Why Facebook, Inc. Stock Is Still a Long-Term Buy

Social media giant Facebook, Inc. (NASDAQ:FB) has been an investor favorite for years due to its exponential growth and dominance within the industry. However, in recent weeks, investors have been spooked by the company’s changing strategy and worries about user numbers.

While its true that some big changes are on the horizon, big opportunities await as well, which make FB stock a buy for long-term investors.

User Number Decline?

A new study by eMarketer showed that Facebook is struggling to hold on to American users under the age of 25. The firm’s research concluded that the number of FB users between 12 and 17 years old declined by 9.9% last year — a far cry from the 3.4% that the firm had initially predicted. This year, eMarketer sees the company losing some 2.1 million users under 25.

On the surface, that looks very worrying. No one wants to be losing clout with the upcoming generation, especially not a social media company like Facebook. However, it’s important to note that these numbers don’t include Instagram, which is also owned by Facebook.

In fact, eMarketer predicted that Instagram’s U.S. user base will see a 13% rise this year, higher than rival Snapchat from Snap Inc (NYSE:SNAP), which is seen growing its U.S. user base by 9% this year. So, although it’s not great that FB’s flagship platform is losing touch with the younger generation, it’s losing users to itself which isn’t so bad.

Big Changes Ahead for FB

Another factor that has been weighing on FB stock is the company’s decision to pivot its strategy to focus on security and engagement over profits. In the tech space, it’s a reality that security spending will rise as new scams emerge.

That’s especially true for a social media company like Facebook, which has had to deal with complaints about fake news reports and extremist propaganda. CEO Mark Zuckerberg cautioned that security spending would take precedence over profits, and most agreed that was a wise move in order to keep the company at the top of the industry.

However, during the firm’s most recent earnings call, Zuckerberg dropped another bomb — engagement would also come before profits. Unfortunately, investors didn’t take quite so kindly to that sentiment.

Facebook has been reworking its platform to make sure that users are seeing more valuable content. That means fewer ads from businesses and viral videos and more posts from actual friends that they care about.

The problem for investors is that taking away ad space will likely cut in to profits. While that is definitely a concern, engagement is the only way FB works, so it’s important that the company change with the times and keep its users happy.

Big Opportunities

While Facebook’s shifting strategy does add some uncertainty, it’s important to note that the company also has quite a few opportunities ahead as well.

The firm has been working to develop a video content option on its site that could eventually rival YouTube from Alphabet Inc’s (NASDAQ:GOOGL, NASDAQ:GOOG).

Facebook’s Watch tab is still in the early stages, but the company is planning to build it out with user-created content through an ad revenue-sharing scheme. The benefit for Watch is the fact that Facebook already has so much data on its users and what they like to see that it will make it easy for the firm to create curated content geared toward individuals.

The firm is also planning to allow companies to select the kind of content their brand wants to be associated with in order to ensure that ad placement is relevant.

While it still has a long way to go before catching up to YouTube, Watch offers a ton of potential for Facebook once it gets rolling.

Facebook has the potential to monetize its grip on the messaging space in the coming year as well. FB currently owns the two most popular messaging services on the planet — WhatsApp and Facebook messenger. So far, the firm has done very little to monetize those assets, but once it does, we will likely see a huge boost to the Facebook’s profits.

The Bottom Line on FB Stock

FB stock could have a bumpy road ahead over the next few months as it works to pivot its business and address concerns. While it’s true that will add some uncertainty, I’d be more worried if the firm were to ignore it and continue with business as usual.

Facebook has 1.4 billion daily active users; with that kind of reach, it’s hard to imagine a scenario in which the company fails miserably. It’s smart to rework the site in order to keep users engaged, and the firm has plenty of other revenue opportunities to build out in order to keep shareholders of FB stock happy.

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Source: Investor Place 

The Key to Crypto Profits

Editor’s Note: In light of cryptocurrency’s recent pullback, we’re presenting an updated version of an article Adam originally wrote in November of last year. The message is simple: You should buy and hold… even though it can be hard not to panic-sell during sharp corrections like those we’re seeing today.


Dear Early Investor,

The key to making money in cryptocurrency is simple.

Buy. Hold.

That’s it.

Yes, you need good security too. But the most important thing is simply being able to hold on during volatile years.

Many are tempted to take profits after they’re up 2X or even 5X. Both would be a mistake (unless you desperately needed the cash).

Let me explain why…

Cryptocurrencies are a (potential) monetary revolution. Bitcoin could become a common investment asset and value transfer vehicle.

As I often point out, ownership today is tiny, with far less than 1% of the population owning any cryptocurrency at all.

But adoption is accelerating incredibly fast. Let’s look at some metrics.

Coinbase, the largest U.S. cryptocurrency exchange, was adding around 55,000 new accounts per day last November.

In a month, that’s 1.7 million new crypto (mostly bitcoin) users.

Let’s say half of those actually invest, and that they invest $3,000 on average (less than half a bitcoin). I suspect this may be a conservative average, but it’s hard to say.

This influx of new buyers from Coinbase would add more than $2.5 billion in buying pressure per month (if they each bought less than half a bitcoin).

The total value of all 16.6 million bitcoins in the world today is around $140 billion, with each coin being worth around $8,315 as I write this.

On the supply side, 1,800 bitcoins are currently being “mined” per day. Not all of those are sold, but let’s pretend they are for this example. That’s $15 million in selling pressure from new coins per day. In a month, that’s $449 million worth of new bitcoins mined.

So from just one exchange, we have perhaps $2.5 billion in new buying pressure. And selling pressure from new coins is just around $449 million.

Let’s also factor in the following:

  • Bitcoin owners are loyal and tend to stick around.
  • There are dozens of other large crypto exchanges around the world.
  • There’s been an influx of 130-plus hedge funds looking into crypto.
  • There will only ever be 21 million bitcoins.
  • CME Group has launched crypto futures.
  • Now that crypto futures are live, bitcoin ETFs are likely to follow.
  • The big money players are dipping their toes in this market.

And there you have a recipe for a feeding frenzy of epic proportions.

Upside for Altcoins

Cryptocurrency owners tend to fit a pattern: They buy bitcoin first and fall in love with the idea of independent money.

Holders tend to do very well on their bitcoin, and eventually some of these profits make their way into “altcoins,” or alternative cryptocurrencies.

The lure of altcoins is simple. Many of them have borrowed from bitcoin’s code (it’s free to use), but have improved it in important ways.

They’re trying to beat bitcoin in transaction speed and cost (and a few are succeeding wildly). Competitors like Ethereum create additional functionality, such as the ability to execute “smart contracts” on the blockchain, leading to endless potential applications.

Bitcoin will always have a special place in my portfolio. I’ll always own some. But much of my time is now spent analyzing its competitors.

It’s an absolutely fascinating field. Competition keeps the technology moving very fast. Some of the most talented developers in the world are racing to make their coins the best.

To learn more about altcoins, you can check out our Crypto Asset Strategies service. We have a portfolio of four altcoins, user guides, research reports and more.

I think we’re just getting started.

