Monthly Archives: March 2019

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7 Stocks That Should Be Worried About a Data Dividend

Source: Shutterstock

Big technology companies have been under a lot of political and social pressure recently, mostly because said technology companies have become the be-all, end-all of society. The worry is that these companies are gaining too much power, and that too much power is never a good thing. Big technology companies that provide “free” services by monetizing user data have borne the brunt of it, as such companies are coming under heavy scrutiny for the way they use personal data to make money.

A lot of these concerns haven’t materialized into anything other than talk. But there’s one potential legislation which big tech investors should be aware of, if not concerned about: the data dividend.

The concept is simple: tech companies should pay you for your data. Your data is valuable. It’s being monetized broadly. Since you technically own your own data, when your data does get monetized broadly, you should get a piece of those rewards. That piece is the data dividend, and it would essentially amount to a percent of the company’s data-derived revenues.

The idea isn’t new. The academic world has been discussing the idea for some time. Washington state tried to pass data dividend legislation in 2017. But attempts to implement a data dividend have been too far and few between to mean anything. Until now. California Governor Gavin Newsom recently proposed the idea, and the proposition carries weight both because of when (amid heightened data privacy concerns) and where (California is home to many of the world’s tech giants, and is ahead of the curve when it comes to data protection laws) it was proposed.

As such, while it’s still far from a sure thing, a data dividend is now closer to reality than ever before. That’s bad news for any big tech company which uses consumer data to make money.

Which stocks are most affected by a potential data dividend? Let’s take a deeper look.

Facebook (FB)

Data-Related Revenue (% of Total Revenue): $55 billion (99%)

At the top of this list is a social-media giant which essentially makes all of its money from consumer data, meaning that essentially all of its revenues are theoretically subject to a data dividend.

Facebook (NASDAQ:FB) rakes in over $55 billion (and growing) in ad revenue per year. This money comes from advertisements across its four social media apps — Facebook, Instagram, Messenger and WhatsApp — and is all the byproduct of leveraging user data to incorporate relevant and targeted ads. Facebook is arguably the best in the business at using this data to create effective ad campaigns. They also have more data than pretty much anyone in the world.

But those positives also mean that Facebook could be a big loser if the data dividend idea gains national and global traction. Even if a data dividend amounts to just 2% of revenues, that would equate to over $1 billion per year for Facebook. And, that extra cost would come at a time when costs are dramatically rising for improved data protection.

In the big picture, the data-dividend risk isn’t a reason not to own FB stock. FB stock is a long-term winner supported by the stickiest digital ecosystem in the world. But it is something to be aware of and monitor.

Twitter (TWTR)

Data-Related Revenue (% of Total Revenue): $3 billion (100%)

The second of the possible data dividend stocks is another social media company, which makes essentially all of its money through either leveraging consumer data to create ad campaigns or just straight-up selling that consumer data.

Twitter (NYSE:TWTR) rakes in about $3 billion per year in data-related revenue. Roughly $2.6 billion of that is from ads — Twitter leverages user data to create targeted ad campaigns. The other $400 million-plus comes from Twitter’s data licensing business, which is essentially Twitter just selling user data. Thus, if a data dividend were to be introduced on a global scale, all of Twitter’s revenues would theoretically be subject to that dividend.

That’s not a great thing. But it’s not a deal breaker, either. Much like Facebook, Twitter has created an ultra-sticky digital service. That service is only getting stickier, as Twitter is increasingly becoming a go-to and irreplaceable platform for consumers of all shapes, sizes, and backgrounds to voice their opinion. Thus, while the data-dividend risk should be monitored, it isn’t a reason to sell TWTR stock.

Snap (SNAP)

Data-Related Revenue (% of Total Revenue): $1.2 billion (almost 100%)

Third of the data dividend stocks is yet another social media company that makes essentially of its money through digital advertising, which comprises leveraging user data for targeting purposes: Snap (NYSE:SNAP).

To be sure, Snap does have a hardware business through Spectacles. But that business has struggled to gain traction, and revenue from Spectacles thus far has been immaterial. Thus, of Snap’s $1.2 billion in revenue last year, almost all of it was from digital ads. That means almost all of it would be theoretically subject to a data dividend.

Again, this isn’t a deal breaker for Snap. But it is a bigger concern for Snap than it is for Facebook and Twitter. Why? Because Facebook and Twitter are already profitable, and they can absorb a 2% hit on revenues without materially impacting profitability. Snap cannot. The company is far from profitable, and needs a lot more scale in order to be profitable. Thus, the data dividend risk is much bigger for SNAP stock, than it is for FB or TWTR stock.

