Monthly Archives: April 2018

Cryptocurrency

Startup Raises $133 Million to Build a Stable Cryptocurrency

A startup called Basis has raised $133 million from top venture capitalists to build a “stable cryptocurrency” (also called a “stablecoin”).

A stablecoin is a cryptocurrency designed to eliminate the high volatility associated with most coins. The goal is to smooth out the ups and downs so the stablecoin is usable as an everyday currency.

Basis plans to stabilize its price by controlling coin supply, increasing it when demand is high and decreasing it when demand is low. It also mentioned possibly letting the coin’s price rise when the algorithms detect inflation. This is similar to how a central bank operates (or should operate).

The tagline on Basis’ site reads “A Stable Cryptocurrency With an Algorithmic Central Bank.”

Here’s an excerpt that describes the goal from Basis:

When demand is rising, the blockchain will create more Basis. The expanded supply is designed to bring the Basis price back down.

When demand is falling, the blockchain will buy back Basis. The contracted supply is designed to restore Basis price.

The Basis protocol is designed to expand and contract supply similarly to the way central banks buy and sell fiscal debt to stabilize purchasing power. For this reason, we refer to Basis as having an algorithmic central bank.

Basis does not plan to “peg” its price to the dollar like other successful stablecoins such as Tether (USDT) have done. Tether is currently the largest stablecoin, with a $2.3 billion market cap. (It trades within a tight range, around $1.)

Basis’ coin isn’t live yet, so we don’t know exactly how it will work in the real world. But the venture capitalists who are investing in this project clearly see huge potential.

The first signal is how much it raised: $133 million. That’s a monster round of funding for such a young company. The average funding round for a company at this stage is typically a few million dollars.

And the investors in this round include many of the best early-stage investors in the world. I almost never see a round of funding from such a prestigious group as this.

Let’s take a look at a few of the VC firms that just invested in Basis, a startup that says it’s “building a new monetary system.”

  • Bain Capital Ventures: Manages $3.1 billion. Early investments include LinkedIn, Optimizely, Jet and Digital Currency Group.
  • Andreessen Horowitz: Manages $2.7 billion. Early investments include Facebook, Skype, Reddit, Oculus and Box.
  • Google Ventures (venture arm of Google): Manages $2 billion. Investments include Uber, Box, Jet and Nest.
  • Lightspeed Ventures: Manages $4 billion. Early investments include Snapchat, DoubleClick and Brocade.

Don’t let the fact that these guys manage “only” $2 billion to $4 billion deceive you. That’s how much they’ve raised. They’re worth much more once you include the value of all the shares they hold and past profits. Lightspeed, for example, made $2 billion on its $8 million investment in Snapchat alone.

Other notable investors in Basis include leading cryptocurrency hedge funds Metastable and Polychain Capital.

This is a very powerful and influential group of investors. And they’ll need that power because they plan to take on one of the largest markets in the world: fiat money.

“Software Eating the World”

Andreessen Horowitz (usually called a16z) is a powerhouse in the venture capital world. Its investment thesis is that “software is eating the world.”

So it invests in disruptive technology companies. For example, it invested early in Skype, which, along with other chat platforms, disrupted the telecom business. It essentially killed the phone companies’ “long distance” business model.

In the case of Basis, a16z is investing in a startup that is attempting to disrupt the entire monetary system.

Competing with the dollar, euro and yen is an ambitious project, to say the least. Hence the $133 million monster round of funding…

If it can pull it off, it will be behind one of those technologies that could truly change the world: independent, stable, secure and inflation-resistant money. A system like this could immediately be utilized both as a payment platform and a store of value.

I believe it’s extremely possible to do from a technological standpoint. I strongly believe that, using blockchain technology and cryptography, a better, stable currency can be built.

The chief difficulty will be resistance from “establishment” groups. Primarily, we’re talking about governments and banks – our modern political elites.

These folks like the monetary and financial systems just fine the way they are and will likely make it hard to build a truly competitive currency. They already discourage other assets (like gold) from being used as money, primarily through regulations and taxes.

But the establishment is fighting an uphill battle in the long run. Its system of ever-increasing debt, high expenditures and easy money will ultimately collapse. At some point, people will adopt crypto despite its drawbacks. This has already begun around the world.

We’re seeing this play out acutely in Venezuela today. In the first quarter of this year, inflation in Venezuela raged at 454%. Its total inflation rate over the last 12 months is a staggering 8,900%.

Unsurprisingly, bitcoin trading volume is at an all-time high in Venezuela. LocalBitcoin, a site that facilitates person-to-person bitcoin exchanges, saw volume in the country spike from $18 million in all of March to more than $55 million in just the last week.

And in a desperate (but calculated) move, the country launched its own cryptocurrency, the Petro, this year. Venezuela’s president just officially made it “legal tender,” meaning it can be used the same way as cash and is accepted as payment by the government.

The Petro aims to be a stablecoin of sorts too, with the government “backing” every coin with a barrel of oil. Again, it’s not clear if this experiment will work, and the country has a bad record financially.

The interesting thing is this almost certainly marks the beginning of a trend.

Stablecoins’ Massive Potential

Stablecoin projects are some of the most promising in the crypto world. They could offer the world an alternative to inflationary fiat currencies, which are usually losing value. And done well, they won’t have the extreme volatility of bitcoin and other traditional cryptos.

This could actually change the world. One day we might be paid our salaries in a stablecoin (or a basket of stablecoins).

I don’t believe stablecoins’ primary challenge will be technological. I’m confident better fundamental currencies can be built with blockchain tech and VC money.

Naturally, stablecoins don’t have the same profit potential as coins like bitcoin. They don’t have the appeal that has been a big part of crypto’s viral success.

But I’m betting those stablecoins that can find a balance between price appreciation and stability will be extremely attractive assets. A truly stable crypto investment would be incredibly useful. And if it has some price increase potential too, that would be great.

We’re going to see some amazing developments in the stablecoin space over the coming years. Clever models will emerge that reward holders, spenders and people who refer friends.

Good investing,

Adam Sharp
Co-Founder, Early Investing

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Source: Early Investing

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Big Oil Bets Big on Big Data to Increase Revenues and Cut Costs

President Trump is not the only one using the words “mission accomplished”. On April 13, the International Energy Agency (IEA) said that OPEC could use those words in its battle to reduce the global glut of oil that had been a problem since 2015.

The IEA said oil stockpiles had dropped dramatically over the past year and could dip below five-year average levels in the coming months. Lowering inventories to that level was a main target for OPEC and Russia when the two countries began to curb output in 2017 to balance an oversupplied market and bolster oil prices.

Falling inventory levels and rising geopolitical tensions in the Middle East combined to push oil to its biggest weekly advance, in the week ended April 13, in eight months – up nearly 8% – and it is still trading at the highest level since late 2014.

But that isn’t the big news in the oil industry. Instead, the real news is the effect that Big Data is having on transforming the entire oil industry.