Good investing,

Adam Sharp
Co-Founder, Early Investing

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Source: Early Investing 

Wondering Why Your Package is Late? Stocks to Buy for Trucking Boom

While the advancement of electric trucks is the headline grabber, the real news in the sector is that the U.S. trucking industry is enjoying a period of prosperity it hasn’t seen in years. Let me explain…

As I have written about many times, the U.S. economy has joined with nearly every other economy around the globe in a period of synchronized economic growth that the world has not seen in over a decade.

That is great news for a number of sectors and for us as investors. It makes even a supposedly boring industry like trucking filled with excitement over the growth opportunities.

U.S. Trucking Boom

We just experienced a robust Christmas season for retailers. In fact, it was the best since 2011. When you add in that manufacturers are also shipping more cargo – industrial production recently experienced the largest year-over-year gain since 2010 – it makes it a great time to be in the trucking industry.

We saw the ratio of loads in need of movement to trucks available in December hit the highest level on record. Then, in early January, just one truck was available for every 12 loads needing to be delivered according to online freight marketplace DAT Solutions LLC. That was the most unbalanced marketplace since the aftermath of Hurricane Katrina in October 2005. Moving into late January, that number only dropped to one truck for every 10 loads.

Related: Top 3 Electric Vehicle Stocks to Buy Instead of Tesla

This is significant since January is typically a quiet month for the industry. Yet this year, the national average spot truckload rates have been higher than during the peak season in 2007.


That has led to rising costs to get something shipped. The spot rate to hire a 53-foot tractor trailer has risen by 24% over the past year to over $2 per mile. Of course, many companies are being forced to pay a lot more than that if they want to jump to the front of the line and definitely have their goods delivered on time.Not surprising then that the consultancy FTR said the rate of active truck utilization stood at 100%, versus a 10-year average of 93%. In other words, there was no excess capacity in the system.

The situation is likely to get worse in April when produce shipments pick up. And this year we have a special factor – the full enforcement by the federal government of the ELD rules kicks in. An ELD is an electronic logging device in truck cabs that will monitor whether truck drivers are getting the amount of rest required by law. Truckers will be limited to driving only 11 hours per day. Trucks without the devices may be removed from the road.

All of these factors add up to great news for the stocks of companies involved in trucking and logistics. One such company is XPO Logistics (NYSE: XPO), which I will discuss in a moment. But there is also another obvious beneficiary of this boom.

Truck Manufacturers Also Booming

That beneficiary happens to be the companies that manufacture heavy-duty trucks. December saw the most Class 8 trucks (that most commonly used on long-hauls) ordered in three years. According to ACT Research, there were 37,500 such vehicles ordered, a rise of 76% from a year earlier.

And January was even a better month for the truck manufacturers! There were 48,700 heavy-duty trucks ordered. That is double the year-ago level and is the most big rigs ordered in 12 years.

The top truck manufacturing companies include: Daimler AG (OTC: DDAIY)Navistar International (NYSE: NAV), and a company that I’ve spoken about before with regard to electric trucks, Volvo AB (OTC: VOLVY), which is the world’s second-largest truck manufacturer.

On January 31, Volvo raised its forecast for the U.S. truck market saying that it expected deliveries to rise 7%. It said this would bring the company much closer to its goal of lifting operating profit consistently above 10% of revenue.

As I said, Volvo is a leader in the electric truck segment too. It is testing a hybrid powertrain for long-haul heavy-duty trucks that is all part of its Super Truck project working in conjunction with the U.S. Department of Energy. Here are some of its features:

  • It recovers energy when driving downhill on slopes steeper than 1%, or when braking. The recovered energy is stored in the vehicle’s batteries and used to power the truck in electric mode on flat roads or low gradients.
  • It also has an enhanced version of Volvo Trucks’ driver support system I-See, which has been developed specially for the hybrid powertrain, which analyzes the upcoming topography using information from GPS and the electronic map.

For long hauls, it is estimated that the hybrid powertrain will allow the combustion engine to be shut off for up to 30% of driving time.

Two U.S. Trucking Opportunities

Two U.S.-based firms that I like as beneficiaries of this ongoing trucking boom (which I can expect to last into 2019) are the aforementioned XPO Logistics and Navistar International. Here are some details on these two companies for you…

XPO Logistics is a top ten global logistics firm with operations in both logistics and transportation in 32 countries. Customers trust XPO with an average of 160,000 shipments and over seven billion inventory units every day.

It currently generates about $15 billion in annual revenue, with about 60% of that coming from the U.S. The breakdown between its two segments shows that roughly 63% of revenue comes from transportation (trucking and brokerage), with the remaining 37% from logistics. The logistics segment includes e-commerce fulfillment and warehousing operations.

XPO actually owns 16,000 tractors; 39,000 trailers; 10,000 53-feet intermodal boxes, and 5,200 chassis.11,000 trucks are contracted via independent operators and it brokers more than one million trucks. XPO also owns 440 cross-docks and 767 contract logistics facilities.

It is also an innovator in the industry with the use of advanced robotics and automation and leading -edge software and cloud-based platform. These innovations helped XPO to be named the top-performing U.S. company by Forbes on its 2017 Global 2000 list.

Navistar International manufactures International brand commercial and military trucks, school and commercial buses as well as diesel engines. Trucks make up most of its revenues, generating 67.8% of the total in 2017. The company has issued positive guidance for 2018 saying it expects revenues to be in the range of $9 to $9.5 billion versus $8.6 billion in fiscal 2017.

The company should benefit from the launch of new products. In order to strengthen the Class 8 lineup, the company introduced a new 12.4 liter engine – A26 – in February 2017. This new lighter-weight engine will provide a competitive entry to the company in the 13 liter segment, which constitutes about 50% of the Class 8 market. Navistar also started delivering new International brand vehicles with A26 engines. On the electric truck front, by 2019, Navistar plans to unveil an electric medium-duty truck in conjunction with Volkswagen.

A year ago (February 2017), Navistar unveiled a strategic alliance with Volkswagen’s truck division. Volkswagen purchased a 16.6% stake in Navistar for $256 million. This alliance should definitely broaden the company’s technology options and widen its range of products and services.

The lesson here is that you don’t have to limit your investments, if you’re looking for growth, to just sectors like technology or healthcare. Sometimes you can find growth opportunities in places you’d least expect.

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It’s Time to Go Long on This ETF While the Rest of the Market Panics

Let’s talk about big, long-term trends.

You know, those relentless economic and technological movements that promise to endure, no matter what’s happening in the stock market.

I’m talking about things that we can’t live without – like water or electricity – as well as fast-developing socio-economic trends like the shift towards greater use of robotics and automation.

I bring this up today because – as was inevitable – the markets are experiencing a sudden bout of serious volatility.

Following a whipping at the end of last week, the major indexes suffered a bloodbath to kick off this week, with the Dow shedding 1,175 points on Monday. It was the index’s biggest one-day points loss in history and the strong start to 2018 has been wiped out in the blink of an eye.

If you’re prone to panic… don’t.

Such volatility is something I’ve forewarned about a few times in recent articles – and I’ve given you a variety of investments to consider that are well-positioned to weather such storms.