Alphabet (GOOGL,GOOG)

 Data-Related Revenue (% of Total Revenue): $116 billion (85%)

The first non-social media company on this list also happens to be the world’s largest digital advertiser, and therefore bears substantial exposure to a potential data dividend.

Alphabet (NASDAQ:GOOG,GOOGL) isn’t all digital advertising. The company has hardware, cloud, and AI-related businesses which aren’t built on the back of user data. But Alphabet is mostly digital advertising. Of the company’s near $140 billion in revenue last year, about 85% of it came from digital advertising through Google, YouTube, and other online ad networks and properties. Thus, if a data dividend were to be implemented, Alphabet would have to pay a large sum back to consumers.

This isn’t a big deal for GOOG stock. For starter’s, Google is the backbone of the internet, and YouTube is very sticky in the free, online entertainment world. Neither of those ad businesses will be hit that hard by a data dividend. Also, of all major digital advertising players, Alphabet is the one of the most diversified, with burgeoning businesses in cloud, hardware, and AI.

Overall, then, any negative impact on GOOG stock from a data dividend will be mitigated by growth drivers elsewhere in the business.

Yelp (YELP)

 Data-Related Revenue (% of Total Revenue): $907 million (96%)

Another company impacted by a potential data dividend isn’t known as a digital advertising giant, yet still derives a majority of its revenue from digital ads that leverage user data.

Yelp (NASDAQ:YELP) reported net revenue of roughly $943 million last year. About $907 million of that, or 96%, was from digital advertising. Thus, although Yelp doesn’t serve consumers ads in the same way that Facebook, Twitter, or Snap do, the company still runs ads based on user data, and those ads are the big driver of the company’s business. Consequently, a data dividend would theoretically be applied to Yelp’s entire business.

A data dividend is just another risk to add to the long list of things not to like about YELP stock, including valuation, competition, slowing growth, lack of scale, and lack of a moat. As such, there’s simply too much not to like here. The data dividend risk is just another reason to stay away from YELP stock.

Amazon (AMZN)

 Data-Related Revenue (% of Total Revenue): $10 billion (~4%)

Although the next company on this list also isn’t known as a digital advertising giant, it is quickly building out a giant digital advertising business which is theoretically subject to a data dividend.

Amazon (NASDAQ:AMZN) isn’t known for digital ads. The company is known as an e-commerce and cloud giant. Nonetheless, Amazon is leveraging its huge user-base and reach across Amazon, IMDb, and other digital properties to create a huge and rapidly growing digital ad business. That digital ad business generated $10 billion in revenue last year. To be sure, that’s less than 5% of Amazon’s total revenues. But it’s a much bigger portion of profits (digital ad sales have way higher profit margins than e-commerce sales).

That fact alone is why the data dividend is actually a sizable risk for AMZN stock. Amazon has been counting on ramp in the digital ad business to drive profits higher, while margins in the e-commerce business remain largely weak due to competition. If the digital ad business gets set back due to a data dividend, that would be a set back to the whole Amazon profit growth narrative. As such, while the data dividend risk isn’t a deal-breaker, it is something which AMZN investors should closely monitor.

Microsoft (MSFT)

 Data-Related Revenue (% of Total Revenue): More than $12 billion (more than 11%)

Last, but not least, is another big tech company which isn’t known for digital ads, but which nonetheless is one of America’s largest digital advertisers, and consequently has broad exposure to a potential data dividend.

Microsoft (NASDAQ:MSFT) isn’t known for digital advertising or using personal data to generate revenue. Still, the company has a big digital ad business. Microsoft’s search advertising revenues measured $7 billion last year. LinkedIn revenues were around $5.3 billion. The company also makes ad revenue through other segments, but doesn’t break that out. Thus, Microsoft’s total data-related ad revenues measured in excess of $12 billion last year, and likely closer towards $15-20 billion. That would represent about 15% of Microsoft’s total revenues.

Because Microsoft isn’t known for digital advertising, the data dividend risk isn’t a big deal for MSFT stock. The big growth narrative here is cloud, not digital ads. Thus, Microsoft can afford a set back in the digital ad business, so long as the cloud business remains healthy. At the end of the day, as go the cloud businesses, so goes MSFT stock.

