Buy These 2 Retailers That Can’t Be Amazoned

Despite the recent Grinch of a market, retail sales this holiday season are expected to rise almost 5% over last year. A report on holiday spending by PWC says 84% of consumers will spend the same or more than they did last year, with individuals expected to spend $1,250 on average.

The largest increases in spending are coming from high earning millennials (those making over $70K are expected to ramp holiday spending to over $2K) on the holiday and consumers in metropolitan areas, while those predicted to spend the least are those living in small towns and individuals with incomes under $25K.

The Haves and the Have Nots

PWCs numbers, though focused on the 2018 holiday season, mirror a major shift that has been developing in the retail sector for several years now. In 2015, then Hershey CEO John Bilbrey, told investors that “consumer bifurcation” was an important driver in the company’s strategy.

Hershey was facing a market in which low-income consumers wanted discounted products, and high-end consumers wanted higher priced, and at least perceived higher quality, specialty items. The middle class, its traditional go-to market, was disappearing.

Since 1971 the percent of U.S. aggregate income held by the middle class has declined every year while the size of the pie for upper-income earners has steadily increased. In 2015 the share of aggregate income received by the middle-class dropped below 50% for the first time.

The income inequality trend is not only a U.S. issue either. The World Economic Forum has called the widening income disparity “one of the key challenges of our time.” Economists from the Paris School of Economics and Cal-Berkley say the top 1% of earners in China have seen their income rise from 6% of total income in 1978 to 12% in 2017.

Leaving the causes of the rising disparity aside, retailers are left with a choice. Move up the value chain and serve what Deloitte calls the “Premier” market, move down and serve the “Price-Based” market, or undertake the onerous task of serving both.

Blue Ocean, Red Ocean

A recent darling of the corporate strategy intelligentsia is a book by W. Chan Kim and Renee Mauborgne titled Blue Ocean Strategy. The main concept of the book is that as a business you should not compete in a red ocean where there are multiple competitors selling similar products, but in a blue ocean in which you can set your products or services apart from others.

It’s a sound and seemingly logical idea. What company in their right mind would want to enter a market and compete on price because your products are basically commodity items. I can’t think of one single company that would say that’s a good idea. Oh wait, there is that one company I saw in the news recently that has grown so large it needs a “H2”, or second headquarters. Maybe you’ve heard of them as well, I believe they’re named after a large rainforest located mainly in Brazil.

Amazon (Nasdaq: AMZN) has made a living out of dominating the red ocean. The company now commands approximately 50% of retail business conducted online in the U.S. and 5% of ALL retail transactions in the U.S. According to Morgan Stanley, the company will surpass Walmart in 2018 as the country’s number one apparel retailer.

To be fair, the red ocean of price-based retail is not all Amazon. There are other stalwart competitors there such as Walmart (NYSE: WMT)Target (NYSE: TGT), and Dollar General (NYSE: DG). Those companies have had decent performance numbers, because as the middle class has disappeared not only have the ranks of the upper-income grown, but the lower-income market has grown as well.

Deloitte puts the 5 year growth of the price-based market at 37%. But recent bankruptcies at Toys ‘R Us and Sears, and the closing of thousands of other retail stores in 2017 and ‘18, appear to indicate that the winners are becoming fewer and fewer.

With the low end dominated by Amazon and a handful of large retailers, I believe we should focus our search for growth companies in the Premier, or luxury, markets.

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10 Cheap Stocks You Won’t Regret Buying

Source: Shutterstock

Everyone is stressing about the FAANG stocks right now. But there are some other stock plays that are looking very attractive even in this choppy market. Not only that but you don’t have to pay three-digit sums to make some sweet returns. It’s time to look outside the box at some cheap stocks you won’t regret. The best way to find these stocks is to use a screener, that way you can open up your investing horizon to a much wider stock pool.

Here I used TipRanks’ Stock Screener to find these 10 cheap stocks. Essentially, I looked for 1) stocks with a ‘Strong Buy’ top analyst consensus; 2) serious upside potential (i.e. over 20%). And on top of this each one of these stocks comes in at under $30. Basically a bargain! Note that the consensus is based on ratings from the last three months, so the consensus is pretty up to date.

Let’s take a closer look now:

Cheap Stocks to Buy: First Data Corp (FDC)

“You Can’t Be Serious; Shares Too Cheap To Ignore” exclaims five-star Oppenheimer analyst Glenn Greene (Track Record & Ratings) on this financial stock. One of the largest payment processing companies in the world, First Data Corporation (NYSE:FDC) offers retailers card and mobile payment acceptance capabilities for online and point-of-sale transactions.

Greene reiterated his Buy rating on the stock on November 14. His $27 price target indicates upside potential of over 50%.

“After reviewing 3Q18 results, and speaking with management, we remain optimistic regarding FDC’s growth trajectory and believe the post-quarter stock reaction (-17% since 10/26 vs. +2% for S&P 500) has been largely overblown” the analyst wrote. Both FDC’s intermediate term growth/profitability outlooks and deleveraging thesis remain intact.

At these levels he views shares as ‘very compelling’, with a roughly 35% discount to peers.

Overall FDC- a ‘Strong Buy’ name- has received 17 recent buy ratings vs just 3 hold ratings. This comes with an average analyst price target of $27 (51% upside potential). Interested in FDC stock? Get a free FDC Stock Research Report.

Stocks to Buy: ANGI Homeservices Inc (ANGI)

Chances are you know of ANGI Homeservices Inc. (NASDAQ:ANGI) — the world’s largest digital marketplace for home services. The company is the result of a major tie-up between Angie’s List and IAC’s HomeAdvisor.

The big news is that ANGI has just reported its best quarter since the merger. “ANGI’s 2017 [earnings] goal of $270 million initially faced investor skepticism,” wrote Raymond James analyst Justin Patterson (Track Record & Ratings) on November 9. “Yet management delivered on its goal while driving revenue outperformance.”

“Having demonstrated the margin potential, management believes it is prudent to reinvest organically and via M&A (i.e. the Handy acquisition) to drive the next phase of growth in a $400 billion total addressable market” the analyst wrote. Handy Technologies Inc is a New York-based startup offering small tasks at fixed prices.

Patterson has a buy rating on the stock and a $23 price target. With shares down over 5% in the last five days, his price target suggests 24% upside potential lies ahead. (However note that the stock is still up 60% year-to-date.) In total this ‘Strong Buy’ stock has received 5 recent Buy ratings and 1 hold rating. Get the ANGI Stock Research Report.

Cheap Stocks to Buy: Altice USA Inc (ATUS)

Source: Altice

Cable stock Altice USA Inc (NYSE:ATUS) is currently trading at ‘frankly ridiculous’ levels argues top Pivotal Research analyst Jeff Wlodarczak (Track Record & Ratings). Indeed, his $25 price target translates into juicy upside of over 40%.

The logic for the fall in cable stocks in 1H was fundamentally flawed, says the analyst. “As these concerns reasonably have cleared up the stocks have rebounded substantially a trend we expect to continue into the seasonally strongest results of the year (4Q/1Q).”

