Monthly Archives: March 2018

Technology

3 Big Growth Tech Stocks That Wall Street Analysts Are (Still) In Love With

Source: Shutterstock

For the past decade, big growth tech stocks have led the way for this bull market. As the stock market has rallied, big growth tech stocks have rallied even more.

But recently, this trend seems to be reversing. Big growth tech stocks are now leading the market lower.

There are a few things at play here.

Facebook, Inc. (NASDAQ:FB) is coming under harsh criticism for its data selling practices. And it’s having widespread fallout throughout the whole tech sector, since essentially every tech company leverages consumer and user data to make business decisions.

Meanwhile, autonomous driving and artificial intelligence initiatives took a hit recently after an Uber self-driving car hit and killed someone in Tempe, Arizona. In the wake of that accident, Uber, NVIDIA Corporation (NASDAQ:NVDA), and others have suspended autonomous driving tests.

Overall, the near-term outlook for tech stocks is pretty cloudy. There seems to be a ton of headline risks from Facebook and Uber, while sentiment seems to have taken a sharp turn for the worse.

But are those headline risks creating an opportunity for long-term investors? If so, what names should you be buying?

Below, I’ve compiled a list of 3 big growth tech stocks that Wall Street analysts are still in love with, despite recent tech weakness. These are stocks with consensus strong buy ratings and price targets substantially above their current price.

Which stocks are they? Let’s find out.

Wall Street’s Favorite Big Growth Tech Stocks:

Facebook, Inc.’s (FB) Politics Are Bad for Business

Source: Shutterstock

#1 Facebook (FB)

The first stock on this list is the company which may have started this whole tech sell-off: social media giant Facebook Inc.

In the wake of a massive data leak that dates back to 2015 and has a political slant, FB stock has fallen nearly 20%. Investors are worried about regulation, and how that might affect Facebook’s business. They are also concerned that user privacy concerns will cause the “#deletefacebook” movement to gain serious traction, causing a drop in active users. If that happens, then advertisers could pull money from the platform, causing a drop in average revenue per user. A drop in active users and a drop in average revenue per user would have a catastrophic impact on Facebook’s financials.

But despite these investor concerns and the sharp drop in FB stock, Wall Street analysts remain resolute in their bullishness on Facebook. The average price target on FB stock, even after this whole data scandal, is $220. That would represent nearly 50% upside from current levels.

Specifically, RBC analyst Mark Mahaney said that Facebook remains the “Best Growth Story in Tech”. He also said that the “latest data controversies would have no material impact on the relevance and attractiveness of Facebook’s marketing platform”, while calling the risk-reward profile on FB stock “downright compelling”.

Wells Fargo, GBH Insights, Oppenheimer, Barron’s, Jefferies and others have all sounded a similar bullish tone on FB stock in the wake of the recent selloff.

All in all, it’s pretty clear that analysts are still in love with FB stock, even amid recent headline risks. The consensus from Wall Street’s analysts seems to be that user and advertiser churn will be mitigated as a result of this data leak, while regulation won’t be that severe. The stock now trades at a pretty cheap valuation relative to growth, and thus, the upside opportunity looks compelling.

Wall Street’s Favorite Big Growth Tech Stocks:

Why MU Stock Is Poised to Climb to $45 a Share

Source: Shutterstock

#2 Micron (MU)

The second stock on this list is red-hot chip-maker Micron Technology, Inc. (NASDAQ:MU).

MU stock has been on fire over the past 2 years, jumping from $10 to $60 as the supply/demand fundamentals in the company’s core DRAM and NAND markets have become exceptionally favorable. Put simply, the mainstream emergence of automation, AI, the Internet-of-Things (IoT), data centers, and cloud computing has created a surge in demand for MU’s chips. Considering many of these technologies are still in their early innings, demand should remain robust into the foreseeable future.

Meanwhile, supply is constrained due to limited chip production capacity against the backdrop of this demand surge. Big demand, short supply means huge profits for MU.

Investors are concerned that supply will ramp at any point now, and that this supply ramp will erode profits. This is a reasonable concern. It has happened time and time again in the cyclical semiconductor industry.

But analysts think that investors are under-estimating the strength and longevity of this current bull market in semiconductors. By and large, analysts expect favorable DRAM and NAND pricing to persist because, despite production capacity expansion, demand will continue to outstrip supply into the foreseeable future.

That is why the consensus analyst price target on MU stock is $67, roughly 30% above MU’s current levels. This is also why a flurry of firms, including Stifel, Mizuho and Cohen, upped their price targets on MU stock after the company’s recent blowout earnings report.

All in all, the Wall Street analyst thesis on MU stock remains bullish. Analysts think that big demand from emerging technologies like automation, AI, and IoT will persist into the foreseeable future. That demand will be so large that regardless of capacity expansion, demand will outstrip supply over the next several years. Consequently, MU’s profit margins should remain near historic highs. And MU stock should head to all-time highs.

Wall Street’s Favorite Big Growth Tech Stocks:

Source: Shutterstock

#3 Lam Research (LRCX)

The third stock on this list another semiconductor company, Lam Research Corporation(NASDAQ:LRCX).

LRCX is in the same DRAM and NAND worlds as MU. But instead of making the chips, Lam Research provides the equipment to companies like MU so that they can make the chips. Thus, MU is the chip-maker, and LRCX is the parts supplier.

Naturally, if the chip-maker is roaring higher thanks to a robust demand backdrop, the part supplier will also roar higher. That has happened. Over the past 2 years, LRCX has gone from $80 to $200.

Analysts think this run is far from over. The consensus analyst price target on LRCX stock is right around $265, implying more than 30% upside from current levels.

Specifically, Mizuho just initiated LRCX at a Buy rating. They slapped a $250 price target on the stock. Analysts at Mizuho believe that the best is yet to come from LRCX, citing acceleration in the hyper-growth China market.

Bank of America Merrill Lynch also recently initiated coverage on LRCX at a Buy Rating. They slapped a $305 price target on the stock. Analysts at BAML named LRCX a Top Pick due to the company’s exposure to the memory upcycle. They believe cloud computing and AI tailwinds will continue to produce strong operational results for LRCX.

Overall, the analyst sentiment on LRCX stock is quite bullish. Much like MU, LRCX is expected to benefit from emerging technology tailwinds over the next several years. Those tailwinds should prop up the numbers, which in turn, should prop up LRCX stock.

As of this writing, Luke Lango was long FB and MU. 

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Source: Investor Place

Cryptocurrency, Uncategorized

Crypto Infrastructure Build Continues Despite Pullback

Despite the recent pullback in crypto prices, amazing things are happening behind the scenes.

Blockchain entrepreneurs and coders are hard at work building the infrastructure necessary for a robust alternative financial system.

Today, we’re going to analyze important recent news items and breakthroughs.

Bitcoin currently maxes out at around seven transactions per second. The Lightning Network (LN) allows it to increase to thousands of transactions per second, with near-instant settlement. LN accomplishes this by taking transactions off the blockchain and settling them later in bulk.

This tech may allow bitcoin to compete with traditional payment processors such as Visa and PayPal. It will take time to perfect this new payment network, but LN has the potential to revolutionize how cryptocurrency is used. Many other coins have announced plans to build similar improvements.

Binance launched only last year, but it has become the highest-volume crypto exchange in the world, with trading volume of around $1.5 billion per day. Currently based in Hong Kong, Binance recently announced that it will be moving to Malta. The small Mediterranean island has crypto- and fintech-friendly laws.

Malta’s prime minister even personally welcomed Binance to Malta on Twitter.

