3 Breakout Stocks to Spice Up Your Portfolio

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The pace of technology is breathtaking. Just some of the trends include cloud computing, AI (Artificial Intelligence), machine learning and the IoT (Internet of Things). So for investors, there are many opportunities.

But then again, breakout stocks are usually volatile — and expensive. It can be tough to make a purchase decision when the returns have already been over triple digits for the past year! And because the expectations are at lofty levels, it does not take much to deflate the stock when there is some bad news.

This is why investors need to be cautious with breakout stocks. Basically, they really should only be a small portion of your portfolio.

So then, what are some companies to consider that could spice up your portfolio? Here’s a look at three:

Breakout Stocks to Buy: Okta (OKTA)

Breakout Stocks To Buy: Okta (OKTA)

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Okta (NASDAQ:OKTA) is a next-generation cloud operator that develops identity services for enterprises. For the most part, the focus is on helping to secure access to critical information. The platform has more than 5,500 pre-built integrations and over 5,100 customers.

Okta has also been seeing a strong acceleration in its growth. Just look at the latest quarter, as the company pummeled Wall Street expectations. Revenues soared by 57% to $94.6 million, compared to the consensus forecasts of $84.8 million. The company also raised its full-year guidance to $372 million to $375, up from the prior forecast of $353 million to $357 million.

A key is that the company has been getting much more traction with large customers. During the past year, there was a 55% increase in the number of customers that generate subscriptions of $100,000 or more. This is all part of the so-called “land and expand” strategy.

But it does look like the opportunity for Okta is still in the early phases. According to CEO Todd McKinnon, during the latest earnings call: “It starts with the significant market tailwind in our favor. Every organization is moving to the cloud. Every company has to become a technology company and everyone is worried about security. We are seeing identity become mainstream as organizations recognize the critical role that identity plays in their environment.”

Breakout Stocks to Buy: Advanced Micro Devices (AMD)

Breakout Stocks To Buy: Advanced Micro Devices (AMD)

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Despite a rough ride today, the turnaround of Advanced Micro Devices (NASDADQ:AMD) is starting to show big-time results. CEO Lisa Su has done an amazing job of focusing on the major opportunities while also being disciplined with the bottom line.

Even though AMD has been around since the late 1960’s, the company now looks more like a scrappy startup. In the most recent quarter, revenues jumped by 53% to $1.76 billion.

As for the main driver, it is the enormous datacenter market. Keep in mind that AMD’s EPYC server processor has gotten adoption from companies like Cisco (NASDAQ:CSCO) and HP Enterprise (NYSE:HPE). It also helps that rival Intel (NASDAQ:INTC) has stumbled, as it has been slow to introduce new chipsets. The company currently has about 99% of the market for datacenters.

In other words, it is a very juicy target for AMD.

Wall Street is definitely getting excited, with multiple upgrades. For example, FBN Securities analyst Shebly Seyrafi notes that the server-chip market is about $16 billion and that the EPYC chip is poised for strong gains.

Breakout Stocks to Buy: Cloudera (CLDR)

Breakout Stocks to Buy: Cloudera (CLDR)

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Back in early April, big data company Cloudera (NYSE:CLDR) stock got crushed, plunging by more than 40%. The company whiffed on its earnings as the growth engine stalled.

Yet management at CLDR took swift action, especially with the restructuring the sales team. And it looks like things are getting back on track. In the second quarter, revenues rose by 23% to $110.3 million, while the Street was looking for $107.7 million. The 8-cent loss was also much better than the consensus forecast of 15 cents. What’s more, CLDR increased its full-year guidance to $440 million to $450 million, up from $435 million to $445 million.

The company certainly faces tough competition from companies like Amazon (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL). But the market size is large enough for multiple players. Besides, CLDR’s strategy of disrupting the traditional data warehousing market appears to be spot-on, as functions like machine learning, AI (Artificial Intelligence) and analytics move towards cloud platforms.

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2 Dangerous Double-Digit Dividends to Sell NOW

One of the best characteristics about dividends is they usually offer a consistent, preferably growing stream of income. However, investors can easily fall into the trap of becoming complacent that future payments will continue to flow in, even when the business isn’t generating enough cash to fund the dividend.

The higher the yield being offered generally means the riskier the dividend is and sometimes losses can outweigh the expected income. For example, Dynagas LNG Partners (DLNG) cut its 16% yield back in April and shares are down 24% since.

With government bonds paying around 2% to 3%, dividends above 10% need to be scrutinized closely and I’ve identified two that are in danger of disappearing.

Dangerous Dividend No. 1: Legacy Investments Could Smother the Dividend

Blackrock Capital Investment (BKCC) is a business development company (BDC) that is trading below its net asset value, which generally signals a potential buying opportunity. That said, the company’s portfolio includes legacy investments that are a wet blanket and could smother the 11.5% dividend yield.

Blackrock Capital generated net operating income (NOI) of just $0.16 a share in the second quarter, which was not enough to cover the quarterly dividend of $0.18. In fact, management has failed to generate enough NOI to pay the dividend four of the past five quarters.

The company’s net asset value actually fell during the period, as management had to write down legacy investments in the industrials, insurance and metals businesses.

Another red flag for Blackrock Capital is the current leadership vacuum in the C-suite. The company has been without a full time CEO since April and its interim CFO has been “filling in” for 11 months now.

Blackrock Capital’s bonds are currently rated BBB- by the major agencies, which is last level before reaching junk status. Debt investors will demand their interest before any dividends are paid and the next management team may have to sacrifice its payout if push comes to shove.