Plus, you have to remember that cable’s best-in-class, high-margin data product (70% EBITDA margins) gives them the ultimate hedge against competition and most anything else that rears its head (including a potential slowing economy).

And as for ATUS specifically, the Pivotal analyst says “investors seem to think that weakness at former parent Altice Europe’s French operations mean the Altice operating strategy cannot work in the U.S. when the reality is that France remains, arguably, the most competitive market in the world.”

He isn’t alone in this bullish take on the stock: ATUS scores 100% Street support. This is with a $25 average analyst price target (40% upside potential). Get the ATUS Stock Research Report.

Cheap Stocks to Buy: Williams Companies Inc (WMB)

Williams Companies Inc (NYSE:WMB) boasts 33,000 miles of pipelines — including America’s largest-volume and fastest- growing pipeline — providing natural gas for clean-power generation, heating, and industrial use.

According to the company, demand for natural gas is tremendous and continues to grow. This is because gas is cleaner, less expensive and more efficient than other fuels capable of meeting around-the-clock energy demand.

“We think Williams is well positioned to benefit from demand-driven Northeast gas projects around Transco, solid NE G&P volume and cash flow growth, low-capex GOM upside, and more control of liquids downstream the Rockies” opines Top 50 RBC Capital analyst T J Schultz (Track Record & Ratings).

He has a Buy rating on the stock with a $36 price target (43% upside potential). Looking forward, Schultz believes Williams can grow EBITDA by 10% in 2019. After 2019, he forecasts mid-to-high single digit growth, supported by new projects coming online and growth on legacy assets.

Overall, 7 analysts have published Buy ratings on WMB in the last three months, vs just 1 hold rating — giving the stock its ‘Strong Buy’ analyst consensus. This is with a $33 average analyst price target (31% upside potential). Get the WMB Stock Research Report.

Cheap Stocks to Buy: Smartsheet Inc (SMAR)

Smartsheet Inc (NYSE:SMAR) calls itself the leading work execution platform. Essentially, it helps organizations move from idea to impact — fast. Shares are already up 35% over the last six months. But don’t worry there’s still plenty of upside lined up ahead.

When you consider the market opportunity SMAR faces, you understand why this stock still looks cheap. Apparently there are now 865 million “knowledge workers”, which is a big TAM [total addressable market] for a company with “only” 4.2 million users.

“We remind investors that when growth software stocks are at the foothills of a large TAM opportunity the stocks almost always work for the simple reason that you don’t have any contravening evidence that says the company won’t scramble its way to the top” notes Canaccord Genuity’s Richard Davis (Track Record & Ratings).

Fresh from the company’s upbeat user conference and analyst day, he calls execution ‘exemplary’ and cites the new $1 billion revenue target in 4-6 years.

Overall this ‘Strong Buy’ stock has received only Buy ratings in the last three months. These six analysts have an average price target of $36 (34% upside potential). Get the SMAR Stock Research Report.

Cheap Stocks to Buy: Trupanion Inc (TRUP)

pets stock

Source: Shutterstock

Everyone loves pets, and one stock out there is benefiting from our growing pet obsession.

Welcome to Trupanion (NASDAQ:TRUP), a pet insurance provider for cats and dogs in the U.S., Canada and Puerto Rico. Trupanion has just smashed Q3 earnings results, earning it a full set of Buy ratings from the Street. “Off the leash” cheered RBC Capital’s Mark Mahaney (Track Record & Ratings) on November 9. He continued: “We view TRUP’s top-line results as encouraging, with EBITDA and pet growth continuing to outperform expectations.”

In short, Trupanion ticks all the boxes for the RBC analyst. Here’s a stock with a large growth opportunity (estimated to be about $3-5B+) in an under-penetrated market (less than 1%) with a robust growth profile, a differentiated business model, and a very strong management team.

The conclusion: Trupanion shares represent an attractive investment absent a significant, unexpected slowdown in pet policy growth. As a result Mahaney reiterated his Buy rating on the stock with a $44 price target (70% upside potential). This comes in slightly above the average analyst price target of $42 — which still indicates compelling upside potential of 61%. Get the TRUP Stock Research Report.

Cheap Stocks to Buy: American Eagle Outfitters (AEO)

True, retail stocks are facing challenging circumstances right now. But could American Eagle Outfitters (NYSE:AEO) be the exception? Both Citigroup and Wedbush firms have just upgraded AEO from Hold to Buy. They are predicting sizable upside potential of 33% and 43% respectively.

Right now AEO is down ~30% since reporting 2Q earnings at the end of August. The stock has been painted with the same brush as most other retail stocks. But according to the Street, investors are missing a big factor in the AEO bull story.

“But AEO has something that others don’t — one of the most attractive growth concepts in retail (Aerie)” argues Citigroup’s Paul Lejeuz (Track Record & Ratings). “Aerie is taking market share in the lingerie market with consistent double-digit comps and significant growth potential… And with the recent sell-off, we believe the market is not giving AEO the credit it deserves for Aerie.

He believes Aerie is worth ~$2BN, implying the core AE biz is valued at 3.1x EV/EBITDA, which is overly pessimistic. Indeed, six analysts have published recent Buy ratings on AEO stock. So no sell or hold ratings here. Get the AEO Stock Research Report.

Cheap Stocks to Buy: Pattern Energy Group Inc (PEGI)

Source: Shutterstock

Renewable energy stocks are perfectly positioned to capture the ongoing transition from carbon-based power systems. A transition estimated to be worth a whopping $10 trillion. And Pattern Energy Group Inc (NASDAQ:PEGI) is one of these stocks. The company owns and operates 12 wind power projects in the U.S., Canada and Chile.

Plus the stock is currently looking super cheap — especially when you factor in that this is a top-quality dividend stock. “With a dividend yield of ~9%, we continue to believe PEGI is significantly undervalued” cheers Oppenheimer’s Colin Rusch (Track Record & Ratings).

He believes the stock is set up for ‘superior performance.’ Moreover, “We believe its underwriting practices are in line with industry best practices and its wind resource modelling capabilities are among the industry leaders.”

With 100% Street support, analysts are predicting upside potential of 20% from current levels. Get the PEGI Stock Research Report.

Cheap Stocks to Buy: Evolent Health Inc (EVH)

Source: Shutterstock

Evolent Health Inc (NYSE:EVH) sells software and consulting services to help healthcare providers, like hospital systems, offer care at lower costs. This is particularly important given the ongoing shift to value-based payments systems. From a Street perspective, this is a first-class stock with a lot of potential.sup

In the last half year, EVH has received only buy ratings from the Street. And in the last three months alone, we are looking at 8 top analyst buy ratings. The best part: with an average price target of $33, analysts see prices spiking over 38% in the coming months.

“We continue to be encouraged by the momentum in the transition toward risk-based reimbursement and by EVH’s position to gain from it” says five-star Oppenheimer analyst Mohan Naidu (Track Record & Ratings). He reiterated his buy rating with a $31 price target on November 7. Plus the recent acquisition New Century Health adds nicely to numbers and moves estimates higher for Q4.