Binance says the move will also allow it to add “fiat trading” to its platform by partnering with local banks. Currently, Binance is a “crypto only” exchange, but the addition of fiat trading will allow it to become a major on-ramp into the crypto market.

Cboe Global Markets, which trades bitcoin futures, sent a letter to the SEC encouraging it to allow the introduction of bitcoin ETFs.

At least six companies are attempting to get bitcoin funds approved, but so far the SEC has denied their applications.

The demand for a publicly traded bitcoin vehicle is certainly there, but the SEC has been twiddling its thumbs for a while now. Let’s see how long it can hold out against the pressure.

Adding ERC20 Support to Coinbase

Coinbase, the largest U.S. crypto exchange, has announced that it will be adding support for ERC20 tokens. In a blog post, Coinbase wrote, “This paves the way for supporting ERC20 assets across Coinbase products in the future, though we aren’t announcing support for any specific assets or features at this time.”

In essence, this means that Coinbase is planning to add more altcoins to its platform. This will drive more interest and altcoin buying. Now the speculation about which assets Coinbase will add next begins…

Bitfinex Announces Addition of New Fiat Pairs; Adds Support for British Pounds & Japanese Yen

Exchanges continue to offer new trading “pairs” in fiat currencies (dollar, euro, yen, etc.). Major player Bitfinex just added new fiat trading pairs for EOS, NEO, IOTA, bitcoin and Ethereum.

Fiat trading pairs are how money enters the crypto world, and it’s not easy to accomplish due to anti-money-laundering laws. More fiat trading pairs means more money entering the system.

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Co-Founder, Early Investing

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Growth Stocks

These 3 Fast-Growing Stocks Top Both Amazon and Netflix

Source: Shutterstock

Big growth stocks have performed quite well in this bull market. At the head of the big growth stockpile are Amazon.com, Inc. (NASDAQ:AMZN) and Netflix, Inc. (NASDAQ:NFLX). And it seems those two fast-growing stock behemoths get all the attention.

But this creates a problem. There’s huge demand for big growth stocks, and most of that demand is flowing into AMZN and NFLX. That means the long Amazon stock and long Netflix trades are quite crowded. Crowded trades can be dangerous trades because when the crowd turns against you, a lot of money exits the stock in a hurry. That is especially true if there is leverage involved.

Long story short, when crowded trades unwind, things can get ugly in a hurry.

That isn’t to say anything is wrong with AMZN or NFLX. Those are two great companies with winning stocks.

It is just to point out that long Amazon and long Netflix stock are crowded trades. So if you’re looking for more exposure to big growth, I wouldn’t go out and buy more AMZN or NFLX. I’d look for big growth elsewhere. In lesser-known names and in less-crowded trades.

Where would I start? Here. Below, I’ve comprised a list of my three favorite growth stocks that are growing faster than Amazon and Netflix.

Fast-Growing Stocks: Shopify Inc (SHOP)

Shopify Stock Could Flash a Perfect Buy Sign Soon

Source: Shopify via Flickr

My favorite growth stock in the market is Shopify Inc (NYSE:SHOP).

In many ways, Shopify reminds me of an early-stage Amazon. Shopify provides digital commerce cloud solutions to retailers of all shapes and sizes. In this sense, the company is a pure-play on the exact same secular trends that burst Amazon into the spotlight: digital commerce and cloud.

Shopify’s growth story may even be a little be sexier than an early-stage Amazon. Shopify is retailer-agnostic. They operate in the background. That means every retailer could use Shopify’s solutions to enhance their digital selling capabilities. Because of this, Shopify’s addressable market is larger than Amazon’s because Shopify serves all retailers, whereas Amazon serves Amazon (and Amazon accounts for less than half of all digital sales in the U.S., and presumably far less internationally).

This is why Shopify’s revenue growth last quarter (+71%) was nearly double Amazon’s revenue growth last quarter (+38%). Considering Shopify is providing solutions for essentially every player in the massive and secular growth e-commerce market, and that Shopify’s revenues were under $700 million last year, Shopify should be able to grow at a faster rate than Amazon into the foreseeable future.

Meanwhile, margins are roaring higher alongside revenue growth and the company is going from a money-losing operation to a money-making operation.

Sound familiar? This is Amazon all over again. Pure-play on digital commerce and cloud. Huge revenue growth. Massive addressable market. Strong margin ramp.

Consequently, if you’re looking for exposure to things AMZN has exposure to but don’t want to buy more Amazon stock, I’d recommend taking a look at SHOP. It could be a big winner over the next five to ten years.

Fast-Growing Stocks: Weibo Corp (ADR) (WB)

wb stock

Source: Shutterstock

If you’re looking for big growth, a good place to start is in China, where a recent boom in consumerism (and a lack of competition from U.S. firms) is creating massive growth opportunities for Chinese tech companies.

One of the fastest growing Chinese tech companies is social media giant Weibo Corp (ADR)(NASDAQ:WB). Weibo is often considered the Twitter Inc (NYSE:TWTR) of China, but they probably wouldn’t like that comparison. Weibo has more users than Twitter (392 million versus 330 million Twitter), is growing at a way faster rate (revenues +77% last quarter versus +2% for Twitter), and is more profitable (ebitda margins of roughly 43% last quarter versus 42% for Twitter).

The exciting thing about Weibo is that the company looks undervalued at the present moment.

If you think that the consumer landscape of China will start to look like the consumer landscape of America over the next several years (which is a realistic belief considering the evolution of the Chinese economy over the past several years), then Weibo’s users should be worth as much as Twitter’s users. But Twitter’s market cap is currently $23.5 billion, meaning each one of its 330 million monthly users is worth roughly $71. Weibo’s market cap is $27.4 billion, meaning each one of its 392 monthly users is worth roughly $70.

If Weibo keeps growing its user base at the current pace (+80 million year-over-year), then the company could have around 470 million monthly users by next year. At $71 per user, that implies $33.4 billion, roughly 20% above current levels.

Overall, Chinese tech stocks are a great place to look for growth outside of AMZN and NFLX. One of the biggest growers in that space is WB, and that stock looks materially undervalued relative to its U.S. comp.

Fast-Growing Stocks: Snap Inc (SNAP)

Source: Shutterstock

It seems you either love or hate Snap Inc (NYSE:SNAP). There really is no in between when it comes to the upstart social media company.

But the numbers are hard to argue. Snap’s revenue growth last quarter was 72%, by far and away the biggest market in the U.S. digital advertising quartet of Facebook Inc (NASDAQ:FB), Alphabet Inc (NASDAQ:GOOG), Twitter and Snap. User growth was 18%, again the best mark in the U.S. social media trio of Facebook, Twitter and Snap.

Bears will scream that growth should be bigger because Snap is smaller. Bulls will argue Snap is stealing market share away from Facebook, Google, and Twitter.

Market research seems to suggest the bulls are right here. According to eMarketer, Snap is chipping away at the digital advertising market dominance of Facebook and Google.

I don’t think that makes Facebook or Google any less attractive as investments. This chipping was inevitably going to happen, and the two still control 57% of the entire digital advertising market.

But I think it does make Snap more attractive as an investment. I continue to believe that Snap is morphing into a go-to digital advertising platform for small to medium-sized businesses that don’t necessarily need the max reach that Facebook and Google offer, but rather need the max engagement that Snapchat offers. This is a strong niche in the digital advertising world for Snap to operate in. As such, massive revenue growth rates in the 50%-plus range are here to stay.

If you’re looking for exposure to the high-growth digital advertising market, but don’t necessarily want to buy more FB or GOOG, SNAP should be on your radar.

