Monthly Archives: April 2018

Cryptocurrency

Is Cryptocurrency Going Mainstream?

Until recently, cryptocurrency was dominated by retail investors, including cryptographic people, libertarians, and a few early venture capitalists and hedge fund managers.

Today, there are more than a hundred cryptocurrency hedge funds.

And just this week, Goldman Sachs announced its first major cryptocurrency hire. According to CNBC, Goldman’s announcement read, “In response to client interest in various digital products, we are exploring how best to serve them in the space.”

So today, we’re going to explore the latest stories that indicate crypto may indeed be going mainstream.

Nasdaq CEO Hints at Future Cryptocurrency Exchange

Nasdaq just announced a partnership with crypto exchange Gemini to monitor futures pricing. Nasdaq CEO Adena Friedman took it further, stating in prepared remarks, “Certainly Nasdaq would consider becoming a crypto exchange over time.”

Square Stock Jumps 5% as Analysts Predict “Sizable Boost” in Earnings Due to Bitcoin Trading

This is big news because, for the first time, cryptocurrency trading is impacting a major public company’s bottom line.

From CNBC:

An analyst at Nomura Instinet said Square could see a “sizable boost” to first-quarter earnings thanks to the addition of bitcoin trading on its payments app.

Major VC Firm Andreessen Horowitz Is Planning a Separate Crypto Fund

Andreessen Horowitz (called a16z) is apparently moving forward with its long-rumored cryptocurrency fund. a16z is a powerhouse firm and is one of the biggest investors in Coinbase, the leading U.S. crypto exchange.

When a16z raises a fund, it’s almost always a large one. Several of its funds are worth more than $1 billion. More from TechCrunch:

The rumor has been going around for a while – not a huge surprise since the firm has invested in the likes of Coinbase, Earn.com and CryptoKitties and co-founder Marc Andreessen is a big crypto advocate – but it now appears there is genuine substance to it.

Crypto Hedge Fund Manager Says Crypto Has Bottomed Out

This story is a nice feel-good piece to end on.

Here’s the juicy part of the article, via Bloomberg:

Pantera Capital Management, which has more than $800 million in assets, says $6,500 was the low of this bear market and bitcoin will stay above that price for the majority of the next year, likely surpassing the previous record of almost $20,000, according to a note sent to investors Thursday.

I wholeheartedly endorse this sentiment.

Have a great weekend, everyone.

Adam Sharp
Co-Founder, Early Investing

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Source:  Early Investing 

Uncategorized

2 Semiconductor Stocks to Sell and 1 to Buy Because of China

Did you know that President Trump is China’s best friend? The reason though isn’t so obvious… he unknowingly is pushing China to expand even faster and push even harder into technology.

Ask any scientist and they will tell you China is catching up fast in fields like quantum computing, virtual reality, robotics, drones, 3D printing, autonomous vehicles, biotechnology and artificial intelligence (AI).  And it already leads in fintech and payment systems.

Now President Trump’s actions are pushing China to quickly develop expertise in semiconductors.

The founder of Alibaba, Jack Ma, recently joined other Chinese CEOs in speaking out on the subject. He said the market for chips is pretty much controlled by America and if it decides to stop selling chips (as the Trump Administration did with regard to ZTE), it results in a major problem. So Ma urged nations like China to develop their own semiconductor industry as fast as possible to get around America’s grip on the industry.

Why China Wants Its Chip Independence

Trump’s actions against the telecommunications equipment firm ZTE have galvanized China’s existing plan to spend at least $150 billion over the next decade to achieve a leading position in chip design and manufacturing. In March, the semiconductor industry was named as the top priority of the 10 industries China wants to foster in its “Made in China 2025” initiative.

But of course, there is a lot more behind China’s move than concern over President Trump’s actions. You see, its annual imports of $260 billion worth of semiconductor-related products is now its biggest import, surpassing even oil. China wants to lower that dependence on overseas (and especially U.S.) semiconductors. Another reason is simply that China wants to move its manufacturing sector toward more high-value products.

And in a mirror-image concern of the Trump Administration, China is worried about breaches of its national security along the lines of the 2013 leaks from Edward Snowden. Those leaks revealed connections between American technology companies and the National Security Agency’s worldwide surveillance program.

China Says ‘Try, try again’

This is not the first time China has tried to build a semiconductor industry. It failed before in the 1990s to start an industry from scratch.

But things may be different this time around. This time it has the proper infrastructure. It now has a massive end market for semiconductors and strong global-class players in smartphones, PCs, TVs and automobiles. Chinese brands controlled 50% of the global smartphone market and 36% of the PC and tablet market in 2017, according to the research firm Gartner.

And China now has everything needed for the supply chain, including expertise and personnel from all over the world.

The company that is set to become China’s national champion in semiconductors is Tsinghua Unigroup. That name should be familiar to anyone that follows the chip industry. It made a $23 billion bid for Micron Technology (Nasdaq: MU) and tried to become a major shareholder in Western Digital (Nasdaq: WDC). But those moves were blocked by the U.S. government on national security grounds. So now it is going a different route.

It recently announced the expansion of its partnership with Intel (Nasdaq: INTC). As early as this year, Intel will provide the company with NAND flash memory chips, which will then turn them into various products such as microSD cards and solid-state devices. This may allow Tsinghua to develop into a globally competitive storage product provider.

Tsinghua Unigroup’s affiliate, Yangtze Memory Technologies, is constructing a large NAND memory plant (costing $24 billion) that will start production sometime in 2018 or 2019. Tsinghua also owns a mobile chip company named Unigroup Spreadtrum & RDA. Intel is giving this firm its advanced 5G modems to its mobile chip business forward.

As to why Intel is doing this, the answer is simple. It is still a small player in NAND flash memory chips and mobile chips. So what better way to grow those segments than by gaining access to the world’s largest market? Intel also, in 2014, invested $1.5 billion for a 20% stake in Tsinghua Unigroup’s holding company. So it will benefit if Tsinghua prospers.

Memory Chip Push

The bottom line is that China will begin shipping its first batch of memory chips probably in 2018. But the more advanced 64-layer chips will not likely ship until 2019.