Dangerous Dividend No. 2: Feeling the Margin Squeeze

MFA Financial (MFA) is a real estate investment trust (REIT) that invests in mortgage securities. Like most others in the financial world, the company is feeling the squeeze of the flattening yield curve.

Simply put, mortgage REITs borrow at short-term interest rates and reinvest the funds into higher-yielding mortgage instruments. It’s no surprise that the Fed has been steadily increasing short-term rates, while yields on long bonds have remained stubbornly low, as far as MFA Financial is concerned.

The company earned $0.17 a share in the second quarter, aided by $0.02 of investment gains. Either way you slice it, management didn’t cover the quarterly dividend of $0.20. That’s the second time in the past four quarters MFA Financial has failed to earn enough to support the payout.

Not only is the yield curve working against the company’s favor, as evidenced by the 18% year-over-year revenue decline last quarter, but management also reported higher operating expenses in the period. In my experience, a stock that regularly under-earns its dividend will struggle to sustain the payout for more than a year.

Replace These Dividend Disasters in the Making with 7 Contrarian High-Yielders

Chasing double-digit yields is risky business. The investing graveyard is littered with dividend promises left unfulfilled when the cash was no longer flowing in to sustain these lofty payouts.

A stock like Dynagas or these two potential time bombs can spell disaster for your portfolio, especially when in or nearing retirement. Not only might you have to forego some much-needed dividend income, but you could also potentially lose your hard-earned nest egg.

The good news is: there’s a better way. My colleague Brett Owens has created an “8% No-Withdrawal Portfolio” that generates steady income and impressive capital gains.

Whether you’re already retired, or looking to augment your paycheck with the passive income that dividends afford, you no longer have to choose between measly 2% to 3% yields from dividend “aristocrats”, government-secured interest payments that barely keep up with inflation and dicey double-digit dividends.

Wall Street has tried to address this issue with structured products, such as single premium immediate annuities (SPIAs). But just like the casinos don’t pay for all the glitz and glamour because gamblers usually win, the big financial service firms charge hefty fees to provide you with that steady income.

Instead, Brett’s system could hand you $40,000 a year on every $500,000 invested with under-appreciated income plays like:

  • Closed-End Funds (CEFs)- We’ll share our top three CEF picks with you, each of which pay a monthly dividend. Many of these trade at a discount to net asset value; but unlike Blackrock Capital, actually can afford to pay their dividends.
  • Preferred Stock- Brett lets you know two of the best active managers in this space to invest alongside with.
  • Recession-Proof REITs- discover two REITs that actually benefit from higher interest rates; rather than being crippled by the Fed, like MFA Financial.

Please don't make this huge dividend mistake... If you are currently investing in dividend stocks – or even if you think you MIGHT invest in any dividend stocks over the next several months – then please take a few minutes to read this urgent new report. Not only could it prevent you from making a huge mistake related to income investing, it could also help you earn 12% a year from here on out! Click here to get the full story right away. 

Source: Contrarian Outlook 

Market Preview: Market Shrugs Off China Trade Posturing, Earnings from Oracle and Fedex Monday

Not even the announcement by President Trump that he is ready to levy tariffs on $200B of Chinese goods could keep the market down for long Friday. Maybe the market is catching on to the President’s hard-nosed negotiation style which has resulted in a new deal with Mexico and has Canada at the table? If the Chinese agree to the high level talks the administration has proposed, the market may take it as a green light that a deal will be reached. But, if they push back over the weekend, and return the tough stance with one of their own, investors could interpret it as going too far. Either way, all eyes have turned back to monitoring the proposed trade talks, and their direction is likely to drive market sentiment short term.

Two heavyweights, both of which stand to be impacted by trade talks, report on Monday. Oracle (ORCL) is in the midst of a business model change, and the market did not take kindly to transition problems it announced last quarter. The stock has since recovered, but analysts will expect more positive progress in the move to the cloud and Oracle’s new subscription model. Also reporting on Monday is Fedex (FDX). The package delivery company also took a beating after it’s last earnings report, but like ORCL has recovered much of that ground. Investors will be looking closely at the Fedex numbers to see if they indicate a cooling economy, or if competition from UPS, and Amazon’s growing delivery service, are eating into profits.

Monday we’ll get a look at the Empire State Manufacturing Survey. Analysts will chew on the number more than usual, as it’s the only economic release on Monday. The survey of over 200 executives in New York State provides both numbers from the past month, as well as an outlook on what is coming in the next six months. The rest of the week has Redbook retail numbers, and the housing market index on Tuesday. Wednesday’s focus will be on housing, as we get mortgage applications and housing starts. Thursday is the busiest day of the week with jobless claims, the Philly Fed Outlook, existing home sales, leading indicators, and the EIA Nat Gas Report. Friday wraps up the week with PMI flash numbers and the Baker-Hughes Rig Count Report.

While the onslaught of earnings season has waned, there are still some large market moving companies reporting next week. Tuesday investors will examine numbers from General Mills (GIS) and Autozone (AZO). Wednesday we’ll see software maker Red Hat (RHT) report, along with $15B Copart (CPRT).Thursday, Micron (MU), which is trading near it’s lows for the year, will report. The semiconductor provider may have a comment on the potential tariff dispute, and how it is projected to impact future earnings. Also reporting Thursday is Darden Restaurants (DRI) and Thor Industries (THO). Currently the slate is clean for Friday of next week.

Pay Your Bills for LIFE with These Dividend Stocks

Get your hands on my most comprehensive, step-by-step dividend plan yet. In just a few minutes, you will have a 36-month road map that could generate $4,804 (or more!) per month for life. It's the perfect supplement to Social Security and works even if the stock market tanks. Over 6,500 retirement investors have already followed the recommendations I've laid out.

Click here for complete details to start your plan today.