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Source: Investor Place

Technology

Facebook, We Have a Problem

2018 was supposed to be the year that Mark Zuckerberg said he would “fix Facebook”. But it’s only three months into the new year and his task looks a lot tougher after the company went through one of the worst periods in its history in recent days with $75 billion wiped off its market value.

To be honest, I don’t know which is worse. . .the fact that an analytics firm used by Donald Trump’s presidential campaign improperly received data about 50 million users of the social network Facebook (Nasdaq: FB) or how poorly senior executives of the company handled the situation.

Natasha Lamb, managing partner at the impact investing firm Arjuna Capital, described what Facebook faces succinctly “[The revelations are] fundamentally troubling from the investor perspective, not only because the company has been so recalcitrant in its response. There are material risks here in terms of regulator risk, revenue risk and brand risk. There are also risks to our democracy.”

Facebook Folly Fallout

The fallout is just beginning as some high-profile people have begun to publicly withdraw from Facebook. Elon Musk deleted the Facebook pages of his companies Tesla and SpaceX and several major firms ‘temporarily’ paused their advertising on the social media site.

In addition, two class action lawsuits have already been initiated against Facebook. But that will pale in comparison to the legal woes it will face from governments on both sides of the Atlantic.

Here in the U.S., the Federal Trade Commission is looking into whether Facebook violated a 2011 privacy settlement, while the attorneys-general in both New York and Massachusetts have opened investigations.

If Facebook is found to have violated the FTC settlement, it would be costly for the company. It could face fines of $40,000 per affected user if it violated its 2011 consent agreement with the FTC, in which it was ordered to be more upfront with users about how their data were being shared. If found guilty, we are talking about over a trillion dollars in fines, folks.

The 2011 order followed complaints from the Electronic Privacy Information Center (Epic) and other consumer groups that Facebook user data were being shared with developers even though the company’s privacy settings said only friends would see the information. Interestingly, the president of Epic – Marc Rotenberg – said the recent revelations were “a clear violation” of the consent order and that the FTC should reopen its investigation (it subsequently has).

This only adds to the possible monetary penalties Facebook may face in the future. In May, the European Union will introduce stricter data protection rules that will put Facebook at risk of fines of up to 4% of global sales for violations. The EU is also considering an e-privacy directive, which if passed, would likely have an impact on Facebook’s business (targeted advertising) because it would significantly restrict the tracking of users’ behavior online.

Stay Away

So what does all of this mean for Facebook as an investment?

I know that most of the pundits on CNBC and elsewhere are telling you to buy it since it’s now ‘cheap’. And indeed the recent plunge has Facebook stock selling at the cheapest valuation since its IPO in 2012. Its one-year forward price-to-earnings ratio has fallen to just 18 times, its lowest ever as a public company and only slightly higher than that for the S&P 500 index.

But what these pundits are doing is “talking their book”. In other words, they already own it and are trying to entice others to buy Facebook.

I would stay far away. Even before its recent woes, Facebook was fighting against a poor public image – it wasn’t nicknamed ‘Fakebook’ randomly. And as Brian Wieser of Pivotal Research said in a recent note to clients, “Facebook is exhibiting signs of systematic mismanagement.”

And while this recent episode will lower trust among Facebook users, the company has already been losing the trust of advertisers. For example, in August 2016, it revealed that its metric for the average time users spent watching videos was overinflated by 60% to 80%.

However, Facebook’s problems should not stop you from investing in other technology stocks outside the social media sector. As editor of Growth Stock Advisor, I continued to be excited about technology sectors including robotics, photonics, semiconductors and ‘new energy’.

Earnings per share for the companies in the information technology sector of the S&P 500 grew 17% in 2017 over the previous year and are expected to rise 16% this year, according to FactSet. And among the larger names, there are quality companies like Microsoft, Intel and Amazon. These stocks are up 5.8%, 6.5% and 29% respectively year-to-date. So why bother with the problem child, Facebook?

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Dividends

Bank $3,333 in Monthly Dividends with Rising Rates

The Fed funds rate is 0.25% higher now than it was this time last week. What does this mean for our income investments – especially our monthly dividend payers?

We’ll explore in a minute. First, let’s allow ourselves a moment to appreciate the attractiveness of meaningful monthly distributions.

Our bills arrive every 30 days. But most stocks only pay their dividends every 90. So why don’t we bridge the gap and line up our income with our expenses?

Electricity bill? No problem – got an emerging market bond distribution to cover that.

Cable? No hurry to cut the cord (and risk live sports) when we have a REIT stock that covers this month’s bill.

As I’ve written before, my 8 favorite monthly dividend payers combine to pay $3,333 every single month on a $500,000 portfolio. (From an average 8% yield, paid every 30 days.) And this is all pure dividend gravy – money we can spend without having to tap our capital.

But before we rush to our favorite stock screener and start plugging in “monthly payouts”, let’s be mindful of rising rates. Some every-30-day-payers are particularly good buys, but others should be avoided.

Two More Hikes Likely

We can’t always take the Federal Reserve’s comments at face value, but traders today are handicapping Fed Chair Jerome Powell at his word. The smart money is betting that Jerome & Co. hike twice more in 2018:

Current Bets: 2 More Hikes 

A 0.50% move doesn’t sound huge, but it’s big enough to bother regular vanilla bonds – and their proxies – when we’ve been living in a no-yield world. In fact, this has already happened to the most well-known monthly payer.

Stay Away (Still): O No

Realty Income (O) was the first firm to stake its claim as “the monthly dividend company.” In fact, it trademarked the phrase! And Realty Income has been a fantastic investment through the years. But there’s a problem with popularity – low yields:

The Bear Market in O’s Yield

The bright spot for income investors? The Big O is down 21% since I warned readers to avoid it. This price decline has been good for the stock’s yield, which is now above 5%:

It Was a Good Time to Avoid O

Five percent remains respectable today. It puts the stock’s payout on a perch just above the safest fixed income investments (like Treasuries).

But is 5%+ enough compensation given that O’s property holding are shakier than ever? I’m not sure. As a retail landlord, it’s a crapshoot every month as to which rents are going to get paid – and which tenants will succumb to “Death by Amazon.”

Instead of gambling on O, I’d prefer to bet on surer things – like bonds that will actually rise in value as rates continue to climb.

Buy Instead: Safe Floating Rate Bonds

Instead of investing in dicey retail strip malls, I prefer corporate debt. After all, the Fed is raising rates because the economy is rolling. That’s good for corporations’ balance sheets and their ability to repay their loans.

We need to pick the right companies, of course, to make sure you get paid back.  One monthly payer on the corporate side is the Market Vectors Investment Grade Floating Rate ETF (FLTR). This fund buys floating rate notes from businesses that are rated as investment grade by Moody’s, S&P, or Fitch.

So far, so good. Unfortunately it currently pays a paltry 1.9%:

FLTR: Slightly Better Than Your Mattress

And FLTR has delivered a total return to investors of just 9% since inception (nearly seven years ago). Yikes.

The best deals in the corporate bond market are actually just below the somewhat arbitrary investment grade cutoff. It’s where contrarian fund managers and investors like us capitalize on the fact that any pension funds, banks, and insurance companies are not allowed to invest in these “low quality” issues per their by-laws.

The result is a sweet spot of value, thanks to the lack of big money chasing these types of bonds.

Agencies’ ratings shortchange a lot of very good debt. You just have to pick and choose the quality companies with plenty of cash flow to service their debt obligations. Or those with enough assets to make their creditors whole no matter what happens.

My preferred way to invest in this market is with my favorite floating-rate bond fund that today pays 5.1% yearly (and has double-digit price upside potential, too.)

