Cryptocurrency

The New Way to Stop Hackers — and Make Profits

At a recent investment conference, someone asked me my opinion on bitcoin and other cryptocurrencies…

I said they were worth paying attention to — not for speculating, but for solving one of the biggest problems of our time: keeping computer networks and data safe from hackers.

I mean, if you want to speculate in bitcoin, Ethereum, Dogecoin — you name it — go right ahead. But the bigger profits will be in the underlying technology that makes cryptocurrencies possible. It’s called a blockchain.

Not Just About Bitcoin

Like anything that’s new, it all sounds a bit scary with a lot of “what ifs” attached. But blockchain is going mainstream faster than most people realize.

  • Lockheed Martin wants to use blockchain technology to keep its defense secrets safe.
  • The Walt Disney Co. built a platform called Dragonchain that’s now open-source.
  • Credit Suisse and other banks are running experiments with logging and tracking their financial deals using blockchain.

We happen to have two companies in the Total Wealth Insider portfolio that are pioneering the use of blockchain technology by major banks, insurance companies and other financial institutions. One is already up more than 25% in six months, and the other I see rising 60% over the next 18 months.

Shared Secrets

So what is blockchain, exactly? Basically, it’s a bit of data — it could be a transfer of money, a contract to buy or sell something or just some information that needs to be kept track of.

But instead of keeping it a secret and hidden away in one place (where it could be stolen or altered without your knowledge), the material is recorded as a “hash” — a random series of numbers and letters — and broadcast to a series of other computers on a network.

The information is attached with other transactions on the network and embedded into a cryptographically sealed “block.” With each series of transactions, the system creates more and more blocks.

Suddenly, it becomes next to impossible to steal or tamper with your data. It would be like hanging a basket (it could be full of cash, or something else) over the crowds in Times Square — everyone can see who makes a grab for it.

Incidentally, what is buried deep inside the new $700 billion spending request from the Defense Department, recently approved by the U.S. Senate?

A request for a new government report that would outline the possibilities of “offensive and defensive cyber applications of blockchain technology.”

Kind regards,

Jeff L. Yastine
Editor, Total Wealth Insider

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Source: Banyan Hill

Options

How To Profit From One Trader’s Large Bet The Market is Crashing

Predicting where the stock market is going is a tricky business. Very few investors or traders have a consistent, strong track record when it comes to guessing the short- to medium-term direction of the market. That’s because there’s always plenty of noise in the short-term.

While there aren’t any obvious events this year (like an election) which could move the market, there are always plenty of unexpected occurrences which can change investor perception. The biggest potential catalyst in the coming months is probably North Korea. However, investors are already starting to write off the rhetoric involved in the situation.

Of course, you can’t ignore interest rates and upcoming Fed meetings. However, the market feels a December rate hike is all we’ll see this year, and Yellen’s Fed has been pretty transparent. Most likely, the Fed isn’t going to offer any major surprises for the balance of 2017.

On the other hand, the choice of a new Fed Chair could disrupt the markets somewhat if an interest rate hawk is brought on board. A more aggressive approach to raising rates could certainly impact stock prices. However, at this time we don’t have any idea who the next Chair will be and if that person will even be confirmed by the Senate.

Other than political events, which tend to only have short-term impact on stock prices, the only big changes in market direction could come from economic news. Particularly, if there are economic surprises, stocks may react more than expected.

This is primarily only a factor with major reports like monthly jobs, GDP, or inflation numbers. Lately, economic news has been pretty much on target, and there’s no reason to believe it will change significantly. Clearly, the hurricane damage will factor into jobs numbers, but economists will likely have taken those changes into account.

Here’s the thing…

Options traders have a better chance at making consistently successfully trades because they don’t typically have to pick a direction to make money. They can place high probability trades (selling options) which make money if stocks stay in a trading range or move sideways.

In fact, a pretty massive range-bound options trade was just made last week in the SPDR S&P 500 ETF (NYSE: SPY). SPY is the most heavily traded ETF in the world and tracks the S&P 500 index, a common proxy of the overall market. This particular trade was an options strangle, where the trader sold an out-of-the-money call and put at the same time, in the same expiration period (but at different strikes).

