All posts by Will Healy

Technology

5 Tech Stocks Investors Should Buy on the Rebound

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If investors have learned anything over the last few months, they have learned that seemingly unstoppable tech stocks have their limits. Even popular equities such as Amazon (NASDAQ:AMZN) and Netflix (NASDAQ:NFLX) saw shares plummet as investors dumped tech equities in droves.

Many stocks have seen a significant recovery since Christmas Eve. However, few have returned to pre-October highs. Many of these equities became victims of overselling. Pessimism can often take stocks down to low price-to-earnings (P/E) ratios. Such metrics usually indicate that some have become stocks to buy on sale rather than equities investors should put up for sale.

Many prominent tech stocks have likely reached that point. These five teck stocks offer both reasonable valuations and a commanding position within their niche of tech:

Apple (AAPL)

Apple (AAPL) tech stocks to buy

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Admittedly, even when Apple (NASDAQ:AAPL) supported its $1 trillion-plus market cap, it was not considered expensive from a P/E standard. However, sales of the iPhone have failed to keep up with growth expectations, and AAPL stock still plunged as a result. Now, the company must make its way forward without the iPhone driving a majority of its revenue.

Apple appears positioned to make that change. Even if it fails to innovate on its own, AAPL holds $245 billion in cash, more than the gross domestic product (GDP) of all but 45 of the world’s countries. This gives AAPL the power to buy what it cannot create, though it already may have found the next growth niche. Former Apple CEO John Sculley believes that the healthcare-related features of the Apple Watch will become the company’s most significant innovation since the iPhone.

While investors wait for healthcare or another innovation to drive revenues, they can buy AAPL stock at a reasonable valuation. Thanks to the drop in the stock price, the forward P/E stands at 13.7. Moreover, the double-digit growth that suddenly turned negative in 2018 should return this year.

I do not expect an immediate recovery for Apple. Investors will need to see a new product category take hold before interest in Apple stock returns. However, with a low valuation and double-digit earnings increases in store for AAPL, the stock price should move higher over time.

Baidu (BIDU)

tech stocks to buy bidu

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Despite negligible involvement with the United States, the U.S.-China trade war, as well as a general slump in tech stocks, took its toll on Baidu (NASDAQ:BIDU). As the Chinese-language counterpart to Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) Google search engine, the company conducts little direct or indirect activity outside of its home country. Nonetheless, BIDU stock has fallen about 43% from its 52-week high.

Despite this slump, the company beat earnings estimates in its last report and raised guidance. Moreover, the drop from last year has taken the forward P/E to about 12.8. Analysts predict profit growth will come in at a modest 2.7% this year. However, they also expect to see a 25.6% increase in earnings next year.

BIDU stock comes with some risk. Since American investors cannot buy shares directly in China-based companies, Baidu stock buys one into a Cayman Islands-based holding company entitled to a share of the company’s profits. Moreover, while the U.S.-China trade war could end soon, the uncertainty will linger until both countries come to an agreement.

Still, with Google blocked and Baidu serving as the primary search engine for China’s 1.39 billion population, I think the recovery of BIDU stock becomes only a question of when.

Facebook (FB)

tech stocks to buy fb

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In 2018, Facebook (NASDAQ:FB) suffered through its worst slump since soon after the 2012 IPO. Allegations related to enabling election interference as well as privacy concerns have weighed on the stock. The drop hit a crescendo with the single-largest one-day market cap loss in stock market history last summer. Moreover, Facebook’s failure to protect private data as well as compliance issues in the midst of the E.U.’s General Data Protection Regulation (GDPR) have also weighed on FB stock.

Despite these attributes, the buy case for FB stock remains. Even though FB has begun to recover from the 2018 slump, the stock trades at about 18.3 times earnings. Profits will probably see a modest decline this year. However, analysts forecast a 17.2% surge in profits in 2020, and further double-digit increases in subsequent years.

Moreover, FB stands out among tech stocks as the only mega-cap social media stock. It owns four of the six apps boasting one billion or more users. Furthermore, no site in this industry has challenged Facebook’s dominance. Twitter (NYSE:TWTR) will likely not venture beyond its microblogging niche. Snap’s (NYSE:SNAP) popularity among youth faces a serious challenge from the Facebook site Instagram.

Facebook will have to address its political and privacy-related challenges. However, with its dominance of the social media space unchallenged, FB stock will find itself slowed but not stopped by recent controversies.

Nvidia (NVDA)

tech stocks to buy nvda

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Until the last quarter of 2018, Nvidia (NASDAQ:NVDA) appeared unstoppable. Having parlayed its gaming capabilities into data center, artificial intelligence (AI) and virtual reality (VR) applications, it supplanted Intel (NASDAQ:INTC) as the most important of the tech stocks in the semiconductor space.

However, once the crypto craze died off, the air of invincibility around NVDA stock died with it. Too many chips flooded the market, and NVDA plummeted along with most other tech stocks. The 2016-18 bull market in NVDA also had reached extremes. The P/E ratio had approached 60, and profit growth, while impressive, did not back up that growth.