With a single-click of our mouse (or tap of our phone), we can hire the best (and most well connected) bond managers on the planet to build a portfolio for us. And we can even get them to work for us for free if we buy the fund today!

This ultimate rate-proof bond fund also pays a monthly dividend (again, good for 5.1% annually). And it delivers total returns between 10% and 15% yearly when the Fed is raising interest rates (as it is right now).

It’s one of 12 monthly payers in my “8% Monthly Payer Portfolio”. With just $500,000 invested, it’ll hand you a rock-solid $40,000-a-year income stream. That’s an 8% dividend yield … and it’s easily enough for most folks to retire on.

The best part is you won’t have to go back to “lumpy” quarterly payouts to do it! Of the 19 income studs in this unique portfolio, 12 pay dividends monthly, so you can look forward to the steady drip of $3,333 in income, month in and month out—give or take a couple hundred bucks – on every $500K in capital you’re able to invest.

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Source: Contrarian Outlook 

Options

Make 150% When The Markets Calm Down

Well this past week has certainly been interesting.  After a pretty terrible week for stocks, the Dow Jones Industrial Average is now down 5% for the year and the S&P 500 is down about 3%.  This certainly isn’t the year most investors expected, especially after the market reacted so positively to the reduction in corporate taxes.

I’ve said many times before that politics usually only has a very short-term impact on the stock market.  However, the rules change if politics end up impacting the economy, or the potential for the economy to grow.

Tax reform was generally viewed as a positive for the economy since companies planned on using tax savings to buy back shares (or possibly increase dividends).  On the other hand, the recent tariff announcements have had the opposite effect.

From a global perspective, tariffs are almost always a bad idea.  They can result in trade wars which end up raising prices for everyone involved (and for those not involved as well).  The steel and aluminum tariffs were already causing some issues in certain sectors.  Now, the introduction of new tariffs against China could create problems across a variety of industries.

The market clearly does not like the idea of a trade war.  I already mentioned how the major indexes are down.  Volatility is also way up, with the VIX (S&P 500 volatility index) up from a low of 17 last week to 25 on Friday’s close.

We barely even saw 15 in the VIX prior to this year.  Now, we’re experiencing higher-than-20 levels on a semi-regular basis.  It seems investors are really worried about a continued market correction.

Here’s the thing…

A trade war is a very bad thing for the economy – but it tends to take a while to have any impact.  Over the short-term, the panic selling we’ve been seeing doesn’t make any sense to me.  I think the selling is overdone and volatility is too high.

At least one big trader agrees with my sentiment.  This trader executed what’s called a risk reversal last week in iPath S&P 500 VIX Short-Term Futures ETN (NYSE: VXX).  VXX is probably the most popular method for trading short-term volatility.

A risk-reversal is a synthetic method for getting long or short VXX stock.  In this case, the trader bought puts and sold calls at the same strike (47) in the same expiration (April).  This is the equivalent to going short VXX at that strike, except it expires in April.

With VXX at $47.75, the trader purchased the April 20th 47 puts while selling the 47 calls for a $0.65 credit.  To simply what can happen with this trade, basically above $48 in VXX loses $500,000 per dollar while below $47, it gains that amount per dollar.  It’s obviously quite risky, so the trader must have strong conviction that short-term volatility is dropping soon.

I agree that we should see a reversion in VXX in the coming weeks.  However, this trade is far too risky for my taste.  Instead, a basic put spread makes more sense to me.  For example, using the same April 20th expiration and the same starting strike, we can buy the 42-47 put spread for about $2.00 (with VXX around $49.50).

That means you’re buying the 47 strikes and selling the 42 strike.  Your max loss is just the $2 you spent, which also makes the breakeven point $45 in VXX.  If VXX goes to $42 or below by April expiration, you make $3.  That’s a 150% returns on an event which seems like it has a good chance of happening!

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Source: Investors Alley 

Uncategorized

The 6 Most Inexpensive Growth Stocks to Buy Now

Source: Shutterstock

In Warren Buffett’s 1992 letter to Berkshire Hathaway Inc. (NYSE:BRK.B) shareholders, Buffett touches upon a subject at odds with much of the investment industry:

“Most analysts feel they must choose between two approaches customarily thought to be in opposition: ‘value’ and ‘growth.’ Indeed, many investment professionals see any mixing of the two terms as a form of intellectual cross-dressing.

We view that as fuzzy thinking… In our opinion, the two approaches are joined at the hip: Growth is always a component in the calculation of value, constituting a variable whose importance can range from negligible to enormous and whose impact can be negative as well as positive.”

Many investors tend to categorize stocks into value and growth. However, the most successful investors view growth as simply one component of a company’s value as Mr. Buffett explains.

The future outlook for a company is an important aspect when you’re looking at buying a stock. And while value investors would argue that it’s the intrinsic value relative to the current trading price that matters the most, a more compelling investment thesis would be high growth potential at a cheap price.

Therefore, I used finbox.io’s stock screener to see if I could find high growth stocks trading below their intrinsic value.

Screening for Inexpensive Growth Stocks

The following are all the filters applied in this growth at a reasonable price stock screen:

The six stocks that stood out from the screen above are presented below.

Inexpensive Growth Stocks to Buy Now: Oasis Petroleum (OAS)

Oasis Petroleum Inc. (NYSE:OAS) is an exploration and production company.

The company’s total revenue stands at $1,248 million as of fiscal year ending December 2017. This is 81.8% higher than the $687 million achieved in fiscal year December 2012 and represents a five-year compounded annual growth rate (CAGR) of 12.7%.

Source: finbox.io

Analysts forecast that Oasis Petroleum’s total revenue will reach $3,012 million by fiscal year 2022 representing a five-year CAGR of 19.3%.

Source: finbox.io

Shares of the company are down -38.8% over the last year while the stock last traded at $8.00 as of Tuesday, March 20th. Three separate valuation analyses imply that there is 34.7% upside relative to its current trading price. Wall Street’s price target of $12.43 per share implies even further upside.

It’s also worth noting that illustrious money manager T Boone Pickens currently owns 331,541 shares of OAS which represents 1.0% of his stock portfolio. T. Boone Pickens is a legend in the American energy industry and has been labeled anywhere from a ‘wildcatter’ to a corporate raider. He clearly expects outsized returns from his investment in OAS.

Inexpensive Growth Stocks to Buy Now: Spirit Airlines (SAVE)

Spirit Airlines Incorporated (NYSE:SAVE) is a low-fare airline operating in North America.

The airline’s total revenue stands at $2,648 million as of fiscal year ending December 2017. This is 100.8% higher than the $1,318 million achieved in fiscal year December 2012. In addition, Spirit’s revenue growth has been fairly stable ranging from 8.4% to 25.5% over the last five years.

Source: finbox.io

Going forward, Wall Street is forecasting that Spirit’s total revenue will reach $4,508 million by fiscal year 2022 representing a five-year CAGR of 11.2%.

Source: finbox.io

Shares of Spirit Airlines are down -13.0% over the last year and finbox.io’s fair value estimate of $62.66 per share calculated from six cash flow models imply 41.1% upside. The average price target from 15 Wall Street analysts of $52.47 per share similarly imply upside.

Inexpensive Growth Stocks to Buy Now: Euronet (EEFT)

Euronet Worldwide, Inc. (NASDAQ:EEFT) provides electronic payment services to financial institutions and retailers worldwide.

The company’s total revenue stands at $2,252 million as of fiscal year ending December 2017. This is 77.7% higher than the $1,268 million achieved in fiscal year December 2012 and represents a five-year CAGR of 12.2%. Euronet Worldwide’s revenue growth has also steadily ranged from 6.5% to 17.8% over the last five fiscal years.

