Last week at the San Francisco MoneyShow I did a joint, dividend stock focused presentation with Kelley Wright of Investment Quality Trends. Here is an excerpt from the MoneyShow description of the event:

“Dividends and dividend growth have historically accounted for the lion’s share of stock total returns. Moreover, companies that are rapidly growing their payouts can be found in some of the fastest-growing sectors of the economy. This gives rise to a largely underutilized strategy: ‘Stealth growth’ investing, which centers around buying quality stocks with a penchant for dividend growth.”

IQ Trends method tracks stocks between historic yields. Buy when the yield is near the high of the range and sell when the yield touches the low of the historic range. Each stock will have its own yield history. This is a very value oriented stock market strategy and the stocks he follow can go for years without hitting a buy or sell signal. The strategy works because the service only recommends growing dividends stocks. This means as the dividend grows and if the share price stays in the historic yield range, the share price must be appreciating.

While he didn’t go deeply into individual stocks Wright did give some quick hits on shares his system shows as undervalued. Here are several:

The Walt Disney Company (NYSE: DIS) has a historic yield range of 0.8% to 1.6%. The current yield is 1.5%, which under the IQ Trends system is a strong indicator that DIS is undervalued and should move higher from here.

Wright labeled CVS Health Corporation (NYSE: CVS) and Philip Morris International Inc. (NYSE: PM) as “screaming buys”. He also discussed his belief in the large cap energy companies stating he owned a “boatload” of Exxon Mobil Corporation (NYSE: XOM) and Chevron Corporation (NYSE: CVX).

I personally like the contrarian value approach of Wright and his IQ Trends approach. He and I both use dividend yields and dividend growth as tools to help us find stocks that provide long term positive returns for investors.

More: 3 High Growth Dividend Stocks Paying Over 6%

During my portion of the presentation, I shared a handful of stocks I thought income investors should take a strong look at. My difference is that I often recommend newer companies. Under the IQ Trends system, stocks must have a 25 year dividend history. I like to find and recommend newer stocks with high yields and potential for dividend growth in the early years, on top of those yields.

Here’s one of the more recent ones I’ve unearthed:

PermRock Royalty Trust (NYSE: PRT) is a new investment I revealed to the presentation attendees. This is not a company, but instead the trust has a right to 75% of the net income from crude oil production from dedicated acreage in the Permian Basin.

PRT pays a variable, monthly dividend based on the prices received for sold crude oil and natural gas. I describe PermRock as a pure play, high yield way to participate in crude oil prices.

I believe that oil will continue to go higher, resulting in a higher share price and larger dividend payments. However, the latest dividend was lower, causing a share price drop, making PRT very attractive.

I expect PRT to yield between 8% and the mid-teens.

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The markets took the news that two of President Trump’s former staffers had been found guilty of several crimes in stride Wednesday. Though the news has been fodder for the pundits, thus far the markets have focused more on a great earnings quarter. Indices are daily flirting with new highs. News that a NAFTA deal with Mexico may be imminent, and the start of trade negotiations with China, are not hurting this juggernaut of a market either.

Thursday the market will see earnings from Alibaba (BABA) before the open, and the heavy retail earnings week continues after the close when Gap (GPS) reports. Alibaba is expected to give a good report on its core business, but those earnings are being overshadowed by spending to expand in bricks-and-mortar retail. Given the blowout earnings from companies like Target (TGT) and Walmart (WMT) investors may be in a forgiving mood to see the Chinese company putting more effort into physical stores. Inventory issues hampered Gap in the first quarter, but analysts expect those issues to be resolved this quarter. After great numbers from other retailers, Gap is expected to deliver an upbeat report. Analysts will be looking for continued strength in the Old Navy brand, as store openings have accelerated due to strong demand.

Thursday’s economic calendar is heavily loaded with the FHFA House Price Index and new home sales data released in the morning. Prices were down and supply was up in June, which analysts believe will bode well for the July report, after buyers have been reporting a dearth of available inventory. Both numbers are expected to rise slightly. Also released on Thursday are weekly jobless claims and the PMI Flash Index. The PMI number has been running up against capacity constraints, and analysts will be listening for anecdotal information from the flash number which is released 10 days before the final report. Thursday also marks the beginning of the Jackson Hole Annual Economic Symposium which often brings market moving commentary from its participants. Durable goods orders will be released Friday morning. The street is expecting a pullback in orders overall, but this is due to a dip in aircraft numbers. Ex-transportation analysts are expecting a .5% increase.