Still, even without crypto, Nvidia’s involvement in AI, VR and gaming still make it arguably the most critical equity in the semi space. As our own James Brumley points out, Nvidia chips power the world’s fastest supercomputers. Their tech has also moved ahead of peers on the AI front.

Nvidia’s financial metrics have also become more favorable for buyers. The forward P/E ratio has fallen to a more reasonable 21.5. Profits will shrink this year as the industry continues to work off the oversupply in chips. However, they also believe the end of the chip glut will bring a 32.8% increase in profits next year. Although profiting from NVDA stock will take time, I think a wider adoption of data centers, AI and VR will help NVDA surpass its 2018 highs.

Qualcomm (QCOM)

qcom tech stocks to buy

Source: Shutterstock

Over the last few years, Qualcomm(NASDAQ:QCOM) has become better-known for its patent disputes with Apple and its failed attempt to buy NXP Semiconductor (NASDAQ:NXPI) than for smartphone chips. However, amid its controversies, it still collects royalties on its 3G and 4G chips. Now, the Snapdragon 855 looks poised to help Nvidia profit from the rollout of 5G phones powered by Android.

5G will force phone upgrades over the next few years. Also, because 5G will enable more Internet of Things (IoT) devices, revenues and profit growth could go well beyond predicted levels.

Moreover, thanks to the failed merger, Qualcomm will buy back $30 billion worth of QCOM stock this year. If a smaller supply is not enough to persuade buyers, QCOM also includes a 4.7% dividend yield. Also, this payout has risen for eight straight years, even amid the patent dispute and the failed buyout.

Several other metrics favor buyers. As a result of last fall’s slump in tech stocks, QCOM trades at 12.2 times forward earnings. Wall Street expects tepid growth this year. However, they forecast 12.4% earnings growth in 2020, and double-digit increases in future years. Due to its critical involvement in 5G, Qualcomm will play a crucial role in upgrades over the next few years. The growing revenues and profits from these purchases should upgrade the price of QCOM stock as well.

Source: Investor Place

Growth Stocks

3 Cheap Stocks to Buy (Before They Skyrocket)

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The end of last year brought something not seen in a while—a bear market. As a result, many investors were reeling as stock prices—particularly in the tech industry—massively declined. However, when stocks decline, there is one silver lining that benefits cash-rich investors: cheap stocks.

Many of the best stocks are now trading at low prices. Moreover, when companies with cheap stocks maintain or improve their growth rates, many investors often look to buy their shares. As we begin the new year, the following cheap stocks have those characteristics, leaving them well-positioned to skyrocket in the coming months and years.

Cheap Stocks to Buy: Bank of America (BAC)

More than ten years after the financial crisis, Bank of America (NYSE:BAC) is again on a list of cheap stocks. BAC has come a long way since it fell to $2.50 per share at the height of the crisis. Now, it trades at almost $29 per share. Moreover, it resumed annual increases of its dividend in 2014. Today, it returns 60 cents per share of dividends to its shareholders each year, yielding about 2.1%.

However, the forward price-earnings ratio of about ten is what really makes BAC one of the best stocks. The multiple is well below the stock’s five-year average of about 19.

Also, companies whose stocks have single-digit PEs rarely generate double-digit profit increases, but BAC is in that category. Wall Street analysts on average expect the bank’s profits to rise 10.6% this year. Moreover, according to the consensus estimate, BAC’s average annual profit increase over the next five years will be 20.7%.

The stock fell in 2018 amid a number of headwinds. Among these headwinds were the declining results of its investment banking unit, the negative market environment and fears of an inverted yield curve.

However, amid these headwinds, Warren Buffett continues to buy BAC, indicating that the Oracle of Omaha considers it to be one of the best stocks in the market. Also, one can likely assume BAC has become his favorite bank stock. He now has a bigger position in BAC than in Wells Fargo (NYSE:WFC), which used to be his favorite bank stock. Assuming the economy doesn’t nose dive, investors can, like Buffett, profit handsomely from one of the best stocks to buy in the market, BAC stock.

Cheap Stocks to Buy: CannTrust (CNTTF)

Although it’s not among the more inexpensive stocks in the S&P 500, Canadian cannabis company CannTrust (OTCMKTS:CNTTF) makes the cheap stocks list because it’s inexpensive compared to its peers in the marijuana industry. Unlike most cannabis companies, CannTrust is already profitable, and CNTTF stock has a forward price-earnings ratio of about 29.8. In an environment in which an industry leader, Canopy Growth (NYSE:CGC), trades at 100 times its sales, CNTTF is a screaming bargain and one of the best stocks in the market.

Canadian marijuana stocks have suffered from a “sell the news” phenomenon since the companies’ principal product became fully legal in their home market.

However, CannTrust is poised to benefit from many trends. For one, it has applied for a listing on the New York Stock Exchange. Joining the Big Board should open up CNTTF stock to a new class of investors. Secondly, although cannabis remains on the list of Schedule 1 drugs in the U.S., the recent legislation that legalized hemp should give all Canadian marijuana firms a foothold in the U.S. market.

