Monthly Archives: August 2018

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Buy These 3 Tech Stocks Immune to Tariffs and Trade Wars

Last week, I told you about how the tone of quarterly earnings conference calls had changed. From a focus on trumpeting the benefits to companies’ bottom lines of the corporate tax cuts Congress passed at the end of 2017, the focus had shifted to the trade war and rising costs.

This is especially true with regard to technology companies, with many of them raising the possibility of having their supply chain disrupted. One particular segment of the technology sector that is under threat is the data center industry. And more particularly, the key components that keep data centers humming. Let me explain…

China Tariffs to Bite

The China tariffs will bite. But the question is whom.

Consider this data from the World Bank: In 2006 exports represented 36% of China’s GDP, by 2017 they were only 19.7%. Looking at the potential impact of tariffs on China’s economy, only 19% of China’s 2017 exports went to the U.S. representing only around 3.6% of its total economy.

So the effects on China from tariffs may be less than many investors expect.

Related: Buy These 3 Growth Stocks Surging Because of Tariffs

However, the effect on tariffs on the U.S. technology has just begun. Two rounds of tariffs on Chinese imports totaling $50 billion have targeted some of the key components that keep data centers functioning. The tech industry is now facing a third $200 billion list of tariffs that takes dead aim at key digital infrastructure — from the routers, switches and servers that redirect and process data, to components such as motherboards and memory modules used by bigger cloud companies to assemble their own equipment, and even the miles of cabling needed to wire the gear together.

The tariffs are particularly ill-timed. That’s because many of the largest internet and cloud computing companies are in the middle of a capital spending boom. And while a lot of the build-out is overseas and will not be affected by the tariffs, there were planned massive upgrades to existing facilities here in the U.S. to meet demand for extra capacity and new services that are now coming into question.

For many of the tech giants, 2018 was to be a year for massive capital spending.

Alphabet (Nasdaq: GOOG), for example, nearly doubled its capital spending in the first half of 2018 to $10.4 billion. Besides adding capacity for YouTube videos and its fast-growing cloud computing business, CFO Ruth Porat, chief financial officer, said to the Financial Times that the company was buying more equipment to meet the demands of machine learning — a “compute intensive” task that is becoming central to many of its services.

Google’s investments mirrors capital spending spurts at both Facebook (Nasdaq: FB) and Microsoft (Nasdaq: MSFT) this year, although Amazon (Nasdaq: AMZN) has pulled back somewhat after a 2017 spending boom. These cash-rich tech giants obviously can easily afford the higher costs of data center equipment caused by a 25% tariff on Chinese imports.

Semiconductor Industry in the Crossfire

But other well-known tech companies may be affected more harshly. For instance, Dell Technologies imports components from China and then makes servers and laptops in the U.S. And Hewlett Packard Enterprise imports a lot of servers from China although it makes most of its products either in the U.S. or Mexico.

Intel (Nasdaq: INTC) is one of those companies for which the tariffs will be a strong headwind. It says 90% of the value of its chips comes in the design and manufacturing stages, which occur “outside of China and largely in the US”. But like many U.S. semiconductor companies, it uses plants in China to do the final assembly and testing on its products because these are lower skill and therefore lower wage tasks. But with the tariffs, any chips brought back to the U.S. from China will face a tariff on their entire value. In effect, this is a tax on work done here in the U.S.

If the proposed next round of tariffs on China goes into effect, the semiconductor industry will be at the epicenter of the ‘quake’. According to the Semiconductor Industry Association, $6.3 billion worth of chips and other products directly related to semiconductors are about to be hit.

Supply Chains Aren’t Cheap to Move

I’m sure you may be wondering why the semiconductor companies just don’t move their supply chain out of China back to the U.S. or to some other country?

In reality, few companies have the flexibility to switch their sourcing quickly to suppliers outside of China. While there are a number of other countries with the capability to produce what the semiconductor industry needs, the supply chains and capacity just don’t exist and would have to built from scratch in many cases.

Even relatively low-value parts of the current supply chain could be prohibitively expensive to move. According to Intel’s calculations, moving a low-value-added chip packaging plant out of China would cost between $650 million and $875 million.

Money spent on building a whole new supply chain may mean less money spent where it really needed, such as research and development.

The irony of the situation has not been lost on KC Swanson, head of policy at the Telecommunications Industry Association. The Trump Administration is burdening U.S. companies with higher costs at just the moment they needed to invest heavily to compete with China. She pointed out that “China is all about trying to build up its industrial internet, and its routing and switching capabilities.”

Investment Implications

So what are the investment implications for you?

The next round of tariffs has yet to take effect, so you have time to adjust your portfolio. And unless a deal is reached (highly unlikely), the tariffs will hit the semiconductor industry hard.

Your best bets in tech will then be to hold the companies that have a ton of money and can absorb the higher cost of goods. That means three of the companies mentioned earlier in the article – Microsoft, Amazon and Alphabet.

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Source: Investors Alley

Dividends

Buy These 3 Stocks Paying Over 7% in the Best High-Yield Sector for Conservative Investors

High yield stocks come out of a range of different business sectors. You may be aware of business development companies (BDCs), real estate investment trusts (REITs), and master limited partnerships—MLPs. Also, on high yield investor radars will be closed-end funds (CEFs) and leveraged ETFs. For an attractive yield combined with a high level of safety, the best high yield stocks come from a subsector of a subsector of one of these three letter descriptors.

REITs operate under a pass-through tax rule that allows a company to not pay income taxes if its business involves the ownership or financing of real estate and at least 90% of net income is paid to investors as dividends. The REIT sector can be divided into equity REITs and finance REITs. Equity REITs are companies that own commercial real estate. These companies usually specialize in a specific type of property such as healthcare, hotels, office buildings, warehouses, and apartments.

Finance REITs operate on the lending side of real estate. A finance REIT may be a lender or just a company that owns a portfolio of mortgage backed securities (MBS). A lot of finance REITs will be a combination of originating new mortgages, packaging mortgages for sale and fee income, holding loans in a portfolio, and owning MBS.

Finance REITs separate into two categories. These companies typically focus on either the residential side of mortgage lending or on commercial property financing. The residential mortgage side takes a lot of interest rate risk to be able to turn 4% home loans into a 10% stock dividend yield. I am not a fan of this business model. The commercial mortgage REITs, on the other hand, give investors an attractive combination of high current yield and a financially conservative business model.

Commercial finance REITs have these attractive attributes:

  • Commercial mortgages are written at low loan to value amounts. These companies typically have portfolios with an overall 65% LTV.
  • Commercial mortgages are almost always adjustable rate. This means that if interest rates increase, so will the REIT’s interest income.
  • Commercial property lending requires a high level of expertise and flexibility. This allows the REITs to generate higher yields on the loans they make.
  • A commercial finance REIT can generate attractive yields on equity using a very moderate amount of leverage.

Here are three commercial finance REITs that will put some serious yield into your income portfolio.

Starwood Property Trust, Inc. (NYSE: STWD) is one of the largest commercial lenders of any business type – including banks. The company currently has a $12.6 billion loan portfolio with a 62% loan to value. Since launching in 2009 the company has put out almost $40 billion in loans and investments with zero realized losses.

In recent years, Starwood has acquired the largest commercial mortgage special servicer. This acquisition has produced growth in CMBS origination and investments. The company also owns a $2.7 billion equity commercial property portfolio that generates 9% to 12% cash on cash returns. Management constantly looks for investment opportunities both in and out of the commercial mortgage business.

STWD current yields 8.4%.