He says: “Evolent is one of the few vendors well positioned to help health systems that intend to transition to risk-based reimbursement models. The systems need significant help… While there is competition, we believe EVH is differentiated in its proven ability, technology offerings, service and credibility in helping organizations make the switch successfully.” Get the EVH Stock Research Report.

Cheap Stocks to Buy: The Medicines Company (MDCO)

CTSO Stock Could Score Big With Its Blood-Filtering Technology

Source: Shutterstock

Last but not least on our cheap stocks list we have The Medicines Company (NASDAQ:MDCO). This is a company with the potential to deliver a blockbuster drug for cholesterol management.

B Riley FBR analyst Madhu Kumar (Track Record & Ratings) recently initiated coverage of the stock with a Buy rating citing the firm’s lead drug, PCSK9 RNAi drug inclisiran (developed in conjunction with Alnylam Pharma (NASDAQ:ALNY)).

He says inclisiran “has the potential to disrupt the management of high cholesterol and cardiovascular disease.” This helps explain the analyst’s very bullish $70 price target. From current levels this means shares could explode 250% from current levels!

Kumar recommends keeping an out for results from the ongoing Phase III ORION-9/10/11 trials for inclisiran, guided for 2H19. If the data meets expectations, these results could serve as key positive catalysts for MDCO shares.

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Market Preview: Markets Continue to Tumble

Investors had little to be thankful for this holiday week as markets continued to tumble. Trade tensions, falling oil prices, and a massive drop in cryptocurrencies resulted in markets falling across the board. The DJIA fell .73%, the S&P 500 dropped .66%, and the Nasdaq fell .48%. A Santa Claus rally was nowhere in sight, and investors are running out of time as end of year approaches.

Stoneco Ltd. (STNE) reports earnings for the first time on Monday. The company’s IPO was a big success when the payments processor came public in early October. Rocketing to $32 from an initial pricing of $24, the Brazilian company looked on its way. But the continued battering of the market has now dropped the share prices back below its offering price. Also reporting Monday is Enanta Pharmaceuticals (ENTA). The pharma company has not participated in the bull market in healthcare stocks this year. Analysts will be looking for an update on the company’s EPD-938 drug aimed at the RSV (respiratory syncytial virus). The new drug is meant to be effective in the under 2 year old age group where there are few options available now.

After a long weekend for many traders, economic numbers on Monday include the Chicago Fed National Activity Index and the Dallas Fed manufacturing numbers. The Chicago number will be closely watched as it measures activity at a national level and has been trending down recently. Tuesday, analysts will again dive into housing numbers when the S&P Corelogic Case-Shiller Housing Price Index is released. The FHFA home price index also comes out Tuesday morning. Analysts will be looking for any weakness in the numbers as a further deterioration in the housing market. Consumer confidence and Redbook retail numbers are released Tuesday as well. Wednesday the focus will be on GDP numbers. Also released will be mortgage applications, corporate profits, new home sales, and the State Street investor confidence numbers. Thursday investors will dissect jobless claims, pending home sales, and personal income. The final week of November will close out with Chicago PMI numbers and the Baker Hughes rig count. Analysts will be looking for the impact of falling oil prices on the rig count headed into the winter season.

Tuesday, Salesforce (CRM) will take to the earnings stage. The customer relationship management focused tech company has been hit hard in the recent market selloff. Also reporting Tuesday are Eaton Vance (EV) and Cracker Barrel (CBRL). Retail will be in focus Wednesday as Burlington Stores (BURL), Dick’s Sporting Goods (DKS), and Guess? (GES) all report earnings. Thursday we can expect earnings from HP (HPQ), Workday (WDAY, and Dell Technologies (DVMT). BRP (DOOO), Citi Trends (CTRN) and Destination XL Group (DXLG) close out the earnings week on Friday.

Buffett just went all-in on THIS new asset. Will you?
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.

Dump These 3 High-Yield Turkeys Now

Turkey is the traditional Thanksgiving fare, and I don’t know anyone who doesn’t like to sit down to a full-spread Turkey dinner on the holiday (OK, my sister the vegetarian is an exception. She just wants her dinner to taste like turkey). However, what we don’t want are turkeys in our stock portfolio. In the case of high yield stocks, those are ones where the dividend payment is at risk of disappearing like the pie on Thanksgiving.

The results from high-yield stock investments tend to have a binary outcome. The reason for the high yield on an individual stock is because there is a market perception that the dividend rate is at risk. You have likely heard the saying that high-yield equals high risk.

The outcome for an individual dividend stock will go one of two ways. One possible outcome is that the market is right and the dividend is reduced or eliminated. When this happens, it’s bad news in a stock portfolio. Dividend cuts also come with steep share price declines. The other potential outcome is that the market is wrong, and the company continues to pay the current dividend or even grow the payout rate.

My research for my Dividend Hunter high-yield stock focused service is focused on finding the second kind of big dividend paying stock.

Today I want to highlight a few stocks in the first group. Many investors pick income stocks just from the yield and don’t analyze the underlying financials to see if a company is positioned to sustain the dividends.

The analysis steps are different in the high-yield world, and if you have not been exposed to the techniques, you will likely end up cursing the idea of investing for yield.

Here are three, that if you own them, my suggestion is to sell before the dividend gets cut any you are left with a lot less income and value in your brokerage account.

Martin Midstream Partners L.P. (Nasdaq: MMLP) is a high-yield master limited partnership. The shares currently yield over 17%. After a decade of dividend growth, the music stopped and in November 2016 the company slashed its payout by 38%.

You might assume or hope that after the big reduction the management team would have put itself into a position to support the new lower dividend rate and at some point, resume growth.

It appears that is not the case. For the first three quarters of 2018, the company generated distributable cash flow coverage of just 76% of the distributions paid to investors.

The company says it will soon be able to cover the distributions with cash flow, but too many times have I seen businesses like this be forced into a dividend cut before the cash flow gets high enough to sustain the current dividend rate.

AGNC Investment Corp (Nasdaq: AGNC) is the largest of a group of finance real estate investment trusts (REITs) that own portfolios of government agency backed mortgage backed securities, often called MBS. You will see these referred to as Freddie Mac, Fannie Mae and Ginnie May mortgage backed bonds.

The challenge for AGNC and all the agency MBS owning finance REITs is taking the 4% yield of these bonds up to a double digit stock yield. The step up in yield is done with large amounts of leverage. An agency REIT will leverage its equity 5 to 10 times with borrowed money.

For the 2018 third quarter AGNC reported leverage of 8.5 times book value. The problem with this amount of leverage is that a flattening of the yield curve can wipe out the net interest margin and the ability to continue paying dividends.

History has shown that these REITs are better for management compensation than they are for investors looking for stable dividend payments. The AGNC dividend has shrunk by 14% per year on average over the last five years.

Ignore the 12% yield and sell.

