corning (NYSE: OC), axle and drivetrain technology company Dana (NYSE: DAN) and automation and power transmission technology company Altra Industrial (NASDAQ: AIMC) are cheap stocks. Although all three face headwinds in 2020, their valuations appear to have Armageddon scenarios built in, and merely avoiding worst-case outcomes could lead to strong price rises. Let's take a closer look at all three.
Image source: Getty Images.
Owens Corning
It hasn't been a perfect year for the company. Slowing industrial production growth negatively affected its composites segment and lower volumes and production curtailments in the North American residential fiberglass market led to lower profits at insulation. Meanwhile, management expects U.S. industry shingle shipments to be flat in 2019. On the bright side, Owens Corning's roofing sales are expected to rise due to taking market share -- partly down to more favorable geographic exposure.
Data source: Owens Corning presentations. EBIT is earnings before interest and taxation.
Looking ahead, management is taking action to produce annual cost savings of some $25 million by 2021 in insulation. Hopefully, a pick-up in industrial production in the second half of 2020 will also aid its composite segment.
Roofing demand is always a function of a combination of underlying conditions in the housing market and the effects of weather and major storms. Around 70% of demand comes from repair and remodeling and new construction. Clearly, there's scope for volatility in roofing revenue due to the weather, but underlying conditions in housing remain positive.
House prices continue to rise, new housing permits are growing again, and the U.S. months supply of new single houses has dropped to levels indicating a need for housing expansion.
US New Housing Permits: 1 Unit data by YCharts
All told, Owens Corning looks capable of getting back on track in 2020. What's more, its stock is trading on a forward PE ratio of less than 13 times earnings and 15 times current free cash flow (FCF). It looks like a good value stock.
DAN PE Ratio (Forward 1y) data by YCharts
Dana
These two companies have three things in common:
Heavy exposure to the truck production market, which is expected to drop significantly in 2020, but then stabilize and start growing again in the 2021 time-frame.
They trade on very attractive valuations -- see chart above.
They are set to generate bundles of cash flow in the coming years, and this should offset concerns about their elevated debt levels.
Starting with Dana, it's no secret that the light vehicle market (Ford, Jeep, and Nissan are key customers and Dana generates around 40% of its revenue from the market) and the heavy truck market -- (Daimler, Navistar (NYSE: NAV), and PACCAR are key customers and Dana gets 29% of its sales from the market) are set for a difficult 2020. Meanwhile, its off-highway sales -- 21% of revenue -- could also be challenged if the dim outlook given recently by another customer, Deere, is correct.
Indeed, here's a look at the recent industry estimates given by Navistar on its recent earnings report.
Data source: Navistar presentations. Class 6-8 U.S. and Canada.
It's not going to be a great year for an axle, power technology, and driveshaft manufacturer like Dana, and just as Navistar dampened down expectations recently, there could be more negative news to come.
But here's the thing. Dana's valuation is so cheap that you can't help thinking there is a huge margin of safety baked in. For example, the company's current market cap is $2.6 billion; add in net debt and it gives an enterprise value of $5.2 billion.
Digging into the details, on the investor day presentation in March 2019, management outlined expectations to generate $2 billion in free cash flow from 2019-2023 with free cash flow jumping from $243 million in 2018 to $465 million in 2020. Obviously, expectations have been reduced in the near term due to the slowdown in the economy, but Dana is still expected to produce around $230 million in 2019 leading to $409 million in 2020 -- equivalent to around 15% of its current market cap. https://danaincorporated.gcs-web.com/static-files/3dd7d370-0992-4b4c-a1df-5c614f8a1247
Frankly, the light vehicle and truck market is going to have to enter a sustained downturn before Dana doesn't look like a good value.
Altra Industrial Motion
Around a quarter of this company's sales go to the transportation market, and Altra also has significant exposure to other markets, such as factory automation (15% of sales) and a bunch of other heavy industries such as energy (7%), metals and mining (7%), and materials handling (6%).
It all adds up to a difficult 2020, and analysts have sales dropping 3.4% in 2020 only to grow again by a similar amount in 2021. It's a sobering outlook, and just as with Dana, don't be surprised if there are some negative revisions to expectations along the way. Such things happen when end markets are trending downwards.
That said, management expects $1 billion in free cash flow over the next five years. Given that Altra only trades on a market cap of $2.3 billion and an enterprise value of $3.8 billion, there appears to be a significant amount of leeway built into the current valuation so as to deal with anything other than a severe downgrade to expectations.
Stocks to buy?
If you can ignore some potentially bad news and possible downward revisions to earnings expectations in the coming months, then these stocks might work for you. They all look cheap on a free cash flow basis, and provided the economy doesn't enter a severe contraction, they are likely to look like a very good value at the end of the year.
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 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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Energy Sector Update for 01/03/2020: BP, XOM, CVX, COP, SLB, OXY, CVI
Top Energy Stocks:
XOM: +0.39%
CVX: +0.56%
COP: +1.44%
SLB: +2.02%
OXY: +2.21%
Energy stocks were gaining during pre-bell trading hours on Friday. West Texas Intermediate crude oil futures were up 4% to $63.68 per barrel at the New York Mercantile Exchange, while the global benchmark Brent crude futures were advancing 4% to $68.80 per barrel. Natural gas futures were 0.6% higher at $2.13 per 1 million BTU.
Among energy-related ETFs, United States Oil (USO) was up 4% while United States Natural Gas (UNG) was up 0.2%.
Energy stocks moving on news include:
(+) BP (BP), which was up 0.8% as oil prices rallied along with gold after an Iranian military general was killed in airstrikes authorized by President Donald Trump, escalating tensions in the region as Iranian political leaders warned of "harsh revenge."
In other sector news:
(=) Credit Suisse has initiated coverage on CVR Energy (CVI) with a neutral rating and a $43 price target. CVI was flat.
(+) Exxon Mobil (XOM) has received a favorable ruling in a lawsuit it filed challenging the $2 million fine imposed by the US Treasury Department for its deal with Russian oil firm PAO Rosneft while Ukraine sanctions were in effect, reports said late Thursday. XOM was marginally higher.
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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Stock Market News: Tesla Delivers; American Loses Altitude
Investors weren't able to enjoy a second day of gains to start 2020, as markets fell following unexpected news on the geopolitical front. A U.S. attack that killed a key Iranian military leader raised new concerns about the state of affairs internationally, and repercussions rippled throughout many different financial markets. As of 11 a.m. EST, the Dow Jones Industrial Average (DJINDICES: ^DJI) was down 223 points to 28,645. The S&P 500 (SNPINDEX: ^GSPC) lost 21 points to sink to 3,237, while the NASDAQ Composite (NASDAQINDEX: ^IXIC) fell 63 points to 9,029.
Among individual stocks, earnings season is still a couple weeks away, but some good news from Tesla (NASDAQ: TSLA) sent shares of the automaker higher. Meanwhile, American Airlines Group (NASDAQ: AAL) saw its stock price descend amid worries about the ramifications of the U.S. attack on Iran.
Tesla hits the target
Shares of Tesla rose almost 5% after the electric vehicle specialist announced its delivery figures for the fourth quarter of 2019. The numbers were above what most of those following Tesla had anticipated, helping the automaker hit its annual targets.
Image source: Tesla.
Tesla delivered a total of 112,000 vehicles during the fourth quarter: 92,550 of those cars were Model 3s, while the other 19,450 were higher-price Model S and X vehicles. Production came in just shy of 104,900 cars for the quarter.
With these results, Tesla celebrated record annual deliveries of 367,500 vehicles in 2019. That figure ended up toward the lower end of the company's projections for 360,000 to 400,000 cars. Yet shareholders were encouraged that Tesla didn't end up missing the target entirely, as some had feared.
Tesla has high hopes that its newly launched facility in Shanghai will help it sustain even stronger production and delivery volume into 2020. With the stock at all-time highs, investors are counting on Tesla's growth curve continuing to rise for the foreseeable future.
American deals with oil threats
Meanwhile, shares of American Airlines Group were down almost 5%. Many of its peers also suffered declines as the threat of disruptions to global oil supplies pushed crude prices higher by more than $2 per barrel to around $63.50.
Fuel makes up a substantial portion of the overall costs that airlines like American have to cover, and fuel costs can be among the most volatile of an airline's regular expenses. For the most part, companies can predict the behavior of other major cost centers like employee compensation and equipment expenses, but energy markets can rise sharply over very short periods of time.
Costs have been a rising concern for American, and fuel is only part of the issue. Increases in nonfuel unit costs have climbed over the past five years at a rate that's roughly double what most airlines try to achieve, and the grounding of the 737 MAX has added some extra short-term pressure on margins.
Airlines have been extremely profitable in recent years, but many had anticipated that low energy prices would eventually give way to a more typical pricing environment. If the current conflict with Iran escalates, that might prove to be the catalyst that makes fuel more expensive for American -- eating further into its profit margin.
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Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Tesla. 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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Evidence Suggests Disney+ Subscribers Have Soared to 25 Million
There's little question that Disney (NYSE: DIS) investors have been enthusiastic about the prospects for its namesake streaming service Disney+. The stock has soared 35% over the past year since Disney announced plans to compete with the likes of Netflix (NASDAQ: NFLX) and Amazon's (NASDAQ: AMZN) Prime Video.
The House of Mouse announced that Disney+ had eclipsed 10 million signups on the day the service debuted in November, but also said that it wouldn't provide additional updates about subscriber data until it reports its fiscal 2020 first-quarter results in early February.
Wall Street is still keenly interested in the trajectory of Disney+, and there's a growing mountain of evidence that the platform will hit its subscriber forecast well ahead of projections.
Image source: Disney.
Survey says...
Rosenblatt Securities analyst Bernie McTernan surveyed more than 200 streaming video customers on Dec. 29, and the results point to massive adoption of the Disney+ service since its launch in November. Of those surveyed, 57% said they were Disney+ subscribers, up from 23% the week after the service debuted. Of the current subscribers, 59% said they signed up after the first day, suggesting strong demand has continued since its highly successful launch.
McTernan estimates that Disney closed out the year with 25 million users, a 20% increase from his previous forecast of 21 million. To put that into context, Netflix boasts 158 million subscribers worldwide, and it's estimated that Amazon Prime Video has 96 million. The analyst is suggesting that Disney will close out fiscal 2020 (which ends Sep. 30) with as many as 39 million subscribers, putting the company on track to more than double analysts' consensus estimates for 18 million subscribers.
The analyst has a buy rating and a $175 price target on Disney stock, which suggests more than 20% upside from where it closed out 2019.
Bad news for the competition
Another surprising conclusion from the research is that Disney is gaining some converts at the expense of the competition. Among the Disney+ subscribers, a whopping 29% said they had unsubscribed from a rival streaming video service in order to sign up for Disney+, and 9% specifically noted they had canceled their Netflix membership.
That seems to contradict the results of previous research by Bank of America analyst Nat Schindler. In a survey of more than 1,000 U.S. consumers conducted after the debut of Disney+, 65% of respondents said they didn't view Disney+ as a substitute for Netflix, while just 5% said they planned to cancel Netflix for Disney+.
Not the only one
In a note to clients on Thursday, Bank of America analysts said their research suggests that Disney+ is the fastest growing among 29 streaming video services it analyzed, and that the company will likely achieve its growth forecast ahead of schedule. "We believe Disney's [fiscal 2024 estimated] guidance for 60-90 million subs globally continues to appear conservative (including 20 million to 30 million subs in the U.S.)," the analysts said.
The report went on to note there was "anecdotal evidence" of heavy engagement by viewers, which was a good sign for the future of Disney+. The key to continued growth will be additional original content, like the company's highly successful freshman effort The Mandalorian, which has scored top-notch reviews. The Star Wars offshoot garnered a score of 94% "Fresh" on review aggregation site Rotten Tomatoes and was lauded by fans and critics alike.
A report released on Dec. 11 by market intelligence company Apptopia revealed that the Disney+ app was ranked No. 1 every day since the service launched on both the Apple App Store and Alphabet's Google Play Store. Even more importantly, the research showed the Disney+ app had been downloaded 22 million times in the four weeks since the service launched.
This seems to give weight to Rosenblatt Securities' forecast of 25 million Disney+ signups to close out 2019.
Advantage: Disney
While services like Netflix and Amazon Prime create and license content to attract new subscribers, Disney uses its wellspring of characters to generate revenue across a host of businesses, including movie theaters, cable and network television, theme parks, and a number of other consumer discretionary products. Streaming is just one more way for the company to monetize its growing library of intellectual property.
This gives Disney an advantage over the competition, which primarily only benefits from the subscription revenue their programming attracts. This will likely make Disney one of the big winners of 2020.
10 stocks we like better than Walt Disney
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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. Danny Vena owns shares of Alphabet (A shares), Amazon, Apple, Netflix, and Walt Disney and has the following options: long January 2021 $190 calls on Apple, short January 2021 $195 calls on Apple, and long January 2021 $85 calls on Walt Disney. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, 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.
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5 Top Stock Trades for Monday: CMG, TSLA, JD
Tension in the Middle East caused the S&P 500 to sink 1% at the open, although buyers bid stocks up off the lows. Letâs look at a few top stock trades going into the first full week of 2020.
Top Stock Trades for Tomorrow No. 1: Chipotle (CMG)
Source: Chart courtesy of
One of my favorite things to do when we see turbulence in the market? Find relative strength. That is, stocks that are outperforming the overall market. Case in point? Chipotle Mexican Grill (NYSE:), which hit new all-time highs on the day.
This stock has bounced hard off the 200-day moving average and its November low at $728. Shares of Chipotle are trying to push through this difficult $840 to $850 area now after breaking out of its rising channel (blue lines).
Now what?
Letâs see if CMG can gain momentum over this area, potentially up to $900. If it canât (or if the broader market weighs it down), look for former channel support to buoy the name. Below breaks the short-term bull thesis and puts the 50-day moving average on the table.
Top Stock Trades for Tomorrow No. 2: Tesla (TSLA)
Source: Chart courtesy of
Shares of Tesla (NASDAQ:) have been on fire, and that didnât change on Friday. The stock ripped to new all-time highs of $454 before retreating like CMG did. The question now is, can TSLA continue to power higher?
As long as shares are over $430, itâs hard to get bearish on the name. Look to see how it handles next week. Does it trade down to $430 or up to $454?
If itâs the former, see if $430 supports the stock. Below there puts the recent low of $402 on the table, as well as prior channel resistance (blue line) and the 20-day moving average. If itâs the latter and Tesla rallies back up to its current high, see if it can breakout or if this mark acts as resistance.
Top Stock Trades for Tomorrow No. 3: JD.com (JD)
Source: Chart courtesy of
JD.com (NASDAQ:) was a beauty on the day, giving day-traders a quick and profitable red-to-green trade.
This stock has been on fire lately â and in fact, many Chinese equities have been. JD.com hit a new 52-week high on Friday as buyers continue to bid it higher. Shares are riding uptrend support (blue line) and the 20-day moving average higher.
For now, the stock is a buy-on-dips into this zone. Below it could send JD down to the 50-day moving average.
Top Stock Trades for Tomorrow No. 4: Coupa Software (COUP)
Source: Chart courtesy of
Coupa Software (NASDAQ:) was the âone that got awayâ for me this morning. I had it on my list, but didnât pull the trigger with the morning mayhem and with $155 resistance looming overhead.
Instead of weighing the stock down though, COUP ripped right through resistance, jumping more than 6% and hitting $162.50. It was a powerful breakout, particularly given that it came on such a rocky day in the stock market.
Bulls now need to see $155 hold up as support. Falling below that level likely sends it to uptrend support (blue line) and the 50-day moving average.
Top Stock Trades for Tomorrow No. 5: Kansas City Southern (KSU)
Source: Chart courtesy of
Kansas City Southern (NYSE:) is setting up in an ascending triangle pattern. Thatâs a bullish technical pattern where rising uptrend support (blue line) squeezes a stock into a static level of resistance (black line).
The stock poked its head over resistance on Thursday, but was battered lower on Friday as volatility jumped in morning trading. However, bulls bid the stock up off uptrend support and the 20-day moving average.
This area is now support for longs. Below it sends it to the 50-day moving average, at a minimum. If KSU can reclaim $155, see that it takes out the November high of $156.57, opening the door to $157.50 and possibly $160-plus.
Resistance has been in place for two months now. Itâs make-or-break time.
Bret Kenwell is the manager and author of and is on Twitter @BretKenwell. As of this writing, Bret Kenwell 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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Ex-Dividend Reminder: Campbell Soup, Gentex and The Gap
Looking at the universe of stocks we cover at Dividend Channel, on 1/7/20, Campbell Soup Co (Symbol: CPB), Gentex Corp. (Symbol: GNTX), and The Gap Inc (Symbol: GPS) will all trade ex-dividend for their respective upcoming dividends. Campbell Soup Co will pay its quarterly dividend of $0.35 on 1/27/20, Gentex Corp. will pay its quarterly dividend of $0.115 on 1/22/20, and The Gap Inc will pay its quarterly dividend of $0.2425 on 1/29/20. As a percentage of CPB's recent stock price of $48.43, this dividend works out to approximately 0.72%, so look for shares of Campbell Soup Co to trade 0.72% lower — all else being equal — when CPB shares open for trading on 1/7/20. Similarly, investors should look for GNTX to open 0.40% lower in price and for GPS to open 1.41% lower, all else being equal.
Below are dividend history charts for CPB, GNTX, and GPS, showing historical dividends prior to the most recent ones declared.
Campbell Soup Co (Symbol: CPB):
Gentex Corp. (Symbol: GNTX):
The Gap Inc (Symbol: GPS):
In general, dividends are not always predictable, following the ups and downs of company profits over time. Therefore, a good first due diligence step in forming an expectation of annual yield going forward, is looking at the history above, for a sense of stability over time. This can help in judging whether the most recent dividends from these companies are likely to continue. If they do continue, the current estimated yields on annualized basis would be 2.89% for Campbell Soup Co, 1.59% for Gentex Corp., and 5.66% for The Gap Inc.
In Friday trading, Campbell Soup Co shares are currently down about 0.1%, Gentex Corp. shares are down about 1.6%, and The Gap Inc shares are off about 0.8% on the day.
Click here to learn which 25 S.A.F.E. dividend stocks should be on your radar screen »
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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Exxon Isn't Just Cashing Out on Assets, It's Upgrading
International energy giant ExxonMobil (NYSE: XOM) has plans to spend up to $35 billion a year through 2025 on a massive capital investment program. The goal is to reverse a multiyear decline in its production. The only problem is that oil and natural gas prices are low right now, so finding the cash for this spending will be difficult and, increasingly, includes asset sales. Here's what Exxon can do to fund its investment plans and why investors shouldn't be too worried about the moves it's making.
A rough spot
The third quarter was a tough one for oil companies in general, and Exxon didn't avoid the pain. Its third-quarter earnings were down roughly 50% year over year. The upstream operation (oil and natural gas drilling) was the hardest hit, representing roughly two-thirds of the overall decline. The main culprit was "lower liquids and gas realizations," which is a fancy way of saying that the prices of these commodities fell. Unfortunately, downstream operations (chemicals and refining) weren't an offset, with earnings at both falling year over year as well. The main cause here was weaker margins. Simply put, it was a rough quarter.
Image source: Getty Images.
There was a positive hidden in the bad news: Exxon's production increased about 3% year over year in the third quarter. That shows that its capital spending plans are bearing fruit. This progress, however, wasn't enough to overcome the impact of volatile energy prices. Oil and gas prices are, for better or worse, the biggest driving force at Exxon.
This highlights the big problem this energy giant is facing today. It is investing heavily to increase production at a time when oil prices are relatively low. How Exxon will come up with the cash to keep spending is an increasing concern on Wall Street. The answer isn't easy.
Finding the cash
The first issue that needs to be addressed is that Exxon doesn't really have much of a choice when it comes to investing in production growth. For several years, its production was in decline, which is a trend that can't be allowed to linger for too long. At the very least it needs to work to keep production roughly flat. An oil company that continually produces less and less oil isn't on a sustainable path.
The second issue is how to pay for its investment plans, which are huge. The most obvious choice is to simply take on additional debt. Exxon has the balance sheet strength to do this, with a financial debt-to-equity ratio of roughly 0.15 times. Most of its closet peers have ratios that are at least twice that level. Simplistically speaking, Exxon could double its roughly $26 billion in debt and still be toward the lower end of its peers leverage-wise.
XOM Financial Debt to Equity (Quarterly) data by YCharts
Before you say that $26 billion doesn't even cover one year of the company's spending plans at a run rate of $35 billion, Exxon doesn't need to fund all of its spending with debt. It is using cash flow to pay for as much of its capital program as it can. For example, in the third quarter the oil giant generated roughly $9 billion in cash flow. Around $3.7 billion of cash went toward shareholder distributions, with another $6 billion being spent on capital projects. Those numbers still don't square, since cash going out the door exceeded cash coming in -- so Exxon also sold $1.9 billion in debt and $500 million worth of assets, which more than filled the void (its cash balance actually increased sequentially).
Assuming that it needs to sell around $2 billion worth of debt each quarter to keep the math simple, that's roughly $8 billion a year in additional debt. Exxon's current investment program lasts through 2025, so it has about five years of spending left. That means about $40 billion worth of debt to get through 2025. These are very rough estimates intended to make a larger point; there's clearly a lot more going on here. Still, that would more than double the current debt Exxon has. However, even that would still leave financial debt-to-equity ratios around the levels of its more heavily leveraged peers.
Only Exxon isn't looking to use leverage to fund all of its investment plans; it also intends to sell assets. The original goal was to sell around $15 billion of assets. If you use that offset the debt needs in the simple model just outlined, you bring debt issuance down to $25 billion. That's roughly doubling the company's current debt load, which would leave Exxon toward the low end of peers on the metric.
More recently, though, Exxon has reportedly upped its asset sale goal to $25 billion. This would mean even less need for debt and was likely driven by investor concerns over the company's increasing leverage. Exxon's conservative financial profile is one of its stock's key selling points, so taking on materially more debt is a tough sell on Wall Street. But here's the big question: Is this decision a sign of trouble?
Clearly, Exxon is stating that it needs more cash to help offset the hit from its spending plans. That's not a great situation to be in, largely driven by the fact that oil prices are relatively weak today. However, you need to step back and look at what is going on from a big-picture perspective. As management has explained before, Exxon isn't selling assets willy nilly. Every single sale is being compared to other opportunities in its portfolio, including the ones in which it is investing today but that aren't yet producing.
Exxon's take is that what it is selling, or plans to sell, isn't as valuable as what it's being compared against -- the oil company is upgrading its portfolio as it is selling. Backing that up is Exxon's continuing to find new oil in its biggest development projects, increasing the size of these opportunities. So selling older fields isn't really as big a deal as it may at first seem. And as these assets come on line -- combined with investments the company is making in its downstream operations -- more cash should be available to put toward the company's massive spending plans. Yes, it is tough right now, but Exxon looks like it is still heading in a good direction.
Muddling through
It wouldn't be accurate to say that Exxon is riding high today; there's clearly a mix of good and bad news. Right now the bad news is weighing heavily on its financial results and investor perceptions. But from a big-picture perspective, Exxon remains in decent financial shape and shouldn't have any problems supporting its spending plans.
While the increase in asset sales could be viewed as a sign of financial strain, it's more likely a mix of assuaging investors and a reflection of the strength of its investment pipeline. Investors shouldn't read too deeply into the issue, since production from some of Exxon's big projects is expected to start adding more materially to results in 2020. Production in Guyana, for example, only started in December 2019, and production from its onshore U.S. fields is still ramping up. Assuming that leads to more robust production growth, Exxon remains on a solid path.
10 stocks we like better than ExxonMobil
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*Stock Advisor returns as of December 1, 2019
Reuben Gregg Brewer owns shares of ExxonMobil. 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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First Week of August 21st Options Trading For The Materials Select Sector SPDR Fund (XLRE)
Investors in The Materials Select Sector SPDR Fund (Symbol: XLRE) saw new options begin trading this week, for the August 21st expiration. One of the key data points that goes into the price an option buyer is willing to pay, is the time value, so with 231 days until expiration the newly trading contracts represent a possible opportunity for sellers of puts or calls to achieve a higher premium than would be available for the contracts with a closer expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the XLRE options chain for the new August 21st contracts and identified one put and one call contract of particular interest.
The put contract at the $37.00 strike price has a current bid of $1.20. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $37.00, but will also collect the premium, putting the cost basis of the shares at $35.80 (before broker commissions). To an investor already interested in purchasing shares of XLRE, that could represent an attractive alternative to paying $38.31/share today.
Because the $37.00 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 61%. 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 3.24% return on the cash commitment, or 5.13% annualized — at Stock Options Channel we call this the YieldBoost.
