Monthly Archives: April 2019

Options

Cash in on Lyft’s Big Moves (either way) With This Simple Option Trade

Whether or not it’s worth investing in IPOs always seems up for debate. It almost certainly varies from company to company. However, one thing that most investors agree on is that IPOs are interesting to talk about and can be fun to follow.

After several mostly dull years on the IPO front, 2019 seems like it could be quite a bit more interesting. We’ve already had Levi Strauss (LEVI) and Lyft (LYFT) come out with big IPOs. We could have Uber and Pinterest in the near future. Later in the year, we may get Airbnb, WeWork, Slack, and perhaps others. That’s quite a year for IPOs.

Trading IPOs is nothing if not exciting – especially once the options are listed. That’s not to say that every IPO has multiple large magnitude moves after launching. But, IPOs where there’s no consensus agreement on the valuation can certainly have their share of volatility.

This often takes place with companies which aren’t earning profits but have spent a ton of money already (in expenses). When the stock price is based entirely on future potential, opinions will vary greatly. How do you price hype?

We’ve seen this situation play out with LYFT. The ride share company is one of two huge players in the space – the other one being Uber. The growth potential in the ride sharing space is vast. However, the company also has net losses of over $900 million.

LYFT’s IPO price was $72, and it quickly climbed to as high as $88 on the day of the launch. However, the hype didn’t take long to fade, and the stock price quickly dropped below the IPO price. As I write this, the share price is all the way down to about $61.

So, how do you trade a stock like Lyft with options? Can you take advantage of all the volatility? Is it worth the risk?

At least one options trader thinks so. This trader purchased a straddle in LYFT, which makes money if the stock moves far enough either up or down from the strike price. By the way, a straddle is simply buying a call and put at the same strike, in the same expiration.

In this case, the trader purchased the May 10th 68 straddle in Lyft, with the stock price right at $68. Most of the time, you’ll see the straddle purchased at the strike that is closest to the actual price of the underlying stock, also know as the at-the-money strike.  

The cost of the straddle (the combination of the 68 call and put) was $9.53, which is certainly expensive. Of course, that’s what you’d expect from a stock that moves as much as Lyft has so far. The breakeven points for the trade are roughly $58.50 and $77.50. So, if the straddle moves beyond those points (and it’s currently already most of the way towards the lower the number) then the trade profits.

About 250 straddles were purchased, so each dollar above or beyond the breakeven points will generate $25,000 in profits. However, the trader paid over $250,000 for these straddles and that premium is at risk the closer the stock closes to $68 at expiration.

So – should you make a straddle trade in Lyft? Well, in this case, it looks like it was a successful gamble. You could still pay about $950 per straddle at whatever the current at-the-money strike is, but that’s clearly a lot of money to spend on one spread (strategy).

On the other hand, Lyft has been sufficiently volatile to justify the price of the straddle so far. I wouldn’t make a habit out of trade like this, but doing a small amount (like 1 or 2 straddles) in a situation like this will likely work out in the short-term. The risk is certainly high due to the cost, but the rewards may also be substantial.

For those curious, professional options traders may make a trade like this, but they’d hedge it with shares of LYFT. It’s a strategy called gamma scalping. It can work really well when there’s volatility, but can be costly and requires you to be at your screen for most of the trading day.

Source: Investors Alley

  [FREE REPORT] Options Income Blueprint: 3 Proven Strategies to Earn More Cash Today Discover how to grab $577 to $2,175 every 7 days even if you have a small brokerage account or little experience... And it's as simple as using these 3 proven trading strategies for earning extra cash. They’re revealed in my new ebook, Options Income Blueprint: 3 Proven Strategies to Earn Extra Cash Today. You can get it right now absolutely FREE. Click here right now for your free copy and to start pulling in up to $2,175 in extra income every week.
Technology

Two Automation Stocks to Buy to Welcome our Robot Overlords

The other day, I decided to reward myself with a trip to McDonald’s (MCD). I’ll confess that I’m not a regular patron of MickeyD’s, but I’d had a long day, and, as a red-blooded American male, I can resist my McNuggets for only so long. So I gave in to temptation.

But once inside the restaurant, I came face to face with an astounding sight. There I saw it. Behold! The future!!! Or, more specifically, an electronic ordering kiosk.

I placed my order, swiped my credit card, and a few moments later, a human being brought me my fried bounty. Total time: four minutes. It couldn’t have been easier or more convenient.

These kiosks are popping up around the country. McDonald’s says it’s planning 1,000 new kiosks a quarter. Actually, the U.S. market is behind Europe and Canada, where the kiosks more established.

The benefits are obvious. The kiosks never get an order wrong. They never get tired. They never take lunch breaks. (Of course, they never form unions either.)

At first sight, the kiosk seemed odd, but it really shouldn’t. After all, much of our world is being automated. It’s changing our economy, and even changing our culture. Could we eventually see a day when a McDonald’s is run by machines? I think so.

Science fiction has had a lot of play with this idea, but what’s interesting to me is that the movies have looked at the macro scene, with big robots like Skynet and the HAL 9000. But what’s more intriguing is the micro level. How will an automated world impact boring mundane transactions?

The world of automation is loaded with investing opportunities, but investors need to be careful. Not every stock in this sector will be a winner, but a few have the potential to see fantastic returns. I’ll give you two such examples. Cognex (CGNX) is what I call the “Terminator” stock. They’re the world’s leading supplier of machine-vision products. Simply put, they help machines see.

These products have dozens of applications. For example, they make code readers that deliver fast and accurate reading of both 1-D and 2-D barcodes. These systems are far more accurate than laser-based ones, and they’re easier for people to work with. On the assembly line, machine-vision products can detect defects, monitor production lines, guide assembly robots, and track, sort and identify parts such as engine parts and semiconductors. Apple is a key customer.