But once it gets going, it will likely cause a major disruption to the memory chip market (NAND flash memory and DRAM memory chips) within three years. Even Apple talked recently with Yangtze Memory about possibly buying some of their chips in the future.

FYI – the NAND flash memory market is a $58 billion market annually and the DRAM memory chip market is a $78 billion annual market.

While China’s move is not good news for Samsung, it is so well diversified it will survive. Other companies will be much more affected including Sk Hynix, Toshiba, Western Digital (Nasdaq: WDC) and Micron Technology (Nasdaq: MU).

Once up and running, and based on its past history, I expect China to flood the memory chips market in three to five years. That will cause a major price drop, hurting the profitability of Micron Technology and Western Digital. I would completely avoid owning these two stocks.

On the other hand, with the close relationship between Tsinghua Unigroup and Intel, I believe Intel will be a great way for American investors to participate in the growing Chinese semiconductor business.

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Dividends

These 7% Dividends Could Skyrocket in May

By this point, you’ve probably heard that earnings season has been off the charts so far.

But there’s a problem.

You see, corporate profits are so good that the big buying opportunity I’ve been telling you about for months is vanishing fast!

Why? Because US firms are too profitable, and economic growth is too strong for the herd to not want to pile into stocks very soon.

So today we’re going to front run those folks by buying before they do.

In a moment, I’ll show you not only why you should buy now, but 2 funds you that are solid bets for serious upside and a huge dividend stream of 7%.

Funny thing is, these 2 funds hold the S&P 500 and Dow stocks you know well. And they pay that huge income stream and return 9% in gains and dividends, on average, every year.

Before I get into these funds, let’s take a look at just how good this market is.

A Profit Bonanza

In February I pointed out that earnings growth was set to remain strong for 2018, and again nearly a month ago, I pointed out that earnings estimates were going up as stocks went down. This is very rare. When it does happen, it’s usually a blaring signal of a strong bull run.

And now that companies are actually reporting earnings, it looks like I wasn’t optimistic enough.

So far, nearly 20% of S&P 500 firms have reported, and 80% of those companies are reporting earnings per share (EPS) far above estimates. Heck, in some sectors, all companies are crushing the Street’s forecasts!

Earnings Come in Piping Hot …

Tech and finance are doing well, thanks to non-stop demand for gadgets and higher interest rates, which boost bank profits. But sectors that have been beaten down so far in 2018, such as energy and real estate, are also doing better than expected.

This all means that earnings growth so far is clocking in at 18.3%, well above the 17.1% growth rate forecast at the end of March and putting us on track for what could be the best earnings record in history.

Yet stocks have gone nowhere in 2018.

… But Investors Miss the Memo

Bottom line: buy signals simply don’t get much stronger than this.

2 Funds to Put on Your Buy List Now

Now you could just run out and buy the SPDR S&P 500 ETF (SPY). You’d get a 1.8% dividend yield, turning your $100,000 investment into $152.50 per month in income. Or you could buy the two other funds I’m going to spotlight today and get almost 4 times that: $591.67 per month in income.

Earnings Season Pick #1: 7.2% Income From the S&P 500

The first fund I’ll show you is the Nuveen S&P 500 Buy-Write Income Fund (BXMX). As the name suggests, it invests in the S&P 500 while also selling “insurance” on those same stocks in the form of “call options” to give you a higher return and a higher income stream. The fund yields 7.2% and has mostly matched the S&P 500’s total return over the last 3 years (note that all returns are after fees).

A Hidden Cash Advantage

So if SPY and BXMX are nearly identical in performance, why not just go with the ETF?

Simply put, the income. Because of its bigger yield, a larger portion of the returns you get come in the form of cash paid in the form of dividends. And unlike SPY, where your capital gains can come and go with a volatile market, you can take your cash from BXMX and put it elsewhere—or, if you prefer, straight back into BXMX. The choice is yours.

Earnings Season Pick #2: Top Stocks, Low Volatility

Now let’s look at the Nuveen Dow 30 Dynamic Overwrite Fund (DIAX), which is almost identical to BXMX except that it buys the Dow Jones instead of the S&P 500. Since the Dow tends to be less volatile, this is a good option for toning down market swings.

Oh, and this fund also pays a 6.9% dividend yield.

The best part is that DIAX is actually beating the total return of the Dow Jones index fund, the SPDR Dow Jones Industrial Average ETF (DIA):

Beating the Market With 3x the Dividend Income

It’s tough to argue with outperformance—but outperformance that includes an income stream that is 3.4 times greater than that of the index fund ($575 per month versus DIA’s crummy $169.17 on the same $100,000)? No one can quibble with that.

1 Click for Even Bigger Dividends and a Safe 28% Win This Year

I’ve got 5 other “limitless” profit machines poised to deliver income and gains that go far beyond a medium-term earnings-season pop.

I’m talking about:

    • A safe—and growing—8.2% average dividend, and
  • 28%+ total returns in the next 12 months.

What’s totally bizarre about this situation is that these 5 funds are even further off the radar than BXMX and DIAX, leaving them trading at even wider discounts (which is where a big part of our 28% total return will come from).

These huge markdowns completely break with the historical pattern for these 5 winners, and they simply can’t last, especially when you consider that these 5 funds also hold S&P 500 names expected to rack up big earnings beats.

The best thing about these 5 cash machines is that they’ve delivered market-crushing gains with much less volatility than what your average ETF investor is forced to stomach. Check out the steady climb one of these funds has piled up since inception, compared to the sickening ups and downs of the market:

A Smooth Ride Higher

The topper: this fund is run by one of the top minds on Wall Street and pays a rock-solid 10.0% dividend today!

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Source: Investors Alley 

Energy

10 Energy Stocks That Are Leaking

Source: Shutterstock

There are two phrases that can make investing seem a bit easier than it actually is: “The trend is your friend” and “A rising tide raises all boats.”

A perfect example to how these can distort your successful investing is the energy sector.