Below is a chart showing the trailing twelve month trading history for The Materials Select Sector SPDR Fund, and highlighting in green where the $37.00 strike is located relative to that history:
Turning to the calls side of the option chain, the call contract at the $39.00 strike price has a current bid of $1.15. If an investor was to purchase shares of XLRE stock at the current price level of $38.31/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $39.00. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 4.80% if the stock gets called away at the August 21st expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if XLRE shares really soar, which is why looking at the trailing twelve month trading history for The Materials Select Sector SPDR Fund, as well as studying the business fundamentals becomes important. Below is a chart showing XLRE's trailing twelve month trading history, with the $39.00 strike highlighted in red:
Considering the fact that the $39.00 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 60%. 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 3.00% boost of extra return to the investor, or 4.74% annualized, which we refer to as the YieldBoost.
The implied volatility in the put contract example is 18%, while the implied volatility in the call contract example is 14%.
Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 252 trading day closing values as well as today's price of $38.31) to be 13%. 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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Validea Motley Fool Strategy Daily Upgrade Report - 1/3/2020
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.
ENERGY RECOVERY, INC. (ERII) is a small-cap growth stock in the Misc. Capital Goods industry. The rating according to our strategy based on Motley Fool changed from 63% to 76% 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: Energy Recovery, Inc. is an energy solutions provider to industrial fluid flow markets. The Company's solutions convert wasted pressure energy into a reusable asset and preserve or eliminate pumping technology in hostile processing environments. Its segments include Water, Oil & Gas, and Corporate. The Water Segment focuses on products sold for use in reverse osmosis water desalination. The Oil & Gas Segment consists of products sold for use in hydraulic fracturing, gas processing, and chemical processing. The Company offers energy recovery devices (ERDs) in the water desalination market with its pressure exchanger (PX) and turbocharger technologies. The Company offers VorTeq hydraulic fracturing system, IsoBoost, and IsoGen product lines to the oil and gas market. The Company's customers include engineering, procurement and construction companies, original equipment manufacturers, international oil companies, national oil companies, and exploration and production companies.
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: FAIL
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
INVENTORY TO SALES: PASS
ACCOUNTS RECEIVABLE TO SALES: PASS
LONG TERM DEBT/EQUITY RATIO: PASS
"THE FOOL RATIO" (P/E TO GROWTH): FAIL
AVERAGE SHARES OUTSTANDING: PASS
SALES: PASS
DAILY DOLLAR VOLUME: PASS
PRICE: PASS
INCOME TAX PERCENTAGE: FAIL
For a full detailed analysis using NASDAQ's Guru Analysis tool, click here
FIRST SAVINGS FINANCIAL GROUP INC (FSFG) is a small-cap value stock in the Regional Banks industry. The rating according to our strategy based on Motley Fool changed from 45% to 72% 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: First Savings Financial Group, Inc. is a bank holding company for First Savings Bank (the Bank). The Company's principal business activity is the ownership of the outstanding common stock of First Savings Bank. The Bank operates as a community-oriented financial institution offering traditional financial services to consumers and businesses in its primary market area. The Bank attracts deposits from the public and uses those funds to originate primarily residential and commercial mortgage loans. The Bank also originates commercial business loans, residential and commercial construction loans, multi-family loans, land and land development loans, and consumer loans. It conducts its lending and deposit activities primarily with individuals and small businesses in its primary market area. The Bank operates in Clark, Floyd, Harrison, Crawford and Washington counties, Indiana. The Bank offers fixed and adjustable-rate mortgage loans secured by commercial real estate.
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: FAIL
INSIDER HOLDINGS: PASS
CASH FLOW FROM OPERATIONS: FAIL
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
FIRST AMERICAN FINANCIAL CORP (FAF) is a mid-cap value stock in the Insurance (Prop. & Casualty) industry. The rating according to our strategy based on Motley Fool changed from 45% to 72% 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: First American Financial Corporation, through its subsidiaries, is engaged in the business of providing financial services. The Company operates through the title insurance and services segment, and specialty insurance segment. The title insurance and services segment provides title insurance, closing and/or escrow services and similar or related services domestically and internationally in connection with residential and commercial real estate transactions. The title insurance and services segment also provides products, services and solutions involving the use of property related data, including data derived from its database, which are designed to manage risk or otherwise facilitate real estate transactions. The specialty insurance segment issues property and casualty insurance policies and sells home warranty products to residential homeowners and renters for liability losses and typical hazards, such as fire, theft, vandalism and other types of property damage.
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: FAIL
INSIDER HOLDINGS: FAIL
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: FAIL
DAILY DOLLAR VOLUME: FAIL
PRICE: PASS
INCOME TAX PERCENTAGE: PASS
For a full detailed analysis using NASDAQ's Guru Analysis tool, click here
FS BANCORP INC (FSBW) is a small-cap value stock in the S&Ls/Savings Banks industry. The rating according to our strategy based on Motley Fool changed from 65% 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: FS Bancorp, Inc. is a holding company for 1st Security Bank of Washington (the Bank). The Company is a diversified lender with a focus on the origination of indirect home improvement loans, also referred to as fixture secured loans, commercial real estate mortgage loans, home loans, commercial business loans and second mortgage and home equity loan products. The Company operates through the community banking segment. The Bank is a relationship-driven community bank. The Bank offers banking and financial services to local families, local and regional businesses and various industries within distinct Puget Sound area communities. It offers a range of commercial real estate loans, which are secured by income producing properties, including retail centers, warehouses and office buildings located in the market areas. It offers a range of deposit instruments, including checking accounts, money market deposit accounts, savings accounts and certificates of deposit.
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: FAIL
"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
MONSTER BEVERAGE CORP (MNST) is a large-cap growth stock in the Beverages (Non-Alcoholic) industry. The rating according to our strategy based on Motley Fool changed from 45% to 72% 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: Monster Beverage Corporation develops, markets, sells and distributes energy drink beverages, sodas and/or concentrates for energy drink beverages, primarily under various brand names, including Monster Energy, Monster Rehab, Monster Energy Extra Strength Nitrous Technology, Java Monster, Muscle Monster, Mega Monster Energy, Punch Monster, Juice Monster, Ubermonster, BU, Mutant Super Soda, Nalu, NOS, Burn, Mother, Ultra, Play and Power Play, Gladiator, Relentless, Samurai, BPM and Full Throttle. The Company has three segments: Monster Energy Drinks segment, which consists of its Monster Energy drinks, as well as Mutant Super Soda drinks; Strategic Brands segment, which includes various energy drink brands owned through The Coca-Cola Company (TCCC), and Other segment (Other), which includes the American Fruits & Flavors (AFF) third-party products. The Strategic Brands segment sells concentrates and/or beverage bases to authorized bottling and canning operations.
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: FAIL
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
INVENTORY TO SALES: PASS
ACCOUNTS RECEIVABLE TO SALES: PASS
LONG TERM DEBT/EQUITY RATIO: PASS
"THE FOOL RATIO" (P/E TO GROWTH): FAIL
AVERAGE SHARES OUTSTANDING: PASS
SALES: FAIL
DAILY DOLLAR VOLUME: FAIL
PRICE: PASS
INCOME TAX PERCENTAGE: PASS
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 575.48% vs. 227.72% 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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Banco Santander Brasil SA (BSBR) Ex-Dividend Date Scheduled for January 06, 2020
Banco Santander Brasil SA (BSBR) will begin trading ex-dividend on January 06, 2020. A cash dividend payment of $0.43 per share is scheduled to be paid on February 28, 2020. Shareholders who purchased BSBR prior to the ex-dividend date are eligible for the cash dividend payment. This represents an 681.82% increase over prior dividend payment.
The previous trading day's last sale of BSBR was $12.64, representing a -7.91% decrease from the 52 week high of $13.73 and a 30.58% increase over the 52 week low of $9.68.
BSBR is a part of the Finance sector, which includes companies such as HDFC Bank Limited (HDB) and Royal Bank Of Canada (RY). BSBR's current earnings per share, an indicator of a company's profitability, is $1. Zacks Investment Research reports BSBR's forecasted earnings growth in 2019 as 7.41%, compared to an industry average of 3.4%.
For more information on the declaration, record and payment dates, visit the BSBR Dividend History page. Our Dividend Calendar has the full list of stocks that have an ex-dividend today.
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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3 Home Care Stocks That Outperformed in 2019
Looking for healthcare stocks that can make you rich? In 2019 these three providers of home-based healthcare services outperformed the benchmark S&P 500 index, and there are reasons to believe it could happen again in 2020 and in the long run.
Home-based medical service stocks aren't terribly popular among everyday investors, but patients and insurers that want to avoid gigantic hospital bills are over the moon with the convenience and savings these companies offer. Let's look at what made 2019 such a great year for these soaring stocks to see how they can keep it going.
COMPANY (SYMBOL) PERFORMANCE IN 2019 MARKET CAP
Chemed (NYSE: CHE) 56% $7.0 billion
LHC Group (NASDAQ: LHCG) 46% $4.3 billion
Amedisys (NASDAQ: AMED) 42% $5.4 billion
Data source: Yahoo! Finance.
1. Chemed: Home hospice care and plumbing
This company has two successful operating segments that don't exactly complement each other, but they do provide steadily growing cash flows. Vitas is the largest provider of hospice and palliative care services in the U.S. and Roto-Rooter is the largest provider of plumbing and drain-cleaning services in North America.
From 2003, when Chemed acquired Vitas, through 2018, total adjusted earnings per share rose at an impressive 25.4% annual growth rate. Vitas employs 4,800 nurses who provide around 7% of all hospice services performed in the U.S. That made Vitas the largest hospice service provider and suggests there is a lot more room to grow in this highly fragmented space.
Image source: Getty Images.
2. LHC Group: Home health and hospice services
This is one of Chemed's larger competitors in the hospice service space, but the number of hospice patients served by Chemed is more than four times higher than LHC Group. In 2018, LHC Group became a leading provider of home health services by merging with Almost Family.
Now LHC employs 32,000 employees operating out of locations across 36 states. By the numbers, the merger has been a success and positioned LHC to keep growing for years to come.
At the end of September, total debt on LHC's balance sheet was just $232 million, which works out to a little less than the company thinks it earned in 2019 before interest, taxes, depreciation, and amortization. That's significantly less debt as a proportion of earnings than the company reported a year earlier.
The home health industry is still highly fragmented and LHC Group has everything it needs to keep growing at a rapid pace. In addition to a solid balance sheet, adjusted free cash flow reached $109 million during the first nine months of 2019.
3. Amedisys: Raising expectations
Amedisys recently expanded its hospice care operations to 146 centers in 33 states. The company's home health segment is even larger, and combined with a smattering of personal care centers, the company operates 470 care centers in 38 states.
Amedisys has been growing by acquisition and organically. Same-location admissions across all three segments are on the rise.
The company has integrated new operations quicker than expected in 2019. It has raised expectations for adjusted earnings twice in 2019 from a range between $3.98 and $4.09 per share to between $4.32 and $4.39 per share.
Image source: Getty Images.
Take your pick
At recent prices, none of these home care stocks are exactly cheap. Chemed's shares trade at around 28 times earnings expectations, and it's the least pricey one here. At 34 times earnings expectations, Amedisys stock has the most success baked into its price at the moment, but it's also predicting some impressive earnings growth over the next couple of years.
Investors who buy shares of any of these home care giants can rest easy knowing the popularity of home-based healthcare services isn't about to slow down. The 65-years-and-older population in the U.S. is expected to double by 2060 to a whopping 95 million. Treatment of chronic conditions that affect a majority of this demographic should drive enough demand to give all three of these stocks a good chance to provide market-thumping gains in the years ahead.
10 stocks we like better than Amedisys
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
Cory Renauer has no position in any of the stocks mentioned. The Motley Fool owns shares of LHC Group. 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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Friday 1/3 Insider Buying Report: AP, KINS
Bargain hunters are wise to pay careful attention to insider buying, because although there are many various reasons for an insider to sell a stock, presumably the only reason they would use their hard-earned dollars to make a purchase, is that they expect to make money. Today we look at two noteworthy recent insider buys.
At Ampco-Pittsburgh Corp. (AP), a filing with the SEC revealed that on Monday, President,Air & Liq. Proc. Group Terrence W. Kenny purchased 2,500 shares of AP, for a cost of $2.90 each, for a total investment of $7,240. So far Kenny is in the green, up about 6.2% on their purchase based on today's trading high of $3.08. Ampco-Pittsburgh Corp. is trading off about 1% on the day Friday.
And at Kingstone Companies (KINS), there was insider buying on Monday, by Director Floyd R. Tupper who bought 705 shares for a cost of $7.50 each, for a trade totaling $5,286. Before this latest buy, Tupper purchased KINS on 2 other occasions during the past year, for a total cost of $34,450 at an average of $8.61 per share. Kingstone Companies is trading off about 1.4% on the day Friday. So far Tupper is in the green, up about 5.1% on their purchase based on today's trading high of $7.88.
VIDEO: Friday 1/3 Insider Buying Report: AP, KINS
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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Analysts Anticipate OIH Will Reach $15
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 Oil Services ETF (Symbol: OIH), we found that the implied analyst target price for the ETF based upon its underlying holdings is $14.74 per unit.
With OIH trading at a recent price near $13.32 per unit, that means that analysts see 10.63% upside for this ETF looking through to the average analyst targets of the underlying holdings. Three of OIH's underlying holdings with notable upside to their analyst target prices are Transocean Ltd (Symbol: RIG), Tenaris SA (Symbol: TS), and Helix Energy Solutions Group Inc (Symbol: HLX). Although RIG has traded at a recent price of $6.93/share, the average analyst target is 22.22% higher at $8.47/share. Similarly, TS has 17.93% upside from the recent share price of $22.62 if the average analyst target price of $26.68/share is reached, and analysts on average are expecting HLX to reach a target price of $11.20/share, which is 15.94% above the recent price of $9.66. Below is a twelve month price history chart comparing the stock performance of RIG, TS, and HLX:
Combined, RIG, TS, and HLX represent 12.94% of the Oil Services 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
Oil Services ETF OIH $13.32 $14.74 10.63%
Transocean Ltd RIG $6.93 $8.47 22.22%
Tenaris SA TS $22.62 $26.68 17.93%
Helix Energy Solutions Group Inc HLX $9.66 $11.20 15.94%
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.
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Financial Sector Update for 01/03/2020: HSBC, JPM, BAC, WFC, C, USB, CS
Top Financial Stocks:
JPM: -1.84%
BAC: -1.57%
WFC: -1.30%
C: -1.60%
USB: -1.01%
Top financial stocks were lower in pre-bell trading Friday.
Stocks moving on news include:
(-) HSBC Holdings (HSBC), down 2% after saying it will suspend weekend and holiday services of its ATMs in Hong Kong after the machines were targeted by pro-democracy protesters angered at the bank for closing the account of the Spark Alliance fund, a crowdsourcing initiative that supports pro-democracy movements, reports said Friday.
(-) Credit Suisse (CS), was down 3% after saying early on Friday that it approved a share buyback of up to 1.5 billion Swiss Francs ($1.54 billion) in 2020 with the Swiss financial institution expecting to buy back at least 1.0 billion Swiss Francs of shares by the end of the 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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Notable Two Hundred Day Moving Average Cross - PINC
In trading on Friday, shares of Premier Inc (Symbol: PINC) crossed below their 200 day moving average of $36.11, changing hands as low as $35.32 per share. Premier Inc shares are currently trading down about 1% on the day. The chart below shows the one year performance of PINC shares, versus its 200 day moving average:
Looking at the chart above, PINC's low point in its 52 week range is $27.37 per share, with $42 as the 52 week high point — that compares with a last trade of $36.08.
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.
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Notable ETF Inflow Detected - AGG
Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the iShares Core U.S. Aggregate Bond ETF (Symbol: AGG) where we have detected an approximate $394.4 million dollar inflow -- that's a 0.6% increase week over week in outstanding units (from 612,700,000 to 616,200,000). The chart below shows the one year price performance of AGG, versus its 200 day moving average:
Looking at the chart above, AGG's low point in its 52 week range is $106.28 per share, with $114.30 as the 52 week high point — that compares with a last trade of $112.88. 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.
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Public Storage's Preferred Shares, Series H, Cross 5% Yield Mark
In trading on Friday, shares of Public Storage's 5.60% Cumulative Preferred Share of Beneficial Interest, Series H (Symbol: PSA.PRH) were yielding above the 5% mark based on its quarterly dividend (annualized to $1.40), with shares changing hands as low as $27.71 on the day. This compares to an average yield of 6.17% in the "Real Estate" preferred stock category, according to Preferred Stock Channel. As of last close, PSA.PRH was trading at a 12.24% premium to its liquidation preference amount, versus the average premium of 38.66% in the "Real Estate" category.
Below is a dividend history chart for PSA.PRH, showing historical dividend payments on Public Storage's 5.60% Cumulative Preferred Share of Beneficial Interest, Series H :
In Friday trading, Public Storage's 5.60% Cumulative Preferred Share of Beneficial Interest, Series H (Symbol: PSA.PRH) is currently up about 0.2% on the day, while the common shares (Symbol: PSA) are up about 0.7%.
Click here to find out the 50 highest yielding preferreds »
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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Listener Question: Are These Stocks Overvalued?
In this episode of MarketFoolery, host Chris Hill chats with Chief Investing Officer Andy Cross about some holiday investing takeaways and some listener mail. Andy shares an inspiring tweet thread from Shopify (NYSE: SHOP) founder Tobi Lutke, as well as some boots-on-the-ground Peloton (NASDAQ: PTON) research. Plus, the guys answer some listener questions. With the gains that Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), and Match Group (NASDAQ: MTCH) had last year, are they still buys, or should investors wait for their valuations to fall a bit? What should long-term investors make of analyst estimates? Is there any value to be gleaned from all the price targets floating around in financial media? Tune in to find out more.
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.
10 stocks we like better than 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'%}
This video was recorded on Jan. 2, 2020.
Chris Hill: It's Thursday, January 2nd. Welcome to MarketFoolery! I'm Chris Hill. With me in studio, the chief investment officer himself, Andy Cross. Thanks for being here.
Andy Cross: Chris, 10 years!
Hill: It's the 10th year. We're kicking off the 10th year. A year from now will be our 10th anniversary. But we're kicking off year 10.
Cross: Congratulations! That's awesome. You are really scraping the bottom of the barrel, coming to me on January 2nd here.
Hill: [laughs] We're going to dip into the Fool mailbag, but let's start with the break that we just had. We were talking this morning. I couldn't shut off the business part of my brain over the holiday break.
Cross: Good for you!
Hill: Well, I don't know. I mean, I'll just share one of the ways. I'm curious, your observations over the break. But literally, Christmas Day, the presents have been opened, they're back under the tree, it's later in the day, and I looked at the presents under the tree, and I started looking at everything through the lens of ticker symbols. Which I think may be a sign of madness.
Cross: [laughs] Or genius!
Hill: I was looking at these gifts, which were lovingly wrapped, and bought with anticipation -- a lot of creativity and love went into the gifts, and at some point in the day, I just started looking at it and seeing the ticker symbols. "Oh, AMZN. LULU. CMG," all those sorts of things.
Anyway, during your break, what, if any, business observations did you have?
Cross: I have young kids, Chris. So Christmas day for me was just a blur of lack of sleep from the night before, of course. So, not so much on Christmas Day, but there were a few things. Tobi Lutke, the founder and CEO of Shopify -- which, I think as so many know, it's a $50 billion company now, provides software platforms for entrepreneurs. We've talked to him, we really respect him. He wrote a great piece on Twitter. Series of pieces, of course. Talking about the Shopify culture and how they're different when it comes to the people that they hire and how they think about development and just the way they go about making Shopify different from other software companies, especially because they are not headquartered in California, or New York, or even really Toronto. They're in Ottawa, Canada. And the way they develop and take time developing people. He wrote this line I found really inspiring, to think about how you're going to build a business. And he wrote, "If we can help a young engineer or designer to get 10 years of career advancement in a single wall clock year, then we do it. If the student is ready, the teachers will appear. We get to share that additional skill for the rest of the decade." And he juxtaposed that against the kind of grind that so many software companies go through. When employees come, they're just looking for equity. They're there for 15, 18 months, 20 months at the most, and then they jump. Not all companies, but they really do this well. So, that piece that Tobi wrote. It's out there on Twitter, he's @tobi. I encourage anyone who is a student of business to read that, because it's very insightful.
Hill: You had sent me the link right before we came in the studio. I'll put that out on the MarketFoolery Twitter feed. Hopefully, it all got aggregated. I mean, I enjoy Twitter, but there are times where I'm like, Oh my god, this is a 17 tweet thread.
Cross: I think it was.
Hill: So, the fact that there's a site that aggregates stuff -- I'll include that.
Cross: So, that was really interesting. From an observation perspective, to get to your more direct question, I was in downtown Bethesda, Maryland doing some shopping, picking up something at the Apple Store, and they have a Peloton showroom there. Peloton, the fitness company, that really had a tough holiday season with one of their advertisements. I did not realize how many showrooms they have. They have more than 74 showrooms across the country. 70% of those are what they call large format, which are 1,500, 2,000 square feet. Compared to Home Depot or Costco, it's tiny, but that's their large format. And then they have very small format stores. But I didn't realize how much they'd put into their live showcasing, versus just having the solutions. This is a place where people can go and try the bikes.
And, what frankly kind of surprised me is that there were a lot of people in this store. This was during the holiday season. Not on Christmas Day, obviously, but during the holiday week. It just surprised me that there were people trying the bikes, talking to salespeople, learning about them. And these are very beautiful stores, Chris. Just like their advertisements, which are a little bit, I think ... sometimes, I look at my training bike in my house compared to what Peloton has at their house. Mine's in my basement or garage, surrounded by all kinds of stuff, compared to the beautiful look of the Peloton studios, or their commercials. But these studios are quite attractive, and there were a lot of people in there.
I've been a little skeptical of Peloton' ability to be able to last into the valuation. It's showing in the stock price since the IPO. But clearly, they are resonating with some people when it comes to using their showrooms.
Hill: It is interesting. Until you told me this morning, I was not aware that they had retail locations. It's going to be interesting in 2020 and beyond to see to what extent, if any, they look to grow that footprint. You have to assume that whatever metrics they're using to judge the success of those locations, if it's working -- I think right now, they've got 75, 80 locations. That's not a particularly large base. So, if they start to ramp that up, that's going to be probably telling in a good way for Peloton.
Cross: And they do have their studios that they spend a lot of money on, I think in New York and LA and I think now London. Interesting, as of the last filing, they have more than $800 million in lease expenses, with 70% of that out beyond 2024. A lot of retail companies, obviously, use operating leases rather than own the footprint. But, clearly, Peloton does have a lot tied into the retail experience that they're going to, I would imagine, continue to expand on.
Hill: Last thing I'll just add is, I'm a Disney shareholder.
Cross: Congratulations.
Hill: Like any good Disney shareholder, I went to see Star Wars, The Rise of Skywalker. Very much enjoyed the movie. Checked the numbers, the box office receipts for 2019. Even though it opened on December 20th, that movie finished sixth overall in U.S. box office receipts.
Cross: For the whole year?!
Hill: For the whole year.
Cross: That's incredible.
Hill: It was open for 11 days of the year, and it finished sixth overall.
Cross: In the high bar that Star Wars pictures have opened with, it was one of the lower-performing ones -- did I read that correctly?
Hill: Yeah, it was definitely lower than the last two in this trilogy. But, we'll see where it ends up.
Cross: I have not seen it. I am excited to see it just, frankly, because it'll get me out of the house.
Hill: [laughs] Our email address is [email protected]. Question from Robin Rifkin in Seattle, who writes, "Looking at the price increase we've seen from Apple over the past year, do you believe the company is, for the first time in a while, by the numbers, overvalued, and now merely a hold at best? What about big price increases over the past year like Microsoft and Match Group? Would love to hear your thoughts."
Thank you, Robin. Just to put some context around that, Apple shares up around 80% in 2019. Microsoft close to 60%. Match Group was nearly a double in 2019. I like the way he phrased the question, because it wasn't just, "Hey, do you think this is overvalued?" It was, "If you own this stock, is it now in that category where it's, you're just going to hold it?"
Cross: It was an incredible 2019 for the markets in general. The S&P 500 was up close to 30%. I think almost all asset classes were up in 2019. That's fairly rare, I believe. Obviously, the past decade has been a fantastic time to be a long-term investor. Apple, Microsoft, so many of these large tech companies had done so well. Apple, from the stock performance, looking across, is the cream of the crop, considering how large it was. Now, at the beginning of the year, the stock was actually very reasonably priced. It's now a little bit more expensive. The multiple has expanded. It's more than probably 20X earnings, 24X earnings. But at one time, Apple was in the 12X to 15X times earnings, selling cheaper than the S&P 500. Now, people concerned about the slowing growth. Clearly, Tim Cook and that team have been operating that business from a strategic side as well as a customer side and a solutions side, a product side, in ways that have resonated with investors as they've moved really into not just the hardware game, but into wearables and services and solutions. So really, kudos to that team, because they've done that very well, and investors have woken up.
