All posts by Eddy Elfenbein

Growth Stocks, Pot Stocks

Get Ready for Cannabis 2.0

ne year ago, on October 17, 2018, Canada legalized marijuana for recreational use.

But that was only the first step.

Now we’re at “Cannabis 2.0.” This comes exactly one year later, on October 17, 2019. Cannabis 2.0 is when Canada will legalize edibles, drinks, vapes, plus a few other categories.

The idea with the Canadian plan was to go about legalization in steps.

The first step of legalization, Cannabis 1.0, unleashed a “green rush” as shares of cannabis stocks soared. The business of getting high was making new highs nearly every day.

Frankly, it got out of hand. The rally soon went bust, and many marijuana stocks tumbled back to earth. Shares of Tilray (TLRY), to use one example, went from $20 to $300.

Then back to $20.

So now that Cannabis 2.0 is here, will we see another explosive rally? My first bit of advice is to slow down. The Canadian law means that on October 17, companies are allowed to file a notice with the government that in 60 days, they’re going to bring new products to the market. (Funny how legalization means bureaucracy and red tape.) So it won’t be until December that anyone can buy anything.

Let’s consider some numbers. Deloitte estimates that the annual market for edibles and alternative cannabis products is worth C$2.7 billion. Of that C2.7 billion, C$1.6 billion is just for edibles, and remember, this is only for Canada.

The key here is breaking down the market. The first wave of legalization was happy news for regular users of marijuana, but the unknown factor is how many occasional users there are.

In addition to that, there could more consumers who have never tried marijuana before due to its illegal status but might be lured in now that it’s legal. There’s been a lot of debate about these so-called “curious” users.

For these folks, they probably want to take baby steps first, and that’s why the edibles legalization is so important. For a person who never inhaled (and watched all their friends get stoned in college), trying a gummi bear might be an easy first step.

So what companies are poised to benefit from Cannabis 2.0? At the top of the list, I’d have to put Canopy Growth (NYSE: CGC). In many ways, this may be the most impressive marijuana stock.

For starters, the company has an NYSE listing. This is important because many institutional investors may shy away from OTC stocks.

I also like that Canopy’s Tweed brand is closely associated with Snoop Dogg, which is a nice relationship to have.

Canopy also has its eye on the future. The company recently made an interesting deal. Canopy offered to buy Acreage Holding (OTC: ACRGF) for $3.4 billion, but there’s a hitch. The deal won’t close until the U.S. legalizes cannabis for recreational use. The deal has a 90-month window, so all bets are off if legalization doesn’t happen. That’s a smart move.

But the most important reason why I like Canopy, and which brings us back to Cannabis 2.0, is that Canopy has developed a close relationship with Constellation Brands (NYSE: STZ). Constellation bought a $4 billion chunk of Canopy stock. This relationship is in the interest of both companies.

Constellation, if you’re not familiar, is a beer and spirits company with a global reach. The company has 9,000 employees and a market cap of $37 billion. Now that cannabis drinks are legal in Canada, it’s nice to have the maker of Corona and Modelo on your side.

This is the perfect partner to have in an effort to reach out to those “curious” consumers. The blue-chip firm could come in handy if Canopy needs to raise a lot of money. The relationship is so close that Canopy recently made the CFO of Constellation Brands its new chairman.

Currently, Canopy has ten production facilities in Canada. That works out to 4.3 million square feet of growing space. Canopy plans to add another 1.3 million square feet. The company also has a hemp production facility in New York state (hemp is legal at the federal level).

This is a good time to give Canopy a close look because the stock was down over the past few months. During the spring, CGC got as high as $52 per share. Lately, it’s been going for less than $20 a piece. That probably cleared out a lot of short-term traders. Cannabis 2.0 could be a major boost for Canopy Growth.

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

Growth Stocks

The Home Run Stocks Wall Street Doesn’t Want You To Know About

Imagine there’s a stock that’s up nearly 30-fold since 2000 and not a single Wall Street investment analyst follows it.

This investment has crushed just about every hedge fund out there, yet Wall Street is entirely unaware of it.

Worst of all, it’s stock in a company that’s known by many. It’s a favorite of people who work on Wall Street.

The stock I’m talking about is Nathan’s Famous (NATH).