Big Data, Big Results

The oil industry is finally starting to adopt the latest innovations in information technology. And it certainly needed to change. In late 2014, MIT Sloane Management Review and Deloitte scored the oil and gas sector’s “digital maturity” at only a 4.68 out of 10.

Techniques such as advanced data analytics – used by tech titans like Amazon and others to disrupt any number of consumer-related businesses, are now being applied to the energy industry. The end result should be similarly dramatic.

The opportunities being opened up by adoption of these techniques include analysis of rocks to target oil well placement more precisely in oil-bearing areas, oil reservoir models and seismic analysis to allow production to be maximized through the lifetime of an oil field, and automation along with predictive maintenance that can make oil field operations more efficient and cheaper while also enhancing worker safety.

There is the hardware side of this technological innovation too. For example, the Chevron Tengiz oil field in Kazakhstan, that will start production in 2022, will have about one million sensors collecting data! The cost of these types of sensors is falling while their sophistication is rising allowing for more and more data to be collected in all aspects of an oil field operation.

But the real difference today is the rise of cloud computing. This makes it possible to store and analyze data at a relatively low cost. That is important to an industry that generates huge volumes of data, (think temperature and pressure readings and video footage as well). And the amount of data is rising almost exponentially. Bill Brain, CIO at Chevron, told the Financial Times the volume of data the company handles has been doubling every 12 to 18 months.

But the problem up to now has been that oil companies have done very little deep analyses of the all the data they have. Most of it went unused. But now with cloud computing, the data can be collected and correlated in one central location.

The IEA estimates that oil production costs will be cut 10% to 20% by the adoption of digital technologies, although I believe the cost savings will be even greater. For instance, BP worked with a Silicon Valley start-up on an optimization model that was able to raise output in its 180 well pilot project by 20%.

Either way, the likely result of all this innovation in the oil industry will be even more oil being produced cheaply. Currently, companies are recovering only about 8% to 10% of the oil in place in many U.S. shale wells. So if adoption of new technologies could raise that rate by even a few percentage points, the results would be dramatic. The end result would be even more downside pressure on the oil price than caused by the advent of the shale revolution here in the U.S.

While this may not be good news for oil price bulls, the adoption of new technologies by the oil industry is great news for the companies that provide the technology – the oil service companies.

Oil Technology Investments

The number one company here is the world’s largest oil field services firm, Schlumberger (NYSE: SLB), which was founded in 1926. A sign of the change in its business since then is the fact that today it has a software technology innovation center that sits at the heart of Silicon Valley.

In 2017, Schlumberger launched a new software system called Delfi, which makes it possible to bring together and coordinate the way oil wells are designed, drilled and brought onstream into production. This allows Schlumberger’s clients to maximize output from an entire oilfield. The company also has worked with Nvidia in adapting its technology for viewing and analyzing seismic data.

The company’s hope is that, by the end of 2018, oil companies around the world will be using its new technologies “on a regular basis”. Schlumberger’s executive vice-president for technology, Ashok Belani, said to the Financial Times that adoption of this technology will cut production costs by 40% in U.S. shale fields within the next decade!

The next company is Halliburton (NYSE: HAL), which is the world’s number two oil field services provider. Like Schlumberger, it is also working with Nvidia on adapting technology for viewing and analyzing seismic data.

Last August, Halliburton announced a major partnership with Microsoft to ‘transform the oil industry in radical ways’. The goal is to digitize the entire upstream oil industry and improve exploration results through the application of deep learning and augmented reality to reserve estimates, modeling and simulations.

The two firms are collaborating in areas including machine learning, augmented reality and user interactions. Halliburton will use Microsoft’s HoloLens, Surface, Azure and its Internet of Things solutions.

Finally, there is Baker Hughes (NYSE: BHGE), which is currently 62.5% owned by General Electric. I expect GE to spin this off in the not-too-distant future.

The company also has a partnership (announced in 2017) with Nvidia, but this one involves using artificial intelligence (AI) to help extract and process oil and gas more efficiently. It believes that it is just scratching the surface of what AI can do for the industry.

It also has a California technology center that it shares with the software operations arm of GE. Baker Hughes uses GE’s innovative industrial software program, Predix, in oil and gas applications.

Schlumberger’s stock is up 4% year-to-date, but is still down over 10% over the past year. Halliburton’s stock is also up about 4% both year-to-date and over the past 12 months. Baker Hughes’ stock is also up nearly 4% year-to-date, but is down a whopping 21% over the last 52 weeks.

With the oil industry finally moving toward digitization, these stocks should have a brighter future ahead of them.

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Cryptocurrency

Four Investors With Bold Predictions About Bitcoin’s Future

Bitcoin Is a Gamble, Not an Investment

Source: Shutterstock

Last year, bitcoin exploded in value, going from under $1,000 a coin at the beginning of 2017 to an all-time high of nearly $20,000 on December 17.

Shortly thereafter, bitcoin entered a bear market, and is down nearly 40% since the beginning of the year. According to Google Trends, interest has steadily declined since its peak.

Bear markets, however, usually don’t last forever. Sooner or later, something happens that reignites the public’s interest and causes the bitcoin price to rise. For example, institutional investors such as endowment funds might decide to start dabbling in this new asset class.

Bear markets such as these tend to be good times for long-term investors to start accumulating an asset. Bitcoin currently sits at $8,200 a coin, but some see bitcoin going much higher in the not-too-distant future. Some of these figures have impressive backgrounds in the fields of finance and technology. They have made bold predictions in the past, some of which have come true.

Let’s take a look at four of the biggest bitcoin bulls.

Bitcoin Bull No. 1: Chamath Palihapitiya

Prediction: Bitcoin at $100,000 by 2020/2021, $1 million by 2037.

Chamath Palihapitiya ran AOL Instant Messenger and later served as an executive at Facebook, Inc. (NASDAQ:FB). He founded the venture capital firm Social Capital in 2011, which has invested in startups such as Box Inc (NYSE:BOX) and Yammer, which was acquired by Microsoft Corporation (NASDAQ:MSFT) in 2012.

He also is part-owner of the Golden State Warriors.

Palihapitiya got in early, having bought bitcoin at around $100 a coin. He owned $5 million in bitcoins in October 2013, when it was trading under $200.

Still, Palihapitiya thinks bitcoin can appreciate further. On December 12, he predicted that bitcoin would reach a price of $100,000 in three or four years, and $1 million within 20 years.

Palihapitiya is known for making bold predictions. As I noted in 2016, he sees Amazon reaching a market capitalization of $3 trillion. Last year, he predicted that Tesla Inc (NASDAQ:TSLA) would eventually capture 5% of the global market for cars and a $336 billion valuation.

Bitcoin Bull No. 2: Tim Draper

Prediction: Bitcoin at $250,000 by 2022 (April 2018).

