10 Stocks That Can Move Higher Whatever Happens

As we move nearer to 2019, market sentiment is growing increasingly cautious. And that’s fair enough. Talks of inverted yield curves and the ongoing U.S.-China trade war certainly aren’t boosting sentiment. But even within these conditions, there are still stellar stocks to buy out there.

I mean stocks with strong fundamentals and high growth potential. And the best part is, you don’t even have to look that far to find them. Morgan Stanley has just released a report revealing its stock picks for 2019. They see 2019 as a year of consolidation for the stock market. Consolidated stocks typically trade within limited price ranges and offer relatively few trading opportunities.

However, the names singled out in the report are capable of growing earnings even if the economy slows and the market tumbles.

Here I pinpoint 10 of the firm’s most compelling stock picks. As you will see all 10 stocks boast a “strong buy” analyst consensus rating (according to TipRanks research tools), and their upside potential doesn’t look too bad either. With that in mind, let’s see why Morgan Stanley is such a fan of these stocks right now:

Alphabet (GOOGL)

Stocks to Buy: Alphabet (GOOGL)

Source: Shutterstock

All’s well that ends well. Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) may have endured a rocky trading period recently, but the future remains bright according to Morgan Stanley.

“As the dominant player in paid search, Google continues to benefit from secular growth as advertising dollars shift into digital,” the firm’s Brian Nowak (Track Record & Ratings) said.

Most notably, Google also owns YouTube, the leader in online video advertising. Indeed, Novak sees video advertising expanding nearly 25% from 2017 to 2020 to roughly $22 billion in the U.S. alone.

The Street shares this upbeat outlook. With a “strong buy” analyst consensus, the company’s $1,349 average price target speaks of 24% upside potential ahead. Get GOOGL Research Report.

Amazon (AMZN)

Stocks to Buy: Amazon (AMZN)

Source: Shutterstock

Also on Nowak’s stocks-to-buy list: Amazon.com (NASDAQ:AMZN). “As the dominant player in U.S. eCommerce, Amazon continues to experience secular growth as retail dollars shift online,” the analyst explained.

He believes the e-commerce giant has a “significant opportunity” to capture a larger piece of the roughly $1 trillion worldwide eCommerce market (ex China). This is thanks to 1) the company’s growing logistics network and 2) its expanding Prime membership program.

Indeed, an impressive 37 out of 38 analysts covering the stock are bullish. That’s with a $2,154 average price target (27% upside potential). Bear in mind that while GOOGL stock might be struggling, AMZN is still enjoying strong momentum. Shares are up 40% year-to-date. Get the AMZN Research Report.

Expedia (EXPE)

Stocks to Buy: Expedia (EXPE)

Source: Shutterstock

Let’s stay in internet land for our third stock: leading online travel player Expedia Group (NASDAQ:EXPE). Like other web stocks, Expedia continues to benefit from secular growth as travel dollars shift online.

“The $1.3 trillion global travel industry remains a highly fragmented market and both BKNG and EXPE look well positioned given their scale advantages and portfolio of brands” writes Morgan Stanley’s Brian Nowak.

In all, over the next three years he expects EXPE’s bookings to grow at an aggressive 11% CAGR.

Indeed, while some skeptics may call the stock overvalued, the Street is forecasting a 23% rise in share prices for EXPE. That’s with 12 buy ratings vs three hold ratings over the last three months. Get the EXPE Research Report.

Illumina (ILMN)

Stocks to Buy: Illumina (ILMN)

Genetic sequencing stock Illumina (NASDAQ:ILMN) gets the thumbs up from Morgan Stanley’s Steve Beushaw (Track Record & Ratings). This is a stock that’s already up 55% year-to-date, boosted by the savvy acquisition of Pacific Biosciences in December.

“As the dominant provider of technology to sequence DNA, ILMN stands to benefit from a series of market developments and policy changes that have emerged over the last year,” Beuchaw said.

Here are a few positive catalysts to consider: 1) The success of DNA-driven drug administration in immunotherapy by Merck 2) Stronger global pharma and government funding for DNA analysis 3) Growing consumer interest in DNA-derived applications; and 4) Growing global research funding for genomic research.

In terms of share price, the Street is modelling for 8% upside ahead. This would take this “strong buy” stock to buy to $367. Get the ILMN Research Report.

Intuitive Surgical (ISRG)

Intuitive Surgical (NASDAQ:ISRG) specializes in robots — robotic surgeries to be precise. Its da Vinci robotic system has already racked up a whopping five million procedures. That’s with 44,000 da Vinci surgeons trained worldwide.

“Intuitive Surgical is the leader in robotic surgery,” states the firm’s David Lewis (Track Record & Ratings) said. The system allows doctors to carry out minimally invasive procedures. It does this by translating the surgeon’s hand movements into smaller, precise movements of tiny instruments inside the patient.

Lewis added: “The company has gained significant adoption within urology and gynecology and is still in the relatively early stages of penetration internationally and within broader procedures (including general surgery).”

With eight buy ratings vs two hold ratings, analysts forecast 24% upside for shares. Get the ISRG Research Report.

National Vision Holdings (EYE)

Stocks to Buy: National Vision Holdings (EYE)

Source: Shutterstock

National Vision Holdings (NASDAQ:EYE) is one of the largest and fastest-growing optical retailers in the U.S. It already boasts 1,000 stores in over 40 states.

“We believe EYE offers a unique blend of defensiveness and growth vis-à-vis its focus on value within the non-cyclical optical retail segment and ~50% unit growth runway,” Morgan Stanley’s Simeon Gutman (Track Record & Ratings) said.

The numbers speak for themselves. As Gutman points out, “EYE has delivered 67 consecutive quarters of positive SSS [same store sales] and is expected to grow square footage ~10% annually over the next several years.”

Plus the upside potential looks very compelling. Analysts see shares exploding by nearly 50% to $49. Get the EYE Research Report.

Palo Alto (PANW)

Stocks to Buy: Palo Alto (PANW)

This cybersecurity stock is primed for success. So says Keith Weiss (Track Record & Ratings). He sees Palo Alto Networks (NYSE:PANW) as well-positioned for future industry trends.

“To garner more effectiveness and efficiency in information security architectures, we believe the key secular trend in security will be the consolidation of spending towards integrated security platforms” revealed this five-star analyst.

And Weiss believes PANW can emerge victorious: “Palo Alto Networks stands well positioned to excel within that trend given its leadership in core network security and growing traction into areas such as Endpoint, Cloud, and Security Analytics.”

Encouragingly, its $240 average price target suggests 24% upside potential for this “strong buy” stock. Get the PANW Research Report.