Energy prices are rising for a variety of reasons. One is OPEC nations are reducing supply to raise prices — remember, Saudi Arabia is funding a war in Yemen and Iran is trying to keep its economy going.

Two, the global economy is recovering, so the engines of growth are cranking up, so demand is growing. Crude oil — including West Texas Intermediate (WTI) — is sitting around $68 a barrel, with Brent around $73. Those are healthy levels compared to the sub-$50 level it was at for years.

But this trend isn’t necessarily your friend. And this rising tide won’t lift all boats in the energy patch; some are taking on water fast.

Below are 10 energy stocks that are leaking rather than sailing to open water.

Energy Stocks to Sell: Williams Partners (WPZ)

Energy Stocks to Sell: Williams Partners (WPZ)

Source: Andy Arthur via Flickr

Williams Partners LP (NYSE:WPZ) is a master limited partnership that operates in the U.S. natural gas business. It operates natural gas — and natural gas liquids (NGLs) — pipelines and fracking in the Utica and Marcellus shales as well as around the Gulf of Mexico (Texas, Louisiana, Mississippi, Alabama).

It has been a tough business for a while now, as NGL pricing is very cyclical, and operations are also tied closely with economic growth. But as that trouble gets put behind WPZ, it faces a new challenge — the debt it has racked up in the meantime.

Also, in March the Federal Energy Regulatory Committee has taken away MLPs’ income tax break for cost of service rates. Part of MLPs’ attraction has been their tax-favored status.

WPZ recently sold off an NGL subsidiary to free up cash to pay down some of its debt, but that may not be enough.

There’s no reason to hold and hope — things could get ugly here.

Energy Stocks to Sell: Energy XXI Gulf Coast (EGC)

Energy Stocks to Sell: Energy XXI Gulf Coast (EGC)

Source: Shutterstock

Energy XXI Gulf Coast Inc (NYSE:EGC) is a small exploration and production (E&P) company that operates offshore and onshore in the Gulf Coast.

Low prices forced the company into restructuring, which took all its shareholders down with it. That left them with a bad taste in their mouths as EGC has now reemerged and is trying to make up for lost time as prices for oil and natural gas begin to rise.

But EGC stock has been volatile and year to date is merely keeping its head above water.

EGC remains in a tenuous position and there’s no guarantee that a rebounding energy market will save it. What’s more, if the market reverses, EGC will be one of the first to suffer.

Energy Stocks to Sell: Advantage Oil & Gas (AAV)

Energy Stocks to Sell: Advantage Oil & Gas (AAV)

Source: Shutterstock

Advantage Oil and Gas Ltd. (NYSE:AAV) is a Canadian E&P firm from Alberta, Canada that focuses on natural gas and NGLs.

At this point, AAV stock is off 24% year to date because gas prices remain low, which has meant AAV has had to reduce production. It also has tried to ramp up NGL production to compensate, but this isn’t as easy as flipping a switch.

Earlier this month, it updated it 2018 guidance and it wasn’t good. Because it’s fiddling with production, costs are rising, which will mean margins will be shrinking. That’s never a good thing.

The only real hope is rising gas prices or a huge upturn in NGL demand. And that’s not worth betting on.

Energy Stocks to Sell: NuStar Energy (NS)

Energy Stocks to Sell: NuStar Energy (NS)

Source: Shutterstock

NuStar Energy L.P. (NYSE:NS) is off more than 56% in the past year. It’s a pipeline and storage company based out of San Antonio.

The best news for NS, as it noted in its Q1 earnings statement released earlier this week, was that insurance will pay for a majority of damage done to its facilities by hurricanes last year.

Aside from that (and a whopping current dividend), there’s more risk than attraction here — the new FERC ruling getting rid of an important tax break for the industry; NS high level of debt; and increasing competition from other players are all making recovery difficult.

It has also delivered half the return on equity of the industry average (10%) in the past year. That’s a long road back, and there’s no point in joining its journey until its further along.

Energy Stocks to Sell: Contango (MCF)

Energy Stocks to Sell: Contango (MCF)

Source: Shutterstock

Contango Oil & Gas Co (NYSEAMERICAN:MCF) had one piece of good news in its Q4 earnings released in early March — it lost less money in the quarter than it had the year before.

But aside from that, there wasn’t much to cheer about for the E&P player that works offshore in the Gulf off of Texas as well as in the Rocky Mountains.

MCF stock is off more than 50% over the past year, and this knife my still be falling. Onshore fracking is cheaper than offshore drilling and natural gas prices aren’t moving.

MCF isn’t a big enough operation to shunt production of one resource for another. So, while it’s true NGL prices are rising, it won’t do much for MCF’s bottom line.

Energy Stocks to Sell: Westmoreland Resource Partners (WMLP)

Energy Stocks to Sell: Westmoreland Resource Partners (WMLP)

Source: Shutterstock

Westmoreland Resource Partners LP(NYSE:WMLP) is an MLP not in the oil and gas space, but in the coal sector. It is a surface miner that produces thermal coal.

While there remains demand for coal as an energy resource, this isn’t exactly a growth industry. And when you add to that the FERC ruling to limit tax advantages of MLPs, you start with two strikes for this stock.

So, what did its Q4 numbers reveal earlier this month? Strike three. Earnings were off 25% for the quarter and 13% for the year. While coal demand was up 18% in the U.S., it was off 41% for Canada.

There’s no doubt that coal will be a valuable resource for years to come, but it’s not the core energy source at this point. And betting on this niche in transition when there are so many better choices it far more risk than your likely reward is worth.

Energy Stocks to Sell: Hess Midstream Partners (HESM)

Energy Stocks to Sell: Hess Midstream Partners (HESM)

Source: Mike Mozart via Flickr

Hess Midstream Partners LP (NYSE:HESM) is a midstream player in the integrated Hess petroleum organization. It’s not unusual for integrated energy companies to spin off various upstream and downstream units to leverage performance in good times and deflect trouble in bad.

HESM is set up as an MLP, which means stockholders (technically called “unitholders”) are essentially business partners that receive their profits in the form of dividends. Right now, HESM stock is delivering a 6.3% dividend.