Tim Draper was an early investor in Internet companies. In 1985, he founded the Silicon Valley venture capital firm Draper Fisher Jurvetson, which invested in Skype, Hotmail, Tesla, SpaceX and Baidu Inc (NASDAQ:BIDU).

He is also bullish on cryptocurrencies. On April 12, Draper predicted that bitcoin would reach a price of $250,000 by 2022. He sees cryptocurrencies like bitcoin eventually replacing fiat currencies such as the U.S. dollar and the Euro.

Why might this be?

Draper says that bitcoin, unlike fiat currency, “is not subject to the whims of some political force or another.”

Central banks such as the Federal Reserve, the European Central Bank and the Bank of Japan can always print more dollars, euros or yen. Indeed, they did this in recent years following the 2008 global financial crisis.

When more dollars are printed, the value of the dollar goes down.

This cannot be done with bitcoin. The total supply of bitcoins is permanently capped at 21 million.

Draper purchased 30,000 bitcoin in 2014 for $19 million. In September 2014, he predicted that the bitcoin price would reach $10,000 within three years.

This prediction came true. Bitcoin hit $10,000 on November 29, 2017.

Bitcoin Bull No. 3: John McAfee

Prediction: Bitcoin at $500,000 by 2020 (July 2017), $1 million by 2020 (November 2017).

John McAfee founded McAfee Inc., which sells antivirus software, in 1987. McAfee sought the Libertarian Party nomination for president in 2016. He also is an outspoken supporter of cryptocurrencies.

McAfee became chairman and CEO of MGT Capital Investments Inc. (OTCMKTS:MGTI), a bitcoin mining firm, in May 2016.

Later that year, the Securities and Exchange Commission (SEC) subpoenaed MGT, causing the stock to fall.

McAfee stepped down as chairman and CEO of MGT in August 2017 and left the company a few months later.

In July 2017, McAfee predicted that bitcoin would reach $5,000 by the end of the year and $500,000 by 2020. In November 2017, he increased this to $1 million.

Despite bitcoin falling in December 2017, he remained bullish, advising investors not to sell.

McAfee is even more bullish on privacy coins such as Monero, Verge and Zcash, which claim to be untraceable and anonymous.


Bitcoin Bull No. 4: James Altucher

Prediction: Bitcoin at $1 million by 2020 (November 2017).

James Altucher is an entrepreneur, angel investor, fund manager, and self-help guru. He founded StockPickr, which was acquired by TheStreet, Inc. (NASDAQ:TST) in 2007.

Like McAfee, Altucher thinks the price of bitcoin will reach $1 million by 2020.

In 2013, Altucher released his book Choose Yourself, which for several weeks was available for sale exclusively in bitcoin.

Altucher is bullish on other cryptocurrencies; in December he said he owned Ethereum, Zcash, Litecoin and Filecoin.

Altucher raised eyebrows in 2007 by stating that Facebook could become a $100 billion company, which it did in 2012.

Risks With Bitcoin

Cryptocurrencies are high-risk investments, and investors should understand these risks before they decide to buy bitcoin. Allianz SE (OTCMKTS:AZSEY) released a report last month calling cryptocurrencies a bubble at risk of bursting.

Richard Turnhill, chief investment strategist at BlackRock, Inc. (NYSE:BLK), said bitcoin is only for those who can ”stomach complete losses.”

For one thing, if your bank or brokerage fails, the FDIC or SIPC will step in to help you get your money back. This isn’t the case with cryptocurrencies, as Coinbase, a popular cryptocurrency wallet, notes on its site.

Investment risks tend to be even greater with altcoins, cryptocurrencies other than bitcoin.

But if you think bitcoin does have a future, now may be the time to buy.

As of writing, Lucas Hahn was long BTC, BCH and ETH.

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8 Long-Term Uptrend Stocks to Buy

Source: Emilio Kuffer via Flickr

In the early stages of an uptrend, it’s hard to tell just how far a stock will rally. Sometimes these trends are short-lived and “only” give us a 10% return. Other times though, these trends are good for several years and return 100% or more.

Telling the difference in the beginning is tough and too many investors take a pass on something because it’s up 10% or 20% in a few months. While there’s no such thing as a risk-free bet, they’re leaving a ton of reward on the table by avoiding the name simply because of its recent rally. It reminded me of a line from a great writer, Richard Saintvilus:

“One lesson, among many others, I’ve learned on Wall Street is that it’s never too late to make the right call. And if ever that proverbial train “leaves the station,” there’s nothing wrong to admit you were wrong and chase that train to get back on board — even if the ticket costs more to ride.”

A stock rallying from $105 to $125 in a few months is a lot and may make many feel they’ve missed the train. But what if we ignored a good fundamental situation because “it had rallied too much.” Ultimately nine months later that stock is sitting another $50 per share higher and we ignored it. We sat out a $50 per share gain because of its $20 rally? That doesn’t make any sense.

With that in mind, let’s take a look at 8 solid stocks that are still in an uptrend and may still have farther to go.

Uptrend Stocks to Buy: Netflix

Netflix, Inc. (NASDAQ:NFLX) has been on a mission, both in reality and in the stock market. The company’s goal is to become the leader in global streaming. With 125 million customers, it’s well on its way to fulfilling that leadership goal. Heck, its market cap is just $7 billion short of Walt Disney Co (NYSE:DIS).

That puts things in perspective a bit.

But NFLX stock has been even more impressive than the company. It’s up 132% over the past 12 months and 73% since the start of 2018. That’s paved a solid — if also explosive — uptrend for investors. Take note of the chart to see what I mean.

nflx stock in an uptrend

As you can see, Netflix stock has been a beast. Notice that when it started 2018, shares weren’t over $200 yet! Now we’re already over $300. The move has been intense, but so long as the trends stay in place it’s hard to bet against NFLX.

Over its previous highs and above $330, Netflix stock is basing nicely. Momentum is strong and the stock is not yet overbought (blue peaks on the chart). Should nearby support fail, investors would be lucky to gobble up the stock near $300. There should be support near this level, along with the 50-day moving average and a rising uptrend line of support.

Given that the company just beat earnings, revenue and subscriber estimates, as well as provided subscriber guidance that topped analyst estimates, I’d rather be a buyer on dips than a seller on rips.

Uptrend Stocks to Buy: Nvidia

Nvidia Corporation (NASDAQ:NVDA) has been one of the market’s best performers. If you bought this name at the start of 2016 and forgot how to hit the sell button, you’d be sitting on a 600% gain in Nvidia. While the move has been extraordinary, we could be setting up for even more gains.

nvda stock in an uptrend

Looking at the charts, it’s pretty obvious that Nvidia has been struggling to eclipse the $250 mark. On three separate occasions this year, shares have rallied to this point only to fail and stumble lower.

Thursday’s 3% selloff could setup NVDA stock to retest the 100-day moving average and uptrend support that’s been in place for almost a year. As much as investors would hate to see this level fail though, I would love to get a shot at NVDA near $200. At this level, it would have the 200-day moving average and decent support to hold it.