CBL & Associates Properties, Inc. (NYSE: CBL) is a shopping mall REIT on the wrong side of the shopping center great divide. At one end are the successful REITs that own Class A malls which are 95% plus occupied with successful retailers. At the other end are the REITs that own malls with fading demographics anchored by declining retailers like Sears and JC Penny.

These second tier malls will require millions in capital spending to make them again attractive to shoppers, and that spending may not do the trick. Shoppers are fickle, and it may be impossible to draw them back to a near failed mall.

It’s easy to tell the difference between the successful mall REITs and the trouble ones. The good REITs in the shopping center category have yields under 5%. The challenged ones have double digit yields. In the case of mall REITs, the high yield is a true danger signal to sell and stay away.

CBL yields 10.7%.

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Buy This Marijuana Stock to Tap Into Legal Pot’s Next Growth Phase

Now that the bloom is off the cryptocurrency rose, investors looking for the latest hot sector have descended upon the pot stock space. Marijuana-related companies look likely to have raised $8 billion from investors in 2018.

And that’s understandable – estimates are that it could be a $150 billion sector within a decade. The growth in the marijuana sector has been greatly aided by recent developments – the legalization of pot by Canada in mid-October and the Democrats winning control of the U.S. House of Representatives. The latter makes it more likely the U.S. will legalize cannabis nationally. Already, a number of states have legalized marijuana, with Michigan being the latest.

From just a $5 billion market in 2015, the legal cannabis industry in North America is expected, in the most conservative estimates, to top $20 billion by 2020. North America is pretty much the global legal pot market at the moment since about 90% of global legal revenues currently come from the U.S. and Canada.

Here though is the most exciting part of the growth story of the legal pot market…

Marijuana-Infused Drinks Coming

Cannabis sales are only a small fraction of alcohol sales, but that is likely to change when major beverage companies enter the market and start replacing alcohol content with cannabis content.

And there is a similar story that looks to be unfolding in the non-alcoholic beverage market also. That growth story is why some of the world’s leading beverage companies have shown interest in the sector.

Some drinks companies are seriously looking at adding CBD (cannabidiol) – the non-psychoactive part of marijuana – into drinks aimed at the mass market. These drinks containing cannabidiol and focused on pain management could become big business. Analysts at Cannacord Genuity estimate that sales of drinks infused with CBD could make up 20% of the edibles market and will reach $600 million in sales in the U.S. by 2022.

Or as a recent Bloomberg article put it, pot has “moved from the black market to the stock market and now appears to be on its way to the supermarket.”

Coca-Cola (NYSE: KO) said it is looking at the possibility of infusing CBD into “functional wellness beverages around the world.” Coke is no doubt looking to broaden the reach of cannabis-infused beverages into functional wellness categories, enabling the company to potentially one day be a major player in the non-recreational cannabis-infused beverage category.

Other drinks companies in the alcoholic beverages space have or are contemplating jumping into the pot sector.

In August, Molson Coors Brewing (NYSE: TAP) jumped in by starting a joint venture with Hexo Corp (OTC: HYYWF)to develop non-alcoholic, cannabis-infused beverages for the Canadian market.

And Diageo (NYSE: DE), the drinks conglomerate behind Johnny Walker whiskey and Guinness beer, has also been exploring investment opportunities in the cannabis sector in recent months. It is thought that Diageo, the world’s biggest alcohol company, has had serious discussions with at least three major Canadian marijuana companies.

The maker of Corona beer and Modelo Especial, Constellation Brands (NYSE: STZ) has taken a giant leap into the sector when it invested just under $4 billion into the Canadian cannabis group Canopy Growth (NYSE: CGC), lifting its stake to 38%. Underlining the company’s bullish projections for cannabis, Constellation CEO Rob Sands acknowledged that the industry could represent “one of the most significant global growth opportunities for the next decade”.

Tread Carefully

However, you must still tread carefully when it comes to investing in the cannabis sector. After all, these companies are still money losers.

Let’s look at three of North America’s largest cannabis companies – Tilray (Nasdaq: TLRY)Aurora Cannabis (NYSE: ACB) and Canopy Growth (NYSE: CGC).

In their latest earnings reports, revenues soared by 85%, 260%, and 33% respectively. But Tilray had a net loss of $18.7 million; Aurora had an operating loss of $112 million; and Canopy Growth had a net loss of $330.6 million.

In other words, these companies have costs that are rising faster than revenue. While some marijuana companies are starting to see the size of their losses slow, not one is profitable, and it could still take some time before they start making money.

Another worrisome item is the fact that the cost-per-gram is falling in Ontario (Canada’s most populous province) as the provincial government is buying product in bulk and at their set prices. (Canada’s cannabis companies can’t sell directly to retailers.) Tilray’s average per-gram price fell to $6.21 from $7.53.

It will still be months too before Canada’s pot companies produce enough to meet the strong demand. Until then, they’ll be spending big money on developing larger greenhouses. For instance, in August, Aurora announced it was starting production on a 1.2 million-square-foot facility, which will take months to build.

Cannabis Investments

These problems are why I do not like a broad play on the industry such as you would get through the ETFMG Alternative Harvest ETF (NYSE: MJ). Instead, I prefer to look for individual opportunities.

One company that is definitely on my list is CannTrust Holdings (OTC: CNTTF), which will be listing soon on the NYSE. It is in active discussions with a number of firms in the beverage, food and cosmetics industries and expects to announce a deal within the next two months.

This strategy is in contrast to that of Canopy Growth, which is tying itself to Constellation Brands. The chairman of CannTrust, Eric Paul, told Bloomberg “Ideally, it would be great to have a bunch of brand partners. We’d like to find the best partner for every one of those verticals [beverages, food, etc.]”

I was impressed too with its third results. Here are some of the highlights:

  • Record revenues of $12.6 million, a 105% increase from the comparable prior year period
  • Operations for the quarter resulted in positive EBITDA and positive net income
  • Active patients increased to more than 50,000, a 61% increase from the comparable prior year period
  • Entered into supply agreements with 9 Canadian provinces to supply recreational cannabis across Canada
  • Made its first shipment of cannabis oil to Denmark – the only cannabis oil accepted in Denmark
  • Partnered with Australia’s Gold Coast University Hospital on a six-month study designed to evaluate the efficacy of CannTrust CBD capsules in slowing the progression of Amyotrophic Lateral Sclerosis (ALS) progression
  • Partnered with McMaster University on medicinal cannabis research for chronic pain and for designing more effective, safer treatment protocols in public health policies

And despite a 20% move up after the earnings announcement, CannTrust stock sells at a much cheaper valuation than its peers.

There is also another cannabis-related company I like a lot that I have recommended to my Growth Stock Confidential subscribers. It is a more conservative way to approach the sector through a REIT that pays regular dividends.

Stay tuned for more on the sector in upcoming articles and special reports.

Buffett just went all-in on THIS new asset. Will you?
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.

Rise of the Robots: How to Grab 500%+ Dividend Growth From AI

Are you looking for that “sweet spot” retirement investment that combines growth tomorrow plus dividends today?

If so, let’s talk about a tech megatrend that’s powering a payout with 546% upside.