The company’s focus on pharma also provides the stock with another potential catalyst. CannTrust sent its first shipment of cannabis oil to Denmark in the third quarter of 2018. It has also entered the Asia-Pacific market, through a partnership with Australia-based Cannatrek. Consequently, even if the company fails to meaningfully penetrate the U.S. market, it still can benefit from overseas expansion.

Furthermore, even though CannTrust’s valuation is lower than that of its major peers, its growth should remain strong for the foreseeable future. On average, analysts predict that its profits will increase by almost 155% this year, making CNTTF a very cheap stock, despite its forward price-earnings ratio of nearly 30. As CannTrust moves into other developed countries and possibly the U.S., a revived interest in cannabis should enable its valuation to catch up with that of its peers.

Cheap Stocks to Buy: Intel (INTC)

Few PC-era stocks have suffered as much as Intel (NASDAQ:INTC) has. Once the world’s largest chip maker, Intel stagnated as consumers increasingly turned away from PCs. Intel’s PC-era peers such as Microsoft (NASDAQ:MSFT), Nvidia (NASDAQ:NVDA), and even AMD (NASDAQ:AMD) built new business lines and resumed growing. However, INTC stock continued to languish. The high turnover of its top management, as well as security-related issues, also weighed on Intel stock.

However, INTC looks ready to again become one of the best stocks to buy in tech. The company has invested heavily in data-center technology. As a result, its Data Center group appears poised to overtake its PC Client group in size over the next few years.

Due to Intel’s purchase of Mobileye, INTC has become a leader in the autonomous-vehicle market. That, along with the company’s Internet of Things (IoT) products, should help INTC stock rise. And as the advent of 5G makes more advanced applications possible, Intel will benefit even more from these trends.

INTC is a cheap stock due to its price-earnings multiple. It trades at a forward PE ratio of about 10.6, showing that investors have yet to fully appreciate Intel’s comeback.

Due to a temporary glut of chips, Intel ‘s profit growth will be slow this year. However, its profits should resume growing by double-digit percentage rates in 2020. Once investors begin to realize that Intel has resumed a leadership role in the tech industry making it one of the best stocks in the market, it should again command valuations comparable to its peers in big tech.

Source: Investor Place

Pot Stocks

Why Aurora Cannabis Stock Needs the U.S. to Make a Comeback

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Aurora Cannabis (NYSE:ACB) has continued its downtrend. Following its principal product achieving legal status across Canada, ACB stock and its peers have seen a brutal selloff.

With ACB losing about 50% of its value over the last six weeks, feelings of hunger for marijuana stocks have given way to paranoia. Legalization might have killed the buzz in Canada. Still, other countries appear poised to loosen their cannabis laws. With that, Aurora could benefit from new rounds of reefer stock madness, particularly if the United States rescinds marijuana’s Schedule I designation.

Legalization Killed the Buzz on ACB Stock

To be sure, official legal status in Canada has become a classic “sell the news” occurrence for ACB stock. ACB along with peers such as Canopy Growth (NYSE:CGC) and Tilray(NASDAQ:TLRY) have sold off over the last six weeks.

This makes little sense on some levels. Canada finds itself in the midst of a shortage of weed that could last months. Interest has also emerged in unexpected places such as the cosmetics industry. Yet, these normally bullish signs have not stopped ACB from falling. As a result, ACB stock has begun to flirt with its 52-week lows.

This offers both good and bad news for owners of cannabis stocks. Investors need to accept the reality that marijuana hype for Canada has ended. Moreover, as more countries loosen regulations on cannabis, more marijuana stocks will emerge. With a greater supply of marijuana stocks, demand for the same few Canadian marijuana equities naturally falls.

Investors should also remember that legalization will make marijuana stocks boring. Their long-term future will probably resemble that of tobacco or alcohol stocks such as Altria (NYSE:MO) or Canopy-investor Constellation Brands (NYSE:STZ). Such a future will likely consist of dividends, slow but steady profit growth and unremarkable price-to-earnings (P/E) ratios.

Countries Like the U.S. Could Bring Back the Hype

That said, every developed country has to first get to this point of legal status. I believe full legalization will sweep the developed world, including the U.S. I also expect this period will inspire a new wave of hype similar to what we saw in Canada before mid-October.

A removal of marijuana’s Schedule I designation in the United States could set that trend afire. Such a move coming from its neighbor to the south would offer a particular benefit to ACB stock and its Canadian peers. With that federal roadblock removed, foreign companies, such as Aurora could participate. This, of course, would probably inspire the interest needed to bring investors back into ACB stock.

So the question becomes when to buy? With the stock still trending downward, now may not serve as the best time. ACB stock currently trades at around $5.50 per share. With 11 Canadian cents (8.3 cents) per share in profit for this year, the stock may appear expensive. Still, the profits speak to the stability of Aurora Cannabis stock.

Also, Wall Street forecasts a profit growth rate of 145.8% for this fiscal year (2019) and 27.3% in 2020. This massive rate of increase lessens the risk of paying a high multiple. Once ACB stops selling off, it should position itself to benefit from the next wave of marijuana hype.