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

Dividends

Pick Up These 3 High-Yield Stocks Raising Dividends in April

While the Fed has for now put interest rate increases on hold, I continue to receive questions on whether REIT values will be hurt by rising interest rates. It is a widely held –but inaccurate– belief that REIT values must fall if interest rates continue to increase. The fact that many REITs increase their dividends over time tells us that these are businesses with potential for growing dividends and share values even in a rising rate environment.

Recently, I looked at the history of REIT values and interest rates. Since 1995, there has been 16 periods of significantly rising interest rates. Out of those 16, REIT values increased 12, or 75% of the time. In the period from June 2004 through August 2006 the Fed increased rates 16 times. During that period REITs outperformed the S&P 500, 59% to 22%.

The fact is that REIT results are driving more by economic conditions, rising commercial real estate values, and the ability of REITs to increase the rental rates on their properties. We can monitor how well a REIT is performing from its history of dividend growth.

Related: 3 High-Yield REITs Raising Dividends in March

Most REITs announce any dividend increases once a year, in the same month each year. Across the sector there are increase announcements in almost every month in the calendar. You can often get a nice share price gain by buying shares before a dividend increase announcement hits the news wires.

I maintain a database that covers about 140 REITs. I use the database to track dividend rates, yields and increases. Of the 140, about 90 have histories of regular dividend increases.

There are four REITs that should announce a dividend increase in April.

American Campus Communities, Inc. (NYSE: ACC) owns, manages and develops primarily off-campus student housing properties in the United States. The company owns over 200 properties near 96 college campuses.

While some growth comes from acquisitions or development, ACC also realizes 2.5% per year of average rental rate growth. Since resuming dividend increases in 2013, the payout has been increased by 5% to 6% for six consecutive years.

In 2018 FFO per share was in line with previous years. The current dividend is 80% of 2018 FFO per share, so another 4% to 5% increase still likely for this year to keep the growth record going.

The new dividend rate is announced at the end of April/early May with an end of May payment date.

ACC currently yields 4.1%.

Hospitality Properties Trust (NYSE: HPT) owns 325 hotels and owns or leases 199 travel centers located throughout the United States, Canada and Puerto Rico. All the properties are leased to management operators. In 2018 FFO per share was up 2% compared to the 2017.

The current dividend rate is 57% of 2018’s FFO. For the last several years, HPT has been increasing the dividend by about 2% annually. I expect an increase this year of similar magnitude.

The new dividend rate has been announced in mid-April, with a late April record date and second half of May payment date.

HPT yields 7.9%.

Life Storage Inc. (NYSE: LSI) owns over 750 self-storage facilities located in 28 states and Ontario, Canada. Self-storage has been a cyclical REIT sector and growth has flattened over the last year. Life Storage was growing its dividend by over 10% per year before keep the rate flat for the last two years.

For last year FFO per share increased by 3.7% so investors should look for a low single-digit dividend increase. If a boost is coming in April it will be announced near the start of the month for the dividend to be paid at the end of April.

The stock yields 4.1%.

Bonus Recommendation:

Tanger Factory Outlet Centers Inc. (NYSE: SKT)was the pioneer in developing factory outlet malls. The company has increased its dividend every year since its 1993 IPO. Over the last five years, the payout has grown at a 9/63% annual compounded rate. However, the rate was increased by just 2.2% last year.

In 2018, AFFO per share was up slightly compared to 2017 results. With the turmoil in brick and mortar retail, Tanger has stayed conservative with its balance sheet and growth projects. The current dividend just 58% of AFFO. I expect a 2% to 3% increase to keep the company’s dividend growth track record intact.

The next dividend will be announced in early April with and end of April payment date.

SKT currently yields 6.8%.

Source: Investors Alley

Technology

Why NOW Is the Time to Buy Gene Therapy Stocks

The biotech industry has been on a tear in 2019, up 25% through the first two months of the year. That’s great. But niche gene therapy stocks are performing even better.

gene editing

Source: Shutterstock

The rally has been fueled by a strong combination of merger announcements, positive news from the FDA and the continued development of breakthrough therapies. Headlines have been popping up nonstop over the last week, and today I’d like to recap some of the highlights.

Spark Therapeutics (NASDAQ:ONCE), a small-cap biotech that focuses on gene therapies, was purchased by pharmaceutical giant Roche (OTCMKTS:RHHBY). On a per-share basis, the $4.8 billion purchase price equated to $114.50 — a huge 122% premium over ONCE’s previous close. Spark investors are now looking at 190% gains in 2019 alone.

