5 Great Stocks to Take a Bite Out of China

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The fears of a trade war have sent the markets into a bit of a panic mode lately. Volatility has spiked and we’ve seen some pretty nasty intraday swings. But it’s not just U.S. firms that have felt the effects of the tariffs. Chinese stocks have also been hurt.

Since the war of words and tariffs, Chinese stocks have felt many of the same pressures as their U.S. counterparts and have sunk by pretty big amounts. But in those drops, Chinese stocks could be big bargains.

The long-term picture for China is still rosy. The nation’s huge and growing consumer class is spending, while its importance in the world’s economic picture is assured — with China becoming less and less reliant on the U.S. For investors, the key emerging market is a must own and now could be a great time to buy them.

With that, here are five great ways to load up on Chinese stocks.

The Best Ways To Buy Chinese Stocks Now #1: iShares MSCI China Index Fund (MCHI)

The simplest and quickest way to add a hefty dose of Chinese stocks is the iShares MSCI China Index Fund (NYSEArca:MCHI). The index ETF has grown more than $3.5 billion in assets as it represents one of the broadest takes on the nation.

As its name implies, MCHI tracks the benchmark MSCI China Index. That index covers a wide spectrum of Chinese equities, including both large- and mid-caps. In fact, MCHI’s 154 stocks provide exposure to roughly 85% of the entire Chinese market available to international investors. And that number is getting bigger as index provider MSCI has begun to gradually add exclusive A-shares. This boosts its holdings to over 375 when the transition is finally done.

That broad exposure to China’s equities makes MCHI one of the best ETFs for investors looking to profit from the nation’s continued rise. And it certainly has delivered in the returns department. MCHI has managed to post an average annual return of 10.76% over the last 5 years and was up an astonishing 53% in 2017.

And as a core holding, MCHI is also a pretty cheap option as well. Expenses for the Chinese stocks ETF only costs 0.62%- or $62 per $10,000 invested.

The Best Ways To Buy Chinese Stocks Now #2: Guggenheim China Small Cap ETF (HAO)

Small-caps have long been the way to play any nation’s domestic economy. After all, smaller firms usually don’t have the global reach of their larger sisters. And when it comes to China, that fact is no different. Smaller is a direct bet on the Asian Dragon’s domestic growth.

The way to play that growth is the Guggenheim China Small Cap ETF (NYSEARCA:HAO).

HAO follows the AlphaShares China Small Cap Index- which tracks the performance of Chinese stocks with market caps under $1.5 billion. HAO’s 319 stocks only include publicly-traded mainland stocks. So, no A-shares. Even without them, the ETFs diversification is broad with no sector accounting for more than 17% of assets.

Performance for HAO has been ok- with a 5-year average return of 7.17%. However, the fund has had periods over double-digit performance based on reactions to the Chinese economy. It’s a volatile play that could pay-off big time for investors looking for a leveraged play on the nation’s growth.

Expenses for HAO clock in at 0.75%.

The Best Ways To Buy Chinese Stocks Now #3: Matthews China Dividend Fund (MCDFX)

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For investors looking for an active way to play Chinese stocks, the Matthews China Dividend Fund (MUTF:MCDFX) could be a great choice.

Matthews’ sole focus is investing in Asia and as a result, the firm’s mutual funds have had plenty of outperformance vs. traditional index funds. This includes MCDFX. The fund has managed to beat the previously mentioned MSCI China Index by nearly double annually since its inception in 2009.

The key is the mutual fund’s focus. MCDFX bets on dividend payers in China. That provides a less volatile ride for shareholders and also provides plenty of income. While most view Chinese stocks as pure growth elements, they also can be great dividend payers. The fund’s 52 holdings throw off a healthy 2.59% dividend yield. That’s more than the S&P 500.

Perhaps the only downside to MCDFX is its expense ratio at 1.22%. in the world of low-cost investing, that’s very high. However, given its outperformance and dividend-focus, it could be worth paying for those investors looking for an active route into China.

The Best Ways To Buy Chinese Stocks Now #4: Global X China Consumer ETF (CHIQ)

One of the biggest reasons to own Chinese stocks in the first place is its growing middle class. With a population of around 1.4 billion, China’s story is very much a consumer one. As the nation’s wealth has expanded, consumer demand in the country has only exploded. The best part is the story is still only in the first couple innings of a very long ballgame.

To that end, betting directly on China’s growing consumerism makes a tone of sense. And the Global X China Consumer ETF (NYSEARCA:CHIQ) is the way to do it.

CHIQ tracks the Solactive China Consumer Total Return Index -which is a measure of all the consumer discretionary and staple stocks that operate in China. The fund’s 40 holdings read like a who’s who of retail, beverage, media, apparel and personal and household products companies in the nation. All in all, it’s a broad-bet on a quickly growing segment of the Chinese economy.