The Bottom Line on ACB Stock

Stock price growth could easily return to ACB stock, especially if the United States chills out on their strict marijuana laws. The massive drop in ACB and other Canadian cannabis stocks following legalization indicates that the stock growth in its home market has lost its buzz. While legalization tends to make cannabis stocks boring across the board, most countries have not yet achieved full legal status.

This brings opportunities for new rounds of reefer stock madness in other countries. With Aurora’s proximity to the U.S. market, this becomes especially true south of the Canadian border. A removal of Schedule I status in the U.S. would open up new production and sales in a nearby market nearly ten times its size. This could set up ACB stock for new highs.

As the stock continues to fall, investors need to watch and wait. However, if ACB forms a floor, or if the U.S. opens up on the federal level, prepare for new highs.

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Source: Investor Place

Bear

5 Stocks to Sell In November Amid Elections and Earnings

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During October, the stock market created many stocks to sell amid a significant decline. At the peak of the plunge in stock prices, all three major indexes fell into correction territory. Despite the volatility, the month ended with two days of triple-digit gains for the Dow Jones Industrial Average.

Although November will begin on a high note, earnings news coming from many key stocks will likely define the market. The midterm elections on November 6th will also loom over the market. Continued Republican control over both houses of Congress would likely lead to few changes.

However, most political analysts predict a Democratic takeover of the House, with fivethirtyeight.com placing the odds at 85.2% as of this writing. Such an occurrence would likely curtail much of President Trump’s agenda and lead to uncertainty as gridlock again takes over Washington.

Whatever happens with earnings or the political makeup of Washington, these equities could become stocks to sell in November:

General Electric Company (GE)

Yet another shoe dropped when GE reported earnings in late October. In the first quarterly report for new CEO Larry Culp, the company cut the quarterly dividend again, this time to one penny per share. The company also missed estimates on earnings and revenue. The firm also announced it would split its power business in two. GE also revealed that the SEC will expand the scope of its investigation on the conglomerate’s accounting practices.It has become difficult to overstate the reputational damage that GE (NYSE:GE) has sustained in recent years. Analysts will likely argue for years whether the poor management of Jeff Immelt or the ability to come clean during the brief tenure of John Flannery caused more damage to GE stock.

Typically, such revelations might inspire a buying opportunity. However, with GE’s recent history, investors have rightly lost trust that more disclosures will not be forthcoming. Coming clean will further hurt GE stock in the short term. Also, even if Mr. Culp turns GE around, I expect more revelations will come soon. I see such a process as necessary to save GE stock in the long term. However, until the company begins to recover its reputation, investors should keep GE on their stocks to sell list.

Lockheed Martin Corporation (LMT)

LMT stock fell by 17% during the swoon in October, signaling that industry observers have begun to price in a Democratic takeover. This places its P/E ratio at just under 17. That valuation looks reasonable. Admittedly, if the Republicans managed to hold the House, investors should remove LMT stock from their stocks to sell list.As the nation’s largest defense contractor, Lockheed Martin (NYSE:LMT) has seen its stock bolstered by an Administration bent on increasing defense spending. So far, that has worked to LMT’s favor. However, the Democrats who appear likely to take over the House have traditionally looked on defense spending less favorably. With the House controlling the government’s purse strings, that will likely place LMT among the stocks to sell.

However, this also came after a forecast 155.2% increase in profits for the year. While analysts predict growth will slow to 11.5% per year, they do forecast average annual profit growth of 51.8% per year over the next five years. If Democrats cut defense spending, that forecast could come down, or even turn into a forecast profit reduction.

Despite these sentiments, the world seems to become more dangerous. For this reason, I still like LMT stock long term. However, with a Democratic takeover of the House likely, uncertainty will probably hamper LMT’s growth for the foreseeable future.

Netflix, Inc. (NFLX)

Netflix (NASDAQ:NFLX) stock has long defied the odds and the naysayers, increasing by almost 40 fold in the last six years. Its leadership in the streaming industry and aggressive move into content have made the company one of the most influential companies in both Silicon Valley and Hollywood. As such, investors drove NFLX stock higher despite valuation metrics.

However, the October selloff may have placed NFLX on many stocks to sell lists for some time to come. The stock has fallen by more than 29% since June. It also declined by almost 20% in October alone. Despite this drop, it trades at a P/E ratio of about 113. Analysts forecast average annual profit growth of 61.8% per year for the next five years. With that, it can easily still maintain a P/E well above the S&P 500 average.

Still, one has to wonder if the heyday of NFLX stock has come to an end. Amazon(NASDAQ:AMZN) has improved its content on its Prime service. Worse, Disney (NYSE:DIS) plans to take its content from Netflix and move it to its own service. Such trends bode poorly for the company.

I expect Netflix to retain its influence in Hollywood and continue to grow at a rapid pace. However, with the challenges it faces on the content front, I do not see NFLX stock maintaining a triple-digit valuation.

Square, Inc. (SQ)

square stock

Source: Chris Harrison via Flickr (Modified)

During October, Square (NYSE:SQ) became another high-flying tech stock that saw a massive selloff. Since hitting a high of $101.15 per share in late September, SQ found itself as one of the stocks to sell, and it lost about 27% of its value.