That’s right, the hotdog place. It’s a New York institution. Not only that, it’s a July 4thinstitution. They sponsor the annual July 4thhotdog-eating contest. When you have a moment check out the ESPN video of this year’s contest featuring record-holder Joey Chestnut.

Nathan’s is currently in its 102nd year of business. The hotdog stand was started by a guy named, wait for it, Nathan. In this case, Nathan Handwerker.

Today, there are tons of Nathan’s located across the country, and several locations around the world. (Earlier this year, I was at the location near Manila in the Philippines.)

I bet you didn’t know Nathan’s has also been an astounding winner.

In late 2000, shares of Nathan’s were going for $2.50 apiece. Lately, Nathan’s is going for $70 each. (That’s down from its high of $107.)

Nathan’s is what we call an “Orphan Stock.” That means that it has zero or near-zero analyst coverage.

I love Orphan Stocks. They’re a great place to find overlooked values. Consider a stock like Amazon (AMZN). I love Amazon, and I wish I had bought it years ago, but what new information can I find on the company now?

Amazon is already worth $900 billion. There are 50 firms in Wall Street that follow the stock. The stock basically lives in a glass fishbowl. That’s not the case with Nathan’s which, despite its name, apparently isn’t as famous as I thought.

How can a stock rise so much for so long and no one on Wall Street has ever thought to start covering it? Part of the reason is probably because they don’t bring Wall Street any investment banking business.

That’s more of a plus than a minus. It suggests the company hasn’t entered into any unwise mergers. Or taken on too much debt. Or has been acquired at a poor price. Not needing a banker is hardly a bad thing.

Every earnings season, investors gather to see what companies have beaten expectations and what companies have fallen short. It’s interesting because a company can have a lousy quarter, but as long as it was less lousy than expected, then it can be a good quarter for its stock. Investors are expecting expectations.(awkward sentence) maybe; investors are expecting the stock to meet expectations.

With Nathan’s and other Orphan Stocks, there’s nothing to expect. Why? Because no one follows them. For an investor, that’s another bonus. They don’t have to worry about the Wall Street earnings game.

Have you ever heard of Atrion (ATRI)? Don’t worry. You’re not alone.

Atrion is a medical products company based in Dallas. Even though they’re small ($1.5 billion market cap), they’re active in some very niche markets like soft contact lens disinfection cases. Ever wonder who makes valves for life vests? There’s a good chance it’s Atrion. I particularly like that Atrion has wide operating margins.

Thirty years ago, you could have picked up one share of ATRI for $6. Recently, the stock got up to $927 per share. A few weeks ago, Atrion boosted its dividend by 15%.

Now I’m going to ask you a straightforward question: Guess how many firms on Wall Street cover Atrion? I’ll give you a hint. It’s the same as Nathan’s.

That’s right. Zero.

Let’s also remember how hard the financial crises blew through Wall Street. The big houses simply don’t have the big research departments that they used to. The budgets have been cut back. As a result, there are lots of companies that get no analyst coverage.

Many Orphan Stocks have been orphaned for good reasons; they’re not very good. But if you look closely, there are many incredible orphan stocks like Nathan’s Famous and Atrion.

With fewer eyes watching, it’s easier to find overlooked gems. Make sure there are some Orphan Stocks in your portfolio.

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

Uncategorized

These Three Stocks Pass Nearly Every Screener

Generally, I’m not a big fan of stock screeners. I’ve found that it causes investors to be overly mechanical in their approach.

However, if investors use screeners as a first step in the investing process, then I think it can help them achieve their investment objectives.

With that in mind, I want to share with you what I call “the world’s easiest stock screener.”

You can use the basic screener at www.finviz.com, which is free. I call it the most effortless screen because it only has three steps.

Step #1: Screen for stocks with dividend yields above 3%.

Step #2: Screen for stocks with low levels or long-term debt.

Step #3: Sit by the pool.

Let me take a step back and explain some details. I use dividend yield because it’s a decent (though not perfect) measure of valuation. Of course, there are exceptions. You want to steer clear of stocks that are in a death spiral. They might have high yields because their share is down, and future dividends are in doubt.

Also, companies may list elevated dividend yields because they’re based on a one-time special dividend that can’t be counted on In the future. Think of the dividend yield as a way to avoid too much risk in an investment.