Just like January 2017 through May 2017, it’s good to see Nvidia digest some of its massive move over the past 12 months. If there are worries about waning demand due to cryptocurrency headwinds, then Nvidia stock could see a further decline — perhaps down to that $200 level we’re wishing for.

While this is one of the strongest uptrend stocks we’ve seen, remember it has massive gains over the past few years. Eventually a big pullback wouldn’t be a surprise. If $200 comes, it would be a 20% decline for the highs. I’d love to buy into its secular upside on a short-term selloff.

Until then, the $250 breakout is still in play.

Uptrend Stocks to Buy: Boeing

Boeing Co (NYSE:BA) went from a frustratingly stubborn stock to one that couldn’t be stopped. Consider that BA stock was flat from January 2014 through October 2016, almost a three-year lull. However, shares then exploded 90% in 2017.

So what now?

BA stock in an uptrend

It obviously wouldn’t be surprising to see Boeing stock settle down and consolidate a bit. Even bouncing between $300 and $360 for a few quarters would represent a relatively healthy consolidation period.

I like BA for its intense earnings growth, commitment to capital return and huge free-cash flow. It’s not the cheapest stock in the world anymore, but valuation and consolidation aren’t enough of a reason to sell the stock.

Shares still look great in the short-term, as our chart shows. Poking through resistance with plenty of support nearby, BA stock could retest its old highs if these patterns hold steady. It’s got bullish momentum and isn’t overbought yet either (blue circles on the chart).

Uptrend Stocks to Buy: Salesforce

salesforce.com, inc. (NASDAQ:CRM) has tripled since mid-2013, but its gains over the past 16 months have been truly impressive. Shares have quietly rallied 81% over that period, forming quite the uptrend in CRM.

crm stock in an uptrend

This is one of my favorite names, because despite its $90 billion market cap, it still flies under the radar. Alphabet Inc (NASDAQ:GOOGL), Amazon.com, Inc. (NASDAQ:AMZN) and Microsoft Corporation (NASDAQ:MSFT) get all the credit for their cloud businesses.

Despite CRM still churning out incredible growth, it seems to be much less discussed than it was a few years ago. That’s not stopping the analysts, though. They expect annual revenue of about 20% for the next four years. On the earnings front, estimates call for almost 60% growth this year and another 26% growth next year.

While CRM is pretty expensive on an earnings basis, its sales-based valuation is actually pretty reasonable versus its peers. CRM has better growth than most of its large cap competition and far superior financials and cash flow compared to its smaller competition. It’s in a real sweet spot right now. Lastly, the company has a very long runway for growth — as seen by the long-term revenue predictions — giving investors confidence to buy the stock today.

Investors could easily draw an uptrend line on CRM’s chart to highlight the stock’s robust rally. But just look at the 100-day moving average instead. All three major moving averages are trending higher, but each time Salesforce pulls back to the 100-day, CRM has an intense bounce.

Uptrend Stocks to Buy: Roper

Roper Technologies Inc (NYSE:ROP) has been in a very steady uptrend over the last year and a half.

In fact, Roper was and still is one of my top Future Blue Chip stocks. Known for robust revenue and earnings growth today, management has demonstrated a tangible commitment to returning capital to shareholders. The goal here is simple: Allow the company’s robust growth to drive shares higher over the long-term and cement its position in our portfolio with a low cost basis, while enjoying management’s continued commitment to raising the dividend once the business is more matured.

Rop stock in an uptrend

Well, ROP sure is delivering on the first part of our strategy: allowing strong growth to drive shares higher. Since the start of 2017, Roper stock is up more than 50% and is up more than 35% over the past year.

I’m definitely not ready to bet against Roper anytime soon. However, some may start to grow concerned over its valuation and growth profile. Analysts expect sales growth of just 6.1% this year and 7% next year. That’s good, but not necessarily great. While 17.5% earnings growth this year is very solid, estimates of just 8.5% next year is sort of lackluster.

It may make some wonder if ROP stock is worth 25 times this year’s earnings and 23 times next year’s estimates. On the chart though, Roper still looks great.

There’s pretty clear resistance between $285 and $290, while uptrend support currently sits around $270. The 100-day is support as well. If these support levels give way though, the 200-day moving average would be my downside target. If ROP stock breaks over resistance, consider buying the breakout.

Uptrend Stocks to Buy: Visa and MasterCard

Let’s do a double for this one: Visa Inc (NYSE:V) and Mastercard Inc (NYSE:MA). Both companies are huge beneficiaries of the same trend, as global consumers continue moving to credit and debit from cash and check. Further, growing e-commerce sales bode well for V and MA too, for obvious reasons.

V stock in an uptrend

The credit card business is attractive for many reasons, as V and MA serve as simple “toll booth” businesses. They don’t lend consumers money and they don’t take on big risks. Instead, when a consumer purchases goods or services from a merchant and pays via credit card, the merchant pays a fee that goes to V and MA.

While the pair of stocks may look expensive on a sales basis at first glance, the earnings-based valuation isn’t all that bad. Especially considering their double-digit earnings and revenue growth.

Throw in the fact that Visa has profit margins of almost 40% while MA has margins of 32% and we can see that these two are earning money hand over fist.

ma stock in an uptrend

Both stocks tend to trade with a high correlation. They’ve been in a steady uptrend since early 2017 and I hate that I’ve taken some off the table since I first initiated a position almost six years ago.

As V and MA both bump up against resistance, they look like they’ll soon push through to new highs, short of another market-wide selloff.

Uptrend Stocks to Buy: Raytheon

Like Roper, Raytheon Company (NYSE:RTN) is another under-the-radar company. However, its stock sure has become something to talk about, with shares up about 50% over the past 12 months.

While the rest of the market has been floundering, RTN stock is already up more than 21%. That’s what happens when a company makes anti-missile defense systems and the U.S. military has an annual budget of roughly $700 billion.

rtn stock in an uptrend

While the U.S. government utilizes other anti-missile defense systems — Lockheed Martin Corporation (NYSE:LMT) also makes one — the desire for countries to boost their defensive capabilities continues to increase. That’s no surprise given the tension on the Korean Peninsula and continuing conflicts in the Middle East.

Despite expectations calling for revenue growth of about 5% this year and next year, earnings are set to explode — no pun intended. Analysts are looking for 27% growth this year and more than 15% growth in 2019. With earnings growth outpacing revenue growth, look for margins to expand as well. If the government keeps spending like Trump has so far, expect more lucrative contracts in the future, too.

After flagging the stock as a potential breakout candidate earlier this month, the recent 52-week highs come as little surprise. Going forward, look for RTN to make even more highs so long as its uptrend support holds steady (as shown on the chart). Keep in mind, the average analyst price target sits at $240.

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Two Stocks to Buy Benefiting from Trump’s Tax Reform Law

With this year’s tax filing deadline date just past, it’s a good as time as any to take a look at a few special situations whose stock prices were hit because of recent changes in tax policies.