That may sound tantalizing, but when you realize HESM stock is trading nearly 20% off for the last year, it sounds less interesting, hopefully.

It released Q1 earnings this week and they weren’t bad … but they also weren’t good enough to have your money sit on the fence. Not even 6% is worth the risk at this point.

Energy Stocks to Sell: Ultrapar Participacoes (UGP)

Energy Stocks to Sell: Ultrapar Participacoes (UGP)

Source: Maciek Lulko (Modified)

Ultrapar Participacoes SA (ADR) (NYSE:UGP) is a Brazilian energy firm that focuses on storage, distribution and chemicals.

Basically the firm uses these imported energy products and sells them to the various markets that use oil, liquified petroleum gas (LPG) and NGLs for their products.

It’s a solid business but UGP stock is off 18% in the past year.

There are two key issues here. First, as energy prices rise, so will its inputs for selling NGLs and other variants. That means lower margins since not all the price increases will be distributed to vendors and customers.

Second, Brazil is an emerging economy that runs faster in both directions than developed nations. If the broader economy stumbles, it will hit Brazil’s economy much harder.

Given the volatility that’s already in place, there’s no reason to look for even more.

Energy Stocks to Sell: Camber Energy (CEI)

Energy Stocks to Sell: Camber Energy (CEI)

Source: SarahTz Via Flickr

Camber Energy Inc (NYSE:CEI) is a small E&P that works mainly out of Texas and Oklahoma.

At this point the stock is off about 95% in the past year, so there isn’t much left of this company, at least unless it gets more oil out of the ground and to market.

Last month, it received another $1 million in funding from its sixth funding tranche. Basically that means it’s looking for more money to fund operations but isn’t in a position to go to a bank for funding. It’s going through investors.

The problem with this way of funding the company is, it dilutes the shares that current shareholders are holding. There’s nothing wrong with this kind of funding; small firms do it all the time.

The problem is, if you’re an investor while CEI is raising capital, there’s no guarantee your stock will be fully valued.

Energy Stocks to Sell: Ultra Petroleum (UPL)

Energy Stocks to Sell: Ultra Petroleum (UPL)

Source: SMelindo via Flickr (Modified)

Ultra Petroleum Corp (NADSAQ:UPL) is an independent E&P that owns properties in Wyoming and Utah.

In the past three years the stock is off a fulsome 82%. The fact that it has only two properties to seek its fortune is certainly a hindrance.

However, the one thing it has going for it is, UPL has been around since 1979, so it has seen its share of boom and bust cycles and has endured, if not thrived. It also has a $1.4 billion line of credit it can tap into, which is better than diluting shareholders’ positions by raising money through issuing more stock.

But that is little reason to invest.

If the big industrial firms are cautious on economic growth in coming quarters, then looking to buy beaten-down small-cap energy companies isn’t a good choice right now.

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Source: Investor Place

Technology

3 Cloud Computing Companies Racing to Push Cloud Computing Aside

Maybe you were thinking about investing into the cloud computing sector. I’m here to tell you that investing into the latest computing trend is changing, much along the lines of transportation changed the horse and buggy era when automobiles came on to the scene.

The technology research firm Forrester Research says that the Internet of Things – and the coming deluge of sensors and data – make a good bit of cloud computing passé. It will be more practical and efficient to process all of this data right on the spot where it is being collected.

In other words, data will be processed not in a centralized cloud, but at the edge of the network. Thus you get the term ‘edge computing’.

Welcome to Edge Computing

This makes sense. Think about an autonomous car. Some estimate that these data centers on wheels generate as much as a gigabyte of data every second. Doesn’t it make sense then to process all that data from radar, lidar, cameras and other sensors right there instead of sending it all up to the cloud and then wait to have an answer back to the vehicle? That’s the logic behind Nvidia’s Drive PX Pegasus artificial intelligence (AI) platform.

Peter Levine, general partner at the venture capital firm Andreessen Horowitz, also sees edge computing as the future. He believes that the proliferation of devices such as autonomous vehicles, drones and robots are going to require very rapid processing of data. The data needed in such a short time frame means, Levine believes, that sending data up to the cloud and back to get an answer will simply be too slow. Slow responses, for example, in autonomous cars could mean crashes and fatalities.

Of course, there are privacy issues too. Some data is just too sensitive to be sent to the cloud where it might remain on the public device it was sent to. Apple is leading the way with devising ways for its users to keep control of more of their personal data on their own devices.

Edge computing will become a big business. In October 2017, the IT research firm Gartner estimated that by 2022, half of all data generated by businesses will come from smart edge devices – IoT sensors as well as smartphones and PCs – rather than from the cloud or their own data centers. That is no doubt part of the reason behind the forecast from TrendForce that the edge computing market of products and services will enjoy a compound annual growth rate (CAGR) of more than 30% from 2018 to 2022.

But that doesn’t mean cloud computing is dead. It will still play an important role. Let’s go back to the example of the autonomous vehicles. These vehicles, at the end of a day of driving, send all the data collected to the cloud. This data can then be used by the vehicle manufacturers to ‘train’ and refine their software to improve vehicle safety and performance. In other words, the cloud will still handle the most intensive data storage and processing needs.

This new reality in computing suggests to me the best way to invest in edge computing, while still keeping exposure to cloud computing, is through certain stocks.

Edge Computing Stocks

At the top of that stock list is Microsoft (Nasdaq: MSFT). When Satya Nadella first became the CEO, he said the company would pursue a “cloud-first, mobile-first” strategy. But in 2017, Nadella updated the strategy to say that Microsoft is all about the “intelligent cloud and intelligent edge.” The company has filed nearly 300 patents in the field.

In last quarter’s earnings report, Microsoft showed a surge in business (revenues nearly doubled) for its centralized cloud data centers. Nadella though gave a counter-intuitive reason for the surge: that growing interest in edge computing was the reason. More customers were turning to Microsoft to deal with their edge needs, which in turn fed Microsoft’s centralized cloud business.

Microsoft has a product called the Azure Stack that offers a set of public cloud services inside a data center. This gives a customer public cloud-like resources at the data center level without having to move data back and forth from the public cloud. Carnival Cruise Lines has used Azure Stack on some of its cruise ships to power many of the day-to-day operations.