I also like dividends because it’s something tangible. The accounting department can endlessly manipulate earnings and cash flow. Companies also use “adjusted” earnings and share buybacks to make the corporate balance sheet appear the way they want it to. Dividends, by contrast, represent real money that goes to you.

The second screen is too much debt. There are lots of ways to measure this, but a good one is to look for companies whose long-term debt is less than 40% of their equity. Don’t worry about the exact dividing line, but that’s an excellent place to start.

The issue we want to avoid is companies that borrow too much and in effect, use their debt fund their dividends. That’s a big no-no. That’s why these two screens worth together. It’s an efficient way to find companies with organic growth. Too often, companies use their balance sheet to buy growth instead of earning it.

As a very general rule of thumb, a deteriorating balance sheet is often a sign of business trouble. Companies will try to use their finances to mask over difficulties that their products are having. You always have to look behind the numbers.

Their other screens you can use to fine-tune your results. For example, you may only want stocks in the S&P 500. Or stocks above $40 per share. Or stocks based in the United States. There are good arguments for all of these, but don’t lose sight of the basic idea.

Our screener is useful because it focuses on price and quality. As long as you do that, you’re investing correctly.

Now let’s look at three stocks that currently pass our screener:

At the top of the list is ExxonMobil (XOM), the largest energy company in the world. Declining energy prices have hurt the stock, but the current yield is 4.6%. That’s excellent protection. Long-term debt currently registers at 21% of equity. That’s not bad. Also, rising geopolitical tensions in the Persian Gulf could be a boost to oil. XOM will report earnings on August 2.

Our next candidate is Bristol-Myers Squibb (BMY). The pharmaceutical company currently yields 3.8%. BMY’s long-term debt is equal to 37% of its equity. The shares have been beaten down this year. BMY is down about 16% in 2019. I like that the shares are currently going for less than ten times next year’s earnings. This could be the time for a turnaround.

Lastly, we have the Cheesecake Factory (CAKE). The chain restaurant stock has a yield of 3% and their debt position is quite good. CAKE’s long-term debt is just 4% of its total equity. The next earnings report is due out on July 31. Wall Street expects 81 cents per share. Look for an earnings beat. High calories will never go out of business.

To clarify, our stock screener is just a first step in finding good stocks. You still want to make sure you own high-quality shares that are fundamentally sound. The three I’ve just given you fit the bill.

Most importantly, don’t forget the final step this summer. Relax by the pool.

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

Technology

The 5G Age Has Arrived But Who Will Benefit?

This is the year of 5G. The possibilities opened up by 5G’s significantly faster data transfer opens up a brave new world. It will enable the newest technologies from autonomous vehicles to virtual reality gaming to advanced robotics to the Internet of Things.

Don’t believe me? Then listen to Paul Lee, the head of telecoms, media and technology research at Deloitte. Lee recently said: “The last 10 years of smartphones have been about invigorating the consumer experience and entertainment. Now it is about the digital transformation of enterprise.” He predicted that 5G-enabled smart devices will soon displace laptops.

Of course, 5G is about a lot more than smartphones. The debate going on about national security and who provides the next generation telecommunications equipment tells you that. Since it has been in the news headlines so much, I want to give you a quick primer on what the heck 5G is all about.

What Is 5G?

5G is the fifth generation of wireless network technology. Browsing web pages on mobile phones caught on with the advent of 3G, while data transmission became faster and more reliable with 4G.

With speeds 100 times faster than current networks, 5G will enable transmission of huge amounts of data with little time delay. 5G can also support more connected devices than current technology—as many as one million devices per square kilometer!

With the new 5G technology, more devices than ever before can be connected in real time, bringing the concept of the “Internet of Things” closer to reality. The CEO of Vodaphone, Nick Read, says that 5G will be around 10 times more efficient than 4G.

A report from the research firm IHS Markit forecasts that 5G will enable $12.3 trillion of global economic output by 2035, fostering new sectors such as smart cities, smart agriculture and autonomous vehicles.

However, it will take time for the faster 5G networks to become seamless enough to support self-driving cars, so consumers are likely to benefit first from faster data speeds in select areas. For example, you will be able to livestream videos in crowded areas without frustration.