I especially like that Cognex’s gross margins are near 80%. Their last several earnings reports have topped expectations, but the stock is down after a raucous rally in 2016 and 2017. I think the lower price gives us an opening. The next earnings report is due on April 29 after the closing bell. The consensus on Wall Street is for 17 cents per share. I’m expecting another beat.

The other stock is Rockwell Automation (ROK). This is the largest company in the world dedicated to industrial automation and information. Last year, Rockwell had revenue of $6.6 billion. The company is over 100 years old, and they have operations in more than 80 counties. Rockwell has 23,000 employees.

When you think of any assembly line with robot arms flinging parts around, you’re probably picturing Rockwell. Let me break down their business. Rockwell gets about half of its sales from heavy industries like energy, mining, paper and chemicals. Another 30% comes from consumer industries like food and beverage, home and personal care, and life sciences. Another 15% comes from transportation, and the final 5% is from a scattering of industries.

Truth be told, Rockwell is more of an industrial-software company. I say that because 70% of their sales include some sort of software. Rockwell has two operating divisions. The slightly larger one is their Control Products & Solutions division. That accounts for 55% of sales. This division deals with motor-control products.

The other division is Architecture & Software. This unit runs Rockwell’s control and information architecture capable of connecting a customer’s entire fabrication operations. Both units have been doing very well lately.

Three months ago, Rockwell crushed earnings. For Q1, they made $2.21 per share, which beat the Street by 22 cents per share. Rockwell’s CEO, Blake D. Moret, said,

“I am pleased with our results for the quarter. Almost six percent organic sales growth was well above expectations, led by consumer and heavy industries. Adjusted EPS grew by 13 percent, and our backlog increased.”

For fiscal 2019, Rockwell sees adjusted earnings ranging between $8.85 and $9.15 per share. Moret added “We have had wins across all regions and in our key industry verticals, and the pipeline of opportunities is growing every day.” I have to agree. The Q1 will be coming out soon. Look for a good report. Wall Street expects earnings of $2.09 per share.

Rockwell also pays a dividend which has increased for more than five years straight, albeit small at 97 cents, with the next payment coming up in a few weeks.

Bonus: The Robot ETF

I’ll give you a bonus. Another way to play the robotics sector is with the Robot ETF (BOTZ). The official name of the ETF is the Global X Funds Robotics & Artificial Intelligence ETF. The benefit of owning BOTZ is that you get instant diversification within the sector. The fund currently owns 36 stocks. The largest holdings are Intuitive Surgical, Keyence and Mitsubishi. BOTZ is up 26% YTD.

We’re living in an increasingly automated world. The applications are endless. It’s something to ponder they next time you ask a machine to get you a cheeseburger.

Pay Your Bills for LIFE with These Dividend Stocks

Get your hands on my most comprehensive, step-by-step dividend plan yet. In just a few minutes, you will have a 36-month road map that could generate $4,804 (or more!) per month for life. It's the perfect supplement to Social Security and works even if the stock market tanks. Over 6,500 retirement investors have already followed the recommendations I've laid out.

Click here for complete details to start your plan today.

Source: Investors Alley

Dividends

Weekly Market Summary: U.S. Stocks Kick Off April With Winning Streak

The domestic stock market averages started April on a positive note and on Thursday, the S&P 500 index achieved its longest winning streak in over a year.

Taking a bit further look back, Bespoke Investment Group noted this week that it’s now been 100 days since the major U.S. indexes bottomed in late December. Highlighted in the following table, Industrial and Technology names have led the average 22% gain in the S&P 500 since then, while healthcare stocks have lagged.

Source: Bespoke Investment Group  

Full Slate of Economic News

In overseas news this week, Theresa May suffered yet another defeat in Parliament, regarding the Brexit process. As a result, May finally proposed conceding to a strategy that could result in the UK pursuing a “softer” exit from the European Union.

Elsewhere, President Trump met with China’s Vice Premier Liu in Washington on Thursday. Earlier in the week, two separate reports of China’s manufacturing purchasing managers’ index confirmed that the economy returned to a state of expansion in March.

Back in the U.S., the March jobs report came in slightly ahead of expectations on Friday. The economy added 196,000 non-farm payrolls last month and numbers from the past two months were also revised higher by 14,000 jobs.

Looking ahead to next week, we’ll get a look at inflation measures for both consumer and producer prices in the U.S. In addition, the minutes from the latest FOMC meeting will be released on April 10.

Q1 Earnings Could Decline

Walgreens Boots Alliance (WBA) was a big earnings-related loser this week, falling 12% a day after disappointing investors with forward guidance.

Once again, earnings season is just around the corner, with activity set to pick up the week of April 22. In the meantime, the companies below are scheduled to headline the reporting calendar next week:

DateCompanyExp. EPS
4/10Delta Air Lines (DAL)$0.91
4/12JP Morgan Chase (JPM)$2.36
4/12Wells Fargo (WFC)$1.11

According to Factset, S&P 500 earnings are expected to decline 3.9% in the first quarter of 2019, down from expectations for 2.9% growth at the beginning of the year. Even though actual profits have historically exceeded expectations, the final result will likely be a far cry from the double-digit growth posted in each of the four quarters of 2018.

Stocks are up 22% over the past 100 days, but we’re staring at a potential earnings recession in the first quarter of 2019.

At times like this, a key question we usually hear is: “what’s still worth buying now?”

It’s important for investors to remember that whether stocks are up or down, the market always places a premium on growth.

