All posts by Luke Lango

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3 Trade War Stocks for a Knock-Down, Drag-Out Fight

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In 2018, the stock market has been presented with two major risks:

  1. Inflation
  2. Trade

These risks have reared their ugly heads from time to time, and caused broader market volatility. Each time, though, the market has shrugged off the risk to ultimately head higher.

Right now, inflation concerns are subdued as the 10-Year Treasury yield has backed off 3%. But trade risks are at all-time highs as President Donald Trump continues to impose tariffs. Simultaneously, no one on the global political landscape appears willing to stand down, so tensions are escalating and the likelihood of a trade war breaking out is rising.

If things go on like this, trade talk will get ugly and the stock market will suffer.

But not all stock should be treated equally. Indeed, there are certain “trade war stocks” out there which should be largely immune to tariffs and trade talk. These stocks should head higher regardless of what happens on the trade front.

With that in mind, here’s a list of my three favorite trade war stocks to buy if all this trade talk takes a nasty turn.

Trade Wars Stocks to Buy: Facebook Inc (FB)

Source: Shutterstock

The FANG stocks are largely insulated from trade war risks for two major reasons: 1) they are giant internet companies that benefit consumers globally via services that won’t be affected in a trade war, and 2) they don’t have a presence in or reliance on China.

Of the FANG stocks, perhaps the one best positioned to succeed amid rising trade war fears is social media giant Facebook (NASDAQ:FB).

Facebook is a global digital ad giant that benefits everyone, everywhere, regardless of nationality. Facebook’s ad services won’t be adversely impacted by tariffs, nor will the volume of ad dollars that flow through the company’s ecosystem or the amount of people who access Facebook every month.

Instead, Facebook will keep doing business as usual. They will keep providing the best, most robust, and most effective digital advertising solutions in the world, and they will continue to roll out new growth initiatives like Messenger/WhatsApp monetization, Workplace, Marketplace and smart home products.

Last quarter, “business as usual” was represented by 50% revenue growth. Trade war risks won’t affect that growth rate. Instead, over the next several years, growth will remain in the 30%-plus range because of the company’s multiple growth catalysts.

Facebook stock trades at less than 30-times forward earnings. A 30 multiple for 30%-plus revenue growth is a bargain, especially considering that the big growth isn’t at-risk to prevailing trade war fears.

As such, Facebook stock is definitely one of the top trade war stocks to own here and now.

Trade War Stocks to Buy: Alphabet (GOOG)

Source: Shutterstock

The other top trade war stock from the FANG group is Alphabet Inc (NASDAQ:GOOG).

Much like Facebook, Google is a global digital advertising giant that benefits everyone, everywhere. The company’s advertising services will not be materially affected by trade war fears or tariffs. The amount of money being pumped into the Google ad machine also won’t be affected, nor will the number of people using Google search.

Instead, much like Facebook, Google will keep doing business as usual. All the trade war talk is just noise in the background.

The upside in Google stock comes from valuation and the company’s unparalleled data-set, which positions it to be a leader in tomorrow’s data-driven and an artificial intelligence-dominated world.

Google has forever been a 20%-plus revenue growth company thanks to its robust digital advertising platform. But that growth could be super-charged over the next several years as Google turns its unrivaled database on consumer searches and preferences into unrivaled AI and automated technologies.

Indeed, at the current moment, Google is the innovation leader in tomorrow’s big growth spaces like self-driving (Waymo) and AI (Google Duplex). Google’s leadership position in these markets will only grow over the next several years since data is what powers advancements in AI. Accordingly, Google’s growth could get a super-charged lift over the next 5-plus years.

But like Facebook stock, Google stock trades at under 30-times earnings. That multiple is just too cheap. Consequently, Google is not only one of the best trade war stocks to own now, but also a great long-term investment.

Trade War Stocks to Buy: Verizon (VZ)

Source: Shutterstock

Perhaps the best trade war stock to own amid rising trade-related fears is telecom giant Verizon Communications Inc. (NYSE:VZ).

At its core, Verizon provides telecommunications services exclusively in the United States. This business inherently has mitigated exposure to tariffs and trade. Consequently, regardless of what happens on the global trade stage, Verizon’s U.S.-based telecom business will be largely unaffected.

Moreover, Verizon is a big dividend payer with a yield of nearly 5%. As broader market fears escalate, investors tend to flock to dividend safe-havens with big and sustainable dividends. Verizon is exactly that.

And then there is the whole improving fundamentals part of Verizon stock.

For years, the wireless service industry was one defined by ruthless competition, price cuts, market saturation, and margin erosion. But those fundamentals are starting to change, mostly due to the forthcoming roll-out of 5G coverage. That will allow Verizon to differentiate itself from the pack, thereby allowing Verizon to lift prices and grow market share. Revenues, margins, and profits will trend higher as a result.