The same day, CRISPR Therapeutics (NASDAQ:CRSP) announced that human trials had begun for its CTX001 gene therapy drug. A patient suffering from beta-thalassemia had been dosed. And in just a few months, the same drug is expected to be tested on patients with sickle cell disease.

CTX001, which is based on the CRISPR/Cas9 gene editing technique, is currently undergoing Phase I/II trials. Typically, the first dose in such a trial would not be a headline. But this was the first time that CRISPR technology had ever been used on a human. The news sent CRSP up more than 20%.

A few days later, gene therapy stock Sarepta Therapeutics (NASDAQ:SRPT) released impressive results for its muscular dystrophy drug. And in the same press release it announced the $165 million purchase of privately-held gene therapy company Myonexus. The stock rallied on the news and is now up 34% so far this year. But even with the acquisition news, SRPT has long been rumored as a takeover target for larger pharmaceutical companies.

Finally, micro-cap gene therapy stock MeiraGTx Holdings (NASDAQ:MGTX) announced an $80 million private placement. This is important because its lead investor is the private arm of Johnson & Johnson (NYSE:JNJ). MeiraGTx is already up a whopping 67% in 2019.

Get in Position for Life-Changing Profits from Gene Therapy Stocks

There is absolutely no question that there is money to be made in the gene therapy stocks over the long term. However, because the sector is still in its infancy, we have to expect increased volatility. What we’re seeing now is a very strong upswing.

Gene therapy is on track to save countless lives. It’s also on track to make you life-changing profits as long as you can weather the ups and downs that are simply the nature of early-stage mega-trends.

Matthew McCall is the founder and president of Penn Financial Group, an investment advisory firm, as well as the editor of Investment Opportunities and Early Stage Investor. He has dedicated his career to getting investors into the world’s biggest, most revolutionary trends BEFORE anyone else. The power of being “first” gave Matt’s readers the chance to bank +2,438% in Stamps.com (STMP), +1,523% in Ulta Beauty (ULTA), +1,044% in Tesla (TSLA), +611% in Liquefied Natural Gas Limited (LNGLY), +324% in Bitcoin Services (BTSC), just to name a few. If you’re interested in making triple-digit gains from the world’s biggest investment trends BEFORE anyone else, click here to learn more about Matt McCall and his investments strategy today.

Source: Investor Place

Dividends

Pick Up These 3 High-Yield Stocks for Long Term Profits

Earnings season for individual stocks has evolved into nothing more than a game. Analysts from the Wall Street firms put out their estimates for quarterly revenue and profits.

Those estimates are averaged into a consensus estimate. When earnings come out the stock trading world looks to see whether individual companies “beat” or “miss” the earnings estimate, which is no more than an average of computer model based guesses from analysts. It’s a silly game that unfortunately can result in sharp share price declines when a company misses analyst expectations.

For investors looking for long term wealth building and attractive dividend income, these stock price drops can, if you understand the affected companies, provide great buying opportunities. Just after earnings share price gains or drops are mostly related on where the reported results stacked up against the Wall Street estimates.

Traders currently don’t seem to be looking at comparison to past results or the prospects of the companies. This is where you, with a longer term outlook, can take advantage of the short-term, earnings “miss” price drop. If a company’s prospects are solid, a quarterly earnings miss should be viewed as an opportunity to pick up shares on sale.

Here are three stocks with earnings related price drops that have excellent long term prospects.

CyrusOne (Nasdaq: CONE) reported 2018 Q4 and full year earnings on February 20. Over the next week the CONE share price dropped from just over $57 to now right under $50. That’s a 12% drop in a week.

There are several reasons for the drop. The company did not follow its pattern of increasing the dividend with this earnings report. The quarterly rate declared stayed at $0.46 per share. In addition, 2019 FFO/share guidance was flat to very slightly down from the cash flow produced in 2018.

The counterpoint to the short term cash flow growth slowdown is that in 2018 the company made investments to ensure years of future growth. Land acquisitions in prime data center areas give the company capacity to construct new data centers that will triple the current footprint.

2018 revenue, EBITDA and FFO growth were 23%, 16% and 16%, respectively. The company is producing strong revenue and cash flow growth. The investment positive is that CyrusOne will have big committed investment years such as 2018 and 2019, and those investments will show up several years down the road as great returns on investment, higher FFO per share and dividend increases.