I think what's very interesting is, the valuation case for a company like this, it really depends on, first of all, if you are looking at this as a long-term investor. I still believe Apple is a business that you can hold, even at a price that's near $300 per share and a $1.3 trillion business, because of all the great things they are doing in the emerging growth areas that they are investing into. I mentioned wearables and services and solutions. That's the real growth catalysts to Apple.
The stock is probably, in my mind, at this level priced to a case that it will be very hard to generate the kinds of returns that they saw last year. But the valuation case, I think you have to give a company that's proven itself, like Microsoft and Apple, a little bit of room. They also offer a little bit more balance to your portfolio. If you have the likes of a Shopify and Apple in your portfolio, while both tech companies, both very different, and the stocks will probably perform a little bit differently over the long term. Even though most stocks are kind of correlated, I think there's some differences there.
So, my thinking around the valuation for those companies is, it's not so much just the past year, but really thinking about, do I want to own this business for the next three to five years? Do I think that the leadership team and the positioning of the company is going to be able to accrue value over time? Apple's making the right investments, not just in their business, buying back stock, you get a little dividend. So, I would feel free to give those kinds of companies that have earned the right a little bit of multiple expansion.
Hill: Also, from a market cap standpoint, you look at Apple, $1.3 trillion. Microsoft, $1.2 trillion. Match Group, it's had a great run, it's only a $23 billion company.
Cross: Yeah, and much different. It will sit in your portfolio differently than an Apple or Microsoft. Even the likes of a Facebook or Alphabet. First of all, in our mind, you have to be investing in these businesses for the next three to five years and beyond. And if they are making the right investments that will generate both sales growth and earnings growth over time, the stock in the near term may seem slightly overvalued, and traders or algorithms may react to that by selling it off. But long-term, if they're going to accrue value to shareholders, and they can do that by growing sales and earnings, the stocks usually perform and move in lockstep to the business performance.
Hill: Question from Dan Beal in the U.K. who writes, "I have a couple of stocks that are currently priced 10% to 15% above the analyst price targets, and they've been lingering at this price for a solid six months. They all seem to be low-growth dividend paying companies. What should I take from this? Is there a general rule of thumb or opinion of what analyst behavior implies? Or should I stick to ignoring what they say because they are almost always wrong?" And then he adds parenthetically, "Apart from you guys, of course."
He concludes by writing, "I'm 26 years old. I love the show. Please give a shout out to my girlfriend Emma. I've talked about investing so much that she is now a fan of the show and is even considering buying some shares."
Shout out to Emma. Emma, thanks for listening!
Cross: Congratulations! Great, Emma.
Hill: And hopefully, just to give a little unsolicited advice here, there's something that Emma is very passionate about in her life that Dan has taken an interest in, just as she has taken an interest in investing.
Cross: I hope so. We can all benefit from our significant others' interests, I think.
It's an interesting question and a good question, because you hear so much about it on the general media. Not so much at The Motley Fool, but if you're listening to the wider media, they talk a lot about analyst pricing, this sort of thing. The very first thing, Dan, you have to understand is the analyst price targets are almost all one-year. They are paid and rewarded based on how their performance does over a very short time period compared to the way that we think about this. So, when they say, "We put a $40 price target on the stock," they really are looking at the next 12 months based on what they see.
The real value to those calls, by the way, Chris, is what is behind the scenes. What are the business reasons, the logic reasons, the valuation reasons? Unfortunately, those don't make the headlines. You don't hear about those. You just hear about the analyst call, and you tend to just see the analyst calls.
So, as Dan mentioned, we tend not to spend a whole lot of thought around that. Instead, we really want to focus on where that business and the team -- as we talked about with Apple -- is going. The fact that it's 10% or 15% higher than the analyst target, I wouldn't worry so much about that. In fact, I wouldn't worry about that at all. I would much more focus on how the business is performing. I think, especially, if he's concerned about some of the lower-growth dividend stocks, those tend to have much more -- without having stats or data in front of me, I would imagine they would have higher accuracy targets from the analysts. But, again, I just don't think the price target, per se, is something you really have to worry about if you're investing the way that we are thinking about. No one on my team thinks about the analyst price targets at all. We never talk about it. We're all looking at the next five years of the business.
Hill: Yeah, you're absolutely right. The thing that gets the headline is the price target. And it's the least interesting thing for me. I'm interested generally in analyst reports, I'm just interested in what is their thinking behind whatever number they come to.
Cross: I will say, sometimes analysts, I think, get panned. They are very smart people and a lot of times, they come from inside the industry, they go to the banks and the investment firms, they go into what's called the sell side to produce these targets. So their analysis is very good. It's just that the track record for one year -- that's a coin flip, Chris, for most investors. We just don't think that's the way. So, Emma, if you are listening to this, don't think about those price targets or the one-year investing timeframe. Really focus on the next five years and own those businesses that will be able to accrue those shareholder gains you believe for that time period and in the meantime. One year, you might as well just flip a coin for that.
Hill: And without naming a company or recommending a stock, Emma, buy a few shares.
Cross: Absolutely.
Hill: Find a company that you understand how the business works. We've talked about this before. Once you own shares of a company, even if it's just a couple of shares, that's when you really start to ramp up your learning about that business and how it works.
Cross: That is so true, Chris. My advice to someone just getting started is, always think about, first, index funds. If you can invest, index funds, ETFs, get started putting some dollars in there. Then, start following some businesses and buying some shares of some businesses that you like. By the way, Emma, unfortunately, almost one of the best things that can happen is that the stock or the business underperforms, the first stock that you buy, because you will learn so much from that experience. It's almost like if your stock just triples over the course of a year and a half or three years, you may feel great, but you might not have learned as much. But the important thing, like Chris said, is just to get started. Buy a few shares if you can, especially nowadays, when commission costs are almost zero or definitely zero.
Hill: Andy Cross, thanks for being here!
Cross: Thanks, Chris!
Hill: As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. That's going to do it for this edition of MarketFoolery. The show is mixed by Dan Boyd. I'm Chris Hill. Thanks for listening! We'll see you on Monday.
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. 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. Andy Cross owns shares of Facebook and Home Depot. Chris Hill owns shares of Walt Disney. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Apple, Facebook, Match Group, Microsoft, Peloton Interactive, Shopify, Twitter, and Walt Disney. The Motley Fool recommends Costco Wholesale and Home Depot and recommends the following options: long January 2021 $60 calls on Walt Disney, long January 2021 $120 calls on Home Depot, long January 2021 $85 calls on Microsoft, short February 2020 $205 calls on Home Depot, short April 2020 $135 calls on Walt Disney, 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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Here's How Accenture Plans to Keep the Good Times Rolling
Professional services giant Accenture (NYSE: ACN) reported financial results on Dec. 19, covering the first quarter of fiscal year 2020. The company edged out Wall Street's estimates across the board, and Accenture's stock has simply continued its upward climb since this report was released.
The company's shares have gained 81% over the last three years, driven by 23% higher revenues and 30% stronger earnings per share. Alongside the first-quarter report, Accenture's management explained how the company hopes to continue these healthy business trends over the next few years.
It's a big world out there, and Accenture wants to serve a larger part of it. Image source: Getty Images.
Local focus in a global business model
On the earnings call, CEO Julie Sweet noted that Accenture's eight largest single-country markets currently account for nearly 80% of the company's total sales. Accenture posted double-digit growth in Japan, Brazil, and Singapore in the third quarter. In that collection of recent winners, only Japan sits among the company's eight-largest target markets. Accenture would love to add more billion-dollar markets beyond this solid core, and management is pulling several levers to make it happen.
"Leveraging our global network of more than 100 innovation hubs that we have built over the last few years, we can bring innovation from every corner of the world to our clients," Sweet said. "We see growth and significant differences by country while at the same time our global footprint gives us the opportunity to leverage our learnings and our talent from around the world to accelerate outcomes for our clients."
For example, the company is helping large utility companies in France and Italy adapt to the evolving low-carbon requirements in Europe with the help of machine learning and artificial intelligence tools. Under Accenture's guidance, these utilities collect tons of operating data from connected devices in important places such as power plants, transmission hubs, and natural gas pipelines.
The incoming treasure trove of information can then be analyzed to help Accenture and its clients identify bottlenecks and problem areas that require further attention. Accenture built these projects around lessons learned in similar situations around the globe, and the Italian and French programs are sure to uncover new wrinkles and solutions that can then be applied to future contracts elsewhere.
Market-beating returns
Accenture's stock climbed 49% higher in 2019, driven by a steady beat of above-expectations earnings reports. That's no mean feat at a time when many technology giants are struggling due to the China-U.S. trade tensions, Brexit troubles, and more. This stock has been crushing the broader market from a longer-term perspective as well, delivering 135% growth in five years while the S&P 500 could only muster a 58% increase.
The stock may be priced for perfection, trading at 28.6 times trailing earnings and 31 times Accenture's free cash flows, but that's no problem as long as the company keeps delivering on that promise. Accenture is a five-star stock (out of five) in our Motley Fool CAPS system for good reason. This is a strong business led by a high-quality management team, and this first-quarter report only underscored Accenture's top-shelf status.
10 stocks we like better than Accenture
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 Accenture 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 recommends Accenture. 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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5 Things Match Group Does Better Than Facebook
Facebook (NASDAQ: FB) expanded into Match Group's (NASDAQ: MTCH) backyard last year with Facebook Dating, a new tab that lets users maintain separate dating profiles. That seemed like dire news for Match, which currently dominates the online dating market with apps like Tinder, OKCupid, and Hinge.
Yet investors shouldn't assume that Facebook can beat Match at its own game. Instead, they should realize that Match consistently does five things better than Facebook -- and those tailwinds could widen its moat against the tech giant.
Image source: Getty Images.
1. A first mover's advantage
Match enjoys a first mover's advantage in the online dating market because it consistently acquires the most promising platforms and apps. Its top app, Tinder, is practically synonymous with online dating.
Facebook is the world's most well-known social network. But in recent years, it's become increasingly associated with data breaches, questionable privacy practices, and an aging user base. Those three factors could quickly kill off Facebook's dating ambitions.
2. Fewer privacy concerns
Over the past three years, Facebook's data breaches led to congressional hearings and regulatory probes. Match didn't suffer any major data breaches, although security experts highlighted some vulnerabilities in Tinder in early 2018.
Later that year, Match updated its security practices and ensured users that all their interactions were properly encrypted. That quick reaction, along with Match's clean track record, prevented it from being thrust into the public spotlight like Facebook -- which is still struggling to regain user trust.
Last December, a HuffPost/YouGov social media survey found that two-thirds of U.S. adults still didn't trust Facebook with their personal data -- which indicates that people likely trust Match's apps more than Facebook.
3. It doesn't depend on targeted ads
Facebook's privacy problems are rooted in its constant need for personal data for its targeted ads, which generated 98% of its revenue last quarter.
Match generated 98% of its top line from "direct revenue" -- which come from paid subscriptions and a la carte services -- last quarter. The remaining sliver came from "indirect revenue", which mainly come from digital ads.
Match's business model is arguably more stable than Facebook's, for three reasons: It locks in users, it's better insulated from macro headwinds, and it doesn't need to constantly mine its users' personal data for ads.
Image source: Getty Images.
4. Smarter acquisitions
Match acquired six companies over the past decade, and all of them expanded its horizontal reach across the online dating and social networking markets. These platforms were easily monetized and integrated into its broader ecosystem.
Facebook acquired dozens of companies during the same period. Some of them strengthened its social network, but many of its biggest acquisitions -- including Oculus VR and WhatsApp -- have barely been monetized. Other acquisitions, like its recent takeover of brain-to-computer interface developer CTRL-labs, seem rooted in sci-fi instead of reality.
I'm not faulting Facebook for its scattershot strategy, since it has plenty of cash to toss at speculative bets, but Match's growth strategy is clearer and easier to understand.
5. Less regulatory heat
Over the past year, Facebook faced a $5 billion FTC fine over privacy violations, potential fines in the EU over other privacy violations, and additional fines from other regulators, organizations, and countries. Those headwinds aren't dampening Facebook's growth yet, but Match faces less regulatory heat.
The only regulatory issue for Match is an ongoing FTC lawsuit regarding misleading ads. But as I explained in a previous article, the potential damage should be limited to just $60 million -- or 2% of its estimated revenue next year.
The bottom line
Facebook and Match are still both solid long-term investments. However, investors shouldn't assume that Facebook can challenge Match in the online dating market, and they should realize that Match actually does quite a few things better than Facebook.
10 other stocks we like better than Facebook
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See the 10 stocks
*Stock Advisor returns as of December 1, 2019
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. Leo Sun owns shares of Facebook. The Motley Fool owns shares of and recommends Facebook and Match Group. 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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Cash Dividend On The Way From Brandywine Realty Trust (BDN)
Looking at the universe of stocks we cover at Dividend Channel, on 1/7/20, Brandywine Realty Trust (Symbol: BDN) will trade ex-dividend, for its quarterly dividend of $0.19, payable on 1/22/20. As a percentage of BDN's recent stock price of $15.48, this dividend works out to approximately 1.23%, so look for shares of Brandywine Realty Trust to trade 1.23% lower — all else being equal — when BDN shares open for trading on 1/7/20.
In general, dividends are not always predictable; but looking at the history above can help in judging whether the most recent dividend from BDN is likely to continue, and whether the current estimated yield of 4.91% on annualized basis is a reasonable expectation of annual yield going forward. The chart below shows the one year performance of BDN shares, versus its 200 day moving average:
Looking at the chart above, BDN's low point in its 52 week range is $12.95 per share, with $16.18 as the 52 week high point — that compares with a last trade of $15.47.
In Friday trading, Brandywine Realty Trust shares are currently off about 0.4% on the day.
Click here to learn which 25 S.A.F.E. dividend stocks should be on your radar screen »
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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Validea James P. O'Shaughnessy Strategy Daily Upgrade Report - 1/3/2020
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.
KAR AUCTION SERVICES INC (KAR) is a mid-cap growth stock in the Retail (Specialty) industry. The rating according to our strategy based on James P. O'Shaughnessy changed from 75% 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: KAR Auction Services, Inc. is a provider of whole car auction services in North America. The Company operates through two segments: ADESA, Inc. (ADESA Auctions or ADESA) and Automotive Finance Corporation (AFC). The ADESA segment is a provider of whole car auctions and related services to the vehicle remarketing industry in North America. It serves its customer base through online auctions and auction facilities that are developed and located to draw professional sellers and buyers together, and allow the buyers to inspect and compare vehicles remotely or in person. The AFC segment provides floorplan financing to independent used vehicle dealers. Its online service offerings include ADESA.com, LiveBlock and DealerBlock that allows users to offer vehicles for sale from any location.
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
EARNINGS PER SHARE PERSISTENCE: PASS
PRICE/SALES RATIO: PASS
RELATIVE STRENGTH: PASS
For a full detailed analysis using NASDAQ's Guru Analysis tool, click here
PACKAGING CORP OF AMERICA (PKG) is a large-cap value stock in the Containers & Packaging industry. The rating according to our strategy based on James P. O'Shaughnessy changed from 50% 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: Packaging Corporation of America (PCA) is a producer of containerboard products and uncoated freesheet. The Company operates through three segments: Packaging, Paper, and Corporate and Other. The Packaging segment produces a range of corrugated packaging products. The Paper segment manufactures and sells a range of papers, including communication-based papers and pressure sensitive papers. The Company's containerboard mills produces linerboard and semi-chemical corrugating medium, which are papers primarily used in the production of corrugated products. The Company's corrugated products manufacturing plants produce a range of corrugated packaging products, including conventional shipping containers used to protect and transport manufactured goods, multi-color boxes and displays. The Company also produces packaging for meat, fresh fruit and vegetables, processed food, beverages, and other industrial and consumer products.
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
EARNINGS PER SHARE PERSISTENCE: PASS
PRICE/SALES RATIO: PASS
RELATIVE STRENGTH: 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 313.25% vs. 227.72% 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 of stock market data from 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 an investment research service 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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Copart Reaches Analyst Target Price
In recent trading, shares of Copart Inc (Symbol: CPRT) have crossed above the average analyst 12-month target price of $91.33, changing hands for $93.48/share. When a stock reaches the target an analyst has set, the analyst logically has two ways to react: downgrade on valuation, or, re-adjust their target price to a higher level. Analyst reaction may also depend on the fundamental business developments that may be responsible for driving the stock price higher — if things are looking up for the company, perhaps it is time for that target price to be raised.
There are 6 different analyst targets contributing to that average for Copart Inc, but the average is just that — a mathematical average. There are analysts with lower targets than the average, including one looking for a price of $79.00. And then on the other side of the spectrum one analyst has a target as high as $100.00. The standard deviation is $7.174.
But the whole reason to look at the average CPRT price target in the first place is to tap into a "wisdom of crowds" effort, putting together the contributions of all the individual minds who contributed to the ultimate number, as opposed to what just one particular expert believes. And so with CPRT crossing above that average target price of $91.33/share, investors in CPRT have been given a good signal to spend fresh time assessing the company and deciding for themselves: is $91.33 just one stop on the way to an even higher target, or has the valuation gotten stretched to the point where it is time to think about taking some chips off the table? Below is a table showing the current thinking of the analysts that cover Copart Inc:
RECENT CPRT ANALYST RATINGS BREAKDOWN
» Current 1 Month Ago 2 Month Ago 3 Month Ago
Strong buy ratings: 3 3 3 2
Buy ratings: 0 0 0 0
Hold ratings: 4 4 4 5
Sell ratings: 0 0 0 0
Strong sell ratings: 1 1 1 1
Average rating: 2.5 2.5 2.5 2.75
The average rating presented in the last row of the above table above is from 1 to 5 where 1 is Strong Buy and 5 is Strong Sell. This article used data provided by Zacks Investment Research via Quandl.com. Get the latest Zacks research report on CPRT — FREE.
The Top 25 Broker Analyst Picks 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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XLB, LIN, APD, ECL: ETF Outflow Alert
Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the The Materials Select Sector SPDR— Fund (Symbol: XLB) where we have detected an approximate $200.3 million dollar outflow -- that's a 5.2% decrease week over week (from 63,520,000 to 60,220,000). Among the largest underlying components of XLB, in trading today Linde plc (Symbol: LIN) is down about 1.7%, Air Products & Chemicals Inc (Symbol: APD) is off about 1.2%, and Ecolab Inc (Symbol: ECL) is relatively unchanged. For a complete list of holdings, visit the XLB Holdings page » The chart below shows the one year price performance of XLB, versus its 200 day moving average:
Looking at the chart above, XLB's low point in its 52 week range is $50.06 per share, with $61.94 as the 52 week high point — that compares with a last trade of $60.08. 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.
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Financial Sector Update for 01/03/2020: DPW,NMFC,HSBC,CS
Top Financial Stocks
JPM -0.93%
BAC -1.94%
WFC -0.64%
C -1.19%
USB -1.04%
Financial stocks extended their mid-day declines in afternoon trading, retesting some of their morning session lows, with the NYSE Financial Index sliding over 0.7% lower while the shares of financial companies in the S&P 500 also were sinking nearly 1.1%. The Philadelphia Housing Index was rising more than 0.1%.
Among financial stocks moving on news:
(-) DPW Holdings (DPW) dropped 34% after saying its DPW Financial subsidiary will acquire registered broker-dealer Glendale Securities and its correspondent clearing broker in exchange for around $15 million in preferred stock. DPW also said will provide a $9 million loan to DPW Financial as part of the transaction.
In other sector news:
(+) New Mountain Finance (NMFC) was nearly 1% higher after the specialty lender said it was extending its buyback until Dec. 31 or until the company exhausts the $50 million it previously authorized for share repurchases. New Mountain has repurchased about $2.9 million of its stock through the current program, it said.
(-) HSBC Holdings (HSBC) was down over 1.5% this afternoon. The financial services company Friday following reports it was suspending weekend and holiday ATM services in Hong Kong after the machines were targeted by protesters angered by the UK bank closing the account of the Spark Alliance, the crowd-sourced fund supporting pro-democracy activities in Hong Kong.
(-) Credit Suisse (CS) slipped 2% in Friday trade. The Swiss bank has authorized a new stock buyback program aiming to repurchase up to $1.54 billion of its shares during 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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Glacier Bancorp, Inc. (GBCI) Ex-Dividend Date Scheduled for January 06, 2020
Glacier Bancorp, Inc. (GBCI) will begin trading ex-dividend on January 06, 2020. A cash dividend payment of $0.2 per share is scheduled to be paid on January 16, 2020. Shareholders who purchased GBCI prior to the ex-dividend date are eligible for the cash dividend payment. This represents an -31.03% decrease from the prior dividend payment.
The previous trading day's last sale of GBCI was $45.83, representing a -1.46% decrease from the 52 week high of $46.51 and a 21.95% increase over the 52 week low of $37.58.
GBCI is a part of the Finance sector, which includes companies such as J P Morgan Chase & Co (JPM) and Bank of America Corporation (BAC). GBCI's current earnings per share, an indicator of a company's profitability, is $2.35. Zacks Investment Research reports GBCI's forecasted earnings growth in 2019 as 13.27%, compared to an industry average of 4.9%.
For more information on the declaration, record and payment dates, visit the GBCI Dividend History page. Our Dividend Calendar has the full list of stocks that have an ex-dividend today.
Interested in gaining exposure to GBCI through an Exchange Traded Fund [ETF]?
The following ETF(s) have GBCI as a top-10 holding:
Invesco S&P SmallCap Financials ETF (PSCF)
iShares S&P Small-Cap 600 Growth ETF (IJT)
SPDR S&P 600 Small Cap Growth ETF (based on S&P SmallCap 600 G (SLYG)
Vanguard S&P Small-Cap 600 Growth ETF (VIOG)
iShares Core S&P Small-Cap ETF (IJR).
The top-performing ETF of this group is IJR with an increase of 9.56% over the last 100 days. PSCF has the highest percent weighting of GBCI at 2%.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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These 3 High-Yield Dividend Stocks Are Among Credit Suisse’s Top Picks for 2020
Dividend stocks are always popular. They offer investors a clear path to quick returns, with regular cash payments and a yield – a return on the original investment – that usually far exceeds bond yields. But not all dividend stocks are created equal, and some offer better opportunities than others.
Dividend yield is a key metric. Among S&P listed companies the average yield is only 2%, but even that is higher than the Fed’s key rate of just 1.75%. However, the highest yields aren’t always the way to go. Investors should also consider share appreciation, upside potential, and past performance – these factors aren’t always connected to dividends, but they will affect the general returns available from a given stock.
International banking firm Credit Suisse has been starting off the new year with in-depth looks at various stock sectors. We will examine the firm’s favorite dividend stocks. These are the stocks that the firm sees bringing investors the best combination of returns, including dividend growth, in 2020.
Enterprise Products Partners (EPD)
We’ll start with an energy company. Enterprise Products inhabits the midstream sector of the oil and gas business, owning and operating almost 50,000 miles of natural gas and crude oil pipelines. Add in storage capacity for 14 billion cubic feet of gas and 160 million barrels of oil, along with import/export terminals on the Texas Gulf coast, and Enterprise stacks up as an important player in the oil boom.
2019 wasn’t kind to Enterprise. Low prices for oil, along with high expenses and slipping margins, hurt the company in the bottom line. Fourth quarter numbers are not available yet, but in Q3 EPD missed the forecasts for revenues and EPS. On the top line, revenues hit $7.94 billion, 3% below the estimates, while EPS missed by 5.7%, at 50 cents.
Through it all, EPD has maintained its dividend. The company as a long history of committing to sharing income with shareholders, and has kept up dividend payments for the last 20 years. The yield has varied over the years, but since Q3 2014, the payment has steadily risen. The current payment, 44.25 cents quarterly, annualizes to $1.77. The yield, at 6.29% is more than triple the average among S&P companies.
Writing on EPD for Credit Suisse, analyst Spiro Dounis says, “EPD is one of the best positioned companies in the industry... We expect to EPD to continue to take advantage of its scale and integrated system in order to offer competitive rates on new projects to continue to grow its market share… We see consistent FCF generation growing to >8% yield by 2023, which should allow for an increased focus on capital returns moving forward.” Dounis’ last point is the key, as those capital returns can include increased dividends.
Dounis gives the stock a Buy rating with a $34 price target, suggesting an upside of 21% from current levels. (To watch Dounis’ track record, click here)
Like Dounis, Wall Street is picking EPD as a long-term winner. With 6 Buy ratings assigned over the last three months, the stock earns a ‘Strong Buy’ analyst consensus. Adding to the good news, its $34.83 average price target puts the upside potential at 23%. (See Enterprise Products’ stock analysis at TipRanks)
Ford Motor Company (F)
Dearborn, Michigan’s Ford Motor is the smallest of the Big Three American automakers. The company is famous for being the first to introduce assembly line techniques into modern factory manufacturing over a century ago. Ford has found continued success in its popular, long-running F-series of pickup trucks and their derivatives.