Overall, then, Verizon is one of the best trade war stocks to own right now given its lack of international exposure and huge dividend yield. Moreover, improving fundamentals in the wireless services industry pave the path for meaningful earnings growth and stock price appreciation over the next several years.

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

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


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3 Fintech Stocks That Could Win Big Over the Next 5 Years

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Fintech is one of the hottest buzz words in the market. Say “fintech stocks”, and suddenly, investors get excited.

But what exactly is fintech? It is a broad term, and essentially, fintech is just the morphing of technology and financial services. In other words, fintech stocks are the class of companies which are using technology to innovate in the traditional financial services space.

Seems pretty straight forward, right?

Right. And because the fintech space is relatively nascent, everyone is winning. Over the past year, GLB X FUNDS/FINTECH THEMATIC ETF (NASDAQ:FINX) is up 40%, versus a mere 12% gain for the S&P 500.

So far, then, betting on the whole fintech sector has been a winning strategy. But over the next several years, this strategy might not work as well. As the nascent fintech field matures, competition will intensify and there will be a clear separation of winners and losers.

Who will the winners be? Nobody knows for sure. But here is a list of my 3 favorite fintech stocks to own for the next several years:

Fintech Stocks for the Next 5 Years: Square Inc (SQ)

square stock

Source: Via Square

My favorite fintech stock is Square Inc (NYSE:SQ), owing to the company’s robust exposure to and dominant positioning in secular growth markets.

At its core, Square is a pure-play on the secular growth in mobile, card and digital payments. The company has emerged as a go-to enabler of non-cash payments for merchants of all sizes.

Why? The company’s commerce solutions are strikingly simple, convenient, and easy to use.

It used to be that accepting digital payments at some locations was a hit or miss due to the complexity of it. But today, as opposed to requiring several moving parts to support digital payments, all retailers need to complete essentially any transaction is a phone and Square technology.

Because of this enhanced convenience and the massive shift away from cash, Square has benefited from explosive growth. Revenues rose by more than 50% last quarter.

This big growth isn’t going anywhere anytime soon. Payments processing is a $26-billion-and-growing market. With the addition of ancillary markets like small-business loans and food delivery (Square’s subscription and services businesses), Square believes its total addressable market is around $60 billion.

Revenues this year are expected to be just over $1.4 billion. Clearly, the growth runway is quite big and long for SQ stock.

The only thing to worry about here is valuation. SQ stock does trade at a rather rich 130-times forward earnings multiple, and the stock’s latest move up to $60 does imply some cryptocurrency hype baked into the valuation. But while near-term valuation friction remains a concern, longer-term, SQ stock will grind higher as cash becomes a thing of the past.

Fintech Stocks for the Next 5 Years: Paypal Holdings (PYPL)

Source: Shutterstock

Much like Square, Paypal Holdings Inc (NASDAQ:PYPL) is another fintech stock that is a pure-play on the transition away from cash. But whereas Square enables non-cash payments for retailers in the brick-and-mortar format, Paypal is more of an e-commerce play on non-cash transactions.

Not surprisingly, as cash payment volume has decreased, e-commerce sales have surged. After all, you can’t pay with cash online. Thus, digital payment methods are the only options in the red-hot e-commerce space.

Paypal is behind one of the most robust and widely used digital payment methods in the world. Thus, considering how digital payments and e-commerce are inextricably linked, Paypal will remain a strong growth stock so long as e-commerce sales volume grows. E-commerce sales growth in the U.S. has only accelerated over the past year (from 15% to 16%), meaning that the e-commerce growth narrative isn’t showing any signs of being knocked off course any time soon.

As a result, the Paypal growth narrative looks quite promising in a multi-year window.

As far as the stock is concerned, the valuation is actually quite reasonable for the fintech space (35-times forward earnings) and against the backdrop of 24% revenue growth and 29% earnings growth last quarter.

Overall, then, PYPL stock looks like a good buy here and now.

Fintech Stocks for the Next 5 Years: Amazon.com (AMZN)

Source: Shutterstock

This one is a bit trickier than the previous two fintech stocks.

Square and Paypal are traditional fintech stocks that are pure plays on the transition away from cash-less payments and towards digital payments. Indeed, their whole business models are based on that transition.

But Amazon.com, Inc. (NASDAQ:AMZN) operates as an e-commerce and cloud giant. While both of those components are big-growth components in their own nature, they don’t inherently fall under the fintech umbrella.

But make no mistake. Amazon will lever its massive e-commerce business to make a big jump into the fintech space.

There has been a lot talk about this recently. The idea is that Amazon has a whole bunch of consumer purchasing data, the sum of which can be used to offer optimized and highly-personalized banking services. Moreover, the company has over 100 million Prime members, presumably implying that more than 100 million consumers frequently shop on Amazon, so an in-house payment method work make sense for uniformity and convenience sake.

Even further, among tech companies, Amazon ranks highly as a company that consumers would trust with their money.