CyrusOne is in a real estate sector –data centers –that will have high demand growth for at least a decade.

A different factor recently pushed the value of EQT Midstream Partners LP (NYSE: EQM) down by almost 10%.

The trigger event for the sell-off was a federal court refusing to hear an appeal on a ruling tossing out the construction permit of the Atlantic Coast Pipeline under construction by Dominion Energy. EQM dropped because they are the major partners on the competing Mountain Valley Pipeline –MVP. The map below shows the routes of the two pipelines.

While the two pipelines have similar routes, it’s tough to make a comparison. The biggest difference is that MVP is 70% complete, including 175 miles of the 303 miles already welded in position. In comparison, the Atlantic Coast Pipeline received construction approval in October 2018 and construction was stopped in December. MVP does need to obtain a Nationwide 12 Permit from the U.S. Army Corps of Engineers for stream and waterbody crossings.

Currently work is scaled back for the winter. Full construction work on MVP will restart in the Spring, and full in service date is forecast for Q4 2019. The EQM situation is comparable to the Atlantic Coast Pipeline legal setback.

EQM is an MLP with a current 11% yield and will grow distributions by 5% per year.

Altus Midstream Company (Nasdaq: ALTM) is a new energy midstream corporation that was formed in August 2018.

This is a “blank check” type of new company that will use the IPO proceeds to acquire energy gathering and pipeline assets.

ALTM is sponsored by Apache Corp. (NYSE: APA) and Kayne Anderson Acquisition Corp. The company has rights of first offer on five pipeline investments. The prospective acquisitions are worth over $3 billion. With its first quarterly earnings for the 2018 fourth quarter, the company had very little revenue and profits to report. Since the earnings, ALTM has dropped by 24%. Current market cap is $650 million.

This is a more speculative energy infrastructure play that just became a lot cheaper.Boring Photo Reveals Trump’s Fate in 2020 Election

While Republicans and Democrats fight tooth and nail in Washington…

President Trump has stayed busy signing 16 pieces of legislation that have ignited a massive $109 trillion income opportunity.

Dividends

Weekly Market Summary

The Dow Jones Industrial Average and S&P 500 fell each of the final three trading days of the month, but all of the major U.S. stock indexes still finished February more than 3% higher. The result is the best two-month start for the S&P 500 since 1991.

Investors have certainly been playing offense in the first two months of 2019, as the following chart shows. Industrial and technology names have led the way higher year-to-date, while defensive sectors (healthcare and utilities) have lagged.


Source: Bespoke Investment Group

Minimal Trade Progress in Asia

President Trump was in Vietnam this week, meeting with Kim Jong Un of North Korea. The talks abruptly ended on Thursday, as the two sides were unable to make progress amending U.S. economic sanctions and North Korea’s nuclear aspirations.

Earlier in the week, President Trump had pushed forward a March 1 deadline to consider enacting further tariffs against China. On Thursday, China reported a three-year low reading of its manufacturing Purchasing Managers’ Index, suggesting the economy is contracting.

U.S. Economy Hummin’ Along

Back at home, the economy appears alive and well, as evidenced by the GDP report on Thursday. The data showed 2.6% U.S. growth in the fourth quarter, which exceeded expectations.

Looking ahead to next week, the main economic focus will be the February jobs report on Friday. The consensus estimate calls for the addition of 185,000 non-farm payrolls and this number has generated a large upside surprise the past two months.

Retail on Earnings Calendar

While most traders were focused on the macro headlines this week, many companies back in the U.S. posted quarterly results. Retailer Best Buy (BBY) was the big winner, gaining 14% a day after posting robust holiday results. On the other hand, HP Inc. (HPQ) lost 18% the day after announcing disappointing sales.

Retailers will continue to dominate the earnings calendar next week. In addition to the names highlighted below, Kroger (KR) and Ross Stores (ROST) will also offer a look into the health of the U.S. consumer.

U.S. stocks are off to the best start in nearly 30 years. After a sharp rally like this, some questions we usually hear are: “should I move my money around?” and “what’s still worth buying now?”

Market-timing, especially when to sell a big winner, is a decision that even experienced investors can struggle with.

However, if you’re nearing retirement or already retired, all you really care about is generating consistent income and protecting your hard-earned nest egg– not whether a company misses earnings expectations by a few pennies, or economic and political negotiations occurring halfway around the world.

The good news is: there’s a better way. My colleague Brett Owens has created an “8% No-Withdrawal Portfolio” that generates steady income and impressive capital gains.