Square succeeded in carving out a niche that the mega-cap tech companies could not supplant. With this niche and a growth rate expected to average 54.8% per year over the next five years, investors have bid up the price of SQ stock. Now, it trades at a P/E ratio of almost 165.

While the stock price has recovered some, one has to wonder if SQ stock can hold the momentum it enjoyed in the recent past. Earnings will come out on November 7th. At that point, investors will find out whether the company can push its stock higher, or if valuations will continue to fall.

Square enabled anyone who owns a smartphone to accept credit card payments. In a society becoming increasingly cashless, this has added tremendous value. With its innovations, I think Square will continue its growth levels for years to come. I also believe it will meet or exceed estimates in its upcoming quarterly report. However, at 165 times earnings, the odds of the report inspiring another sustained move higher do not favor the longs.

Starbucks Corporation (SBUX)

Starbucks (NASDAQ:SBUX) achieve something unusual in October — it went up in value. While indexes flirted with bear market territory, SBUX stock saw a steady increase.

The company will announce its quarterly earnings on November 1st. However, I do not see earnings and revenue numbers as the most critical part of the report. With Starbucks having reached a saturation point in its home country, the focus has turned to China. As of now, the company still open a new store an average of once every 15 hours.

Still, the looming trade war remains a dark cloud over all things China. With no signs of a resolution, most stocks with a large presence in China have sold off. Moreover, companies such as Amazon and Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG) have long found themselves blocked out of a market in favor of a homegrown alternative. If the same thing were to happen to Starbucks, SBUX stock would face severe, long-term damage. China makes up about 3,400 stores of its current store count of over 28,200.

It also accounts for the bulk of the company’s growth. The predicted 14.6% annual profit growth rate over the next five years could disappear in such a scenario. And at a P/E ratio of over 24, the company supports above average multiples. Given its situation in China, I see substantial risk and little reward for buying SBUX stock at these levels.

As of this writing, Will Healy did not hold a position in any of the aforementioned stocks. You can follow Will on Twitter at @HealyWriting.

 

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Pot Stocks

4 Medical Marijuana Stocks to Buy as the U.S. Chills Out

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Even in America’s reddest states, favorable conditions for medical marijuana stocks could emerge soon. A permissive medical marijuana law received voter approval in Oklahoma earlier this year. Also, Republicans in Texas recently approved medical marijuana in their party platform. Cannabis’ days as a Schedule I drug are likely numbered. When this status changes, investing in medically-related marijuana stocks could reach a fever pitch in the fourth quarter and beyond.

Right now, most pot stocks trade on the OTC market and base themselves in Canada. The thirst for American investment has led more marijuana stocks to list on the NYSE and Nasdaq already, but more will likely join them when cannabis’ Schedule I designation ceases to exist. Both the designation swith and increased U.S. listing should flood more investment capital into the marijuana industry, driving stock prices higher. While many of these marijuana stocks have already achieved high valuations, investors could still more gains.

These four medical marijuana stocks are perfect to get into now before the interest in pot stocks becomes even bigger:

CannTrust Holdings, Inc. (CNTTF)

Source: Shutterstock

Vaughan, Ontario-based CannTrust (OTCMKTS:CNTTF) exists as a federally-regulated medical marijuana producer within Canada. It produces a 100% pesticide-free medical-grade cannabis and cannabis oils. The company also conducts medical research on marijuana-related drug products. CannTrust partnered with McMaster University and Hamilton Health Sciences on medical research trials.

CannTrust just completed their first overseas shipment of cannabis oil to Denmark-based StenoCare. CannTrust’s cannabis oil is the first and only to gain acceptance on the Danish Medicine List thus far. Incidentally, StenoCare will launch Europe’s first IPO by a medical marijuana company next month. Such a move will likely expand CannTrust’s reach within Europe.

From a financial perspective, CannTrust outshines most other marijuana stocks in one area — making a profit. Analysts forecast it will earn 11 cents CAD (8.5 cents U.S.) per share in 2018. They expect that to grow to 38 cents CAD (29 cents) per share in 2019. While that brings the forward price-to-earnings (P/E) ratio to 115, CNTTF still compares well to other profitable peers. Moreover, if the stock price were to stay the same over the next year, that P/E would fall to just over 33.

This marijuana stock’s profit should rise as its recreational brands also gain traction. With supply agreements in place in the Atlantic provinces, CannTrust now can sell across Canada. And with a schedule change in the U.S., its medical products could move south of the border. With the high growth potential and the financial stability, CNTTF one of the few cannabis stocks that will prosper under any conditions.

Hexo Corp. (HYYDF)

Source: Shutterstock

Hexo Corp. (OTCMKTS:HYYDF) develops and produces medical marijuana products for the Canadian market. Formerly known as Hydropothecary, this company offers a wide variety of cannabis-based products to treat various conditions.