For this type of dividend growth, we must consider huge breakthroughs, like the Internet of Things—another name for the millions of devices (from your home thermostat to industrial sensors) hooking up to the web every year.

But hands-down the most important disruptor of all, from a dividend standpoint, is artificial intelligence (AI), the move toward “thinking” computers.

That’s because AI is the one revolution that’s baked into just about every tech advance you can imagine, making everything from cybersecurity defenses to self-driving cars faster, smarter every day.

AI: Your Next Big Dividend Play

Before you roll your eyes, let me tell you this: AI is already a huge source of dividends, and it will only line our pockets with more cash in the future.

Now, I know you don’t often hear “artificial intelligence” and “dividends” in the same sentence, but hear me out.

Because there are billions surging into this technology as I write—and you can grab your share safely, through a large and growing dividend payout, just like the lucky investors in the 3 stocks I’ll show you in a moment.

Geek that I am, I could go on about AI all day. But I don’t want you to nod off, so let’s get into how we’re going to grab our slice of these billions. So here, from worst to first, are my top 3 AI dividend plays now.

AI Pick No. 3: An Accelerating Dividend on the Cheap

AI needs a massive amount of computing horsepower and reams of data to work its magic, and you can already see that demand playing out at Intel (INTC). The company’s hardware for data centers—the maze of servers that companies use to store and analyze vital customer data every day—is flying out the door.

For proof, look no further than the third quarter, when Intel’s data-center group (including its Xeon scalable processor, custom-made for high-demand apps like AI) took off, setting record sales that surged 26% from a year ago.

That sent Intel’s overall sales and earnings per share (EPS) up 19% apiece, crushing the Street’s expectation. No wonder Intel’s dividend (current yield: 2.5%) is not only growing but accelerating:

A Sign of Things to Come

Now is a terrific time to buy: thanks to this fall’s “tech wreck,” this top-notch AI play trades at a silly 10-times earnings, well below the 13-times you’d have paid in June.

The kicker? The payout eats up just 38% of cash flow, making it one of the safest dividends on the market—and practically locking in another big hike this January.

AI Pick No. 2: Clockwork Dividend Growth From “the Backbone of AI”   

No doubt Intel is at the heart of the AI revolution, but a safer way to play earth-shaking trends like this is through Crown Castle International (CCI), a “pick-and-shovel” play on AI.

(If you’re unfamiliar, “pick and shovel” refers to the California gold rush, when the only people who really got rich were the shopkeepers who sold the picks and shovels to the gold-seekers, not the prospectors themselves.)

CCI fits that description to a T: it’s a real estate investment trust (REIT) with 40,000 cell towers and 65,000 miles of fiber-optic cable across the US.

That makes it the backbone of AI, the Internet of Things and just about every other tech trend you can imagine!

The company is already converting our smartphone addiction into soaring revenue and funds from operations (FFO, the REIT equivalent of EPS):

Megatrend-Powered Gains

And if you’re looking for predictable dividend growth, CCI is for you. Management has a stated goal of growing the dividend, which yields 4% as I write, by 7% to 8% a year, and it’s easily clearing that bar.

Another Year, Another 7%+ Payout Hike

So why isn’t CCI my top AI pick?

For one, it’s a bit pricey for my taste, at 20-times forecast 2018 FFO.

Second, we want stocks with long dividend histories, and CCI has only been making payouts since December 2014—not nearly long enough to see if management has the chops to stick keep the payout coming in a crisis.

Which brings me to …

My No. 1 AI Play Now: A Cheap Dividend With 546% Upside

My top AI pick is Digital Realty Trust (DLR), an even better pick-and-shovel play on AI than Crown Castle: the REIT owns 198 data centers and boasts a top-20-client list that’s a who’s-who of the tech (and AI) world:


Source: Digital Realty Trust November 2018 investor presentation

The best part? The dividend! DLR yields just under 4% now, but the real story is its explosive payout growth: up 546% since its IPO 14 years ago!

Heck, this one even kept hiking right through the financial crisis, so you can be sure management knows how to keep your income safe (and growing) in a rocky market:

A Battle-Tested Payout

I fully expect the chart for the next 14 years to look a lot like the chart for the last 14. And as I’ve written before, a rising dividend is the No. 1 driver of share prices, so you can expect this unsung company’s stock to ignite in short order, too.

There’s another reason to buy DLR now: the stock has moved lower this year, while FFO has arced higher:

Share Price and Cash Flow Part Ways

We can thank overhyped fears that rising rates will hurt REITs (a worry that’s easily banished by the orange line in the chart above) for this split, which has left DLR trading at a bargain 17.3-times trailing-twelve-month FFO.

I wouldn’t wait to grab this one. With another big payout hike almost certainly headed our way this winter, I expect DLR’s share price to start gapping higher soon.

4 Surefire Ways to Boost Your Income 4X in 2019

My team and I have zeroed in on 4 other investments pay an average 8% cash dividend as I write. That’s double what Digital Realty pays … and these 8%+ payouts are growing, too!

Think of what that could mean for you: $8,000 a year in dividends on every $100k invested. That’s 4 TIMES what you’d get from the average S&P 500 stock’s payout. Plus, your cash stream grows every year like clockwork!

I call these 4 life-changing buys “dividend conversion machines.”

Why? Because they “convert” the pathetic dividends on your typical S&P 500 stock into gigantic cash payouts.

To show you what I mean, consider my No. 1 pick from this 4-pack of “dividend conversion machines.” It takes the 2% average dividend you’d get from well-known stocks like NextEra Energy (NEE), Union Pacific (UNP) and American Water Works (AWK) and “converts” it into a massive 8.6% cash payout!

Not only that—this perfect retirement play lines your pockets every single month! Check it out:

A Monthly—Growing—8.6% Payout

As I write, thousands of folks across America are quietly collecting big dividend checks from these 4 ignored investments every single month. And you can join them today.

Buying in couldn’t be easier: you can do it straight from your online brokerage account, just like buying the blue chips you know well. But instead of their paltry sub-2% dividends, you’ll kick-start your own 8%+ cash stream!   

Editor's Note: The stock market is way up – and that’s terrible news for us dividend investors. Yields haven’t been this low in decades! But there are still plenty of great opportunities to secure meaningful income if you know where to look. Brett Owens' latest report reveals how you can easily (and safely) rake in 8%+ dividends and never worry about drawing down your capital again. Click here for full details!

Source: Contrarian Outlook

7 Winning Stocks to Buy in November for 2019

Source: Shutterstock

The Thanksgiving holiday — a time for investors to take time off to be with family and friends, celebrating all that we have to be thankful about. But it’s also a time to begin thinking about the winning stocks to buy for 2019.

After a month like October that saw the S&P 500 lose 7%, there are certainly a lot more stocks to consider given the pullback. By comparison, November has been roughly flat so far.

When planning for 2019, it makes sense to consider stocks to buy that have momentum heading into the final six weeks of the year. So, I would recommend stocks that are up 20% over the past month.