It also has launched Azure IoT Edge which it says is “a dynamic software platform that delivers cloud services to edge devices, making hybrid cloud and edge IoT solutions a reality.”

Microsoft’s results in the last quarter do  seem to confirm what Peter Levine of Andreesson Horowitz said several months ago, “There’s going to be a symbiotic relationship between the edge and the cloud.”

The next company is Amazon.com (Nasdaq: AMZN), which is the biggest public cloud provider with its AWS service. It has a product called Greengrass that provides a set of computing services directly on IoT devices when public cloud services are not available. Greengrass builds on top of AWS IoT and AWS Lambda, its serverless computing service.

Then there is also Alphabet (Nasdaq: GOOG) and its platform for intelligent IoT services. Google Cloud IoT is a comprehensive set of fully managed and integrated services that allows businesses to securely connect, manage, and ingest IoT data from devices dispersed around the world at a large scale. That data can then be processed and analyzed in real time to take actions as necessary.

The bottom line is that all the major players in cloud computing are embracing edge computing in one way or another. You should embrace these stocks as investments in the future of computing.

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Source: Investors Alley 

Uncategorized

Nintendo Profit Is Up Over 500% on Switch Sales — But NTDOY Is Down

Source: Nintendo

Nintendo Ltd/ADR (OTCMKTS:NTDOY) released its annual earning report for 2017 and it included some staggering numbers. Strong Switch sales drove the company’s profit up more than 500% compared to the previous year. And it’s predicting more growth in 2018. In addition, Nintendo announced a new, younger, president will be taking over from the interim leader.

With the huge numbers released and indications the momentum will continue, you might expect Nintendo stock to get a shot in the arm. However, NTDOY is currently down over 3%.

Switch Sales Drive Massive Nintendo Profit Increase

Nintendo released its annual earnings report for the year ending March 31 2018, and the numbers are phenomenal. Especially when you consider the dark place the company was in just a few years back.

For the year, Nintendo generated $9.66 billion in revenue, an increase of 116% compared to 2016. And while that’s an impressive number, earnings are even more so: $1.62 billion on the year, a whopping 505% increase.

Driving that Nintendo profit were Switch sales. The company reported it sold over 15 million of the portable consoles during the year covered, bringing lifetime sales to over 17.79 million units.  Though it was actually on sale for only a month prior to the start of the fiscal year.

To put that in perspective, its previous generation Wii U console sold 13.56 million units during its entire five-year run. Sony Corp (ADR) (NYSE:SNE) is the leader in this generation of game consoles and its Playstation 4 recently hit 76 million units — but it’s been on sale for four and half years. Those strong Switch sales are the reason why Nintendo stock is up nearly 65% on the year and over 300% since the dark days of the struggling Wii U.

A New President and Momentum

The company didn’t just kill it in 2017, it has momentum.

Nintendo is forecasting that it will sell an additional 20 million Switch consoles over the next year. It also has the red hot Nintendo Labo construction sets that are expected to drive additional revenue while helping to keep Switch sales humming. As a result, Nintendo profit for 2018 is predicted to see growth of 26% for 2018.

That’s not as impressive as the 505% growth the company chalked up from 2017 — and that may have something to do with the Nintendo stock dip after the earnings report. But the company is starting 2018 in much stronger place, so triple digit growth isn’t in the cards.

In addition to the impressive Nintendo profit, massive Switch sales and guidance for 2018, the company also announced a new president.

Current president and CEO Tatsumi Kimishima is stepping down, with Shuntaro Furukawa taking his place. The current president was an interim leader, taking the place of the company’s long-term leader Satoru Itawa who died in 2015. Furukawa is 46 and has served on the Nintendo board of directors. He’s seen as a solid choice whose youth will allow consistency in leadership as the company moves out of recovery mode and moves forward.

Bottom Line for Nintendo Stock

Despite today’s dip, Nintendo stock isn’t exactly a bargain at the moment — although it still has plenty of room for upside compared to its 2007 heights.

But based on today’s earnings announcements, Nintendo profit predictions for this coming year, and the strong product lineup from the company, don’t expect it to be a cheap buy any time soon.

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Source: Investor Place

Uncategorized

This Former Hot IPO Stock Could Be Ready To Move

Remember when social media stocks were all the rage? It already seems like a long time ago when the market eagerly awaited any social media company going IPO. Typically the shares were snapped up right away and the stock would soar.

Twitter (NYSE: TWTR) is probably the best example of this fad. The microblogging site went IPO in 2014 and the stock soared above $50 per share. It was still above $50 about a year later. But, by mid-2015, reality hit.

Investors started to figure out that, besides Facebook (NASDAQ: FB), it was very difficult to generate ad revenue growth on social media platforms. As the numbers started coming out, TWTR stock got hammered, dropping below $15 in 2016.

However, when a company has several hundred million users, you can’t just write them off entirely. Lately, TWTR has gotten the attention of the investment crowd again, and is back above $30.

Just last year, we probably had the biggest social media IPO since TWTR, in the form of SNAP (NYSE: SNAP). SNAP’s Snapchat was one of the most popular social media platforms out there, especially for the younger crowd. It also debuted to much fanfare and investor excitement.

You can see where the stock immediately shot up after its IPO. But this time, it didn’t take long for the reality of the numbers to set in. Just like TWTR, the investment community wanted to know how SNAP would monetize its user base. When no obvious answer was forthcoming, the stock dropped.

SNAP has mostly been in the $12 to $16 range for the last year, although it did briefly spike above $20. So is this one-time social media darling about to move again? At least one trader thinks the stock could make a big move… in either direction.

This past week, a trader purchased the May 4th 15 calls and the 14.5 puts with stock trading at $14.88. Buying both calls and puts in the same expiration at the same time, but using different strikes is called a strangle. This particular strangle cost $2.20, which means breakeven points for the trade are $17.20 and $12.30.