Hexo has taken a slower approach than most of its peers. Unlike others, it has kept its focus to its core region, in this case, Quebec. However, that creates advantages. Through supply agreements, this should give the company a market share of about 34% within Quebec. Quebec also happens to border four pot-friendly U.S. states. If the U.S. market were to become available, Hexo could expand to New York and New England while keeping to its regional market.

Despite its smaller footprint, investors still need to look at HYYDF stock. It makes 24 different products ranging from tried products like cannabis flowers and cannabis powder to a fine cannabis mist. The company also works in conjunction with Molson Coors (NYSE:TAP) on cannabis-infused drinks.

Since the company has not spent heavily on expansion, analysts expect the company will break even next quarter. This should make the company profitable by the fourth quarter of this year. Consensus estimates for 2019 place profits at five cents CAD (3.9 cents) per share.

That gives the company a 2019 forward P/E ratio of about 129. This ratio should come down in future years, and it still compares favorably to most marijuana stocks. With its forecasted profits and its go-it-slow approach, I think HYYDF will not only survive, but thrive.

MariMed Inc. (MRMD)

Wait for the Next Big Correction to Jump on Canopy Growth Stock

 

MariMed (OTCMKTS:MRMD) specializes in medical-marijuana consulting. As a company, it helps others optimize production and sales for both the medical and legal cannabis firms. It helps to design production facilities to grow safe medical cannabis. It also offers business planning services to cannabis companies. Additionally, MariMed produces its own proprietary products that it sells under the MariMed brand name.

Such a business could help medical marijuana companies in Canada bring product into the U.S. once marijuana ceases to be a Schedule I drug. Moreover, it should help cannabis enterprises produce more medical marijuana as legal roadblocks gradually disappear. According to their last quarterly report, the company has initiated plans to operate in Florida, Michigan, New Jersey, Pennsylvania and Ohio.

Also, when non-cash charges are excluded, MRMD could call itself one of the profitable marijuana stocks. The company earned $530,000 in the first six months of the year. Due to stock option issuance and payment of debt via stock sales, the company reported an $8.1 million loss.

However, this shows MariMed can earn money. Profits should move much higher once more markets open up as well. With its own product line and its consulting business positioned in multiple states, MRMD should grow along with the U.S.’s weed industry.

OrganiGram Holdings, Inc. (OGRMF)

Source: Shutterstock

Unlike its peers, OrganiGram (OTCMKTS:OGRMF) takes a unique approach to medical pot. It focuses on treatments for conditions such as PTSD and chronic pain.

The firm also emphasizes partnerships. The company will invest in Eviana Health Corporation, a European, cannabinoid-focused hemp company. With Europe more ready than ever to embrace legalization, this gives OrganiGram an early advantage.

OrganiGram also signed a deal with Canopy Growth (NYSE:CGC). Under terms of the agreement, OrganiGram will provide Canopy’s Tweed retail locations in Newfoundland and Labrador with branded cannabis products. Since Canopy also made a deal with Constellation Brands (NYSE:STZ), this creates that much-needed U.S. connection. This agreement could lead to a medical marijuana agreement in the U.S. whenever the government permits Canadian medical cannabis products.

Analysts also expect OrganiGram to begin reporting profitability beginning in the fourth quarter. For 2019, consensus earnings stand at 14 cents CAD (11 cents) per share.

At current prices, this takes the 2019 forward P/E ratio to about 48.6. Given where other marijuana stocks trade, this makes OGRMF a safer bet than most. Also, with its connections to Europe and now, an indirect contact in the U.S., OrganiGram should place itself in a strong market position once sales in the U.S. and Europe take off.

As of this writing, Will Healy is long CNTTF stock.

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Source: Investor Place 

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5 Up-And-Coming Stocks That Investors Should Consider

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One constant in the human journey remains the creativity of the human mind. Ideas can emerge from this wellspring that not only change the way we live, they also bring new businesses to the market. From a stock market perspective, this leads to new up-and-coming stocks. Other ideas breathe new life into old stocks whose older business lines fell out of favor. In reality, investors do not make outsized returns by buying stocks like Apple Inc (NASDAQ:AAPL) or Amazon.com, Inc. (NASDAQ:AMZN) at their current sizes. They make money buying the future Apple or Amazon that has not yet become well-known.

What the technology world has experienced recently has become nothing short of another Industrial Revolution. I believe historians will look back upon the 2010s as a time when many of these ideas spring forth.

Fortunately, several up-and-coming stocks have appeared that will allow investors to profit from this growth and change. These 5 stocks hold potential for investors to bolster their portfolios on revolutionary change.

5 Up-And-Coming Stocks: ETFMG Alternative Harvest ETF (MJ)

 

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Marijuana is by no means a new substance. This revolution is more of an attitudinal change which has brought the market numerous up-and-coming stocks. The ETFMG Alternative Harvest ETF (NYSEARCA:MJ) stands at the forefront of this revolution. As of now, this has become the first and currently only marijuana ETF to trade on U.S. exchanges.

ETF inflows have stagnated as of late while as their counterparts on the Toronto Exchange continue moving higher. This pause likely hinges on the uncertainty surrounding federal marijuana laws in the U.S. However, I think this uncertainty creates opportunity. And this opportunity comes from an attitudinal change from an unexpected source: the Republican party.