In the big picture, it seems like Amazon launching a fintech service is a matter of when, not if. This fintech component will be yet another huge growth driver alongside the company’s already red-hot e-commerce and cloud growth drivers. Put all three of those together, and it is easy to see not only why AMZN has a big valuation, but also why that valuation could be even bigger.

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Technology

Why the Bull Thesis On Tesla Inc (TSLA) Stock Makes Sense

Tesla Inc (NASDAQ:TSLA) stock has always been a highly volatile stock with a wildly entertaining backstory. But recently, Tesla stock has been even more volatile than ever, while the backstory has become even more entertaining than ever.

Credit concerns amid sluggish Model 3 production caused Tesla stock to plunge from $350 to $250 in a just a few weeks in March. All the while, CEO Elon Musk was humorously engaging on Twitter Inc (NYSE:TWTR) as if nothing were going on with TSLA stock.

Why the Bull Thesis On Tesla Inc (TSLA) Stock Makes Sense

Source: Shutterstock

Then, Musk and company announced first quarter deliveries that were much better than what most feared. Tesla stock proceeded to bounce. All the way back to $300.

Shortly thereafter, Q1 earnings hit the tape. Those numbers were also better than expected, led by a surprise beat on margins. But those numbers took a backseat to what happened on the conference call, when Musk brushed aside questions from analysts, calling the questions “boring”, and instead fielded questions from a relatively unknown YouTube blogger.

All together, it has been a wild ride for Tesla stock. This volatility won’t smooth out any time soon. It will be a bumpy ride forward for TSLA investors.

But amid all this noise, investors shouldn’t lose sight of the big picture, which is that Tesla is building the car company of the future. Eventually, production issues will be resolved, profitability will ramp, and the balance sheet will be cleaned up.

At that point in time, Tesla stock will roar higher.

Here’s a deeper look:

Tesla Is a Big Growth Story

All conference call and Twitter theatrics aside, Tesla is still building tomorrow’s biggest car company.

The electric vehicle revolution is here, and traditional automotive manufacturers have been slow to pivot. Consequently, Tesla got a head start, and by getting a head start, the company has not only captured market leadership, but also brand leadership.

When you think of electric cars, you think of Tesla first. That is why Tesla’s Model 3, despite production issues, is still America’s top-selling electric vehicle.

Because of this brand leadership, as the electric vehicle market grows both nationally and globally, TSLA will be at the forefront of that growth. Considering growth in the electric vehicle market actually accelerated in the U.S. in 2017 to 40% (from 32% over the prior several years) and that global electric vehicle adoption is still anemic, Tesla’s leadership in the EV market means that this company has guaranteed itself a robust growth trajectory over the next several years as EV adoption rates rise.

Important note: that robust growth trajectory is big even without considering the company’s energy business, which could also be quite large at scale in 5-10 years.

All together, then, this is a big growth story. Bears will pound on the table about leverage, margins, and the need for a capital raise. But those things will get resolved. Tesla has a ton of options when it comes to raising money, and the company’s gross margins are already above its peers. Thus, once revenue scales and opex rates naturally drop, the company’s overall profitability profile will actually be best-in-class in the auto industry.

As such, the bear thesis seems short-sighted here and now, while the bull thesis seems to understand the full scope of Tesla’s growth narrative.


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Tesla Stock Could Reasonably Hit $500

Here is the case of Tesla stock hitting $500 in 4 years.

The EV market is growing at a 40% clip in America, and growth is only picking up. Globally, growth rates will likely also start to accelerate given secular trends towards EV adoption.

Consequently, even amid rising competition, TSLA should be able to grow revenues around 40% per year over the next 5 years, assuming the EV market grows in excess of 40% per year in that time frame.

Gross margins of other auto manufacturers hover around 15-20%. But Tesla’s gross margins over the past several years have hovered around 19-23%. Once Model 3 gross margins scale towards 25% and above over the next several years, the company’s overall gross margin rate should trend towards 25%.

Meanwhile, other at-scale auto manufacturers operate with an opex rate of roughly 10-15%, with the median hovering closer to 10%. Tesla should be able to drive its opex rate down to around those levels at scale. Thus, in 5 years, Tesla’s opex rate should be down to about 15%.

A 25% gross margin on a 15% opex rate implies 10% operating margins in 5 years. That margin on 40% revenue growth per year over the next 5 years leads me to believe that Tesla can do about $25 in earnings per share in 5 years.

A market-average growth multiple of 20-times forward earnings on that implies a four-year forward price target of $500.

Bottom Line on TSLA Stock

As Musk said on the recent conference call, if volatility scares you, don’t buy Tesla stock. Otherwise, the bull thesis makes a ton of sense on Tesla stock. Over the next several years, a surge in global EV adoption rates will send TSLA stock to $500 and up.

As of this writing, Luke Lango was long TSLA.

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Technology

3 Big Growth Tech Stocks That Wall Street Analysts Are (Still) In Love With

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For the past decade, big growth tech stocks have led the way for this bull market. As the stock market has rallied, big growth tech stocks have rallied even more.