A stable dividend of 5% or more is nice, but what investors really need to build wealth over time, is a dividend that management continues to raise year in and year out.

It may sound too good to be true, because growth investors and income investors don’t usually see eye to eye.

Income seekers want the security of 5%-plus annual dividend yields, while growth hounds think that cash should be reinvested back into the business– because a solid earnings report can send a stock up that much in one day.

We’re here to tell you it’s possible to have the best of both investing worlds, and my colleague Brett Owens can show you how, with his simple (and safe) way to earn 12% a year from stocks with “hidden yields”.

At that rate, your money will double every six years, plus you can triple the retirement income that most dividend aristocrats or “safe” fixed income investments currently offer.

How do we accomplish this? Brett has discovered a key relationship between dividends and price gains that allow investors to find both growth and income in “hidden yields”.

Companies that consistently grow their dividends over time tend to outperform. The trick is the best dividend stocks almost never show high yields, because stock gains tends to track the size of dividend increases. If a company increases its dividend by 10% and the higher yield brings new buyers in, it often will send the price up and the yield back down toward where it started.

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

Dividends

10 Highest Yield Dividend Stocks Going Ex-Div This Week

DIVIDEND INVESTING, HIGH-YIELD INVESTING, HIGH-YIELD INVESTMENTSApril 7, 2019 5:15 am by Investors Alley Staff

Stock  SymbolEx-Div DatePay DateDiv PayoutYield
CLM04/12/1904/30/190.2119.93%
CRF04/12/1904/30/190.219.69%
EDF04/11/1904/25/190.1815.94%
JQC04/12/1905/01/190.115.64%
ZF04/10/1904/18/190.3614.24%
EDI04/11/1904/25/190.1513.84%
GGN04/12/1904/23/190.0513.82%
ECC04/11/1904/30/190.213.77%
CNSL04/12/1905/01/190.3913.22%
ZTR04/10/1904/18/190.1112.39%

Data current as of market close 04/04/19.It is stocks like these that make up the high-yield portfolio (current average is over 8%) used in the Monthly Dividend Paycheck Calendar, a wealth creation system used by thousands of dividend investors enjoying a steady, reliable income.

The Monthly Dividend Paycheck Calendar is set up to make sure you receive a minimum of 5 paychecks per month and in some months 8, 9, even 12 paychecks per month from stable, reliable stocks with high yields.

If you join my calendar by Wednesday April 17th, 2019 you will have the opportunity to claim…

Pay Your Bills for LIFE with These Dividend Stocks

Get your hands on my most comprehensive, step-by-step dividend plan yet. In just a few minutes, you will have a 36-month road map that could generate $4,804 (or more!) per month for life. It's the perfect supplement to Social Security and works even if the stock market tanks. Over 6,500 retirement investors have already followed the recommendations I've laid out.

Click here for complete details to start your plan today.

Source: Investors Alley


Options

Want to Make a Big Bullish Bet On Facebook Ahead Of Earnings?

It’s undoubtedly been a good year for stocks, with the S&P 500 up almost 15% year-to-date. But, it’s been an even better year for the oft-embattled tech giant, Facebook (FB). Shares in the omnipresent social media company are up 33% so far this year.

FB has taken quite a beating over the last year on user privacy concerns and other regulatory issues. The company has dealt with issues ranging from not doing enough to curb election interference to promoting hate speech to selling user data to dubious third-party vendors. Moreover, there are growing calls by government officials to break up FB and its alleged monopoly power in the social media space.

Cleary, there has been plenty of bad news in recent months. As such, investors have to be pleased with the year-to-date results of FB stock taking everything into consideration. But, can the current bullish trend continue? And what about all the concerns from the previous year?

First off, I don’t think FB is in any real danger of getting broken up. I believe it would be very difficult to prove monopoly power for a company like Facebook, which technically has plenty of substitutes and competition out there.

On the other hand, other regulatory and privacy concerns are still an issue. FB is attempting to get in front of these issues (after months of criticism). However, the company still has a lot of work to do to improve the massive hit to its reputation.

Nevertheless, FB still has plenty of growth potential. That’s mostly because Instragram is still extremely popular, along with WhatsApp. Both platforms were acquired by Facebook and have continued to thrive and grow.

In fact, an analyst thinks Instragram’s new e-commerce service could produce $10 billion in revenues by 2021. That’s obviously music to the ears of current investors, who saw the shares gain over 3% when the analyst comment hit the wire.

Options action on FB has been plenty bullish as well. The last week of options activity has been roughly 70% bullish. Earnings are due during the first week of May, but many of the large trades I’ve seen expire in April. So, it wouldn’t be a shock to see the share price climb into next month’s earnings.

One trade in particular was about as bullish of a trade as is possible with options. This trade, called a risk reversal, has the strategist selling puts to finance a call purchase. Downside risk is precarious below the short put strike, but upside gain potential is enormous.

This particular trade expires April 18th and involved selling the 162.5 put and buying the 177.5 calls with the stock at about $174. The trade cost $1.42 and was executed about 1,000 times (for a total cost of about $150,000). That makes the breakeven point just below $179.

The 162.5 put was sold as a way to lower the price of the call, which would have cost nearly $2.00 without the proceeds from the short put. However, in return, the trader could lose $100,000 per $1 move below the put strike plus the premium cost of the trade.

Conversely, the trade generates $100,000 per $1 move above the breakeven point. By the way, that breakeven point of $179 is much closer to the price (about $174) than the short put strike. If FB closes in between the strikes at April expiration, the trade only loses the premium paid.

Still, this is clearly a very bullish trade over the next two weeks. There is quite a bit at stake using a risk reversal, so the trader clearly has a strong opinion on FB’s upside potential.