As it is a late Friday in August, only six companies are reporting earnings Friday morning. Among the group are Foot Locker (FL) and Hibbett Sports (HIBB). Analysts are looking for a continuation of improving numbers at the retail shoe chain. Foot Locker has been benefiting from an improved product offering mix from big names like Nike (NKE). FL is not expected to slip as its comeback continues. Although same-store sales and earnings dipped slightly at Hibbett last quarter, the small-town sports store is expected to recover this quarter. Analysts will be looking for increased traffic, and listening for commentary for how the economic recovery is fairing in small town America.

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Once again, stock market jitters worldwide have emerged in August when trading desks are thinly manned with junior staff. This year, the worries emanated from the self-inflicted economic woes in Turkey brought on by its leader, President Recip Tayyip Erdogan.

He thinks he knows more than markets and has taken full control of the Turkish economy. Even though its economy needs much higher interest rates and tough austerity measures, he will not hear of that and is leading his country down the path of Venezuela toward economic oblivion.

Turkey’s troubles then spread to much of the emerging world even though many countries hit by selling (by those junior staffers) have solid fundamentals. I cover all the details for you in an article that will appear on Monday at the Investors Alley website.

Why do I say the selloff in emerging markets was not justified? Because Turkey is ‘small potatoes’.

The country is not a significant player in the global economy. Last year its GDP was $900 billion, or about 1% of global GDP at market exchange rates. And when it comes to foreign exposure to Turkish assets, the impact is equally limited. Non-residents hold 20% of Turkey’s equity market, which has a market capitalization less than 2% the size of the U.K. stock market. In terms of debt, foreigners hold about 40% of Turkish government bonds – and Turkey’s public debt is quite low, at 30% of its GDP.

There’s been much talk about the exposure of certain European banks to Turkey. But even there, the exposure is quite limited. Of the Eurozone’s roughly €175bn claims on Turkish assets, Spanish banks have the largest exposure, with one of the country’s biggest, BBVA, having the most at risk. French and Italian banks are next, a very distant second. Korea barely slides into the top ten, and no other Asian country has any significant exposure to Turkey.

Market Effects

Emerging market stocks last Wednesday that their worst day in six months, sending the FTSE Emerging Index to a decline of more than 20% from its January 26 peak – a classic definition of a bear market.

The decline was exacerbated by a plunge in one of China’s tech giants, Tencent, as pressure from the Chinese government on video games and e-sports led to the company reporting its first quarterly drop in profits in over a decade.

The selloff also spread to developed markets on Wednesday, with Wall Street experiencing its steep decline since late June. And more importantly, a widely watched measure of the yield curve briefly dipped to a new decade low on Wednesday morning, as the fallout from Turkey’s escalating economic crisis ricocheted around the world.

The difference between two- and 10-year yields on U.S. Treasuries dropped to only 23.4 basis points. That was below its previous low of 23.6 basis points reached in mid-July. This spread is important because of its reliability as an economic indicator. It has turned negative, with the yield curve inverting, before every recession of the past 50 years.

Related: Buy These ETFs Setting Up for Profit’s from a Strong U.S. Dollar

Markets did stabilize and enjoy a robust rally on Thursday though after word that the U.S. and China are to resume formal trade talks in late August.

Time to Play Defense?

One interesting item I want to bring to your attention has been happening even before the Turkish turmoil. . .that is that investors around the world have turned more defensive. Some investors seem to be bracing themselves for some sort of economic slowdown or financial stress.

That can be seen in the recent outperformance of healthcare stocks. Globally, healthcare stocks have outperformed the technology sector to the greatest extent since mid-2016. Healthcare stocks have gained 8.5% in the three months through mid-August, according to data from Thomson Reuters. In comparison, the former leaders – global tech stocks –  rose only 4.1%. This is a classic sign of portfolio re-positioning to a more defensive posture.

This is good news if you’re invested in the sector. I’ve seen in my personal portfolio some European healthcare stock ADRs that have hit all-time highs recently.