That’s a pretty big move in either direction for such a cheap stock. Plus, the trader bought 375 strangles which is over $80,000 in premiums. Why would he or she spend $80k for a two week trade with long odds? It’s all about SNAP’s earnings. The company releases earnings on May 1st, and the strangle buyer is obviously expecting the market to react strongly.

I have no problems with this kind of trade, as long as you keep your quantity low. SNAP is definitely the sort of stock that could move $3 (20%) after earnings. But, you don’t want to use up a bunch of capital on a two-week trade that requires such a sizeable gap.

Instead, this is the type of trade where you buy 1 to 3 lots and hope to double your money. You don’t base your trading strategy off of these kinds of trades. However, it’s not bad to take a flier every once in a while during earnings season if you have strong conviction a stock is going to move, but no opinion on the direction.

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Source: Investors Alley 

Dividends

3 High-Yield Energy Stocks to Buy as Crude Oil Continues to Climb

After two-and-a-half years of giving income investors false hopes of a recovery, the energy infrastructure sector is now ready to stage a sustained positive price trend. Investors are renewing interest in these sectors. Now is the time to buy into these companies for attractive current yields, dividend growth and price appreciation.

Energy infrastructure (also called energy midstream) companies provide the assets and services which move energy commodities (crude oil, natural gas, refined products and natural gas liquids, also referred to as NGLs) from the production areas to the end users. The assets in the sector include pipelines, storage facilities, processing facilities, and all kinds of terminals. Here are some of the current events that point to higher midstream values as we move further through 2018.

The rise in the price of crude oil has increased investor interest in the overall energy sector. The crude price increase has come even as U.S. crude oil production has continued to climb. The production growth in the Permian oil play is well covered, and higher oil prices will result in more drilling in other production areas. Coverage of the energy sector by the financial news outlets is growing.

A recent Wall Street Journal article Is the U.S. Shale Boom Hitting a Bottleneck, highlighted the need for even more pipelines to move crude oil and natural gas out of the Permian.

Over the last two years, the midstream energy companies were forced to rethink their financial structures and how they managed their balance sheets. There have been distribution rate reductions, but most of those are now history. At this point the payouts from the larger companies are secure and investors can look forward to future dividend growth. Current yields are very attractive.

Companies will be releasing first quarter earnings reports over the next few weeks. I expect most of the reports to exceed Wall Street analyst forecasts, which will allow the recent upward price trend to continue.

Prior to 2015, the master limited partnership (MLP) was the prevailing business structure for energy midstream companies. Through the energy sector bear market, several companies have changed structures. Now the sector is close to a balanced mix of MLPs and corporations. At the present time, the higher yields come from the MLPs. This means these companies have more upside price potential has yields between them and the corporate shares become similar for companies with comparable business results. Most MLPs report tax information on what’s called a Schedule K-1. For my Dividend Hunter subscribers, I search out Form 1099 reporting energy infrastructure investments.

Related: 9 High-Yield MLP Funds Without the Tax Hassles

Here are three midstream companies with high current yields, continuing dividend growth, and strong business prospects.

Enterprise Products Partners LP (NYSE: EPD) with a $57 billion market cap is the largest midstream MLP. The company provides the full range of energy infrastructure services. EPD is one of the biggest pipeline service providers to transport crude oil from the Permian to the Texas Gulf Coast. It recently announced that its 416-mile Midland-to-Sealy pipeline is now in full service with an expanded capacity of 540,000 barrels per day (BPD) and capable of transporting batched grades of crude oil.

This company also stands out from the MLP pack by using internally generated cash flow to pay for growth projects. In an era of high equity unit yields, this is a significant advantage.

EPD yields 6.4% and is growing distributions by 2.5% per year.

Magellan Midstream Partners LP (NYSE: MMP) primarily owns and operates refined products (gasoline, diesel fuel, jet fuel, etc.) pipelines and storage terminals. The company also owns 2,200 miles of interstate crude oil pipelines. The company provides service to almost 50% of the U.S. refining capacity.

With its $15 billion market cap, Magellan is one of the more stable large MLPs. This is another of a very small number of midstream energy companies that funds growth capital from internal cash flow.

Since its 2001 IPO, this MLP has consistently grown the distributions paid to investors. Over that period, the payouts have grown at a 12% compounding rate. Currently the company forecasts 5% to 8% distribution growth through 2020. MMP currently yields 5.6%.

Related: Big Oil Bets Big on Big Data to Increase Revenues and Cut Costs

CNX Midstream Partners LP (NYSE: CNXM) owns, operates, develops and acquires gathering and other midstream energy assets to service natural gas production in the Appalachian Basin in Pennsylvania and West Virginia. This MLP primarily provides gathering and processing services to CNX Resources Corp (NYSE: CNX), which is also the sponsor and holds the MLP’s general partner interests.

CNXM provides support to the production growth planned and executed by CNX. This $1.1 billion market cap MLP is very separated from much of the drama that has driven MLP values.

At its recent analyst and Investor Day the company affirmed its guidance for 15% distribution growth through 2022. The current yield is 6.9%.

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Source: Investors Alley 

Uncategorized

7 ‘Strong Buy’ Stocks Bloggers Are Raving About

Like me, I’m sure many of you already follow the ‘strong buy’ recommendations of analysts that receive a lot of attention, analysts that work for leading financial institutions such as Goldman Sachs, Deutsche Bank and Credit Suisse (to name but a few). But there is a completely different group of financial experts who are also capable of delivering robust returns for investors — financial bloggers. So which stocks are bloggers raving about right now?

Here, I combine the wisdom of both financial bloggers and the Street to find 7 top stocks. I used the nifty TipRanks Stock Screener to scan for stocks which have a Very Bullish sentiment from top bloggers and a Strong Buy consensus rating from top analysts. These are the best-performing analysts who consistently outperform the market based on their success rate and average return per rating. You can track these analysts to ensure you are basing crucial investing decisions on analysts who tend to get it right.