Former House Speaker John Boehner, once a staunch opponent of cannabis, joined the board of a marijuana company. President Donald Trump recently proposed removing legal restrictions on marijuana. And just this week, Oklahoma, one of the most deeply Republican states in the Union, approved a permissive medical marijuana law.

Such changes will only bolster the cannabis industry, especially with regard to U.S. companies. Though the ETF holds several U.S. stocks, Canadian stocks The Green Organic Dutchman Holdings (OTCMKTS:TGODF), Canopy Growth (NYSE:CGC), and Aurora Cannabis (OTCMKTS:ACCBF) stand as its largest holdings. It also trades about 25% below its January high, despite the solid performance of many of its Canadian holdings. Between Canada’s legalization and loosening restrictions in the U.S., MJ stock should provide a safe and profitable segue into the cannabis industry.

5 Up-And-Coming Stocks: IPG Photonics (IPGP)

 

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IPG Photonics Corporation (NASDAQ:IPGP) develops and manufactures high-performance industrial lasers. Industries ranging from automotive to aerospace to semiconductors use IPG’s technology in their manufacturing processes. In addition to lasers, it also produces equipment for medical and telecom applications.

Growth has remained both robust and steady. Both revenue and profits have increased at an annual rate of about 20% for the last five years. Although revenue growth will likely slow in future years, earnings increases should maintain their current pace for the foreseeable future.

Recent geopolitical events have created opportunity in IPGP stock. IPG earns about one-third of its business from China. The escalating trade dispute with China had led to a massive selloff.  IPGP stock has fallen by over 17% since the beginning of June as a result.

Despite this drop in the stock price, massive growth has defined this stock for most of the decade. Few up-and-coming stocks have seen this level of growth. The stock has risen from a low below $7 per share in 2009 to as high as $264 per share. However, even with this increase, IPGP stock trades at around 32 times current earnings. With this high level of growth expected to continue for the foreseeable future, interested investors should take advantage of this China uncertainty to buy into IPGP.

5 Up-And-Coming Stocks: iRobot Corporation (IRBT)

 

Why the Rebound in IRBT Stock Will Continue

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iRobot Corporation (NASDAQ:IRBT) should serve as one of the more recognizable up-and-coming stocks. It leads its industry in the emerging field of consumer robots. Founded in 1990 by a group of MIT graduates, it expanded the reach of artificial intelligence (AI), settling on a niche in consumer robots. Its most commercially successful robot has become the Roomba vacuum. Its floor mopper, Braava, and other consumer robots also continue to sell well.

The Bedford, Massachusetts-based company has enjoyed years of high growth as a result. Annual revenue growth tops 15% per year. Profits have also seen double-digit percentage growth in most years. In fact, analysts expect yearly profit growth to exceed 20% per year through 2021.

Considering the stock price has increased by more than tenfold since its 2009 low, the company trades at a fair valuation. That growth has taken the market cap to about $2.1 billion. Its current PE now stands at about 40. While that may appear high, it also trades at about 2.3 times sales and around 4.2 times its book value.

It also has fallen substantially from its 52-week high. SharkNinja has posed a challenge to iRobot’s market dominance. Between July and February, IRBT stock lost over 50% of its value as Shark claimed a market share exceeding 20%. However, since early May the stock has jumped from about $56 per share to around $76 per share today. Although analysts expect its 60% market share to fall, profits should continue growing at 20% per year. And with only about 11% of U.S. households owning a robotic vacuum, growth should continue for years to come.

5 Up-And-Coming Stocks: Nokia (NOK)

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As the oldest company on this list, Nokia Oyj (ADR) (NYSE:NOK) makes the up-and-coming stocks list on reinvention. The company began its history in the mid-19th century in present-day Finland as a pulp mill. As late as the 1960s, they produced toilet paper. Moving from that point to achieving the domination of the mobile phone market required a radical change. With the decline of non-smart mobile phones, Nokia has reinvented itself once again. It now stands at the forefront of the 5G revolution.

5G promises to increase connection speeds by as much as 100-fold from the current 4G technology. Most of the major wireless companies throughout the world will each invest tens of billions of dollars to upgrade their wireless networks. Since Nokia has become a leading producer of 5G equipment, it will derive massive benefits from this upgrade.

Still reeling from its loss of the mobile phone market, NOK stock still trades under $6 per share. However, 5G leads the way in its comeback. The company expects earnings of between 23 and 27 euro cents (between 27 and 31 cents) per share this year. By 2020, NOK expects earnings to reach between 37 and 42 euro cents (between 43 and 49 cents per share). For 2018, this takes the forward price-to-earnings (PE) ratio to between 18.8 and 21.6.

Growth would also remain in the double-digits by even the most conservative estimates. If NOK stock can maintain such a growth pace, perhaps it could return to the $42 per share high it saw in 2007 and maybe beyond.