Ladder Capital Corp (NYSE: LADR) uses a three-prong approach to its investment portfolio. The three legs are commercial mortgage loans, which account for 75% of the company’s capital allocation; commercial real estate equity investments for 12%; and commercial MBS bonds accounting for 8%. The business plan is that the three groups shift as more or less attractive through the commercial real estate cycle. Leverage is a comfortable 2.7 times equity. Since it paid its first dividend for Q1 2015, Ladder has steadily increased the quarterly payout at an average 8% annual growth rate.

The shares currently yield 7.7%.

Blackstone Mortgage Trust, Inc. (NYSE: BXMT) is a pure commercial mortgage lender. The REIT receives high quality mortgage lending leads from its sponsor, The Blackstone Group L.P. (NYSE: BX).

As of its 2018 first quarter earnings, BXMT had a $12.1 billion portfolio of senior mortgage loans. 94% of the portfolio is floating rate. The loans were at 62% loan to the value of the underlying properties. In the first quarter the company originated $1.9 billion of new loans, while $900 million of principal was paid off. Leverage is 2.3 times debt to equity.

Blackstone management states that each 1% increase in LIBOR will grow annual net income by $0.24 per share. The stock currently yields 7.5%.

In recent months, I have added two newer, still in the growth phase, commercial mortgage REITs to my Dividend Hunter recommendations list. If you like the idea of high yield and growing dividends, check out a subscription for these two winners and more of my picks.

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Source: Investors Alley 

Dividends

10 Dividend Doublers Ready to Soar

Moe Ansari, host of the popular Market Wrap radio show and podcast, asked me on air:

“Brett, how do you find dividend paying stocks that will double your money?”

He was intrigued enough by my analysis to ask me on his show, but I knew he was a bit skeptical as well. And that’s perfectly normal – even experienced investors and money managers like Moe think of dividend payers in terms of their current yields only.

Price appreciation potential often gets ignored, and the thought of achieving 100%+ profits from a safe dividend payer sounds absurd. But smart investors bank their payouts while their stocks double in price.

(Want to hear me describe this strategy in detail? Click this link for the full interview.)

Subscribers to my Hidden Yields service know the three-step formula that I explained to Moe well. In fact, our “dividend doubling” portfolio has earned 23.3% yearly gains since inception three years ago – which means we’re closing in on 100% profits already.

How’d we do it buying safe dividend paying stocks? Let me walk you through the simple three-step formula. (And shortly I’ll show you how to get your hands on my latest research, which features ten dividend stocks likely to double, too.)

Step 1: Buy Dividend Growth for 10%+ Annual Gains

On the show we discussed Verizon (VZ), which has piqued the interest of many income investors lately. The stock yields 4.6%, and the dividend is covered by monthly cell phone bills across America.

Here’s the problem buying Verizon in hopes of a double – it’s not going to happen. Its 4.6% yield would get us repaid in 15 years. That’s not fast enough for our purposes, so we would need to look to dividend growth to fill the gap and speed up the pace of our profits.

Problem is, Verizon raises its payout every single year. But it’s barely moving in absolute terms! A sleepy 7.3% cumulative dividend increase over the last four years has rocked its share price to sleep (+6% over the entire time period):

Verizon’s Dividend “Growth” Rocks Its Shares to Sleep

For double-digit price appreciation, we must buy dividends destined to grow by 10% or more annually in the years ahead. This means we need to find businesses that are booming (with higher profits driving higher payouts). To do so, it helps to focus on stocks that are threat-proof.

Step 2: Be Sure to Threat-Proof Your Purchase

The classic “Dogs of the Dow” strategy advises buying the then highest-yielding Dow Jones Industrial Average stocks, then holding onto them for a year. The idea is that higher yields are a signal of a beaten-up share price in which the business struggles are temporary. When business picks up again, so will the undervalued stock.

The problem using this strategy blindly today is that many businesses are becoming obsolete before our very eyes. Look no further than Jeff Bezos and his firm Amazon, which crushes entire sectors for sport additional growth.

To qualify for our Hidden Yields portfolio, a business model must be Amazon-proof, rate-proof and heck, even tariff-proof.

Incidentally, this doesn’t mean we must avoid all brick and mortar stores. Best Buy (BBY), for example, decided to take Amazon head-on in 2012 when turnaround CEO Hubert Joly took the helm. And not only did the electronics giant live to tell about it, but it’s now leveraging Jeff Bezos’ website as a shopping channel of its own!

In recent years, Joly has been smartly “doubling down” on the quality of its retail stores (which Amazon doesn’t have). This has powered impressive free cash flow (FCF) growth, which has in turn driven serious stock returns:

Expert Service. Unbeatable Stock Price.

What else doesn’t Amazon have? A dividend, of course. Meanwhile Best Buy pays one, and its growth has been spectacular. Joly & Co. just raised their dividend by 32%. This “high velocity payout” is now up 165% in the last five years!

Its stock has followed its dividend higher, delivering 187% total returns (including those payouts). But are BBY shares truly a best buy today? It depends if the price is still lagging its payout.

Step 3: Greedy for Gains? Only Buy a Dividend That Lags

Dividends are magnets that pull their share prices along with them. If you’re looking for the stock market’s tail that wags the dog, pay attention to the payouts attached to a given share price.

Steps one and two help us lock in double-digit yearly gains. But if we’re looking for quick triple-digit (100%+) upside, we should only buy stocks that are lagging their payouts.

Texas Instruments (TXN) is a great example of a stock we’ve profited from in Hidden Yields (+46% returns in the 14 months we’ve owned it).

Since 2012, its share price (blue line below) as consistently lagged its payout (orange line below). Try as it might, TXN the stock (+358%) hasn’t been able to catch up with TXN the dividend (+464%):

TXN’s Magnetic Dividend Drives 358% Stock Gains

Since dividends follow their share prices higher, we can make the most money by buying when these payouts are most likely to “snap higher” towards their runaway dividend curves.

In other words, we buy the price dips when the dividend appears to be running away. Anyone who says you can’t time stocks hasn’t used this surefire strategy for buying shares ready to “catch up” to their runaway payouts.

It’s simple:

  1. Plot a stock price versus its dividend,
  2. Look for a “lag” between the shares and the payout, and
  3. Buy any big lags you see.

Bonus: An Extra “Steroid” for Upside

The stock market can do its own thing over any set of days, weeks or month. But over many years, dividends are the tail that wags the (price) dog. As payouts go, so will their corresponding stock price.

This is where share repurchases become a compelling natural steroid for our portfolio. When management teams repurchase their own stock smartly (when it’s cheap), they reduce the number of outstanding shares. Which means any dividend raises get an added boost on a per share basis.

Ideally, we look for a pattern like this one. This firm has reduced its share count (red line) by 10.8%. It’s tripled its dividend per share over the same time period. And its stock hasn’t kept pace, indicating pent up value (it has another 85% to go to catch up!)

Share Count Down, Dividend Up & Price is Due

This stock boasts an ideal setup for us. Shares are too cheap, the business owns a profitable niche with business momentum, and the broader investing herd isn’t paying attention because they don’t understand how the company truly makes money.

If you like this setup, you’ll LOVE nine more that I’ve identified. All of these stocks pay dividends today. And they’re all likely to double your money in the months ahead.

Coming This Friday: 10 Dividend Payers with 100% Upside

How much money should you allocate to pursuing dividend stocks that will double your money?

As you can see – as much as possible. This strategy is such a “slam dunk” for investing returns that there’s no reason to collect more current yields than you need right now. There are three big benefits to buying dividend payers that are likely to double your money.

Benefit 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.