From the list generated by these criteria, I picked these 7 compelling ‘Strong Buy’ stocks. Now let’s dig down into just why these top stocks are so popular with online bloggers right now:

Strong Buy Stock: Microsoft (MSFT)

microsoft stockMicrosoft Corporation (NASDAQ:MSFT) has no shortage of supporters right now. And two of the most recent bullish blogger pieces highlight a crucial element of the MSFT story for investors — dividends. Did you know that Microsoft has managed to grow its dividend by 225% in just eight years? Top blogger Valuentum Securities Inc. even wonders if MSFT is setting itself up as a future Dividend Aristocrat. This is the name given to an elite handful of companies that have raised their dividends consecutively for over 25 years.

MSFT’s dividend prowess comes from the fact that this is one of the most cash-rich companies around. Right now the company is sitting on a stupendous cash pile of around $135 billion. These cash flows are partly generated by the extreme success of MSFT’s Azure cloud platform. Top blogger InvestorPlace’s Aaron Levitt praises Microsoft’s renaissance as a cloud company under the leadership of CEO Satya Nadella. He points out that in the last quarter Azure grew 90% year-over-year.

Five-star KeyBanc analyst Brent Bracelin agrees. He picks MSFT as one of his favorite cloud platforms to own in software as:

“The combination of Office 365, Azure and Dynamics 365 not only makes Microsoft the largest cloud platform in the world, but also ranks it as one of the fastest-growing among its Cloud Titan peers.”

Bracelin — one of the Top 50 analysts on TipRanks — reiterates his Buy rating with a $110 price target.

Strong Buy Stock: Alcoa (AA)

 

Is It Time to Buy the Dip in AA Stock?

Source: Josh Hallett via Flickr (Modified)

High-flying aluminum stock Alcoa Corporation (NYSE:AA) is a great buy right now. The stock has the seal of approval from both bloggers and the Street. Indeed we can see that blogger sentiment is 100% bullish with positive articles from publications across the board.

This upbeat mood comes on the back of the company’s stellar Q1 earnings results and guidance. For the quarter, AA announced profit of 77 cents per share and revenue of $3.09 billion. These figures easily exceeded consensus expectations of 70 cents and $3.08 billion respectively. Berenberg Bank explains in its mining report: “The confluence of current events (trade actions, sanctions and supply disruptions) has created highly favorable trading environments for Alcoa.”

Encouragingly, top blogger IP.com’s James Brumley believes that “things could get even better for Alcoa as the year progresses.”  The company is projecting a full-year 2018 global deficit for both alumina and aluminum.

In the recent earnings call, AA revealed that: “Due to delays in projects to expand smelters in China, the Company expects the global aluminum deficit to grow to between 600,000 – 1 million metric tons, up from last quarter’s deficit estimate of between 300,000 – 700,000 metric tons.” Meanwhile global aluminum demand is due to rise 4.25 to 5.25%.

And this tightening aluminum market further strengthens AA’s pricing power. As a result, management has upgraded 2018 guidance and signaled their intention to return cash to shareholders in Q2.

Strong Buy Stock: XPO Logistics (XPO)

Bloggers are raving over transportation hot stock XPO Logistics Inc (NYSE:XPO) right now. And with good reason. With over 95,000 employees, the company is an industry leader in both transportation and logistics. But it is the company’s ‘rock solid’ business that is really getting commentators excited.

Leo Nelissen notes that revenue is growing at a CAGR of 87% since 2014 while EBITA is growing at 157%. These figures are through the roof. He calls the stock a “real winner” (Editor’s note: source is behind a paywall) due to its massive growth spurt across the US and Europe. In fact XPO has huge expansion potential in Europe where it has its eye on the $455 billion European transport segment. Already XPO is the largest provider of truck brokerage and largest owned fleet in Europe.

From a Street perspective, we can also see that XPO boasts 100% buy ratings from best-performing analysts. In the last three months, six top analysts have published buy ratings on the stock. Meanwhile their average price target of $113 indicates just over 8% upside potential from the current share price.

Top Oppenheimer analyst Scott Schneeberger is more bullish than consensus. He sees shares spiking 14% and explains that XPO won $2.8B (annualized revenue) of new business in 2017 with a global pipeline of $3.2B. “Pairing strong business conditions/ the 2017 new business wins, we anticipate high-single digit organic revenue growth in 1Q18, which could persist over the balance of 2018” concludes Schneeberger.

Strong Buy Stock: Applied Materials (AMAT)

Applied Materials, Inc. (AMAT) Stock Is a Screaming Buy Right Now!

This semiconductor stock may be a controversial choice right now but as far as bloggers are concerned, it’s full steam ahead. Share prices in Applied Materials, Inc. (NASDAQ:AMAT) are down from close to $58 on April 17 to just above $51. Weighing on the semiconductor space is China’s plan to boost domestic chip production as part of its ongoing trade tussle with the US.

However, the subsequent pullback in prices has been described as a ‘kneejerk’ reaction by bloggers. Crucially, as blogger Joseph Hargett points out, Chinese semiconductor firms are far behind their US, Japanese and European rivals. “In other words, competition from Chinese chip makers isn’t coming anytime soon, making yesterday’s selloff rather premature,” states Hargett.

Plus with prices at these levels, the Street is now predicting considerable upside potential of over 42%. This would take shares to over $72. Nine analysts have published buy ratings on AMAT recently — so no hold or sell ratings here. Analysts are confident that demand for DRAM chips remains favorable with “upward memory spending pressure.”

One of these analysts is TipRanks’ Number 2 analyst, Craig Ellis from B.Riley FBR. He recently reiterated his AMAT buy rating with a $77 price target. “We believe AMAT’s +100% dividend boost and $6.0B share buyback hike to $8.8B exemplify confidence in fundamentals sustainability and growth execution,” writes Ellis.

Strong Buy Stock: Align Technology (ALGN)

ALGN Stock Will Clear $300 After Earnings

Source: Shutterstock

Global medical device company Align Technology, Inc. (NASDAQ:ALGN) wins the award of top-performing S&P 500 stock in 2017. Shares shot up in the year from $96 to $223 during the year. The company is pioneering a new wave of teeth straightening technology with its popular ‘clear aligners.’ So say goodbye to the high school movie makeover, because this is fast becoming an increasingly feasible alternative to traditional braces.