But recently, this trend seems to be reversing. Big growth tech stocks are now leading the market lower.

There are a few things at play here.

Facebook, Inc. (NASDAQ:FB) is coming under harsh criticism for its data selling practices. And it’s having widespread fallout throughout the whole tech sector, since essentially every tech company leverages consumer and user data to make business decisions.

Meanwhile, autonomous driving and artificial intelligence initiatives took a hit recently after an Uber self-driving car hit and killed someone in Tempe, Arizona. In the wake of that accident, Uber, NVIDIA Corporation (NASDAQ:NVDA), and others have suspended autonomous driving tests.

Overall, the near-term outlook for tech stocks is pretty cloudy. There seems to be a ton of headline risks from Facebook and Uber, while sentiment seems to have taken a sharp turn for the worse.

But are those headline risks creating an opportunity for long-term investors? If so, what names should you be buying?

Below, I’ve compiled a list of 3 big growth tech stocks that Wall Street analysts are still in love with, despite recent tech weakness. These are stocks with consensus strong buy ratings and price targets substantially above their current price.

Which stocks are they? Let’s find out.

Wall Street’s Favorite Big Growth Tech Stocks:

Facebook, Inc.’s (FB) Politics Are Bad for Business

Source: Shutterstock

#1 Facebook (FB)

The first stock on this list is the company which may have started this whole tech sell-off: social media giant Facebook Inc.

In the wake of a massive data leak that dates back to 2015 and has a political slant, FB stock has fallen nearly 20%. Investors are worried about regulation, and how that might affect Facebook’s business. They are also concerned that user privacy concerns will cause the “#deletefacebook” movement to gain serious traction, causing a drop in active users. If that happens, then advertisers could pull money from the platform, causing a drop in average revenue per user. A drop in active users and a drop in average revenue per user would have a catastrophic impact on Facebook’s financials.

But despite these investor concerns and the sharp drop in FB stock, Wall Street analysts remain resolute in their bullishness on Facebook. The average price target on FB stock, even after this whole data scandal, is $220. That would represent nearly 50% upside from current levels.

Specifically, RBC analyst Mark Mahaney said that Facebook remains the “Best Growth Story in Tech”. He also said that the “latest data controversies would have no material impact on the relevance and attractiveness of Facebook’s marketing platform”, while calling the risk-reward profile on FB stock “downright compelling”.

Wells Fargo, GBH Insights, Oppenheimer, Barron’s, Jefferies and others have all sounded a similar bullish tone on FB stock in the wake of the recent selloff.

All in all, it’s pretty clear that analysts are still in love with FB stock, even amid recent headline risks. The consensus from Wall Street’s analysts seems to be that user and advertiser churn will be mitigated as a result of this data leak, while regulation won’t be that severe. The stock now trades at a pretty cheap valuation relative to growth, and thus, the upside opportunity looks compelling.

Wall Street’s Favorite Big Growth Tech Stocks:

Why MU Stock Is Poised to Climb to $45 a Share

Source: Shutterstock

#2 Micron (MU)

The second stock on this list is red-hot chip-maker Micron Technology, Inc. (NASDAQ:MU).

MU stock has been on fire over the past 2 years, jumping from $10 to $60 as the supply/demand fundamentals in the company’s core DRAM and NAND markets have become exceptionally favorable. Put simply, the mainstream emergence of automation, AI, the Internet-of-Things (IoT), data centers, and cloud computing has created a surge in demand for MU’s chips. Considering many of these technologies are still in their early innings, demand should remain robust into the foreseeable future.

Meanwhile, supply is constrained due to limited chip production capacity against the backdrop of this demand surge. Big demand, short supply means huge profits for MU.

Investors are concerned that supply will ramp at any point now, and that this supply ramp will erode profits. This is a reasonable concern. It has happened time and time again in the cyclical semiconductor industry.

But analysts think that investors are under-estimating the strength and longevity of this current bull market in semiconductors. By and large, analysts expect favorable DRAM and NAND pricing to persist because, despite production capacity expansion, demand will continue to outstrip supply into the foreseeable future.

That is why the consensus analyst price target on MU stock is $67, roughly 30% above MU’s current levels. This is also why a flurry of firms, including Stifel, Mizuho and Cohen, upped their price targets on MU stock after the company’s recent blowout earnings report.

All in all, the Wall Street analyst thesis on MU stock remains bullish. Analysts think that big demand from emerging technologies like automation, AI, and IoT will persist into the foreseeable future. That demand will be so large that regardless of capacity expansion, demand will outstrip supply over the next several years. Consequently, MU’s profit margins should remain near historic highs. And MU stock should head to all-time highs.

Wall Street’s Favorite Big Growth Tech Stocks:

Source: Shutterstock

#3 Lam Research (LRCX)

The third stock on this list another semiconductor company, Lam Research Corporation(NASDAQ:LRCX).