But I’ve also highlighted companies that aren’t just defensive. They’re ones that should rise over the long term regardless – and are capitalizing on the robotics trend that I mentioned above.

These Two ‘Bots Are Rising

Specifically, I’m referring to ABB Ltd. (NYSE: ABB), which I profiled on November 30, and Brooks Automation(Nasdaq: BRKS), which I wrote about on December 14. Both stocks are up since I wrote about them.

As I noted in my original ABB piece, almost one-third of the firm’s annual sales come from its robotics business. And Frost & Sullivan recently recognized its prowess in this area with the 2017 Global Company of the Year Award for innovation in automation systems. The award was based on ABB’s industry-leading work in the Distributed Control Systems (DCS) industry. ABB connects 70 million smart devices via 70,000 automated control systems.

With Brooks, the company reported strong fiscal first-quarter earnings last week, with revenue totaling $189.3 million – up 18% over Q1 2017. Non-GAAP net income also rose by 35% over Q1 2017 to $35 million. That resulted in $0.32 EPS – up 25% and beating estimates by a penny.

For the current quarter, revenue is projected to hit $195 million to 205 million, with EPS between $0.33 and $0.41.

On a wider industry scale, the verdict is clear: The robotics and automation trend is growing. Fast.

  • The International Data Corp (IDC) projects robotics spending to surge to $230.7 billion in the five-year period to 2021 – with a CAGR of 22.8%.
  • The International Federation of Robots (IFR) says 1.3 million industrial robots will enter the global factory “workforce” this year. The figure will rise to 1.7 million by 2020.
  • The IFR projects even bigger growth for the service robot industry, with 32 million units in operation between this year and 2020. That will bring the market value to $11.7 billion.

As John Santagate, research manager at IDC Manufacturing Insights’ Supply Chain, says, “We continue to see strong demand for robotics across a wide range of industries.”

And as technology and innovation improves, the reach is spreading beyond just industrial and manufacturing, too. Dr. Jing Bing Zhang, research director at IDC Manufacturing Insights’ Robotics division, says. “The convergence of robotics, artificial intelligence, and machine learning are driving the development of the next generation of intelligent robots for industrial, commercial, and consumer applications. Robots with innovative capabilities such as ease of use, self-diagnosis, zero downtime, learning and adaptation, and cognitive interaction are emerging and driving wider adoption of robotics and enabling new uses in healthcare, insurance, education, and retail.”

He’s right. Growth here will continue for years to come – and I’m still positive on ABB and Brooks.

The past week’s market downturn also gives you a great chance to buy another investment on the cheap.

Go Robo

With volatility currently cranking higher, if you’re looking for a more diversified way to play this trend, take a look at the ROBO Global Robotics and Automation ETF (Nasdaq: ROBO).

Launched in October 2013, the actively managed fund (which includes both investment managers and industry experts) was the first to track global robotics, automation, and AI. It holds 89 stocks – including stalwarts like iRobot (Nasdaq: IRBT)and Rockwell Automation (NYSE: ROK) – with the $2.4 billion in assets divided equally among them.

In a testament to the strength of the industry, ROBO is coming off a stellar 2017, in which it gained 40%. It’s up 68% since inception.

With “lots of people looking at what’s going to happen over the next 5, 10, 20 years,” according to Global X Funds director of research Jay Jacobs, the robotics and automation trend is most definitely one place they’re looking. And as the industries continue to expand, heavily diversified funds like ROBO are right in the sweet spot of the growth.

Not only that, the market’s current downturn means you can buy shares for around 8.5% cheaper than a couple of weeks ago.

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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

Dump These Healthcare Stocks Getting Amazoned

Amazon.com (Nasdaq: AMZN) has often been referred to as the ‘Death Star’. In Star Wars, this was the ultimate weapon, capable of destroying an entire planet. Not a bad analogy, considering Amazon’s ability to totally disrupt the existing order of entire industries.

Next on the list of industries to be disrupted looks to be healthcare, as Amazon recently announced a partnership with Warren Buffett’s Berkshire Hathaway (NYSE: BRK.A and BRK.B) and JPMorgan (NYSE: JPM). The three behemoths are forming a not-for-profit healthcare firm whose goal will be to lower costs for the three companies nearly one million employees and “potentially all Americans”.

This is good news for American consumers. Here’s why…

The rising price for healthcare in the U.S. has meant health benefits now make up about 20% of total worker compensation, up from a mere 7% in the 1950s. This is likely one of the major reasons why we have wage stagnation in our country. Healthcare – emergencies and the cost of them – are also the number one reason for personal bankruptcies in the U.S.

Ripe for Disruption

But while the Amazon-led venture may be good for consumers, any company in the healthcare sector, except those that actually provide the care or manufacture medicines should be shaking in their boots.

The reason why was summed up nicely by Carmen Weelso, director of research at Janus Henderson, when she spoke to the Financial Times. She said, “The healthcare sector is ripe for disruption. [JPMorgan, Berkshire, Amazon] are potentially creating a model for something that is a lot cheaper than what is out there already.” Weelso added, “Healthcare margins are fat, and it is opaque how they make their decisions. Their profits have been great, so they’ve got a target on their back.”

This venture will be a competitive threat to all of the many middlemen in the healthcare sector. These include insurance companies, wholesalers and pharmacy benefit managers (PBMs). I’m sure the CEOs of these middlemen companies recall Jeff Bezos’ words: “Your margin is my opportunity.”

The U.S. simply has too many middlemen involved in its healthcare system. And so despite spending more per capita on healthcare than any other developed country, the US still ranks 12th out of the 12 wealthiest industrialized countries when it comes to life expectancy, according to data from the Organization for Economic Co-operation and Development (OECD).

So make no mistake – this venture is aimed squarely at those middlemen driving up the cost of healthcare. Warren Buffett said, “The ballooning cost of healthcare act as a hungry tapeworm on the American economy.” And he’s right – check out this graph on rising drug costs:

So what sectors are companies are in the crosshairs of these three giants of American industry?

First are the healthcare insurance companies. These include the top five U.S. insurers: UnitedHealthAnthemAetnaHumana and Cigna. UnitedHealth alone provides or manages employee health insurance for nearly 30 million people.

Next come the PBMs that negotiate drug prices on the behalf of insurance firms and employers. These include Express Scripts and CVS Health and UnitedHealth. These latter three are involved in the lives of 250 million people!

And while the drugmakers will not be affected directly – Amazon will not begin manufacturing drugs – they will be affected in so far as they may struggle trying to maintain premium pricing on their drugs.

What the Venture May Do

While no one yet knows what exactly the venture may do, I think their first target will be insurance.

Amazon, Berkshire and JPMorgan will “self insure” their employees on a not-for-profit basis. Importantly, they would likely invite more companies to join the initiative in the very near future.

Some large companies, including all the U.S. automakers, already fund their own insurance plans by keeping the premiums and setting aside capital for potential losses. But they have contracted with the health insurers and PBMs to manage the plans. That has left control and fat profit margins still in the hands of those firms. For example, Amazon uses Express Scripts as its PBM and JPMorgan uses both Cigna and UnitedHealth to meet its employee healthcare needs.