Pluralsight (PS)

Despite what its name might suggest, this isn’t another vision-related stock. Pluralsight (NASDAQ:PS) is an online education company that provides IT and software video training courses through its website. The company is seeing “exceptional” business-to-business activity, with Q3 with billings growth over 50%.

“We believe Pluralsight is well positioned to help enterprises address the need for IT knowledge while managing an accelerating industry-wide talent gap,” commented Brian Essex (Track Record & Ratings).

He continues, “The platform is driven by machine learning technology that not only enables a more efficient learning process at the individual level but also enables enterprises to efficiently quantify, develop, and manage talent across technology platforms.”

Five analysts have rated the stock in the last three months. All named it a stock to buy. They see 30% upside potential ahead. Get the PS Research Report.

Vertex Pharmaceuticals (VRTX)

Stocks to Buy: Vertex Pharmaceuticals (VRTX)

Source: Shutterstock

Vertex Pharmaceuticals (NASDAQ:VRTX) is a biotech that focuses primarily on cystic fibrosis (CF). Word on the Street: This is a stock with some of the best growth prospects in large-cap biotech.

“The company’s CF therapies Kalydeco and Orkambi collectively generated ~$2.2B in sales in 2017, and a third therapy (Symdeko) was approved in early 2018, which we believe could generate ~$750M in sales for 2018E” comments Morgan Stanley’s Matthew Harrison.

Plus Vertex is also developing a triple combination therapy for cystic fibrosis. According to Harrison, this triple therapy has generated strong late-stage data and “could address a large portion of the CF market.”

In total, 12 out of 13 analysts rate this “strong buy” stock a buy, with 17% upside potential from current levels. Get the VRTX Research Report.

Visa (V)

Stocks to Buy: Visa (V)

Source: Shutterstock

Last but not least we have financial giant Visa (NYSE:V). Trends are looking strong going into 2019.

“Visa is a key beneficiary of robust consumer spending worldwide, the ongoing migration from cash to electronic payments, and broadening merchant acceptance,” sums up Morgan Stanley analyst James Faucette.

This should power the stock higher despite forex headwinds.

“Global Personal Consumption Expenditure and secular growth drivers should support high-single-digit volume growth and low double-digit revenue growth in the near-to-medium term” he adds.  Europe, India and Visa Direct are all potential upside drivers.

All told, 15 analysts rate this a stock to buy with only two analysts staying sidelined. Their average price target indicates 19% upside potential. Get the V Research Report.

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Market Preview: Markets Cling to Gains as Rally is Sold

Markets continued a trend of sell the rallies today, even though the three major indexes finished in the black. News that the U.S. and China were making progress on tariffs, and that President Trump was willing to consider intervention in the detention of the Chinese CFO of Huawei, sent markets soaring after the open. The rally on headline trade news was once again sold as traders turned negative in the afternoon, leaving the DJIA up .64%, the S&P 500 clinging to a gain of .54%, and the Nasdaq up .95%. The tech heavy Nasdaq had been up as much as 2.35% earlier in the day. Investors are running out of time for any meaningful rally in December, and face the prospect of another Fed rate hike next week. Continued unsettling trade news, rate hike fears, a crumbling housing market, and general international unrest, both with BREXIT and riots in Paris, have kept the market on an uneven kilter as 2018 is drawing to an end. Investors can likely expect more up and down trading until some of these major issues are resolved.

Tech earnings will be front-and-center Thursday when Adobe (ADBE) and Ciena Corp. (CIEN) report. Adobe will look to placate investors who have begun to rely on the Saas company to produce ever increasing earnings. Last quarter the company hit another earnings record, increasing earnings 24%, beating both company and analyst projections. Expectations for Ciena are a little more down to earth, with an expected 4.8% year-over-year earnings increase projected. The stock has performed well in 2018, and will look to assure investors who have driven the stock to a 50% gain thus far. Also reporting Thursday is warehouse retailer Costco (COST). Reporting 10% comparable store sales for November late last week, investors are expecting another great number from the membership store as we head into year end.  

Thursday analysts will review weekly jobless claims, import and export prices and the EIA nat gas report. The recent uptick in jobless claims is expected to level off, with claims projected at 228K, down slightly from last week’s 231K. Thursday afternoon the Treasury budget and the Fed balance sheet numbers will be released. While it usually attracts little attention, the Treasury budget may garner mention this week with the possible partial shutdown of the U.S. Government looming in a few weeks. The Fed balance sheet has been in focus lately as the Fed is using a reduction in the balance sheet to tighten monetary policy. The balance sheet has shrunk from a high of $4.5 trillion to just over $4 trillion currently. The Fed shrinks the balance sheet by decreasing the amount of reinvestment it performs from maturing securities. Another $11 billion is expected to be removed from the balance sheet this week.

Retail sales and industrial production numbers will be released Friday. Industrial production, which rose only .1% in October, is expected to rebound slightly rising .3%. Also released Friday will be the PMI composite flash reading along with the Baker-Hughes rig count numbers and business inventories.

Indian multinational ICICI Bank (IBN) is projected to report earnings on Friday. With a $62 billion market cap, the bank has traded relatively flat in 2018. Earnings are expected to come in at $.05 per share. Analysts are also expecting numbers from Telecom Italia (TI) to close out the week. The NYSE traded ADR of the Italian communications company has fallen on hard times this year. The stock is down 26% so far in 2018.

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This 20.1% Yield is Too Good to Be True (But This 11.8% Payout Isn’t!)

Most dividend investors understandably love the idea of an 8% No Withdrawal Portfolio. It’s a simple yet “game changing” idea that you don’t hear much from mainstream pundits and advisors.

Find stocks that pay 7%, 8% or more and you can retire comfortably, living off dividend checks while your initial capital stays intact (or even appreciates).

Now this strategy is a bit more complicated than simply finding 8% yields and buying them. Granted the recent stock market pullback has benefited investors like us because we can snag more dividends for our dollar. Yields are higher overall, and that’s a good thing.

Next we must smartly select the stocks that are going to pay our dividends securely – without tapping their own shares prices to pay us.

An Ideal 11.8% Dividend Payer That “Pivoted” Properly

As I write to you there are 123 stocks (trading on major US exchanges with market caps above $500 million) that yield 8% or more. A holiday basket of these dividends is going to be a mixed bag, however. While some of these stocks will shower you with quarterly (or even monthly) payouts with price appreciation to boot, others will lose some or all of your cash in price depreciation.

Of our 123 candidates, 99 have not delivered 40% total returns over the past five years. And this is the minimum we ask of an 8% payer – dish us our dividend and don’t lose our initial capital!