Much like previously mentioned HAO, CHIQ’s returns have been mixed- with periods of significant outperformance and underperformance. Over the last five years, however, CHIQ has averaged a 7.96% annual return. That’s not too shabby and considering the long-term projection for consumer growth, performance should pick-up over the upcoming decades.

Expenses run at 0.65%.

The Best Ways to Buy Chinese Stocks Now #5: Alibaba Group Holding Ltd (BABA)

The ‘New’ Alibaba Group Holding Ltd (BABA) Stock Looks a Lot Like the Old One

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If you were going to own just one Chinese stock, it would have to be Alibaba Group Holdings Ltd (NYSE: BABA). Heck, if you were going own any tech stock- from any country- it might just have to be BABA. That’s because the stock has become a conglomerate of the some of the best takes in the technology sector.

For starters, BABA’s main bread-n-butter is its retail business. But unlike Amazon.com, Inc. (NASDAQ:AMZN), BABA only serves as the marketplace and doesn’t actually hold inventory. That provides higher margins than its rival.

Founder Jack Ma has used the hefty cash flows from this business to fund expansions into everything from peer-to-peer lending, social media, and even tablets/mobile devices. These moves, as well as deals into other parts of Asia, have only cemented Alibaba’s stance as one of China’s most important stocks and technology firms.

Meanwhile, the recent downturn in Chinese stocks has made BABA pretty attractive. Toward, the firm can be had for a forward P/E of just 24. That’s pretty cheap considering the potential, long-term growth and dominance of Chinese tech.

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Source: Investor Place 

7 Monster Market Trends and 7 Ways to Invest

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It’s been a treacherous few months for investors. As of this writing, stocks remain range bound between two major technical support levels. On the upside, the S&P 500 is contending with its 50-day moving average. Last week, the 200-day average provided critical support.

What happens throughout the rest of the year depends in large part on how the market resolves this stalemate.

But from this vantage of volatility and uncertainty, a few major trends are clear. And for investors trying to cut through the noise, here are seven monster trends and seven ways to ride these catalysts toward a better 2019:

Monster Market Trends: Amazon (AMZN) Eats the World

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Multiple Amazon.com, Inc. (NASDAQ:AMZN) related headlines have crossed in recent days, serving as a reminder just how quickly and aggressively the company is diversifying into new business areas.

Like shipping logistics. And meal boxes. And possible initiatives in the healthcare space.

The company will next report results on April 26 after the close. Analysts are looking for earnings of $1.30 per share on revenues of nearly $50 billion.

When the company last reported on Feb. 1, earnings of 36 cents per share beat estimates by 36 cents on a 38.2% rise in revenues.

Monster Market Trends: Combat Syria With Lockheed (LMT)

lmt stock

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President Trump’s decision late Friday to launch cruise missiles into Syria for the second straight year is lifting a bid into defense stocks amid a realization this is likely the first stage of a multi-part escalation involving Russia, Iran, Saudi Arabia and Israel.

As a result, Lockheed Martin Corporation (NYSE:LMT) shares are breaking up and out of a multi-month consolidation range ahead of a possible rally to the late February highs near $360, which would be worth a 4% gain from here.

The company will next report results on April 24 before the bell. Analysts are looking for earnings of $3.35 on revenues of $11.3 billion.

Monster Market Trends: Volatility Is Here to Stay With the iPath Short-Term VIX (VXX)

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After one of the quietest rallies in market history in 2017, investors have been rudely awakened by the reappearance of dynamism in the markets.

Bespoke Investment Group notes that compared to 2017 when there were just eight moves of 1% or more, so far in 2018 there have been 28 with 11% just over the last month.

Yet despite the volatility, actual price movement has been subdued: At 3 pm Friday, the S&P was trading at the exact same price that it was on Feb. 5.

Watch for this short-term volatility to continue until some medium-term volatility manifests into a major repositioning of the major market averages. That’ll be a boon to the VXX.

Monster Market Trends: Uncertain Bull Market Helps SPDR Gold Shares (GLD)

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Precious metals and the related exchange-traded funs like the SPDR Gold Trust ETF (NYSEARCA:GLD) have been in the doldrums for years amid low volatility and calm conditions.

But that could be set to change thanks to a number of tailwinds, including higher inflation pressures, geopolitical tension, a deepening trade rift, and the ongoing Russia collusion probe involving President Trump, his administration and his 2016 campaign.

Any developments on these fronts should send investors into safe havens like gold. Which, in turn, should lift the GLD out of its three-year trading range to levels not seen since early 2014.