But costs will be a major headache. The European Commission estimates the cost of rolling out 5G and full fiber infrastructure across the continent to be in the range of 500 billion euros. This means the ‘pick and shovel’ companies that supply the equipment and components for 5G are going to make a lot of money.

That leads me to my top 5G pick, which is Ericsson (ERIC). The Swedish telecom player is making a big bet on 5G, and that bet seems to be paying off. Ericsson expects there to be 3.5 billion Internet of Things connections running over 5G by 2023, with 20% of global mobile data carried by 5G in 2023, and one billion consumers on the faster networks, representing 12% of projected mobile subscriptions.

Ericsson is right to put such an emphasis on 5G, but the company has struggled since 2016 with quarter after quarter of losses. It had been caught out with a high cost base just as global telecom providers cut spending drastically ahead of the rollout of 5G networks.

So now, the company’s recovery plans are closely tied to an uptick in spending by network operators on 5G networks along with restructuring, cost cutting and new partnerships such as that with Japan’s Fujitsu to develop 5G base stations.

A restructuring, I might add, that is still ongoing. In January, it said it would cost about $850 million to restructure a unit that provides digital services to telecom operators.

However, the restructuring is already taking hold and shows signs of momentum. Ericsson’s gross margin in Q4 of 2018 rose to 36.3%, a nice uptick. And here’s what caught my eye: in 2018, Ericsson returned to full-year top-line growth for the first time since 2013!

Ericsson Beats Earnings…Again

Then on Wednesday, April 17, Ericsson did it again. The company reported adjusted earnings of nine cents per share. That nearly doubled Wall Street’s estimates of five cents per share. That’s their fifth earnings beat in a row. Consider that about 40% of the world’s mobile phone traffic is currently carried through Ericsson networks.

Wall Street is taking notice. The day after Ericsson’s earnings report, the shares jumped 7.3% to touch a four-year high. Digging through the numbers, the details look very encouraging. For the quarter, Ericsson’s gross margin improved to 38.4%. Sales rose 7% to $5.33 billion driven by strength in North America. Bear in mind that Ericsson reported a loss for the same quarter one year ago.

Ericsson says spending on 5G is exceeding its expectations both in volume and speed of the uptake. It gained market share in North America even though it was raising prices.

In fact, it says it currently lacks enough personnel in North America to keep up with the demand from the likes of Verizon and AT&T. That’s a good problem to have and one that the company can fix quickly to take advantage of the fact that it is likely that 5G will have a longer spending period than prior 3G and 4G rollouts.

In addition, 5G should create more opportunities for the company’s software and services within Internet of Things device networks. Clearly, Ericsson is benefiting from a major turnaround as it helps usher in the Age of 5G.Buffett just went all-in on THIS new asset. Will you?

Buffett could see this new asset run 2,524% before the end of 2019. And he’s not the only one… Mark Cuban says “it’s the most exciting thing I’ve ever seen.” Mark Zuckerberg threw down $19 billion to get a piece… Bill Gates wagered $26 billion trying to control it…

What is it?

It’s not gold, crypto or any mainstream investment. But these mega-billionaires have bet the farm it’s about to be the most valuable asset on Earth. Wall Street and the financial media have no clue what’s about to happen… And if you act fast, you could earn as much as 2,524% before the year is up.

Buffett just went all-in on THIS new asset. Will you?
Buffett could see this new asset run 2,524% in 2018. And he's not the only one... Mark Cuban says "it's the most exciting thing I've ever seen." Mark Zuckerberg threw down $19 billion to get a piece... Bill Gates wagered $26 billion trying to control it...
What is it?
It's not gold, crypto or any mainstream investment. But these mega-billionaires have bet the farm it's about to be the most valuable asset on Earth. Wall Street and the financial media have no clue what's about to happen...And if you act fast, you could earn as much as 2,524% before the year is up.
Click here to find out what it is.

Source: Investors Alley

Growth Stocks, Technology

So the 3D Hype Is Over? Yes, But Not for Everyone

A great area to find investment opportunities is places where the Wall Street hype machine went crazy and then the bubble burst. I’ll give you a great example.

After the dot-com bubble burst, shares of Amazon plunged 95%. People thought the entire industry went bust when in reality, only the shady start-ups went under.

A current example is 3D printing, or, to use the more formal name, additive manufacturing. In 2013, valuations here went bonkers. We were told that a 3D printer would soon be in every home. Then in 2015, the bubble finally burst.