Now, most people shouldn’t mess with risk reversals, which are mostly used by professional traders. Instead, you can make a bullish trade on FB with limited risk over the same period by using a vertical call spread.

For instance a similar bullish trade for April 18th would be buying the 177.5 strike call and selling the 182.50 strike call. The trade only costs $1.25 and that’s all you are risking. The gains are capped at $3.75, which is still 300% return potential. That’s not bad for a trade with clearly defined and limited risk.

  [FREE REPORT] Options Income Blueprint: 3 Proven Strategies to Earn More Cash Today Discover how to grab $577 to $2,175 every 7 days even if you have a small brokerage account or little experience... And it's as simple as using these 3 proven trading strategies for earning extra cash. They’re revealed in my new ebook, Options Income Blueprint: 3 Proven Strategies to Earn Extra Cash Today. You can get it right now absolutely FREE. Click here right now for your free copy and to start pulling in up to $2,175 in extra income every week.

Source: Investors Alley

Uncategorized

The Best Electric Vehicle Stock to Buy Today

Electric vehicles (EVs) are taking the market by storm, and soon, auto manufacturers everywhere will fall in line.

In fact, investors watching this shift are gearing up to make a lot of money by investing in electric vehicle stocks.

Just take a look at Volkswagen AG’s (OTCMKTS: VWAGY) most recent announcement: They plan to produce 22 million EVs within the next decade.

And right now, manufacturers everywhere are slowly phasing out gas-powered vehicles. If you don’t believe that, just look at their online catalogs. Check out all the hybrids on the road nowadays.

This is a $1.7 trillion industry where the biggest names are announcing their lineups of hybrids and EVs.

And while most vehicles still run on gas, the above trends show the shift has already started. Whether it’s Ford, BMW, or Volkswagen, they’re all putting money into hybrid and electric vehicles.

5G Revolution: This breakthrough technology is expected to unleash $12 TRILLION in new wealth… and one $6 stock could be better-positioned than any other to skyrocket. Learn more.

Even Money Morning Defense and Tech Specialist Michael A. Robinson sees EVs as the future of the auto industry. In fact, he has a play that can help you get in on the action.

It’s one of the best electric vehicle stocks you can buy. And it’s kind of like owning an exchange-traded fund (ETF) for future automotive technology.

This EV Is Changing the Game

Volkswagen’s goal of 22 million EVs is a game-changer for the auto industry. In fact, it’s a 46% jump from its previous target of 15 million.

And right now, Volkswagen is the best-selling automotive company on the planet. It has even outsold Toyota Motor Corp. (NYSE: TM) for the past three years in a row.

Beyond that, the company predicts 40% of all its vehicles will be EVs in just a few years. By 2050, it expects to be completely carbon-neutral.

Allied Market Research says Volkswagen is a key leader in global EV production. According to their research, it’s a market segment that’s growing more than 22% annually.

AMR even predicts that the company’s EV sales will top $567 billion by 2025. That’s a 380.5% increase from 2017.

With such impressive growth, it’s a golden market for automotive suppliers to jump in and supply components to manufacturers for EVs.

In fact, we have a company that is one of the best suppliers to automotive manufacturers. This company is one of the best electric vehicle stocks to buy today.

So, if you’re a tech investor looking to make big profits, you better take this EV stock out for a spin.

Pay Your Bills for LIFE with These Dividend Stocks

Get your hands on my most comprehensive, step-by-step dividend plan yet. In just a few minutes, you will have a 36-month road map that could generate $4,804 (or more!) per month for life. It's the perfect supplement to Social Security and works even if the stock market tanks. Over 6,500 retirement investors have already followed the recommendations I've laid out.

Click here for complete details to start your plan today.

Source: Money Morning

Dividends

The 7 Steps I Always Follow for 8% Dividends in CEFs

Today, the 10-year Treasury pays just 2.4%. Put a million bucks in T-Bills and you’re banking $24,000 per year. Barely above poverty levels!

Hence the appeal of closed-end funds (CEFs), which often pay 8% or better. That’s the difference between a paltry minimum-wage income of $24,000 on a million saved or a respectable $80,000 annually.

And if you’re smart about your CEF purchases, you can even buy these funds at discounts and snare some price upside to boot!

The market’s fast run-up since January 1 has made cheap CEFs just a bit harder to find. And some CEFs have become so pricey that, if you hold them, you should consider selling before their premiums fall to earth.

(We recently spotlighted one CEF paying a too-good-to-be true 13.7% dividend. Unfortunately its ridiculous double-digit premium is about to evaporate! You can learn more about this one here.)

Perfect Time for a CEF “Brush-Up”

So, with the markets in flux, now is a great time to take a run through my “golden rules” of successful CEF investing.

Picking CEFs is a bit more nuanced than researching regular stocks, because we’re analyzing managers, strategies and holdings versus simple businesses models. After all, for lazy investors, it’s easier to count on dividends from a tired Dividend Aristocrat like Coca-Cola (KO) than it is to determine how much China exposure the Aberdeen Asia-Pacific Income Fund (FAX) has!

(The answer? Only about 5%. But that bit of extra bit of research will lead you to a secure 9.9% yield, versus a fallible 3.5% for Coke and its lineup of yesterday’s sugar-packed soft drinks!)

CEF Rule #1: Make Sure All Charts Include Dividends

The Gabelli Equity Trust (GAB) has been a great performer in the last decade—but going by its price chart, it looks like it’s been run over by the “dumb” SPDR S&P 500 ETF (SPY), which blindly tracks the market:

Looks Like a Laggard …

… Until You Add the Payouts Back!