This alternative is definitely needed. According to the Kaiser Family Foundation, annual premiums for employer-sponsored family health coverage reached $18,764 last year, up 3% from 2016. Workers, on average, paid $5,714 towards the cost of their coverage with employers picking up the rest. You can clearly the rising cost of healthcare insurance:

The not-so-funny joke among those in charge of employee benefits is that they currently have no option but to deal with ‘CUBA’ – Cigna, UnitedHealth, Blue Cross, Anthem or Aetna. But now, there will soon be a much cheaper and very viable alternative in the form of this newly-formed Amazon-led venture.
Investment Implications

So what could the investment implications be for you? They’re pretty obvious.

It should give you another reason to own  Amazon, if you needed one. I think the ‘Death Star’ will be successful in disrupting another sector, benefiting American consumers.

And even though the middlemen companies will fight change tooth and nail (already the big insurers have voiced their ‘concerns’ to JPMorgan’s Jaime Dimon) I would avoid or sell the stocks of all these companies.

I would even go as far as, if you have a high risk tolerance, to look at shorting these two ETFs that are loaded with middlemen stocks, the iShares U.S. Healthcare Providers ETF (NYSE: IHF) and the SPDR S&P Health Care Services ETF (NYSE: XHS).

Get Your Hands on Stocks Growing Revenues (and Stock Prices!) Faster than Google and Apple

I’d like to reveal to you the blue chip stocks – one in particular – that could literally be worth millions of dollars to you over the next decade.

Revenues for one firm in particular is growing faster than that of Google and Apple, the darlings of Wall Street. Investors have watched the stock price shoot up over 100% this past year and we’re just getting started.

You need to get in this stock before April 1st (it’s closer than you think!).

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 

7 Stocks to Own Should the Latest Correction Get REALLY Ugly

It’s official. The latest correction in the markets has entered scary territory. If you’re one of the thousands of investors freaking out, you might want to consider these seven stocks to own should things get really ugly.

Boy, did it come out of the blue, or what?

The S&P 500 gained 5.7% in January. By the end of trading Feb. 7, it had lost more than 80% of those gains culminating with the index’s reversal of fortune.

Up 1.2% in the first few hours of February 7 trading, investors fled in droves, sending stocks for a 0.5% loss on the day, the fourth negative performance in five days of trading erasing more than a trillion dollars in market cap. 

Where to hide other than cash?

Here are seven stocks to own I believe can withstand whatever else this correction throws at investors.

You’ll note all seven have little or no debt, lots of free cash and as wide a moat as possible.

Happy investing.

Stocks to Own Should Latest Correction Get Really Ugly: Public Storage (PSA)

I recently moved from Toronto to Halifax, a thousand-mile change in residence. Not having moved in a while, my wife and I had accumulated a lot of junk.

It made me realize that people don’t like to part with their junk, hence the growth in self-storage facilities like the ones owned by Public Storage (NYSE:PSA).

There’s a two-step process. 

First, you realize your house is overloaded with stuff, so you rent a storage locker to declutter. Then after a few years, you forget why you had a storage locker in the first place, so you call someone like 1-800-Got-Junk to haul it away. And then you repeat the process over and over until you die.

I’m facetious, of course, but I’m sure there’s a grain of truth in what I’m saying. In good times and bad, people are always looking for storage space.

Last July, I called PSA a boring stock to own, which it is, because it operates in an industry that’s only going to keep growing as boomers downsize.

Since recommending its stock, it’s down a little more than 10%. At the time, I thought it was cheap; it’s even cheaper today. It yields an attractive 4.3%. 

Stocks to Own Should Latest Correction Get Really Ugly: Acuity Brands (AYI)

Stocks to Own Should Latest Correction Get Really Ugly: Acuity Brands (AYI)

Source: Shutterstock

Consider this my contrarian pick of the bunch.

Acuity Brands, Inc. (NYSE:AYI) specializes in lighting solutions for homes and businesses. It has been in an awful funk in recent years after going on a big run that saw its stock deliver annual returns of 29%, 62%, 29% and 67% between 2012 and 2015.

In January, I called Acuity Brands one of the ten stocks that could surprise in 2018. That’s on top of recommending its stock on two occasions in 2017.

Since my article, it has lost another 20% on top of the 24% it lost in 2017.

A glutton for punishment, I can’t ignore the fact analysts expect it to earn $9.40 a share in 2018 and $10.23 in 2019. That’s less than 15 times its forward 2019 earnings.

Considering its P/E ratio hasn’t been this low since 2008, I see Acuity as a smart buy in a market that’s taking down overpriced stocks.

Stocks to Own Should Latest Correction Get Really Ugly: Hormel Foods (HRL)

When times get difficult, many people eat to forget their problems. A company like Hormel Foods Corp (NYSE:HRL) can help with that. Some of its brands have been around for years such as Spam, its mystery meat product in a can.

Hormel as increased its dividend for 52 consecutive years. In times of market volatility, it’s nice to know you’re going to get paid regardless of what happens to the stock price in the interim.

In October, Hormel announced that it was paying $850 million to acquire Columbus Manufacturing, Inc., a California business that specializes in premium deli meats under the Columbus brand. Together with its other deli brands Hormel and Jennie-O, it allows the company to provide a stronger offering to grocery stores in the refrigerated foods aisle.

Accretive to earnings in both 2018 and 2019, this is an excellent example of a strategic investment that will transform this segment of Hormel’s business.

Hormel stock has flatlined since early 2016. The Columbus acquisition should help get it unstuck. Until it does, a 2.3% yield isn’t a bad trade-off for a stock that’s trading at 17.5 times cash flow, its cheapest valuation since 2012.

Stocks to Own Should Latest Correction Get Really Ugly: Tractor Supply (TSCO)

Stocks to Own Should Latest Correction Get Really Ugly: Tractor Supply (TSCO)

Tractor Supply Company (NASDAQ:TSCO) serves the rural lifestyle. Its combination of product offerings provides a nice contrast to retailers like Walmart Inc (NYSE:WMT) and Home Depot Inc (NYSE:HD).

In the last couple of years, TSCO’s stock has missed out on the broader rally in the markets and now trades in the high $60’s, well off its all-time high of $97, hit in May 2016.

Its recent earnings results are encouraging — same-store sales up 4% in Q4 2017 compared to 3.8% a year earlier; transactions were up 2.7% and average ticket increased 1.3% — but it needs to work a little harder on keeping margins in check if it also wants to grow the bottom line.

A big reason for the 120 basis point increase in its Q4 2017 SG&A expenses is Tractor Supply continues to work on providing a better customer experience through technology and employee training and those things cost money.

In 2018, TSCO sees comps of at least 2%, net income of between $490 million and $515 million, and net sales of at least $7.69 billion.

In the past week, TSCO stock’s seen a 12% slide in its share price and is now trading at 16.7times its forward earnings, which is well below its average P/E ratio over the past decade. 

Perhaps, this too is a contrarian pick for a volatile market, but I see a stock that’s taken a beating for far too long and is ready to come to life.