Related: Dump These Healthcare Stocks Getting Amazoned

It looks like prolonged trade war talk is unfortunately slowing the global economy. “We are seeing a lot of leading indicators already starting to turn down; year-on-year trade growth is now decelerating quite rapidly and we are starting to see a rotation within markets,” said Ian Harnett, chief strategist at Absolute Strategy Research to the Financial Times.

And indeed, the rate of growth in world trade is slowing. The volume of world trade increased a mere 0.4% in the six months to May, according to the latest figures from CPB, the Netherlands Bureau for Economic Policy Analysis — down month on month from 2.8%. It was the slowest growth rate since the six months to October 2016.

Hints of slowing can be seen here in the U.S. too, if you know where to look. If the economy starts to grow more slowly, the impact will show up first in the price of refined fuels such as road diesel, marine gasoil and jet fuel that play a central role in the freight transport system.

These middle distillate fuels are principally burned in the high-powered engines used in trucks, ships, railroads, barges and aircraft to move freight around the world, as well as in factories, on farms and at mines and oilfields. Mid-distillates actually account for more than a third of the oil used around the world every day, and are the single-largest category of refined products.

In other words, distillate fuels are closely correlated with the global economic and trade cycle, and at the moment they confirm other indications the rate of growth is slowing. Even here in the U.S., distillate stocks, which had been drawing down faster than usual during the first four months of 2018, have now been building faster than normal since late May.

Even the mighty U.S. tech sector could become more and more vulnerable to the rising geopolitical and trade tensions. As Mr. Hartnett said to the Financial Times, “Trade wars could morph into tech wars, with a lot more talk about the tech sector and whether the U.S. administration will remain relaxed about how tech companies are fostering the globalization that it seems Trump is looking to reverse.”

Even if that doesn’t happen, I will be looking for more high-quality companies in the healthcare sector to add to the Growth Stock Advisor portfolio in the months ahead. In the meantime, stay tuned for more volatility – the historically volatile period of August, September and October is far from over.

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Exclusive Lime IPO Guide: It may seem like a novelty, but electric scooters are bringing in serious money.

Lime, which was founded in 2017 and just started offering electric scooters in May 2018, is now valued at $1 billion.

And the industry, along with Lime’s valuation, is only going to get bigger…

The global electric scooter and motorcycle industry will be worth $22 billion by 2024, and that has investors salivating over the prospects of getting in early on scooter startups like Bird and Lime.

Now, there’s no indication a Lime IPO will happen in 2018.

But to be prepared if it does happen, we wanted to provide Money Morningreaders with a Lime IPO Guide.

In this exclusive report, we’ll answer all your questions, so you’ll know if you should buy Lime stock if there is a public offering.

And the first question we’ve been asked is, “How does Lime work?”

How the $1 Billion Electric Scooter Company Lime Works

Lime works similarly to Uber.

The entire process of finding a ride and payment is handled through an app.

Through the Lime app, users locate scooters near them. They pay $1 to unlock a scooter and pay a ride fee of $0.15 per minute.

Lime users then ride their scooter to their destination and leave it for the next user to come along.

Customers don’t have to worry about charging the scooters, either.

At night, individuals are paid to collect scooters, charge them, and then leave them in highly trafficked areas for morning use.

After knowing how Lime works, the next question our readers have been asking is, “Who are the founders of Lime?”

How Toby Sun and Brad Bao Founded Lime

Toby Sun and Brad Bao founded Lime in 2017, but it was originally called LimeBike.

Lime still offers bike rentals, but its scooter launch in May helped attract more investors to make it a billion-dollar company.

Sun’s LinkedIn profile says he’s currently attending the University of California, Berkeley, and he was the Product & Marketing Manager for PepsiCo Inc.(Nasdaq: PEP) from 2005 to 2011. Before being a co-founder of Lime, he was an investment director for Fosun Kinzon Capital from 2014 to 2017.

Bao also has an impressive background, with stints at Tencent Holdings Ltd.(OTCMKTS: TCEHY) and International Business Machines Corp. (NYSE: IBM), according to Angel.co.

And tech giants are buying into their vision…

On July 9, Lime announced it raised $335 million in a round led by Google Ventures, which lends capital to “bold new companies.” Some of its investments include Slack, Stripe, and 23andMe.

Lime also said Uber took part of this funding round.

Stunning: New innovation will be like “adding twin turbos to the Bitcoin engine” – and could send its price to $100,000. Learn more…

With a total of $467 million raised, Sun’s and Bao’s company is now valued at more than $1 billion.