In 2018, Ford saw both a production decline and a gain in top-line revenues, with sales totaling over $160 billion that year. In Q3 2019, the most recent for which data is available, the company beat the earnings forecast while just missing on revenues. The quarterly results, the first reported after the company’s bonds were reduced to junk status by Moody’s, showed 34 cents EPS, 8 cents better than expected, and total auto revenues of $33.93 billion, within one percent of the forecast. The company is in the midst of a major restructuring program, spending over $11 billion on factory modernization, new vehicle design, and a major manufacturing push toward electric vehicles.
The company is not forgetting its shareholders and investors, even if the business climate is difficult. Ford has paid out its regular dividend, at 15 cents per quarter, for the last five years – and has interspersed those payments with occasional special dividend payments. Despite small sum of the payment, F’s low share price makes the yield high – an impressive 6.37%. The reliability with which the company has maintained that dividend makes Ford a true dividend champ.
Credit Suisse’s Dan Levy is optimistic about Ford’s recovery plan and future prospects. He writes, “We see upside to earnings improvement / positive earnings revisions ahead, as the healthy parts of the business remain strong (i.e., North America trucks, Ford Credit), while the underperforming businesses see some recovery (i.e. Europe and China)… Ford has ample opportunities to drive profit recovery / earnings improvement – making it one of the few positive EPS revisions stories in the autos sector.”
Levy’s Buy rating is backed by a price target of $11, and an upside of 17%. (To watch Levy’s track record, click here)
Despite the company’s strong turnaround prospects and clear upside potential, F shares have a Hold rating from the analyst consensus. The stock has received 8 analyst reviews in recent months, including 2 Buys, 4 Holds, and 2 Sells. Ford shares sell for a bargain, just $9.42, but the $10.40 average price target indicates an upside of 11.47%. (See Ford’s stock analysis at TipRanks)
International Business Machines (IBM)
IBM is a blue-chip standard of the Dow Jones, producing the office equipment that everyone needs. It’s Selectric typewriters long dominated the electric typewriter market. The company has been at the forefront of computing technology since the days of punch-card computers, and IBM’s PCs helped to set the standard for desktop computing. IBM acquired Red Hat last year, in a move that sets it up to enter the cloud computing market. The company sees annual sales revenue in the neighborhood of $80 billion, and has a market cap of $119 billion. In short, IBM is a force to be reckoned with in business tech.
Maintaining a position at the top comes with a high price tag, however. The Red Hat acquisition cost IBM $34 billion, and resulted in bookkeeping losses that pushed Q3 – the most recent reported – down, with revenues of $18.03 billion just below the $18.22 estimate. There was good news in the quarter, though: EPS, at $2.68 was in line with expectations, and the new Red Hat subsidiary saw a 20% gain in revenues.
Like Ford, IBM has kept up a commitment to its dividend during hard times. At $1.62 quarterly, the payment annualizes to $6.48. The company has been raising the dividend steadily since 2011, has maintained payments for almost 20 years. The yield, at 4.79% is more than 2 and half times higher than average on the S&P 500.
Matthew Cabral, a 4-star analyst with Credit Suisse, sees IBM as a company is the process of shifting gears, implementing a new strategy to cope with a changing business tech environment. He writes, “The Red Hat acquisition marks a fundamental shift in strategy for IBM, bringing meaningful financial opportunity as they look to drive hybrid cloud adoption across enterprises… Execution on their hybrid cloud vision will be key to shifting the narrative of IBM, with both opportunity to accelerate the acquired business and the pull-through of ‘core’ IBM.”
Cabral puts a $173 price target on IBM, along with a Buy rating. His target implies an upside of 28% from yesterday's closing price. (To watch Cabral’s track record, click here)
Overall, IBM has a Moderate Buy rating from the analyst consensus, with 5 Buys and 4 Holds set in recent weeks. The stock also has the highest upside potential of the shares in this list – the current trading price is $135 and the average price target of $163.71 indicates 22% growth potential to the upside. (See IBM stock analysis at TipRanks)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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These 3 Energy Stocks Pay Big Dividends
The energy industry is decidedly out of favor today, even though the world still needs the oil and natural gas that it creates. That presents an opportunity for investors with a contrarian bent. But buying any old energy stock isn't the way to go -- you want to own financially strong names that can handle a little near-term adversity. Here are three companies with big dividend yields that should muddle through this rough patch with relative ease.
1. The energy giant
With a yield of roughly 5%, international energy major ExxonMobil (NYSE: XOM) is one of the largest and most diversified oil and gas companies in the world. Operations that span from the drill bit (upstream) to the gas pump (downstream) help provide some stability to the company's results over time, since low oil prices result in reduced costs for the company's refining and chemicals operations. Having assets spread across the globe, meanwhile, allows the company to tap into economic growth around the world.
Image source: Getty Images
Exxon, however, isn't the only company that can claim these traits. What helps set Exxon apart from many of its peers is its conservative approach. One of the best examples of this is the oil giant's rock-solid balance sheet. Financial debt to equity stands at just about 0.15 times, which is well below the levels of most of the energy majors (Chevron, at about the same level, is the only competitor that's in the same ballpark, leverage-wise). In fact, that figure is low for any industry. Management's conservative approach is one of the reasons why Exxon has been able to increase its dividend every year for 36 years and counting -- a record that no peer can match.
To be fair, Exxon is spending a lot of money right now on drilling for new oil, and that's likely to mean more debt over the near term. But management believes it has an incredibly strong set of investment opportunities right now, and early progress on its capital investment plans has been good. If you can think long-term with a company that thinks long-term, then Exxon could be a great high-yield addition to your portfolio today.
2. Moving it all around
Despite all of its diversification, Exxon's top- and bottom-lines will always be highly dependent on energy prices. That might turn more conservative types off. That's where 6.2%-yielding Enterprise Products Partners (NYSE: EPD) comes in. This master limited partnership operates in the midstream space, helping to move energy products from where they are drilled to where they get used. The key, however, is that roughly 85% of its gross operating margin is fee-based, meaning that it gets paid for the use of its assets. The prices of the products passing through its system of pipes, storage, transportation, and processing facilities isn't all that important -- demand for energy is the key factor to watch, and that remains fairly strong.
Meanwhile, Enterprise is one of the most conservative names in the midstream space. The partnership's debt to EBITDA ratio is around 3.4 times, near the low end of its peer group. Enterprise also covered its distribution by a massive 1.7 times through the first nine months of 2019. For reference, 1.2 times is considered strong coverage. Put simply, Enterprise is a rock-solid partnership, which helps explain how it has managed to increase its distribution annually for 22 consecutive years.
Looking to the future, Enterprise is currently spending around $9 billion on capital projects. This is a lot of money, but hardly unusual. Enterprise has successfully spent nearly $70 billion building its business (via acquisitions and construction projects) since its IPO in 1998. There's no reason to doubt that it will continue to execute well at this point. And as it expands its portfolio of revenue-generating assets, it expands its ability to pay distributions. Enterprise is a strong option for conservative income investors.
3. Surviving the ups and downs
The last name here, Helmerich & Payne (NYSE: HP), is for investors that can handle uncertainty. The company builds, leases, and operates drilling rigs for companies like Exxon. Demand for drilling service providers tends to go up and down with energy prices, since low oil prices often lead drillers to pull back on spending. That, in turn, reduces demand for the services Helmerich & Payne provides. Right now demand is weak and investors are concerned that Helmerich & Payne's dividend won't hold up, which is why it yields a hefty 6.3% today.
That said, the company has increased its dividend annually for an incredible 46 years and counting. There have been a lot of oil bull and bear markets over that span, and the dividend has survived them all. A big piece of that is, as should come as no surprise by now, a solid financial foundation. Helmerich & Payne's financial debt to equity ratio is just about 0.10 times -- low for any company in any industry. The company's closest peer on this metric, meanwhile, comes in at around 0.5 times.
HP Financial Debt to Equity (Quarterly) data by YCharts
As for the safety of the dividend, some investors will likely complain that earnings aren't covering the dividend today. That's true -- the company's payout ratio is terrible. But dividends don't come from earnings, they come from cash flow, and the cash dividend payout ratio (which looks at dividends in relation to free cash flow) is roughly 80%, which is pretty normal for Helmerich & Payne. Yes, times are tough right now, but this financially strong drilling service provider has the financial strength to muddle through.
Meanwhile, it has one of the most advanced drilling fleets in the U.S. onshore market. This fact has allowed Helmerich & Payne to gain over five percentage points of market share since late 2014 (when oil prices were much higher) despite relatively weak energy prices. Although income investors will need to be able to stomach the ups and downs of the oil market here, Helmerich & Payne appears built to survive and thrive in any environment.
Big yields, various risk profiles
The one theme that holds for Exxon, Enterprise, and Helmerich & Payne is that each has a strong financial foundation. Those foundations are what underpin the income that each throws off to investors. All three should be able to survive the current weak energy market and come out the other side stronger competitors.
That said, Enterprise's fee-based business model should be the most attractive to conservative investors. Exxon's large and diversified business would be appropriate for investors willing to take on moderate risk in search of yield. And Helmerich & Payne is most appropriate for investors with strong constitutions, noting that its price would likely advance rapidly should oil prices (and demand for its services) rebound.
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These 2 Stocks Will Fall After the New Year
For all of the hype surrounding gene therapy and gene editing, the precision genetic medicine approach that turned in the best 2019 may have been RNA interference (RNAi). The gene-silencing technique earned its first regulatory approval for a novel targeted delivery method. That may not sound like much to get excited about, but it promises to open up numerous high-value opportunities for RNAi drug developers.
The approval, coupled with promising early-stage clinical results and massive partnership deals, explains why Arrowhead Pharmaceuticals (NASDAQ: ARWR) and Dicerna Pharmaceuticals (NASDAQ: DRNA) erupted higher in 2019. The RNAi drug developers saw their market valuations increase by 450% and 106%, respectively, last year.
While both companies have promise, the pharma stocks are likely to fall in early 2020. What does that mean for investors with a long-term mindset?
Image source: Getty Images.
A year to remember, but investors can't forget about valuations
Shares of Arrowhead Pharmaceuticals had a pretty good first nine months of 2019, but the most impressive gains came in the fourth quarter. The RNAi stock gained heading into the American Association for the Study of Liver Diseases (AASLD) Annual Meeting in November. Investors were eagerly awaiting the results of two drug combinations being developed to treat chronic hepatitis B (CHB) by Johnson & Johnson (NYSE: JNJ) subsidiary Janssen.
The results lived up to the hype. The most impressive data came from a triple combination of an RNAi drug from Arrowhead Pharmaceuticals (now called JNJ-3989), an antiviral drug from Johnson & Johnson (JNJ-6379), and a nucleos(t)ide analog (NA). After 16 weeks of treatment, all 12 individuals in the study achieved at least a 90% reduction in two biomarkers of hepatitis B virus activity.
Investors gobbled up shares of Arrowhead Pharmaceuticals because the triple combination appears to be the industry's best hope for developing the first functional cure for CHB (although it can't be called a functional cure just yet).
Additionally, the RNAi drug candidate in the triple combination is based on a targeted delivery platform called TRiM. The approach is simple: The gene-silencing payload is attached to a special sugar that's absorbed by the liver. Since many RNAi drug candidates need to interact with DNA in liver cells, and the sugars are easily metabolized by the liver (improving safety over prior-generation lipid nanoparticle delivery vehicles), it's a perfect pairing.
It helps that just a few weeks after AASLD, Givlaari from Alnylam Pharmaceuticals (NASDAQ: ALNY) became the first RNAi drug candidate based on a conjugated-sugar delivery method to earn regulatory approval. It also helps that Dicerna Pharmaceuticals landed two massive partnerships in the fourth quarter of 2019 -- both based on its own conjugated-sugar delivery platform. Following those deals, there's now considerable overlap between the pipelines of Arrowhead Pharmaceuticals and Dicerna Pharmaceuticals, which are both all-in on targeted delivery.
RNAI DEVELOPER
PARTNER, INDICATION
FINANCIAL TERMS
Arrowhead Pharmaceuticals
Johnson & Johnson, hepatitis B
$175 million up front, $75 million equity investment, up to $1.6 billion in milestone payments, royalties
Arrowhead Pharmaceuticals
Johnson & Johnson, undisclosed
Up to $1.9 billion in total milestone payments for up to three additional drug candidates, royalties
Arrowhead Pharmaceuticals
Amgen, cardiovascular disease
$35 million up front, $21.5 million equity investment, up to $617 million in milestone payments, royalties
Dicerna Pharmaceuticals
Roche, hepatitis B
$200 million up front, up to $1.47 billion in milestone payments, royalties
Dicerna Pharmaceuticals
Novo Nordisk, various liver-related cardio-metabolic diseases
$175 million up front, equity investment of $50 million, an additional $75 million over the first three years, up to $357.5 million per drug candidate, royalties
Data source: Press releases, filings with the Securities and Exchange Commission.
Despite all of the progress from both Arrowhead Pharmaceuticals and Dicerna Pharmaceuticals in 2019, both companies are likely to fall back to Earth a bit following giant run-ups.
Consider that Arrowhead Pharmaceuticals is valued at $6.3 billion at the start of 2020. The company's most advanced drug candidate, ARO-AAT, recently began dosing patients in a phase 2/3 trial in a rare genetic liver disease associated with alpha-1 antitrypsin (AAT or A1AT) deficiency. While that study can be used for a new drug application (NDA), and the drug candidate could achieve over $1 billion in peak annual sales, that alone doesn't support a $6.3 billion valuation.
Meanwhile, the triple combination in CHB could support a market valuation well above $6 billion, especially if it proves to be a functional cure. The drug candidate could eventually earn peak annual sales of over $10 billion in that scenario. But the recent gains were spurred by results in only 12 individuals after 16 weeks of follow-up. A phase 2b trial now underway will enroll 450 patients and follow them for two years. In other words, there's plenty of time for investors to take some gains off the table.
Dicerna Pharmaceuticals is valued a little more reasonably, at just $1.5 billion, but it has only one drug candidate in mid- or late-stage clinical trials. The pipeline programs at the center of recent deals with Roche and Novo Nordisk are still in preclinical development or phase 1 studies; there's little to no clinical data from the programs for investors to survey. While the business will be flush with cash after receiving up-front payments in the coming months, there's a lot of work to be done.
Promising long-term stocks, but a little overpriced now
To be clear, both Arrowhead Pharmaceuticals and Dicerna Pharmaceuticals hold a lot of promise. Targeted delivery of RNAi drug payloads into the liver could open up considerable opportunities to treat -- for the first time, in some cases -- rare diseases, viral infections, and cardiovascular ailments. Both companies have even demonstrated early work to target gene-silencing payloads to other cell types, such as muscle tissues, which may open up additional avenues for drug discovery and development.
However, these two RNAi stocks have fallen 10.7% and 12.3%, respectively, since Dec. 3 -- and both are likely to fall a bit further in early 2020. If and when that occurs, investors may want to give each stock, especially Arrowhead Pharmaceuticals, a closer look.
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Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alnylam Pharmaceuticals. The Motley Fool recommends Amgen, Johnson & Johnson, and Novo Nordisk. The Motley Fool has a disclosure policy.
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National Beverage (FIZZ) Shares Cross Below 200 DMA
In trading on Friday, shares of National Beverage Corp. (Symbol: FIZZ) crossed below their 200 day moving average of $47.93, changing hands as low as $47.85 per share. National Beverage Corp. shares are currently trading off about 1.2% on the day. The chart below shows the one year performance of FIZZ shares, versus its 200 day moving average:
Looking at the chart above, FIZZ's low point in its 52 week range is $38.28 per share, with $84.77 as the 52 week high point — that compares with a last trade of $47.96.
Click here to find out which 9 other stocks recently crossed below their 200 day moving average »
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6 Reasons JD.com's Stock Will Hit New Highs in 2020
JD.com (NASDAQ: JD), the largest direct retailer in China, lost half its market value in 2018 amid concerns about its decelerating growth and rising expenses, along with a rape allegation against founder and CEO Richard Liu.
However, the stock rebounded nearly 70% in 2019 as its revenue growth accelerated again, its profits stabilized, and the charges against Liu were dropped. Looking ahead, I believe JD.com's stock could still surge to new highs in 2020 for six simple reasons.
Image source: JD.com.
1. A de-escalation of the trade war
The trade war between the U.S. and China weighed down many Chinese stocks over the past two years. Chinese companies buckled under the pressure as the growth of China's economy decelerated to its slowest pace in nearly three decades.
Yet JD's e-commerce business recently weathered those headwinds with two consecutive quarters of accelerating revenue growth. Moreover, the upcoming "phase one" trade deal between the U.S. and China could further amplify that growth by easing the pressure on the Chinese economy.
2. Its expansion into lower-tier cities
JD's number of annual active customers grew nearly 10% year-over-year to 334.4 million last quarter, marking its strongest growth in four quarters. 70% of those new customers came from China's lower-tier cities. JD's new discount marketplace, Jingxi, also posted robust growth when it launched near the end of the quarter.
JD's expansion into lower-tier cities is offsetting its slower growth in top-tier cities like Beijing and Shanghai. It also contains the growth of Pinduoduo (NASDAQ: PDD), its rapidly growing discount rival, which surpassed JD in total shoppers (but not revenue) last year.
3. The stabilization and possible spin-off of JD Logistics
JD stores its own inventories across a massive network of over 650 warehouses, and fulfills orders via seven fulfillment centers and front distribution centers in 29 cities. That platform can fulfill approximately 90% of JD's orders across China within 24 hours.
That logistics unit was a constant weight on its bottom line in previous years, but its losses narrowed last year thanks to its scale, tighter cost controls, and its decision to offer the service to third-party customers. The network is also increasingly automated, with warehouse robots, autonomous delivery vehicles, and drones.
JD Logistics will likely continue to stabilize throughout 2020, and a recent Reuters report suggests that JD could even spin off the unit in an IPO in the second half of the year to boost its cash flows and improve its operating margin.
Image source: JD.com.
4. A lower key person risk
Richard Liu's arrest in 2018 highlighted a serious flaw in JD's management model. Liu holds an 80% voting stake in the company, and an unusual clause stated that the board couldn't make any decisions without Liu's physical presence -- which effectively paralyzed the company during his brief incarceration.
Liu still holds a super-voting stake in JD, but he gradually withdrew from its operations throughout 2019. In May, Liu resigned as the manager of the Jade Palace Hotel in Beijing, which JD acquired for $400 million in February. In July, he resigned as a legal representative for a subsidiary that holds a stake in JD Digital.
In November, Liu resigned as the manager of two of JD's new cloud computing units. Throughout December, he relinquished his top roles at four of JD's healthcare subsidiaries. If Liu continues to step away from the company and lays out a clearer succession plan in 2020, it could reduce the oft-cited "key person risk" to JD's stock and attract new investors.
5. Support from its biggest investors
JD's biggest investors include Tencent (OTC: TCEHY), Walmart (NYSE: WMT), and Alphabet's (NASDAQ: GOOGL) (NASDAQ: GOOGL) Google.
Tencent will continue to integrate JD's marketplace into WeChat, the most popular messaging app in China, via its in-app mini programs. Walmart, which owns a grocery delivery joint venture with JD, will continue expanding its distribution network. Google will help JD expand overseas by integrating its marketplace with Google Shopping in the U.S. and Europe, and it plans to aid its expansion into Southeast Asia.
Assistance from those tech and retail giants, which all view Alibaba (NYSE: BABA) as a common enemy, could significantly strengthen JD's core business this year.
6. An attractive valuation
JD's troubles in 2018 caused many investors to shun the stock. The stock recovered in 2019, but it still trades at less than one times next year's sales and just 25 times forward earnings -- which are low valuations compared to analysts' forecasts for 19% revenue growth and 38% earnings growth next year.
JD's attractive valuation, along with its other aforementioned tailwinds, indicate that this underappreciated stock could surge to fresh highs in 2020.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Leo Sun owns shares of JD.com and Tencent Holdings. The Motley Fool owns shares of and recommends Alphabet (A shares), JD.com, and Tencent 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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Kratos Defense & Security Solutions (KTOS) Shares Cross Above 200 DMA
In trading on Friday, shares of Kratos Defense & Security Solutions, Inc. (Symbol: KTOS) crossed above their 200 day moving average of $19.31, changing hands as high as $19.93 per share. Kratos Defense & Security Solutions, Inc. shares are currently trading up about 7.8% on the day. The chart below shows the one year performance of KTOS shares, versus its 200 day moving average:
Looking at the chart above, KTOS's low point in its 52 week range is $13.14 per share, with $25.08 as the 52 week high point — that compares with a last trade of $19.87.
Click here to find out which 9 other stocks recently crossed above their 200 day moving average »
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Health Care Sector Update for 01/03/2020: DBVT, CANF
Top Health Care Stocks:
JNJ: -0.82%
PFE: -0.43%
ABT: -1.09%
MRK: -0.65%
AMGN: Flat
Most leading stocks in the health care industry were retreating before markets open on Friday.
Stocks moving on news include:
(+) DBV Technologies S.A (DBVT), up more than 1% after the investigational proprietary technology platform said aftermarket Thursday that it appointed Ramzi Benamar as its chief financial officer, starting Monday.
(-) Can-Fite Biopharma Ltd (CANF), a biotechnology company, rose 23% pre-bell after reporting that pre-clinical data from a phase 2 trial of Namodenoson demonstrate that the drug candidate induces weight loss in experimental models and normalizes glucose levels.
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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Notable Friday Option Activity: KTOS, UAL, FSCT
Among the underlying components of the Russell 3000 index, we saw noteworthy options trading volume today in Kratos Defense & Security Solutions, Inc. (Symbol: KTOS), where a total of 10,152 contracts have traded so far, representing approximately 1.0 million underlying shares. That amounts to about 125.7% of KTOS's average daily trading volume over the past month of 807,390 shares. Especially high volume was seen for the $22.50 strike call option expiring January 17, 2020, with 2,737 contracts trading so far today, representing approximately 273,700 underlying shares of KTOS. Below is a chart showing KTOS's trailing twelve month trading history, with the $22.50 strike highlighted in orange:
United Airlines Holdings Inc (Symbol: UAL) options are showing a volume of 23,914 contracts thus far today. That number of contracts represents approximately 2.4 million underlying shares, working out to a sizeable 119.2% of UAL's average daily trading volume over the past month, of 2.0 million shares. Particularly high volume was seen for the $100 strike call option expiring January 17, 2020, with 1,765 contracts trading so far today, representing approximately 176,500 underlying shares of UAL. Below is a chart showing UAL's trailing twelve month trading history, with the $100 strike highlighted in orange:
And ForeScout Technologies Inc (Symbol: FSCT) saw options trading volume of 5,028 contracts, representing approximately 502,800 underlying shares or approximately 112.7% of FSCT's average daily trading volume over the past month, of 446,205 shares. Especially high volume was seen for the $40 strike call option expiring February 21, 2020, with 2,389 contracts trading so far today, representing approximately 238,900 underlying shares of FSCT. Below is a chart showing FSCT's trailing twelve month trading history, with the $40 strike highlighted in orange:
For the various different available expirations for KTOS options, UAL options, or FSCT options, visit StockOptionsChannel.com.
Today's Most Active Call & Put Options of the S&P 500 »
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Interesting FIVN Put And Call Options For February 21st
Investors in Five9, Inc (Symbol: FIVN) saw new options become available this week, for the February 21st expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the FIVN options chain for the new February 21st contracts and identified one put and one call contract of particular interest.
The put contract at the $60.00 strike price has a current bid of $1.65. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $60.00, but will also collect the premium, putting the cost basis of the shares at $58.35 (before broker commissions). To an investor already interested in purchasing shares of FIVN, that could represent an attractive alternative to paying $66.66/share today.
Because the $60.00 strike represents an approximate 10% 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 78%. 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 2.75% return on the cash commitment, or 20.48% annualized — at Stock Options Channel we call this the YieldBoost.
Below is a chart showing the trailing twelve month trading history for Five9, Inc, and highlighting in green where the $60.00 strike is located relative to that history:
Turning to the calls side of the option chain, the call contract at the $70.00 strike price has a current bid of $2.85. If an investor was to purchase shares of FIVN stock at the current price level of $66.66/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $70.00. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 9.29% if the stock gets called away at the February 21st expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if FIVN shares really soar, which is why looking at the trailing twelve month trading history for Five9, Inc, as well as studying the business fundamentals becomes important. Below is a chart showing FIVN's trailing twelve month trading history, with the $70.00 strike highlighted in red:
Considering the fact that the $70.00 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 59%. 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 4.28% boost of extra return to the investor, or 31.85% annualized, which we refer to as the YieldBoost.
The implied volatility in the put contract example is 48%, while the implied volatility in the call contract example is 45%.
Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 252 trading day closing values as well as today's price of $66.66) 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 »
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Interesting EFA Put And Call Options For June 2021
Investors in iShares Trust - iShares MSCI EAFE ETF (Symbol: EFA) saw new options become available today, for the June 2021 expiration. One of the key inputs that goes into the price an option buyer is willing to pay, is the time value, so with 532 days until expiration the newly available contracts represent a potential opportunity for sellers of puts or calls to achieve a higher premium than would be available for the contracts with a closer expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the EFA options chain for the new June 2021 contracts and identified one put and one call contract of particular interest.
The put contract at the $59.00 strike price has a current bid of 79 cents. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $59.00, but will also collect the premium, putting the cost basis of the shares at $58.21 (before broker commissions). To an investor already interested in purchasing shares of EFA, that could represent an attractive alternative to paying $69.42/share today.
Because the $59.00 strike represents an approximate 15% 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 87%. 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 1.34% return on the cash commitment, or 0.92% annualized — at Stock Options Channel we call this the YieldBoost.
Below is a chart showing the trailing twelve month trading history for iShares Trust - iShares MSCI EAFE ETF, and highlighting in green where the $59.00 strike is located relative to that history:
Turning to the calls side of the option chain, the call contract at the $79.00 strike price has a current bid of 13 cents. If an investor was to purchase shares of EFA stock at the current price level of $69.42/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $79.00. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 13.99% if the stock gets called away at the June 2021 expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if EFA shares really soar, which is why looking at the trailing twelve month trading history for iShares Trust - iShares MSCI EAFE ETF, as well as studying the business fundamentals becomes important. Below is a chart showing EFA's trailing twelve month trading history, with the $79.00 strike highlighted in red:
Considering the fact that the $79.00 strike represents an approximate 14% 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 85%. 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 0.19% boost of extra return to the investor, or 0.13% annualized, which we refer to as the YieldBoost.
The implied volatility in the put contract example is 24%, while the implied volatility in the call contract example is 13%.
Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 252 trading day closing values as well as today's price of $69.42) to be 11%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.
Top YieldBoost Calls of the S&P 500 »
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Friday Sector Leaders: Defense, Oil & Gas Exploration & Production Stocks
In trading on Friday, defense shares were relative leaders, up on the day by about 3.3%. Leading the group were shares of Kratos Defense & Security Solutions (KTOS), up about 9.4% and shares of Northrop Grumman Corporation (NOC) up about 4.9% on the day.
Also showing relative strength are oil & gas exploration & production shares, up on the day by about 2.1% as a group, led by Pacific Drilling (PACD), trading higher by about 18.9% and Abraxas Petroleum Corporation (AXAS), trading up by about 8.2% on Friday.
VIDEO: Friday Sector Leaders: Defense, Oil & Gas Exploration & Production Stocks
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3 Top Small-Cap Stocks to Buy for 2020
As the calendar changes to a new year, it's once again time for investors to scour the stock market for intriguing bargains. For a lot of investors, large-cap stocks (those with a market cap of at least $10 billion) will be preferred due to the time-tested nature of their business models. But for investors seeking game-changing returns, the small-cap arena is where you'll want to look.
Small-cap stocks (those with market caps under $2 billion) tend to be considerably more volatile than large-cap companies, and their business models may, as of yet, be untested. In other words, they can be a far riskier investment than buying into a large, branded business. But because so many small-cap stocks have yet to be discovered by the masses, the potential for big gains is very much there.
In 2020, I've pinpointed the following three small-cap stocks as being particularly attractive.
Image source: Getty Images.
Innovative Industrial Properties
Despite marijuana stocks being an absolute train wreck in 2019, cannabis-focused real estate investment trust Innovative Industrial Properties (NYSE: IIPR) was a completely different breed of pot stock. That's because its business model of acquiring marijuana growing and processing facilities looks to be completely unaffected by a persistent black market and high tax rates in select U.S. states.
Innovative Industrial Properties began 2019 owning only 11 properties. It ended the year with a portfolio of 46 assets spread across 14 states. It's been especially easy for IIP to broaden its portfolio given that the U.S. is the most lucrative cannabis market in the world and access to financing remains scarce for U.S. multistate operators (MSO).
With marijuana remaining an illicit substance at the federal level, most MSOs have limited or no access to non-dilutive forms of financing. This paves the way for IIP, through sale-leaseback agreements, to purchase properties and then lease them back to the original owner for a long period of time (10 to 20 years). With the U.S. federal government highly unlikely to budge on marijuana's Schedule I classification in 2020, IIP's competitive advantage will remain in full force.
Also, unlike nearly all pot stocks, Innovative Industrial Properties is rolling in the green. IIP has been profitable for some time now and has a lower forward price-to-earnings ratio than the broad-based S&P 500. Additionally, with an average yield on its $489.3 million in invested capital of 13.6%, IIP should have a complete payback in just over five years.
IIP looks to be an extremely smart way to play the cannabis craze in 2020, and you'll receive a 5.4% yield to boot.
Image source: Lovesac.
Lovesac
Next, I'd encourage investors to take off their shoes and give home furnishing provider Lovesac (NASDAQ: LOVE) a closer look.
Unlike IIP and the next company on this list, Lovesac isn't profitable, but that's not scaring me away. Rather, I see multiple positives here that should drive Lovesac to profitability by 2021 or 2022.
For one, most of Lovesac's share price weakness last year was the result of the ongoing trade war between the U.S. and China. Tariffs wound up adding 25% to the cost of some core furniture products, leading the company to make supply chain changes and raise its prices. Since 2019 began, Lovesac has continued to transition its sourcing away from China and toward Vietnam, which should lead to a more stable cost environment in 2020.
Beyond just shifting production to Vietnam, I think it's worth noting how price hikes didn't adversely impact the company's business model last year. Net sales for 2019 are expected to have grown between 40% and 42%, with strong attachment rates for new products (i.e., consumers buying sets or matching accessories) and average order value continuing to climb. It's evident that Lovesac's products are resonating with consumers, and its growing retail presence, especially online, should help further drive top line growth.
Despite losing money, Lovesac still anticipates positive adjusted EBITDA for full-year 2019 and is valued at less than 1 times Wall Street's projected sales for 2020 (which assumes 40% sales growth). Just because it's not profitable yet doesn't mean it's not a value stock. Among the three small-cap stocks on this list, it's the one I've recently added to my own portfolio.
Image source: Getty Images.
CalAmp
Finally, I'd encourage investors to shrug off CalAmp's (NASDAQ: CAMP) less-than-appealing third-quarter results and focus on the progress that's been made for this maturing Internet of Things (IoT) company.
Similar to Lovesac, CalAmp's telematics business segment was plagued throughout 2019 by its ties to China. Importing from China had long been a cost-saving move, but tariffs wound up tacking on added expenses in 2019 that were difficult to absorb. The good news, though, is that CalAmp has reduced its reliance on China for telematics product imports from between 70% and 80% down to around 50%. This ongoing shift should lead to a lot more cost certainty in the current year.
But what's really exciting for CalAmp is just how quickly its software-as-a-service (SaaS) business is growing. Subscription-based business revenue skyrocketed 67% from the prior-year period in the third quarter, and accounted for 35% of total sales. Subscription revenue is highly predictable and resistant to recessionary declines, meaning CalAmp has been boosting its net sales floor with each passing quarter.
This is also a company that's very profitable, despite not having lived up to some very lofty expectations for IoT growth. CalAmp is valued at just 13 times forward-year earnings, less than 1 times 2020's consensus sales, and offers a price-earnings-to-growth ratio (PEG ratio) of 1.4, signifying room to run. As the company's businesses mature, we're liable to see mid-to-high single-digit growth from telematics, all while SaaS pushes toward 40% of total quarterly revenue.
CalAmp's recent "disappointments" have made it quite the bargain, and investors would be wise to scoop this top small-cap stock up in 2020.
10 stocks we like better than CalAmp
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Sean Williams owns shares of The Lovesac Company. The Motley Fool recommends CalAmp and 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.
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First Week of February 21st Options Trading For Ares Management (ARES)
Investors in Ares Management Corp (Symbol: ARES) saw new options begin trading this week, for the February 21st expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the ARES options chain for the new February 21st contracts and identified the following put contract of particular interest.
The put contract at the $35.00 strike price has a current bid of $1.00. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $35.00, but will also collect the premium, putting the cost basis of the shares at $34.00 (before broker commissions). To an investor already interested in purchasing shares of ARES, that could represent an attractive alternative to paying $35.18/share today.
Because the $35.00 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 54%. 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 2.86% return on the cash commitment, or 21.28% annualized — at Stock Options Channel we call this the YieldBoost.
Below is a chart showing the trailing twelve month trading history for Ares Management Corp, and highlighting in green where the $35.00 strike is located relative to that history:
The implied volatility in the put contract example above is 35%.
Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 252 trading day closing values as well as today's price of $35.18) to be 27%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.
Top YieldBoost Puts of the S&P 500 »
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SPHQ, FTXG: Big ETF Outflows
Looking at units outstanding versus one week prior within the universe of ETFs covered at ETF Channel, the biggest outflow was seen in the Invesco S&P 500— Quality ETF (SPHQ), where 8,800,000 units were destroyed, or a 14.9% decrease week over week. Among the largest underlying components of SPHQ, in morning trading today Apple (AAPL) is off about 0.3%, and Visa (V) is lower by about 0.6%.
And on a percentage change basis, the ETF with the biggest outflow was the First Trust Nasdaq Food & Beverage ETF (FTXG), which lost 100,000 of its units, representing a 33.3% decline in outstanding units compared to the week prior. Among the largest underlying components of FTXG, in morning trading today Intelsat (I) is off about 1.5%, and Archer-Daniels-Midland Company (ADM) is lower by about 0.2%.
VIDEO: SPHQ, FTXG: Big ETF Outflows
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Notable ETF Inflow Detected - SPLG, V, PG, NFLX
Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the SPDR— Portfolio Large Cap ETF (Symbol: SPLG) where we have detected an approximate $101.1 million dollar inflow -- that's a 3.0% increase week over week in outstanding units (from 87,450,000 to 90,100,000). Among the largest underlying components of SPLG, in trading today Visa Inc (Symbol: V) is down about 0.6%, Procter & Gamble Company (Symbol: PG) is trading flat, and Netflix Inc (Symbol: NFLX) is lower by about 0.3%. For a complete list of holdings, visit the SPLG Holdings page » The chart below shows the one year price performance of SPLG, versus its 200 day moving average:
Looking at the chart above, SPLG's low point in its 52 week range is $28.88 per share, with $38.14 as the 52 week high point — that compares with a last trade of $37.92. 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.
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Global Markets Fall, Mideast Tensions Flare, Oil Prices Spike 4%
FXEmpire.com -
The U.S. Futures Fall In Early Trading
The U.S. index futures are indicating a lower open in early Friday trading. The move was sparked by an airstrike by U.S. forces that killed top Iranian general Soleimani. Soleimani, the head of Iran’s elite forces, was killed in a retaliatory strike while in Baghdad. Oil prices spiked on the news, rising more than 4%, and will likely move higher before this situation is played out. The NASDAQ Composite led the decline with a loss of -1.32% while the S&P 500 and Dow Jones Industrial Average fell about -1.05%.
The VIX, a measure of volatility and fear in the market, jumped nearly 25% on the news. The jump in volatility points to a possible correction in equities that could spell the end to the 2019/2020 stock market rally. Airline stocks were among the hardest hit, down -2.0% on rising oil prices, while safe-haven assets like gold and U.S. treasuries moved higher. Instock news there were no major earnings reports this morning. On the economic front, key reads on manufacturing and construction spending are due out at 10 AM.
Europe Falls, Mideast Tensions Threaten Market Stability
European markets are down at midday on Friday following the killing of Soleiman. The German DAX led the decline with a loss of -1.70% while markets in England and France posted much smaller losses. Travel & Leisure were among the hardest hit with average losses of -1.7%, airlines Lufthansa and AirFrance both shed about -7.0%.
All sectors are moving lower at midday save the energy sector. Tullow Oil is the top gainer with an advance of 3.0%. The move in Tullow is a strong one but should be taken with a grain of salt, Tullow is under intense downward pressure following poor test results at a key development project.
Asian Markets Are Mixed At The End Of Friday’s Session
Indices in Asia finished the session mixed because of the news out of Iraq. The Shanghai Composite and Hong Kong Hang Seng both posted small losses. The Korean Kospi and Australian ASX both moved higher. In Australia, all sectors advanced. Japan was closed for a holiday.
The situation in the Mideast will be closely watched by the market in the coming days. The attack on Soleimani will not likely be overlooked by Iran’s central government. The government has already vowed to retaliate and may spark an all-out war in the region.
This article was originally posted on FX Empire
More From FXEMPIRE:
GBP/USD Price Forecast – British Pound Falls After Anemic GDP Figures
USD/JPY Breaks Through Key Resistance to 7-Month Highs
Crude Oil Price Forecast – Crude Gets Hit Again With Lowering Tensions
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iShares MSCI Emerging Markets ETF Experiences Big Inflow
Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the iShares MSCI Emerging Markets ETF (Symbol: EEM) where we have detected an approximate $576.8 million dollar inflow -- that's a 1.9% increase week over week in outstanding units (from 656,550,000 to 669,150,000). Among the largest underlying components of EEM, in trading today Alibaba Group Holding Ltd (Symbol: BABA) is off about 1.3%, Baidu Inc (Symbol: BIDU) is off about 2.7%, and JD.com, Inc. (Symbol: JD) is higher by about 0.5%. For a complete list of holdings, visit the EEM Holdings page » The chart below shows the one year price performance of EEM, versus its 200 day moving average:
Looking at the chart above, EEM's low point in its 52 week range is $38.72 per share, with $45.78 as the 52 week high point — that compares with a last trade of $45.10. 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.
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7 Surprising Dividend Stocks to Buy That Offer Ample Yields
When it comes to dividend investing there are many traditional stock sectors which have been the go-to stocks for bigger dividend distributions. Utilities of course are one of the usual areas, in that many older utilities stocks used to be called âwidows and orphansâ stocks for their reliability in generating income.
And indeed, utilities continue to deliver income and safer gains over the longer haul. The S&P Utilities Index has an average yield of 3.2% â which is well above the S&P 500âs average yield of 1.8%. And over the past ten years, the Utilities Index shows a price gain of 105.7% but with dividends, the return jumps by nearly double to 202.3%.
Source: Chart by Bloomberg
Then there is the more modern-day source for widows and orphans: real estate investment trusts (REITs). Thanks to the , companies owning real estate and related assets are able to be formed as pass-through securities largely exempt from income taxes. And thanks to the Tax Cuts and Jobs Act of 2017, REIT dividends also come with a 20% deduction for individual investors when they file their taxes with the tax treatment found in Box 5 of their 1099-DIV forms.
The REIT market, as measured by the Bloomberg US REITs Index, has an average yield of 3.8.%. Thatâs much higher than the general S&P 500. And like for utilities, the past decade has shown a price gain for the index of 116.3% while with dividends, the return again jumps to 223.9%.
Source: Chart by Bloomberg
But there are many sectors and individual stocks that you will be surprised to learn offer ample dividend yields well beyond the usual sources for stock income investors.
The following are some of my recommendations which are inside the model portfolios of my Profitable Investing.
Dividend Stocks to Buy: Covanta (CVA)
Source: Chart by Bloomberg
Dividend Yield: 6.8%
The world is increasingly surrounded by trash and waste. Think of the Disney (NYSE:) film WALL-E, in which the worldâs population has fled in a cruise ship-like space craft as trash has piled up so high that there is no room for anything including crops and food production. While we are not nearly there, trash continues to be a bigger problem.
Adding to the problem is that recycling is increasingly not economically viable. or severely limited. This has led to many hundreds of municipalities throughout the U.S. no longer conducting recycling programs.
Enter the problem solver: Covanta (NYSE:). The company operates collection and processing facilities for trash throughout the U.S. Covanta cleanly incinerates the trash, providing clean energy which is then sold on the wholesale and contracted municipal markets for revenue.
So, Covanta earns cash from collecting trash and then earns more from selling clean energy.
It yields 6.8% and has been raising the dividend distribution by 3.1% on average for the trailing five years.
Revenues are rising with the trailing year seeing gains of 6.6%. And while operating margins are narrow, they are still steady to feed the dividend income. And with newer and pending additional investments from investment companies, expansion is set to continue for the cash from trash company.
FMC Corporation (FMC)
Source: Chart by Bloomberg
Dividend Yield: 1.8%
Food is another critical problem for the world. Continuing population expansion is stressing agriculture to produce more and more crops, as well as livestock, for a hungry world.
Now, you might buy a farm and try your hand at growing crops or raising cows and pigs â but I have a better idea which comes with nice dividends. It starts with getting better-quality crops from grains to produce and even grapes for wine. FMC Corporation (NYSE:) is a long-standing company with a history of transforming itself every so many decades. Itâs now fully focused on enhancing agricultural production.
FMC makes and delivers pesticides and herbicides and works with local producers around the globe, including tough markets such as China and India. And it has history with one of the first patents for chemical application hardware many decades ago.
The dividend yield is running at a lower rate of 1.8%. But it has huge revenue gains over the past year by 69.3%. And its operating margins are fat at 17.3%, which in turn deliver a return on equity of 18%. Lots of cash and little debt makes for a dependable company.
FMC has delivered a total return including dividends of 112.7% over the past three years. Its recent focus on agricultural chemicals helps make it a good and dependable performer for both income and gains.
Zoetis (ZTS)
Source: Chart by Bloomberg
Dividend Yield:Â 0.6%
Then for livestock thereâs Zoetis (NYSE:). This company makes animal healthcare products and vital vaccines. It is mission critical for farm livestock production as well as highly beneficial for pets including my dachshund, Blue. In addition, China and many other markets are experiencing African swine fever, which is decimating pork production and pig populations. Zoetis is an expert in solving this, including with its patented vaccines.
Revenues are up 9.8% over the past year and operating margins are fat at 31.1%. And while the dividend yield is a bit sparse at 0.6% as the company has been retaining earnings for more product development, the distributions are up 30.2% over the past year.
Zoetis has provided a total return including dividends of 217.98% over the past five years â well above the S&P 500. And it makes for a great play on cash from food and farming markets.
Hercules Capital (HTGC)
Source: Chart by Bloomberg
Dividend Yield:Â 9.5%
Technology is usually assumed to be for growth and not income. And this is easily seen in the average yield for tech stocks, as measured by the S&P Information Technology Index. The average is a mere 1.2% â much lower than for the S&P 500.
But I have a tech stock that significantly bucks this assumption. Hercules Capital (NYSE:) is based in the tech mecca of the U.S. in Palo Alto, California. Structured under the Investment Companies Act of 1940 and the , the company largely avoids corporate income taxes and in turn pays out ample dividends.
It focuses on finding and financing tech companies in various stages of their development. It loans money as well as taking equity participation and works to guide companies through their development and exit strategies.
Revenues continue to rise year in and year out with the past year seeing gains of 8.8%. Internal financial returns are significantly better than traditional financials and banks. And while the stock has generated a total return of 233.2% over the past ten years, it is still a value. HTGC stock is only valued at a price-to-book ratio of 1.4.
Now I come to the great news. The dividend yields 9.5% on an annual basis, as the company pays both regular dividends as well as ongoing special distributions which continue to rise over the past years.
Tech can be a surprising source for dividend income with Hercules Capital.
American Campus Communities (ACC)
Source: Chart by Bloomberg
Dividend Yield:Â 4.1%
When it comes to college, most think about spending money to educate their children so that they can be empowered to earn salaries later in life. But college isnât just about investing for the future â it can also be a source for surprising dividends right now.
American Campus Communities (NYSE:) develops, owns and operates student housing for major universities around the U.S. Despite housing shortages at many major schools, universities are more eager to fund academic and athletic facilities. But ACC is there to serve the gaps.
Revenues are rising from its impressive collection of properties gaining 10.6% over the past year. And its return from actual property operations (excluding other profits from gains and appreciation), as measured by the return on funds from operations (FFO), is ample at 11%.
It is structured as a REIT but with a particular focus on colleges, which is unique as it is the only listed REIT in this space which is increasingly dominated by private equity and other investment funds.
Its dividend yields 4.1% and the stock has generated a total return of 141.9% including dividends for an average annual equivalent return of 9.2%.
Colleges are great at education, but thanks to American Campus Communities, they are also a surprising source for dividend income.
MFA Financial (MFA)
Source: Chart by Bloomberg
Dividend Yield:Â 10.5%
Home is of course where the heart and hearth are, but it also where ample dividends can be a surprise for investors in the know.
And no, Iâm not writing about renting out homes or home equity loans. But instead, I have a stock from a company which generates lots of cash while paying a dividend yielding in the double digits.
MFA Financial (NYSE:) yields 10.5% â and that isnât a misprint. And it isnât a flighty, higher-risk stock either. It has generated a total return including dividends of 241.8% over the past decade.
The company owns and manages a portfolio of mortgage securities on homes and other properties throughout the U.S. And it knows how to deal with risks and opportunities in that it was paying dividends and performing well even during the very dark times for mortgages in 2007-2008.
Legally, it is structured under REIT laws which makes it tax advantaged for corporate income taxes, with tax deductions for individual investors as well. Revenues are rising, with the past year gaining 5.1%. Plus, its internal financial performance continues to deliver to fund the dividends.
And it is a bargain stock which is priced at $7.64 and is only valued at 1 times book. It is a great surprise for big dividends with proven performance.
Franco-Nevada (FNV)
Source: Chart by Bloomberg
Dividend Yield:Â 1%
Gold is on the move. The current spot price for gold is sitting at $1,525.52 and is up by 20% since May of last year. Gold is gaining from some specific factors including the recent softness in the U.S. dollar as well as falling shorter-term U.S. dollar interest rates. Gold benefits from a lower dollar in that as it is priced in dollars, it is worth more as the dollar dips. And gold benefits from lower interest rates because it costs less in opportunity cost to hold it.
Source: Chart by Bloomberg
But gold has a catch. It doesnât pay a dime in interest. And it costs to store it. Even the SPDR Gold Shares (NYSEARCA:) exchange-traded fund has a cost to own it. Its expense ratio runs at 0.4%, or $40 on a $10,000 investment, and comes with no dividend. So, if gold doesnât move up or drops back, it has locked in losses.
But I have an alternative for gold which does pay a dividend. Franco-Nevada (NYSE:) is a Canadian-based company which also easily trades in the U.S. markets. It doesnât mine gold, but merely obtains royalties on gold production quarter by quarter and year by year. This means no capital for mine development and operation, and less risk that capital will be lost in bad mines.
Gold goes up in price and it gets more cash. And if gold goes down, it still gets paid cash. And it pays a dividend all along the way.
The total return for the stock since May 2019 is 47.8%, which is more than twice the price movement in gold.
Now the dividend doesnât yield much at 0.97% â but thatâs way better than zero. And the stock return is proof that it makes a surprising (and better) investment over gold itself or a gold ETF.
Neil George was once an all-star bond trader, but now he works morning and night to steer readers away from traps â and into Neilâs new income program is a cash-generating machine ⦠one that can help you collect $208 every day the marketâs open. Neil does not have any holdings in the securities mentioned above.
The post appeared first on InvestorPlace.
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Kinder Morgan Is Still Trying to Rebuild Trust
Operationally speaking, Kinder Morgan (NYSE: KMI) is doing pretty well right now. That is highlighted by the company's 25% dividend increase in 2019, with another hike of the same size currently planned for 2020. At the goal run rate of $1.25 per share per year, management is gloating that it will have increased the dividend by an incredible 150% over the 2017 level.
All of this sounds pretty good, until you step back and look at what happened in 2016. When you do that, Kinder Morgan still has a lot to prove.
Bad math
On Oct. 21, 2015, Kinder Morgan reported third-quarter earnings and announced that it planned to increase its dividend by as much as 10% in 2016. On Dec. 8, 2015, Kinder Morgan changed direction and announced that it would, instead, cut the dividend by 75%.
To put some numbers on that, in October 2015, the annual run rate of the dividend was $2.04 a share, with more increases expected in the near future. As 2016 began, though, the run rate was cut to just $0.50 per share with no clear path to future increases.
Image source: Getty Images.
The main reason for the dividend cut was that Kinder Morgan needed to find cash to fund its capital investment program. The options at the time were all fairly bad. Selling stock would have been a poor choice because the midstream sector in which Kinder Morgan operates was out of favor. Selling stock at depressed prices is never good. The company's balance sheet, meanwhile, was already debt heavy, so selling more debt wasn't particularly appealing either (and it likely would have been expensive). That left cutting the dividend to free up cash, a decision that would hurt shareholders who were relying on the dividend.
In the end, the dividend cut was probably the best move for the company even if ended up hurting investors. The company used 2016 and 2017 to turn things around, shoring up its balance sheet while still investing for the future. And in 2018, Kinder Morgan increased its dividend by a huge 60%. It followed that up with a 25% increase in 2019. The planned increase of 25% in 2020 basically fulfills a promise the company made in mid 2017 to get its dividend back on a growth track.