LRCX is in the same DRAM and NAND worlds as MU. But instead of making the chips, Lam Research provides the equipment to companies like MU so that they can make the chips. Thus, MU is the chip-maker, and LRCX is the parts supplier.

Naturally, if the chip-maker is roaring higher thanks to a robust demand backdrop, the part supplier will also roar higher. That has happened. Over the past 2 years, LRCX has gone from $80 to $200.

Analysts think this run is far from over. The consensus analyst price target on LRCX stock is right around $265, implying more than 30% upside from current levels.

Specifically, Mizuho just initiated LRCX at a Buy rating. They slapped a $250 price target on the stock. Analysts at Mizuho believe that the best is yet to come from LRCX, citing acceleration in the hyper-growth China market.

Bank of America Merrill Lynch also recently initiated coverage on LRCX at a Buy Rating. They slapped a $305 price target on the stock. Analysts at BAML named LRCX a Top Pick due to the company’s exposure to the memory upcycle. They believe cloud computing and AI tailwinds will continue to produce strong operational results for LRCX.

Overall, the analyst sentiment on LRCX stock is quite bullish. Much like MU, LRCX is expected to benefit from emerging technology tailwinds over the next several years. Those tailwinds should prop up the numbers, which in turn, should prop up LRCX stock.

As of this writing, Luke Lango was long FB and MU. 

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


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Growth Stocks

These 3 Fast-Growing Stocks Top Both Amazon and Netflix

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Big growth stocks have performed quite well in this bull market. At the head of the big growth stockpile are Amazon.com, Inc. (NASDAQ:AMZN) and Netflix, Inc. (NASDAQ:NFLX). And it seems those two fast-growing stock behemoths get all the attention.

But this creates a problem. There’s huge demand for big growth stocks, and most of that demand is flowing into AMZN and NFLX. That means the long Amazon stock and long Netflix trades are quite crowded. Crowded trades can be dangerous trades because when the crowd turns against you, a lot of money exits the stock in a hurry. That is especially true if there is leverage involved.

Long story short, when crowded trades unwind, things can get ugly in a hurry.

That isn’t to say anything is wrong with AMZN or NFLX. Those are two great companies with winning stocks.

It is just to point out that long Amazon and long Netflix stock are crowded trades. So if you’re looking for more exposure to big growth, I wouldn’t go out and buy more AMZN or NFLX. I’d look for big growth elsewhere. In lesser-known names and in less-crowded trades.

Where would I start? Here. Below, I’ve comprised a list of my three favorite growth stocks that are growing faster than Amazon and Netflix.

Fast-Growing Stocks: Shopify Inc (SHOP)

Shopify Stock Could Flash a Perfect Buy Sign Soon

Source: Shopify via Flickr

My favorite growth stock in the market is Shopify Inc (NYSE:SHOP).

In many ways, Shopify reminds me of an early-stage Amazon. Shopify provides digital commerce cloud solutions to retailers of all shapes and sizes. In this sense, the company is a pure-play on the exact same secular trends that burst Amazon into the spotlight: digital commerce and cloud.

Shopify’s growth story may even be a little be sexier than an early-stage Amazon. Shopify is retailer-agnostic. They operate in the background. That means every retailer could use Shopify’s solutions to enhance their digital selling capabilities. Because of this, Shopify’s addressable market is larger than Amazon’s because Shopify serves all retailers, whereas Amazon serves Amazon (and Amazon accounts for less than half of all digital sales in the U.S., and presumably far less internationally).

This is why Shopify’s revenue growth last quarter (+71%) was nearly double Amazon’s revenue growth last quarter (+38%). Considering Shopify is providing solutions for essentially every player in the massive and secular growth e-commerce market, and that Shopify’s revenues were under $700 million last year, Shopify should be able to grow at a faster rate than Amazon into the foreseeable future.

Meanwhile, margins are roaring higher alongside revenue growth and the company is going from a money-losing operation to a money-making operation.

Sound familiar? This is Amazon all over again. Pure-play on digital commerce and cloud. Huge revenue growth. Massive addressable market. Strong margin ramp.

Consequently, if you’re looking for exposure to things AMZN has exposure to but don’t want to buy more Amazon stock, I’d recommend taking a look at SHOP. It could be a big winner over the next five to ten years.

Fast-Growing Stocks: Weibo Corp (ADR) (WB)

wb stock

Source: Shutterstock

If you’re looking for big growth, a good place to start is in China, where a recent boom in consumerism (and a lack of competition from U.S. firms) is creating massive growth opportunities for Chinese tech companies.

One of the fastest growing Chinese tech companies is social media giant Weibo Corp (ADR)(NASDAQ:WB). Weibo is often considered the Twitter Inc (NYSE:TWTR) of China, but they probably wouldn’t like that comparison. Weibo has more users than Twitter (392 million versus 330 million Twitter), is growing at a way faster rate (revenues +77% last quarter versus +2% for Twitter), and is more profitable (ebitda margins of roughly 43% last quarter versus 42% for Twitter).