Monster Market Trends: iPhone Notches for Everyone With Apple (AAPL)

 

Apple Stock Is Still One of the Best Long-Term Picks Out There

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Apple Inc. (NASDAQ:AAPL) shares have been treading water since the iPhone X with its $1,000 price tag and iconic screen “notch” was unveiled.

Shares have stalled on underwhelming demand, production woes, and a surprisingly warm reception for the iPhone 8. But this year’s models, according to reports, will replicate the iPhone X’s notch screen across three new handsets including an entry-level model with an LCD screen instead of the more expensive OLED option.

The company will next report results on May 1 after the close. Analysts are looking for earnings of $2.70 per share on revenues of $61.2 billion.

When the company last reported on Feb. 1, earnings of $3.89 beat estimates by four cents on a 12.7% rise in revenues.

Monster Market Trends: Merck (MRK) Takes the Fight to Cancer

merck stock

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Merck & Co., Inc. (NYSE:MRK) shares jumped 2.4% on Monday, popping back over its 200-day moving average, after the company announced positive clinical results from its Keytruda treatment for lung cancer and melanoma.

Immunotherapies like Keytruda are enjoying increased clinical success and set to play a larger and more lucrative role in the healthcare market.

The company will next report results on May 1 before the bell. Analysts are looking for earnings of $1 per share on revenues of $10.10 billion.

When the company last reported on Feb. 2, earnings of 98 cents per share beat estimates by four cents on a 3.1% rise in revenues.

Monster Market Trends: U.S. Shale Returns to Form, Boosting Kinder Morgan (KMI)

Energy pipeline stocks like Kinder Morgan Inc (NYSE:KMI) have been hit by the post-2014 weakness in energy prices. But a recent strengthening, with crude oil pushing back towards the $70-a-barrel threshold, has reinvigorated interest as U.S. shale producers ramp up production in response.

The company will next report results on April 18 after the close. Analysts are looking for earnings of 21 cents per share on revenues of $3.5 billion. When the company last reported on Jan. 17, earnings of 21 cents per share beat estimates by three cents on a 7.2% rise in revenues.

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

3 Stocks for Profits from People Playing Video Games All Day

The definition of sports is changing. For those people who have never known a world without the internet, sports can mean something quite different than for us a wee bit older. For those people, sports are just as likely to be played sitting in a comfy chair with headphones, a keyboard and a mouse.

Welcome to the brave new world of e-sports!

This new realm for sports still requires quick thinking, lightning reflexes and dedication to the sport. And like traditional sports, these athletes are playing for substantial money. Here is a list of the top 10 purses for e-sports in 2017:

 

The e-Sports Market

According to PricewaterhouseCooper (PwC), the global e-sports market was worth $327 million in 2016. One reason for its smallish size compared to say the NFL is that e-sports is a collection of different game titles across different game genres, with different intellectual property holders that, to date, have not bargained together for TV (and streaming) rights and sponsorship deals.

But now e-sports is moving into the ‘major league’ of sports. They will be added as a medal event in the 2022 Asian Games. That’s not surprising considering that South Korea is the hot spot for these sports, with other Asian countries also joining in. The backers of e-sports are pushing too for it to be added as an official event in future Olympics too.

Any future Olympics boost will only add to the growth already occurring. PwC estimates that the e-sports market will expand at a compound annual growth rate (CAGR) of 21.7% through 2021 into an $874 million market. Other forecasts are even more bullish. For example, the Dutch research firm Newzoo says e-sports will be a $1.6 billion industry by 2021.

Whatever forecast you believe, the bottom line is that the e-sports industry is growing in leaps and bounds. Especially in certain countries… here are the projected growth rates for the three top e-sports countries – South Korea, China and the United States – according to PwC…

China is set to be the fastest grower with a 26.3% CAGR, with its industry set to hit $182 million in 2021. The growth there is being spearheaded by its two tech titans – Tencent Holdings (OTC: TCEHY) and Alibaba Group (NYSE: BABA). Tencent, which is a major games developer, agreed last May with the city of Wuhu to transform it into an e-sports hub, with a dedicated stadium to host international tournaments and with an e-sports university to train the next generation of players.

The next-fastest growth is forecast to come from the U.S. with a CAGR of 22.6% though 2021, while South Korea is expanded to expand at a 13.9 rate though 2021.

Eyeballs = Revenues

I believe these projected growth rates may even be conservative. The reason is because e-sports is becoming a major spectator sport.

Goldman Sachs estimates that the global monthly audience for e-sports will reach 385 million by 2022. That’s more than the NFL, folks.

That will give Amazon another boost, as if it needed it. It got into the ‘game’ early when it bought Twitch, a very popular live streaming platform for gamers, for $970 million in 2014.