Make sure the chart you’re reading includes dividends paid (so that it reflects total returns).

CEF Rule #2: Past Performance Matters

A fund’s history can tip you off to the quality of the management team and its strategy. GAB has one of the smartest stock pickers on the planet in Mario Gabelli, who drove it to that monster 556% return, with most of that in the form of cash payouts.

Meanwhile, the Aberdeen Total Dynamic Dividend Fund (AOD) has delivered the worst of all worlds. It crashed harder than the broader markets in 2008, then provided almost no rebound as stocks themselves bounced back.

Dynamic dividends? Not here!

Price Collapse Wipes Out AOD’s 8.3% Payout

Don’t be fooled by the siren song of its fat 8.4% current yield—it’s not going to do you much good when the fund’s share price drops out from under you.

Which brings me to our next point…

CEF Rule #3: A 1-Click Dividend “Health Check”

Some funds pay big distributions that look great, but they’re not sustainable. However they continue to attract new (sucker) investors because they are able to fund their payouts.

Too bad they’re doing it by eating into their net asset values (NAV, or the market value of their underlying portfolios)!

So you’ll want to pay close attention to NAV when you’re picking CEFs. Here are two funds whose underlying portfolios have grinded sideways (or worse) over the past three years:

2 More Big Yields Built on Flimsy Foundations

As you can see, the BlackRock Energy and Resources Trust (BGR) and the Wells Fargo Global Dividend Opportunity Fund (EOD) and have seen terrible NAV performance in the last three years.

So even though both offer outsized dividends of 7.8% and 11.7% respectively, that hardly matters! Because both funds’ weak NAVs kneecapped their total returns (with dividends included). You would have been way better off just buying SPY and being done with it!

Weak Portfolio, Weak Return

The bottom line? Always check out a fund’s NAV performance, in addition to its market-price return and dividend history, before clicking “buy.”

CEF Rule #4: Learn the 3 Ways a Fund Can Make Money

A closed-end fund can pay you from some combination of:

  1. Investment income,
  2. Capital gains, and/or
  3. Return of capital.

Of the three, investment income is preferable because it’s usually the most reliable. Many CEFs pay monthly distributions, so it’s best if they match up their payouts with steady income streams themselves.

Capital gains from rising bond or stock prices can further boost distributions. But they are at risk of disappearing if the markets turn unfavorably.

Finally, everyone assumes return of capital is bad, because it’s simply shipping your money back to you. But as we’ve written previously, it’s often good for investors.

What’s more, if the fund trades at a sizeable discount, this can actually be a savvy way to kickstart the closing of a discount window. More on this shortly.

CEF Rule #5: Keep Fees in Perspective

Most investors are conditioned by their experience with ETFs to search out the lowest fees. This makes sense for investment vehicles that are roughly going to perform in-line with the broader market. Lowering your costs minimizes drag.

Closed-ends are different, though. On the whole, there are many more dogs than gems. It’s an absolute necessity to find a great manager with a solid track record. Great managers tend to be expensive, of course, but they’re worth it.

The stated yields you see quoted, by the way, are always net of fees. Your account will never be debited for the fees from any fund you own. They are simply paid by the fund itself from its NAV.

CEF Rule #6: Never Pay Retail

One aspect of the CEF structure lends itself perfectly to contrary-minded investing: fixed pools of shares.

Mutual funds issue more shares whenever they want. But CEFs have a fixed share count, with their funds trading like stocks. As a result, from time to time a fund will fall out of favor and find its shares trading at a discount to its NAV.

This is basically free money because these underlying assets are constantly marked to market. If a fund trades at a 10% discount, management could theoretically liquidate the fund and cash out everyone at $1.10 on the dollar. Or it can buy back its own shares to close the discount window (and boost the share price).

You can see this in the Cohen & Steers Quality Income Realty Fund (RQI), which trades at an 8% discount now but has traded at par in the last year, implying some nice upside here:

RQI’s Free-Money Markdown

Source: CEFConnect.com

A discount is a great start, but do make sure the team at the top has a plan to close that window!

CEF Rule #7: Look for Management With “Skin in the Game”

It’s rare to see any fixed income manager put his or her own money on the line at all, unfortunately. According to a recent Barron’s article, nearly half of all closed-end funds have no insider ownership whatsoever.

That raises an obvious question: why would we want to own any of these funds, if the managers don’t want to buy in themselves?

The 3 Best Closed-End Funds to Bankroll Your Retirement

Closed-end funds are a cornerstone of my 8% “no withdrawal” retirement strategy, which lets retirees rely entirely on dividend income and leave their principal 100% intact.

Well that’s not exactly right.

Their principal is more than 100% intact, thanks to price gains fueled by collapsing discounts, like the example I gave you in Rule #6 above! Which means principal is actually 110% intact after year 1, and so on.

To do this, I seek out closed-end funds that:

  • Pay 8% or better…
  • Have well-funded distributions…
  • Trade at meaningful discounts to their NAV…
  • And know how to make their shareholders money.

And I talk to management, because online research isn’t enough. I also track insider buying to make sure these guys have real skin in the game.

Today I like three “blue chip” closed-end funds as best income buys. And wait ‘til you see their yields! These “slam dunk” income plays pay 6.1%, 8.6% and even 9.1% dividends.

Plus, they trade at 10 to 15% discounts to NAV, which means they’re perfect for your retirement portfolio because your downside risk is minimal. Even if the market takes a tumble, these top-notch funds will simply trade flat… and we’ll still collect those fat dividends!

If you’re an investor who strives to live off dividends alone, while slowly but safely increasing the value of your nest egg, these are the ideal holdings for you.