The exciting thing about Weibo is that the company looks undervalued at the present moment.

If you think that the consumer landscape of China will start to look like the consumer landscape of America over the next several years (which is a realistic belief considering the evolution of the Chinese economy over the past several years), then Weibo’s users should be worth as much as Twitter’s users. But Twitter’s market cap is currently $23.5 billion, meaning each one of its 330 million monthly users is worth roughly $71. Weibo’s market cap is $27.4 billion, meaning each one of its 392 monthly users is worth roughly $70.

If Weibo keeps growing its user base at the current pace (+80 million year-over-year), then the company could have around 470 million monthly users by next year. At $71 per user, that implies $33.4 billion, roughly 20% above current levels.

Overall, Chinese tech stocks are a great place to look for growth outside of AMZN and NFLX. One of the biggest growers in that space is WB, and that stock looks materially undervalued relative to its U.S. comp.

Fast-Growing Stocks: Snap Inc (SNAP)

Source: Shutterstock

It seems you either love or hate Snap Inc (NYSE:SNAP). There really is no in between when it comes to the upstart social media company.

But the numbers are hard to argue. Snap’s revenue growth last quarter was 72%, by far and away the biggest market in the U.S. digital advertising quartet of Facebook Inc (NASDAQ:FB), Alphabet Inc (NASDAQ:GOOG), Twitter and Snap. User growth was 18%, again the best mark in the U.S. social media trio of Facebook, Twitter and Snap.

Bears will scream that growth should be bigger because Snap is smaller. Bulls will argue Snap is stealing market share away from Facebook, Google, and Twitter.

Market research seems to suggest the bulls are right here. According to eMarketer, Snap is chipping away at the digital advertising market dominance of Facebook and Google.

I don’t think that makes Facebook or Google any less attractive as investments. This chipping was inevitably going to happen, and the two still control 57% of the entire digital advertising market.

But I think it does make Snap more attractive as an investment. I continue to believe that Snap is morphing into a go-to digital advertising platform for small to medium-sized businesses that don’t necessarily need the max reach that Facebook and Google offer, but rather need the max engagement that Snapchat offers. This is a strong niche in the digital advertising world for Snap to operate in. As such, massive revenue growth rates in the 50%-plus range are here to stay.

If you’re looking for exposure to the high-growth digital advertising market, but don’t necessarily want to buy more FB or GOOG, SNAP should be on your radar.

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


Source: Investor Place

Technology

3 Robot Stocks To Buy And Hold For The Long Term

The robot revolution is here.

Right now, everyone is buzzing about artificial intelligence, automation, and robotics.

Amazon.com, Inc. (NASDAQ:AMZN) is trying to pioneer an era of cashier-less stores in the United States. Alibaba Group Holding Ltd (NYSE:BABA) and JD.Com Inc(ADR)(NASDAQ:JD) are trying to do the same in China. Amazon is also automating its warehouses — and so is JD. Alphabet Inc (NASDAQ:GOOGL) is making huge strides in the automated driving space. The fast food industry is rapidly moving towards automation.

Indeed, everywhere you look, there are signs that the robots are coming.

Is your portfolio prepared for this forthcoming robotics revolution?

Here are my three favorite robot stocks that are solid holdings for a long-term oriented investor

2.) iRobot Corp.

The company behind the mega popular Roomba vacuum, iRobot Corporation (NASDAQ:IRBT) is the undisputed king of the robotic vacuum world.

Although some IRBT bears have been concerned about rising competition, the company has successfully deflected those concerns en route to consistent 20%-plus revenue growth every single quarter.

And that is expected to continue over the next several years.

iRobot plans on launching several new products in 2018, thereby growing its reach in the consumer robotics world. Rumors are that a robotic lawnmower is in the works. Then, there will likely be a robotic window cleaner, a robotic surface cleaner, a robotic trash remover… the list of potential new products goes on and on.

Therefore, IRBT is the best of the robot stocks to buy for a pure-play on the whole consumer robotics market. This is a market projected to grow at a 20%-plus rate into 2023, meaning that IRBT’s revenue growth should remain in excess of 20% over the next several years.

Meanwhile, gross margins continue to grow despite the emergence of lower-priced competitors. Gross margin resiliency speaks to IRBT’s dominance, and illustrates that the company has powerful long-term margin drivers in place.

Altogether, this is a 20%-plus revenue growth narrative with strong margin drivers, implying earnings growth prospects in excess of 25%. But IRBT stock trades at just 28-times forward earnings, implying a price-to-earnings/growth (PEG) ratio of 1.1 The market is at a PEG of 1.2, so not only is this a promising growth stock, but its also an undervalued growth stock.

2.) Intuitiive Surgical Inc.

Just like iRobot is the undisputed leader in the secular growth consumer robotics space, Intuitive Surgical, Inc. (NASDAQ:ISRG) is the undisputed leader in the secular growth surgical robotics market. At the heart of ISRG is the da Vinci surgical system, which is essentially an exceptionally-precise robotic doctor’s arm in the operating room.