Don't forget the past
There's no question that Kinder Morgan is in a better financial position today than it was when it made the hard call to cut the dividend. For example, the company's financial debt to EBITDA ratio peaked at around 9 times in 2016 but is currently around 5.3 times. Adjusted earnings through the first nine months of 2019, meanwhile, were up 8% year over year, with cash available for distribution up 5%. The company expects to cover the dividend by an incredibly strong 2.2 times in 2019. That suggests that it can easily support more dividend growth in the future.
So far so good, but there are some additional factors to consider. For starters, even after increasing the dividend by 150%, the annual run rate in 2020 will still be nearly 40% below the dividend run rate prior to the 2016 dividend cut. In other words, Kinder Morgan is moving in the right direction, but investors who have hung on, expecting better days, are still a long way from where they were before the cut.
KMI Financial Debt to Equity (Quarterly) data by YCharts
Then there's the even more important issue of leverage. There's no question the company's debt to EBITDA ratio has dramatically improved. However, Kinder Morgan still makes relatively aggressive use of its balance sheet compared to more conservative players in the midstream space. At about 5.3 times, the company financial debt to EBITDA ratio is still way higher than super conservative Magellan Midstream Partners' (NYSE: MMP) 2.9 times and industry bellwether Enterprise Products Partners' (NYSE: EPD) 3.3 times. While you could argue that those two aren't perfect comparisons because they are master limited partnerships, Kinder Morgan's number is also higher than ONEOK's (NYSE: OKE) 4.1 times financial debt to EBITDA ratio. What's most interesting here, though, is that this isn't a one-time thing -- Kinder Morgan has historically used leverage more aggressively than these peers.
To look at this a different way, Kinder Morgan's financial debt-to-equity ratio is roughly 0.77 times. ONEOK's ratio is roughly 0.41 times -- which is roughly in line with Enterprise and Magellan. While Kinder Morgan's financial debt to equity is down from over 1.2 times in 2016, it still remains relatively high. Yes, Kinder Morgan has moved in a better direction, but it hasn't materially changed its ways when it comes to leverage. And since excessive use of leverage was one of the reasons the dividend was cut 2016, it should be hard for more conservative investors to look at Kinder Morgan today without some trepidation.
To be fair, the company recently sold its stake in a Canadian pipeline company with plans to reduce debt even further. But until it has proven that lower leverage will be the new normal, most investors should take a wait-and-see approach.
Not there just yet
When a company says one thing and does another, investors need to proceed with extra caution. That's exactly what happened in late 2015 at Kinder Morgan. Since that point, the midstream giant has been earning back investor trust by reducing leverage and materially increasing the dividend. But when you dig a little deeper, you see that Kinder Morgan still has more to prove. Despite the much-hyped dividend increases, income investors are still short of where they were before the cut. And while leverage ratios are better, Kinder Morgan still appears to be more aggressive with its balance sheet than peers. There are simply better options for conservative investors looking at the midstream space today.
10 stocks we like better than Kinder Morgan
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 Kinder Morgan 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
Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Kinder Morgan. The Motley Fool recommends Enterprise Products Partners, Magellan Midstream Partners, and ONEOK. 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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Notable Two Hundred Day Moving Average Cross - CF
In trading on Friday, shares of CF Industries Holdings Inc (Symbol: CF) crossed below their 200 day moving average of $46.00, changing hands as low as $45.97 per share. CF Industries Holdings Inc shares are currently trading off about 0.7% on the day. The chart below shows the one year performance of CF shares, versus its 200 day moving average:
Looking at the chart above, CF's low point in its 52 week range is $38.90 per share, with $55.15 as the 52 week high point — that compares with a last trade of $46.08. The CF DMA information above was sourced from TechnicalAnalysisChannel.com
Click here to find out which 9 other stocks recently crossed below their 200 day moving average »
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Did Canopy Growth Stock Just Have a Dead Cat Bounce?
Canopy Growth (NYSE:) stock jumped more than 12% on the final day of 2019, its best single-day performance since early December.ÃÂ
Source: Shutterstock
While itâÂÂs easy to get excited about the one-day romp, most of the other major Canadian cannabis companies had good days on Dec. 31, with Aurora Cannabis (NYSE:) and Aphria (NYSE:APHA) gaining 13.1% and 10.4%, respectively. The fact that many names in the sector climbed indicates that the gains may have been nothing more than a much-needed relief rally.ÃÂ
So the question for Canopy Growth shareholders is whether the latest move was a dead-cat bounce or the beginning of something bigger.ÃÂ
Here are some arguments on both sides of the issue.ÃÂ
CanopyâÂÂs Latest Jump Is Temporary
Canopy GrowthâÂÂs most significant problem is the black market.ÃÂ
While wholesale prices of pot have dropped by approximately 17% since the legalization of dried cannabis in October 2018, black market prices have remained much lower than those of the legal retail stores in Canada. That situation, combined with a shortage of retail stores, is why the black market still accounts for a majority of Canadian cannabis sales.
âÂÂThereâÂÂs a very strong resistance to the legal stores in the sense that a) and b) there arenâÂÂt enough of them. (Buyers are)ànot close to them, so they just deal with their local guy like they always have,â said Robin Ellis, the co-founder of a Toronto cannabis retailer.ÃÂ
Producers of dried cannabis built up the capacity to meet projected demand, but the lack of retail locations in Ontario, CanadaâÂÂs most populous province, led to severe surpluses of legal cannabis supplies.ÃÂ
Although Ontario for awarding new retail stores in favor of an open-market system that allows anyone to apply to open stores, the new system only started on Jan. 1. It wonâÂÂt meaningfully increase cannabis sales until the second half of this year.ÃÂ
In the meantime, Canopy has ramped up its spending to get its beverages and edibles into the hands of consumers, ItâÂÂs also launched its first hemp-derived CBD product in the U.S.. But InvestorPlace contributor Mark Hake thinks these initiatives will continue to .ÃÂ
In the first six months of fiscal 2020, Canopy GrowthâÂÂs adjusted EBITDA losses were , three times larger than in the same period a year earlier.ÃÂ
Until the companyâÂÂs new products improve its results, itâÂÂs hard to imagine investors paying more than the current prices to own the companyâÂÂs stock.ÃÂ
CanopyâÂÂs Stock Will Rally MuchàFurther
In my last article about Canopy Growth in early December, I recommended that investors springing up against the company due to its falling stock price and increasing losses.ÃÂ
I felt that the company was wise to let its lawyers deal with the legal sideshow while it focused on growing its business. Most importantly, I thought it needed to hire a CEO who couldàhelp reignite the companyâÂÂs growth.
I didnâÂÂt believe that Canopy Growth would hire a new CEO by the end of the year.àBut true to its word, on Dec. 10 it announced that Constellation Brands (NYSE:) CFO David Klein would take over as CanopyâÂÂs permanent CEO on Jan. 14.ÃÂ
Portfolio manager Tim Seymour was upbeat about Klein.ÃÂ
âÂÂThis appointment of truly a consumer products CEO, someone who knows the CPG world very well and someone who knows this company very well, is very exciting, I think heâÂÂs the right man for the job,â Seymour told CNBC after the announcement.ÃÂ
I second that emotion.ÃÂ
KleinâÂÂs been chairman of Canopy Growth since November. Before that, as ConstellationâÂÂs CFO, he was very knowledgeable about Canopy, in which Constellation had invested billions of dollars. As a result,àhis transition into the CEO position will be easy. Furthermore, Canopy GrowthâÂÂs current CFO also came from Constellation, so its two top executives will already be well-acquainted with each other.ÃÂ
They can hit the ground running.
Over the long-term, I believe that Canopy GrowthâÂÂs current financial position puts it heads above most of its Canadian competitors. Now that it hasàthe right CEO in place, it can return to focusing on growth while also boosting its profitability.
Its pathway to profitability might be a little blurry at the moment, but it will get there. In the meantime, the volatility of its stock is unlikely to disappear anytime soon. That said, I do believe that the shares can reach $30 or more in the next 12 months.ÃÂ
I believe that CaopyâÂÂs rally will continue.
At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.
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The post appeared first on InvestorPlace.
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First Week of ORLY August 21st Options Trading
Investors in O'Reilly Automotive, Inc. (Symbol: ORLY) saw new options begin trading this week, for the August 21st expiration. One of the key data points that goes into the price an option buyer is willing to pay, is the time value, so with 231 days until expiration the newly trading contracts represent a possible opportunity for sellers of puts or calls to achieve a higher premium than would be available for the contracts with a closer expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the ORLY options chain for the new August 21st contracts and identified one put and one call contract of particular interest.
The put contract at the $430.00 strike price has a current bid of $27.90. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $430.00, but will also collect the premium, putting the cost basis of the shares at $402.10 (before broker commissions). To an investor already interested in purchasing shares of ORLY, that could represent an attractive alternative to paying $437.42/share today.
Because the $430.00 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 59%. 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 6.49% return on the cash commitment, or 10.25% annualized — at Stock Options Channel we call this the YieldBoost.
Below is a chart showing the trailing twelve month trading history for O'Reilly Automotive, Inc., and highlighting in green where the $430.00 strike is located relative to that history:
Turning to the calls side of the option chain, the call contract at the $450.00 strike price has a current bid of $30.10. If an investor was to purchase shares of ORLY stock at the current price level of $437.42/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $450.00. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 9.76% if the stock gets called away at the August 21st expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if ORLY shares really soar, which is why looking at the trailing twelve month trading history for O'Reilly Automotive, Inc., as well as studying the business fundamentals becomes important. Below is a chart showing ORLY's trailing twelve month trading history, with the $450.00 strike highlighted in red:
Considering the fact that the $450.00 strike represents an approximate 3% 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 50%. 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 6.88% boost of extra return to the investor, or 10.87% annualized, which we refer to as the YieldBoost.
The implied volatility in the put contract example is 26%, while the implied volatility in the call contract example is 25%.
Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 252 trading day closing values as well as today's price of $437.42) to be 21%. 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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Notable Friday Option Activity: VLO, DAL, HAL
Among the underlying components of the S&P 500 index, we saw noteworthy options trading volume today in Valero Energy Corp (Symbol: VLO), where a total of 17,416 contracts have traded so far, representing approximately 1.7 million underlying shares. That amounts to about 63.3% of VLO's average daily trading volume over the past month of 2.7 million shares. Especially high volume was seen for the $87.50 strike put option expiring January 17, 2020, with 769 contracts trading so far today, representing approximately 76,900 underlying shares of VLO. Below is a chart showing VLO's trailing twelve month trading history, with the $87.50 strike highlighted in orange:
Delta Air Lines Inc (Symbol: DAL) options are showing a volume of 28,416 contracts thus far today. That number of contracts represents approximately 2.8 million underlying shares, working out to a sizeable 61.4% of DAL's average daily trading volume over the past month, of 4.6 million shares. Especially high volume was seen for the $58 strike call option expiring January 10, 2020, with 3,727 contracts trading so far today, representing approximately 372,700 underlying shares of DAL. Below is a chart showing DAL's trailing twelve month trading history, with the $58 strike highlighted in orange:
And Halliburton Company (Symbol: HAL) saw options trading volume of 74,833 contracts, representing approximately 7.5 million underlying shares or approximately 58.6% of HAL's average daily trading volume over the past month, of 12.8 million shares. Especially high volume was seen for the $26 strike call option expiring February 21, 2020, with 17,163 contracts trading so far today, representing approximately 1.7 million underlying shares of HAL. Below is a chart showing HAL's trailing twelve month trading history, with the $26 strike highlighted in orange:
For the various different available expirations for VLO options, DAL options, or HAL 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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Dow Jones News: Apple Price Targets Raised; Exxon Expects Big Gain From Norway Asset Sale
So much for a rally to start the year. After a strong Thursday performance, the Dow Jones Industrial Average (DJINDICES: ^DJI) sank on Friday following news that a U.S. airstrike had killed Iranian General Qasem Soleimani, ramping up tensions between the two countries. Also dampening investors' spirits was a weak reading on the Institute for Supply Management's purchasing managers' index, which measures U.S. factory activity.
The Dow was down 0.84% at 11 a.m. EST, with all 30 components in negative territory. Outperforming the index were Apple (NASDAQ: AAPL) and ExxonMobil (NYSE: XOM). Two analyst price target bumps prevented Apple stock from falling too much, and Exxon's disclosure of significant gains from an asset sale kept losses for the oil stock small.
Apple gets some analyst love
With Apple stock soaring 85% in 2019, it's not too surprising to see bullish analysts piling on after the fact. On Friday, Apple received two price target boosts from analysts at Bank of America and RBC Capital Markets. Both now see Apple rising to $330 per share, up from roughly $300 today.
This analyst optimism wasn't enough to lift Apple on a rough day for the stock market. Shares of the tech giant were down 0.6% in the morning.
Strong iPhone demand was the core reason for the price target bumps from both analysts, with RBC noting that the latest iPhone 11 was producing more social media mentions than its predecessor. RBC expects Apple to report solid holiday-quarter sales thanks to the iPhone.
Image source: Apple.
Bank of America based its price target bump on other parts of Apple's business as well. BofA expects strong results from wearables and the App Store, and in the long run, it sees 5G adoption benefiting Apple. Apple is expected to launch a 5G-capable iPhone in 2020, although the jury is still out on how much consumers really care about 5G technology.
While iPhone demand appears to be strong in the U.S., China is a different story. Credit Suisse said last month that iPhone sales in China had plunged 35.4% in November, a sign that Apple's comeback in the country is in jeopardy. It remains to be seen whether strong iPhone demand elsewhere can offset weakness in China.
While analysts are generally optimistic on Apple, the stock is more expensive than it's been in more than a decade. Shares trade for around 25 times trailing-12-month earnings, a lofty valuation for a company worth well over $1 trillion.
Exxon sees big gain from Norway asset sale
Shares of Exxon were down just 0.25% Friday morning, outperforming the broader market. A combination of renewed tensions in the Middle East and an update from the company on asset sales seems to be driving the outperformance.
In an SEC filing on Friday, Exxon laid out various factors that will affect its earnings in the fourth quarter relative to the third quarter. Exxon expects to realize a gain of between $3.4 billion and $3.6 billion from the sale of oil and gas assets in Norway, boosting fourth-quarter results. This gain will help offset lower expected margins in the refining and chemical businesses.
Exxon is targeting $25 billion of total asset sales as it looks to shed noncore operations and use the proceeds to invest in projects with higher potential returns on investment. Shares of Exxon were up just 2.3% in 2019, badly trailing the Dow's 22% return.
Find out why Apple is one of the 10 best stocks to buy now
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Timothy Green has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Energy Sector Update for 01/03/2020: USEG,YUMA,CEI,XOM
Top Energy Stocks
XOM -0.72%
CVX -0.17%
COP +0.67%
SLB +1.00%
OXY +2.46%
Energy stocks turned mixed Friday afternoon, giving back all of their morning gains amid a 3% jump in global oil prices in response to US forces killing Iranian general Qasem Soleimani in a drone strike in Baghdad overnight. The NYSE Energy Sector Index was ahead 0.2% while the shares of energy companies in the S&P 500 were down nearly 0.4% as a group. West Texas Intermediate crude oil settled $1.87 higher at $62.56 per barrel while the front-month Brent crude February contract advanced $2.36 to $68.61 per barrel. February natural gas futures rose 1 cent to $2.14 per 1 million BTU.
In industry news:
Crude oil prices firmed after the Energy Information Administration Friday reported an 11.5 million barrel decline in US inventories during the seven days ended Dec. 27, or more than triple the 3.1 million-barrel draw expected in a survey of industry experts by S&P Global Platts. The American Petroleum Institute earlier this week reportedly said crude oil supplies dropped by 7.8 million barrels.
Among energy stocks moving on news:
(+) US Energy (USEG) was nearly 26% higher in late Friday trade after saying it will begin trading on a split-adjusted price with the start of Monday's regular session following the execution of a 1-for-10 reverse stock split by the oil and natural gas producer. Shareholders approved the upcoming stock split on Dec. 10 and the company amended its articles of incorporation with securities regulators in Wyoming on Tuesday, Dec. 31.
In other sector news:
(+) Yuma Energy (YUMA) jumped more than 27% after the oil and natural gas company said it has revised its credit agreement with an affiliate of Red Mountain Capital Partners, adding a new $2 million delayed-draw term loan facility on top of its $1.7 million purchased loan already outstanding with the alternative asset manager. The purchased loan matures at the end of 2022 and can be exchanged by Red Mountain for a 5% convertible note with an initial rate of $0.129 per share, according to a regulatory filing late Thursday by the company.
(+) Camber Energy (CEI) climbed nearly 8% after saying it has reversed its merger with privately held Lineal Star Holdings announced in July by redeeming all of the Series E and Series F preferred stock it issued to the owners of the pipeline integrity and inspections company. One of the reasons for unwinding the deal, it said, was the post-merger company's inability to meet some of the listing standards of the NYSE American stock exchange, including gain shareholder approval for conversion rights and other terms of the preferred stock.
(-) Exxon Mobil (XOM) turned 0.7% lower this afternoon, giving back a small gain earlier Friday that followed the energy major saying it expects between $3.4 billion to $3.6 billion in proceeds from the sale of its oil and natural gas production assets in Norway, providing a significant boost to its Q4 earnings.
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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Nokia Has Momentum Early in 2020, but Is It a Buy?
As I write this late on Jan. 2, Nokia (NYSE:) is having a good day on the markets. NOK stock was up almost 5% on the day. More importantly, Nokia stock gained 6% in December, ringing in the New Year in style. Can it keep up its momentum?ÃÂ
Source: RistoH / Shutterstock.com
Although as being against buying NOK stock if it doesnâÂÂt pay a dividend, I do think that the skepticism surrounding the Finnish maker of telecom equipment is starting to lift, and that should result in some more optimistic projections from analysts in 2020.
The question is whether its December momentum makes it a buy early in 2020.
Commentary Getting More Bullish
InvestorPlace contributors like me have generally been quite bearish about NokiaâÂÂs prospects throughout most of 2019. Things began to change in late December, with several prognosticators turning bullish.ÃÂ
My Canadian colleague, Brad Moon, wrote on the final day of 2019 that 2020 could be a big year for Nokia. Brad knows a thing or two about electronics; his comments have peaked my interest.ÃÂ
âÂÂThe past 10 years have seen Nokia battered, and it has become arguably the biggest casualty of the smartphone era. It goes into 2020 with its name once again on smartphones and retro feature phones, a strong patent portfolio, and a networking business in a big way from the 5G rollout,â Brad wrote on Dec. 31.ÃÂ
âÂÂBarring any major miscalculations, look for the Finnish company to once again begin climbing that Fortune Global 500 list.âÂÂ
Sometimes, given a stock price less than $4, we investors forget that Nokia is still the 466th-ranked company on the Fortune Global 500 list, with almost and $45 billion in assets.ÃÂ It still is a massive company with approximately 103,000 employees worldwide.ÃÂ
Yes, it doesnâÂÂt generate operating profits on an International Financial Reporting Standards (IFRS) basis; it lost in the first nine months of 2019. However, on a non-IFRS basis, its Q1-Q3 operating profit was 869 million euros, down 18% from a year earlier, but positive nonetheless.ÃÂ
The Altman Z-Score
I havenâÂÂt done an for Nokia. Anything less than 1.81 suggests there is a reasonable probability of going bankrupt within the next 24 months.
According to Gurufocus.com, NokiaâÂÂs current , which suggests it is in financial distress. By comparison, NokiaâÂÂs best Z-score over the past 10 years is 21.69, seven times the minimum score needed to be considered safe from bankruptcy.ÃÂ
The Z-Score isnâÂÂt perfect, and it can change on a dime based on an improving or deteriorating financial situation. ItâÂÂs best to consider the changes from quarter to quarter.ÃÂ
In 2020, should its 5G business take off as Brad suggests, NOK will quickly move into the safe zone. Nonetheless, I think itâÂÂs important to realize that despite having $45 billion in total assets, it is still far from being a perfect investment.
Is NOK Stock a Buy?
As IâÂÂve stated in past articles, if you are interested in betting on 5G through a single stock, there are much better and less risky alternatives.ÃÂ
InvestorPlaceâÂÂs Will Healy recently recommended , one of which was Nokia. For my money, IâÂÂd go with Apple (NASDAQ:AAPL) or Intel (NASDAQ:) before IâÂÂd bet on any of the other three. But thatâÂÂs a subject for another day.ÃÂ
Although I wouldnâÂÂt recommend Nokia stock to anyone whoâÂÂs saving for retirement or their kidâÂÂs education, I do feel the 5G prospects continue to titillate speculative investors.
If you can afford to lose it all, the recent momentum would suggest now is the time to take a flyer on Nokia stock.ÃÂ
At the time of this writing Will Ashworth 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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Preferred Bank (PFBC) Ex-Dividend Date Scheduled for January 06, 2020
Preferred Bank (PFBC) will begin trading ex-dividend on January 06, 2020. A cash dividend payment of $0.3 per share is scheduled to be paid on January 21, 2020. Shareholders who purchased PFBC prior to the ex-dividend date are eligible for the cash dividend payment. This marks the 5th quarter that PFBC has paid the same dividend.
The previous trading day's last sale of PFBC was $60.11, representing a -0.63% decrease from the 52 week high of $60.49 and a 43.19% increase over the 52 week low of $41.98.
PFBC's current earnings per share, an indicator of a company's profitability, is $5.08. Zacks Investment Research reports PFBC's forecasted earnings growth in 2019 as 13.9%, compared to an industry average of 4.9%.
For more information on the declaration, record and payment dates, visit the PFBC Dividend History page. Our Dividend Calendar has the full list of stocks that have an ex-dividend today.
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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SCHD: Large Outflows Detected at ETF
Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the SCHD ETF (Symbol: SCHD) where we have detected an approximate $130.7 million dollar outflow -- that's a 1.1% decrease week over week (from 202,800,000 to 200,550,000). The chart below shows the one year price performance of SCHD, versus its 200 day moving average:
Looking at the chart above, SCHD's low point in its 52 week range is $46.535 per share, with $58.22 as the 52 week high point — that compares with a last trade of $57.65. 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 »
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Is the Slump In Pinterest Stock Finally Finished?
When it comes to social media stocks, there are a few giants that get the bulk of the attention, such as Facebook (NASDAQ:) and Twitter (NYSE:TWTR). But there are other social media companies that deserve investorsâ attention. One of these is Pinterest (NYSE:). This has been a trying year for those who bought PINS stock â with an impressive run after the companyâÂÂs April IPO, followed by an even bigger slide starting in the fall â but the turmoil seems to have settled.
And now Pinterest stock has levelled out over the past month or so. With shares now trading below their IPO price, is now the time to consider an investment in Pinterest?
PINS Stock: A Social Media Investment ThatâÂÂs Different
Facebook and Twitter are mature social media platforms. They have a huge number of users, but their growth rates have slowed significantly. For example, in its last quarter, Facebook reported it had . ThatâÂÂs an 8% gain over the previous year. Last February, Twitter reported it had 321 million MAU. That was down from the previous year, and marked the third-straight quarter where the platform lost users. In response, Twitter announced it would stop publishing that metric altogether.ÃÂ
In addition, both Facebook and Twitter have been embroiled in controversy over data privacy and the use of their platforms for election tampering. and the prospect of regulation. In 2019, Facebook was hit with a record-setting FTC fine, after being ordered to pay $5 billion in penalties for privacy violations.
Pinterest is different. ItâÂÂs a social media platform, but one thatâÂÂs on the upswing. Where Facebook and Twitter are seeing relatively flat user growth, Pinterest announced MAU numbers that were up 28% compared to the previous year. Revenue was up 47% for the quarter. Where Twitter and Facebook have been under fire for their policies, Pinterest has earned praise for its swift response when users post controversial content.
That all sounds good, but something has spooked investors, resulting in a PINS stock price thatâÂÂs now just over half the $36.56 it hit in mid August.
Why the Fall Punishment for Pinterest Stock?
Shortly after its April IPO, Pinterest stock had a cooling off period, but then it rapidly climbed through the summer. At the end of August it began to slide, and the decline continued through the fall. PINS stock dropped 17% in a single day after reporting Q3 earnings on Oct. 31. Although the company beat estimates for earnings per share, and posted better-than-expected user growth, revenue and average revenue per user were misses.
As InvestorPlace contributor , concern about international growth hit PINS stock hard. The worry wasnâÂÂt that the company wasnâÂÂt seeing growth outside of the U.S., it was actually the opposite. International growth is accelerating faster than the American market, and investors arenâÂÂt convinced that Pinterest can monetize those users to the same extent. àÃÂ
In October, New York University marketing professor Scott Galloway with Pinterest at the top.
Is Now the Time to Invest in Pinterest?
At its current $18.40, the PINS stock price is below its , and the $23.75 it hit on its first day of trading.ÃÂ
However, the tumble that began last fall appears to have halted. There have been some minor ups and downs, but Pinterest stock has remained flat for over a month, suggesting the worst is over.