Stocks to Own Should Latest Correction Get Really Ugly: Carter’s (CRI)

Stocks to Own Should Latest Correction Get Really Ugly: Carter’s (CRI)

Source: Shutterstock

When it comes to buying clothes for babies and young children, Carter’s, Inc. (NYSE:CRI) has the upper hand on the rest of retail. Between the Carter’s and OshKosh B’gosh brands, many new parents make it a must visit, hence why it’s the largest branded marketer of apparel to these two age groups.

Sure, we might not be having kids at the same rate as in the past, but we’re definitely willing to spend money on those we do bring into the world. We’ll forego buying ourselves a nice pair of pants to buy that cute jumper for our newborn.

In Carter’s Q3 2017 results announced at the end of October, it had notably strong U.S. results. Retail same-store sales increased 2.6% on the strength of eCommerce comp growth of 20.9%, offset by a 3.2% decline in brick and mortar sales.

Interestingly, that’s not necessarily a bad thing for the company. As customers become accustomed to the fit of its clothes, it makes sense for returning buyers to purchase online saving themselves time.

Omnichannel means you’re sometimes going to see store comps contract as eCommerce grows. It’s a fact of life in the new retail.

Carter’s continues to drive margins higher generating record free cash flow which it uses to buyback shares, pay dividends and keep debt low.

As long as people have kids, it’s a great stock to own in volatile markets. 

Stocks to Own Should Latest Correction Get Really Ugly: Church & Dwight (CHD)

Church & Dwight Co., Inc. (NYSE:CHD) not only is a great stock to own should the markets get really ugly, it’s one of the most consistent performers trading on the NYSE.

Back in 2016, I wrote about the consumer packaged goods company’s perfect record over the past decade. It hadn’t experienced a single year in negative territory. It’s carried on with that tradition notching gains of 5.8% in 2016 and 15.3% in 2017. 

The gains over the past two years seem insignificant compared to the S&P 500, but over the long haul, Church & Dwight has delivered for shareholders. A $10,000 investment in CHD stock at the beginning of 2008 is worth approximately $42,000. The same investment in the index is worth approximately $23,000 or 40% less.

The company has a proven method for building its business through acquisitions and organic growth. By focusing on a few healthy brands, it’s able to grow market share over time.

If you’re going to buy only one consumer defensive stock for your portfolio, Church & Dwight ought to be it.

Stocks to Own Should Latest Correction Get Really Ugly: Jacobs Engineering (JEC)

Stocks to Own Should Latest Correction Get Really Ugly: Jacobs Engineering (JEC)

Source: Shutterstock

While an infrastructure plan is said to be coming from the White House at any moment, Jacobs Engineering Group Inc (NYSE:JEC) is too busy to notice.

The professional services company just released its Q1 2018 results and they were very healthy with adjusted net earnings up 13% to $97 million or $0.77 a share with double-digit organic revenue growth from its professional services segment.

The company continues to integrate its 2017, $3.3 billion acquisition of CH2M, Colorado’s largest privately held company. Jacobs is excited about the future with CH2M a part of the company.

Jacobs raised its fiscal 2018 guidance for adjusted earnings from $3.75 a share to $4.05, almost a 10% increase, as a result of the lower corporate tax rate.

It finished the quarter with a backlog of $26.2 billion. As the company continues to focus on profitable growth, I would expect JEC stock to hold up well should the markets continue to correct.

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Source: Investor Place 

9 Dividends Due for a Raise in March

Dividend growth is the key to retirement because it fends off the effects of inflation. Even amid low inflation of 2% to 3% a year, a stagnant dividend will actually lose 2% to 3% of purchasing power a year. The only way to actually grow your income over time, then, is to invest in companies whose management makes rising dividends a priority.

That’s one reason you should buy stocks before their dividend increases. And we’ll review nine upcoming payout raises in a moment.

But there’s a second reason that’s coming to the fore of late: interest rates.

While the Federal Reserve has tried to put the spurs to interest rates with five bumps to the Fed funds rate since December 2015, bond yields haven’t cooperated much. The 10-year Treasury reached 2.6% in late 2016 and early 2017, but retreated each time. But near the end of 2017 and into 2018, rates went on the march again, and they’re now making another attack on 2.6% and higher.

Is the T-Note Back?

Why does that matter? Because low-growth stocks with 2% to 3% yields and flatlining dividend expansion are starting to look far less attractive to the higher security of American debt. Conversely, even modestly yielding companies that actually grow their dividends and have some potential for capital gains remain superior investments – after all, the only way for bonds’ yields to continue rising from here is for their prices to drop.

So let’s take a look at nine stocks (yielding up to 9%) that are due to up their payouts sometime in March. Here’s the list, in order of ascending yield:

Oracle (ORCL)
Dividend Yield: 1.5%

Tech stalwart Oracle (ORCL) is a relatively young dividend payer, having started a nickel-quarterly distribution in 2009 as the market began emerging from its bear fit. Since then, however, the company has well more than tripled its payout to 19 cents per share, including a 26.7% hike in 2017.

Oracle has been criticized for being late to certain technological trends, most notably the cloud, but Nomura’s Christopher Eberle recently slapped a “Buy” rating on the stock in part because the company has rectified that situation and now offers a deep suite of cloud-based business apps.

The promise in Oracle’s cloud and on-premise software has helped drive roughly Nasdaq Composite-meeting returns in the past 12 months. But investors will want to continue seeing robust growth in the dividend as well. An announcement on that front should come sometime in the middle of March.

Best Buy (BBY)
Dividend Yield: 1.8%

Pop quiz: Which stock has a better total return in the past five years: Best Buy (BBY), or Amazon (AMZN)?

Nothing Makes Sense Anymore

Yes, Amazon is a threat to companies across several industries, and Best Buy’s future is far from guaranteed. But to say that Best Buy figured out how to at least fend off the giant is both fair and accurate.

Also, don’t sleep on this retailer’s dividend. While other brick-and-mortar outfits have had to slow or stop their payout growth altogether, BBY has doubled its distribution since 2013.

If that’s to continue in 2018, Best Buy should let investors know either in very early March, or the waning days of February.

Vail Resorts (MTN)
Dividend Yield: 1.8%

Vail Resorts (MTN) – the operator of ski and other resorts in Vail, Colorado, as well as across the U.S. and the world – is one of several stocks I highlighted because their dividends could benefit from Republicans’ proposed tax overhaul.

Well, Washington delivered.

That means we should look ahead to Vail’s next potential dividend increase, which should be announced sometime in the early to middle part of March.

If past precedent means anything, this isn’t going to be a small hike. Vail’s payout has more than quintupled since 2013 to its current quarterly dole of $1.053 per share. That includes a robust 30% improvement in 2017.

American Tower (AMT)
Dividend Yield: 1.9%

American Tower (AMT) is one of the more interesting real estate investment trusts (REITs) out there. That’s because rather than owning apartments, office buildings or warehouses, it owns and operates wireless and broadcast towers and other infrastructure in the U.S. and abroad.

Here, its customers include the likes of Verizon (VZ) and AT&T (T), meaning it has its hand in most of the calls and mobile internet surfing going on in this country right this very minute.