5 Up-And-Coming Stocks: Teladoc Inc (TDOC)

 

Source: MayApps207 via WikiMedia

 

Teladoc Inc (NYSE:TDOC) is one of the up-and-coming stocks that continues to bolster its dominance in the emerging telehealth industry. The Purchase, New York-based provider boasts of a 75% market share in an industry that could claim a significant percentage of the market for doctor’s office visits.

For $40, patients can visit a Teladoc doctor 24 hours a day, seven days aweek. Assuming the doctor can evaluate the patient this way, the patient can receive a diagnosis and, if necessary, have a prescription sent to a pharmacy within a few minutes. Similar services from an in-person physician can run more than three times the cost and are only available during regular business hours. TDOC also offers similar services for behavioral health services.

Analysts believe this service, which serves under 1% of patients now, could cover up to 30% of all doctor visits within a few years. It will also receive a boost when it begins to cover Medicare Advantage patients starting in 2020.

Best of all, TDOC stock has worked to expand what might otherwise be described as a thin moat. In 2017, it acquired Best Doctors to improve its diagnosis capabilities. This year, it acquired Advanced Medical. This will bring Teladoc’s services to several other countries.

Investors will have to exercise patience as a positive net income remains a few years off. However, revenue continues to grow by about 50% per year. The number of patient visits increases by nearly the same amount. With that level of growth and its market share, TDOC stock has positioned itself to both grow quickly and dominate the telehealth industry.

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Why Investors Should Be Concerned About Amazon.com, Inc. Stock

Amazon.com, Inc. (NASDAQ:AMZN) appears poised to take over the world. From groceries, to streaming, to its original business of retail, Amazon seems to succeed at everything it does — and AMZN stock reflects this.

The stock prices of competitors fall at the mere hint of having Amazon as a competitor. Dozens of cities have offered billions in tax breaks to secure its second headquarters. However, amid its popularity, a pattern of history repeating itself has emerged.

And this pattern bodes poorly for AMZN stock.

Historical Patterns Should Concern Holders of AMZN Stock

Amazon is becoming the new Wal-Mart Stores Inc (NYSE:WMT).

In roughly a generation, Walmart emerged from obscurity in rural Arkansas to become the world’s largest retailer. Walmart’s bulk pricing, advances in supply chains and, eventually, the power to force supplier cost cuts made WMT a retail behemoth that everyone feared — much like Amazon today.

However, other companies caught up on pricing and surpassed Walmart on product quality. Furthermore, reports of poor working conditions cut into WMT’s popularity and, eventually, its stock price. Unfortunately for owners of AMZN stock, some of the same trends have emerged at Amazon.

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Amazon has failed in many areas. Reports of poor working conditions have become more frequent. Stories of product failures have also emerged. As my colleague Dana Blankenhorn mentioned, the Amazon Fire smartphone did not burn its competitors. Amazon Register also failed to defeat tiny Square Inc (NASDAQ:SQ) in the credit card reader market. Moreover, the Amazon Prime streaming movie offerings never became a threat to Netflix, Inc. (NASDAQ:NFLX). While AMZN succeeds in many areas, it has failed on many occasions as well.

Yet, despite the failures, Amazon’s reputation for success and growth drive the AMZN stock price. AMZN trades at nearly 300 times current earnings. Revenue growth has averaged over 23% per year over the last five years. This is an impressive feat for a company with a market cap of close to $550 billion. Along with a 5-year average net income increase of 30%, high growth metrics have driven Amazon stock to over 22 times book value.

Amazon Isn’t Declining… Yet

The long-term worry involves the stock following in Walmart’s footsteps and experiencing a slowdown in growth. As a comparison, Walmart trades at 23 times earnings and less than 4 times book value. Its growth has slowed to an average of 1.7% in terms of revenue and income has actually been declining — to the tune of 2.8%. Matching Walmart’s PE ratio would bring the AMZN stock price to below $100 per share.

At least for now, the hunter has become the hunted. The fear Walmart once inspired has been brought forth on Walmart itself by Amazon. Competitors such as Target Corporation (NYSE:TGT), Costco Wholesale Corporation (NASDAQ:COST) and Kroger Co (NYSE:KR) have also seen stock declines by the mere presence of Amazon in markets they compete in.

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Additionally, the company hasn’t followed in Walmart’s footsteps in all areas. Amazon founder Jeff Bezos remains alive and in charge. Walmart’s decline began long after founder Sam Walton passed away.

Walmart’s decline also occurred over several years. Amazon analysts still expect profits to double most years into the foreseeable future. However, double-digit growth remains difficult to maintain as a company grows larger. And if AMZN loses its reputation for taking over business niches, investors will stop paying 300 times earnings.

Summary

The successes and emerging problems with AMZN stock place the company in the same historical pattern as another successful retailer — Walmart. Amazon’s market takeovers and tremendous growth have inspired both fear and respect in other companies.

Stocks swoon at the threat of Amazon. Dozens of cities have also offered incentives to attract the company’s second headquarters.

However, high valuations, product failures and reports of poor working conditions should concern investors. All these could change the company’s reputation for the worse and drive AMZN stock price to much lower levels.

Investors wanting bigger returns should look for the next AMZN… and avoid the current one.

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Source: Investor Place