Pinterest is expected to report Q4 earnings at the start of February and thatâÂÂs a wild card. Long-term, PINS stock has real potential and its current price makes it tempting. But if the company reports Q4 numbers that once again show American user base growth not keeping up with the international pace and a corresponding revenue miss, its possible that Pinterest stock could take another hit.ÃÂ
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
The post appeared first on InvestorPlace.
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Better Buy: Illumina vs. Guardant Health
Illumina (NASDAQ: ILMN) is a giant in the field of DNA sequencing. Using its machines, biotech companies can design drugs to target specific cell receptors in the human body. Illumina's stock has been a monster for years; it's up 5,791% since the company's initial public offering in 2000.
Guardant Health (NASDAQ: GH) is a fast-growing oncology company that is replacing tissue sampling for cancers with a simple blood test. When a patient has an advanced cancer, doctors can use the company's liquid biopsy called Guardant360 to determine the cancer's genomic profile. This blood test is far simpler, easier, and safer than removing tissue from a patient's organs. Guardant's stock is up 165% since its initial public offering in 2018, dwarfing the S&P 500 over that time span.
What's the better buy going forward, Illumina or Guardant Health? We'll look at valuation, market opportunity, and competitive threats to decide.
Image source: Getty Images
1. Valuation
Illumina is a highly successful company, with $907 million in revenue in its most recent quarter, and $234 million in profit. Its net margin was 26% for the quarter. Illumina is sitting on $3.16 billion in cash, with only $1.34 billion in debts, for a net cash position of $1.82 billion.
The bad news is that Illumina's revenue growth has slowed to a crawl. In its most recent quarter, sales were up only 6% year over year. The stock was hit hard earlier this year when the company slashed its growth estimates. And the stock is still priced for high growth, trading at 14 times sales and 50 times earnings.
COMPANY QUARTERLY SALES QUARTERLY SALES GROWTH RATE PRICE-TO-SALES RATIO
Illumina $907 million 6% 14
Guardant Health $60 million 181% 40
Fast-growing Guardant Health is unprofitable right now, spending money to achieve market dominance. The company had $60 million in sales in its most recent quarter, up 181% from this time last year. While the company isn't profitable yet, gross margins are quite high, hitting 70% in the third quarter. (Illumina has gross margins of 72%.) Guardant has $522 million in cash and $8 million in debt, for a net cash position of $514 million.
Unlike Illumina, which cut its forecasts, Guardant Health has surpassed expectations and is increasing its estimates going forward. The only bad news is that Guardant Health has a sky-high valuation. The stock is trading at almost 40 times sales, which is very high -- nosebleed territory. Guardant Health has a price-to-sales ratio almost three times higher than Illumina's. On the other hand, Guardant Health is growing sales 30 times faster.
Winner: Guardant Health
2. Market opportunity
Illumina controls an estimated 80% of the next generation sequencing (NGS) market for analyzing the human genome. Illumina has won its market dominance by focusing on short-read data sequencing, which for many years has been the cheapest, fastest, and most accurate solution in the market.
By being a top dog and first mover, Illumina has a very large base of customers who have already paid a lot of money to buy one of Illumina's machines. Similar to Intuitive Surgical, Illumina uses a razor-and-blade model. The real money for Illumina is not in the one-time purchase of its sequencing machine, but all the follow-up revenues the company receives when the biotech or research lab uses the machine to sequence a genome. In its first three quarters of 2019, for instance, Illumina had $390 million in instrument revenue and $1.73 billion in consumables revenue.
Guardant Health has a lot of room to grow in its immediate markets. Guardant360 has a $4 billion opportunity among patients with advanced-stage cancer. And the company's GuardantOMNI test -- a broader test that looks at 500 genes instead of the 73 genes in the Guardant360 -- has a $2 billion opportunity in finding patients with a suitable genetic profile for a clinical study.
The company also hopes to compete in a couple of much larger markets. Guardant Health wants to use its liquid biopsy to test for cancer recurrence in survivors, a $15 billion market opportunity. And the company wants to use its liquid biopsy to do early detection of cancer in high-risk individuals, a market the company conservatively estimates at $18 billion.
Right now it seems Guardant Health has a larger future upside than Illumina. On the other hand, Illumina's future revenues are far more assured.
Winner: Tie
3. Competitive threats
Both companies face serious competitive and regulatory threats. One big concern for Illumina is that the company has a pressing need to add a different kind of NGS technology to its solution. Many scientific researchers are finding that Illumina's short-read machines -- while fast, cheap, and accurate -- are incomplete and insufficient for their needs. Illumina's sequence machines chop DNA into very tiny strands, say 150 base pairs in length. But some researchers are finding they need much longer strands to be analyzed. Pacific Biosciences (NASDAQ: PACB) sells machines that can read strands up to 100,000 base pairs long. And private Oxford Nanopore claims that its machine can read DNA strands up to 1,000,000 base pairs long.
Illumina is seeking to fill this hole in its offering by acquiring Pacific Biosciences. And this is where Illumina's market dominance is now hurting it. State regulators in the U.K. and U.S. are blocking this deal out of fear that Illumina is too big and powerful already, and is on the way to becoming a monopoly. The Federal Trade Commission alleges that Illumina "is seeking to unlawfully maintain its monopoly in the U.S. market for next-generation DNA sequencing (NGS) systems by extinguishing PacBio as a nascent competitive threat."
It seems rather bizarre to claim that Illumina is a "monopoly" when it's competing with Roche (OTC: RHHBY), a $274 billion mega-cap that once tried to acquire Illumina. Nevertheless, Illumina's attempt to acquire PacBio appears stymied by the government.
As for Guardant Health, the fast-growing company is also facing large and powerful competitors. Roche, for instance, has a subsidiary called Foundation Medicine, a company it acquired in 2018. Foundation is a direct competitor with Guardant in its immediate markets. And now Foundation has Roche's salesforce to expand its markets.
Another competitor with a liquid biopsy to detect early cancer is a private start-up called Grail, spun out of Illumina, and backed by an all-star roster of names including Jeff Bezos, Bill Gates, Alphabet, Johnson & Johnson, Merck, and Bristol-Myers Squibb. Grail's test -- which is designed to look for multiple cancers with one blood sample -- was given a "breakthrough device" designation by the U.S. Food and Drug Administration, which will help speed its way through clinical trials.
Winner: Tie
Conclusion
Both stocks are highly expensive. Guardant Health has exceptional growth right now, and as long as the company can continue to grow at its fast pace, the stock should continue to rise. Illumina has a dominant competitive edge in its market, but its revenue growth has stalled. Its high-priced stock seems risky right now. Based on valuation, market opportunity, and competitive threats, it appears that Guardant Health has the advantage today.
10 stocks we like better than Illumina
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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. Taylor Carmichael owns shares of Intuitive Surgical. The Motley Fool owns shares of and recommends Alphabet (C shares), Bristol-Myers Squibb, Guardant Health, Illumina, and Intuitive Surgical. The Motley Fool recommends Johnson & Johnson. 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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Better Buy: CRISPR Therapeutics vs. Sangamo Therapeutics
If you're considering investing in the gene editing sector, it's worth taking some time to look through all the main players in this small but promising biotech market. At the moment, there are just a few noteworthy companies in this space, all of them still at early clinical stages despite commanding market valuations well into the billions of dollars.
CRISPR Therapeutics (NASDAQ: CRSP) is likely the first gene editing stock to come to mind, and it's considered by many to be the leading company in the market, if only by market cap. However, smaller companies, like Sangamo Therapeutics (NASDAQ: SGMO), also have plenty of promise.
If you're wondering which of these two stocks is the better buy, then read below to find out all the details.
Image source: Getty Images.
What they have in common
While different gene editing companies target their own specific conditions, investors will notice that many tend to coalesce around the area of blood disorders. Both CRISPR and Sangamo are working on drug candidates that target sickle cell disease and transfusion-dependent beta thalassemia (TDT), which are disorders that hinder the ability of hemoglobin to carry oxygen around the body.
CRISPR is working on CTX001, which has been used to treat two different patients, one with sickle cell disease and the other with beta thalassemia. Both patients have shown a complete reversal of all key symptoms, with more patients now undergoing CTX001 treatment.
Unlike CTX001, Sangamo has two separate drug candidates, each targeting only one of the blood disorders mentioned above. ST-400 is Sangamo's beta thalassemia drug, while BIVV003 is its sickle cell candidate. Both are being developed alongside Sanofi, which has partnered with Sangamo to develop these drugs.
While BIVV003 is still undergoing early clinical testing, with investors still waiting to see the preliminary results, ST-400 has proven to be an early success so far. Sangamo released data in early December regarding the first three patients treated with ST-400 for TDT, with all of them showing encouraging results with few side effects. Further results are expected to come out in 2020.
What sets Sangamo apart
Sangamo has a pretty diverse portfolio of drug candidates that are either in preclinical or clinical stages of development, totaling 15 separate projects in comparison to CRISPR's nine. Five of those are in early phase 1/2 trials. Besides Sangamo's sickle cell and beta thalassemia treatments, Sangamo is working on treatments for Fabry disease, Hemophilia A, and Hunter syndrome (also known as mucopolysaccharidosis type 2 or MPS II).
The Hemophilia A treatment, SB-525, showed strong results in its phase 1/2 study earlier this year. Patients with this blood disorder, who experience a lack of a key blood-clotting factor, showed significant improvements in levels of this clotting factor after taking SB-525.
Even patients with severe cases of hemophilia A, which is extremely hard to treat, showed impressive improvements in the levels of this clotting factor. Pfizer, which is partnered with Sangamo to develop SB-525, is now moving toward a new phase 3 trial, which is expected to begin sometime in 2020.
Sangamo's Fabry treatment, ST-920, is still undergoing its own early-stage clinical trials, with little information available at present. The only setback for Sangamo has been in its MPS II drug, SB-913, which ended up failing to significantly help patients with the rare genetic disorder. While the company hasn't given up on SB-913 yet, it's definitely the weak link in an otherwise strong drug portfolio.
What sets CRISPR apart
CRISPR's drug portfolio is a bit narrower, with only two drugs in clinical testing in comparison to Sangamo's five. Besides the previously mentioned CTX001, CRISPR has a fairly strong cancer immunology lineup. CTX110, CTX120, and CTX130 are its selection of immunology candidates, although CTX110 is the only one in clinical testing at the moment.
Cancer immunology is a massive market that's estimated to reach $127 billion by 2026, and a home run in this area would be a major win for CRISPR. CTX110 is a CAR-T (chimeric antigen receptor T-cell) therapy, a type of treatment in which immune cells are extracted from a patient, retrained outside the body, and later reintroduced into the patient's system in hopes they will perform better. While it's not the only CAR-T therapy being developed, CRISPR's treatment could prove to be much cheaper than current treatments, which cost hundreds of thousands of dollars for a single patient.
Evaluating the financials
CRISPR has had a strong fiscal third quarter, reporting $138.4 million in net income on revenues of $211.9 million. But in 2019, CRISPR has so far only reported $36.3 million in net income, as the earlier quarters reported losses. While it's nice that CRISPR is reporting a profit, something very few early-stage biotech companies can boast, it's still a very small figure considering CRISPR's $3.9 billion market cap.
Sangamo's financials look a lot different. Besides being a fraction of CRISPR's size with a market cap of $970 million, Sangamo's Q3 2019 revenues came in at $21.9 million, while reporting a net loss of $27.4 million for the quarter. However, the company has an impressive $408.3 million in cash and equivalents, enough to last for around four years at the current rate of expenses.
In terms of traditional valuation metrics, it's hard to evaluate clinical-stage biotech stocks by looking at ratios, as their financial figures can change dramatically if a drug candidate receives approval. Currently, CRISPR trades at 16.7 its price to sales (P/S) ratio, but in July, the company was trading at an astronomical 1,800 P/S ratio, meaning that investors were willing to pay extraordinarily high amounts for what little revenue it was making that quarter. In comparison, Sangamo is more moderately priced, with a 12.2 P/S ratio.
Which is a better buy?
Both companies are compelling investments if you're looking for exposure to the gene editing sector. While Sangamo has a broader pipeline of projects, I still think CRISPR is the better choice if you had to pick just one of these companies. CRISPR has not only shown positive clinical results for CTX001 and CTX110, but is also reporting a profit for this most recent quarter, which is pretty rare for early-stage biotech stocks. Meanwhile, Sangamo isn't expected to turn a profit anytime soon.
However, gene-editing drugs are still at an early stage of clinical development, and plenty of things can change over the coming years. Both CRISPR and Sangamo are promising investments for someone who's comfortable buying into early-stage biotech stocks.
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Mark Prvulovic has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends CRISPR Therapeutics. 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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3 Beaten-Up Biotech Stocks That Just Got More Enticing
The Biotech sector came back to life towards the end of 2019. The Nasdaq Biotechnology Index jumped up 20% between October and December, beating the S&P 500’s 9% increase. The surge, according to some analysts, is set to continue into 2020.
Washington’s lack of attention to drug pricing or Medicare for All, due to present focus on trade talks and the impeachment process, along with the J.P. Morgan Healthcare Conference between Jan. 13-16, which usually generates investor interest, are both seen as reasons to be bullish. Furthermore, according to Jared Holz, a sector strategist at Jefferies, the beginning of the year is a likely period for mergers and acquisitions.
“We continue to think there is much more consolidation on the horizon given the pipeline needs across large cap bio-pharma,” said Holz.
This leads us to think now is a good time for bargain hunting in the Healthcare sector. So, we dug into TipRanks’ Stock Screener to find three biotech stocks that have yet to catch up with the uptick in the sector’s fortunes, but which according to the analysts, are ready to make some upward movement in 2020. Let check out the data.
bluebird bio (BLUE)
No one is doubting the fact that gene therapy company bluebird bio has had a rough going. We’re talking about a 50% fall in the past two years. However, Oppenheimer analyst Mark Breidenbach believes that the drop presents investors with a buying opportunity.
bluebird recently presented at the annual American Society of Hematology (ASH) conference and Breidenbach was there to get the lowdown. The 4-star analyst is forecasting "blue skies” following Bluebird’s presentation.
bluebird has one product approved for patients in the EU; Zynteglo, the first gene therapy approved for transfusion-dependent β-thalassemia (TDT). Breidenbach expects “Zynteglo sales in Europe to slowly begin ramping in 2020.” Bluebird plans to initiate a rolling BLA (Biological License Application) for the treatment in the US by the end of the year.
Furthermore, the company has several drugs in the pipeline, of which data presented from its ongoing Phase 1/2 HGB-206 study of investigational LentiGlobin gene therapy for sickle cell disease (SCD), was a highlight for the analyst.
“At ASH, bluebird showcased tangible signs of progress across its hemoglobinopathy pipeline, with especially impressive results in sickle cell anemia (SCA) [...] Nine treated patients with ≥6 months follow-up showed sustained hematological improvements and a 99% reduction in serious symptoms including VOC and ACS episodes,” said Breidenbach.
A further catalyst for Breidenbach is bluebird’s partnership with Bristol-Myers Squibb. The two are collaborating on a therapy candidate for patients with relapsed and refractory multiple myeloma, and positive top-line results from KarMMa, a Phase 2 study of idecabtagene vicleucel (ide-cel; bb2121) met its primary endpoint and key secondary endpoint.
Breidenbach noted, “We expect pivotal data from KarMMa to support FDA approval of ide-cel by late 2020, and we believe new data from competing products could help calibrate expectations for its commercial potential."
As a result, Breidenbach upgraded his rating on BLUE from Perform to Outperform, alongside a price target of $135, implying upside potential of over 50%. (To watch Breidenbach’s track record, click here)
On the Street, bluebird currently has 8 Buys and 5 Hold ratings, which coalesce into a Moderate Buy consensus rating. The average price target comes in at $118.67, and represents possible upside of 36%. (See BLUE stock analysis on TipRanks)
Aridis Pharmaceuticals (ARDS)
Another company which struggled in 2019, is fellow micro-cap Aridis Pharmaceuticals. The biotech saw out the year with its share price down by 60%.
However, H.C. Wainwright analyst Vernon Bernardino believes now is the right time for investors to hop onboard. The analyst initiated coverage on Aridis shares with a Buy rating, and set a price target of $7, implying upside potential of 57%. (To watch Bernardino’s track record, click here).
So, what has piqued the analyst’s interest, then? Bernardino believes Aridis has “product candidates that present novel targets and mechanisms of action” and a clinical strategy which “is designed to achieve superiority and maximize the probability of adoption of Aridis’ fully human mAbs as first-line anti-bacterial therapies.” The analyst added, "We expect Aridis’ mAb anti-bacterial candidates to differentiate themselves through their potential to be active against antibiotic resistant strains of urgent threat bacteria.”
Aridis has several therapies in the pipeline. Its most advanced candidate is AR-301, currently in a Phase 3 trial for hospital-acquired pneumonia (HAP) infection and ventilator-associated pneumonia (VAP) infection bought on by the Gram-positive bacteria, Staphylococcus aureus (S. aureus). Bernardino thinks the drug has potential for regulatory approval by 2022 and projects AR-301 could reach annual sales of approximately $700 million by 2030.
Bernardino further expounded, “We believe the potential for results from the ongoing Phase 3 trial with AR-301 as adjunct therapy in patients with hospital acquired and ventilator-associated pneumonia to be a positive catalyst in early 2020 is under-appreciated.”
Similarly, other Wall Street analysts like what they’re seeing. With 3 Buy ratings received in the last three months, the stock earns a ‘Strong Buy’ Street consensus. At an $18 average price target, analysts see 270% upside potential in store for Aridis. (See Aridis price targets and analyst ratings on TipRanks)
Ocugen Inc (OCGN)
It’s been a miserable 2019 for investors in clinical-stage biopharmaceutical company Ocugen, which saw its stock price cut nearly 90%. The low value, though, could also present opportunity, at least according to H.C. Wainwright analyst Swayampakula Ramakanth.
Ramakanth initiated coverage on Ocugen with a Buy rating and set a price target of $1.25. Should the target be met, investors will see a solid 140% gains over the next 12 months. (To watch Ramakanth’s track record, click here)
Ocugen’s lead candidate is OCU300, a treatment for ocular graftversus-host disease (oGVHD), a condition which can cause damage to the ocular surface and tear-producing glands and has no approved therapy. The drug is currently in a Phase 3 trial and topline results are expected in 2H20. According to estimates, there are 63,000 oGVHD patients in the US, a figure expected to grow to 140,000 by 2030.
Ramakanth noted, “Given the promising data generated so far, we believe that OCU300 Phase 3 study is likely to report a positive readout, which could be a major catalyst. Additionally, OCU300 is the first and only product candidate that has received Orphan Drug Designation (ODD) from the FDA for oGVHD. We currently project OCU300 risk-adjusted revenues to reach $141M by 2030, growing from $5M in 2021.”
There is little action on the Street heading Ocugen’s way right now, with only one other analyst chiming in with a view on the micro-cap’s prospects. An additional Buy rating means Ocugen qualifies as a Moderate Buy. The average price target, though, is $1.63, and implies massive upside potential of 213%. (See Ocugen price targets and analyst ratings 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.
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Better Buy: NXP Semiconductors vs. Texas Instruments
Investors with an interest in the semiconductor industry often find themselves weighing Texas Instruments (NASDAQ: TXN) against NXP Semiconductors (NASDAQ: NXPI). The two enormous chipmakers have a lot in common, competing head-to-head in several key markets and running very similar hybrid manufacturing models. So which one is the better investment right now?
Valuation
Once upon a time, the main tiebreaker between these two stocks lay in their valuation. NXP traded at the bargain-bin ratio of 10 times forward earnings last spring, making it a no-brainer bargain of an investment. At the time, Texas Instruments shares were changing hands at 20 times forward earnings. For P/E purists, there was just no reason to consider TI over NXP.
Things have changed since then, but perhaps not to a game-changing degree. NXP investors pocketed a 74% return in 2019, while TI's shareholders had to settle for a (still market-beating) gain of 36%. Today, NXP's stock trades at 15 times forward earnings and 24 times free cash flows, while Texas Instrument's valuation ratios stand at 26 times forward earnings and 39 times free cash flows.
Operating trends
So NXP sure looks like the richer bargain right now, but that's never the whole story. Master investor Warren Buffett famously prefers buying great companies at a fair price over settling for fair companies at a great price, and that's a fantastic way to think about what matters to serious investors.
From that point of view, both companies have seen better days.
TI's top-line sales fell 12% year over year in October's third-quarter report. Adjusted earnings per share declined by 6%. The Chinese-American trade war limited the demand for TI's analog and embedded chips in important markets such as automotive computing and communications.
At the same time, NXP's revenues fell 7% and operating profits followed in lockstep. Once again, management pointed to weakness in the automotive computing sector, and the trigger event for that negative trend can be traced back to Chinese-American trade tensions.
On the other hand, NXP may have seen the worst of the trade war-related market softness. CEO Rick Clemmer said that the automotive revenue drops should slow down in the fourth quarter and probably turn around in 2020. And TI's top and bottom lines may be suffering, but the chip giant's free cash flows increased by 6.2% in the third quarter.
Image source: Getty Images.
So which stock should I buy?
At the end of the day, we're looking at two fantastic companies with plenty of long-term growth ahead of them, as soon as the tensions between Washington and Beijing go away. Anything can happen in an election year, and I would be surprised to see international trade issues weighing on the tech sector in 2021.
There aren't any losers in this matchup, but the two stocks do serve different types of investors.
Texas Instruments is the larger and slower option, committed to returning those massive cash flows directly to shareholders through buybacks and dividends. The dividend yield currently stands at 2.8%, which might not sound like a lot, but it really does make a difference in the long term. Over the last 10 years, TI delivered a 391% return measured in pure share-price gains. Reinvesting the dividends along the way into more TI stock would have boosted your returns to 523%.
NXP Semiconductors started paying a modest dividend last year, sporting a yield of 1.2% today. But this smaller and nimbler business can turn its attention to new growth markets with more conviction than TI's broad product portfolio ever could. That's how NXP became a market leader in not-yet-hot sectors like automotive computing and mobile security. Today, NXP investors can look back at an 807% return as these trends played out over the last decade, or 823% with dividends reinvested.
So TI is arguably the better choice for patient long-term investors with a yen for juicy dividends, while NXP appeals more to growth-stock enthusiasts. In this age of commission-free stock trades, there's nothing stopping you from buying some of each.
10 stocks we like better than Texas Instruments
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 Texas Instruments 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
Anders Bylund owns shares of NXP Semiconductors. The Motley Fool owns shares of Texas Instruments. The Motley Fool recommends NXP Semiconductors. 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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Energy Sector Update for 01/03/2020: YUMA,CEI,XOM
Top Energy Stocks
XOM -0.54%
CVX -0.20%
COP +0.34%
SLB +0.34%
OXY +1.73%
Energy stocks have turned lower, giving back all of their spike earlier Friday amid a more than 2% jump in global oil prices in response to US forces killing Iranian general Qasem Soleimani in a drone strike in Baghdad overnight. The NYSE Energy Sector Index was down 0.1% while the shares of energy companies in the S&P 500 also were down nearly 0.6% as a group. West Texas Intermediate crude oil was rising $1.38 to $62.56 per barrel in New York while the front-month Brent crude February contract was ahead by $1.85 to $68.10 per barrel. February natural gas futures were 2 cents higher at $2.14 per 1 million BTU.
Among energy stocks moving on news:
(+) Yuma Energy (YUMA) jumped 32% after the oil and natural gas company said it has revised its credit agreement with an affiliate of Red Mountain Capital Partners, adding a new $2 million delayed-draw term loan facility on top of its $1.7 million purchased loan already outstanding with the alternative asset manager. The purchased loan matures at the end of 2022 and can be exchanged by Red Mountain for a 5% convertible note with an initial rate of $0.129 per share, according to a regulatory filing late Thursday by the company.
In other sector news:
(+) Camber Energy (CEI) climbed 15% after saying it has cancelled the merger with privately held Lineal Star Holdings it announced in July by redeeming all of the Series E and Series F preferred stock it previously issued to the owners of the pipeline integrity and inspections company. One of the reasons for unwinding the deal it said was the post-merger company's inability to meet some of the listing standards of the NYSE American stock exchange, including receiving shareholder approval for the conversion rights and other terms of the preferred stock.
(-) Exxon Mobil (XOM) turned 0.7% lower this afternoon, giving back a small gain earlier Friday that followed the energy major saying it expects between $3.4 billion to $3.6 billion in proceeds from the sale of its oil and natural gas production assets in Norway and providing a significant boost to its Q4 earnings.
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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3 Small-Cap Healthcare Stocks With Large-Cap Potential
While small-cap stocks -- those with market caps between $500 million and $2 billion -- don't get as much attention as their large-cap cousins, there are plenty of promising investments in this area. Given their smaller sizer, these stocks have much more growth potential and are capable of multiplying in market value over a short period of time.
