Market Preview: Earnings from Cruise Lines and Steak Houses, Plus CPI on Friday

Thursday morning investors will hear earnings from Norwegian Cruise Lines (NCLH). The company preannounced a strong quarter last month, so analysts will be looking for a positive outlook from the company. Cruise industry stocks have been under pressure this year as investors fear too many ships are coming online outstripping demand. In the afternoon investors will hear from Dropbox (DBX). The storage company recently increased the storage size available to business customers without raising prices. Analysts are generally positive on the stock which went public earlier this year, spiked up 50%, and then traded back to its IPO price.

Thursday will also bring Jobless Claims which have been hovering at the lowest level seen in decades. Investors will be looking for any hint of an unexpected trend change. The Producer Price Index for July will also be released. The expectation is for a 0.3 percent increase, after increases in May and June were attributed to trade services and trade tariff expectations. Federal Reserve Bank of Chicago President Charles Evans will also be speaking Thursday morning. Fed watchers will be parsing Mr. Evan’s speech for any hint that he is moving even further into the camp that believes interest rates must rise.

The earnings calendar is relatively light on Friday, as earnings season is in its final weeks. Investors will hear from Applied Industrial Technologies (AIT) and Ruth’s Hospitality Group (RUTH). Analysts are expecting Applied to increase earnings almost 30% year-over-year. The almost 100 year old industrial supply company should give some color on general industrial health in the U.S. Ruth’s, owner of Ruth’s Chris Steak House, will also announce earnings on Friday. The stock has been on an upward trajectory for the past year. Investors will be waiting to hear of any changes from incoming CEO Cheryl Henry. Ms. Henry has been the President and Chief Operating Officer of the company, and is replacing outgoing CEO Michael P. O’Donnell.

On the economic front, Friday’s conversation will be around the Consumer Price Index numbers released Friday morning. Economists are expecting a 0.2 percent gain in July, following a 0.1 percent gain in June. The number is closely watched as a gauge of inflation, and will feed the conversation around whether the Fed is raising interest rates too quickly. The Baker-Hughes Rig Count numbers will be released at 1pm. Investors will be watching this number closely to see if the rig count is rising and if that number is high enough to slow the steady increase in the price of oil. The prior week’s numbers stood at 1,267 active rigs in North America.

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This 8.5% High-Yield Stock Could See Its Share Price Jump 50%

In the IPO world, new biotech or consumer tech stocks get all the attention. The financial news keeps close track of how much a new tech IPO climbs the first few days after a public market launch. This makes great news bites, but it is hard for individual investors to participate. IPOs in the high-yield stock world get little or no attention. I make a point of finding and tracking new dividend stocks, and then recommending them to my subscribers when my analysis confirms attractive total return potential. One such stock has returned 50% since I made the first recommendation last Fall. The 2018 second quarter earnings show that the positive run still has plenty of room to grow.

With a transformative acquisition in 2016, Arbor Realty Trust Inc. (NYSE: ABR) became a “new” company as far as investment potential. In July 2016 the REIT acquired privately held Arbor Commercial Mortgage, LLC. The acquisition diversified the company’s revenue stream, primarily by bringing in a larger commercial mortgage servicing portfolio. When well managed a portfolio of mortgage servicing assets can generate tremendous returns.

One of my long time recommendations, New Residential Investments (NYSE: NRZ) has generated a 100% plus total return over the last four years by focusing on residential mortgage servicing rights.

After the transaction, Arbor management noted that the move “Transitioned the REIT from a mono line dependent entity into a fully integrated franchise with a significant agency origination business with high barriers to entry providing a natural limitation on competition.”

Related: Is This the Best High-Yield Stock?

The investment returns from ABR since mid-2016 have been spectacular. The quarterly dividend has grown 56% from $0.16 per share to the current $0.25 per share. The share price has appreciated by a comparable 60%. I first recommended this REIT to my Dividend Hunter subscribers in October 2017, and we caught most of the gains with the stock generating a 51% total return since that time.

However, don’t worry that if you don’t yet own ABR you have missed the party. The recent 2018 second quarter earnings report shows that the Arbor growth story will continue. You may not earn 50% per year, but total annual returns in the 20% range are likely. Here are the catalysts for continued above average returns.

The current yield is 8.5%. This is above the peer group, which means for the yield to be in line with those peers, the share price must move higher.
The ABR market cap just surpassed $1 billion. That is a level which will draw more institutional investor interests.
The company grew its balance sheet by 18% in the first half of 2018, well ahead of expectations. This is a company that is generating strong growth across all its business lines.
A recent litigation win means the company will likely pay a bonus dividend near the end of 2018.
Stock stories like Arbor Realty are not found in the mainstream financial news outlets. You also can’t find them using a stock screener. To find these types of opportunities for my subscribers I follow hundreds of stocks that the mainstream ignores.

Get up to 14 dividend paychecks per month from safe, reliable stocks with The Monthly Dividend Paycheck Calendar, an easy-to-use system that shows you which dividend stocks to pick, when to buy them, when you get paid your dividends, and how much.  All you have to do is buy the stocks you like and tell them where to send your dividend payments. For more information Click Here.


Source: Investors Alley