Source: finbox.io

Analysts are estimating that Euronet Worldwide’s total revenue will reach $3,869 million by fiscal year 2022 representing a five-year CAGR of 11.4%.

Applying these assumptions to 8 valuation models imply nice upside for shareholders.

Source: finbox.io

Euronet Worldwide’s stock currently trades at $86.43 per share as of Tuesday, up only 2.8% over the last year. However, finbox.io’s intrinsic value estimate suggests that shares could increase 34.1% going forward.

Furthermore, Joel Greenblatt is a notable investor in the company. His fund currently holds a position worth $9.0 million. Greenblatt is best known for a very specific style of value investing termed: Magic Formula Investing. The company clearly has the fundamental characteristics that make it a perfect fit within his magic formula.

Inexpensive Growth Stocks to Buy Now: Centene (CNC)

Centene Corp (NYSE:CNC) is a multi-national healthcare enterprise that acts as an intermediary between government and private health insurance programs.

The company’s total revenue stands at $48.3 billion as of its latest fiscal year. This is nearly 5x higher than the $8.1 billion achieved five years prior.

Source: finbox.io

Going forward, analysts are forecasting that Centene’s total revenue will reach $87.9 billion by fiscal year 2022 representing a five-year CAGR of 12.7%.

Source: finbox.io

Shares of the company are trading 54.2% higher year over year. But the stock price could end up trading another 31.6% higher in 2018 based on Centene’s future cash flow projections.

It’s worth noting that highly followed portfolio manager David Tepper currently holds a position in Centene worth $76.5 million. Tepper, founder and portfolio manager at Appaloosa Management, is widely known for having inspired what’s been dubbed the Tepper Rally of 2010. Through his macro view of the financial markets, Tepper was able to predict not only the stock market rally but the catalysts behind it which ultimately proved to be the Fed’s stimulus. Whatever the catalyst, Tepper is likely expecting a sizable rally in Centene’s stock price.

Inexpensive Growth Stocks to Buy Now: Equinix (EQIX)

Equinix Inc (NASDAQ:EQIX) connects businesses to their customers, employees and partners via data centers.

The company’s top-line reached $4,368 million as of its latest fiscal year, up 131.5% from fiscal year December 2012. Over that time period, Equinix’s revenue growth has ranged from 11.5% to 32.5%.

Source: finbox.io

Wall Street analysts estimate that Equinix’s total revenue will continue to grow at an annual rate of 10.1% over the next five years.

Source: finbox.io

Equinix’s stock currently trades at $414.48 per share as of Tuesday, up 9.4% over the last year. On a fundamental basis, the company’s stock is trading at a 7.0% discount to finbox.io’s intrinsic value estimate. However, the average price target from 22 Wall Street analysts of $507.23 implies 23.2% upside.

Inexpensive Growth Stocks to Buy Now: II-VI (IIVI)

II-VI, Inc. (NASDAQ:IIVI) is an electronics component manufacturer.

The company’s total revenue reached $972 million as of fiscal year ending June 2017. This is 88.2% higher than the $516 million achieved in fiscal year June 2012. II-VI’s top-line growth has ranged from 6.7% to 24.0% over the last five fiscal years.

Source: finbox.io

Going forward, Wall Street forecasts that II-VI’s total revenue will reach $1,839 million by fiscal year 2022 representing a five-year CAGR of 13.6%.

Source: finbox.io

Shares of the company are up 23.0% over the last year. The stock last traded at $47.25 as of March 20th and 8 separate valuation analyses imply that the stock is trading near its fair value. However, the average price target from nine Wall Street analysts implies 13.0% upside.

Inexpensive Growth Stocks to Buy Now: A Summary

While investors tend to categorize stocks into value and growth, some of the most successful investors view growth as simply one component of a company’s value. The companies above have positioned themselves so that double-digit growth appears to be a reasonable assumption for the foreseeable future. More importantly, this growth actually looks attractive relative to their current trading levels. As such, value and growth investors may want to take a closer look at these names.

In conclusion, the table below ranks all six stocks by their blended upside.

Source: finbox.io

Matt Hogan is a co-founder of finbox.io. His expertise is in investment decision making. Prior to finbox.io, Matt worked for an investment banking group providing fairness opinions in connection to stock acquisitions. He spent much of his time building valuation models to help clients determine an asset’s fair value. He believes that these same valuation models should be used by all investors before buying or selling a stock.

Get up to 14 dividend paychecks per month from safe, reliable stocks with The Monthly Dividend Paycheck Calendar, an easy-to-use system that shows you which dividend stocks to pick, when to buy them, when you get paid your dividends, and how much.  All you have to do is buy the stocks you like and tell them where to send your dividend payments. For more information Click Here.


Source: Investor Place

Dividends

4 Smart Retirement Buys for 7.2% Dividends and Big Gains

Today I’m going to show you 4 funds that, when put together, give you a juicy 7.2% dividend yield.

And that’s just the start. In addition to giving you $595 per month in income for every $100,000 invested, this “instant” 4-fund portfolio gives you diversification that limits your risk of losing cash in a market downturn.

Oh, and there is capital gains upside here for you, too.

The reason for that upside is that all of these funds are trading at a pretty big discount to their net asset value (NAV).

Let me explain.

Each of these picks is a “closed-end fund,” a unique type of fund that has a few key advantages over more familiar mutual funds and exchange-traded funds. A big one is that CEFs can—and very often do—trade on the market at a price that is below the actual market price of all of the assets inside the CEF.

How is this possible?

It boils down to this: CEFs set how many shares are in the fund when they do an initial public offering and don’t release new shares in the future. That weird mechanism means funds will often trade for less than their NAV—and those discounts can be really big.

Which brings me to…

“Instant Portfolio” Pick #1: A Real Estate Titan With a 7.9% Dividend

Every real estate developer, landlord and house flipper’s dream is to get their hands on a property that’s selling for 17% below its actual market value. But those deals are hard to come by.

In CEF land, however, they’re easy to get.

All you need to do is buy shares in the RMR Real Estate Income Fund (RIF), a CEF that’s been around since 2005 and not only survived the bursting of the 2008–09 real estate bubble but has also been paying out massive dividend checks ever since.

And right now, RIF is paying out a 7.9% yield.

The fund’s portfolio makes this possible. RIF owns shares in some of the largest real estate investment trusts (REITs) in the world—basically companies whose sole purpose is to buy, manage and rent out real estate.

And since RIF’s portfolio is diversified across 125 REITs, shareholders are getting a slice of literally thousands of properties in all kinds of sectors: retail outlets, assisted-living facilities, offices and even data centers for cloud-computing companies.

And here’s why you want to buy now:

A Big Sale Ending Soon

Notice how the fund’s discount to its NAV has gone off a cliff in recent years—but it’s starting to recover? The current 16.7% discount is a bargain that may end soon thanks to a pile-in back into CEFs. That makes this one a fund to consider now—because buying at this point could set you up for 25% capital gains while this fund’s discount disappears.

“Instant Portfolio” Pick #2: Peace of Mind and a Tax-Free 5.7% Payout

The Nuveen Quality Municipal Income Fund (NAD) is not only a great option because of its 5.7% dividend yield but also because of the diversification and low volatility it provides.

Let me explain by comparing this fund to the S&P 500, which we will do with the benchmark SPDR S&P 500 ETF (SPY). In 2017, the stock market famously saw extremely low volatility, steady gains and little fear, which resulted in stocks climbing up and up, with few corrections.

Then 2018 happened.

Fear Is Back!