The first company I want to tell you about is one that has become a real life example of the law of unintended consequences…

Congress changed the way American corporations are taxed on their overseas earnings. Previously, firms were taxed at the 35% rate. But most companies avoided that by booking their income overseas and then keeping the money there.

So Congress came up with GILTI (Global Intangible Low-Taxed Income), which was set at 10.5%. Its main target was the tech and pharma companies that transferred their trademarks and patents overseas to avoid paying tax on them.

Kansas City Southern

But this new tax intended to tax overseas income earned by U.S. technology and pharmaceutical firms and their trademarks and patents has hit closer to home with the railroad company Kansas City Southern (NYSE: KSU), which has a substantial business in Mexico.

Even though its main assets are railcars (and not intellectual property) and it already pays a 30% tax in Mexico, it will also be hit by GILTI. That’s because of the way the new tax interacts with the treatment of foreign tax credits that are supposed to prevent two countries from taxing the same income. When companies figure out the credits they receive for paying taxes overseas, the law typically requires them to assign some of their domestic expenses to foreign jurisdictions.

The result for some firms like KSU is that, for U.S. tax purposes, their foreign income and foreign taxes look smaller than they actually are. This actually shrinks their tax credits and may force them to pay the GILTI tax on top of their foreign tax bills. In particular, it hits companies with operations in high-tax countries like Mexico, Germany and Japan.

So the net effect for companies like Kansas City Southern from the new tax law is practically nil, receiving almost no net boost. Nevertheless, I do like the company because of its large exposure to Mexico (it owns one of two large regional railroads in the country) and its 50% ownership in the Panama Canal Railway Company.

Record financial results have driven the stock higher in recent months despite fears over whether NAFTA negotiations between Canada, Mexico and the Trump Administration will end with a positive result. The stock is up 25% over the past year and 6% year-to-date. Here is a breakdown of its latest results (fourth quarter) by segment:

  • The Industrial & Consumer Products segment generated revenues of $147.1 million, up 8% year over year. While business volumes improved 10%, revenues per carload fell 1% year over year.
  • The Chemical & Petroleum segment had revenues of $137.7 million, up 24% year over year. Volumes improved 12% year over year. Revenues per carload rose 11% from the prior-year quarter.
  • The revenues at the Agriculture & Minerals segment were $121.7 million, down 1% year over year. Business volumes declined 9%, but revenues per carload were up 9% both on a year-over-year basis.
  • The revenues at the Energy segment were $69.8 million, up 15% year over year. Particularly impressive performance was the amount of frac sand the company hauled. Volumes increased 3% year over year and revenues per carload rose 11%.
  • Intermodal revenues were $97.4 million, up 5% year over year. Volumes improved by 7% and revenues per carload decreased 2% in the quarter.
  • Revenues at the Automotive segment came in at $60.6 million, up 15% year over year. Volumes improved 5% and revenues per carload increased 9%.

Other revenues totaled $26.1 million, up 16% year over year.

Bottom line… it is a solid company whose stock looks like a good buy anytime NAFTA headlines send it lower.

Tax Ruling Hits MLPs or Does It?

In March, there was also a ruling from the Federal Energy Regulatory Commission (FERC) that had tax implications. It closed a loophole that allowed some master limited partnerships (MLPs) with pipelines to be eligible for a tax recovery payment even though they paid no taxes.

Virtually all MLPs said the FERC ruling would have little impact on their cash flow. The only actual MLPs affected were those with substantial interstate oil and gas pipelines such as Enbridge Energy Partners, Williams Partners and Spectra Energy Partners.

The mass sell-off occurred even though U.S. energy production is reaching record highs. With the sector’s newly-found focus on good corporate governance and with yields approaching 10% in some cases, MLPs are worthy of renewed interest from you. With the fear over this FERC ruling did was simply to lower the valuations of the sector to levels that in the past turned out to be good buying opportunities.

After the ruling, the Alerian MLP index was trading at an 8% discount to the S&P 500 on the basis of price to projected funds from operations over the following year, according to FactSet. The only two other times in the past 10 years that saw a similar discount occurred in November 2008 and February 2016. What followed were rallies of 50% and 60% respectively in the index over the subsequent six month period.

If you’re looking for a specific MLP, I suggest you check out articles from my colleague, Tim Plaehn, who has lots of expertise in the sector. For broad exposure – since I believe the whole sector is so beaten-down – there are a number of exchange traded funds that fit the bill. The largest of these is the Alps Alerian MLP ETF (NYSE: AMLP), which has 27 stocks in it and is down over 23% in the past 52 weeks and more than 10% year-to-date, putting it in a bargain price range.

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Options

A Solid Trade Set-up for the Recent Return of Short Term Volatility

For the last couple years, perhaps no investing strategy was more popular than shorting volatility. The short volatility trade was the primary source of yield for many investors, both institutional and retail. With interest rates so low, selling volatility seemed like one of the few easy ways to generate consistent income.

There are several different ways to sell volatility, but using short VIX ETPs (exchanged traded products) was definitely the most popular, at least for the retail crowd. No doubt, institutions used these ETPs as well, but they also had access to several other products in the space (volatility swaps and other OTC instruments, VIX futures, etc.).

There certainly was evidence that mom-and-pop traders were using the short VIX ETPs to sell volatility. (And don’t forget the manager from Target who quit his job to start his own volatility selling fund.) Which is why when volatility exploded on February 5th, many non-institutional investors got hurt. The short volatility ETPs either imploded (XIV) or were substantially defanged (SVXY).

And then market volatility stopped going down.

You probably know the story. VIX (the Cboe’s S&P 500 volatility index) shot up above 20, which is roughly the long-term average, and it stayed there basically for two months. Of course, the VIX – a measure of implied volatility – shot up because realized volatility was also way up (i.e. the market was moving around a lot). However, it’s pretty clear that the lack of volatility sellers, and far fewer easy choices for selling volatility, added to the slow (or lack of) mean reversion.

At least until recently. Finally this week, the VIX dropped all the way to below 15, a level not seen since before the February 5th selloff. Does that mean the short volatility trade is back? We won’t know until we have a few more weeks of data, but at least volatility is beginning to behave like things are going back to normal.

What’s more, at least one big trader is betting a hefty sum that short volatility is the place to be right now. The trade is betting on volatility either dropping or staying where it is by selling calls in iPath S&P 500 VIX Short-Term Futures ETN (NYSE: VXX). VXX is the most popular ETP for trading short-term volatility.

To take a short position in short-term volatility using options, the easiest thing to do is buy puts on VXX. The next easiest thing to do is selling calls in VXX. Of course, with call selling you don’t have to have VXX go down, you just don’t want it to come back up. On the other hand, the risk is much higher when selling calls than with buying puts.