Others have followed Amazon. BAMTech, Major League Baseball’s streaming company, is a subsidiary of Disney. In 2016, it agreed to pay video game developer Riot Games (owned by Tencent) $300 million over six years for the “exclusive rights to stream and monetize” League of Legends tournaments.

These viewer eyeballs will turn into revenues for the industry. You see, there are three main areas where e-sports can produce revenues. First is direct payments from live streaming services – some live tournaments have tens of millions of viewers. Last year, there were 11.1 billion e-sports videos streamed in China and 2.7 billion in North America, where about one-third of gamers reside.

The next source of revenue is the sale of content rights to broadcasters. Finally, advertising revenues, which today come largely from the gaming industry. But it isn’t hard to imagine a whole raft of companies looking to get their message in front of millions of viewers.

Goldman Sachs analyst Christopher Merwin said in a note to clients, “We expect sponsorship will be one of the largest revenue opportunities for e-sports.” He pointed to the fact that nearly 80% of the viewers are between the ages of 10 and 35, which is a very coveted demographic for advertisers.

Importantly, the backers of e-sports are being smart and adapting what works for traditional sports and applying it to e-sports. Such as creating a league and having permanent teams in many of the major cities. The parent companies of the New England Patriots, Los Angeles Rams and the New York Mets now own franchises (at a cost $20 million) in the first attempt to create an actual league.

The teams were sold by the world’s largest publisher of video games, Activision Blizzard (Nasdaq: ATVI), which came up with the idea of a 12-team Overwatch League. Unlike traditional U.S. sports leagues, this league also has teams from London and Shanghai.

Related: 5 Growth Stocks to Ride the Semiconductor Supercycle

The Overwatch League is not the only e-sports league in existence. There is a similar venture from Riot Games, which charged $10 million for franchises in the North American League of Legends Championship Series. Over 43 million people watched last year’s League of Legends World Championship online, up from just 8 million in 2012. Major venues such as Seoul, South Korea’s Olympic Stadium were sold out to watch the event.

The build-out of leagues is already attracting sponsors, as I hinted at before. Both Intel and HP are lead sponsors for the Overwatch League. And Geico and Nissan are among the sponsors of the North American League of Legends league while Coca-Cola sponsored the finals for the league.

e-Sports Investments

So how can you invest into this e-sports phenomena?

At the top of my buy list is the aforementioned Activision Blizzard, which also has a live streaming channel called Major League Gaming, which it acquired in 2016 for $46 million. It currently has many popular franchises including Call of Duty, Destiny, Skylanders, World of WarcraftCandy Crush and, of course, Overwatch.

Management believes the release of new titles, its expanding mobile pipeline and increasing initiatives in advertising and e-sports will drive growth. In-game net bookings are anticipated to show a double-digit percentage growth in 2018. The release of World of Warcraft’s Battle for Azeroth this summer should also boost growth this year as will Destiny 2. Activision also anticipates Overwatch League to be profitable this year. The company also plans to ramp up ad business by rolling out more video-based ad products.

For 2018, Activision expects GAAP revenues of $7.35 billion and earnings per share of $1.78. On a non-GAAP basis, revenues and earnings are expected to be $7.35 billion and $2.45 per share. Its stock, up about 30% over the past year, should enjoy another good year in 2018.

Next on the list is a rival of Activision, Take Two Interactive Software (Nasdaq: TTWO), which is best known for its Grand Theft Auto, Red Dead and NBA 2K franchises.

While trailing in the e-sports business, the company is finally moving ahead now. It inked a deal with the NBA to launch a NBA eLeague. Take Two had conducted an NBA e-sports tournament the last two years. The NBA will be the only major professional sports league to have its own e-sports league. The league will begin in May 2018 with so far 17 of the 30 NBA teams saying they will play for at least three years. The NBA eLeague recently held its initial draft.

Take Two is also expanding rapidly into mobile games. It strengthened this area of the company with its acquisition of Barcelona-based Social Point for $250 million in 2017. Social Point is one of the most prolific mobile game developers.

Take Two’s for fiscal 2018 centered on strength in its franchises like Grand Theft Auto, NBA 2K and WWE 2K, which should boost the top line in the fiscal year. GAAP net revenues are likely to be in the range of $1.80–$1.85 billion, above the earlier projection of $1.74–$1.84 billion. The company forecasts earnings per share in the range of $1.40–$1.60, well above the 55–80 cents projected earlier. Once again, that should keep the stock, up about 66% over the past year, moving forward.

Finally is a bit of a dark horse since it has yet to really move into e-sports, Japan’s Nintendo (OTC: NTDOY). The company has already enjoyed a major change in fortunes thanks to its launch of the record-breaking Switch console, causing its stock to nearly double.

 

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Source: Investors Alley