Benefit 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.

Benefit 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 20% or more on average with almost no effort or active investing at all.

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

Source: Contrarian Outlook

Market Preview

Market Preview: Retail Sales and Productivity Numbers in Focus, Home Depot and Cisco Earnings

Tuesday investors will continue to watch the currency crisis in Turkey unfold, and try to decipher what, if any, impact it will have on U.S. markets. While viewed in isolation, the crisis has little impact on U.S. companies. But, analysts fear a domino effect from the weakening lira. On Friday the market suffered its largest one day decline since early June, and investors don’t want to be left holding the bag if decisions in Turkey begin spilling into other markets. Protecting gains and hiding in quality may be the buzzwords most used for the remainder of the week.

On Tuesday Home Depot (HD) reports earnings. Analysts are looking for the home building and remodeling stock to put up good numbers. After missing earnings projections earlier this year, due to cold and severe weather, HD is expected to rebound in the second quarter and benefit from an upward remodeling trend. The trend has been fueled by construction costs outpacing home appreciation numbers, which are forcing homeowners to postpone new home purchases. Also reporting on Tuesday is Advance Auto Parts (AAP). Tom Greco, Advance CEO, also blamed weather for the auto parts retailer’s numbers earlier this year. Analysts will be looking for the company to continue to increase operational efficiency numbers this quarter, and improve the top-line as well.

Tuesday’s economic calendar brings import and export prices. Analysts are looking for July import prices to rebound after an unexpected .4 percent decline in June. Wednesday investors will focus on retail sales numbers. The headline number is expected to be a relatively weak .1 percent gain, but that is due to weakness in auto sales. The ex-auto numbers are expected at a more healthy .4 percent increase. Productivity and cost numbers for 2Q will also be released on Wednesday. High unit costs in the first quarter limited productivity gains, but those numbers are expected to rebound in 2Q with productivity projected to jump 2.5%, holding down labor costs. Investors will also have to digest new mortgage application numbers, the Empire State Manufacturing Survey and industrial production, all Wednesday morning.

Earnings are on tap from Macy’s (M) Wednesday morning and Cisco Systems (CSCO) after the close. After excellent inventory control measures buoyed the stock last quarter, analysts are looking for a continuation of the turnaround story at Macy’s this quarter. Momentum gained earlier in the year is expected to vault the retailer to another earnings beat on Wednesday. Analysts are giving Cisco a pass on earnings this quarter. With European weakness and the recent announced acquisition of Duo (a network security company) analysts believe CSCO may miss earnings this quarter, But, consensus is that the networking provider is on the right strategic path and that the upcoming quarter will be the real litmus test for the San Jose based tech company.

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Growth Stocks

10 Killer Stocks to Buy That No One Knows About

We have all heard about the big stocks a million times. That’s not to say they are bad investing prospects. Not at all. Amazon (NASDAQ:AMZN), for example, is an expensive stock with robust growth potential.

However, there are thousands of stocks out there. What about the stocks no one else is talking about? They can make compelling investing propositions too. In fact, some of the stocks covered below are performing incredibly strongly right now. They deserve their moment in the spotlight.

Plus if other investors aren’t investing in these stocks, there’s still a strong chance that they are trading on the cheap.

Here I turned to TipRanks’ Stock Screener to pinpoint 10 killer stocks that are floating under the radar. All the stocks covered below have a “strong buy” analyst consensus based on the last three months. This is apart from Solid Biosciences (NASDAQ:SLDB) which has a “moderate buy” consensus but was just too promising not to include! I also use TipRanks to track the upside potential of each of these stocks from their current trading levels.

Let’s take a closer look now:

Top Stocks to Buy: Activision (ATVI)

Top Stocks To Buy: Activision (ATVI)

Source: Shutterstock

Game on! So says top Jefferies analyst Timothy O’Shea (Profile & Recommendations). He has just selected Activision Blizzard (NASDAQ:ATVI) as his No. 1 Franchise Pick with a bullish $86 price target (22% upside potential).

And now is the perfect time to jump in: “With ATVI down 7% since July 25, we see a buying opportunity given the numerous major catalysts coming in 2H and into 2019.”

Notably, Call of Duty (Oct 12) is expected to again be the No. 1 best-selling title globally. In addition to expansions for World of Warcraft, Hearthstone, and Destiny, the second half will feature a major mobile game from King (potentially a new Candy Crush).

O’Shea concludes “ATVI remains a Franchise Pick given our expectation for nice leverage as the new mobile game and ad businesses scale.”

Bear in mind that this “strong buy” stock has received an impressive 11 recent buy ratings vs just one hold rating. This is with an $83.5 price target (17% upside potential). See what other Top Analysts are saying about ATVI.

Top Stocks to Buy: Galmed (GLMD)

Top Stocks To Buy: Galmed (GLMD)

Source: Shutterstock

Liver disease biotech Galmed Pharmaceuticals (NASDAQ:GLMD) has 100% Street support. Seven analysts have published GLMD buy ratings in the last three months. And their $38 average analyst price target predicts massive upside potential of 191%.

Analysts are excited about lead product candidate, Aramchol. The drug has the potential to be a disease modifying treatment for fatty liver disorders, including NASH (Non-alcoholic steatohepatitis). This is a chronic disease that constitutes a large unmet medical need. According to statistics published by GlobalData, the NASH market is slated to balloon to $25.3B by 2026.

“We believe that Galmed, with a market cap of $230 million, is undervalued in relation to its peers in the NASH space” writes Cantor Fitzgerald’s Elemer Piros (Profile & Recommendations). He points out that Arachmol has so far demonstrated a strong safety profile with positive efficacy across numerous endpoints. See what other Top Analysts are saying about GLMD.

Top Stocks to Buy: KKR (KKR)

Top Stocks To Buy: KKR (KKR)

Source: Shutterstock

Investment management company KKR & Co. (NYSE:KKR) is a top pick for Oppenheimer’s Allison Taylor (Profile & Recommendations). She recently attended the company’s first investor day after five years.

Since the previous investor day, “The results have been excellent, and we think the growth targets laid out by management across the platform are conservative and achievable.”

Most notably, KKR is growing fast, and thus gaining share in an already fast growing industry — 20% CAGR since 2004 vs. 12% industry CAGR. It’s been doing that by diversifying the scope of the products it offers and assets it manages.

As a result, Taylor concludes: “We left with every reason to believe that the stock remains significantly undervalued in a world where undervalued growth is very hard to find.” She has a $35 price target on the stock (30% upside potential). See what other Top Analysts are saying about KKR.

Top Stocks to Buy: Parsley Energy (PE)

Top Stocks To Buy: Parsley Energy (PE)

Source: SMelindo via Flickr (Modified)

Parsley Energy (NYSE:PE) – a “strong buy” stock according to the Street — is a promising oil stock. The company is focused exclusively on the Permian Basin, one of the most resource-rich oil basins in the world.

“We believe PE shares should outperform the company’s peer group over the next 12 months” cheers RBC Capital’s Scott Hanold (Profile & Recommendations). “PE’s production growth profile, balance sheet, and oil hedge book are best-in-class and differentiate from peers”

Notably, PE is focused on improving development cycle times which could drive upside to 2018 and beyond’s oil volumes and higher present value from core Permian assets. Hanold’s $40 price target falls just below the average analyst price target of $42.64 (36% upside potential). See what other Top Analysts are saying about PE.