According to Finviz.com, there are 145 stocks with a market cap greater than $2 billion that are up 10% over the past month. Here are my seven winning stocks to buy heading into 2019 from that group.

Canada Goose (GOOS)

November Winning Stocks to Buy: Canada Goose (GOOS)

Source: Shutterstock

If you own Canada Goose (NYSE:GOOS) stock, you’re no doubt pleased with the company’s returns both in 2018 and halfway through November. Of course, when you’re blowing through analyst estimates and raising your guidance for the year, you’re bound to get a nice updraft in your stock price.

In the second quarter, which ended Sept. 30, Canada Goose had revenue of CAD$230.3 millionand an adjusted profit of CAD$0.46 a share. Revenues were up 34% year over year while adjusted earnings per share were up 59% in the quarter.

More importantly, Canada Goose raised its revenue growth for the year from 20% to at least 30% and adjusted earnings per share growth of 40%, 15 percentage points higher than its earlier guidance.

Equally exciting, Canada Goose announced on Nov. 14 that it’s getting into footwear, acquiring Canadian-based Baffin for CAD$32.5 million.

A triple-threat business with wholesale, retail and e-commerce, Canada Goose is easily one of the top three stocks to buy in North American apparel.

Tesla (TSLA)

November Winning Stocks to Buy: Tesla (TSLA)

Source: Shutterstock

Okay, so Tesla (NASDAQ:TSLA) stock isn’t tearing it up in 2018 like Canada Goose, but the fact that it’s up for the year is great news for longtime shareholders. After all, it was trading as low as $252 as recently as Oct. 22, 29% lower than today.

That’s what I’d call a recovery.

There’s no doubt that 2018 has been a trying year for the company, but Elon Musk is both a visionary and resilient as all get out, two characteristics necessary to deliver new technology to the world.

“Tesla certainly endured a summer of discontent, what with its troubled Model 3 launch and CEO Elon Musk’s failed go-private scheme and subsequent SEC action and fines,” wrote Business Insider’s Matthew DeBord on Nov. 17. “But the company snapped its season of self-inflicted bad luck in time to turn a rare profit in the third quarter. As it turns out, the timing was excellent, given the impending tech-industry meltdown.”

Indeed it was.

I’ve had my doubts about whether Elon Musk could bring Tesla to the promised land without having a breakdown; he’s proven me wrong and that’s great news if you own TSLA stock.

Heading into 2019 on a high, TSLA stock might be the best investment you can own at this point in the bull market.

Noah Holdings (NOAH)

November Winning Stocks to Buy: Noah Holdings (NOAH)

Source: Shutterstock

Noah Holdings (NYSE:NOAH) is a Chinese wealth management company. It’s also one of my favorite Chinese stocks. I’ve been recommending NOAH regularly since 2013.

“In Q2 2018, the company’s ‘Other Financial Services’ grew by 73% to $6.9 million. While that pales in comparison to its wealth management and asset management segments, it’s the future potential of services such as lending and online trading that’s got my attention,” I wrote on Nov. 9. “Eventually, I could see a business that act’s like a three-legged stool, with each division delivering profitable growth.”

The fact is, as China continues to grow, whether we’re talking 8% or 3% GDP growth, Chinese affluent and near-affluent are going to need financial advice.

Noah Holdings has $24.4 billion in assets under management, a network of 1,495 relationship managers, and 287 branches spread across China serving more than 220,000 clients.

As long as China doesn’t give up on some form of quasi-capitalism, Noah Holdings will continue to be a reliable long-term play in my opinion.

HMS Holdings (HMSY)

November Winning Stocks to Buy: HMS Holdings (HMSY)

Source: Shutterstock

Businesses that make or save people time or money, as a rule, tend to do well. HMS Holdings (NASDAQ:HMSY), a Texas-based data analytics company that helps save big health plans billions of dollars annually, is no exception.

HMS announced its Q3 2018 earnings report November. Revenues were up 5.1% from Q2 2018 and 22.8% from Q3 2017. Regarding adjusted earnings per share, HMS had sequential growth of 24.0% and year over year growth of 63.2%.

”The record third quarter revenue reflects progress we have made throughout the year on a number of growth initiatives related to our coordination of benefits and payment integrity offerings, as well as the important contribution of our new care management and consumer engagement products,” stated Bill Lucia, chairman and CEO.

Is it any wonder then that HMS stock is up 119% over the past year and 108% year to date? It sure isn’t.

As a result of the strong results announced in early November, HMS raised the low end of its revenue guidance for the year by $20 million to $595 million while increasing the top end by $15 million to $600 million.

If you’re looking for a healthcare stock to bet on in 2019, HMS ought to be at the top of your list.

Autohome (ATHM)

November Winning Stocks to Buy: Autohome (ATHM)

Source: Tesla

If you live in China and you’re looking to buy a car or truck, new or used, Autohome (NYSE:ATHM) is the information provider to help you make that decision.

Autohome went public in December 2013 at $17 a share. If you bought its stock in the IPO and are still holding, you’re up 327% in the five years since.

I’ll take that kind of return every day of the week and twice on Sundays. Interestingly, Telstra Corporation (OTCMKTS:TLSYY), the Australian telecom company that took it public, sold much of its stock for $1.6 billion in April 2016. Today that would be worth almost three times as much.

However, don’t feel sorry for Telstra. It paid less than $76 million for 55% control of Autohome’s parent back in 2008. As for Autohome itself, its business is doing splendidly.

In Q3 2018, announced Nov. 12, Autohome’s revenues were 34% higher year over year to $275 million while adjusted earnings rose 55% to 90 cents a share. It finished the third quarter with 279 million mobile users, 48% higher than a year earlier.

As I said earlier in November, Autohome might be the best Chinese stock to buy on recent weakness.

Fox Factory (FOXF)

November Winning Stocks to Buy: Fox Factory (FOXF)

Source: Shutterstock

November Return: 40.0%

Fox Factory (NASDAQ:FOXF) is a stock that I wish I would have bought when it first went public at $15 a share in August 2013.

Back then, the maker of bike, ATV and motocross shocks was owned by Compass Diversified Holdings (NYSE:CODI), a Connecticut-based investment company that’s part private equity, part asset manager, definitely patient capital.

While Compass Diversified did well on its investment in Fox Factory — it initially invested $78 million — today, if it had hung on to its 19.6 million shares after the IPO, they would be worth $1.4 billion. That’s about half the holding company’s current market cap.

Would’ve. Could’ve. Should’ve.

Fox Factory announced its Q3 2018 results Oct. 31. They were solid with revenues up 38% in the quarter while adjusted net income rose 56% in the quarter.

Investors liked the results, pushing FOXF stock up 18% on the news. It’s now up 32% since Oct. 31 as investors get on board what could be the best momentum play of these seven stocks in 2019.   

Newell Brands (NWL)

November Winning Stocks to Buy: Newell Brands (NWL)

In early September, I recommended that investors buy Icahn Enterprises (NYSE:IEP), because its stock was down but not out, having lost 13% in just five days of trading.