Anyhow, in this case, the trader chose to sell calls, over 17,000 of them in fact, with a June 1st expiration. With VXX at $40, the trader sold the 55 calls for $0.73. He or she collected over $1.2 million in premiums. Breakeven is $55.73, which is obviously quite a bit higher than where we currently are.

Even though $55 in VXX is an unlikely level to hit by June 1st, keep in mind that volatility moves really fast (just glance at the beginning of February in the chart above for a very clear example of this). Plus, there’s unlimited risk on this trade if volatility were to spike and remain high.  That’s why I’d rather buy puts to sell volatility.

For example, the May 18th 38 puts (the 30-delta puts) are trading for around $1.50. VXX needs to get to $36.50 for them to start making money but that’s very possible over the next month. Additionally, the most you can lose is the $1.50 per contract you spend on premiums.

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Dividends

How to Cherry Pick the Top Dividend Growers

Eric Ervin was making his rich client so much money that he suggested: “Hey, why don’t you just quit your job?”

The investor saw the opportunity to scale Eric’s “secret strategy” – and he wanted to help invest!

Both guys knew the power of dividend growth investing. But Eric’s second-level insight is what made them both a boatload of cash. He figured out a way to bet purely on the higher payouts – as close to a “sure thing” as you’ll ever see in stocks. Here’s what I mean.

Blue chip stocks tend to raise their dividend every year. Even if it’s a token increase, it keeps shareholders happy. Betting on S&P 500 dividend growth is steadier and better than wagering on price appreciation itself:

S&P 500 Dividend Growth (Blue) vs. Price (Gray)

Problem is, traditionally there’s been no way to bet on the blue line above. You’d have to buy the index and hope its price appreciates in tandem. Not as compelling a bet.

Well Eric figured out that he could buy “swaps” on S&P 500 dividend growth itself. He banks the steady upside for his Reality Shares DIVS ETF (DIVY) – which has methodically grinded higher year-to-date, unbothered by the drama in the broader markets:

Stocks Up? Down? DIVY Don’t Care

The genius of DIVY is that it capitalizes on the underappreciated annual tradition of dividend raises. For 42 of the last 45 years, S&P 500 companies have increased their dividends at large. And the swaps that Eric buys tend to be perennially underpriced – resulting in incredibly steady gains that track payout growth rather than price action.

Eric’s Newest ETF

Since launching DIVY, Eric and his team created a five-tier rating system called DIVCON that provides a snapshot of dividend health for individual companies. It combines and weights seven factors (such as cash flow, earnings growth, and shareholder payouts) to provide a comprehensive snapshot of a company’s dividend health.

DIVCON 5 is the best bucket. It means the dividend is in good shape, and there’s a 97.6% likelihood that it’ll be increased in the next year.

DIVCON 1 is the danger zone. It means the dividend is more likely to be cut than increased in the next 12 months.

Over the past 15 years, investors who would have traded off DIVCON ratings – buying the fives, and selling or shorting the ones, would have done quite well:

DIVCON’s Dividend Prescience

By now you probably know that higher payouts drive stock prices up in tandem. It’s why dividend growers have returned 10% per year for the past three decades, outpacing static dividend payers, dividend cutters and non-payers (according to Ned Davis).

But we can’t look in the rearview mirror to predict future dividend growth and stock returns. We need a leading indicator – like DIVCON.

And Eric is making outperformance easy for us individual investors. His Reality Shares DIVCON Leaders Dividend ETF (LEAD) buys DIVCON’s top 50 stocks and holds them for a year. Many of them boast dividend charts like these beautiful staircases:

Stairway to Payout Heaven

Everyone loves dividends, but dividend hikes are often underappreciated. Not only do they increase the yield on your initial capital, but they often are reflected in a price increase for the stock.

For example, if a stock pays a 3% current yield and then hikes its payout by 10%, it’s unlikely that its stock price will stagnate for long. Investors will see the new 3.3% yield, and buy more shares. They’ll drive the price up, and the yield back down – eventually towards 3%. This is why your favorite dividend aristocrat never pays a high current yield – its stock price rises too fast!

LEAD is a convenient way to get exposure to stocks that are “at-risk” of rapid share price appreciation. With DIVCON looking ahead, you can use this fund to create a diversified portfolio of the 50 blue chip stocks most likely to raise their dividends over the next 12 months.

The Sweet Spot: 8% Yields With Dividend Growth

But what if you need big dividend income today so that you can retire comfortably? After all, 2% or 3% just won’t cut it unless you’re rich already!

You can retire on as little as $500,000 today by focusing on stealth income plays such as closed-end funds, preferred shares and real estate investment trusts (REITs). In many cases, these issues pay secure yields of 8% or better – with dividend growth to boot!

This means you are assuring yourself of 10%+ annual returns, with most of that coming as cash dividends. These vehicles are safe, but they aren’t as well known as the usually-expensive dividend aristocrats. And that’s a good thing for us, because we can lock up secure income streams of 8% or more while enjoying payout growth and price upside to boot.

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Source: Contrarian Outlook 

Cryptocurrency

An Analyst’s Bullish $10 Trillion Case for Crypto

Dear Early Investor,

A broker from a big bank just did something I’d never do…

He put a number on the potential value of the blockchain market.

If you think, as I do, that blockchain technology will expand from dozens of uses to hundreds and then thousands, how can you calculate a precise market value for that?

It’s like Thomas Edison trying to predict in the late 1800s how much the electricity market would be worth a few decades into the 20th century.

Did he realize at the time that almost everything we now make and use, not just lights, would be electrified?

Probably not. How could he?

(And the one thing he thought would be electrified – vehicles – didn’t catch on until more than 100 years later!)

I believe at some point in the future (10 years? 20 years?), most of the services we’ll be using on a daily basis will be enabled by the blockchain.

Again, how can you put a price on such a ubiquitous technology?

Is it in the tens of billions? Hundreds of billions? More?

A Report From Deep Inside Wall Street

Here’s the best thing about the report this broker put together…

It doesn’t come from crypto investors talking their own book… initial coin offering companies hyping their future growth… or blockchain evangelists espousing best-case scenarios as a given.

Mitch Steves, the author of this report, is a traditional Wall Street equity analyst. He works for the RBC Capital Markets subsidiary.

His only connection to blockchain and crypto?

Among the companies in his bailiwick is NVIDIA because it makes graphics processing units for mining cryptocurrency.

By the way, he says the $4 billion-plus market for mining cryptocurrency is here to stay.

Steves says that blockchain technology is misunderstood – that store of value and payment use cases are the most commonly cited but “the least interesting.”

The single most “positive technology” breakthrough is the one staring us in the face: The blockchain, the underlying technology, HAS NEVER BEEN HACKED.

(And, in my opinion, it WILL NEVER be hacked.)

This is no small thing. Steves compares Box, a content management platform, with Filecoin, a decentralized blockchain equivalent, to highlight the differences…

With Box, your data is owned and controlled by a third party that has access to your information (a photo loaded can be retrieved by anyone with access to Box servers – employees). With Filecoin, your storage is distributed and decentralized, making the holders unable to retrieve your photo (they would need to hack every computer on the decentralized network – blockchain). Your information is now secure, and without your private keys, it cannot be accessed.