The short strangle consisted of selling the December 15th 263 calls and 237 puts. The credit received for the strangle was $1.64, and it traded about 21,000 times. That means the trader collected over $3.4 million in premium as a credit, and will keep all of it if SPY stays between $237 and $263 by December expiration.

Breakeven points for this trade are around $235 and $265. With SPY at roughly $254 at the time of the trade, the trader has more cushion to the downside ($19 down compared to $11 to the upside). Clearly the trader is less worried about upside for the remainder of the year.

Once again, there’s not much expected to occur between now and December which could roil the markets significantly. Of course you never know, which is why I’d recommend a very different trade than this. Frankly, selling strangles isn’t the sort of thing most traders should be doing. Leave that sort of strategy to the big institutions and professionals.

Instead, buying a straddle (buying the call and put at the same strike, at the same time, in the same expiration) could be a profitable strategy while also not in direct opposition to the short SPY strangle we just discussed. You see, a large stock index like the S&P 500 could easily sit within the range of the short strangle, but an individual sector could see a lot more movement.

One such sector is consumer staples. The Consumer Staples Select SPDR Fund (NYSE: XLP) is sitting right at the 200-day moving average, and could easily be much higher or lower by December 15th. Plus, the December 15th 54 straddle (buying the 54 call and put) is trading for less than $2.

XLP would only need to go to $52 or $56 in the next 10 weeks or so to make money. That seems like a very achievable goal with so much time left before expiration.

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Source: Investors Alley

Cryptocurrency

Investing in Cryptocurrency Startups

Most cryptocurrencies are decentralized, meaning they don’t have a corporate entity that one could invest in.

A typical cryptocurrency (what I like to call “crypto”) is, like bitcoin, governed by its users, miners and usually a nonprofit foundation.

So there’s no way to invest in bitcoin as a company. You can buy coins, but there is no stock or equity.

However, there is a dynamic and fast-growing community of private businesses being built around crypto today.

If crypto continues to take off, these companies could be the financial giants of the future.

I’ll tell you about a few of the crypto startups I’m watching, and why I’m excited about the increasing number of these companies using equity crowdfunding.

Bitwise

Bitwise aims to be the “Vanguard of cryptocurrency.” The fintech startup just revealed its first investment product, the HOLD 10 Private Index Fund. It’s a basket of the top 10 cryptocurrencies by market cap.

Co-founder Hunter Horsley told Coindesk…

We want to create a meaningful and secure way to own a portfolio of cryptocurrency. We feel that, today, it’s too hard and it’s too expensive.

The company plans to charge 2% per year, with no additional fees. That’s a bargain compared to most crypto hedge funds, which take at least 20% of profits, plus 2% annually.

Bitwise has attracted notable Silicon Valley investors, including AngelList co-founder Naval Ravikant.

For now, the HOLD 10 fund is only available for accredited investors. This is likely due to the fact that the SEC hasn’t approved any bitcoin ETFs yet, but I fully expect Bitwise to go after the broader market eventually.

Coinbase

Founded by Brian Armstrong in 2012, Coinbase has grown exponentially to become the world’s largest cryptocurrency exchange.

With 10.8 million users and 36 million wallets, Coinbase is a force in the crypto community.

Coinbase has processed more than $25 billion in transactions in 2017, according to a Fortune article published in August. It also offers crypto payment processing tools for roughly 40,000 merchant accounts.

The company just announced a $100 million round of funding at a $1.6 billion valuation. Investors in its latest round include top venture capital firms IVP, Greylock and Spark Capital.

This August fundraise made Coinbase the first crypto “unicorn” startup (one that has grown to a $1 billion-plus valuation). Its earliest investors include members of FundersClub, an online investment platform for accredited investors.

The company’s explosive growth has caused some growing pains, however, and Coinbase is struggling to keep up with customer service inquiries. U.S. laws dictate that it follow certain rules designed to prevent money laundering, and partly as a result, the company’s pipeline is clogged.

The good news is it appears to be putting the new round of capital to good use, having recently launched phone support for users. If it can overcome these issues, Coinbase is well-positioned to become a dominant financial institution in this new market.

Bittrex

Bittrex is a fast-growing and disruptive cryptocurrency exchange.

The biggest difference between Bittrex and Coinbase is the number of digital currencies they offer.