Granted this “back of the envelope” study is probably a bit harsh. We’re missing a few elite 8% payers that “graduated” to lower yields thanks to good stock performances. Still, the important lesson here is that 8% payout success is challenging (though not impossible, as we’ll see shortly).

Of these 99 high paying under-performers we have 57 “biggest losers.” These stocks have actually lost their investors money over the past five years. In other words, they have delivered their big dividends yet lost as much (or more) in price. Not good!

And remember, the S&P 500 returned 61% over the time period. So while we can expect our steadier strategy may underperform during roaring bull markets, we would expect a business to at least beat your mattress as a total return vehicle.

Exceptions? Sure. Business models can change, and past performance isn’t necessarily a predictor of future results.

For example a subscriber recently wrote in to ask why New Residential Investment (NRZ) declined in price three years ago. Well, NRZ had a completely different portfolio now than it did then. Let me explain.

Mortgage REITs (mREITs) like NRZ typically buy mortgage loans and collect the interest. Their business model prints money when long-term rates are steady or, better yet, declining. When long-term rates drop, these existing mortgages become more valuable (because new loans pay less).

On the other hand, the mREIT gravy train usually derails when rates rise and these mortgage portfolios decline in value. Historically, rising rate environments have been very bad for mREITs and resulted in deadly dividend cuts.

But NRZ has actually doubled its investors’ money and the value of its own portfolio (its book value) in less than three years. Its secret? Rather than buying mortgages, NRZ has been investing in mortgage service rights (MSRs). This is “the right” to collect payments from a borrower. In other words, the firm doesn’t own these loans – it owns the rights to service these loans.

MSRs tend to rise in value when mortgage refinancing slows down. That’s exactly what happened, and this “pivot” has made many retirement riches. Happy NRZ investors have collected double-digit dividends while enjoying price appreciation to the tune of 151% total returns!

An Ideal 11.8% Dividend Payer

NRZ’s success story is, as discussed, more rare than not in 8%-ville. Let’s now call out a couple of popular “losers” that, despite their high current yields, don’t really belong in retirement portfolios.

2 Stocks Yielding Up to 20.1% to Avoid

Fashion retailer Buckle Inc (BKE) has paid 14.7% of its current share price in dividends over the past twelve months (thanks to a $2 “special” payout). But the dividend well might run dry soon.

Buckle’s sales (the blue line below) have been in a slow-motion nosedive for three years, taking earnings (red line) and free cash flow (FCF, in orange) down with them:

Belt Tightens on Buckle’s Payout

Why are sales suffering? The firm’s revenues are drying up with its retail outlets. Buckle must pivot its business model to sell direct to consumers online in order to survive.

These “death of retail” market stresses, predictably, have driven up Buckle’s payout ratios: in the last 12 months, the company paid out more than it earned in dividends (140% of profits, to be precise), along with 123% of FCF.

I don’t like to see payout ratios above 50% from non-REITs, let alone 100%. This dividend has too high a risk of becoming unbuckled to belong in a No Withdrawal Portfolio.

Government Properties Income Trust (GOV) meanwhile is a real estate investment trust (REIT) that frequently pops up on cute recession-proof dividend lists. Most of the company’s income comes from government entities, so it seems like a smart way to potentially tap Uncle Sam for rent checks.

And GOV’s big dividend usually qualifies itself for No Withdrawal consideration. However its recent run-up in yield is actually a bad thing:

The Wrong Kind of Bull Market

Problem is, this “bull market” in yield has happened because GOV’s stock has collapsed! Its share price is down 66% in five years. Even with the supposedly generous payout, GOV investors have the taste of stale government cheese in their mouths:

GOV Investors Down 46% With Dividends

There are a few reasons GOV has been crushed. First, its stated funds from operation (FFO) have been in decline. FFO per share is 24% lower today than it was five years ago, even though the dividend is the same.

Second, GOV may be overstating its FFO. The firm has been accused of conveniently excluding maintenance-related capital expenditures. Can you imagine old government buildings that don’t require any maintenance?

And finally, even if we give GOV the benefit of the doubt, it still seems to be paying cash it doesn’t have. Its annual dividend of $1.72 per share exceeds its trailing twelve-month FFO of $1.54. A more responsible 90% payout ratio (which is OK for a REIT) would mean a reduced dividend closer to $1.38 per share.

But the market is expecting worse, which is why GOV yields a “beyond contrarian” 20.1%. Stay away from this sketchy situation.

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Source: Contrarian Outlook

The 10 Best Marijuana Stocks to Buy in 2019

Any cursory look at the markets would reveal that 2018 wasn’t the best year for investors. That goes for speculative assets as well, including marijuana stocks. Although going green has proven net positive for the early birds, the sector tanked heavily during the October selloff. Still, I wouldn’t drop them from your list of stocks to buy just yet.

Despite their well-publicized fall from grace, several marijuana stocks have stabilized from their severe correction. While that’s no guarantee that the industry is done spilling blood, the deflated prices will almost certainly attract speculators. Should enough risk-takers enter the arena, publicly traded cannabis companies will jump higher, even if it’s only a temporary swing.

However, some other factors suggest that marijuana stocks may enjoy a sustained rise. First, none of the big waves currently spooking benchmark indices affect the legal cannabis industry. Whether it’s political unrest in the Middle East, the spiraling protests in Paris or the ugly Huawei controversy, marijuana for now is mostly a North American issue.

Second, medical cannabis potentially offers significant social utility. A stunning Bloomberg article analyzed whether Gilead Sciences (NASDAQ:GILD) made the right business decision in producing a drug that cured diseases rather than managing them. The perception exists that big pharma companies should focus primarily focus on revenue generation rather than medical breakthroughs.

On the other hand, medical marijuana companies have no such quandaries. Because they are typically much smaller outfits, they don’t mind the inability to patent a naturally occurring plant. If anything, an organization that produces a proven, effective cannabis strain would represent a buyout target. This asymmetry challenges big pharma, but makes marijuana-based pharmaceuticals among the best stocks to buy.

While the sector remains risky, the deflated market environment offers attractive deals on these 10 marijuana stocks.

Tilray (TLRY)

Tilray (NASDAQ:TLRY) easily represents the most interesting and controversial picks among marijuana stocks to buy for next year. Within a few months after its initial public offering, TLRY stock pulled a ten-bagger. But as you know, the victory was short-lived, and Tilray came crashing down to earth.

Naturally, several analysts and commentators blasted the company as an unsustainable bubble. Keep in mind, though, that since its IPO, TLRY stock is up over 470%. I wouldn’t dismiss such a performance as a failure. Moreover, shares have stabilized near the $100 level. If this company was as terrible as the bears claimed, I doubt TLRY would ride this support line.