Top Stocks to Buy: Gray Television (GTN)

Top Stocks To Buy: Gray Television (GTN)

Source: Flash.pro via Flickr (modified)

Atlanta-based Gray Television (NYSE:GTN) has just snapped up Raycom Media in a $3.65 billion deal. Following the deal, Gray will become the third-largest TV station owner in the US. Plus Gray’s station reach will rise from about 10.4% of total U.S. television households to 24%.

“The deal positives appear to vastly outweigh the associated risks” applauds top Benchmark analyst Daniel Kurnos (Profile & Recommendations). He recently reiterated his “buy” rating with a $26 price target (75% upside potential). Even with the heavier debt load, he still sees significant further upside potential ahead.

“The Raycom acquisition meshes two highly complementary station portfolios from both a quality and culture perspective, while also enhancing opportunities to capture political upside and participate in the growing market for original content.” See what other Top Analysts are saying about GTN.

Top Stocks to Buy: Solid Biosciences (SLDB)

Top Stocks To Buy: Solid Biosciences (SLDB)

Source: Shutterstock

This is an extremely interesting life science company focused on solving Duchenne muscular dystrophy. Solid Biosciences (NASDAQ:SLDB) is a genuine rival for larger biotech Sarepta Therapeutics (NASDAQ:SRPT) — but at a much-reduced price. (Solid is trading at $38, while SRPT is already at $120)

And now Sarepta Therapeutics has announced that its phase I/II trial of its micro-dystrophin gene therapy (GT) for DMD has been placed on clinical hold. This gives Solid the advantage says five-star Chardan Capital analyst Gbola Amusa (Profile & Recommendations).

He writes “Solid to us may gain the edge on timing, also as a result of its clinical trial design being more consistent with FDA guidelines.”

The conclusion “With Pfizer’s market cap at $222.2 bn, Sarepta’s at $8.6 bn, and Solid’s at $1.4 bn, Solid to us continues as the most logical play for profound stock price upside based on emergence of potentially breakthrough AAV-based GTs [gene-therapies] in DMD.” His $60 price target indicates 56% upside potential. See what other Top Analysts are saying about SLDB.

Top Stocks to Buy: Trupanion (TRUP)

Top Stocks To Buy: Trupanion (TRUP)

Source: Shutterstock

Welcome to Trupanion (NASDAQ:TRUP), a pet insurance provider for cats and dogs in the U.S., Canada and Puerto Rico. The company has just smashed its second-quarter earning results. As a result, five-star RBC Capital analyst Mark Mahaney (Profile & Recommendations) ramped up his price target from $36 to $44.

“TRUP posted very strong Q2 results with accelerating subscription pet growth, expanding EBITDA margins, and a full-year revenue guidance raise that was larger than the Q2 revenue beat,” Mahaney told investors in his Aug. 3 report.

He sees a long growth runway ahead as Trupanion faces a large growth opportunity (TAM could be $3–5B+) in an underpenetrated market (less than 1%). Ultimately: “we continue to believe TRUP has the characteristics of a high-growth, subscription-based ‘Net company and benefits from a highly recurring model, which adds predictability.” Meow! See what other Top Analysts are saying about TRUP.

Top Stocks to Buy: Splunk (SPLK)

Top Stocks To Buy: Splunk (SPLK)

Source: Shutterstock

Splunk (NASDAQ:SPLK) turns machine data into answers. This can cover anything from security and compliance to actionable business insights e.g. into customer behavior. Now Splunk is trading at just over $100. This is down around 5% on a three-month basis.

For top-rated Monness analyst Brian White (Profile & Recommendations), this price is far too low. “Essentially, Splunk’s stock did not experience the upside of other rapidly growing companies over the past four years, yet the recent market volatility hit the stock harder than most.”

This is even though “Splunk reported one of the best quarters in our universe just over a month ago and raised its revenue outlook for FY19.”

That’s lucky for investors, because we are now looking at an attractive entry point says White. This is “one of the most consistent companies we cover and with strong revenue growth that we peg at 30% in CY18.” See what other Top Analysts are saying about SPLK.

Top Stocks To Buy: MOMO (MOMO)

Top Stocks To Buy: MOMO (MOMO)

Source: Shutterstock

Known as the “Tinder of China.” Momo (NASDAQ:MOMO) is a free social search and instant messaging mobile app that specializes in match-making. This is especially true following the February acquisition of Tantan — “China’s Tinder” — for $735 million. However, it has also morphed into a gaming and social platform, much of it driven by streaming video.

Five-star Standpoint Research analyst Ronnie Moas (Profile & Recommendations) has just upgraded Momo from “hold” to “buy.” He believes the stock is now trading at a far more attractive level. Indeed, his new $54 price target indicates upside potential of over 30%.

“The stock is now trading at just ~13 X earnings estimates for next year. Revenue growth should be 25%. There is 1 billion dollars in cash on their balance sheet with no debt against the market cap of 8 billion dollars. If you stripped out the cash, the stock is trading at 11.5 X earnings” points out Moas.

And the Street as a whole is even more bullish. The $58 average analyst price target indicates upside potential of over 40%. See what other Top Analysts are saying about MOMO.

Top Stocks To Buy: Marinus Pharma (MRNS)

Top Stocks To Buy: Marinus Pharma (MRNS)

Source: Shutterstock

Last but not least, Marinus Pharmaceuticals (NASDAQ:MRNS) is a cutting-edge biotech with a unique focus. The biotech is developing ganaxolone to improve the lives of patients with epilepsy and neuropsychiatric disorders. This includes postpartum depression — a massive market opportunity.

Mizuho Securities’ Difei Yang (Profile & Recommendations) is one of the Top 100 analysts ranked by TipRanks. She sees prices surging by almost 130%. She is extremely optimistic about the upcoming results of a Phase 2 study of ganaxolone IV in women with postpartum depression (PPD).

“We anticipate this will be an important catalyst for the shares” writes Yang. She continues “We see upside potential of 100%+ assuming convincing data including a clear dose response.”

And the best part: “We believe the downside is limited given the history of the compound and potential in other indications.” The data is now due in Q4 instead of Q3, but Yang isn’t worried. “With no change to the trial design, we are not concerned about the slippage on the timeline by a few weeks.” See what other Top Analysts are saying about MRNS.

TipRanks.com offers exclusive insights for investors by focusing on the moves of experts: Analysts, Insiders, Bloggers, Hedge Fund Managers and more. See what the experts are saying about your stocks now at TipRanks.com. As of this writing, Harriet Lefton did not hold a position in any of the aforementioned securities.

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Dividends

3 Quick Buys for Dividends Up to 6% (and 112% Upside)

There’s been a massive discount building in a pocket of the market where you can get big dividends that are entirely tax-free.

And I’m going to show you three “1-click” ways to tap this income investor’s wonderland today.

I know that tax-free anything these days sounds impossible, but in this case, I assure you it’s not. The key is investing in municipal bonds, which give you a passive income stream that is entirely tax exempt at the federal level. Plus it’s also exempt from state taxes in many situations, too.

That means a 4%-yielding municipal bond, or “muni,” is more like a 5.3%-yielding dividend stock for a family earning $100,000 per year—and that’s before we factor in state taxes.

Plus, there are some funds out there that hold munis that can get you much more than 4%. Below I’ll show you 3 of them with “regular” yields as high as 5.8%. First, let me tell you why now is the perfect time to buy them.

How to Amplify Your Muni Gains (and Dividends)

To get the biggest bang for your buck in munis, buy them through closed-end funds (CEFs). There are nearly 200 muni-bond CEFs out there, and most of them yield over 4%. And since they’re CEFs, several are priced far below their “true” value.

How can you tell?