Because the company was only founded one year ago, anxious investors wanted to know how they can invest in the scooter startup before the Lime IPO…

Can Retail Investors Buy Lime Stock Ahead of the Lime IPO?

Unfortunately, retail investors can’t buy Lime stock ahead of the Lime IPO.

Right now, only institutional and accredited investors have the ability to invest in Lime. Once the company decides to go public, regular investors will get their chance to own a slice of the company. But it might not be a bargain…

A team of bankers will determine a Lime IPO offering price, which will only be available to a select few before going on a stock exchange.

For example, Snap Inc. (NYSE: SNAP) offered shares to big banks, hedge funds, and wealthy insiders for $17 per share on March 1, 2017.

When retail investors could first buy shares of SNAP on March 2, 2017, they had to pay $24 per share.

That means those who paid $17 per share made a profit of 41.17% in a day just for being a well-connected individual.

Fortunately, retail investors don’t have to sit on the sideline and wait for the Lime IPO.

In fact, owning shares of Alphabet Inc. (Nasdaq: GOOGL) is a backdoor investment strategy for Lime.

And owning GOOGL could give you a 20% profit in the next year to roll over into the Lime IPO…

Why You Need to Own Shares of GOOGL Before the Lime IPO

An early-stage investment like Lime can send the GOOGL stock price higher.

Yes, electric scooters themselves could make Alphabet money, but the bigger picture is they could lead to billions in revenue thanks to the data that can be collected from Lime.

Here’s how…

Alphabet can utilize Lime’s data for its mapping systems and alternative transportation startups. Thanks to Lime, Google will know how long people use electric scooters, where they take them, and the daily, weekly, and monthly usage of customers.

And gathering data is how Google was able to make nearly $100 billion in advertising revenue last year.

The data from Lime could provide vital information for Sidewalk Labs, which is part of Alphabet’s investment portfolio. The New York–based company wants to reinvent cities through technology to improve quality of life.

A major focus is mobility, with the goal to improve the convenience of transportation, reduce costs, and enhance safety.

Sidewalk’s website says that could be through self-driving technology, but it could also include electric scooters now that Alphabet is invested in Lime.

And this isn’t just a far-fetched plan to build a super city…

The city of Toronto is currently working with Sidewalk to bring innovations to a new neighborhood called Quayside. From there, executives will use what they learned to work on an 800-acre area in Canada.

It’s hard to estimate how much revenue this could generate for Alphabet, but the U.S. federal government spends nearly $500 billion on contracts for goods and services each year. With U.S. President Donald Trump promising to upgrade infrastructure across the country, Google could start winning more of that $500 billion federal contract pool with the knowledge it gains.

“Google will be gaining insights about urban life – including energy use, transit effectiveness, climate mitigation strategies, and social service delivery patterns – that it will then be able to resell to cities around the world,” Wired.com said in a January report.

While shareholders wait to see investments like Lime pay off for the long term, they can also make a profit in the next 12 months.

Susquehanna Financial Group projects the GOOGL stock price will trade for $1,500 in the next year, a 19.8% climb from today’s (Aug. 14) price of $1,252.

But that might be too conservative of a prediction for an innovator like Google.

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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.

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Source: Money Morning

Last week, I told you about how the tone of quarterly earnings conference calls had changed. From a focus on trumpeting the benefits to companies’ bottom lines of the corporate tax cuts Congress passed at the end of 2017, the focus had shifted to the trade war and rising costs.

This is especially true with regard to technology companies, with many of them raising the possibility of having their supply chain disrupted. One particular segment of the technology sector that is under threat is the data center industry. And more particularly, the key components that keep data centers humming. Let me explain…

China Tariffs to Bite

The China tariffs will bite. But the question is whom.

Consider this data from the World Bank: In 2006 exports represented 36% of China’s GDP, by 2017 they were only 19.7%. Looking at the potential impact of tariffs on China’s economy, only 19% of China’s 2017 exports went to the U.S. representing only around 3.6% of its total economy.

So the effects on China from tariffs may be less than many investors expect.