Now, it’s easy to dismiss any individual opinion. It’s much harder when a banking giant like Barclays (NYSE:BCSincreases their position. Clearly, they view TLRY as one of the best stocks to buy in 2019, and they’re putting their money where their mouth is.

Canopy Growth (CGC)

The prior two months have not been for Canopy Growth (NYSE:CGC). Taking a similar route to most other marijuana stocks, CGC dropped 26% in October. The following November appeared promising, building off a sharp burst of momentum. Unfortunately, the rally lost traction and CGC ended up losing double-digits for the month.

But what I like about Canopy Growth is that true to its name, it’s a steady grower. Despite the recent sharp losses, its longer-term bullish trend channel remains intact. I wouldn’t consider hitting the panic button unless shares started to decisively fall below the $25 level. That said, I think the broader fundamentals favor CGC stock.

Tilray has a financial institution backing it. For Canopy Growth, they have alcoholic-beverages maker Constellation Brands (NYSE:STZ). This is a trend that investors, even the skeptical ones, shouldn’t ignore. Big money is increasingly stepping into the cannabis sector, making CGC one of the best stocks to buy despite its well-publicized setbacks.

Cronos Group (CRON)

While most marijuana stocks have struggled to rekindle their prior catalysts, Cronos Group(NASDAQ:CRON) currently stands above the competition. For the month so far, CRON stock has streaked to an amazing 39% lead. Of course, most of that optimism comes courtesy of Altria Group (NYSE:MO).

The iconic tobacco company made headlines when it announced a partnership with Cronos. The deal, worth $1.8 billion, provides CRON with a boatload of cash to further develop its cannabinoid (CBD) products. On the other side of the fence, Altria needs something fresh to reinvigorate its traditional tobacco business.

A key long-term synergy could be the vaporizer market. Vaping CBD e-liquids have taken off in terms of popularity. Altria has attempted to break into the vaporizer market with its own heat-not-burn tobacco products. But with Cronos’ expertise in CBD, Altria has another angle in this sector to work.

In the meantime, feel free to put CRON in your list of best stocks to buy for next year.

Aurora Cannabis (ACB)

Aurora Cannabis (NYSE:ACB) has suffered a disjointed long-term performance in the markets, even compared to other marijuana stocks. In 2017, ACB stock shot from near-obscurity to the toast of Wall Street. This year, ACB has shown flashes of brilliance, but little to show for it overall.

I expect the cannabis sector to wake from its slumber. When it does, the currently embattled ACB has the potential to become one of the best stocks to buy for 2019. The markets really haven’t responded positively to Aurora’s buyout of Farmacias Magistrales. Farmacias made news when it became the first, and so far only Mexican importer of raw materials that contain the psychoactive component THC.

The buyout allows Aurora a viable channel to Latin America’s medical-marijuana market. In addition to Farmacias, ACB has operations in Colombia and Uruguay. Should the industry establish medical breakthroughs in Latin America, advocates will pressure the U.S. to further loosen federal cannabis restrictions.

Auxly Cannabis (CBWTF)

One of the most common misconceptions is that legal-cannabis advocates are only “fronting” to get high. While that use is unavoidable, the botanical industry has several legitimate applications. On the business aspect, several investors assume that all cannabis companies focus on growing weed.

But as Auxly Cannabis (OTCMKTS:CBWTF) demonstrates, marijuana stocks feature the same vibrancy and dynamism as other commodity related investments. Auxly specializes in all areas of the legal-cannabis supply chain, with a primary focus on upstream operations. This involves partnering with companies that grow the actual product.

In addition, CBWTF levers a viable midstream operation. This includes activities such as extraction, processing and branding. It also involves longer-term efforts like research and development.

The biggest advantage for CBWTF to pull this streaming business off is its balance sheet. With a favorable cash-to-debt ratio, Auxly can make key acquisitions and investments while the cannabis market is still young.

Origin House (ORHOF)

Formerly known as CannaRoyalty, Origin House (OTCMKTS:ORHOF) is another cannabis firm that made its name through streaming businesses. And while it still generates some revenue through its initial line of work, ORHOF has become a powerhouse in branding.

The proof is in its utter domination of California. Unbeknownst to me prior to this write-up, the Golden State is the world’s largest legal cannabis market. With a title like that, it’s a wonder how anything gets done around here. Joking aside, Origin House boasts more than 450 California-based dispensaries and more than 50 popular brands.

In other words, if you can make it in California, you can make it anywhere. This bodes very well for ORHOF stock. Last month’s midterm elections proved that legal weed is gaining serious momentum. Inevitably, more recreational markets will open, allowing Origin House to expand its dominating presence.

Marimed (MRMD)

Let’s face facts: Marijuana stocks don’t exactly have the greatest reputation for stability. That goes five-fold for over-the-counter offerings. One notable exception to this rule is Marimed(OTCMKTS:MRMD).

While other sector players hemorrhaged severely during the October rout, MRMD stock actually enjoyed a standout performance, gaining nearly 19%. That said, Marimed eventually gave up those gains and then some. Since the first of November, MRMD is down a little over 17%.

Still, I think it’s fair to say that compared against other marijuana stocks to buy, Marimed has held up well. Heading into the new year, MRMD has the potential to turn heads.

Its biggest advantage is its highly demanded consultation services. Covering everything from licensing application support to facilities management, MRMD provides relevant and critical insights for budding entrepreneurs. Plus in my opinion, Marimed levers one of the brightest and well-rounded leadership teams in the marijuana industry.

Medmen Enterprises (MMNFF)

Marijuana retail outfit Medmen Enterprises (OTCMKTS:MMNFF) suddenly became one of the best stocks to buy in botany around mid-October. Within a matter of days, MMNFF stock skyrocketed over 60%. But like most over-the-counter affairs, Medmen gave up its profits just as quickly.

Since its peak closing price, MMNFF stock has dropped a humbling 53%. I get that most investors will balk at such volatility. However, for the speculator, I sense serious growth opportunities for Medmen.

The company has established itself as a retailer of premium cannabis products. Yet many investors may not appreciate that Medmen is a vertically integrated organization. From its upstream production operation down to extraction, branding and distribution, Medmen essentially controls its supply chain. This is a “farm-to-bong” business at its finest.

As Medmen CEO Adam Bierman stated recently, this structure affords the company generous margin-expansion possibilities. Further, the aforementioned high-profile deals only help validate smaller players like MMNFF stock.

Aleafia Health (ALEAF)

Broader and sector weakness has hurt virtually all marijuana stocks. However, the lesser-known names have experienced disproportionate pain. Unfortunately, this is something that Canadian cannabis firm Aleafia Health (OTCMKTS:ALEAF) knows all too well.