Because the average municipal-bond CEF’s market price is 8.6% below its net asset value (NAV, or the market value of all the holdings in its portfolio).

That discount to NAV is a key number to watch in any CEF, and with a wide 8.6% average markdown, it’s easy to snap up a great muni-bond CEF cheap, then set yourself up for some nice price upside as that gap narrows to its traditional level.

Muni CEF Pick #1: A 4.9% Yield at a Massive Discount

A good example of a great marked-down fund is the Eaton Vance New Jersey Municipal Income Fund (EVJ), which pays a 4.9% dividend and currently trades at a massive 12.3% discount to NAV.

EVJ is no slouch in the performance department, either. On a NAV basis, the fund has earned an 11.5% return over the last 3 years, which is nearly double the gain posted by the muni-bond index fund, the iShares National Muni Bond ETF (MUB).

EVJ Demolishes the Benchmark

On top of that outperformance, EVJ’s yield is about twice that of MUB, making it both a market outperformer and a big yielder.

But should you worry that the fund focuses on just one state? In a word, no.

New Jersey’s average income is $62,554 per capita, the third highest in the union. And while the state’s GDP grew more slowly than that of America as a whole in 2017 (0.9% versus 2.1%), New Jersey is the eighth-wealthiest state in America, which means its growth rate will tend to be lower than those of poorer states.

That wealth has also resulted in fast-growing investment in infrastructure (this spending is budgeted to rise 172% in the next year), which tends to boost economic growth.

But here’s the real key: New Jersey revenues are set to rise 5.7% in 2019 after gaining in 2018. That 2019 estimate is far higher than the 4.2% growth in the state’s spending, so the bottom line here is that New Jersey’s fiscal health is getting better. And that makes EVJ worth considering for income and growth now.

Muni CEF Pick #2: Unbeatable Safety and 4.1% in Tax-Free Cash

Nonetheless, if you do want to go beyond a fund that focuses on just one state, you’d be smart to snap up the BlackRock Municipal Intermediate Duration Fund (MUI), one of the best-performing muni CEFs over the last decade. Just look at how it’s done compared to MUB:

MUI Quietly Delivers Big Profits

This outperformance isn’t rewarded with a premium price; MUI trades at a 13% discount to NAV, which is double its 6.5% average markdown over the last decade. That also means the fund’s 4.1% dividend yield is extremely sustainable, since MUI’s management only needs to get a 3.6% income stream in the muni-bond markets to keep the payouts coming.

Then there’s the diversification. Here’s a chart from BlackRock breaking down the fund’s exposure by state—you can see that it focuses on the biggest states with the healthiest budgets:

A Diverse Fund

Plus, MUI is exposed to the northeast, southwest and every area in between—the fund actually holds municipal bonds from 44 states in total!

If you’re looking for a sleep-well-at-night, high-yielding, tax-free income stream, MUI is a great option.

Muni CEF Pick #3: Crushing the Index for Over 2 Decades

The last fund I want to show you is another BlackRock fund, the BlackRock MuniHoldings Fund II (MUH), which is one of the best-performing muni CEFs of all time. Over the last decade, it’s returned 7.5% annualized. Just look at what it’s done compared to MUB!

Another Long-Term Winner

What’s the secret to this fund’s success?

Two things. First, it invests in municipal bonds that are income tax free but not alternative minimum tax (AMT) free. That limits the appeal of these bonds to some investors, making the market for them less efficient. That, in turn, lets the geniuses at BlackRock easily spot bargains that will boost your returns (as management has for the last decade).

Another big reason for MUH’s healthy gains is the fund’s use of derivatives. By using a mixture of futures, options and interest-rate swaps, MUH can boost your total return by actively playing the bond market as it relates to the Federal Reserve’s changing monetary policy. This approach has worked well over the fund’s history, going back to the 1990s.

Finally, MUH trades at a 7.6% discount to NAV, far higher than the 3.4% markdown it’s averaged over the last decade. That discount has gotten unusually big in the last year—but it’s also starting to recover:

Sale Ending Soon

That makes a good time to consider moving into MUH. You’ll collect a nice 5.8% income stream while you wait for its discount to close.

Beyond Munis: 4 Buys for 7.8% CASH Payouts and 20%+ Upside

As I mentioned earlier, a CEF’s discount to NAV is an incredibly reliable indicator that it’s poised to deliver serious price upside.

That’s true of the 3 funds I just showed you … and it goes double for the 4 other CEFs I want to show you now. Each one trades at an even more absurd discount to NAV than our 3 muni funds … so these 4 unsung funds are spring-loaded to catapult us to price gains of 20%+ in the next 12 months.

When you combine these 4 buys with our muni-fund CEFs, you get an “instant” portfolio that lets you dip a toe in some of the best income investments in the world: munis, high-yield REITs, preferred stocks, corporate bonds and dividend stocks, to name a few.

PLUS, these 4 amazing income plays also pay dividends 3 or 4 TIMES higher than your typical stock—up to 8.0%! So you’re getting paid very handsomely while you wait for these funds’ discount windows to slam shut.

Here’s a quick look at each of them:

  • The real estate mogul: This fund has DOUBLED the market’s return since inception—including during the financial crisis—by investing in real estate, the very thing that caused the meltdown in the first place! It pays you 7.8% in cash today, and its silly discount points to a shockingly big price rise ahead.
  • The bond play with a fat 7.2% payout: This one trades at a totally unusual 14.9% discount to NAV. And it has something I love in a CEF: management with skin in the game. The team at the top includes a Wall Street vet with $250,000 of his own cash in the fund, so you can bet he’ll be working for you.
  • The perfect buy for rising rates: This one holds floating-rate loans, whose rates adjust higher with interest rates. If you want to hedge your portfolio against the Fed’s next move (and collect 6.4% in cash while you do) this fund is for you.
  • The preferred-stock player: Preferred stocks trade around a par value, like a bond, but pay outsized dividends, fueling this fund’s amazing 6.9% payout. Better yet, preferreds have gone on sale in the last few months, driving this fund to a rare discount—and giving us our in.

Michael Foster has just uncovered 4 funds that tick off ALL his boxes for the perfect investment: a 7.4% average payout, steady dividend growth and 20%+ price upside. — but that won’t last long! Grab a piece of the action now, before the market comes to its senses. CLICK HERE and he’ll tell you all about his top 4 high-yield picks.

Source: Contrarian Outlook 

Market Preview

Market Preview: Earnings from Sysco, Walmart and Deere, and a Packed Economic Calendar

Though earnings season is winding down, there are still a few market-moving companies to report next week. Home Depot (HD), Cisco Systems (CSCO), Walmart (WMT) and Deere (DE) all will be reporting earnings. From these reports investors will interpret data on consumer spending, the health of the tech rally, and how U.S. companies are being treated internationally as the tariff standoffs continue. Most expect good numbers from these stalwarts as reporting on second quarter earnings winds down.   

While this week’s economic calendar was light, next week brings a bevy of economic numbers for analysts to chew on. We’ll start off lite with nothing Monday and only import and export prices on Tuesday. But, hold onto your economic hats as Wednesday brings new mortgage applications, retail sales, the Empire State manufacturing survey, productivity and unit costs, industrial production, and business inventories. Needless to say there will be a plethora of analysts spouting opinions as the economic numbers fly. Thursday we’ll get housing starts and jobless claims, and we’ll wrap up the week with consumer sentiment on Friday

Monday investors will digest earnings from foodservice supplier Sysco (SYY). Analysts are looking for Sysco to continue its winning ways, with the stock up over 40% the past year. The main question for management will be how they are planning on handling rising commodity costs going forward. Also reporting Monday is JinkoSolar (JKS). Named the number one supplier of solar panels in China by Fortune, the stock has been in a steady decline. Analysts will want to know if rising oil prices are improving the prospects for solar. But, there will also be questions around U.S. tariffs on solar products and how that will impact Jinko.