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

Technology

Jeff Bezos Text Messages Could Still Be Private if He’d Had This Service

The security officer hired to protect the richest man in the world just accused Saudi Arabia of hacking his client.

Jeff Bezos, the top dog at Amazon, hired Gavin de Becker to find out how his personal text messages wound up in the hands of the National Enquirer. The story is particularly juicy since Bezos accused the National Enquirer’s parent company of trying to blackmail him in exchange for favorable coverage from the Washington Post, which is owned by Mr. Bezos.

OK, but why would this interest the Saudis? Well, it doesn’t. At least not directly. Mr. de Becker claims the hack was due to the Post’s coverage of the murder of Jamal Khashoggi inside the Saudi consulate in Istanbul. Khashoggi wrote for the Washington Post.

This story is starting to sound like a le Carré novel, cloak and dagger stuff, but it’s real life. It also raises a disturbing question: if the richest man in the world can be hacked, how can you be safe? How can anyone be safe?

This is why cybersecurity is such a vital field, and I think it’s a long-term growth opportunity. There are a number of players in the field but I want to highlight my favorite, FireEye (FEYE), and illuminate why I think its subscription-based business model makes it best-positioned to enjoy profits in the years ahead.

FireEye: The Last Line of Defense

Interestingly, I’m not FireEye’s only fan. The CIA was not only an early customer but an investor as well through its In-Q-Tel venture capital arm. I also like that FireEye recently turned profitable after along period of steep upfront investments. On February 6, the company reported earnings of six cents per share. That topped Wall Street’s estimate by a penny per share. Stay tuned for the next earnings report which should be out in early May.

Cyber hacks are particularly worrisome because oftentimes the victims aren’t aware they’ve been victimized. Even Google has hired FireEye. FireEye has 230 threat analysts in 19 countries that speak 32 languages. The company is present in Kiev. They can be found in Israel. They can be found in South Korea. Name any hot spot and Fire Eye is there.

So what does FireEye do? CEO Kevin Mandia, a former Air Force officer and computer security officer at the Pentagon, described FireEye as “the last line of defense after all technology fails.” The company provides specialized software-based appliances under three broad categories—threat prevention, security management and security forensics.

FEYE offers cloud-based subscription services as well as consulting services to both commercial customers and governments.

FireEye’s threat prevention segment provides solutions against cyberthreats that may come through the web, e-mail, file or mobile. Its security management segment offers two types of products—a central management system and a threat analytics platform. The first allows customers to identify and block attacks.

The second is a cloud-based system that lets security teams identify and respond to cyber threats. They can correlate data from a security event from any security product with real-time threat intelligence.

FireEye also has a security forensics unit. This is the really cool stuff, and it’s considered to be one of the best in the industry. They have three products here: a forensic analysis system, a network forensics platform and an investigation analysis system.

The Subscription–Based Model

The key to understanding FireEye is that they’re shifting their business to a subscription-based model. This is a very good idea for a few reasons. One is that it generates recurring revenue that leads to a more stable outlook for its future revenue and earnings. The margins are also higher than their previous business model. Subscriptions are nice because this seems to bring in the customers while increasing penetration with existing customers, both of which will drive revenue growth.

The new model seems to be working. In fact, an analyst at J.P. Morgan just upgraded FireEye due to their billing potential.

Let’s look at some recent results.

For Q4 of 2018, the company reported record revenues and billings. CEO Mandia said, “The fourth quarter was a strong finish to a record year for FireEye,” He also noted that the company “achieved full-year non-GAAP profitability for the first time in our history.”

In Q4, FireEye’s recurring subscriptions and support billings rose by 20% over last year. Those accounted for 82% of all non-service billings in 2018.

As good as 2018 was, the company sees this year being even better. FireEye sees 2019 revenues ranging between $880 and $890 million, and they’re targeting gross margins of 75%. At the bottom line, FireEye projects earnings of 17 to 21 cents per share.

Despite their rosy outlook, the stock hasn’t done much over the last three years, but I think that gives us a good opportunity. We live in a dangerous world, and Fire Eye is working on real-world solutions.

Pay Your Bills for LIFE with These Dividend Stocks

Get your hands on my most comprehensive, step-by-step dividend plan yet. In just a few minutes, you will have a 36-month road map that could generate $4,804 (or more!) per month for life. It's the perfect supplement to Social Security and works even if the stock market tanks. Over 6,500 retirement investors have already followed the recommendations I've laid out.

Click here for complete details to start your plan today.
Pot Stocks

5 Cannabis Stocks Set to Skyrocket — According to Wall Street’s Top Analysts

acb stock Aurora Cannabis stock
Source: Shutterstock

The cannabis market is buzzing right now. According to Cowen & Co’s Vivien Azer — aka the first pot analyst — U.S. marijuana sales are set to reach about $80 billion by 2030. Currently, U.S. legal and illicit sales total at least $50 billion. That’s on top of an estimated 12 billion Canadian dollars in revenue by 2025, for both recreational and medical use, and $31 billion by 2025 in the 43 countries that have legalized medical cannabis or are likely to do so. In short, cannabis stocks represent a very compelling investing opportunity.

But which cannabis stocks are worth your time and money? Because honestly some pot stocks look seriously overvalued. For example Canaccord Genuity just downgraded Cronos Group (NASDAQ:CRON) to ‘Sell’ because ‘valuation has gotten ahead of fundamentals.’ So using TipRanks Top Analysts Stocks tool, I pinpoint five cannabis stocks that still have plenty of upside ahead. I believe that all these stocks make very intriguing investments right now. Let’s take a closer look:

Aphria (APHA)

Source: ShutterstockAphria (NYSE:APHA) sells medical marijuana direct to registered patients across Canada. It was the first Canadian LP to exclusively use greenhouses and is still one of the lowest-cost producers in the Canadian industry.