Coinbase offers three: bitcoin, Ethereum and Litecoin.

Bittrex allows users to trade 200 different cryptocurrencies, including all the top ones offered by Coinbase. The other 197 “altcoins” are what really set Bittrex apart.

Altcoins have exploded in popularity over the last year, as the price of Ethereum rose from less than a dollar in 2016 to $294 today, giving it a $27 billion market cap.

On Bittrex, users can search for the next big opportunity. Many of the coins on this exchange are tiny, with market caps in the low millions.

Bittrex also offers a flat trading fee of 0.25%, while the fees on Coinbase vary and tend to be higher.

The one drawback to using Bittrex is that you can’t buy coins directly with dollars or other fiat currency, as you can on Coinbase.

Still, it’s a great example of a disruptive startup shaking up the incumbents of a new industry. By offering users a much wider selection of alternative cryptocurrencies, Bittrex is gaining ground on crypto powerhouse Coinbase.

Bittrex’s founding team has deep experience in web security, having worked at Amazon, Blackberry and Microsoft.

With a talented team, great tech and impressive growth, Bittrex is definitely a crypto startup to watch.

Crowded Startup Pipeline

We’re just beginning to see how transformative and disruptive the crypto market can be.

An entire ecosystem of new financial technology is being created. This sort of thing doesn’t happen very often, to say the least.

Many crypto startups will launch over the next few years, and some are likely to become the fintech titans of tomorrow.

We’ve already started to see a few high-quality crypto deals utilize equity crowdfunding.

Just last month we recommended one to members of our research service, First Stage Investor. It’s called Balance, and it’s building a user-friendly financial dashboard app that tracks not only your traditional financial transactions, but your crypto ones too. Soon users will be able to buy and sell cryptocurrencies directly through its app, and many more features are in the works.

The deal was quite popular, and it filled up after the company raised the maximum allowable $1.17 million. With a focus on simplicity and ease of use, Balance is well-positioned to help bring crypto to the mainstream.

Balance is among the first crypto- and blockchain-related startups to utilize equity crowdfunding, and it certainly won’t be the last.

I can’t reveal any details yet, but developments are coming that will merge the equity crowdfunding and crypto worlds in ways I couldn’t have even imagined a year ago.

It’s going to be a very exciting time.

Good investing,

Adam Sharp
Co-Founder, Early Investing

Can a $10 Bill Really Fund Your Retirement? The digital currency markets are delivering profits unlike anything we’ve ever seen. ​23 recently doubled in a single week. And some like DubaiCoin have jumped as much as 8,200X in value in 18 months. It’ unprecedented... but you won’t receive any of the rewards unless you put a little money in the game. Find out how $10 could make you rich HERE. ​



Source: Early Investing

Energy

My Recommendation Is Up 19% Since August. Did You Buy It?

Back on August 4, I told you that major oil companies were raking in record cash flows. Giants like BP (NYSE: BP) and Royal Dutch Shell (NYSE: RDS) made more cash in the first half of 2017 than they did in 2014, when oil was more than $100 per barrel.

However, one critical sector didn’t see the benefits of that cash flow at the time — oil service stocks.

At the time, Schlumberger Ltd. (NYSE: SLB) had its best quarter since the end of 2015. Revenue and earnings spiked higher.

It was clear that these companies made it through the bear market. The fundamentals headed higher … but share prices just hadn’t moved yet.

As I told you in August, there was zero chance that the service companies will continue to fall if the major oil companies are making record gains. That’s exactly what happened in mid-August. Oil service companies bottomed, as you can see from the chart below:

As I told you in August, there was zero chance that the service companies will continue to fall if the major oil companies are making record gains.

The chart above is the VanEck Vectors Oil Services ETF (NYSE: OIH). It found a bottom at $21.76 per share in mid-August.

Since then, shares rose steadily. Today it trades at $25.84 per share. That’s a 19% gain in less than two months.

The price these companies charge oil companies is flexible. Oil service companies can raise their rates as their clients make more money.

The service companies, like the oil companies, took a huge hit in 2015 and 2016 as oil prices fell. Now rates are going back up. More earnings will drive the shares of these companies higher.

It’s still early in the game for oil services. If you haven’t gotten in yet, you have plenty of time to make some gains here.