With no economic numbers Monday, the market may also focus on earnings from YY, Inc. (YY). Fortnite has been blowing up streaming services like Twitch, a subsidiary of Amazon (AMZN). Analysts  will be eager to hear how the Chinese streaming service is faring, and how they perceive the competitive landscape in this evolving sector.

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Click here for complete details to start your plan today.
Uncategorized

15 Stocks to Buy Ahead of the Fall Season

Source: Shutterstock

Summer conjures images of top-down driving and beach bods strutting along the boardwalk. That allure also bites elite market professionals, who typically jet off to the Hamptons. The prevailing wisdom of course is to “sell in May, and go away.” But because of this dynamic, it’s an ideal time to strategize about which stocks to buy.

As MainStreet contributor Max Levin explains, the markets tend to slow down or even drop during the summer due to a lack of rally sparking news. As Levin puts it, almost any volatility that you see during this part of the year is pure speculation.

Timing is also an issue. When the year begins, it’s a fresh start for everyone. By the halfway point, participants need to recharge their batteries. Furthermore, the summer season falls inline with second-quarter earnings. After such a big event, well-heeled investors take in their profits and call it a day.

This circumstance usually leaves the smaller retail investors clawing for scraps. But from another perspective, this gives you a discount on your list of stocks to buy. Because when the summer season ends and fall begins, the markets typically resume their temporarily halted trajectory.

These stocks to buy have demonstrated either a technical tendency to bounce up during the fall season, or their core industry often receives a seasonality boost.

Fall Stocks to Buy: Royal Caribbean Cruises (RCL)

Fall Stocks to Buy: Royal Caribbean Cruises (RCL)

Source: Shutterstock

For fairly obvious reasons, most advertisements feature cruise liners basked in the summer season’s glow. So it seems counterintuitive to discuss Royal Caribbean Cruises (NYSE:RCL) in a list of fall stocks to buy.

But don’t let initial assumptions fool you: RCL stock has demonstrated a tendency of rising into strength from the summer to the fall season. Although summer is peak season for the cruise-liner industry — as is the case for virtually all travel-related businesses — cruises leave port throughout the entire calendar.

Consumer trends also vary. Summer is most convenient for working families as kids get off of school, and employers generally anticipate vacation requests during this timeframe. But many travelers don’t like scorching heat, or may prefer the more tranquil experience of winter travel.

Fall Stocks to Buy: Norwegian Cruise Line (NCLH)

Fall Stocks to Buy: Norwegian Cruise Line (NCLH)

Source: Corey Balazowich via Flickr

Another cruise liner that has a tendency of doing well leading into the fall and winter seasons is Norwegian Cruise Line (NYSE:NCLH). Like rival Royal Caribbean, Norwegian Cruise Line operates year-round, attracting both casual tourists and cruise-aficionados.

One factor to remember is that while the summer season is the most popular, the seasons’ timing differs depending on region. Moreover, international weather patterns can disrupt our summer vacation plans. For instance, hurricanes can negatively impact Caribbean, Bahamas, Bermuda and Mexico cruises during this time. Alaska also incurs the most rain during the summer months.

NCLH stock is down double-digits year-to-date, which makes it an attractive contrarian opportunity. The company levers strong profitability margins and annual revenue growth. Recent sales trends are encouraging, providing legitimate hope for a push higher this autumn.

Fall Stocks to Buy: Southwest Airlines (LUV)

Fall Stocks to Buy: Southwest Airlines (LUV)

Source: Jerry Landers via Flickr (Modified)

Traveling by boat isn’t the only profitable route as we head toward the fall season. Southwest Airlines (NYSE:LUV) has proven to be a robust investment, especially as the summer months wind down.

To be 100% transparent, I’ve had an on-again, off-again relationship with airline companies. The industry has suffered a black eye from the consumer’s perspective. The seats are getting smaller, passengers are becoming more violent and operations sometimes appear chaotic. Don’t get me started about United Continental’s (NYSE:UAL) passenger-beatdown controversy last year.

That said, LUV stock has proven doubters wrong. Moreover, with the economy improving significantly, prospective passengers have more money in their pockets. By logical deduction, since the labor market is also robust, employers are likely more willing to offer generous vacation packages.

This broadly provides strong tailwinds for LUV, making it one of the better stocks to buy right now.

Fall Stocks to Buy: Starbucks (SBUX)

Fall Stocks to Buy: Starbucks (SBUX)

Source: Shutterstock

I’m going to warn you straight off the bat: Starbucks (NASDAQ:SBUX) is a contrarian bet.

A few months ago, I discussed the ugly, racially charged incidents that have negatively impacted the Starbucks brand. I agree that any racially motivated acts of discrimination must be dealt with quickly and seriously. I disagree in overhauling an entire company over a few bad apples.

That’s what Starbucks did, introducing store-wide changes in addition to an all-hands racial sensitivity training. I warned that this move could backfire: Cunning actors could fake a racism charge, crippling the brand image yet again. Because in this political climate, how can you prove otherwise?

Interestingly, SBUX shares are down double-digits since my article was published. But now that perhaps most of the ugliness has been baked in, it could be a time to buy. At the end of the day, Starbucks levers an incredibly powerful, global brand. Additionally, shares have previously demonstrated upside momentum as the weather cools down.

Fall Stocks to Buy: Amazon (AMZN)

Fall Stocks to Buy: Amazon (AMZN)

Source: Amazon

Amazon (NASDAQ:AMZN) is one of those rare companies that belongs to almost any list of stocks to buy, irrespective of the season. But if you want to time your purchases, AMZN stock generally trades well as the autumn and winter seasons approach.

Obviously, the biggest reason is the holidays. While Amazon is currently attempting to take over the world — it’s a cloud-computing powerhouse and a grocer, among other things — it’s still primarily a retailer. As such, it must abide by retail rules. That means putting your best foot forward in the second half of the year.

But again, the beauty of AMZN stock is that it’s not just an e-commerce powerhouse. It’s involved in so many emerging businesses, as well as traditional, “analog” ones, that it’s difficult to keep tabs. Should one area suffer weakness, other divisions can easily pick up the slack.

That’s why the discussion regarding $1,000 AMZN has quickly transitioned to $2,000 AMZN.

Fall Stocks to Buy: Best Buy (BBY)

Fall Stocks to Buy: Best Buy (BBY)

Source: Austin Kirk via Flickr

Brick-and-mortar retailers have obviously weakened due to rising e-commerce companies. As a result, the traditional holiday season, while still the biggest for retailers, has lost much of its joy. Foot traffic is down, leading to an understandable downfall in sales.

Most businesses in this sector struggled to find an adequate answer. Best Buy (NYSE:BBY) is one of those rare few that have thrived following a painful reconstruction process. Today’s Best Buy isn’t just a digital device and electronics hub; instead, the retailer provides valuable services, such as mobile-phone setup and its 24/7/365 technical-support team Geek Squad.

In addition, Best Buy’s management team demonstrated their entrepreneurial spirit, moving into the lucrative senior-services market. This sector should only continue to grow in demand as the Baby boomer generation rapidly ages into their retirement years.

To paraphrase the Dos Equis guy: I don’t always buy retail stocks, but when I do, it’s BBY.