“We’ve seen a maturation of Invisalign’s clear aligners over the past decade,” explains Robert W Baird analyst Jeff Johnson. “They went from a product that was passable for some patients but not good for all back in 2011, to a product that by mid-2016, had orthodontists saying ‘I can use this technology in most cases.’”

Luckily for investors it seems like Align’s growth spurt is only just beginning. Top-ranked blogger Keith Speights believes Align has the power to double again over the next couple of years. First of all — even with the rapid uptake — the company still only accounts for 11% of the global orthodontics market. This means its expansion potential is huge. And at the same time, aligners are currently usable in only 65% of teeth misalignment cases. Align wants to take this figure to 80%.

The stock is also a top pick from the Street. Note that Goldman Sachs has also just selected Align as one of its 30 buy-rated high dispersion stocks. This means that it boasts “micro driven, idiosyncratic returns” not dictated by the general market forces. Good news when the market is as choppy and unpredictable as it is right now.

Strong Buy Stock: Home Depot (HD)

Why Home Depot Stock Is Finally Too Expensive

Source: Mike Mozart via Flickr (Modified)

Home Depot Inc (NYSE:HD) is a key beneficiary of the housing market upswing. A recent report by CoreLogic reveals that US house prices are peaking again. The average home price is now 1% higher than it was in 2006, the report said — with the greatest improvement in West Coast states.

According to TipRanks, this home improvement chain store boasts a 91% bullish blogger rating right now. This works out way more bullish than the average services sector stock. Indeed, just a couple of days ago, five-star blogger Valuentum Securities Inc. described Home Depot as ‘building for the long haul.’ The financial blogger continued:

“We find Home Depot’s comparable store sales numbers highly impressive, but we find its return on invested capital (ROIC) targets downright amazing.” Indeed, its targeted ROIC stands at a very impressive 40%.

Meanwhile Morgan Stanley’s Simeon Gutman sees the stock spiking a further 19%. He is betting on the stock following ‘reassuring’ meetings with Home Depot management. Gutman told clients:

“Our meetings reinforced several strengths of the story: a favorable macro backdrop, an ability to take market share through differentiation, investing for the future, and organizational cohesion that increases productivity and efficiency while minimizing execution risk.”

Strong Buy Stock: Booking Holdings (BKNG)

Source: Shutterstock

Last, but by no means least, we have this extremely promising online travel company. Andres Cardenal is one of the Top 100 bloggers out of over 6,400 tracked by TipRanks. On April 10 he sets out why he is such a fan of the Booking Holdings Inc. (NASDAQ:BKNG) — formerly known as Priceline.com. I particularly like this point “the company makes massive amounts of money.” (Editor’s Note: Paywall)

This is borne out by the facts — Booking was making $1.88 billion in revenue in 2008, fast forward ten years, and the Street is looking for $14.18 billion in revenue this year.

In fact, Booking has just disclosed a total of 28MM listings on its platform, of which 5.2MM listings are Alternative Accommodations. As a result, Booking now exceeds Airbnb’s ~4.85MM, to become the leading supplier of alternative accommodations. This trend is set to continue according to Mizuho Securities James Lee. He has recently initiated BKNG with a buy rating.

Even though the stock is already trading at $2,140 he sees big upside potential of 20%. This means we are looking at prices around the $2,600 mark. Lee believes Booking will continue to gain “disproportional” market share due to its “industry-leading expertise” in performance marketing. In fact, out of the 16 recent analyst ratings on the stock, 13 are bullish with only 3 analysts staying on the sidelines.

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

Options

This Former Hot IPO Stock Could Be Ready To Move

Remember when social media stocks were all the rage? It already seems like a long time ago when the market eagerly awaited any social media company going IPO. Typically the shares were snapped up right away and the stock would soar.

Twitter (NYSE: TWTR) is probably the best example of this fad. The microblogging site went IPO in 2014 and the stock soared above $50 per share. It was still above $50 about a year later. But, by mid-2015, reality hit.

Investors started to figure out that, besides Facebook (NASDAQ: FB), it was very difficult to generate ad revenue growth on social media platforms. As the numbers started coming out, TWTR stock got hammered, dropping below $15 in 2016.

However, when a company has several hundred million users, you can’t just write them off entirely. Lately, TWTR has gotten the attention of the investment crowd again, and is back above $30.

Just last year, we probably had the biggest social media IPO since TWTR, in the form of SNAP (NYSE: SNAP). SNAP’s Snapchat was one of the most popular social media platforms out there, especially for the younger crowd. It also debuted to much fanfare and investor excitement.

You can see where the stock immediately shot up after its IPO. But this time, it didn’t take long for the reality of the numbers to set in. Just like TWTR, the investment community wanted to know how SNAP would monetize its user base. When no obvious answer was forthcoming, the stock dropped.

SNAP has mostly been in the $12 to $16 range for the last year, although it did briefly spike above $20. So is this one-time social media darling about to move again? At least one trader thinks the stock could make a big move… in either direction.

This past week, a trader purchased the May 4th 15 calls and the 14.5 puts with stock trading at $14.88. Buying both calls and puts in the same expiration at the same time, but using different strikes is called a strangle. This particular strangle cost $2.20, which means breakeven points for the trade are $17.20 and $12.30.

That’s a pretty big move in either direction for such a cheap stock. Plus, the trader bought 375 strangles which is over $80,000 in premiums. Why would he or she spend $80k for a two week trade with long odds? It’s all about SNAP’s earnings. The company releases earnings on May 1st, and the strangle buyer is obviously expecting the market to react strongly.

I have no problems with this kind of trade, as long as you keep your quantity low. SNAP is definitely the sort of stock that could move $3 (20%) after earnings. But, you don’t want to use up a bunch of capital on a two-week trade that requires such a sizeable gap.

Instead, this is the type of trade where you buy 1 to 3 lots and hope to double your money. You don’t base your trading strategy off of these kinds of trades. However, it’s not bad to take a flier every once in a while during earnings season if you have strong conviction a stock is going to move, but no opinion on the direction.

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Source: Investors Alley