Related: Buy These 3 Growth Stocks Surging Because of Tariffs

However, the effect on tariffs on the U.S. technology has just begun. Two rounds of tariffs on Chinese imports totaling $50 billion have targeted some of the key components that keep data centers functioning. The tech industry is now facing a third $200 billion list of tariffs that takes dead aim at key digital infrastructure — from the routers, switches and servers that redirect and process data, to components such as motherboards and memory modules used by bigger cloud companies to assemble their own equipment, and even the miles of cabling needed to wire the gear together.

The tariffs are particularly ill-timed. That’s because many of the largest internet and cloud computing companies are in the middle of a capital spending boom. And while a lot of the build-out is overseas and will not be affected by the tariffs, there were planned massive upgrades to existing facilities here in the U.S. to meet demand for extra capacity and new services that are now coming into question.

For many of the tech giants, 2018 was to be a year for massive capital spending.

Alphabet (Nasdaq: GOOG), for example, nearly doubled its capital spending in the first half of 2018 to $10.4 billion. Besides adding capacity for YouTube videos and its fast-growing cloud computing business, CFO Ruth Porat, chief financial officer, said to the Financial Times that the company was buying more equipment to meet the demands of machine learning — a “compute intensive” task that is becoming central to many of its services.

Google’s investments mirrors capital spending spurts at both Facebook (Nasdaq: FB) and Microsoft (Nasdaq: MSFT) this year, although Amazon (Nasdaq: AMZN) has pulled back somewhat after a 2017 spending boom. These cash-rich tech giants obviously can easily afford the higher costs of data center equipment caused by a 25% tariff on Chinese imports.

Semiconductor Industry in the Crossfire

But other well-known tech companies may be affected more harshly. For instance, Dell Technologies imports components from China and then makes servers and laptops in the U.S. And Hewlett Packard Enterprise imports a lot of servers from China although it makes most of its products either in the U.S. or Mexico.

Intel (Nasdaq: INTC) is one of those companies for which the tariffs will be a strong headwind. It says 90% of the value of its chips comes in the design and manufacturing stages, which occur “outside of China and largely in the US”. But like many U.S. semiconductor companies, it uses plants in China to do the final assembly and testing on its products because these are lower skill and therefore lower wage tasks. But with the tariffs, any chips brought back to the U.S. from China will face a tariff on their entire value. In effect, this is a tax on work done here in the U.S.

If the proposed next round of tariffs on China goes into effect, the semiconductor industry will be at the epicenter of the ‘quake’. According to the Semiconductor Industry Association, $6.3 billion worth of chips and other products directly related to semiconductors are about to be hit.

Supply Chains Aren’t Cheap to Move

I’m sure you may be wondering why the semiconductor companies just don’t move their supply chain out of China back to the U.S. or to some other country?

In reality, few companies have the flexibility to switch their sourcing quickly to suppliers outside of China. While there are a number of other countries with the capability to produce what the semiconductor industry needs, the supply chains and capacity just don’t exist and would have to built from scratch in many cases.

Even relatively low-value parts of the current supply chain could be prohibitively expensive to move. According to Intel’s calculations, moving a low-value-added chip packaging plant out of China would cost between $650 million and $875 million.

Money spent on building a whole new supply chain may mean less money spent where it really needed, such as research and development.

The irony of the situation has not been lost on KC Swanson, head of policy at the Telecommunications Industry Association. The Trump Administration is burdening U.S. companies with higher costs at just the moment they needed to invest heavily to compete with China. She pointed out that “China is all about trying to build up its industrial internet, and its routing and switching capabilities.”

Investment Implications

So what are the investment implications for you?

The next round of tariffs has yet to take effect, so you have time to adjust your portfolio. And unless a deal is reached (highly unlikely), the tariffs will hit the semiconductor industry hard.

Your best bets in tech will then be to hold the companies that have a ton of money and can absorb the higher cost of goods. That means three of the companies mentioned earlier in the article – Microsoft, Amazon and Alphabet.

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Buffett could see this new asset run 2,524% in 2018. And he's not the only one... Mark Cuban says "it's the most exciting thing I've ever seen." Mark Zuckerberg threw down $19 billion to get a piece... Bill Gates wagered $26 billion trying to control it...
What is it?
It's not gold, crypto or any mainstream investment. But these mega-billionaires have bet the farm it's about to be the most valuable asset on Earth. Wall Street and the financial media have no clue what's about to happen...And if you act fast, you could earn as much as 2,524% before the year is up.
Click here to find out what it is.

Source: Investors Alley