This is an early case of how a globally decentralized network of computers can work using the blockchain. Steves calls this network of computers the “World Computer.”

He says that same concept can be applied to a “wide variety of decentralized applications (aka ‘dapps’).”

I completely agree.

Rose-Colored Glasses?

What Steves is saying is reasonable and, frankly speaking, not entirely novel. People who aren’t paying close attention may be confusing hacks of exchanges and individual wallets (which has happened) with hacks of the blockchain itself (which has never happened).

But insiders have well understood the security benefits of putting data, transactions, assets, documents and sensitive information on the blockchain… and how the blockchain makes it fast, easy and secure to track these things.

But it’s nice hearing this confirmed by a big bank with no vested interest in the crypto or blockchain markets.

And because Steves hails from outside the crypto community, he openly acknowledges the “many risks to crypto.” No rose-colored glasses on him.

Among the risks, he lists the possibility of an attack if a single entity were to garner more than 50% of the computing power (which, I should add, would be near impossible).

Other risks mentioned? Coordinated attacks to manipulate prices… and the potential for smartphone wallet hacking.

The Worth of the Market?

How he arrives at this big round number turns out to be the most disappointing part of his 38-page report.

He basically took a third of the roughly $30 trillion in assets held in offshore funds and gold. Just a rough stab, in other words.

But perhaps that’s as it should be. At this early stage, trying to do anything more would be a reach.

We simply don’t know how big this number will be. Anybody who says differently is lying to themselves or everybody else.

However, I believe it will be a big number. Blockchain technology is driving a surge of innovation in the development of new protocols and blockchains.

There’s a long way to go. And nothing is a given at this point. But decentralized computer technology has the potential to reinvent huge swaths of the global economy.

With that kind of upside, even a modest investment could yield quite a large return.

Good investing,

Andy Gordon
Co-Founder, Early Investing

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Source: Early Investing 

Growth Stocks

5 Great Stocks to Take a Bite Out of China

Source: Maher Najm via Flickr

The fears of a trade war have sent the markets into a bit of a panic mode lately. Volatility has spiked and we’ve seen some pretty nasty intraday swings. But it’s not just U.S. firms that have felt the effects of the tariffs. Chinese stocks have also been hurt.

Since the war of words and tariffs, Chinese stocks have felt many of the same pressures as their U.S. counterparts and have sunk by pretty big amounts. But in those drops, Chinese stocks could be big bargains.

The long-term picture for China is still rosy. The nation’s huge and growing consumer class is spending, while its importance in the world’s economic picture is assured — with China becoming less and less reliant on the U.S. For investors, the key emerging market is a must own and now could be a great time to buy them.

With that, here are five great ways to load up on Chinese stocks.

The Best Ways To Buy Chinese Stocks Now #1: iShares MSCI China Index Fund (MCHI)

The simplest and quickest way to add a hefty dose of Chinese stocks is the iShares MSCI China Index Fund (NYSEArca:MCHI). The index ETF has grown more than $3.5 billion in assets as it represents one of the broadest takes on the nation.

As its name implies, MCHI tracks the benchmark MSCI China Index. That index covers a wide spectrum of Chinese equities, including both large- and mid-caps. In fact, MCHI’s 154 stocks provide exposure to roughly 85% of the entire Chinese market available to international investors. And that number is getting bigger as index provider MSCI has begun to gradually add exclusive A-shares. This boosts its holdings to over 375 when the transition is finally done.

That broad exposure to China’s equities makes MCHI one of the best ETFs for investors looking to profit from the nation’s continued rise. And it certainly has delivered in the returns department. MCHI has managed to post an average annual return of 10.76% over the last 5 years and was up an astonishing 53% in 2017.

And as a core holding, MCHI is also a pretty cheap option as well. Expenses for the Chinese stocks ETF only costs 0.62%- or $62 per $10,000 invested.

The Best Ways To Buy Chinese Stocks Now #2: Guggenheim China Small Cap ETF (HAO)

Small-caps have long been the way to play any nation’s domestic economy. After all, smaller firms usually don’t have the global reach of their larger sisters. And when it comes to China, that fact is no different. Smaller is a direct bet on the Asian Dragon’s domestic growth.

The way to play that growth is the Guggenheim China Small Cap ETF (NYSEARCA:HAO).

HAO follows the AlphaShares China Small Cap Index- which tracks the performance of Chinese stocks with market caps under $1.5 billion. HAO’s 319 stocks only include publicly-traded mainland stocks. So, no A-shares. Even without them, the ETFs diversification is broad with no sector accounting for more than 17% of assets.

Performance for HAO has been ok- with a 5-year average return of 7.17%. However, the fund has had periods over double-digit performance based on reactions to the Chinese economy. It’s a volatile play that could pay-off big time for investors looking for a leveraged play on the nation’s growth.

Expenses for HAO clock in at 0.75%.

The Best Ways To Buy Chinese Stocks Now #3: Matthews China Dividend Fund (MCDFX)

Source: Shutterstock

For investors looking for an active way to play Chinese stocks, the Matthews China Dividend Fund (MUTF:MCDFX) could be a great choice.

Matthews’ sole focus is investing in Asia and as a result, the firm’s mutual funds have had plenty of outperformance vs. traditional index funds. This includes MCDFX. The fund has managed to beat the previously mentioned MSCI China Index by nearly double annually since its inception in 2009.

The key is the mutual fund’s focus. MCDFX bets on dividend payers in China. That provides a less volatile ride for shareholders and also provides plenty of income. While most view Chinese stocks as pure growth elements, they also can be great dividend payers. The fund’s 52 holdings throw off a healthy 2.59% dividend yield. That’s more than the S&P 500.

Perhaps the only downside to MCDFX is its expense ratio at 1.22%. in the world of low-cost investing, that’s very high. However, given its outperformance and dividend-focus, it could be worth paying for those investors looking for an active route into China.

The Best Ways To Buy Chinese Stocks Now #4: Global X China Consumer ETF (CHIQ)

One of the biggest reasons to own Chinese stocks in the first place is its growing middle class. With a population of around 1.4 billion, China’s story is very much a consumer one. As the nation’s wealth has expanded, consumer demand in the country has only exploded. The best part is the story is still only in the first couple innings of a very long ballgame.

To that end, betting directly on China’s growing consumerism makes a tone of sense. And the Global X China Consumer ETF (NYSEARCA:CHIQ) is the way to do it.

CHIQ tracks the Solactive China Consumer Total Return Index -which is a measure of all the consumer discretionary and staple stocks that operate in China. The fund’s 40 holdings read like a who’s who of retail, beverage, media, apparel and personal and household products companies in the nation. All in all, it’s a broad-bet on a quickly growing segment of the Chinese economy.