Fall Stocks to Buy: Costco (COST)

Fall Stocks to Buy: Costco (COST)

Source: Shutterstock

While brick-and-mortar retail generally fights for traction, the big-box retail segment has enjoyed a much more comfortable ride. Among the major retail stocks to buy, Costco (NASDAQ:COST) stands head-and-shoulders above the rest.

Very few companies have the business and social cache that Costco levers. The warehouse business model that the company practically originated has been the topic of movies and punchlines. People simply can’t get enough of it.

Of course, it’s not just the branding. Costco maintains robust sales growth in large part because it simply sells everything. From the latest laptop computer to 50-gallon barrels of mayonnaise, every shelf is stocked with something useful or enticing.

COST stock also trades well as a summer buy. When temperatures cool down, trading sentiment typically heats up. Although I don’t think you’re going to get rich off of COST, any dips now could prove profitable soon.

Fall Stocks to Buy: FedEx (FDX)

Fall Stocks to Buy: FedEx (FDX)

One necessary evil that the e-commerce industry must endure is shipping costs. Traditional retailers don’t have to charge their customers shipping as the products are sold on the spot.

Previously, Amazon, like any other e-commerce enterprise, simply bit the bullet, offering a variety of shipping options. But with sales exploding into the stratosphere, it’s becoming more onerous to keep up with the associated shipping demand. Our own Brad Moon points out that President Trump takes a dim view on Amazon’s perceived low-balling of the U.S. Postal Service.

In response, Amazon introduced its own delivery service. This endeavor will likely take time to fully develop, which create an opportunity for FedEx (NYSE:FDX).

Conventional wisdom states that Amazon is a competitor. They are, but FedEx is an established leader in the courier business. It will take a gargantuan effort to replace FedEx’s advantage in the economies of scale.

Additionally, FedEx has a tendency to perform well leading up to the autumn and winter months. While Amazon is a huge partner, it’s not the only fish in the sea.

Fall Stocks to Buy: UPS (UPS)

Fall Stocks to Buy: UPS (UPS)

Source: Shutterstock

While we’re discussing the courier business, don’t forget about FedEx rival UPS (NYSE:UPS). Like its ever-present competitor, UPS benefits strongly from Amazon and the e-commerce craze. However, I’m not worried that Amazon’s own shipping venture will derail UPS stock.

For one thing, traditional brick-and-mortar retailers have stepped up their online-commerce game. One example is Target (NYSE:TGT), which uses UPS for its ship-from-store business model. While I’ve criticized Target in the past, I must admit that their online-fulfillment centers have delivered the goods.

We can expect further development into this business model because that’s where the money is. In addition, Target’s competitors will follow suit as they adapt to retail’s new reality.

And just like FedEx, UPS benefits from the economies of scale. Their brand reputation and networks are too extensive to simply replace. As e-commerce takes increasing market share from total retail sales, overall demand for UPS goes higher.

More than enough demand exists for several industry titans to profit handsomely.

Fall Stocks to Buy: Wynn Resorts (WYNN)

Fall Stocks to Buy: Wynn Resorts (WYNN)

Source: Aurlmas via Flickr (Modified)

Wynn Resorts (NASDAQ:WYNN) is another company on this list that warrants a warning, as it is a speculative affair. Earlier this year, I covered the Las Vegas fixture as Steve Wynn faced sexual-harassment allegations. Suffice to say, it was a PR disaster and Wynn had to resign.

During the fiasco, I stated, “I wouldn’t be opposed to taking all profits off the table.” More times than I care to remember, I put my foot in my mouth. This time, though, I gladly stand by my words. Since my article was published, WYNN stock lost 18.5%.

But now that the company is working through its tough issues, it might be time to buy back in. This contrarian move isn’t without risk, primarily because shares have been so volatile lately. But Wynn Resorts remains a top sleepover for those who can afford it.

Plus, you’d have to be crazy to visit Las Vegas during the summer. Those who know, know that you visit Sin City during the autumn or early spring.

Fall Stocks to Buy: Las Vegas Sands (LVS)

Fall Stocks to Buy: Las Vegas Sands (LVS)

Source: Shutterstock

I didn’t like Wynn due to its negative PR incident. However, the crux of my argument was that the Las Vegas gaming and tourism industry never truly recovered from the Great Recession. Ultimately, this fundamental headwind was going to drive Vegas-centric stocks lower.

However, the economy, as President Trump has repeatedly bragged, has improved significantly. You may or may not like our current administration, but we can all agree on this: The second-quarter GDP growth was surprisingly robust.

I don’t want to hinge everything on one report. However, if the trend continues, currently deflated investments like Las Vegas Sands (NYSE:LVS) may enjoy a resurgence.

Also, I can’t help but notice the timing. In years past, LVS stock has grown into strength from summer to autumn. This trend corresponds with the best times to visit Las Vegas, which is between September to November and March to May.

But having been to Sin City several times, I can attest that the autumn-winter months feature the least atrocious weather. Tourists probably feel the same, which is why LVS is a good speculative bet now.

Fall Stocks to Buy: Vail Resorts (MTN)

Fall Stocks to Buy: Vail Resorts (MTN)

Source: Shutterstock

With a few exceptions, Vail Resorts (NYSE:MTN) typically enjoys a burst of investor sentiment as autumn and winter approach. This is for patently obvious reasons. As a premier mountain and ski resort, Vail comes alive when temperatures are near their coolest.

Over the past five years, MTN stock earned a reputation as a reliably profitable investment. That continues to be the case in 2018, with shares up 35% year-to-date. Because of this robust sentiment, I wouldn’t classify MTN as one of the discounted stocks to buy. However, its bullishness is fundamentally justified.

Vail Resorts’ profitability margins are substantially higher than the competition. Additionally, the company’s three-year revenue and EBITDA growth rates are both in double-digit territory. It also pays a dividend, albeit with a modest 1.8% yield.

Fall Stocks to Buy: VF Corp (VFC)

Fall Stocks to Buy: VF Corp (VFC)

Source: Andy Via Flickr

VF Corp (NYSE:VFC) isn’t a household name. Its popular brands, including Lee, Wrangler and Dickies, certainly fall under this category. Fashion companies usually benefit from year-round demand as they adjust product offerings seasonally.

However, VF Corp receives an extra boost during the cooler months of the year thanks to its winter-brand, The North Face. This segment has been a notable winner overseas, enjoying 5% year-over-year revenue growth in international markets during the first quarter of fiscal 2019. Specifically, Europe, the Middle East and Africa grew 12%, while Asia Pacific grew 26%.

With the exception of Vans, all other VF brands experienced negative growth in at least two markets.

Coincidentally, VFC stock has performed well as the autumn and winter seasons approach. Given strong growth prospects for The North Face, I expect the trend to continue.

Fall Stocks to Buy: Johnson & Johnson (JNJ)

Fall Stocks to Buy: Johnson & Johnson (JNJ)

Source: Shutterstock

When most people think about Johnson & Johnson (NYSE:JNJ), images of common household goods arise. In addition, JNJ features a pharmaceutical division that has been driving revenues for the company over the last several years. Collectively, JNJ’s broad reach makes it a good pick for the patient investor.

That said, JNJ stock also benefits from a cynical reason to consider buying shares now. According to Time Health, “the biggest surge in human rhinovirus infections occurs in the fall.” And what exactly are human rhinovirus infections? Essentially, they are the biological agents responsible for more than half of cold-like illnesses.

According to the American Society for Microbiology, human rhinovirus infections cost billions in medical visits and lost productivity. Without trying to sound like a conspiracy theorist, JNJ benefits from this cold season thanks to increased over-the-counter medication sales.