In the last three years, shares have rocketed by over 700% to $9.32. So despite the extreme gains, this remains a fairly cheap cannabis option. And now Aphria is set to soar higher.

Year-to-date, APHA stock has already surged over 60% as the company turns its back on a disastrous 2018. At the end of last year, Aphria was embroiled in a sticky legal situation, which featured a hostile takeover attempt and the exit of its CEO. Most worryingly, a short-seller alleged that insiders profited from acquiring international businesses at highly inflated prices.

However, a special board committee has now found that the price paid was acceptable and that the assets are progressing according to plan. As a result, top-rated Clarus analyst Noel Atkinson (Track Record & Ratings) has reiterated his buy rating on APHA. That’s with a new price target of $22.75, up from $19.25 previously — suggesting upside potential of over 100%.

Now Aphria needs to get its mojo back by refocusing on key operational items. This includes Health Canada cultivation approvals for Leamington Part IV and the Aphria Diamond facility, EU GMP status for export, and the launch of softgels. Plus the company’s new CEO has extensive executive experience guiding multi-billion-dollar CPG companies.

“Aphria’s list of near-term operational milestones is significant, and successful execution in a timely fashion could transform the Company both in terms of financial results and investor sentiment. If management can execute, there is the potential for a very substantial re-rating of the stock price from current levels” Atkinson tells investors.

Overall the stock earns a ‘Strong Buy’ consensus from the Street. Out of 5 analysts covering the stock, 4 have published bullish ratings. Want to learn more about Aphria Inc? Get the free APHA Stock Research Report.

Zynerba (ZYNE)

zynerba stock syne stock

Source: Zynerba PharmaceuticalsIf you haven’t heard of Zynerba Pharmaceuticals (NASDAQ:ZYNE) before, listen up. This promising biotech is currently running clinical trials for a groundbreaking cannabinoid (CBD) gel. Yes that’s right, gel. This is the first and only patented permeation-enhanced CBD gel for delivery through the skin and into the circulatory system.

According to ZYNE, the gel delivers drugs without using the digestive process. In doing so, it minimizes psychoactive effects, limits drug-drug interaction, and avoids digestion of the drug by the liver. Zynerba wants to use this to help treat rare neuropsychiatric conditions like Fragile X syndrome and autism spectrum disorder.

As far as investing is concerned, the upside potential is jaw dropping. Five-star HC Wainwright analyst Oren Livnat (Track Record & Ratings) reiterated his buy rating on ZYNE with a $23 price target on March 18- indicating 324% upside potential lies ahead.

Livnat noted, “We reiterate our Buy, rating and see the current $105M market cap ($27M EV) leaving remarkable upside potential on positive data; as our $23 price target still reflects only a 35% probability of success in FXS.” So keep an eye out for pivotal data from ZYNE’s lead FXS program, due by 4Q19. “We remain optimistic for positive data” adds the analyst.

Only three Wall Street analysts are covering ZYNE stock right now. But all three are a ‘buy’. With shares trading at just $5.42, their $20 average price target suggests shares have huge upside potential of over 250%. Get the ZYNE Stock Research Report.

Tilray (TLRY)

Wait For Canopy Growth Stock To Fall To $40 Before Longer-Term Uptrend

Source: Shutterstock Tilray Inc (NASDAQ:TLRY) is one of the largest producers of medical cannabis in the world. The company is set to be a major player in the evolving cannabis space, with supply agreements for no less than 8 Canadian provinces for adult use, and medical products currently available in 12 countries worldwide.

In just one-year prices have exploded by 192%– leading to accusations that the stock is ‘ridiculously expensive’. But I disagree, and so does five-star Cowen & Co analyst Vivien Azer (Track Record & Ratings). She is one of the best consumer goods analysts around and has just reiterated a buy rating on the stock with a $150 price target. From current levels that means we are talking about a further 129% upside. In other words, share prices can more than double.

So what will push prices higher? Azer is bullish on Tilray’s new $419 million CAD acquisition, Manitoba Harvest. By snapping up the world’s largest hemp food company, Tilray can ramp up its position in the fast-moving U.S. Cannabidiol market. According to Azer, this should help Tilray stabilize its top line in the face of supply constraints for Canadian recreational weed use. She raised her sales estimate for the current fiscal year to $179.4 million from $119.5 million, while boosting her fiscal 2020 revenue forecast as well. “We continue to believe that TLRY can reach CPG-like margins of ~30% longer-term” the analyst concludes. Get the TLRY Stock Research Report.

Cara Therapeutics (CARA)

gene editing spark stock

Source: ShutterstockFrom one of the world’s largest cannabis companies to one of the smallest. As far as cannabis stocks go, Cara Therapeutics (NASDAQ:CARA) continues to trade relatively under-the-radar. This clinical-stage biotech is busy developing a novel kappa opioid receptor agonist to change the way pain is managed.

Its lead drug candidate Korsuva has so far shown promising pain relief in clinical trials. Excitingly, this is without many of the traditional side effects that you see with mu opioids (morphine, oxycodone and hydrocodone) and NSAIDs (ibuprofen). That includes abuse liability. On top of this the company is developing a synthetic cannabinoid drug as a novel therapeutic approach for neuropathic pain.

“We believe that Cara is positioned to experience a transformational 2019, with the first few waves of major value inflection points that will bring it closer to a commercial stage company” cheers top Cantor Fitzgerald analyst Charles Duncan (Track Record & Ratings). He has just reiterated his CARA buy rating with a $27 price target.