Much like previously mentioned HAO, CHIQ’s returns have been mixed- with periods of significant outperformance and underperformance. Over the last five years, however, CHIQ has averaged a 7.96% annual return. That’s not too shabby and considering the long-term projection for consumer growth, performance should pick-up over the upcoming decades.

Expenses run at 0.65%.

The Best Ways to Buy Chinese Stocks Now #5: Alibaba Group Holding Ltd (BABA)

The ‘New’ Alibaba Group Holding Ltd (BABA) Stock Looks a Lot Like the Old One

Source: Shutterstock

If you were going to own just one Chinese stock, it would have to be Alibaba Group Holdings Ltd (NYSE: BABA). Heck, if you were going own any tech stock- from any country- it might just have to be BABA. That’s because the stock has become a conglomerate of the some of the best takes in the technology sector.

For starters, BABA’s main bread-n-butter is its retail business. But unlike Amazon.com, Inc. (NASDAQ:AMZN), BABA only serves as the marketplace and doesn’t actually hold inventory. That provides higher margins than its rival.

Founder Jack Ma has used the hefty cash flows from this business to fund expansions into everything from peer-to-peer lending, social media, and even tablets/mobile devices. These moves, as well as deals into other parts of Asia, have only cemented Alibaba’s stance as one of China’s most important stocks and technology firms.

Meanwhile, the recent downturn in Chinese stocks has made BABA pretty attractive. Toward, the firm can be had for a forward P/E of just 24. That’s pretty cheap considering the potential, long-term growth and dominance of Chinese tech.

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Source: Investor Place 

Uncategorized

7 Monster Market Trends and 7 Ways to Invest

Source: Shutterstock

It’s been a treacherous few months for investors. As of this writing, stocks remain range bound between two major technical support levels. On the upside, the S&P 500 is contending with its 50-day moving average. Last week, the 200-day average provided critical support.

What happens throughout the rest of the year depends in large part on how the market resolves this stalemate.

But from this vantage of volatility and uncertainty, a few major trends are clear. And for investors trying to cut through the noise, here are seven monster trends and seven ways to ride these catalysts toward a better 2019:

Monster Market Trends: Amazon (AMZN) Eats the World

Source: Shutterstock

Multiple Amazon.com, Inc. (NASDAQ:AMZN) related headlines have crossed in recent days, serving as a reminder just how quickly and aggressively the company is diversifying into new business areas.

Like shipping logistics. And meal boxes. And possible initiatives in the healthcare space.

The company will next report results on April 26 after the close. Analysts are looking for earnings of $1.30 per share on revenues of nearly $50 billion.

When the company last reported on Feb. 1, earnings of 36 cents per share beat estimates by 36 cents on a 38.2% rise in revenues.

Monster Market Trends: Combat Syria With Lockheed (LMT)

lmt stock

Source: Shutterstock

President Trump’s decision late Friday to launch cruise missiles into Syria for the second straight year is lifting a bid into defense stocks amid a realization this is likely the first stage of a multi-part escalation involving Russia, Iran, Saudi Arabia and Israel.

As a result, Lockheed Martin Corporation (NYSE:LMT) shares are breaking up and out of a multi-month consolidation range ahead of a possible rally to the late February highs near $360, which would be worth a 4% gain from here.

The company will next report results on April 24 before the bell. Analysts are looking for earnings of $3.35 on revenues of $11.3 billion.

Monster Market Trends: Volatility Is Here to Stay With the iPath Short-Term VIX (VXX)

Source: Shutterstock

After one of the quietest rallies in market history in 2017, investors have been rudely awakened by the reappearance of dynamism in the markets.

Bespoke Investment Group notes that compared to 2017 when there were just eight moves of 1% or more, so far in 2018 there have been 28 with 11% just over the last month.

Yet despite the volatility, actual price movement has been subdued: At 3 pm Friday, the S&P was trading at the exact same price that it was on Feb. 5.

Watch for this short-term volatility to continue until some medium-term volatility manifests into a major repositioning of the major market averages. That’ll be a boon to the VXX.

Monster Market Trends: Uncertain Bull Market Helps SPDR Gold Shares (GLD)

Source: Shutterstock

Precious metals and the related exchange-traded funs like the SPDR Gold Trust ETF (NYSEARCA:GLD) have been in the doldrums for years amid low volatility and calm conditions.

But that could be set to change thanks to a number of tailwinds, including higher inflation pressures, geopolitical tension, a deepening trade rift, and the ongoing Russia collusion probe involving President Trump, his administration and his 2016 campaign.

Any developments on these fronts should send investors into safe havens like gold. Which, in turn, should lift the GLD out of its three-year trading range to levels not seen since early 2014.

Monster Market Trends: iPhone Notches for Everyone With Apple (AAPL)

 

Apple Stock Is Still One of the Best Long-Term Picks Out There

Source: Shutterstock

Apple Inc. (NASDAQ:AAPL) shares have been treading water since the iPhone X with its $1,000 price tag and iconic screen “notch” was unveiled.

Shares have stalled on underwhelming demand, production woes, and a surprisingly warm reception for the iPhone 8. But this year’s models, according to reports, will replicate the iPhone X’s notch screen across three new handsets including an entry-level model with an LCD screen instead of the more expensive OLED option.

The company will next report results on May 1 after the close. Analysts are looking for earnings of $2.70 per share on revenues of $61.2 billion.

When the company last reported on Feb. 1, earnings of $3.89 beat estimates by four cents on a 12.7% rise in revenues.

Monster Market Trends: Merck (MRK) Takes the Fight to Cancer

merck stock

Source: Shutterstock

Merck & Co., Inc. (NYSE:MRK) shares jumped 2.4% on Monday, popping back over its 200-day moving average, after the company announced positive clinical results from its Keytruda treatment for lung cancer and melanoma.

Immunotherapies like Keytruda are enjoying increased clinical success and set to play a larger and more lucrative role in the healthcare market.

The company will next report results on May 1 before the bell. Analysts are looking for earnings of $1 per share on revenues of $10.10 billion.

When the company last reported on Feb. 2, earnings of 98 cents per share beat estimates by four cents on a 3.1% rise in revenues.

Monster Market Trends: U.S. Shale Returns to Form, Boosting Kinder Morgan (KMI)

Troubling Times for Kinder Morgan Inc (KMI) Stock Appear Temporary

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Energy pipeline stocks like Kinder Morgan Inc (NYSE:KMI) have been hit by the post-2014 weakness in energy prices. But a recent strengthening, with crude oil pushing back towards the $70-a-barrel threshold, has reinvigorated interest as U.S. shale producers ramp up production in response.

The company will next report results on April 18 after the close. Analysts are looking for earnings of 21 cents per share on revenues of $3.5 billion. When the company last reported on Jan. 17, earnings of 21 cents per share beat estimates by three cents on a 7.2% rise in revenues.

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Source: Investor Place