The orange line here represents volatility in price changes over the last month for SPY, and you can see how the line fell sharply and stayed low throughout 2017.

But this is an aberration. Big spikes, like we saw in 2015 and 2016, are the norm—moments when the market goes into a panic and starts selling shares. The blue line, however, represents the volatility we saw with NAD, a fund with bonds from as diverse places as Utah and New York.

Although the fund’s price swings did accelerate a bit in late 2016, after Donald Trump was elected president (and the market worried about how his tax plans would affect municipal bonds), the blue line stays pretty quiet all the time.

There’s a reason for this: municipal bond values do not go up and down a lot. That means buying NAD gets you steady income without big paper losses when the market freaks out.

That’s why you need to diversify your portfolio so you aren’t forced to sell when the market collapses. With NAD, you can hedge against a market downturn by diversifying beyond stocks and into these low-volatility, high-quality municipal bonds.

And if you’re worried about missing out on gains, don’t be. Here are NAD’s total returns over the last decade:

Strong Gains in a Safe Haven

A 6.8% average annual return from a fund with such low risk shouldn’t be possible. But here it is.

“Instant Portfolio” Pick #3: A 7.1% Dividend From Top-Quality Stocks

Of course, we still need stocks in our portfolio so we can profit from the good times in the stock market—and I see many of those still to come. As I wrote in a March 8 article, stocks are set for a good year, thanks to rising earnings and a better economic environment, and we want to be part of that.

That’s why you should take a serious look at the AGIC Equity and Convertible Income Fund (NIE).

Not only does NIE pay a 7.1% dividend, but it also has an enviable portfolio full of winners, such as Amazon.com (AMZN), Microsoft (MSFT), Alphabet (GOOGL) and Visa (V). NIE is able to turn big gains from these stocks into steady income for shareholders. That’s why the fund has been able to deliver this massive 9.8% average annualized return over the last decade:

Strong and Steady Returns

The fund also makes its dividend safer with convertible bonds. Let me explain.

In addition to shares in the best companies in the world, NIE also buys and trades a group of unique bonds that smaller and riskier companies issue. These “convertible bonds” are a kind of debt with a special agreement that, if the company’s stock rises to a certain level, the bonds will turn into common stock.

NIE buys these convertibles because it gets them a reliable income stream from these companies and the potential upside of owning actual shares in the firm. The fund has a long track record of using these to secure its dividend and provide more capital gains upside for shareholders.

And despite its amazing track record, NIE is selling at a 10.4% discount! That’s why it’s time to buy now.

“Instant Portfolio” Pick #4: A Rock-Steady Corporate-Bond CEF With a 7.3% Dividend

Speaking of bonds, we should also add some corporate bonds to our “instant” portfolio. Not only can we get a 7.3% dividend by doing this with the Western Asset High Yield Defined Opportunity Fund (HYI), but we can also dip our toes in this asset class at a massive 10.2% discount.

And now is clearly the time for HYI to shine.

That’s because the market has turned its back on this fund for too long, despite the recent improvements management has made. Specifically, HYI has focused more on companies that are on the cusp of getting credit upgrades that will raise the value of their bonds. Just take a look at how its discount to NAV has trended over the last few years:

The Discounts Just Get Bigger

The market has sold off HYI in a big way, sending it from an 8% premium to NAV to an 11.2% discount.

And there was a good reason for that back in the mid-2010’s: HYI was not doing well. Its total return was about 17.5% from mid-2010 to 2014, which isn’t great and definitely lagged the S&P 500 over the same period (SPY rose 65% during that same timeframe).

But that’s been changing. Take a look at this chart.

Gains Accelerating for HYI

HYI is up 25% from the beginning of 2016, and its strong gains are just getting started. Why? Because, again, the economy is improving—which means the credit quality of the bonds HYI holds is starting to go up. That increases demand for them, resulting in higher prices on the market and profits for HYI shareholders.

Exposed: The “Billionaires Only” 7.6%+ Dividends You Can Buy NOW

Here’s something else you may not know about CEFs: some of the world’s richest billionaires have been quietly cashing in on them for years.

I’m talking about financial titans like Bill Gates, Bill Ackman and Jeffrey Gundlach, the legendary “Bond God.”

Then there’s Boaz Weinstein, who made a fortune betting against the ridiculous trades of JPMorgan’s so-called “London Whale” back in 2012.

In 2017, Weinstein dropped a cool billion into—you guessed it—CEFs.

Here’s what he had to say about the big profits waiting to be made from these funds:

“You go into it hoping the discount will narrow on its own, but one of the nicest points about this investment is that while you wait, you earn an above-average yield, given the discounted price.”

He also called CEFs “a rare corner of the market where retail investors can get an edge over institutions.”

I couldn’t have said it better myself!

And now is your chance to grab your share of the profits from this exclusive corner of the market.

The 4 CEFs I just told you about are a great start. But right now I’m pounding the table on 4 OTHER funds throwing off fatter average dividends—7.6% as I write—and one of these unsung cash machines even pays an amazing (and growing!) 8.1%.

Better yet, all 4 trade at even more outrageous discounts to NAV, putting you well on your way to 20%+ GAINS in the next 12 months! Throw in that 7.6% average dividend and you’re looking at a fast 28%+ gain here—with a big chunk of that in CASH!

Returns like these are common in the CEF space. No wonder billionaires like Weinstein, Gates and others have silently flocked to them.

Your opportunity to join this “billionaire’s club” through the 4 very best funds in the space is open now. But the weird discounts on these stout 7.6%+ payers are already starting to slam shut, so you need to make your move!

Michael Foster has just uncovered 4 funds that tick off ALL his boxes for the perfect investment: a 7.4% average payout, steady dividend growth and 20%+ price upside. — but that won’t last long! Grab a piece of the action now, before the market comes to its senses. CLICK HERE and he’ll tell you all about his top 4 high-yield picks.

Source: Contrarian Outlook

Uncategorized

The 7 Best Stocks from Each Sector Through Q2

We are now rolling into the second quarter of 2018. So far this year the markets have been undeniably jumpy. Just last week global markets posted sharp losses as talk of a trade war continues to spook investors. But for the stocks listed below 2018 hasn’t been so bad at all.

In fact, it’s been something of a blessing. Bearing in mind the recent turbulence, all these stocks have defied the market and posted exceptional first-quarter gains. Here we dive in and take a closer look at the best-performing stock from each sector and what has prompted these out-sized movements.

Some are obvious picks — Netflix, Inc. (NASDAQ:NFLX) for example — while others slide in relatively under the radar; Whiting Petroleum Corporation (NYSE:WLL) anyone? But the crucial question is: Are these stocks capable of recording similar high-growth levels in the coming months?

Using TipRanks we can see both the overall Street take on each stock’s outlook and specific insights from the Street’s top analysts. And if the stock isn’t looking so promising for the next quarter, I suggest a better stock pick to boost your 2018 portfolio. Ready? Let’s take a closer look:

Best Sector Stocks Through Q2: Healthcare: TG Therapeutics (TGTX)

Source: Shutterstock

Sector: Biotech

Shares in TG Therapeutics, Inc. (NASDAQ:TGTX) have exploded by a whopping 76% over the last three months. This innovative biotech is focused on developing novel treatments for devastating blood cancers and autoimmune diseases.

“We believe TG is generating a complete B-cell therapy franchise that is unique in the oncology space, which could provide substantial value across various B-cell cancers” cheers B.Riley FBR’s Madhu Kumar. He selects TGTX as an Out the Gate 2018 Pick, due to his “reasonable confidence in success in the Phase III UNITY-CLL trial, with interim data expected in 2Q18.”

