Wall Street Preview: Onslaught of Earnings Continues Mid-Week

Earnings, earnings and more earnings will drive investor sentiment today and Wednesday. Several stocks may get attention as “canaries in the coal mine” for what impact the trade wars are beginning to have. Not normally a bellwether, Canadian National Railway (CNI) may merit more attention than usual today. Investors will be listening to conference call commentary for sentiment changes due to recent tariffs.

Color on international sales will also be front-and-center when Harley-Davidson (HOG) reports today and Coca-Cola (KO) reports tomorrow. Harley has recently come under the ire of President Trump for moving some production to the EU to offset tariffs. Coke may also give some indication of whether foreign sentiment toward the trade wars is beginning to weigh on earnings.

Much of Wednesday will be devoted to Facebook (FB). Investors will want even more assurances of data safety, even as the company blankets airways with advertisements meant to assuage FB users. If Facebook can blow away ad revenue numbers, which they’ve been trying to jolt with their latest algorithm updates, it will go a long way toward appeasing investors.

The rest of Wednesday will see earnings from heavy hitters Visa (V) in the financial sector, General Dynamics (GD) and Northrop Grumman (NOC) in defense, and Boeing (BA) in aviation.

And finally on the earnings front, investors will be looking to see if Boeing can continue to benefit from increased passenger jet orders without facing headwinds caused by the potential for trade wars.  Earlier this month, Boeing announced increased orders for its 737 and 787 but decreased demand for the 777.

The economic calendar for Tuesday and Wednesday is relatively light, allowing the market to remain focused on earnings. Most notable are mortgage applications and new home sales released Wednesday morning. A low housing supply and increased prices slowed sales in the first half of the year. But, Freddie Mac expects conditions to improve the rest of the year and is predicting 2.5% growth in combined new and existing sales.


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5 Best CEOs by Stock Market Returns

Source: Shutterstock

Do you watch Shark Tank, the show that replicates a tricycle version of what real venture capital is like? Well, on Shark Tank, the investors (or “sharks”, as they are called) are always talking about investing in people. By that, they mean they are investing in entrepreneurs who they know will succeed because of their personality, drive, skills, intellect and/or passion.

That is easy to do in venture capital. But, it is much more difficult to do in the public markets. After all, it isn’t everyday that you are rubbing elbows with a Fortune 500 CEO.

So how do you determine who are the best CEOs in the stock market?

Look at their track record. See what they’ve done. See what they’ve said. And, most importantly, see how their stock has done while they’ve been at the helm.

With that in mind, here’s a list of five of the best CEOs in the stock market, as determined by compounded annual average return in their company’s stock price while they’ve been the boss.

Best CEOs by Stock Market Returns: Mark Zuckerberg, Facebook (FB)

Best CEOs by Stock Market Returns: Mark Zuckerberg, Facebook (FB)

Source: Shutterstock

Compounded Annual Returns: ~32%

Social media giant Facebook (NASDAQ:FB) went public on Wall Street at $38-per-share in May 2012. Fast-forward six years and two months, and Facebook stock trades around $210 today. At the helm the whole time was founder and CEO Mark Zuckerberg.

That means that under Zuckerberg’s tenure as CEO, Facebook stock has seen its public value grow by over 30% per year. That is an impressive clip.

But, it shouldn’t be any surprise. Zuckerberg is the boy-genius founder of Facebook, turned corporate-leader of one of the world’s most dominant companies. He is constantly working to improve the products within Facebook’s ecosystem (Marketplace and Workplace), looking for strategic acquisitions (WhatsApp and Instagram), studying new technology (cryptocurrencies) and rolling out features which, even if he didn’t invent them, his platforms implement best (Stories).

Thus, so long as Zuckerberg remains at the helm of the Facebook growth machine, this stock should continue to produce in excess of 30% returns per year.

Best CEOs by Stock Market Returns: Reed Hastings, Netflix (NFLX)

Best CEOs by Stock Market Returns: Reed Hastings, Netflix (NFLX)

Source: Shutterstock

Compounded Annual Returns: ~47%

There is the famous story of Netflix (NASDAQ:NFLX) founder and CEO Reed Hastings sitting in a hot tub with a friend in Santa Cruz in 2012 when Hastings shared with his friend that he was considering splitting the DVD and streaming business of Netflix. His friend told him it was a bad idea. And, initially, it was.

But, Hastings’ idea proved to be revolutionary. Over the next several years, streaming became the hottest trend. And Netflix, with the biggest streaming platform in the world, became the hottest company.

Then, everyone started to question Hastings again when the company decided to invest best in original content in 2015. But, over the past several years, original content has become the hottest trend in streaming. And Netflix, with the biggest original content portfolio, has once again become the hottest company.

In other words, Hastings always seems to be on the frontier of what is coming next in the entertainment industry. That is why NFLX stock has risen by nearly 50%-per-year under his tenure.

These big gains should continue so long as Hastings and Netflix continue to be the innovators in the dynamic entertainment industry.

Best CEOs by Stock Market Returns: Satya Nadella, Microsoft (MSFT)

Compounded Annual Returns: ~31%

In the first half of this decade, Microsoft (NASDAQ:MSFT) looked like an antiquated technology company with its feet stuck in cement. Innovation wasn’t happening. Growth wasn’t there. And MSFT stock was stuck in neutral.

Then, Satya Nadella came along. He took over as CEO in February of 2014, when the stock price was just a hair above $32. Since then, MSFT stock has soared to all-time highs of right around $107, implying compounded annual returns in excess of 30%.

How did Nadella do it? He focused on the cloud.

Microsoft had a bunch of valuable assets like Microsoft Office. They were just being distributed the old-school way via disks and chunky installation packages. So, Nadella took all those assets, moved them to the cloud, and created cloud-hosted software services.