But despite its severe market loss over the past two-and-a-half months, ALEAF stock offers a speculative opportunity for risk-takers. For starters, the underlying company features the largest network of referral-only medical cannabis clinics in Canada. Furthermore, their patient base continues to increase as the industry gains social recognition and acceptance.

Management has also invested heavily in cultivation facilities, targeting an annual growing capacity of 98,000 kilograms in 2019. Most importantly, Aleafia has the substance to back up the outlook. In its most recent third-quarter earnings report, the company increased revenue 36%year-over-year.

Diego Pellicer Worldwide (DPWW)

We’ve arrived at the end of our journey regarding marijuana stocks to buy in 2019. In keeping with my loose tradition, I like to throw in an extremely speculative name. And don’t roll your eyes at me: you know you want to know!

The following idea comes from an InvestorPlace reader named Anthony. He asked my opinion regarding Diego Pellicer Worldwide (OTCMKTS:DPWW). My answer to him is the same one I’m giving to you, which is that DPWW stock is extremely risky. Aside from its distressingly low trading volume and market capitalization, Diego Pellicer lacks financial strength to convincingly pull off its licensing and royalties business model.

However, I’m intrigued with its premium branding business. Not that I would know, but Diego Pellicer specializes in high-class cannabis products. As companies like Origin House and Medmen have proven, cannabis users eschew quantity for quality. That could lead to a surprising turnaround for DPWW stock.

Or you can lose every cent that you put in.

As of this writing, Josh Enomoto is long MRMD and ALEAF.

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3 REITs Increasing Dividends in January

To build momentum from your income stocks going into the new year, consider buying into those REITs that should announce higher dividend rates in the first month of 2019. Each month I publish a list of those real estate investment trusts (REITs) that should announce higher dividend rates in the upcoming months. This knowledge can give you a jump on the rest of investing public, which will be surprised when the positive news is announced.

I maintain a database of about 130 REITs. With it I track current yields, dividend growth rates and when these companies usually announced new dividend rates. Most REITs announce a new dividend rate once a year, and then pay that rate for the next four quarters. Currently about 85 REITs in my database have recent and ongoing histories of dividend growth. Out of that group, higher dividend announcements will come from different REIT companies during almost every month of the year. With the potential of continued Fed interest rate hikes, the prospects of higher dividend payments coming in January will help to offset any share price disruptions resulting from announcements out of the Federal Reserve Board.

My list shows three companies that historically announce higher dividends in January and should do so again this year. Investors will start earning the higher payouts in the new year. But remember, you want to buy shares before the dividend announcement to get the benefit of a share price bump caused by the positive news event.

Here are three REITs expected to raise dividends that you might want to consider:

Apartment Investment and Management (NYSE: AIV) is a mid-cap sized REIT that owns and operates about 140 apartment communities.

About 40% of the company’s properties are in coastal California, with the balance spread across major U.S. metropolitan areas.

Last year, AIV increased its dividend by 5.6%. Cash flow growth has been comparable in 2018, and I forecast an 5% to 6% dividend increase in January.

The new dividend rate announcement will come out in late January with a mid-February ex-dividend date and payment at the end of February.

AIV yields 3.3%.

EPR Properties (NYSE: EPR) focuses its real estate investments in three different business sectors. Primary is the ownership and triple-net leasing of entertainment complexes and multiplex theaters. The second sector is the ownership of golf and ski recreation centers, also triple-net leased. The third sector is the construction, ownership and leasing of private and charter schools.

EPR pays monthly dividends and has grown the dividend rate by an average of 6.3% per year for the last five years.

In 2018 the company was active in both acquisitions and new developments.

The new dividend rate is announced in mid-January, with an end of January record date and mid-February payment. This stock is a long-term recommendation in my Dividend Hunter high-yield investing service.

EPR currently yields 6.2%.

Welltower Inc (NYSE: WELL) is a large cap healthcare sector REIT. The company owns properties concentrated in markets in the United States, Canada and the United Kingdom.

The portfolio is divided into three segments consisting of: Seniors housing, post-acute communities, and outpatient medical properties. Triple-net properties include independent living facilities, independent supportive living facilities, continuing care retirement communities, assisted living facilities, care homes with and without nursing, Alzheimer’s/dementia care facilities, long-term/post-acute care facilities and hospitals.

Outpatient medical properties include outpatient medical buildings. Welltower had increased its dividend every year since 2009 but did not change the rate at the beginning of 2017.

To get back on the dividend growth track, I expect a 2.0% to 2.5% increase to be announced in January.

The announcement will come out at the end of the month, with an early February record date and payment around February 20.

The stock yields 4.8%.

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Market Preview: Progress on U.S./China Trade War Lifts Markets

Markets rallied strongly Monday after President Trump and Chinese President Xi Jinping agreed to a 90 day moratorium on trade tariffs in which the U.S. will hold off on raising tariffs by 25% at the beginning of 2019. Larry Kudlow, the President’s National Economic Council Director, said “If China opens its markets as they promised to do, and they’re going to do it fast according to their promises, we will increase our exports substantially…” Kudlow is well known on Wall Street, and many analysts put faith in his comments over often exaggerated political commentary regarding trade. Markets rallied from the outset Monday morning, gave back some of those gains, and then rallied again near the close. Investors are hoping Director Kudlow is correct and for a quick resolution to the trade issues. If a resolution is not arrived at either before, or soon after, the new year markets will see the 90 day window as simply kicking the can down the road.

Dollar General (DG), Autozone (AZO) and Marvell Technology (MRVL) all report earnings on Tuesday. As Todd Vasos, CEO of Dollar General stated last quarter, “our two-year same-store sales stack for the second quarter of 2018 was the highest in 10 quarters.” The company has been hitting on all cylinders this year, and raised earnings estimates as a result. The stock has been little impacted by the market pullback, and analysts expect another strong quarter from the discount retailer. Autozone earnings are expected to increase 23% year-over-year when the company reports before the bell Tuesday. After selling off earlier this year the stock has regained the $800 level, recently hitting all-time highs. Analysts are looking for another strong quarter, and an update on the company’s aggressive buyback program.

Tuesday, investors will get to take a peak at motor vehicle sales and Redbook retail numbers. The auto sales number is expected to decrease slightly to 17.2 million from the 17.5 reported in October. But both month’s numbers increased dramatically from a summer slump. Wednesday was to see Fed Chairman Powell deliver testimony to Congress’s Joint Economic Committee. But, the passing of President George H.W. Bush, and the declaration of a national day of mourning, means that testimony will be postponed. Stock markets in the U.S. have also announced that they will be closed on Wednesday to honor the nation’s 41st President.  