Most notably, the company will reveal critical phase 3 data for chronic kidney disease associated pruritus in 2Q19. With strong results from previous trials, analysts are optimistic that the data will meet its desired targets. And a partnership with Fresenius (worldwide hemodialysis provider) provides further upside potential post-approval.

“We believe that IV KORSUVA will prove to be a commercially de-risked asset should it get approved in the U.S. and EU because of the company’s agreement with Vifor Fresenius Medical Care Renal Pharma,” states Duncan. Indeed, six out of seven analysts are bullish on Cara Therapeutics right now. That gives the stock its ‘Strong Buy’ Street consensus.

Shares are currently trading up 50% year-to-date. Get the CARA Stock Research Report.

Constellation Brands (STZ)

Source: ShutterstockAs we all know Constellation Brands (NYSE:STZ) is a drinks giant, with Corona one of the most popular beer brands under its umbrella. But thanks to its savvy Canopy Growth (NYSE:CGC) investment, STZ also provides unique exposure to the burgeoning cannabis market.

Following a $4 billion investment, STZ now owns a 38% stake in Canopy, one of the world’s largest cannabis companies. Canopy boasts a leading position in both the recreational and medical markets, and is now also aggressively expanding into U.S. hemp production.

“We continue to see compelling upside in STZ as we est. the base biz’s implied valuation has declined to ~12.5x NTM EV/EBITDA vs. its ~15.5x five-yr avg. and ~13.5x for staples, despite STZ’s much stronger financial profile” explains Jefferies analyst Kevin Grundy (Track Record & Ratings).

He calls Constellation his ‘top pick for 2019’. As well as a compelling valuation and weed exposure via Canopy, STZ also boasts continuing strong beer growth and achievable Street margin estimates. With this in mind, Grundy reiterates his buy rating with a $258 price target. From current levels, this means we are looking at substantial upside potential of around 45%.

Interestingly, Grundy adds that even without Canopy he would ascribe STZ a $233 price target. That still indicates 33% upside potential lies ahead. Basically STZ’s investment in Canopy is a free call option in the stock at these current levels. Get the STZ Stock Research Report.

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.

Pay Your Bills for LIFE with These Dividend Stocks

Get your hands on my most comprehensive, step-by-step dividend plan yet. In just a few minutes, you will have a 36-month road map that could generate $4,804 (or more!) per month for life. It's the perfect supplement to Social Security and works even if the stock market tanks. Over 6,500 retirement investors have already followed the recommendations I've laid out.

Click here for complete details to start your plan today.

Source: Investor Place


Uncategorized

Option Traders Make a Massive Bullish Bet on This Transportation Play

It is nearly impossible to overstate how valuable options can be for traders. The benefits to using options for trading are numerous and straightforward. In many cases, the more traders get used to using options, the more they realize how beneficial they can be.

For example, traders will often begin experimenting with options because of the leverage they provide. Having 1 option equate to control of 100 shares of stocks can certainly lead to greater returns than simply using stocks.

However, options leverage is more than just increasing returns. The leverage component also means traders can trade stock they may not normally be able to afford. Take Amazon(AMZN) for example. It’s nearly an $1,800 stock. With options, you could conceivably control 100 shares ($18,000 worth) of AMZN for a few hundred dollars.

Options can also provide access to strategies traders may not normally be comfortable with, such as short selling stock or trading commodities. Using options can make these strategies simpler and safer than they’d otherwise be.

But options can provide other benefits above and beyond how they’re used in trading. In fact, studying the options market and following options action can be highly instructive and rewarding.

Big investment firms, funds, and trading desks will often use the options market to establish their positions in stocks and ETFs. Traders can often get an idea of what the smart money is doing by following big, block trades in options.

Sometimes, block trades will occur in stocks you’ve never heard of or that rarely trade in big volume. These situations can be particularly useful. Not only are they easier to spot among the noise of everyday trading, but it can often be easy to tell what the goal of the trader is.

For instance, let’s look at a large block trade in Knight-Swift Transportation (KNX). The trucking and transportation company trades about 2.5 million shares a day on average, but only about 2,000 options. So, when a massive options trade hits the wire in this name, it can be an eye-opener.

This particular block was a trader buying 20,000 August 35 calls for $2.35 per contract with the stock trading at $32 per share. What this means is that KNX needs to be at $37.35 or above by August expiration for the trade to break even.

The trader is spending $4.7 million for this trade, which is the max loss potential. So, this clearly is a very bullish trade and the strategist is risking a lot on the call purchase. After all, we’re talking about over a $5 move higher (over 15%) in a stock that doesn’t make big moves all that often.

On the other hand, the trade will generate $2 million for every dollar the stock moves higher than the breakeven point. In other words, there is some substantial upside to this strategy. And, it isn’t likely someone is dropping nearly $5 million on calls on a whim.

This is exactly the sort of situation where copying the trade is a reasonable strategy. KNX options don’t trade that much and a straight up call trade is pretty transparent. Someone thinks this stock is going up in the coming weeks. And, for about $250 – $300 you could control 100 shares of KNX for about 5 months.

  [FREE REPORT] Options Income Blueprint: 3 Proven Strategies to Earn More Cash Today Discover how to grab $577 to $2,175 every 7 days even if you have a small brokerage account or little experience... And it's as simple as using these 3 proven trading strategies for earning extra cash. They’re revealed in my new ebook, Options Income Blueprint: 3 Proven Strategies to Earn Extra Cash Today. You can get it right now absolutely FREE. Click here right now for your free copy and to start pulling in up to $2,175 in extra income every week.