That transition has played out beautifully. Now, revenue growth and margin growth are accelerating higher and Microsoft’s future looks brighter than it arguably ever has.

So long as Nadella continues to push cloud innovation through Microsoft’s huge business, then MSFT stock should be a lock for solid long-term gains through global cloud market expansion.

Best CEOs by Stock Market Returns: Jeff Bezos, Amazon (AMZN)

Best CEOs by Stock Market Returns: Jeff Bezos, Amazon (AMZN)

Source: Shutterstock

Compounded Annual Returns: ~43%

Jeff Bezos didn’t become the richest man on the planet by accident. He did so by pioneering a new way of commerce, and in so doing, propelled Amazon (NASDAQ:AMZN) from a $300 million start-up in 1997 to an $880 billion global retail and cloud powerhouse today.

Bezos did that by being ruthless along the way (interestingly enough, ruthless.com directs to Amazon.com). He was ruthless on pricing, cutting prices on Amazon to near break-even so as to out-price competitors. He was ruthless on perks, throwing in things like free shipping so as to one up the competition. And he was ruthless on market expansion, buying giant enterprises like Whole Foods and attempting to disrupt the grocery market right after disrupting the mall retail market.

As a result of this ruthless growth strategy, Bezos has led Amazon to being the world leader in the booming e-commerce and cloud markets. Both of these markets have a lot of firepower left. Plus, Bezos will likely be just as ruthless in dominating the pharmacy, logistics, and cosmetics markets, too.

All together, this is a big growth company with a big growth oriented leader who has a great track record of success. Thus, if you are looking for a strong stock with a strong CEO, there aren’t many out there that the fit the bill quite like AMZN.

Best CEOs by Stock Market Returns: Elon Musk, Tesla (TSLA)

Compounded Annual Returns: ~43%

He may be controversial, and he may rub you the wrong way on social media. But, you can’t argue with results when it comes to Tesla (NASDAQ:TSLA) founder and CEO Elon Musk.

Tesla went public at $17-per-share in June 2010 as a nascent electric vehicle company with big aspirations. Today, eight years and a month later, Tesla stock trades above $300-per-share, and is widely considered to be the world’s leading and premiere electric vehicle company. Those are impressive leaps and bounds, and they happened in such a short amount of time and despite frequent interruptions from Musk’s Twitter (NYSE:TWTR) feed.

Going forward, I think the best way to look at Musk is a mad genius. He does some mad things. But, he’s also a genius creating the future of transportation and energy. As an investor, it is best to forget the mad part. Focus on the genius part. That is the only part that shows up in financial statements.

TSLA stock has been under hot water recently due to Model 3 production ramp issues and credit concerns. But, in the big picture, these risks are over-stated. Longer-term, Model 3 production will ramp, credit concerns will disappear, and this company will emerge as the leader in what will inevitably be a massive electric vehicle market.

As of this writing, Luke Lango was long FB, AMZN, and TSLA. 

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3 High-Yield Stocks Increasing Dividends in August

When interest rates start to go up, investors worry about the value of their higher yield dividend stocks. A defense against higher interest rates is to own dividend stocks that will grow the dividend payments. The challenge is to know in advance which stocks will make a higher dividend announcement before the rest of the market finds out.

Real estate investment trusts (REITs) pay attractive current yields and regularly increase their dividend rates. I maintain a database of about 140 REITs, out of which about 100 have histories of dividend growth. Most of these companies increase the quarterly dividend once a year, and then pay the new rate for the next four quarters.

Even though individual REITs increase their dividends just once a year, those announcements are spread across almost every month of the year. To capture those share price gains, you want to buy shares a few weeks to a month before the next dividend increase announcement is published. Now in mid-July, it is a great time to look at those REITs that should increase dividends in August.

Here are three REITs from my database that historically have boosted their payouts in August.

Federal Realty Investment Trust (NYSE: FRT) is a $9 billion market cap REIT that owns, operates, and redevelops high quality retail real estate in the country’s best markets. FRT has increased its dividend for 50 consecutive years, the longest growth streak of any REIT.

Over the last 5 years, the average annual dividend increase has been 6.55%. Last year the dividend was increased by 2.0%. Based on management guidance, an increase close to the 5% annual average is in the cards for this year. The company announces its new dividend rate in early August. The ex-dividend date will be in mid-September with payment about a week later.

The FRT share price is down by 4% over the last year. This is a very high-quality REIT currently on sale. The stock yields 3.25%.

Eastgroup Properties Inc (NYSE: EGP) is a $3.3 billion market value REIT that focuses on development, acquisition and operation of industrial properties in major Sunbelt markets throughout the United States with an emphasis on the states of Florida, Texas, Arizona, California and North Carolina. Industrial properties is currently one of the best performing real estate sectors.

The company has increased its dividend for 22 of the last 25 years, including the last six in a row. Last year the payout was increased by 3.3%. This year my forecast is for a 5% to 7% increase. The new dividend rate should be announced in late August or early September, with a mid-September ex-dividend date and end of the month payment date.

EGP yields 2.7%.

Healthcare Trust of America, Inc. (NYSE: HTA) is a $5.4 billion REIT that acquires, owns and operates medical office buildings. The company reduced its dividend in 2012 and 2013, which was followed by small increases in each of the next four years. Last year the dividend was bumped up by 1.7% which is comparable to the increase of the previous year.

In 2017, the funds available for distribution per share increased by 1.2%, and for the 2016 first quarter, FAD per share was flat compared to a year earlier. Management has been very conservative with the dividend growth and I expect a small increase comparable to the last couple of years.

Last year the new dividend rate was announced in early August, with an end of September ex-dividend date and early October payment date.

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Source: Investors Alley