AMT also stands out for its performance over the past year, in which the stock has gained 37% versus a 4% loss for the broader Vanguard REIT ETF (VNQ). That should continue going forward, in part thanks to a recent deal with Vodafone (VOD) and Idea Cellular to widen its exposure in India by roughly a third.

That in turn bodes well for the company’s dividend, which goes up not every year but every quarter, including a regular April distribution the company typically announces in early March.

American Tower (AMT) Has Separated Itself From the Pack

Colgate-Palmolive (CL)
Dividend Yield: 2.1%

Consumer staples giant Colgate-Palmolive (CL) needs to open up its purse strings.

The maker of namesake Colgate dental products and Palmolive soaps, as well as Speed Stick and other personal care brands, has grossly underperformed the broader market over the past year thanks to eroding growth and far better investing options in a rip-roaring market.

Why buy Colgate, after all, when the way is clear for the likes of Amazon (AMZN) and Alphabet (GOOGL)?

The only thing Colgate has going for it is its dividend, which the company has grown for 54 consecutive years – one of the longest streaks among the Dividend Aristocrats. But CL has been getting by not on generosity, but technicality; the company’s payout expanded by less than 3% in 2017.

With more profits in its pocket thanks to more favorable tax rates, Colgate needs to give its income-hungry shareholders something to cheer about. News on that front should come sometime during the first two weeks of March.

Signet Jewelers (SIG)
Dividend Yield: 2.1%

Signet Jewelers (SIG) – the corporate entity lording over the mall jewelry trinity of Zales, Kay Jewelers and Jared – has been a dog’s breakfast for more than two years now. Since October 2015, shares have lost nearly two-thirds of their value.

What hasn’t gone wrong? The company’s operational results have been propped up by the 2014 purchase of Zales, but the company clearly is suffering from a shopper exodus from malls. The company got cracked hard in late November after announcing a 20-cent-per-share loss and 5% year-over-year drop in same-store sales for its third quarter, then reduced its 2018 earnings guidance by about 14%.

It followed that up with a December report that the Consumer Financial Protection Bureau’s is exploring the company’s credit practices and promotional offers, with a particular eye on a law that forbids “unfair, deceptive, or abusive act or practice.”

The only thing shareholders have going for it is a token dividend that still only yields 2% despite its steep losses. Signet at least is solidly profitable, so investors should hope for another payout hike, which would be announced sometime in late March.

The CFPB Went to Jared

Realty Income (O)
Dividend Yield: 4.7%

Realty Income (O), the “Monthly Dividend Company,” is revered among income hunters for its frequent regular payouts and strong history of increases. As its homepage loudly boasts, the company has delivered 81 consecutive quarterly dividend increases and 570 consecutive monthly dividends paid.

It’s also a weird bird in that the increases don’t come in neat, three-month increments. For instance, O had been announcing dividend increases every January for the past few years, but came out swinging a little early with a December 2017 proclamation instead.

Realty Income also has a streak of dividend-increase announcements in mid-March. It remains to be seen whether the company will pop this one off early, too.

W.P. Carey (WPC)
Dividend Yield: 6.1%

W.P. Carey (WPC), like American Tower and Realty Income, delivers greater dividends every single quarter, and has been raising its payouts at that frequency for several years.

WPC, as a reminder, is a net lease REIT whose properties span a wide set of industries, from retail to automotive to hotels to even government entities. Some of its top tenants include German DIY retailer Hellweg, Amerco (UHAL)subsidiary U-Haul and Marriott (MAR).

W.P. Carey has been sliding of late in the wake of weak third-quarter results and a broader decline in the REIT industry. Nonetheless, the company should offer up another dividend improvement sometime in the back half of March.

W.P. Carey (WPC) Keeps Building Its Dividends

GameStop (GME)
Dividend Yield: 9.0%

GameStop’s (GME) long-term prospects look mostly doomed because of the growing migration of gaming to digital sales and downloads. Still, the company looked like it would have a flicker of hope at the start of 2017, given the launch of two systems: the Nintendo (NTDOY) Switch and the Microsoft (MSFT) Xbox One X and S.

No such luck.

GME shares have plunged 30% over the past 52 weeks while the S&P 500 has climbed nearly 24%. That has come despite a third-quarter beat and raised expectations for its fiscal 2017 comps, which improved from -5% to flat, to an improvement in the low to mid-single digits.

We’re still nowhere near dividend danger at the moment, considering GME is tracking $1.52 per share in annual payouts compared to $3.42 in trailing-12-month earnings. Thus, you can expect at least a token increase to the payout sometime in either early March or late February.

Revealed: The 7 “Must Have” Dividend-Growth Stocks for 2018

Life is too short to waste our time with middling dividends! Since share prices move higher with their payouts, there’s a simple way to maximize our stock market returns: Buy the dividends that are growing the fastest.

Don’t be fooled by modest current yields. They often don’t capture the growth potential (and it’s the dividend’s velocity that really makes us big money – not its starting point).

How to we buy high-velocity dividends, the dividend aristocrats of tomorrow? It’s a simple three-step process:

Step 1. You invest a set amount of money into one of these “hidden yield” stocks and immediately start getting regular returns on the order of 3%, 4%, or maybe more.

That alone is better than you can get from just about any other conservative investment right now.

Step 2. Over time, your dividend payments go up so you’re eventually earning 8%, 9%, or 10% a year on your original investment.

That should not only keep pace with inflation or rising interest rates, it should stay ahead of them.

Step 3. As your income is rising, other investors are also bidding up the price of your shares to keep pace with the increasing yields.

This combination of rising dividends and capital appreciation is what gives you the potential to earn 12% or more on average with almost no effort or active investing at all.

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Source: Contrarian Outlook 

Why These Cryptos Fail to Toe the Line

Most cryptos fell in January. All the big ones anyway. I’m talking about the top six (by market capitalization).

The seventh? That’s NEO.

It’s called “China’s Ethereum” by some. Like its American cousin, it specializes in smart contracts.

It nearly doubled in January, from $74.54 on January 1 to $145.76 on January 31.

NEO’s price follows its own path because its main applications will be in China, not the West. And the majority of investors are Asians, not Westerners.

As an investor in NEO, I must admit, it was nice to see.

And it wasn’t the only cryptocurrency to do so.

VeChain (VEN) is a top-20 altcoin. It shot up 146% in January. Like NEO, it’s another China-centric coin, developing blockchain solutions for Chinese companies.

Populous, currently ranked 23rd by market cap, rose 72% last month. Its platform, currently in beta, garnered some positive comments and interest from the crypto investment community.

The first week of February didn’t see a turnaround. As I write, bitcoin is already down another 20%… Ether is down 29%… and Litecoin is down 6% (but all three are now heading up!).

Like those in January, though, some coins have not fallen in line.

Tether, with a current ranking of 16 and a market cap of $2.2 billion, is holding its value so far this month.

So are a few other much smaller coins, like bitCNY. It has a cap of around $32 million.

BitCNY is a decentralized cryptocurrency based on the BitShares blockchain that is pegged to the Chinese yuan. The demand of bitCNY emanates from users who desire that the token get the same purchasing power as the yuan.