Now, if anything, we’re at the other extreme. Some folks who should know better think the field is dead. Well, they’re wrong. The long-term growth story for additive manufacturing is alive and well. The difference is that the industry has shifted its priorities to industrial and medical applications.

So what exactly is additive manufacturing? I’ll make it simple—it’s the process of making something by building it one layer at a time.

The first step is to create a design. This is typically done using computer aided design, or CAD software.

The software translates the design into a layer-by-layer framework for the additive manufacturing machine to follow. This is sent to the 3D printer which begins creating the object immediately.

There are some key benefits. With traditional manufacturing, the entire supply chain can take months and require an investment of millions of dollars that can only be recouped by high-volume production. With additive manufacturing, many of those intermediate steps are simply removed.

Manufacturing something additively also makes it possible to use different materials on the inside and outside. For example, making something that has high conductivity but that is also abrasion-resistant is no problem. With conventional manufacturing, this can be a big headache.

Additive manufacturing also makes it easier to create small amounts of something. Hearing aids, for example, which are customized for each person, could be almost entirely additively manufactured.

3D Printing Body Parts?

In the future, bioprinters will use human cells from the patients themselves as the “ink” in order to create living body parts.  Sounds freaky? Sure.

We’re still years away from that, but when that day does arrive, it will offer the prospect of immunologically compatible replacement parts for humans. Here in the U.S. alone, about 900,000 deaths annually occur because of a shortage of organs for ailing patients.

According to the research firm Gartner, medical 3D printing will have a market value of $1.2 billion by 2020. 3D printing in medicine has already evolved from making relatively simple prosthetics to printing a silicon prototype of a functioning human heart. 3D printing can also be used to speed up surgical procedures and produce cheaper versions of required surgical tools.

In 2015, the FDA approved the first 3D printed drug used to treat epilepsy. Elderly patients in need of a hip or knee replacement could benefit from 3D printing of specialty implants. Particularly, as the process is more exact, these patients would avoid the second or third procedure to replace traditional, less-effective implants.

Materialise Is Leading the Way

The best 3D printing stock to own now is the Belgium-based firm, Materialise (MTLS). What got my attention is Materialise’s complete and automated software solutions and certified 3D printing services.

Materialise’s business isn’t something to dream of in the future. They’re already working on 3D printing solutions in dozens of different industries, and they’re currently working with firms like Hyundai, Toyota, HP, Airbus, Volvo, BASF, Stryker and Microsoft.

Consider some numbers. In the auto sector, 3D printing is estimated to grow at 34% per year. In healthcare, it’s expected to be 23% per year. By 2021, 75% of all commercial or military will contain a 3D-printed engine or airframe.

In March, Materialise became the first company ever to get FDA clearance for software for 3D printing anatomical models for diagnostic use. The software is a tool that makes it possible to convert patient medical image data, such as CT scans, to 3D models.

This is a game-changer. It will allow for the creation of patient-specific diagnostic models which doctors can use for three-dimensional and tangible examination of scan data, potentially revealing affected areas that may have been missed using traditional 2D medical images.

The medical community is enthusiastically welcoming this advancement. Sixteen of the top 20 hospitals in the U.S., as ranked by U.S. News & World Report, are using Materialise Mimics software as a medical 3D printing strategy.

Patient-specific 3D printed models are becoming increasingly common for pre-surgical planning procedures. Gartner writes that by 2021, “25% of surgeons will practice on 3D-printed models of the patient prior to surgery.”

The next step for Materialise may be receiving clearance for the tools to create actual 3D-printed implants, stents and other medical devices. If it jumps that hurdle, the company may then have a significant lead on other device manufacturers that have received FDA approval for individual devices and product categories, as it could potentially apply the clearance to a complete host of 3D-printed components at once.

This is also a good time to add shares of Materialize since they’re off the peak from earlier this year.

Buffett just went all-in on THIS new asset. Will you?
Buffett could see this new asset run 2,524% in 2018. And he's not the only one... Mark Cuban says "it's the most exciting thing I've ever seen." Mark Zuckerberg threw down $19 billion to get a piece... Bill Gates wagered $26 billion trying to control it...
What is it?
It's not gold, crypto or any mainstream investment. But these mega-billionaires have bet the farm it's about to be the most valuable asset on Earth. Wall Street and the financial media have no clue what's about to happen...And if you act fast, you could earn as much as 2,524% before the year is up.
Click here to find out what it is.