Wednesday the earnings focus on retailers continues as lululemon (LULU), Five Below (FIVE) and American Eagle Outfitters (AEO) report earnings. Last quarter lululemon handily beat estimates by 44% sending the stock higher yet again after an earnings beat. The stock has performed exceptionally well this year, rising from $80 to around $140. Investors will be looking for the athletic apparel company to provide color on the final few months of the year as we’re in the midst of the holiday season. American Eagle has stair-stepped lower since August of this year. The company has invested heavily in its online operations, and has achieved relatively strong sales numbers from that channel the past few quarters. Analysts will be looking for an update on the progress of the online initiative and what hurdles the company is encountering as it broadens its platform.

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Buy These 3 Growth Stocks in a Sector Shielded From a Downturn

I’ll be the first to admit, when I went looking for stocks that would not be impacted by the trade war between the U.S. and China, or a flip-flopping interest rate policy, I did not think I would end up in the for-profit education sector. I viewed the sector as plagued by shaky financials and remember clearly the bubble and relatively recent collapse of many stocks in the for-profit education space.

The U.S. government’s policy of an “education for everyone” brought out bad actors in the sector who were more than willing to take advantage of the government’s largesse, and enroll students that had very little chance of paying back their educational debt. The resultant shakeout, when the government realized what was happening and pulled back on the lending reigns, left the most aggressive companies, like Corinthian Colleges and ITT, bankrupt.

So why look at these companies now? I found two catalysts as I began to research the companies. First, in the U.S., a more friendly government is in place after what I view as the correct crackdown of the previous administration. And second, the shakeout in the industry appears almost complete with several of the remaining companies touting solid financials and solid growth prospects due to economic and demographic changes.

In the U.S., Education Secretary Betsy DeVos has begun what NPR calls a “regulatory reset on Obama-era for-profit regulations”. One of the most onerous rules on the for-profit institutions in the U.S. is known as the “gainful employment” rule.

The rule in essence requires a for-profit institution to prove the students they enroll can be gainfully employed following graduation. The gainful employment policy is set to expire July 1, 2019, and Secretary DeVos has clearly indicated the Department of Education will not seek to extend the policy. This policy shift should benefit the for-profit education companies.

The companies I believe you should look at, which I list below, also have solid financials in place and are expected to grow substantially. There are two factors driving this growth. First, the companies are increasingly relying on technology, such as artificial intelligence, to educate more people using fewer and more efficient resources. And second, the move to a gig-economy means workers need more education throughout their career than they did even a few years ago. And, in countries like China, the gig-economy, combined with a move away from agriculture, is fueling rapid growth.

Karl McDonnell, CEO of Strategic Education (Nasdaq: STRA) (in early 2018 Strayer Education merged with Capella Education to form Strategic Education) recently said Strategic is, “using technologies like artificial intelligence and predictive analytics today to teach vastly more students with fewer humans and yet, better outcomes.” As this technology gets better, the efficiency should continue to drive cost out of the business model.

A few months ago Forbes reported that by 2020 fully half of U.S. employees will be engaged in freelance work. A McKinsey study examining the same issue, says that also by 2020, the U.S. will need 1.5 million more college educated workers than are available. And it’s not just a U.S. problem, as France is projected to have a shortfall of 2.2 million college educated workers with the European Union expected to have major shortfall issues due to both education and complicated hiring laws.

It’s my view that the for-profit educational institutions, with expertise in distance learning and educating adults who need to upgrade skills, will benefit from this changing job landscape and skills gap.

Here are a few of the companies I believe you should look at for your portfolio.

Grand Canyon Education (Nasdaq: LOPE)

The first thing to strike me about Grand Canyon is the positively sloping operating and profit margins the company has posted. In one year profit margins have risen to 23.6% in the latest reported quarter from 19.3%.

Grand Canyon is also very interesting because of a recent change in its business model. The company split off the “school” into a nonprofit and now Grand Canyon gives investors a services company that provides technology, counseling and a variety of other services to the school.

The services company receives 60% of the tuition from the nonprofit, and importantly can offer the services it provides to other institutions. This should allow the company to grow beyond the confines of being tied to one institution and provide substantially more market to address.

Grand Canyon is projected to grow earnings this year almost 27% and is projected to have a 17% growth rate over the next five years. The company has only a .05 debt to equity ratio and trading around $120 has a book value of almost $24 per share.

New Oriental Education & Technology Group (NYSE: EDU)

The for-profit education market is booming in China. In 2016 40% of the Chinese population was engaged in farming. In the U.S. and Germany, that number is 2% and 10% respectively. As China’s agriculture sector becomes more efficient, a major government initiative, it is projected that 250 million Chinese will leave agriculture and move to jobs requiring a higher education skill set.

As the education market grows in China for-profit institutions are also taking share from public schools. Revenue from 2012 through 2020 for private educational institutions is expected to grow at a compound annual growth rate of approximately 12%. New Oriental Education is poised to take advantage of these favorable demographics and growing market.

In October the company reported a 49% year-over-year revenue increase and a 13% year-over-year increase in student enrollments. The company has no long term debt and expects to increase earnings next year by over 34%.

What is impressive about the company is that it is both expanding rapidly, opening 18 new facilities last quarter, and is also earnings positive during this growth period. As CFO Stephen Yang described in the company’s latest earnings call, New Oriental uses a low cost promotional experiential course offering in the summer to bring in new students and then moves, as of the latest quarter, over 54% of those promotional students into full course offerings.

The stock has pulled back this year after becoming somewhat overheated and now trades at a PE of 36. But, based on the projected earnings growth, the forward PE is projected to be cut in half to just over 18.

Chegg, Inc. (Nasdaq: CHGG)

Chegg focuses on homework help, online tutoring, and scholarships and internship matching. The company is expanding rapidly, and is expected to grow earnings next year over 25%.

The company has been steadily increasing margins with gross margins coming in at just over 74% last quarter. The company appears to be on the cusp of profitability, and is just moving into a more efficient operating model through technology implementations.

CEO Dan Rosensweig discussed the company’s move to a chat-based platform, which allows fewer employees to service more students, in their last earnings call. Rosensweig stated, “With over 40% of college students requiring remediation in Math, English, or both, these are key subjects where we are starting to leverage A.I. and machine learning to expand our product offerings and provide greater support to a broader range of students.”

Employing a business model with a mix of human interaction provided by tutors, combined with a growing reliance on increasingly efficient technology, increases Chegg’s total addressable market as it expands its service offerings.