My rationale for buying it was that it was oversold with a relative strength index (RSI) of 21 and numerous interesting investments, including a significant stake in Newell Brands (NYSE:NWL), a company that owns Rubbermaid and many others, that’s lost its way.

Carl Icahn has a way of shaking up establishment CEOs and boards to the point where changes are made to extract value for shareholders. In the case of Newell Brands, Icahn brokered a truce between fellow activist investor Starboard Value, himself, and the company.

That was in April.

Although Newell’s board has yet to replace CEO Michael Polk, who has delivered woeful returns since becoming CEO in July 2011, its latest quarterly report released Nov. 2 was much better than analysts were expecting, hence the 36% return in November.

As long as Carl Icahn’s a significant shareholder, NWL has a good chance in 2019.

As of this writing Will Ashworth did not hold a position in any of the aforementioned securities.

Buffett just went all-in on THIS new asset. Will you?
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: Investor Place

Market Preview: Tech Once Again Leads Lower

Markets were rocked Monday following a speech by Vice President Pence this weekend in which he reiterated a hardline stance on trade against China. On the heels of the speech came a Wall Street Journal report that Apple (AAPL) had cut production figures for all of its just released iPhones. The one-two punch hit Apple (-3.96%) and its chip suppliers, as well as international companies like Caterpillar and Deere which fell 3.06% and 3.58% respectively. The Nasdaq was hardest hit finishing off 3.03%, followed by the S&P 500, down 1.66%, and the DJIA off 1.56%. The continued flip between hot and conciliatory rhetoric in the trade war appears to be tiring investors. Many had hoped the signing of the U.S.-Mexico-Canada Agreement (USMCA) was a precursor to a relatively quick resolution of the trade war with China, but those hopes are dwindling as the new year approaches. The lingering trade war, combined with predicted interest rate increases, now have analysts projecting a slowdown in GDP at a minimum, and a possible recession in the latter half of 2019.

The TJ Maxx (TJX) family of companies will report earnings Tuesday coming off of an over 5% decline Monday. Analysts are looking for the company to report a strong quarter with earnings up 22%, but fears of an economic slowdown heading into 2019 has hammered retailers over the past week. Joining  the retail parade on Tuesday are Target (TGT) and Ross Stores (ROST). Both are expected to report strong quarters as well, though all of the retailers are expected to report increasing labor and freight costs. Other names of note with earnings Tuesday are Medtronic (MDT) and Lowe’s Companies (LOW).

Economic numbers Tuesday include Redbook retail data and housing starts. The housing starts number takes on added significance after the Housing Market Index fell through the floor Monday morning. The index, coming in at 60 versus an expected 68 showed weakness across the geographic board. Wednesday, the last day before Thanksgiving, brings the release of durable goods, jobless claims, consumer sentiment, existing home sales and leading indicators data. Leading indicators are expected to rise .1% in October following a healthy .5% bump in September. Analysts will clearly be focused on the existing home sales number for further clarification of how badly the housing market is fairing.

Deere (DE) reports earnings before the bell Wednesday. The tractor company missed estimates last quarter due to rising costs. Analysts are cautious ahead of this quarter and are worried the agribusiness cycle may have peaked. Sociedad Quimica y Minera (SQM) will release earnings after the bell Wednesday. The Chilean chemicals and mining grew earnings by over 34% last quarter. Also reporting Wednesday are Baozun (BZUN) and AstroNova (ALOT).

Buffett just went all-in on THIS new asset. Will you?
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.

Two Stocks to Add to Your Artificial Intelligence (AI) Watch List

The Turing Test, which is considered one of the best ways to identify artificial intelligence (AI), requires that a human being is unable to distinguish a computer from another human being when asking both of them the same questions. It’s a great academic exercise, but not especially helpful in determining which company in the AI area you should invest in.

When it comes to predicting the size of the the “AI market” we find projections for market size in 2025 from well-respected firms ranging anywhere from $37 billion to $1.2 trillion. A large part of the deviation in estimates is due to the lack of clarity in defining AI, and how the technology will benefit companies able to employ AI in their business models.

As Eliezer Yudkowsky, an American writer who has warned on the danger of AI laments, “By far, the greatest danger of AI is that people conclude too early that they understand it.” So here we stand. We don’t know exactly what AI is, we have difficulty defining the market, and we don’t know what the future capabilities of the technology look like.

A Forbes article earlier this month by Kathleen Walch, was actually titled Artificial Intelligence is Not a Technology. Ms. Walch, an AI expert, considers AI to be a “journey” with technology spun off along the way.

While we may have many questions about what AI is, we do know that the two leading countries in terms of AI research are China and the U.S. China has published more research papers on AI, and the government announced last year the country would become, “a principal world center of artificial intelligence innovation.” But, some question the quality of China’s research and most believe the U.S. has a slight lead in the technology.

We also know that many companies are attacking big problems using the current state of AI, and that the technology will have a major impact on our everyday lives. For example, Deere (NYSE: DE) recently bought a company called Blue River Technology. The company uses robots and AI to fertilize, water, and harvest crops. The result is the use of less fertilizer, less water, and better yielding crops. In this way, AI is already being used to prevent pollution, conserve water, and feed more people.

As investors we should also know that one form of AI, machine learning, is already being used by many of the largest companies on Wall Street. Andrew Ng, Stanford professor and founding lead of Google Brain defines machine learning as “the science of getting computers to act without being explicitly programmed.”

Let’s go a just a little further down the machine learning rabbit hole in order to understand where companies plug into the machine learning ecosystem. Machine learning can be broken down into two stages. First, there is the “training” of the computer. This involves providing patterns, e.g. videos, pictures, and any other of a wide variety of data, to the computer and asking it what the pattern is. The computer is allowed to get the answer wrong over and over, until eventually getting it right. In this way the computer “learns” what information presented in a specific manner means to humans.

The second stage is “inference”. In this stage the computer takes what it has learned in the training stage and “infers” an answer based on the learning that has taken place. Inferring involves massive amounts of data and must often be done in a split second.

Think of the inference stage in a driverless car. While traveling 55 MPH, surrounded by other cars, a driverless car “sees” a child’s ball roll into the road ahead. The car must simultaneously recognize the fact that it is a child’s ball, determine there is a high probability a child may follow the ball into the street, communicate with the other driverless cars around it what it sees, and then decide whether the best course of action is to brake, change lanes, or take some other evasive action.

Clearly the inference must be fast and correct. One company working to insure inferences are arrived at in a timely manner is:

Xilinx (Nasdaq: XLNX)

Xilinx is known today as the field programmable gate array (FPGA) company. They compete with companies like NVIDIA (Nasdaq: NVDA) that make graphics processing units (GPU). Demand for NVIDIA’s GPUs, driven by video gaming, data centers, cryptocoin mining, and AI, has driven the company’s stock up over 788% from the beginning of 2016 to highs reached earlier this year.

While FPGAs and GPUs both process data, FPGAs are generally faster and use less power, but GPUs are cheaper. When comparing the two options, chiefly cost constraints, in both crypto coin mining and video gaming platforms, has historically GPUs the technology of choice, and in the process powered NVIDIA’s stock skyward.