Source: Investors Alley

REITS

Two Under-the-Radar REITs to Buy for a Reserved Fed

It was only six months ago that Fed Chairman Jay Powell said that the Fed was “a long way from neutral,” meaning that they were going to keep raising rates.

How times have changed!

In December, the central bank hiked rates and the market threw a fit, and the stock market plunged. Still, the Fed’s economic projections saw them raising rates two more times this year.

Now those plans are out the window. It looks like rates may go unchanged all year. In fact, there are some folks calling for a rate cut. Larry Kudlow, President Trump’s economic advisor, recently said the Fed should jump in and cut rates by 0.5%—immediately.

Investors must understand that we now live in a low-rate world. The old rules of rates swimming up and down between 3% and 6% are gone. Just last week, we got another tame inflation report.

The good news is that for income investors, there are plenty of low-risk ways to profit. Here are two real estate investment trusts, or REITs, that aren’t your garden-variety REIT. Both are ready to ride long-term growth trends. Let me explain….

The REIT Being Powered by Millennials’ Love of Food

The first REIT is Americold Realty Trust(NYSE: COLD). The company is still fairly new to the markets. COLD completed its $834 million IPO in January 2018. The REIT currently yields about 2.6%.

What makesAmericold Realty Trust different is that it’s the largest REIT that’s focused on owning and running temperature-controlled warehouses.

Why is that important? Well, these warehouse are vital to the food industry. COLD owns and operates 156 such warehouses with approximately 928 million refrigerated cubic feet of storage. They now serve more than 2,400 customers worldwide.

Don’t be fooled. The food industry is hardly a no-growth area. A lot more of these warehouses will be needed, and soon. With Millennials embracing online grocery shopping, demand for cold storage facilities is rising.

I want to emphasize the uniqueness of its business. COLD isn’t just a landlord. The firm also provides services that help their customers properly move their products around the supply chain. Here’s an important stat for you to ponder: 96% of all the frozen food that you find in the grocery store comes through some company like Americold. This is potentially a huge market that’s barely been tapped.

The REIT Riding the Data Wave

Sounds boring, right?

The other REIT is American Tower(NYSE: AMT), which is in the cell phone tower business. Tower companies lease the space on their structures to several tenants like wireless carriers and government agencies.

Guess again. Consider that this business has a strong growth component, thanks largely to the coming of 5G wireless networks. These faster, more powerful networks are an absolute necessity for our interconnected world.

The explosive growth in data traffic is driven by two key trends. The first is an expected 50% increase in connected wireless devices by 2021. The second is a major rise in the amount of data consumed per device as users upgrade to new smartphones.

This new tech also includes things like ultra-HD video, augmented reality and connected self-driving cars. And they all consume huge amounts of data, and that means towers.

If you think of the wireless network as a toll road, 5G would have significantly larger lanes for wireless traffic and dramatically higher speed limits than 4G—in both cases 100 times greater.

Each new generation of wireless technology has required a greater level of investment from wireless carriers which closely correlates with tower leasing activity. It is highly likely the adoption of 5G will follow this historical trend.

Now let’s get back to American Tower. The company has over 170,000 tower sites. What I like is the economics of this business. As the company explained to Bloomberg, “single-tenant towers have gross margins of 40% from rentals…two tenants have 74% margins…three tenants have 83% margins.” You can see the benefits of steady growth.

American Tower generates more than half its total revenue here in the U.S., with its customers being all the major wireless carriers. Another big plus I see for American Tower is its vast overseas footprint. This is important because the U.S. does not lead in 5G technologies.

American Tower is also in key emerging markets. For example, AMT has its largest international exposure in India where data usage has been growing 100% per year. Within a few years, I think most of AMT’s revenue will come from outside the U.S.

Latin America has a lot of potential too. There are over 200 million people in the middle class in Latin America. A significant proportion of these consumers are under 40 years old (the heaviest data users). American Tower is a REIT very well positioned to ride the trend of a more interconnected world!

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

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.

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Source: Investors Alley

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.

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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.

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