Source: Contrarian Outlook

Technology

5 Tech Stocks Investors Should Buy on the Rebound

Source: Shutterstock

If investors have learned anything over the last few months, they have learned that seemingly unstoppable tech stocks have their limits. Even popular equities such as Amazon (NASDAQ:AMZN) and Netflix (NASDAQ:NFLX) saw shares plummet as investors dumped tech equities in droves.

Many stocks have seen a significant recovery since Christmas Eve. However, few have returned to pre-October highs. Many of these equities became victims of overselling. Pessimism can often take stocks down to low price-to-earnings (P/E) ratios. Such metrics usually indicate that some have become stocks to buy on sale rather than equities investors should put up for sale.

Many prominent tech stocks have likely reached that point. These five teck stocks offer both reasonable valuations and a commanding position within their niche of tech:

Apple (AAPL)

Apple (AAPL) tech stocks to buy

Source: Shutterstock

Admittedly, even when Apple (NASDAQ:AAPL) supported its $1 trillion-plus market cap, it was not considered expensive from a P/E standard. However, sales of the iPhone have failed to keep up with growth expectations, and AAPL stock still plunged as a result. Now, the company must make its way forward without the iPhone driving a majority of its revenue.

Apple appears positioned to make that change. Even if it fails to innovate on its own, AAPL holds $245 billion in cash, more than the gross domestic product (GDP) of all but 45 of the world’s countries. This gives AAPL the power to buy what it cannot create, though it already may have found the next growth niche. Former Apple CEO John Sculley believes that the healthcare-related features of the Apple Watch will become the company’s most significant innovation since the iPhone.

While investors wait for healthcare or another innovation to drive revenues, they can buy AAPL stock at a reasonable valuation. Thanks to the drop in the stock price, the forward P/E stands at 13.7. Moreover, the double-digit growth that suddenly turned negative in 2018 should return this year.

I do not expect an immediate recovery for Apple. Investors will need to see a new product category take hold before interest in Apple stock returns. However, with a low valuation and double-digit earnings increases in store for AAPL, the stock price should move higher over time.

Baidu (BIDU)

tech stocks to buy bidu

Source: Shutterstock

Despite negligible involvement with the United States, the U.S.-China trade war, as well as a general slump in tech stocks, took its toll on Baidu (NASDAQ:BIDU). As the Chinese-language counterpart to Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) Google search engine, the company conducts little direct or indirect activity outside of its home country. Nonetheless, BIDU stock has fallen about 43% from its 52-week high.

Despite this slump, the company beat earnings estimates in its last report and raised guidance. Moreover, the drop from last year has taken the forward P/E to about 12.8. Analysts predict profit growth will come in at a modest 2.7% this year. However, they also expect to see a 25.6% increase in earnings next year.

BIDU stock comes with some risk. Since American investors cannot buy shares directly in China-based companies, Baidu stock buys one into a Cayman Islands-based holding company entitled to a share of the company’s profits. Moreover, while the U.S.-China trade war could end soon, the uncertainty will linger until both countries come to an agreement.

Still, with Google blocked and Baidu serving as the primary search engine for China’s 1.39 billion population, I think the recovery of BIDU stock becomes only a question of when.

Facebook (FB)

tech stocks to buy fb

Source: Shutterstock

In 2018, Facebook (NASDAQ:FB) suffered through its worst slump since soon after the 2012 IPO. Allegations related to enabling election interference as well as privacy concerns have weighed on the stock. The drop hit a crescendo with the single-largest one-day market cap loss in stock market history last summer. Moreover, Facebook’s failure to protect private data as well as compliance issues in the midst of the E.U.’s General Data Protection Regulation (GDPR) have also weighed on FB stock.

Despite these attributes, the buy case for FB stock remains. Even though FB has begun to recover from the 2018 slump, the stock trades at about 18.3 times earnings. Profits will probably see a modest decline this year. However, analysts forecast a 17.2% surge in profits in 2020, and further double-digit increases in subsequent years.

Moreover, FB stands out among tech stocks as the only mega-cap social media stock. It owns four of the six apps boasting one billion or more users. Furthermore, no site in this industry has challenged Facebook’s dominance. Twitter (NYSE:TWTR) will likely not venture beyond its microblogging niche. Snap’s (NYSE:SNAP) popularity among youth faces a serious challenge from the Facebook site Instagram.