For investors looking for some serious upside potential, five-star HC Wainwright analyst Edward White sees the stock spiking to $38 (154% upside potential). He reiterated his buy rating on March 21. White bases his valuation on the potential revenue and success of the company’s two main drugs ublituximab and umbralisib. Combined, he is projecting very promising 2026 revenue for these drugs of $990 million.

Bear in mind that so far White has struck gold with his TGTX recommendations. Across his 20 TGTX ratings he scores an 85% success rate and 38.3% average return.

Overall four analysts have published recent buy ratings on TGTX. No “hold” or “sell” ratings here. And with an average analyst price target of $27.50, on average analysts are predicting huge upside potential of over 80%. Conclusion: for risk-tolerant investors, this top stock still seems like a bargain!


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Best Sector Stocks Through Q2: Twilio (TWLO)

TWLO Stock

Source: Web Summit Via Flickr

Sector: Tech

Cloud communications platform Twilio Inc. (NYSE:TWLO) is no stranger to volatility. After going public in June 2016 at $15/share, prices surged to $71. But a 7-million secondary share offering saw the stock plummet just as fast. And on the shock loss of major customer Uber, shares sunk to just $23.

Now TWLO is on a roll again. In the last three months, prices have climbed almost 61% to $40. So what does all this mean? Will this bumpy ride continue? Well word on the Street is decidedly bullish. Analysts are excited about the recent unveiling of Twilio Flex, a programmable contact center vertical that is poised to become a major new platform for Twilio.

Following Twilio’s strong 4Q17 results, Oppenheimer analyst Ittai Kidron takes a deep dive into the company’s growth metrics. Even though sentiment is improving, the stock’s long-term potential is still underappreciated.

Kidron explains: “We believe that (1) expectations still underestimate Twilio’s growth potential; (2) expansion into traditional enterprise is showing early signs of success and offers a long runway ahead; (3) gross margin is likely to bottom in 1Q18 and has the potential to recover thereafter; and (4) Twilio continues to outperform the competition.”

In total, this ‘Strong Buy’ stock boasts 7 recent buy ratings vs 3 hold ratings. On average these analysts see just 5% upside potential from current levels. However, on the high-end Drexel Hamilton’s $47 price target from Brian White suggests much more appealing upside of almost 18%.


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Best Sector Stocks Through Q2: Bofl Holding (BOFI)

Source: Shutterstock

Sector: Financials

Internet-based Bofl Holding, Inc. (NASDAQ:BOFI) is proof that banks don’t need physical branches to succeed. Over the last five years, BOFI has posted life-changing returns 344%. Even in the last quarter shares climbed 35% to $39.45 due to better-than-expected earnings results.

For top B.Riley FBR analyst Steve Moss this is a top-notch stock with multiple positives. We are looking at “a quality franchise with clean credit, solid loan growth, ample capital, and strong profitability.” However, bearing in mind the stock’s sharp gains, he removes BOFI from his Alpha Generator list. He notes a “significant narrowing of its valuation relative to peers.”

Nonetheless, his report ends on a bullish note with a price target ramp from $42 to $45 (14% upside potential). Moss puts the move down to ‘increased confidence’ in estimates following H&R Block‘s (NYSE:HRB) disclosure of $1.07 billion in refund anticipation loans. Indeed this is the first year BofI is the exclusive provider of HRB’s refund anticipation loans giving the company huge cross-selling potential.

In total, this Strong Buy stock has recorded 3 recent buy ratings vs just 1 hold rating. Meanwhile the $43.25 average analyst price target indicates upside potential of just under 10%.


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Best Sector Stocks Through Q2: Fossil Group (FOSL)

Fossil Group, Inc. (NASDAQ:FOSL)

Source: Joe King via Flickr (Modified)

Sector: Consumer

Is Fossil Group, Inc. (NASDAQ:FOSL) making a comeback? The fashion watch and accessories maker jumped nearly 67% in Q1 on a resound Q4 earnings beat. Specifically, FOSL reported earnings of 64 cents per share, topping analysts’ expectations of 40 cents per share. In addition, revenue came in at $920.8 million, ahead of Wall Street’s estimate of $890 million.

However, don’t bring the champagne out just yet. Top Oppenheimer analyst Anna Andreeva is going into party-pooper mode. She reiterates a Perform rating on FOSL shares as: “On the surface, FOSL appears to be playing better defense” but wearables growth is moderating, and even traditional watches are resetting lower with partners managing inventories down.

She concludes that the: “Stock is heavily shorted and is up big AMC on covering; net/net, in our view, not much has changed fundamentally: sales guided down sharply for 1Q18, profitability improvement aided by financial fixes as underlying trend is still negative.”

If we take a step back, we can see that Wall Street is not rooting for FOSL stock’s success. Based on 4 recent analyst ratings, TipRanks analytics exhibit FOSL as a Hold. However- boosted by the 1 bullish rating- the average analyst price target of $15 indicates 24% upside potential.

A far better investment proposition in the consumer good sector is semiconductor stock Lam Research (NASDAQ:LRCX). As the memory chip industry goes from strength to strength this stock is flourishing right now. With 32% upside potential and 14 recent “buy” ratings this is a stellar company I highly recommend checking out.


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Best Sector Stocks Through Q2: Netflix (NFLX)

Netflix NFLX stock

Source: via Netflix

Sector: Services

Streaming giant Netflix, Inc. (NASDAQ:NFLX) has popped over 56% in Q1 to an all-time-high. Now NLFX is worth approx. 130 billion, just short of Disney’s $150 billion. Of course, at these levels, we need to ask: how sustainable are these gains, and where can the stock price go now? And here the Street is- not surprisingly- divided. Let’s take a look:

On the one hand we have Pivotal analyst Jeffrey Wlodarczak. He is out with a bullish research note on NFLX after conducting thorough country by country research. The analyst’s verdict? “As long as NFLX continues to beat and raise on subscribers we believe the stock will continue to work.” Indeed, his $400 price target suggests big upside potential of 32%.

Long term international subscribers are looking better than ever, with Wlodarczak now angling for 250 million international subscribers by 2024. Netflix is even finally showing traction in Japan with upward trends detected across Asia as a whole. Following Netflix’s fourth quarter print, “the market appeared to effectively give NFLX management carte blanche to spend aggressively to drive healthy subscriber growth” highlights Wlodarczak.

Top Loop Capital Markets analyst Alan Gould is more restrained. Yes Netflix has an “unstoppable lead” in the US streaming TV business but ultimately: “with the stock up 66 percent in the first 11 weeks of the year, we find it hard to justify a bullish rating.”  Even so, his Hold rating comes with a $325 price target indicating 8% upside potential.

Overall, the stock has a mixed bag of ratings. We can see that the price target average for the last three months indicates downside potential. But crucially the average price target from ratings over just the last month comes out at $348. So now we are looking at 15% upside potential. Not so bad after all for one of the fastest-growing stocks out there!


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Best Sector Stocks Through Q2: Whiting Petroleum (WLL)

Whiting Petroleum Corp

Sector: Basic Materials

Haven’t heard of Whiting Petroleum Corporation (NYSE:WLL) before? Well now’s your chance. This is a top crude oil producer in North Dakota which also operates substantial assets in northern Colorado. Shares soared over 30% in Q1 after the shale driller reported stronger-than-expected fourth-quarter results and a bullish 2018 outlook.

On the news Seaport Global analyst Mike Kelly upgraded Whiting Petroleum to Buy from Hold. He also increased his price target to $40 from $30 citing confidence in the Bakken development post Q4 results and the experience of new CEO, Brad Holly. He is pushing WLL toward its goal “of becoming a top-tier E&P company as measured by capital efficient growth and free cash flow generation.”