While there are hundreds, if not thousands, of small-cap stocks to chose from, not all of them are good investments. Here are three small-cap stocks that have tremendous upside potential over the near future.
Image source: Getty Images.
1. Portola Pharmaceuticals
Portola Pharmaceuticals (NASDAQ: PTLA) is a $1.9 billion biotech stock that has a drug candidate with serious blockbuster potential. The drug, called Andexxa, is an anticoagulant reversal agent, which essentially means it helps stop excessive bleeding in patients who are taking anticoagulants (also known as blood thinners).
There is tremendous demand for a drug that can stop the uncontrollable bleeding many patients on blood thinners experience. There were around 140,000 hospital visits in 2017 due to anticoagulant-induced uncontrollable bleeding, with many resulting in patient deaths. At the moment, there are no other anticoagulant reversal agents on the market, meaning Andexxa is the only drug that can address this issue.
Portola is putting Andexxa's price tag at $27,500 per patient dose, and when factoring in the 140,000 or so hospital visits of 2017, the American market for Portola's new drug would roughly be around $3.85 billion per year. With no other treatments on the market, investors can expect Portola's revenue to exponentially increase from the $36.8 million reported in Q3 2019, possibly reaching a figure in the billion-dollar range.
In terms of clinical development, Andexxa is in the clear. The Food and Drug Administration (FDA) has already approved the drug for commercial production in the U.S. alongside other prestigious designations, such as the important Breakthrough Therapy designation. Investors have a lot to look forward to from Portola in the years to come.
2. NanoString Technologies
NanoString Technologies (NASDAQ: NSTG) is a small, $980 million market cap medical technology company that's done exceedingly well in 2019. With the stock having almost doubled since the start of the year, there's plenty of excitement behind NanoString -- and for good reason.
The company provides diagnostic equipment to laboratories, including technical instruments, diagnostic kits, and chemical reagents required for its other products (which it refers to as consumables). NanoString has pioneered some pretty novel technologies, such as its nCounter Analysis System, which lets scientists save time by analyzing a single tissue sample for hundreds of biological markers simultaneously. Without this technology, scientists would have to spend exponentially more time setting up tests, and they'd also need many more tissue samples from patients to execute the same number of tests.
NanoString's Q3 2019 revenue came in at only $30.6 million, and it reported a net loss of $22.8 million. While the company's management team is still focusing on pursuing a high-growth strategy, which means NanoString isn't expected to turn a profit anytime soon, it is expected to continue growing at a strong pace going forward. It is also worth noting that the bulk of NanoString's revenue came from consumables. Similar to how printer manufacturers also sell ink cartridges, these sales are a recurring source of revenue that will only continue to grow as more of its laboratory equipment is sold.
Although NanoString will stay a pretty niche business, when considering that it already commands a $1 billion market cap on its relatively small revenue figures, it wouldn't be surprising if NanoString's valuation shoots up by several times as the company's income grows.
3. Cara Therapeutics
Cara Therapeutics (NASDAQ: CARA) has been one of the most anticipated biotech stocks so far in 2019, although the company was hit by some unexpected news earlier in December. Cara's main drug candidate, a late-stage treatment called Korsuva, aims to treat patients with a type of reoccurring skin itch caused by kidney failure. Known as pruritus, this condition is especially prevalent among patients with late-stage kidney failure, with over 30 million people in the U.S. having been prescribed pain medication to deal with it.
At the moment, no drugs specifically treat pruritus. Instead, patients end up having to take opioids, corticosteroids, and antihistamines -- typical pain management drugs that often have their own side effects. However, Korsuva sets itself apart by the fact that it targets the peripheral nervous system to deliver pain relief. It doesn't have the same side effects or addictive properties as traditional pain drugs that target the central nervous system.
Clinical results have been strong for the most part. Korsuva's first phase 3 trial, Kalm-1, ended up a success, handily outperforming the placebo by a 20 percentage point margin in reducing itching symptoms. A second phase 3 trial, Kalm-2, is underway and expected to yield preliminary data sometime in early 2020.
However, a separate phase 2 trial for Korsuva surprised investors by failing to meet its secondary endpoints, although the primary target was still met by the trial. While the setback sent Cara's stock falling, in the grand scheme of things, missing the secondary endpoints for a single phase 2 trial isn't enough to derail what's already a promising drug candidate.
Cara Therapeutic's has a market cap of only $760 million at the moment, with Q3 2019 revenue of just $5.8 million. However, some analysts have estimated that Korsuva's peak revenue could reach as high as $570 million per year, although it's uncertain how quickly this could happen. With revenue figures that high, Cara Therapeutics' market value could easily multiply by several times on the low end should Korsuva end up receiving FDA approval, which seems more likely than not at this point.
10 stocks we like better than Portola Pharmaceuticals
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 Portola Pharmaceuticals 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
Mark Prvulovic 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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SM Crosses Above Key Moving Average Level
In trading on Friday, shares of SM Energy Co. (Symbol: SM) crossed above their 200 day moving average of $11.45, changing hands as high as $12.23 per share. SM Energy Co. shares are currently trading up about 6.4% on the day. The chart below shows the one year performance of SM shares, versus its 200 day moving average:
Looking at the chart above, SM's low point in its 52 week range is $6.845 per share, with $21.19 as the 52 week high point — that compares with a last trade of $11.94.
Click here to find out which 9 other energy stocks recently crossed above 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.
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As 2 Executives Leave Aurora Cannabis, Should Investors Worry?
On Dec. 21, Aurora Cannabis (NYSE: ACB) announced that its chief corporate officer, Cam Battley, would be leaving the company to work for MedReleaf Australia. Aurora owns a 10% stake in MedReleaf and has 50% voting rights in the company.
Earlier in the month, Neil Belot also decided to leave the company, although Aurora made no formal announcement. It hired Belot in 2017 to be its chief global business development officer, helping with its international growth.
Anytime a company loses a key executive, let alone two (especially since it's struggling), it could be a cause for concern.
Was Battley just the fall guy?
Battley was often the face of Aurora, speaking for the organization and providing the news media with updates. And with the company falling short of expectations multiple times, he's likely drawn the ire of agitated investors as well, especially as the stock hit new 52-week lows several times last year. Over the past 12 months, Aurora's share price has fallen by 61%, which is even worse than how the Horizons Marijuana Life Sciences Index ETF performed, which declined by 41% during the same period.
Image source: Getty Images.
At least part of the frustration from investors comes with the company's projection that its EBITDA should be positive by now. A year ago, Battley told investors that profitability was in sight, stating that "we can project positive EBITDA in the second calendar quarter." That's in reference to the company's fourth-quarter earnings of fiscal 2019. The company would not come close to profitability, even at adjusted EBITDA, which was a loss of 11.7 million Canadian dollars ($9 million). Although it was an improvement from the third quarter, when Aurora lost CA$36.6 million, investors were disappointed.
With reports surfacing that Aurora forced Battley out, it could show that Aurora is trying to distance itself from its poor performances in 2019 and looking to start with a clean slate for the new year. While Battley may have just been the figurehead and not likely the one behind the forecasts themselves, it's an easy way for the company to try to separate itself from those aggressive projections.
Does Belot's departure mean Aurora will focus less on international growth?
It's unclear whether Aurora pushed out Belot as well, and it's unlikely we'll ever know the real reasons he exited the company. But with the departure being low key and Aurora not announcing his replacement, it could indicate that the company is shifting priorities away from theglobal marketfor cannabis and onto the domestic one. While Aurora is still active globally and prides itself on having a presence in 25 countries, cash flow has also been on the company's mind of late.
In a press release on Dec. 23 about its recent changes, the company said, "Aurora has taken steps to proactively rationalize capital expenditures, reduce near-term debt and bolster liquidity in an effort to position the Company for the long-term success." Moving cash flow and expenses away from its global strategy would align with that statement, especially as the company focuses on ingestible products, which are now legal in Canada.
What should investors do?
Turnover shouldn't come as a big surprise, especially given the challenges that Aurora has faced in the past year. With the company falling short of expectations, it was likely that there would be changes coming. And while investors may not be excited by the moves, they do make Aurora's management team leaner and perhaps more focused.
However, investors should wait until the company releases some positive results before buying shares. As poorly as the marijuana stock has performed, its low price isn't enough to make it a buy. All that matters is if Aurora is able to hit a positive EBITDA figure and if it can do that while continuing to grow. Right now, it hasn't demonstrated that it can, and until it does, investors should stay away from the stock.
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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.
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Delta Air Lines Employees Sue Lands' End Over Their Uniforms
(RTTNews) - Some of the Delta Air Lines employees filed a lawsuit against Lands' End Outfitters, alleging that the uniforms it supplied to the airline are causing them health issues.
The class-action lawsuit was filed in federal court in Wisconsin by more than 500 Delta workers who work in various capacities, including as ticket agents, flight attendants, ramp and gate agents, and cargo workers.
Wisconsin-based Lands' End is the manufacturer of the new "Passport Plum" uniforms introduced by Delta Air Lines in May 2018 for some 64,000 workers.
According to the lawsuit, the various chemical additives and finishes used by Lands' End in the new uniform material to make them waterproof, anti-static, and wrinkle and stain-resistant have an allergic and sensitizing effect on the human body.
The employees alleged that the uniforms caused health problems, including skin blisters, rashes, blurred vision, headache, fatigue, and difficulty breathing.
The employees are seeking damages for their personal pain and suffering, emotional distress, and financial as well as economic loss. They are also seeking to require Lands' End to recall the uniforms so that the uniforms do not present a "continuing risk of toxic exposure".
However, Delta Air Lines reportedly said its study confirmed that the uniforms met the highest textile standards - OEKO-TEX - with the exception of the optional flight attendant apron, which the airline removed from the collection.
A similar lawsuit was filed against Lands' End by two Delta flight attendants in May 2019, who alleged that the new uniforms were causing allergic and other reactions.
Delta Air Lines is not the only airline whose employees have alleged health issues due to their uniforms. In 2018, employees of American Airlines filed a lawsuit against uniform maker Twin Hill, alleging that the chemicals in their synthetic uniforms caused health problems for flight attendants and pilots.
However, Twin Hill maintained the uniforms were safe and said that the claims were without merit.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Shares of EAF Now Oversold
In trading on Friday, shares of GrafTech International Ltd (Symbol: EAF) entered into oversold territory, changing hands as low as $11.115 per share. We define oversold territory using the Relative Strength Index, or RSI, which is a technical analysis indicator used to measure momentum on a scale of zero to 100. A stock is considered to be oversold if the RSI reading falls below 30.
In the case of GrafTech International Ltd, the RSI reading has hit 29.8 — by comparison, the universe of metals and mining stocks covered by Metals Channel currently has an average RSI of 58.8, the RSI of Spot Gold is at 76.5, and the RSI of Spot Silver is presently 71.2. A bullish investor could look at EAF's 29.8 reading as a sign that the recent heavy selling is in the process of exhausting itself, and begin to look for entry point opportunities on the buy side.
Looking at a chart of one year performance (below), EAF's low point in its 52 week range is $9.60 per share, with $15.35 as the 52 week high point — that compares with a last trade of $11.24. GrafTech International Ltd shares are currently trading off about 1.3% on the day.
Click here to find out what 9 other oversold dividend stocks you need to know about »
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Aurora Cannabis (ACB): Will Nelson Peltz Save 2020?
Aurora Cannabis (ACB) ended 2019 with an executive shuffle that might have just started. The Canadian cannabis LP is in need of a more streamlined expense structure to survive and thrive until mid-year 2020 catalysts boost the Canadian market. Until then, investors have to wonder if the promises of working with Nelson Peltz on CPG partnerships will ever bear fruit.
Executive Shuffle
Back on December 20, Chief Corporate Office Cam Battley stepped away from the company. Mr. Battley has long been the face of Aurora Cannabis despite not being the CEO or CFO.
The move is an interesting step for a company struggling to reach EBITDA positive. As recent as November 20, the company promoted individuals to the Chief Product Officer and Chief Integration Officer positions.
One has to question if Aurora Cannabis has too many chiefs and the additional costs for a company with revenues far under a $500 million run rate. In addition, CEO Terry Booth and CFO Glen Ibbott will need to take more active roles in promoting the company. In the lastearnings call Mr. Battley was the primary corporate spokesperson followed by the CFO. Both the CEO and Executive Chairman didn’t speak until the Q&A section.
The company has quarterly operating expenses of $67 million and analyst forecasts with gross profits only reaching into the $50 million range far into 2021. The company faces a scenario where revenues won’t reach levels to generate profits at the current operating expense level until maybe two years.
Aurora Cannabis needs to take this executive departure as part of a cost cutting move.
Mr. Peltz
The company signed a partnership with Mr. Peltz back last March. The investment activist has worked with many CPG firms to improve their operations, but Mr. Peltz was normally an activist investor and not a hired consultant.
Another issue is that Peltz signed up for the job via stock options priced far above current market prices. One has to even wonder, if he has the motivation to find Aurora Cannabis worthwhile deals when his 20 million stock options have exercise prices closer to $8 per share.
One has to imagine his firm has the incentive to purchase shares in the open market or rework the original deal before working out a partnership for Aurora Cannabis. Though, the holding of potential inside information might preclude an investment.
Aurora Cannabis is at a financial situation where a strategic investment of several hundred million dollars would help resolve a lot of the financial pressure on the company. The biggest issue is the level of dilution with the stock down to $2 and whether any highly respected CPG firm would even invest down here.
The best solution might be a partnership with a major CPG company wanting to expand in the cannabis sector starting in Canada. As 2020 progresses and Cannabis 2.0 products reach market, somebody should find working with an industry leader as appealing. If not, one has to wonder why Aurora Cannabis brought on Nelson Peltz when just about every other major Canadian cannabis player already has big partnerships.
Takeaway
The key investor takeaway is that Aurora Cannabis has a lot of positive catalysts to play out in 2020, but the company needs to reorganize the firm to reduce operating expenses following the departure of Cam Battley. Once the company gets the business better aligned with market realities, investors can own the stock knowing the catalysts will benefit shareholders.
Consensus Verdict
This troubled cannabis giant certainly has the Street divided, as TipRanks analytics indicate ACB as a Hold. Based on 10 analysts polled in the last 3 months, 3 rate Aurora stock a Buy, 4 say Hold, while 3 recommend Sell. However, the bulls still win out in the bigger picture, as the average price target of $3.49 marks over 70% upside from Friday's closing price. (See Aurora's stock analysis at TipRanks)
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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Wait for a Better Price on Apple Stock
Last year was a dominant year for Apple (NASDAQ:). Shares of the tech giant rose more than 100% from its January 2019 lows, and ended the year higher by more than 86%. That kind of move is impressive for any company, whether itâÂÂs Advanced Micro Devices (NASDAQ:), Tesla (NASDAQ:) or any other high-octane growth company.
Source: thanat sasipatanapa / Shutterstock.com
But thatâÂÂs the thing: Apple isnâÂÂt a high-octane growth company.
ThatâÂÂs why when we consider the size of Apple, its rally is even more impressive. Remember, Apple and Microsoft (NASDAQ:) are the only two U.S. public companies that trade with a market cap in excess of $1 trillion. At the January 2019 lows, Apple had a market cap of $662 million. As of the close on Tuesday (Dec. 31), that figure had swelled to $1.304 trillion.
That $642 billion in market cap gain is wildly under-appreciated in my view. ThatâÂÂs the combined value of Uber (NYSE:), Citigroup (NYSE:), Disney (NYSE:), Roku (NASDAQ:) and Netflix (NASDAQ:). Just to give you an idea.
I always find the concept of âÂÂfear of missing outâ interesting. FOMO drives investors to pile into stocks with momentum. It causes investors to chase Apple when itâÂÂs up 50% in a few months and up about 100% from its annual low. Rather than say, buying near those lows, investors tend to congregate at the highs.
Is 2020 setting up for disappointment?
Understanding Apple
There are no secrets when it comes to Apple. Everyone knows it has a monster balance sheet, colossal buyback program and the most successful consumer electronic device in history. With no stone left unturned then, why do investors struggle to understand this name so much? Why does the stock suffer from so much volatility?
In regards to the former â understanding Apple â I think investors overcomplicate the company.
Think about it. Apple runs a razor/razor blade model. Only instead of giving away the razor in hopes of generating razor blade sales, it sells the razor (the iPhone, iPad, etc.) for billions in profit per year. Then it generates razor-blade sales (Services revenue) on top of that.
All the while, it generates immense cash flow â roughly $59 billion over the trailing 12 months â and buys back gobs of stock. The business model is simple and investors overcomplicate it by worrying about minor details and reading too many headlines.
Being Realistic With Apple Stock
We need to pick and choose our spots where the risk/reward is favorable, and just sit tight on this incredibly well-run company. WeâÂÂll get to that part in a minute â the charts â but letâÂÂs look at some other facts.
The price-to-earnings (P/E) ratio is not the end all, be all stat in the stock market. But at 23 times earnings, itâÂÂs the highest reading for Apple in a decade. Also in the past decade, Apple has only returned more than 30% in a calendar year three times. Each of the following years have been subpar, to say the least. In those years following a 30%-plus gain, Apple has also suffered big drawdowns too, (in excess of 25% each time).
Now one could argue that AppleâÂÂs move to Services revenue makes it worth a higher valuation. One could also argue that its historical price action isnâÂÂt indicative of future returns.
I agree with those statements and wouldnâÂÂt sell Apple simply because of how much it rallied last year. But based on its charts, valuation and how much it has rallied lately, I am simply not a buyer here.
ThatâÂÂs even as estimates are favorable for Apple â with calls for 6% and 7.7% revenue growth this year and next year, respectively, and 10% and 14.2% earnings growth in 2020 and 2021, respectively â and a 5G iPhone is likely coming this fall.
Finally, letâÂÂs look at the charts.
Trading AAPL
Source: Chart courtesy of
A look at the weekly chart shows just how intense this move has been.
Apple is up 57% from the August lows and it has rallied in 14 of the past 15 weeks. Shares are up in 17 of the past 19 weeks, provided Apple ends the week of Jan. 2 higher. ItâÂÂs also worth noting that its two âÂÂlosingâ weeks in the stretch were losses of 0.47% and 1.5%.
AppleâÂÂs relative strength index (RSI) sits at 87. This measures how overbought or oversold a stock is. On its own, itâÂÂs worth little. But when used with other measures, it can be one more catalyst for flat or negative returns in the intermediate term.
I love Apple for the long term. But before buying the stock, investors at least need a dip to the 10-week moving average. And preferably, a deeper correction than that to shake off some of the excess.
Bret Kenwell is the manager and author of and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long AAPL, DIS 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.
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Notable Friday Option Activity: AMD, AZO, YELP
Looking at options trading activity among components of the Russell 3000 index, there is noteworthy activity today in Advanced Micro Devices Inc (Symbol: AMD), where a total volume of 542,535 contracts has been traded thus far today, a contract volume which is representative of approximately 54.3 million underlying shares (given that every 1 contract represents 100 underlying shares). That number works out to 111.2% of AMD's average daily trading volume over the past month, of 48.8 million shares. Especially high volume was seen for the $49 strike call option expiring January 03, 2020, with 32,510 contracts trading so far today, representing approximately 3.3 million underlying shares of AMD. Below is a chart showing AMD's trailing twelve month trading history, with the $49 strike highlighted in orange:
AutoZone, Inc. (Symbol: AZO) options are showing a volume of 2,651 contracts thus far today. That number of contracts represents approximately 265,100 underlying shares, working out to a sizeable 107.4% of AZO's average daily trading volume over the past month, of 246,935 shares. Particularly high volume was seen for the $1180 strike put option expiring January 03, 2020, with 115 contracts trading so far today, representing approximately 11,500 underlying shares of AZO. Below is a chart showing AZO's trailing twelve month trading history, with the $1180 strike highlighted in orange:
And Yelp Inc (Symbol: YELP) options are showing a volume of 7,422 contracts thus far today. That number of contracts represents approximately 742,200 underlying shares, working out to a sizeable 103.5% of YELP's average daily trading volume over the past month, of 717,230 shares. Especially high volume was seen for the $36 strike call option expiring January 17, 2020, with 1,664 contracts trading so far today, representing approximately 166,400 underlying shares of YELP. Below is a chart showing YELP's trailing twelve month trading history, with the $36 strike highlighted in orange:
For the various different available expirations for AMD options, AZO options, or YELP 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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Why Advanced Micro Devices Stock Can Keep Rising
The S&P 500âÂÂs top stock of 2019 was chip-maker Advanced Micro Devicesà(NASDAQ:), with AMD stock up about 160% in the year. Impressively, AMD stock was also the S&P 500âÂÂs top stock of 2018, rising 80% in that year. Even more impressively, before turning into the S&P 500âÂÂs top stock in back-to-back years, AMD stock posted a jaw-dropping 300% return in 2016.
Source: Joseph GTK / Shutterstock.com
In other words, Advanced Micro Devices stock has been red-hot for several years now. From the start of 2016, shares are up nearly 1,600%, versus a 60% gain for the S&P 500.
What has driven the sustained out-performance in Advanced Micro Devices stock? Sustained market share expansion in the very big global semiconductor market. That is, a few years back, AMD was a no-name player in the Intel (NASDAQ:) dominated computer processing unit (CPU) market. But over the past few years, AMD has made significant inroads against Intel, leveraging superior technology and quicker-to-market product times to expand its CPU market share significantly.
As AMD has gained market share, the companyâÂÂs revenues, margins, and profits have all soared, as has the AMD stock price. It has gone from $3 at the start of 2016 to nearly $50 today. Can the big rally continue in 2020?
Yes. But at a much slower pace, and with much larger risks. HereâÂÂs a deeper look.
Advanced Micro Devices Stock Can Move Higher
My thesis on Advanced Micro Devices stock has been . So long as AMD keeps gaining share in the big CPU and GPU markets, AMD stock will keep moving higher.
Consider the following: Global semiconductor sales will measure about â and thatâÂÂs a down year. In 2018, global semi sales were up above $450 billion. The big CPU and GPU players in this market â Nvidia (NASDAQ:) and Intel â have $150 billion-plus market caps. Advanced Micro Devices, meanwhile, has just a $50 billion market cap. But AMD is quickly stealing share from Nvidia and Intel. If this trend persists, then Advanced Micro Devices could realistically be on a pathway towards becoming a $100 billion or $150 billion-plus company one day.
It is this logic which has continued to support big gains in AMD stock over the past few years. Importantly, what drives adoption of this thinking is sustained market share expansion. Thus, so long as AMD keeps gaining market share and the company remains a fraction of the size of Intel and Nvidia, then Advanced Micro Devices stock will likely keep heading higher. That is exactly what will happen in 2020.
At present, Advanced Micro Devices is in full-swing when it comes to mass producing next-gen, 7-nanometer processors. Intel wonâÂÂt release comparable 7-nanometer processors until the the fourth quarter of 2021. Thus, throughout 2020, AMD will be the only viable player in the market with such products, and this open field devoid of serious next-gen competition should propel continued share expansion and big revenue and profit growth.
Against that backdrop, itâÂÂs tough to see AMD stock not going higher.
Beware Valuation Risks At These Levels
Although Advanced Micro Devices will likely move higher in 2020, valuation friction will limit the magnitude of those gains.
I continue to see Advanced Micro Devices as an out-sized share gainer in the global semi market over the next several years. I also think that the pace of share expansion will slow in 2021 and after, as Intel introduces 7-nanometer products and levels the competitive playing field. As such, considering that the global semi market will likely grow sales at a historically normal low single-digit pace over the next few years, AMD realistically projects as a ~15% revenue grower into 2025.
Gross margins will improve with scale and as the company breaks into more valuable end-markets. Expense growth rates should moderate, too, which will lead to positive operating leverage.
Big picture: 15% revenue growth on top of steady margin expansion should drive 20%-plus profit growth at AMD for the next several years. But, even profit growth that big isnâÂÂt enough to fundamentally support much more upside in Advanced Micro Devices stock.
My best-case scenario pegs AMDâÂÂs 2025 earnings per share at $3.50. Based on an information technology sector-average 21-times forward earnings multiple and a 10% annual discount rate, that equates to a 2020 price target for AMD stock of $50. ThatâÂÂs roughly where shares trade hands today.
Sure, stocks that are firing on all cylinders can and often do trade above their fundamentally supported fair values. So, AMD stock will likely shoot above $50 in 2020. But buyers up there should beware of valuation risks.
Bottom Line on AMD Stock
Advanced Micro Devices stock has been the S&P 500âÂÂs best-performing stock for two years in a row. Shares will likely continue to move higher in 2020 thanks to continued market share expansion. But the valuation today makes it seem highly unlikely that AMD stock notches its third consecutive year as the S&P 500âÂÂs top performer in 2020.
As of this writing, Luke Lango did not hold a position in any of the aforementioned securities.ÃÂ
The post appeared first on InvestorPlace.
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