GPUs are also favored for the “training” stage of machine learning, because speed is not a vital component of training as it is for inference.

But, I believe that growth in the inference market, as a variety of technologies come online in the next few years e.g. 5G, IoT, and driverless automobiles, will concurrently drive sales of Xilinx FPGAs. XLNX grew earnings in its latest reported quarter by 25.37% year-over-year, and is expected to grow full year earnings 16.08%.

The company also recently introduced of a new technology, which is one reason I believe now is a good time to get into the stock. The new chip from Xilinx, which combines FPGA, GPU and CPU capabilities on one chip, may be its ace in the hole.

In October Xilinx CEO Victor Peng introduced a new chip aimed squarely at the inference market. The Adaptive Compute Acceleration Platform (ACAP) chip is code named Everest, and according to Xilinx the chip can “infer” 2x-8x faster than Nvidia’s GPUs, and do so with 4x less energy. The Everest chip is featured in the company’s Versal line of products, short for “versatile” and “universal”.

Mr. Peng took over the CEO position at Xilinx in January after joining the company in 2008 and most recently served as Chief Operating Officer. With the launch of the new more powerful technology, Mr. Peng is already attempting to leap ahead of the competition by changing the company’s branding.

“…we have to say no, we’re not the FPGA company. With ACAP, at the moment nobody even knows what that is – but they will understand over time.” The combination of rising demand for their FPGA product with an aggressive move to expand the new ACAP technology, should put Xilinx in the sweet spot of a coming machine learning boom.

Alteryx (NYSE: AYX)

While Xilinx makes the hardware necessary for the inference stage, Alteryx uses machine learning to provide the end user with the ability to gather the inference and make it actionable. Alteryx is a “self-service data analytics” company. They provide data processing and presentation software allowing companies to turn data into human consumable presentations and graphs which can be used to make business management decisions.

The Alteryx solution allows customers to combine data from a variety of sources, e.g. warehouse data, combined with customer data, combined with purchasing data, to present a holistic and repeatable picture of business health. The software, which includes various aspects of machine learning, provides insights without the user having to use or know computer code. Easily combining data from a variety of databases, and being able to present a coherent representation of that data, is a major boon to large corporations.

In its recently reported Q3 earnings, CEO Dean Stoecker reported the company grew revenue 59% year-over-year. But, more importantly, sustained net revenue retention, a measure of customers staying with the company and purchasing additional services, was 131%. The company has also grown earnings by over 46% year-over-year as of its latest quarterly report. Analysts are projecting a 5 year average earnings growth rate of 8% going forward.

This marked the eighth consecutive quarter the customer retention number was over 130%. This is important as it shows me that Alteryx is not just good at marketing, but actually has a product that customers want and are using more and more of. Having been able to continuously obtain new customers, while increasingly monetizing current customers, is one of the reasons I believe the stock is a buy here.

Another thing I like about the company’s growth is that they are diversifying their customer base both across industries and across geographies. Their clients now include Cowen and Company, J.Crew, Cisco Systems, McDonald’s and Textron, as well as AkzoNobel Sourcing in the Netherlands, Anheuser in Belgium, and Oxford University Press in the U.K.

As CEO Stoecker stated in the latest earnings call, using Alteryx allows customers to realize “significant time savings and reduced expenses…” An economic slowdown could actually increase demand for the company’s services as cost cutting comes back into vogue.

While Xilinx and Alteryx are already benefiting from the AI revolution, both companies appear poised to accelerate their growth. Whether it be through the introduction of new technology, or the ability to grow and retain their customer base, as the AI technology “journey” progresses to the next stage these companies should be highly considered for your AI portfolio allocation.

Buffett just went all-in on THIS new asset. Will you?
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 

Time to Scoop Up These Three Yieldcos Paying 7% and Higher

Last week was a seriously mixed bag for energy sector fundamentals. The WTI crude oil benchmark tumbled to $56 a barrel, after trading above $70 a few weeks ago. Over the same period natural gas went from $3.00 MMBtu to $4.60.

In recent days, the share values of renewable energy Yieldco stock have also been pulled lower. It seems the market is linking these companies to the plight of California power company Pacific Gas and Electric (NYSE: PGE).

Yieldcos are companies that own renewable power production assets such as wind farms, solar energy facilities, and hydropower production assets. The companies acquire energy producing assets and sell the power to utilities and other end users on long term contracts. They operate as pass-through entities, paying out most of the free cash flow as dividends to investors.

The better Yieldcos look to acquire assets that allow them to grow the dividends. Most have a sponsor company that is either a developer of power production facilities or provides additional financial support for the Yieldco’s growth goals.

Buy These 3 High Yield Clean Energy Stocks While They’re Still Cheap

The prospects of these companies have not changed in the last few days or weeks. Renewables are the growth area of energy production. The Yieldco companies have pipelines of assets in development that allow them to stay on their forecast growth trajectories. If you are an income stock focused investor, now is a good reason to buy low and yield high in the Yieldco group.

TerraForm Power (Nasdaq: TERP) is a $2.3 billion market cap which owns wind and solar power production assets. The company has gone through significant transformation over the last year. In October 2017 Brookfield Asset Management took over sponsorship of TERP and became a 51% shareholder in the Yieldco.

In February 2018, TerraForm made an offer to acquire 100% of Saeta which owned and operated 1,028 megawatts of rate-regulated and contracted solar and wind assets, located primarily in Spain. The $1.2 billion purchase closed in June 2018.

TerraForm’s financial results show the company was coming up short of covering the $0.19 per share dividend for the first two quarters of 2018, building up to 1.15 times coverage. Management has stated a goal of 5% to 8% annual dividend growth going forward, while paying out 80% to 85% of cash available for distributions.

Current yield is 7.0%.

Brookfield Renewable Partners (NYSE: BEP) was operating like a Yieldco long before the term was invented. The company owns 260 hydro power plants, which account for 76% of production. 35% of production is done outside of North America. Also, 90% of power production is purchased on long-term contracts.

BEP owns the 51% of TERP acquired by Brookfield Asset Management. Brookfield Renewable Partners has been publicly traded since 2001 and is the only Yieldco to have an investment grade credit rating.

The company pays out about 70% of CAFD as dividends and has been growing the dividend since 2011. Management guides for 5% to 8% annual dividend growth. Unlike the other Yieldcos discussed here, BEP is a Schedule K-1 reporting company for tax purposes.

The shares currently yield 7.0%.

Clearway Energy (NYSE: CWEN) is another Yieldco that recently went through a change of sponsorship. Clearway was started by utility company NRG Energy (NYSE: NRG).

In the Spring of 2018 the sponsor interests in what was then called NRG Yield Inc. was transferred to Global Infrastructure Partners. CWEN retained the right of first offer on the renewable energy projects in the NRG pipeline.

These projects plus the ability to make outside acquisitions will allow Clearway to be a growth focused Yieldco. The company forecasts 5% to 8% annual distribution growth.

CWEN currently yields 7.8%.

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Source: Investors Alley

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