With a rapidly increasing market, due to the changing way people work and the increasing industrialization of growing economies, for-profit education companies like Grand Canyon, New Oriental and Chegg deserve a closer look. These companies have made it through the recent for-profit education shakeout and are rapidly earning their way back to a spot in your portfolio.

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2 Important Levels to Watch for Nvidia Stock

Nvidia Stock NVDA stock

Source: Shutterstock

Shares of Nvidia (NASDAQ:NVDA) have been hammered since the start of October. The rout in Nvidia stock pained a lot of long-term investors and shaken out, or caused severe losses for, a lot of recent buyers.

NVDA stock suffered a 50% decline in just 35 trading sessions from its early-October highs. Others, like Advanced Micro Devices (NASDAQ:AMD) have fared better, but have also been under pressure.

Despite the beating, Nvidia’s stock price is more a case of a broken stock than a broken company. Admittedly, it has a few issues, but they are more temporary than anything else and it still has several secular tailwinds at its back.

Evaluating Nvidia Stock

Current estimates call for 50% earnings growth this year and nearly 26% sales growth. However, those estimates drop considerably next year, calling for flat earnings growth and just 6% revenue growth. Now, inaccurate estimates can hurt both the bulls and the bears here, but consider how far off analyst estimates were for the upcoming quarter.

Management guided for $2.7 billion in Q4 sales, way below expectations for $3.4 billion. With that kind of miss, we can’t rule out that revenue could come under further pressure through the year. We also can’t rule out that analysts cut their estimates too much over the next five quarters.

That said, Nvidia has its share of issues. Mainly there was a false sense of demand for graphics chips thanks to cryptocurrency mining. Even though Nvidia had crypto-specific options, these miners were using all the chips they could get their hands on. That led to management, analysts and investors believing that demand was much strong than it really was. Once that crypto-fueled demand faded, it left NVDA with a glut of inventory, which will hurt business over the next few quarters.

For short-term investors, that likely takes Nvidia stock off their watchlist. For long-term investors though, that opens the door to opportunity. Nvidia is still a leading force in the artificial intelligence revolution and its new ray-tracing technology is unrivaled. It has solid growth in gaming and monstrous growth in the datacenter. Its professional visualization segment is no slouch and while small now, its automotive unit continues to churn out impressive growth, too.

Trading NVDA Stock

chart of NVDA stock price
Click to Enlarge 
Trading at 21 times this year’s earnings isn’t expensive when we have 50% growth. However, with flat growth next year, that valuation may concern some investors.

When in doubt, I side with the company’s quality, which is top notch. Further, my outlook for Nvidia stock isn’t the next five to eight quarters, it’s the next five to eight years.

With that said, the valuation is only part of the equation. What do the charts say?

Nvidia stock has been locked in a costly downtrend that it’s still not out of. That sets up the first level we need to watch. Over the 21-day moving average and downtrend resistance, and NVDA stock may be able to get some bullish momentum.

If it can, look to see if it can hurdle its November high and make a push back to $194. At that level, Nvidia will fill its earnings gap and hit its 38.2% Fibonacci retracement level from the October highs to the November lows (that’s also the 2018 high/low range).

The other level to watch comes on the downside. Specifically, let’s see how Nvidia does in this $140 to $145 level. Although it shot below it last month amid its post-earnings pummeling, it’s been serving as a level of stability for the name.

If it can hold up there, long-term investors may add to their position. Should it fail as support, the $134 lows are in play. Below that and perhaps $120 becomes possible, a big breakout level in 2017.

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Market Preview: Markets Take Another Beating on Trade Fears

Markets finished the first week of December on more of a Grinch footing than in a hoped for Santa Claus rally. Suffering another beating across the board, all the major indices finished in the red with the DJIA down 2.24%, the S&P 500 off 2.33%, and the Nasdaq faltering 3.05%. The arrest of Huawei CFO Meng Wanzhou, who is also the daughter of the Chinese company’s founder, threw a wrench into U.S./China trade negotiations. Ms. Meng, CFO of one of China’s largest companies, has been charged with fraud in misleading U.S. banks regarding transactions executed by them on Huawei’s behalf. The transactions were in direct violation of U.S. sanctions on Iran. The surprise arrest, as Ms. Meng changed planes in Canada, throws into turmoil yet again talks on trade tariffs between the two superpowers. It did not help markets when early Friday separate high level White House representatives, both involved in the trade talks, gave opposite views on what the 90 day freeze on tariffs means to the overall negotiations. It appears investors are in for a rocky ride into 2019 as the trade issue seems to become murkier by the day.  

Monday will bring earnings from Casey’s General Stores (CASY) and Stitch Fix (SFIX). Casey’s has missed earnings estimates 6 of the last 8 quarters, and the market is in an unforgiving mood for companies that miss estimates lately. Positive results last quarter, as reported by CEO Terry Handley, were driven by higher fuel margins, operating 105 more stores and cutting employee hours worked. As the company grows analysts will be looking for a stabilization of operating margins which have been in a steady decline since 2016. Stitch Fix will be looking to redeem itself after an early October earnings report that basically cut the stock in half over the next few trading sessions. While sales and active customer growth metrics both increased by over 20% last quarter, expectations were for much higher numbers. Though the company grew profit margins in the quarter, investors were more concerned with the active customer growth rate. Analysts will again be focusing more on customer growth than earnings when the company reports Monday.

The Labor Department will release the JOLTS numbers, which track job openings and offer rates on Monday. With somewhat weaker than expected job numbers on Friday, the JOLTS number will take on added emphasis. Scheduled for a 12:30pm release Monday is the TD Ameritrade Investor Movement Index. The index measures investor sentiment by looking at what activity retail investors are engaging in within their brokerage accounts. The report will be especially telling this time around given the extreme volatility in the market the past few weeks. Tuesday we’ll see small business optimism data, PPI, and Redbook retail data. Mortgage application data, CPI, and Atlanta Fed business inflation expectations will all be released on Wednesday. Inflation expectations, which came in at 2.2% year-over-year last month, may be falling as growth is expected to slow. Thursday investors will see the release of jobless claims, import and export prices, and the EIA natural gas report. We’ll close out the week Friday with industrial production numbers, retail sales, PMI composite flash numbers, and business inventories. Manufacturing is expected to pick up an additional .3% month-over-month.

American Eagle Outfitters (AEO), Dave and Buster’s (PLAY) and DSW, Inc. (DSW) will give us a feel for the retail market when they report earnings on Tuesday. DSW broke through support levels Friday reaching prices it has not seen since June. Wednesday Nordson Corp. (NDSN), Tailored Brands (TLRD) and Oxford Industries (OXM) will take the earnings stage. Thursday, heavy-hitters Adobe (ADBE), Costco (COST) and Cienna (CIEN) will take the center ring. Adobe has rewarded investors handsomely this year, up around 40% even after the recent pullback in the stock. Lee Enterprises (LEE) is scheduled to close out the earnings week on Friday.