Facebook will have to address its political and privacy-related challenges. However, with its dominance of the social media space unchallenged, FB stock will find itself slowed but not stopped by recent controversies.

Nvidia (NVDA)

tech stocks to buy nvda

Source: Shutterstock

Until the last quarter of 2018, Nvidia (NASDAQ:NVDA) appeared unstoppable. Having parlayed its gaming capabilities into data center, artificial intelligence (AI) and virtual reality (VR) applications, it supplanted Intel (NASDAQ:INTC) as the most important of the tech stocks in the semiconductor space.

However, once the crypto craze died off, the air of invincibility around NVDA stock died with it. Too many chips flooded the market, and NVDA plummeted along with most other tech stocks. The 2016-18 bull market in NVDA also had reached extremes. The P/E ratio had approached 60, and profit growth, while impressive, did not back up that growth.

Still, even without crypto, Nvidia’s involvement in AI, VR and gaming still make it arguably the most critical equity in the semi space. As our own James Brumley points out, Nvidia chips power the world’s fastest supercomputers. Their tech has also moved ahead of peers on the AI front.

Nvidia’s financial metrics have also become more favorable for buyers. The forward P/E ratio has fallen to a more reasonable 21.5. Profits will shrink this year as the industry continues to work off the oversupply in chips. However, they also believe the end of the chip glut will bring a 32.8% increase in profits next year. Although profiting from NVDA stock will take time, I think a wider adoption of data centers, AI and VR will help NVDA surpass its 2018 highs.

Qualcomm (QCOM)

qcom tech stocks to buy

Source: Shutterstock

Over the last few years, Qualcomm(NASDAQ:QCOM) has become better-known for its patent disputes with Apple and its failed attempt to buy NXP Semiconductor (NASDAQ:NXPI) than for smartphone chips. However, amid its controversies, it still collects royalties on its 3G and 4G chips. Now, the Snapdragon 855 looks poised to help Nvidia profit from the rollout of 5G phones powered by Android.

5G will force phone upgrades over the next few years. Also, because 5G will enable more Internet of Things (IoT) devices, revenues and profit growth could go well beyond predicted levels.

Moreover, thanks to the failed merger, Qualcomm will buy back $30 billion worth of QCOM stock this year. If a smaller supply is not enough to persuade buyers, QCOM also includes a 4.7% dividend yield. Also, this payout has risen for eight straight years, even amid the patent dispute and the failed buyout.

Several other metrics favor buyers. As a result of last fall’s slump in tech stocks, QCOM trades at 12.2 times forward earnings. Wall Street expects tepid growth this year. However, they forecast 12.4% earnings growth in 2020, and double-digit increases in future years. Due to its critical involvement in 5G, Qualcomm will play a crucial role in upgrades over the next few years. The growing revenues and profits from these purchases should upgrade the price of QCOM stock as well.

Source: Investor Place

Uncategorized

7 March Madness Stocks to Consider for the Big Dance

Source: slgckgc via Flickr (modified)

The Big Dance is just around corner. I’m talking about March Madness, of course. The winner-take-all, single-elimination tournament to decide the champion of the 2019 NCAA Men’s Basketball season. Millions of viewers. Sixty eight teams. Dozens of venues. Six rounds. One winner.

Some call it the most exciting times of the year for sports fans. It may be. But the fact that the stock market tends to perform really well during March Madness isn’t up for debate. Stocks often tend to rise during the March Madness tournament, which spans throughout all of March and spills into April. They also tend to rise during that stretch by more than any other stretch during the year.

Maybe it’s just a coincidence. Maybe not. But, there are unarguably a handful of March Madness stocks which do directly benefit in a big way from the Big Dance.

Which stocks fall under that umbrella? Let’s take a look at seven March Madness stocks to track as the Big Dance plays out in March and April.

March Madness Stocks to Watch: Nike (NKE)

Of all March Madness stocks, the one to watch most is Nike (NYSE:NKE).

The athletic apparel giant has its fingertips all over the Big Dance. Nike consistently outfits somewhere north of 40 of the 68 teams that play in March Madness, representing about 60% of the tournament’s participants. That means that six out of every 10 jerseys, shoes, warm-ups and more in March Madness sports a Swoosh or Jumpman logo. So, for the millions of viewers who tune into March Madness every year, the Nike brand is everywhere. It also helps that this year’s top four teams (Gonzaga, Virginia, Duke and Kentucky) are all Nike schools.