Again, it’s cynical, but it’s also reality. You might as well profit from it.

Fall Stocks to Buy: Public Service Enterprise Group (PEG)

Fall Stocks to Buy: Public Service Enterprise Group (PEG)

Source: Shutterstock

Public Service Enterprise Group (NYSE:PEG) is more of a winter play than an autumn one, but the thesis is similar. As temperatures drop, more people use energy to heat their homes. Logically, this adds up to increased revenues for PEG.

But I especially like the company’s location, which features utility networks throughout New Jersey and Long Island. Indeed, from a utility investor’s perspective, places like Newark, New Jersey represent a gold mine. Temperatures are bitterly cold — at least from a spoiled Californian’s mentality — from October through March.

This translates to people constantly running their heating systems, ringing up robust sales. Also, PEG pays out a fairly generous 3.5% dividend yield.

As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.

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Source: Investor Place 

Options

Making Money Off Chipmaker Stocks With Surging Prices

In the world of graphics cards, also known as GPUs, the US market is dominated by two major players. You’ve probably heard of both of these companies as their stocks are often in the news. The bigger of the two is Nvidia(NASDAQ: NVDA), but Advanced Micro Devices (NASDAQ: AMD) and their Radeon GPUs have plenty of traction in the industry.

NVDA and AMD are big players in the chip-making industry as powerful GPUs have become normal components in most desktops and many laptop computers. While potent GPUs are a perquisite for any serious video gamers, even casual games can benefit from high-end graphics cards. And let’s not forget, GPUs are the devices of choice for mining cryptocurrencies.

Even without the cryptocurrency craze, NVDA and AMD would still be doing quite well as gaming becomes a bigger part of our everyday lives. The whole e-sports industry is still relatively new and gaining popularity rapidly.

NVDA is a $150 billion company that’s seen over 30% gains this year in its share price. Meanwhile, AMD is a much smaller $18 billion company, but the stock is up 89% this year. The stock price jumped about 15% on very solid earnings just recently.

NVDA may have settled into a range, but AMD is still in breakout mode. So, how high can the stock go? Is it worth buying despite the huge year it’s already had?

To help answer these questions, I prefer to look at the options market. Here’s what I found…

A highly capitalized trader recently sold 9,000 January 2019 AMD calls at the 25 strike for $0.91 per contract (with the stock trading at $19.05). The trader is collecting over $450,000 on the calls but is exposed to unlimited upside risk above $25.91. Any price below $25 at January expiration and the entire amount of premium is kept.

So what’s going on here? $450,000 is a lot of money, but is it enough in return for unlimited risk? For every dollar the stock moves above roughly $26, the position loses $900,000. That’s obviously a heavy amount to risk, especially for a stock which has already moved up 89% this year.

The thing is, this trade is very likely being used as an overwrite on existing long AMD stock. The trader could already hold AMD shares and feels the shares won’t climb above $25 before next year. In that case, the call selling is being used to generate extra income on the long shares while still maintaining upside potential up to $25.

We could easily emulate this trade by purchasing shares and selling the same calls against them (1 call sold for every 100 shares purchased). In fact, I think that’s pretty solid covered call. You’d be earning 4.8% yield for about a 5-month period, with a chance to make an extra 31% if the stock keeps climbing.

While AMD has had a really nice run this year, it’s also probably not going to shoot above $25 anytime soon. A covered call could be a great way to capture a decent yield without giving up most of you upside potential.

If covered calls aren’t your thing, you could also make a similar trade to the short call trade by selling a call spread. The January 25-30 call credit spread (selling the 25, buying the 30) has about a $0.60 credit while limiting your risk to $4.40 if the stock skyrockets higher.

Personally, I like the covered call trade quite a bit better than the credit spread. However, the important takeaway here is don’t ever short calls by themselves. Either use stocks or other options as a hedge. Even pros rarely short calls without some kind of protection.

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Source: Investors Alley 

Cryptocurrency

Bitcoin’s “New Normal”

Recently, I’ve been wondering about crypto’s NEXT BIG MOMENT. What it will look and feel like when institutional money starts pouring in.

So I did a little digging…

I found out that what’s new in this country is old hat in other parts of the world.

A bitcoin exchange-traded product has been around in Europe since 2015! An ethereum one has been around since 2017.

Now, these are ETNs, or exchange-traded notes. They’re not exactly ETFs (exchange-traded funds), but they’re very similar. Unlike ETFs, they don’t allow for ownership in a pool of securities. Rather, they’re debt instruments that mature.

But, like ETFs, they follow an underlying index. These ETNs follow indexes that mirror the price of bitcoin and ethereum, with the repayment of principal depending on how the index performs.

Europe Before the U.S.

In 2015, a small Swedish company named XBT Provider listed two bitcoin ETNs on the Stockholm Nasdaq exchange – one following bitcoin prices in Swedish krona and the other following prices in euros.

It was a first for Sweden and for Europe.

Anyone could invest. Participants ranged from everyday investors buying as little as $500 to large European institutional clients investing millions. Even with access to institutional investors, these exchange-traded products grew slowly at first.

And then 2017 happened.

It was a breakthrough year. XBT introduced its two Ethereum ETNs. And they took off. Within four months, it had more than $350 million of assets under management (AUM).

XBT followed those two funds with a token fund that tracked ethereum-based ICOs.

It was also a banner year for expanding the accessibility of its bitcoin and ethereum funds. Its customer base grew sevenfold. Brokers and banks from the U.K. (Hargreaves Lansdown), Italy (UniCredit), France (Société Générale), Germany, Belgium and Spain made the funds available to their customers for the first time.

XBT finished the year with more than $1 billion AUM – a 36X improvement over 2016. And the company’s income shot up by 3.5X.

XBT’s funds were bought out by CoinShares in September of that year – another key event. CoinShares aims to offer a full lineup of crypto products. It wants to be the iShares of the crypto-investing world.

It’s now offering a CoinShares “Active” Fund. This is a multicoin, alpha-generating, active strategy fund. It has also rolled out a passive large cap basket fund. (And that’s in addition to the active bitcoin GABI hedge fund Global Advisors (CoinShares’ parent company) launched back in 2014.

Today, its bitcoin and ethereum products are accessible in 179 countries… from any electronic brokerage platform that can interact with the Nasdaq family of marketplaces.

What’s Different, What’s the Same

CoinShares has done a nice job of getting the ball rolling in Europe. And it did so without scams, frauds, hacks or complaints about volatility.

It was, heaven forbid, drama free.

In the U.S., I believe we’re going to see many firms within a relatively short period be approved for an ETF. Will it be as drama-free as it was in Europe? Probably not. But Europe’s experience shows us that bitcoin’s next big moment can take off in a smooth and professional way.

CoinShares used the crypto boom in 2017 to spur the growth of its existing funds and launch additional crypto products. It’s going to play out a little differently in the U.S…

Here, we’ve accumulated a great deal of pent-up demand among institutional investors waiting for ETFs to be greenlighted.

That money is coming. It doesn’t need a boom to pave the way.

It would take nothing short of a crypto crash to dent the impending rush of institutional money into the crypto space.

That’s not in the cards at this point. If anything, we see bitcoin rallying. And bitcoin ETFs would only add to it.

An increasingly user-friendly infrastructure… SEC approved ETFs… the participation of both retail and institutional brokers…

They all add up to a key inflection point in crypto’s continuing journey toward looking like and feeling like mainstream investing – crypto’s “new normal.”

Invest early and well,

Andy Gordon

Co-Founder, Early Investing

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Source: Early Investing