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Pay No Commissions When Loading Up on These 3 Stocks

I like to get a sense of what is going on in global markets to help me guide you through a path to profits.

And there is one item that caught my eye that I’m sure isn’t being reported by media outlets, such as CNBC. That is, after powering ahead of global rivals for much of the summer, the U.S. stock market has been struggling to continue outperforming since the peak in late September. The chart below illustrates that point.

Other markets, which have been beaten down, are starting to outperform. For example, in November, the Hang Seng index in Hong Kong soared by 6.1%. Such a rebound is not surprising when you consider the battering it took because of the U.S.-China trade war.

The recent relative outperformance of some foreign markets had me thinking again about those foreign stocks you can buy in the U.S. in the form of an ADR (American Depository Receipt) and how you can buy some of these through the Robinhood brokerage firm for zero commission!

Robinhood Revisited

Robinhood is still growing rapidly. It added about 3 million accounts over the past year, bringing its total number of customers to 5 million, which is more than twice the big three incumbent discount brokerage firms combined. And it remains the only venue that offers trading on stocks, options and cryptocurrencies all in one place.

I first told you about it adding ADRs back in September. At that time, Robinhood announced it was adding about 250 ADRs from Japan, China, Germany, the U.K. and elsewhere. ADRs of companies from France will be added in the coming months. A quick definition of ADRs is that they are stocks of foreign companies that trade and settle in the U.S. market in dollars, allowing investors to avoid having to transact in a foreign currency.

Robinhood co-founder and CEO Vlad Teney told CNBC at the time, “We looked at what customers were searching for and not getting. It [adding ADRs] allows customers to get some exposure outside of the U.S.”

The company found its users wanted access to global stocks by looking at its own search data. Robinhood’s staff has access to what people are typing into the app’s search and looking to trade. Names such as Nintendo, Adidas, BMW and Heineken continued to pop up. The company used similar reasoning in February when it decided to add cryptocurrency trading after users repeatedly searched for bitcoin.

As someone that owns a good number of foreign stocks personally, this was fantastic news. This move made investing in overseas blue chip stocks easy, safe, and cost-efficient. While there are hundreds of quality foreign companies to choose from on Robinhood’s platform, let me briefly highlight for you three of them…

Nintendo

If you have children, you no doubt have heard of the Japanese gaming company Nintendo (OTC: NTDOY). It is doing well and recently announced its best quarterly results in eight years! It reported operating profits of ¥30.9 billion ($27.2 million) for the July to September quarter, up 30% on the same period a year earlier.

Its recent success has been due in large part to the popularity of its Switch console. Nintendo said that over the April to September half it had sold 5.07 million units of the Switch console, adding that it would maintain its full-year sales target of 20 million units by the end of the financial year ending March 31, 2019.

And despite a visibly slower pipeline of blockbuster titles this year, sales of Switch games reached 42 million in the April to September period, almost double what was sold in the first half of the company’s previous fiscal year. And its next blockbuster – Super Smash Bros Ultimate – is only being released on December 7. Despite this, the highest ranked title in Amazon’s list of the best-selling games of 2018 is Super Smash Bros. That suggests there have been a lot of pre-orders and that means it could be a record-breaking hit.

With the games industry tilting towards the huge Asian market – UBS expects gaming revenues in Asia to grow 9.5% annually to $200 billion in 2030 – Nintendo seems well-positioned.

Naspers

One company that many U.S. investors have never heard of is South Africa’s Naspers (OTC: NSPNY). Yet, it is perhaps the savviest venture capital investor in the world. It is best known for taking a major stake in China’s tech giant Tencent (OTC: TCEHY) back in 2001 for a mere $31 million. That stake grew in value to $175 billion earlier this year!

If there is one thing I love as an investor, it is buying something on the cheap. And Naspers is that. The entire current valuation of Naspers is valued at about $25 billion less than just its stake in Tencent! And all its other investments in technology companies around the emerging world are valued at nothing – you’re getting them all for free!

It comes down to the same old Wall Street bugaboo – its analysts are either too lazy or not smart enough to understand Naspers business. Its business is very successful, posting a 39% rise in half-year earnings. The earnings of $1.7 billion in the six months ended in September were driven by Naspers’ classifieds business becoming profitable as well as Tencent generating stronger profits. The company touts a 22% internal rate of return on non-Tencent investments since 2008, including a stake in Flipkart of India which was sold to Walmart earlier this year.

Africa’s largest company has begun to tackle the steep discount in its share price to its net asset value. As part of tackling the discount, this year Naspers announced plans to spin off its African pay-TV arm and it did raise $10 billion from selling off some of its Tencent shares, reducing its stake to 31%.

I look forward to its spinoff of its very successful pay-TV arm Multichoice, which is Africa’s Netflix and more. Its services include sports broadcasting and South Africa’s Dstv, reaches 13.5 million households on the continent and generated profits of 6.1 billion rand ($409 million) during its latest fiscal year.

Nestlé

For more conservative investors, there is the world’s largest food and beverage company, Switzerland’s Nestlé (OOTC: NSRGY), which was founded as a baby food manufacturer in the 1860s. Today, Nestlé’s four priority markets are coffee, bottled water, pet food and baby food.

I suspect that someday the company will be making some large divestitures. One of these will likely be its frozen foods business, which controls a 29.6% share of the U.S. market. Another may be its consumer nutrition and consumer healthcare division.

Already, Nestlé has said it plans to spin off or sell its skin health business. In the latest streamlining measure by CEO Mark Schneider, Nestlé said it had decided the future of Nestlé Skin Health, which analysts said could be worth as much as 7 billion Swiss francs ($7 billion), laid “increasingly outside the group’s strategic scope”.

The division had sales of 2.7 billion Swiss francs last year and makes prescription items, anti-wrinkle creams and other consumer healthcare products. Nestle said it would “explore strategic options” for the business, which could include a sale, spin-off or even a stock market listing. Possible buyers could include consumer or pharmaceutical groups.

Nestlé said that the planned sale or spin-off would “sharpen its focus” on food, drinks and “nutritional health products”, led by its top brands including KitKat chocolate bars, Perrier bottled water and Purina pet food. The decision to abandon the skin health business I believe reduces still further the strategic case for Nestlé selling its 23% stake in the French cosmetics giant, L’Oreal (OTC: LRLCY).

There you go – three high-quality foreign stocks you can buy for zero commission at Robinhood.

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