Of course, this is huge for Nike basketball mind-share. That’s big for Nike’s entire business. Nike dominates the basketball market, and this dominance is a big driver behind Nike’s nearly $40 billion revenue base. As such, continued dominance in basketball will keep Nike atop the entire the athletic apparel market.

Adidas (ADDYY)

Although Nike is king in the basketball market, Adidas (OTCMKTS:ADDYY) is gradually making moves in this market which are becoming increasingly apparent during March Madness.

In 2015, Adidas outfitted just 11 of the 68 teams in March Madness. In 2017, Adidas outfitted 15 of the teams. This year, that number could very well be higher. Importantly, one of the nation’s top teams — Kansas — is an Adidas school.

As is the case for Nike, basketball is a huge market for Adidas, and a healthy presence in the Big Dance is a net positive for Adidas basketball mind-share. The benefits here are smaller than they are over at Nike, given smaller overall presence. But, if an Adidas team makes some serious noise in the Big Dance (like Kansas), then that could be a huge medium to long term win for ADDYY stock.

Under Armour (UAA)

When it comes March Madness stocks and athletic apparel brands, Nike is king, Adidas is a solid second place and Under Armour (NYSE:UAA) is the dark horse with a lot of potential.

Back in 2015, Under Armour outfitted just six of the 68 teams in the Dance. In 2017, that number doubled to 12. This year, that number could be even bigger. Texas Tech, an Under Armour school, has a fringe-top-10 basketball team this year. Meanwhile, both Maryland and Wisconsin — also Under Armour schools — are top 20 teams, and Cincinnati is a top 25 team. Thus, Under Armour has four teams this year which could make some serious noise in March.

If any of them do, that could be big for UAA stock. Under Armour has struggled in the basketball market ever since early red-hot success with NBA superstar Steph Curry faded. Surprise college basketball success in the 2019 Dance could reinvigorate the now-stalled-out Under Armour basketball growth trajectory. If it does, that could create sizable tailwinds for UAA stock.

CBS (CBS)

Any discussion of March Madness stocks would be incomplete without CBS (NYSE:CBS), the network which hosts a healthy portion of the Dance’s 63 nationally televised games, including the most watched ones.

March Madness coverage averages millions of viewers per game, and most data indicates that those numbers are only going up. A healthy majority of those games air on CBS. Moreover, viewership goes up as the tournament narrows down, and some numbers point to the final games in the Big Dance averaging 15 million-plus viewers. All those final games are televised through CBS.

As such, CBS has a lot to gain through ad revenue and partnerships during March Madness. There’s reason to believe this year will have unusually large March Madness viewership, given the plethora of young talent across college basketball this year, the extreme level of parity among the teams, and the enormous hype surrounding college basketball’s best player, Zion Williamson. If March Madness does score unusually large viewership ratings this year, the biggest winner will be CBS stock.

AT&T (T)

There are 63 nationally televised games in March Madness. CBS doesn’t air all of them. In fact, a majority of the tournament’s early games are aired by Turner Sports, which is owned by AT&T(NYSE:T).

Through TBS, TNT and truTV, Turner Sports actually airs a majority of March Madness games in the first and second rounds, as well as half the games in the Sweet 16 and Elite 8. To be sure, those games average less viewers than the Final Four and Championship Game. Nonetheless, they still average millions of viewers per game, and represent a sizable ad revenue opportunity for AT&T.

As stated earlier, this year’s Dance could have unusually large viewership due to various factors, one of which is an unusually large amount of parity among this year’s field of teams. Higher parity usually lends itself to closer early round games, and also more upsets. That usually lends itself to higher viewership in the earlier rounds. As such, AT&T could actually be a big March Madness winner this year.

Coca-Cola (KO)

One company that consistently has its finger tips all over March Madness is Coca-Cola(NYSE:KO).

The beverage giant is one of the Dance’s official NCAA Corporate Champions, and that means that Coca-Cola TV ads and in-arena ads will be all over the place during March Madness. That’s a win for mind-share. It’s also worth noting that Coca-Cola owns Powerade, the sports drink brand which is typically front-and-center during the entire March Madness tournament.

This year is especially important for Coca-Cola. The company is under intense pressure regarding the health of some of its core drinks, including the staple Coca-Cola carbonated beverage. Thus, it has an opportunity this year to reduce that pressure via effective March Madness marketing. If they do, sales in North America could get a nice lift, and that could power gains in KO stock for the rest of the year.

Source: Investor Place