The da Vinci system has been a huge success. Global procedures grew by 16% last year, while shipments rose 27%. Moreover, growth accelerated towards the back half of the year, implying that the da Vinci system is still gaining momentum. Global procedures grew by 17% last quarter, while shipments rose a whopping 33%.

These da Vinci systems are big and costly machines. But they are also exceptionally valuable. And there really isn’t any major rival in the market. So ISRG has flexibility with pricing, which translates into big gross margins. ISRG currently operates at gross margins slightly north of 70%, and that is where they have been for several years.

Given tremendous pricing power and lack of stiff competition, there aren’t any signs of margin compression on the horizon.

But the ISRG growth narrative is more than just the da Vinci system. Robots are taking over medical rooms. This is a secular growth market that is expected to grow at a 20% clip over the next 8 years. That means ISRG’s big growth is here to stay for the long term.

The one knock on ISRG stock is that its expensive. Even if earnings growth over the long term does stay at 20%, ISRG stock is trading at a rather rich 43-times forward earnings. That gives the stock a PEG of more than 2.

But the balance sheet is rock solid, the moat is huge and the addressable market is larger. That feels like enough to justify the rich valuation. Consequently, ISRG stock should continue to trend higher as the surgical robotics market continues to grow.

3.) Cognex Corp. 

As it turns out, robots have to see, too. That is where machine vision comes into play. Machine vision is the technology which gives machines “eyeballs” for automated inspection and analysis.

The leader of this market is Cognex Corporation (NASDAQ:CGNX). Cognex has been around for a while (almost 40 years), but growth has been booming recently thanks to a surge in integration of vision-guided robotic systems across multiple industries. As it relates to Cognex, the three biggest industries are consumer electronics, automotive and logistics. All of these posted double-digit growth last year.

CGNX just reported a record year for revenues and profits. Revenue surged 44% higher while operating margins expanded 400 basis points.

This growth will inevitably slow, but its not going to zero anytime soon. The machine vision market, led by a surge in vision-guided robotic system usage, is expected to grow around 10%per year into 2025. But CGNX is the market leader and has higher exposure to the high-growth segments of the market, like automotive. Its no wonder, then, that CGNX revenue growth is pegged in the low- to high-teens range over the next several years, along with expected earnings growth of 27%.

But CGNX stock trades at just 37-times forward earnings, implying a PEG ratio of 1.4. That is pretty good for a hyper-growth robotics stock. Its also pretty good for a company with a cash-heavy balance sheet, a bunch of share buybacks in the pipeline, and a solid dividend.

Overall, CGNX stock looks like a long-term winner.

As of this writing, Luke Lango was long IRBT. 

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Source: Investor Place 

Technology

How Much Higher Can Intel Corporation Stock Go?

So much for Spectre and Meltdown, the two security vulnerabilities found in Intel Corporation(NASDAQ:INTC) chips that were supposed to catalyze customer churn and sent INTC stock spiraling downward earlier this month.

After reporting a robust double-beat quarter with a strong full-year guide that didn’t show any signs of customer churn, Intel stock is bouncing. Big. Its up nearly 10% on the day.

And its up more than 15% since the Spectre and Meltdown concerns dragged INTC stock down to the $42 level in early January. How much higher can this stock go?

Quite a bit. INTC stock deserves to trade above $50. And there is a strong argument for it to trade above $60. Here’s a deeper look.

Strong Quarter Supports Further Upside for the Stock

Intel is a company in transition. While the company’s core PC business is stable and not going anywhere anytime soon, its also not growing. The PC market is saturated. Everyone who wants a computer already has one. There won’t be any growth there in the foreseeable future.

But Intel is managing to grow revenues at a healthy rate because the company is innovating in new growth spaces, like the data center market.

Data is exploding in popularity right now (think about all the smart devices, like smartphones, smartwatches, and smart home gadgets). All this data has to be stored somewhere. So big tech players like Amazon.com, Inc. (NASDAQ:AMZN) and Alphabet Inc(NASDAQ:GOOG,NASDAQ:GOOGL) have created hyper-scale data centers that store and secure all that data in the cloud.

So long as data continues to explode, these data-centers will continue to grow.

And so will Intel. Intel supplies critical components to those cloud data-centers so that they actually work, making the company an indispensable part of the process.

This business for INTC is doing very well. Data center revenues jumped 21% higher in the fourth quarter, up from 15% growth the prior quarter. This led to total revenue growth acceleration from 6% to 8%. Moreover, its signals that Intel’s big cloud customers view the aforementioned security vulnerabilities as a minor hiccup in an otherwise quality offering from Intel.

Intel also delivered a strong guide, yet another sign that demand will remain robust into the near future and that investor concerns related to Spectre and Metldown were overdone.