In a nutshell, bitCNY is a token that represents the amount of BitShares (BTS) equivalent to one yuan.

From around $0.14 at the end of January, as I write, the token is trading at $0.17, a rise of 14%.

Market pegged assets are NOT leveraged to sudden price booms like many other digital coins. They simply follow the price of the asset they are pegged with.

Because bitCNY operates differently from other coins, it can go up while the vast majority of coins go down.

Russian startup Revain, on the other hand, is a more typical crypto. The company built an unbiased feedback platform where reviews cannot be changed or deleted. Revain hopes to stop the spread of fake news and ratings manipulation.

Revain has a market cap of more than $300 million, ranked No. 58. Its price went up 18% in the first week of February.

Apart from Revain, bitCNY and Tether, 16 other coins are up in the month of February. Here’s a list of the top 12 as I write…

Source: Coinmarketcap.com

Two coins are up by triple digits and six by double digits.

But the only one that’s a top 20 coin by market cap is Tether (currently ranked No. 16).

Most of these coins are tiny. The top gainer, Quebecoin, has a market cap of $680,000.

Small caps can sometimes be manipulated. For example, bitcoin Diamond, the second-top-ranked coin, is extremely volatile, even for a cryptocurrency. Its volatility can be traced to suspected pump-and-dump schemes emanating from Asia.

Is that what’s happening with E-Coin (ECN)? Take a look at its seven-day chart…

As I write, it’s up almost 4,000% in the last 36 hours. And I can’t figure out why!

Its price hike seems to have come from transactions totaling less than $50,000 that occurred on CoinExchange in the last 24 hours.

E-Coin is a European exchange service that works with bitcoin, Litecoin and dollars. It seems to be on the up and up.

But until I know for sure what’s going on, I’m keeping my distance.

The variety of cryptos you can buy and sell is truly amazing. But recent market activity seems to be ignoring that, not quite treating them as an undifferentiated whole but also failing to take into full account the huge differences in technologies and prospects among the cryptocoins.

There are very few that manage to break free of a falling market and rise.

Today, I’m seeing this dynamic again. The market has turned up, and I count only seven coins out of the top 100 that have gone down in the last 24 hours.

When there is a shortage of concrete metrics to go by, investment sentiment plays a bigger role in boosting or withdrawing support.

That seems to be the case here…

At least for now.

Good investing,

Andy Gordon
Co-Founder, Early Investing

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Source: Early Investing 

7 Top Takeover Targets for 2018

When the market experiences a sharp sell-off, savvy investors may choose to look elsewhere for their profit fix. Luckily enough, Morgan Stanley has just released a very intriguing report highlighting 15 stocks that are most likely to be bought in 2018. The firm singled out these acquisition targets by looking for large, liquid stocks from different sectors that are most likely to be acquired in the next 12 months. There is big value in identifying takeover targets correctly, as share prices tend to soar when a deal is announced.

From the list, we used TipRanks to identify the top stocks with a bullish Street outlook. Four of the seven stocks below boast a “Strong Buy” analyst consensus rating. Three of the stocks score a “Moderate Buy” analyst consensus rating — but for two of the stocks this is due to the lack of ratings more than than the sentiment itself. The advantage of these stocks is that they represent compelling investing opportunities — with or without a takeover deal.

TipRanks’ algorithms track and rank almost 5,000 Wall Street analysts. This allows us to: 1) see the overall analyst consensus and upside potential on any stock and 2) extract insights from the Street’s best-performing analysts.

So with this in mind, let’s take a closer look at what the Street has to say about these key stocks:

Top Takeover Targets: Domino’s Pizza (DPZ)

Domino’s Pizza Inc (NYSE:DPZ) has just experienced one of its busiest delivery days. The company expected to sell over 13 million pizza slices and 4 million chicken wings across the US on Super Bowl Sunday — boosted by multiple special offers on chicken wings and pizza toppings.

And, with strong U.S. growth under its belt, this pizza delivery giant scores a “Strong Buy” rating from the Street. This breaks down into eight buy ratings vs just two hold ratings. Meanwhile the average price target of $230 indicates upside potential of over 10% from the current share price.

Top Maxim Group analyst Stephen Anderson has a $250 price target on DPZ (18% upside). He says: “DPZ is one of our top industry picks as the valuation remains attractive.” Anderson also points out that for the first time, DPZ is now the market share leader in the Quick Service pizza category with 16.9% of total sales.

Top Takeover Targets: Graphic Packaging (GPK)

Top Takeover Targets: Graphic Packaging (GPK)

You’ve probably purchased food, beverages or other consumer products sold in packaging by Graphic Packaging Holding Company (NYSE:GPK). Immediately, we can see from the Street that GPK has a “Strong Buy” analyst consensus rating and big upside potential of 29% to boot.

RBC Capital’s Arun Viswanathan ramped up his $17 price target to $19 (23% upside) while reiterating his buy rating. He attributes the bullish move to 1) tax benefits for US-exposed packaging companies like GPK and 2) the recent $5 billion offer for KapStone Paper(NYSE:KS) from packaging company WestRock LLC (NYSE:WRK).

The deal, announced on Feb. 1, sees WRK pay a multiple of about 10x for KapStone. As a result of the tax reforms, GPK will now only pay a 24%-27% rate instead of 35.18% previously.

Top Takeover Targets: Pinnacle Foods (PF)

Top Takeover Targets: Pinnacle Foods (PF)

Pinnacle Foods, Inc. (NYSE:PF) is the business behind many famous food brands, including Birds Eye vegetables and Log Cabin syrups. Indeed its brands are so widespread that apparently  85% of US households have a Pinnacle Foods product in their kitchen right now. But most interesting of all is that Dan Loeb’s Third Point fund has just taken a stake in PF- leading the takeover rumor mill to work overtime.

Stephens analyst Farha Aslam reiterated her buy rating on Jan. 29 with a $65 price target (11% upside). She is convinced that if Loeb spearheads an activist campaign it would be for a sale instead of simply operational or management changes. Aslam suggests food giants ConAgra Foods (NYSE:CAG) or Tyson Foods (NYSE:TSN) as potential buyers with a valuation of around $67-$70 per share. Indeed Tyson Foods is not afraid of big purchases. It acquired sausage company Hillshire Brands for a whopping $8.55 billion back in 2014.

From a Street perspective, this “Strong Buy” stock has received 100% Street support over the last year. On the basis of the last three months alone, analysts see Pinnacle spiking to $67 (15% upside) from the current $60 share price.

Top Takeover Targets: Express Scripts (ESRX)

Top Takeover Targets: Express Scripts (ESRX)

Express Scripts Holding Company (NASDAQ:ESRX) is the largest pharmacy benefit management organization in the US. TipRanks reveals that the company has a “Strong Buy” analyst consensus rating from best-performing analysts. Indeed JP Morgan’s Lisa Gill calls ESRX her top pick in Healthcare Technology & Distribution for fiscal 2018.

But most exciting here is the recent upgrade by RBC Capital’s George Hill. On Jan. 31 he ramped up his price target from $68 to a very bullish $91 (31% upside potential).