However even though the stock posted stellar gains this quarter, I would recommend not to invest at this point. Top analysts in particular appear unconvinced by WLL’s success story and there are better stocks worth checking out. Instead consider a ‘Strong Buy’ basic materials stock like MasTec, Inc. (NYSE:MTZ).

While MTZ hasn’t posted Q1 gains like WLL, it has big upside potential and has just been named a top mid-cap idea by Canaccord Genuity.


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Best Sector Stocks Through Q2: Axon Enterprise (AAXN)

Source: Shutterstock

Sector: Industial Goods

Arizona-based Axon Enterprise, Inc. (NASDAQ:AAXN) is best known for its flagship product: electroshock tasers. In fact, the company used to be known as TASER International. However, the company actually develops a wide range of technology and weapons for military, law enforcement and personal defense usage. Right now, it is focusing on developing on-body cameras and digital evidence software.

Over the last few quarters, it is fair to say that AAXN has not been a top performer. However, in Q1 all that changed with an impressive 43% increase in share prices. AAXN finally showed that it is delivering on its promise of better discipline and positive changes. After two quarters of GAAP operating break-even, Axon Enterprises posted the best operating profit in a year. This was on adjusted EBITDA basis the best in three years and a near record.

Top Oppenheimer analyst Andrew Uerkwitz believes that a ‘positive change is occurring.’ Operating expense was still up and there was yet another quirky one-time cash tax expense but “for the first time in several quarters, we are raising our numbers.” However even though he “liked what he heard,” for now Uerkwitz is staying sidelined. “We want to see where the stock settles in the near term and spend time on new growth initiatives such as fleet and RMS” explains Uerkwitz.

For investors looking to invest in the industrial goods sector, I would suggest trying major U.S. defense contractor Raytheon Company (NYSE:RTN) instead. Shares are up 15% in the last three months and with multiple big contract wins the stock has 100% Street support right now.


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The 145 Companies Your Stockbroker Will NEVER Tell You About Did you know more than 145 tiny companies have grown to $1 billion-plus valuations since 2012? SpaceX  is up 26,309% in value... Dropbox 31,733%... and Pinterest 487,404%. All of these 145 businesses started out as private companies your broker would have NEVER told you about. But now there’s a great way to find the next private companies poised for hyper-growth. Full Details Here.

Source: Investor Place

Technology

5 Stocks to Buy in the AI Race Between the U.S. and China

While President Trump fights the battle to save jobs in old-line industries such as steel, he may be losing the war for the future (despite the imposition of direct tariffs on China). The United States has always been predominant in new technologies, such as artificial intelligence (AI). But now China is rapidly closing the gap.

Think about some examples of U.S. prowess in AI: DeepBlue, which defeated chess grandmaster Garry Kasparov, was developed by IBM (NYSE: IBM), as was Watson, which defeated champion Jeopardy players in 2011. The robot Stanley, which demonstrated the feasibility of driverless cars in 2005, was developed at Stanford University in the heart of Silicon Valley. And don’t forget that one reason for U.S. dominance has been Darpa (Defense Advanced Research Projects Agency), the U.S. military research funding agency, whose backing was behind many of the most prominent research papers in AI.
However, one recent example highlighted how China has come to the fore in AI.

In January, companies from all over the world subjected their artificial intelligence systems to questions from the Stanford Question Answering Dataset, which assess reading comprehension. The winning AI systems came in at a few percentage points above the average human score of 82.3%. The two winning companies (in a virtual tie) were Microsoft (Nasdaq: MSFT) and Alibaba (NYSE: BABA).

China Tech Giants and AI

Yes, the Chinese e-commerce giant is rapidly becoming a powerhouse in artificial intelligence.

The evidence can even be seen in its latest Singles Day event, the world’s biggest shopping day. Alibaba used AI to generate 400 million customized banner advertisements in the month leading up to the shopping day. It also used chatbots, to answer 3.5 million simple questions a day over the pre-sale period, such as “Where’s my package?”

And on its Taobao e-commerce platform, users can search by image using deep learning, a technique designed to emulate the way a human brain works, to find a matching or similar item. This enables shoppers, for example, to find a dress worn by a celebrity to order it… an ability that does not exist on Amazon today.
Fellow Chinese tech titans

Baidu (Nasdaq: BIDU) and Tencent (OTC: TCEHY) are also making a big push into AI. Baidu is working on developing autonomous vehicles and unveiled its Apollo 2.0 autonomous driving platform at the recent CES trade show in Las Vegas.

Examples of what Tencent is doing include using AI to detect diseases like lung cancer an early stage and having its FineArt AI program easily defeat China’s human Go (a board game). But the Chinese push into AI is broader than these three companies.

One key reason behind China’s rapid growth in AI is sheer numbers. You see, the machine-learning techniques behind the current AI boom are extremely data hungry. To recognize human faces, translate languages, make medical diagnoses, pilot autonomous vehicles, and numerous other tasks requires huge quantities of “training data”, which is the fuel for machine learning algorithms that we generate every time we go online or use our smartphones.

With a population larger than the U.S. and Europe combined (and limited privacy laws), Chinese companies like Alibaba, Tencent and Baidu have a huge advantage over U.S. firms in terms of access to all sorts of data.

China Closing Fast

If you want to get an idea of how fast China is closing the AI gap with the U.S. just look at the recent annual meeting for the Association for the Advancement of AI. The first meeting in 1980 was an all-U.S. affair. But at the February 2018 meeting, China submitted about a quarter more papers than the U.S. (1242 to 934). And more importantly, it lagged the U.S. in papers accepted by just three.

There are a few reasons behind this rise to prominence in AI by China. The first is backing from the central government, which has a specific target for becoming an AI leader within a decade.

The second reason is that China is overtaking the U.S. in terms of AI start-up funding. Technology research firm CB Insights says that in 2017, 48% of the record global investment ($15.2 billion) into AI start-ups went to China. That is a huge jump from just 11.3% in 2016.

And forget about the old thought about China just being copycats… that hasn’t applied in decades. China has beaten the U.S. in AI-related intellectual property as well. Chinese patent publications with the terms “artificial intelligence” or “deep learning” in the title or abstract surged from 549 in 2016 to 1,293 in 2017. This compares with just 135 and 231, respectively, in the U.S., according to CB Insights.

It’s not a straightforward victory for China though. In terms of the volume of individual deals, the country still accounts for only 9% of the total, while the U.S. leads still in both the total number of AI startups and total funding overall. The bottom line is that China is ahead when it comes to the dollar value of AI startup funding, which CB Insights says shows the country is “aggressively executing a thoroughly-designed vision for AI.”

Investment Implications

China has a vision because it realizes how important AI will be in the future. The former chief scientist for Baidu, Andrew NG, said in 2017 that AI is the “new electricity”, and that “just as electricity transformed many industries roughly 100 years ago, AI will also now change nearly every major industry”. I totally agree. Now the question remains whether the U.S. or China will be the main ‘generator’ of an AI future.

A good way for you to ‘hedge’ on that outcome is to first own the well-known AI leaders in the U.S. – the aforementioned Microsoft as well as other companies that have been snapping up AI start-ups, Apple (Nasdaq: AAPL) and Alphabet (Nasdaq: GOOG). Since 2012, Google has bought 14 AI start-ups while Apple has acquired 13 AI start-ups.

But then you must also own the leaders in China as well. While many AI companies trade only in mainland China, the so-called BAT stocks (Baidu, Alibaba, Tencent) are easily available to you here in U.S. markets.

 

 

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Source: Investors Alley