All in all, Intel is one part stable PC business, one part surging data-center business. As it has in the past, this combination should lead to top-line growth in the 3-5% range.

INTC also has some solid margin drivers. Long-term gross margins should trend up as chip complexity and demand grows. Long-term operating margins should also trend up thanks to major cost savings initiatives from management.

Mid-single-digit revenue growth plus healthy margin drivers and buybacks should drive somewhere around 7-10% earnings growth from 2018’s $3.55 expected base (8.5% at the midpoint).

The S&P 500 is currently trading at 18.6-times 2018 earnings for roughly 10.5% earnings growth prospects after 2018 (a 77% premium).

If you carry that same premium over to INTC stock, you get to a fair earnings multiple of 15 for 8.5% growth. A 15-times multiple on 2018 earnings of $3.55 implies a price target of $53.

If growth can get to 10% after 2018, then INTC stock is looking at a fair multiple of nearly 18, which would get you to a price north of $60.

Bottom Line on INTC Stock

This rally in INTC stock will continue. This is still the lowest multiple player with exposure to secular growth markets like data centers. As the Spectre and Meltdown security vulnerabilities move into the rear-view window, investor demand for INTC stock will only grow.

And INTC stock will head higher. I think we could see INTC at $60 in the not-too-distant future.

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

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Source: Investor Place 

Technology

Use Dip To Buy Red-Hot Take-Two Interactive Software Inc

As the tech sector has slid recently, red-hot Take-Two Interactive Software Inc (NASDAQ:TTWO) stock has been punished.

TTWO stock has fallen from a near $120 high to just over $100 in a few days. That is a pretty big sell-off that wiped out essentially all of the stock’s gains from the prior 2 months.

Alongside the rest of the tech sector, TTWO stock is rebounding some. TTWO stock now trades near $108. But it’s still far from its recent $120 highs.

Does that mean that this rebound in TTWO stock will continue? I think so. Here’s why.

Tech Is In Rebound Mode

Tech names were beaten up last week and early this week as a rotational trade gripped the markets. With tax reform, strong retail earnings, and positive Black Friday numbers in focus, investors ditched the hyper-growth tech beauties which have led the market for so long in favor of more traditional value investments.

In other words, TTWO stock sold off in dramatic fashion without anything being wrong with the fundamental growth narrative. Same with other hyper-growth tech names.

But these growth narratives are really, really strong. After all, there is a reason many of these hyper-growth stocks have continued to roar higher for so long. At most of these companies, growth simply isn’t slowing, nor is it showing any signs of slowing any time soon.

Consequently, I’ve been buying this big dip in tech, including gobbling up Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL), Amazon.com, Inc. (NASDAQ:AMZN), Facebook Inc (NASDAQ:FB), Alibaba Group Holding Ltd (NYSE:BABA), and Netflix, Inc. (NASDAQ:NFLX), among others.

Add TTWO stock to that list.

TTWO Stock Is In Rebound Mode

TTWO stock has long been one of my favorites in the tech sector.

Towards the end of May, I said TTWO stock was a buy based on its robust, unparalleled content portfolio in the video game industry. That portfolio, which includes names like Grand Theft Auto, Red Dead, NBA 2K, WWE 2K, and Civilization, sets the company up to succeed in a long-term window.

That buy thesis remains largely unchanged today. A strong content portfolio isn’t a near-term tailwind: It’s a long-term tailwind. TTWO can continue to pump out GTA, Red Dead, and NBA 2K sequels into perpetuity and, as long as each iteration offers some unique value prop, demand won’t lessen.

Don’t believe me? Just look at the data.

The first game in the Grand Theft Auto series was released in 1997. Twenty years later,  Grand Theft Auto V is the best-selling video of all-time, both in terms of revenue and units sold.

The first NBA 2K  game was released in 1999 (published by Sega.) Eighteen years later, NBA 2K17  is Take-Two’s highest-selling sports title ever, while NBA 2K18 is expected to perform even better than NBA 2K17. 

Fans simply don’t bore of these titles. Demand remains robust for every sequel.

TTWO Stock Valuation

Consequently, TTWO is a buy and hold so long as the valuation remains reasonable.

Today, the valuation on TTWO stock is very reasonable. TTWO stock is expected to grow earnings around 22% per year over the next two years, but the stock only trades at 34.8x this year’s earnings estimate. That means TTWO stock is trading at a mere 60% premium to its growth prospects.

The S&P 500, meanwhile, trades at a 100% premium to its growth prospects (20x this year’s earnings for about 10% growth).

Clearly, the recent dip in TTWO has plunged the stock into materially undervalued territory.

Bottom Line on TTWO Stock

Hyper-growth tech names will rebound from this recent sell-off. This is a “buy the dip” opportunity in many different stocks.

One stock that looks particularly attractive here is TTWO, given its robust growth narrative and cheap valuation.

I continue to believe TTWO stock is a hold into 2019, which is expected to be a banner year for the company with multiple big game launches.

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Source: Investor Place