Hill reaffirms Morgan Stanley’s selection and says that Express Scripts looks like an attractive M&A target as “one of the few remaining assets at scale”. He also cites the “recent sharp pullback on Amazon.com, Inc.’s (NASDAQ:AMZN) healthcare entry” as de-risking the stock.

Top Takeover Targets: W.R. Grace (GRA)

Top Takeover Targets: W.R. Grace (GRA)

This U.S. chemicals conglomerate has only received two recent analyst ratings — hence its “Moderate Buy” analyst consensus. However, both these ratings are firm buys. In particular, we can see that KeyBanc’s Michael Sison highlights the opportunity for large M&A as one of W.R. Grace & Co.’s (NYSE:GRA) ongoing catalysts.

Indeed, the company has just signed a $416 million deal for Albemarle Corp’s (NYSE:ALB) polyolefin catalysts and components business for $416 million. Sison highlighted the company’s improving results and reiterated his buy rating with an $87 price target (24% upside).

Top Takeover Targets: Allergan (AGN)

Barclays’ Douglas Tsao has just upgraded Botox maker Allergan Plc. (NYSE:AGN) from “hold” to “buy.” The move comes with a bullish $230 price target (39% upside) up from $220 previously. Tsao’s shift in sentiment, after over three years on the sidelines, comes from the company’s market-leading Botox position. And he doesn’t see any cause for concern any time soon:

“While Revance’s RT-002 and, to a less extent, Evolus, represent competition, we expect Botox will retain its market leadership,” Tsao wrote on January 29. “Especially in the case of Revance, we expect new entrants to drive market expansion from current levels.” As a result he calls the Irish-based company’s aesthetics business “undervalued at current levels.”

However concerns over the stock’s longer-term outlook have led to its more cautious “Moderate Buy” analyst consensus rating. In the last three months Allergan has received nine buy ratings. However these are offset by five hold ratings. Analysts (on average) see the stock rising 29% to hit $213 in the coming months.

Top Takeover Targets: Six Flags (SIX)

Six Flags Entertainment Corp (NYSE:SIX) is one of the world’s largest theme park operators with over 135 rollercoasters to its name. Top B.Riley FBR analyst Barton Crockett is bullish on theme parks in general- and SIX specifically.

Despite a volatile 2017, Crockett is confident the stock “can maintain a premium multiple because of exposure to high-margin international licensing, a unique focus on share repurchase, and a tendency for attractive growth (ex-natural disaster interruptions from fires, earthquakes and hurricanes that impacted 2017.)” He reiterated his buy rating on Jan 26 while ramping up his price target from $71 to $78 (21% upside potential).

Bear in mind that SIX also pays out a lucrative dividend. Wedbush’s James Hardimananticipates that SIX will pay a 4.2% dividend yield on his estimated 2018 dividend payout of $3.18. Hardiman sees SIX at $76 vs the current share price of $65.

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Source: Investors Alley

3 High-Yield Energy Stocks Ready to Climb After Exxon Mobil’s Blunder

Recent good news out of the energy sector has been masked by the stock market pullback and a not-so-great earnings report from Exxon Mobil (NYSE: XOM). However, beneath the noise exists some attractive total return potential for dividend investors in energy infrastructure services companies.

Here are some of the details about the current state of U.S. energy production.

 

  • Last week the Energy Information Agency (EIA) announced the U.S. had surpassed 10 million barrels per day of crude oil production. Production had not been at the 10 million bpd level since 1970. This is double the crude production 10 years ago.
  • Net imports of 2.5 million bpd are at the lowest level since 1973 and 7.5 million bpd lower than a decade ago.
  • S. natural gas production has grown by 37% over the last decade. Liquid natural gas (LNG) exports started in 2016 and are rapidly ramping up.
  • Polyethylene, the basic material of plastics, production uses natural gas as its raw material. Domestic and foreign chemical companies are building new polyethylene production plants in the U.S. to source inexpensive natural gas. By 2021, Texas will be the largest producer of ethylene by steam cracking in the world. Louisiana is also a hot bed for new production plants.

The growth in both upstream production and downstream demand for crude oil and natural gas puts energy midstream infrastructure companies in a very good position for growth and profits. These are the companies that provide the gathering, processing and transport of energy commodities from the production plays to the end users.

Related: Getting Paid 15% in Monthly Dividends From The Growing Energy Sector

Another beneficial change for many investors is a reduction in the use of the master limited partnership (MLP) structure by a number of energy midstream companies. The challenges of the previous three years pushed these companies back into the corporate structure. This means investors can buy higher yield energy midstream stocks and earn regular dividends. With these companies investors receive IRS Forms 1099 and not the unpopular Schedules K-1.

Here are three energy infrastructure companies that have restructured in recent years and are now poised to grow revenues, cash flow and dividends.

At the time of its 2010 IPO, Targa Resources Corp (NYSE: TRGP) owned the general partner interests in the midstream MLP, Targa Resources Partners LP (NYSE: NGLS). When energy prices crashed in 2015, the separate general partner and MLP business arrangement was an expense drag on the companies. In early 2016 TRGP completed the purchase of all NGLS units, which eliminated the general partner expenses. Currently Targa Resources operates four business units providing the following services:

  • Gathering, compressing, treating, processing, and selling natural gas.
  • Storing, fractionating, treating, transporting, and selling NGLs and NGL products, including services to LPG exporters.
  • Gathering, storing, terminaling and selling crude oil.
  • Storing, terminaling, and selling refined petroleum products.

TRGP yields 7.7% and has paid the current $0.91 per share dividend since the 2015 third quarter. I forecast that dividend growth will resume in late 2018 or early 2019.

Plains GP Holdings LP (NYSE: PAGP) was also a general partner interests company, owning GP rights from large cap MLP Plains All American Pipeline, LP (NYSE: PAA). Last year, the companies restructured, eliminating the GP interests and expenses. Now each PAGP share is backed by one PAA unit. PAA is a K-1 reporting company and PAGP reports tax info on a Form 1099. In all other respects, they are shares of the same company with the same dividend rates.

Plains owns the largest independent network of crude oil and natural gas liquids pipelines and storage facilities. The company handles more than 5 million barrels of oil per day. The dividend rate was reduced twice in the past two years as the company struggled to cope with the crash in crude oil prices. The business finances are now very secure, and I expect the dividends to start growing again in 2019. PAGP yields 5.9%.

ONEOK, Inc. (NYSE: OKE) is another former general partner company that bought in its controlled MLP, ONEOK Partners LP. ONEOK completed the roll-up transaction in June 2017. This midstream company focuses on providing natural gas infrastructure services. Operations include a 38,000-mile integrated network of NGL and natural gas pipelines, processing plants, fractionators and storage facilities in the Mid-Continent, Williston, Permian and Rocky Mountain regions.

After the ONEOK Partners merger was completed, ONEOK increased its dividend by 21%. In January this year, the company again boosted the payout, increasing the dividend by 3.4%. Company EBITDA is forecast to increase by 20% in 2018 compared to last year. Management has given dividend growth guidance of 9% to 11% per year through 2021. OKE yields 5.3%.

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