Good investing,

Matt Badiali
Editor, Real Wealth Strategist

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Source: Banyan Hill 

Technology

3 Stocks on Apple’s ‘Hit List’ to Buy Next

While most investors are focused on the introduction of the iPhone8 and iPhone X from Apple (Nasdaq: AAPL), I am much more interested in other news the company is making. It is involved in the consortium that submitted the winning (for now) $14 billion bid for 60% of the semiconductor manufacturing business of struggling Japanese conglomerate Toshiba (OTC: TOSYY).

This move further highlights to me a major change underway at Apple. The company famously outsources almost its entire supply chain. But that seems set to change, especially with regard to semiconductors.

The reason is straightforward. . .as I discovered in my Singularity project research, semiconductors are the lifeblood of our technological world, including the iPhone.

Apple and Semiconductors

Apple and its rival, Korea’s Samsung Electronics (OTC: SSNLF), remain the top two semiconductor buyers. Together, the two consumed $61.7 billion of semiconductors in 2016. Last year was the sixth consecutive year that the two companies led the way in usage of semiconductors.

But there is a difference between the two.

You see, Samsung is also a major manufacturer of semiconductors. So it consumes its own chips.

But Apple buys memory chips (and OLED screens) from Samsung for its iPhones. The Wall Street Journal reported that Samsung stands to make about $4 billion more in revenue from Apple’s iPhone X components than from components made for its own Galaxy S8 in the 20 months following the iPhone release.

I’m sure that doesn’t make Apple happy. But Samsung is one of the few firms globally that can make enough small chips packed with extra memory capacity (or enough OLED screens).

That is simply due to the exorbitant cost of building a new plant to make semiconductors, which are called foundries or fabs. Even back in 2010, a new foundry set Taiwan Semiconductor (NYSE: TSM) back $9.7 billion. Today, that cost is likely doubled.

That brings us back to Apple’s interest in Toshiba’s chip business. It is heavily involved in the manufacture of NAND memory chips similar to the ones that Apple is currently buying from rival Samsung.

Apple’s Growing Chip Expertise

There is a lot more, however, to the story surrounding Apple and semiconductors.

The company has long been known in technology circles as having prowess in chip design. After all, it did build core processors for both the iPhone and iPad (manufactured by TSM). And it has created fingerprint chips as well as a unique chip for AirPods that allows seamless pairing with other Apple hardware.

Now, Apple is believed to be expanding efforts in developing proprietary semiconductors in artificial intelligence (AI chips). In mid-September, Apple revealed an AI chip that would power facial recognition for iPhone X.

And its plans don’t stop there. Apple may also be interested in building designs for core processors for notebooks, modem chips for iPhones, and a chip that will integrate touch, fingerprint and display driver functions.

This should not come as a surprise to anyone. It has made six semiconductor-related acquisitions since 2008 and is also vacuuming up AI chip-related start-ups. And it poached a top modem chip engineer from Qualcomm (Nasdaq: QCOM) earlier this year as well as engineers from Taiwan’s leading display-driver designer Novatek Microelectronics. And it also took talent from Broadcom (Nasdaq: AVGO) and Texas Instruments (Nasdaq: TXN)among others.

Related: Buy These 3 Hot Semiconductor Stocks for Long-Term Profits

According to research firm IC Insights, Apple ranked as the world’s fourth biggest chip design firm as of the end of 2016. It trailed only Qualcomm, Broadcom and Taiwan’s Mediatek (OTC: MDTKF) and was one spot ahead of semiconductor stock market darling Nvidia (Nasdaq: NVDA).

Investment Implications

The emphatic move by Apple into semiconductors is not good news for many of its suppliers. One example is Germany’s Dialog Semiconductor (OTC: DLGNF), which had Apple poach many of its engineers and will design its own power management chip that Dialog was supplying to it.

Or the U.K.’s Imagination Technologies (OTC: IGNMF), after Apple said it would no longer use its intellectual property surrounding graphics processors. Imagination had to sell itself to a Chinese company in order to survive. Apple also took its chief operation officer before it announced it was building its own graphics processor.

The damage will not be restricted to less well-known overseas Apple suppliers. The damage will eventually spread to those suppliers that trade here in the U.S. too.

I believe at the top of Apple’s ‘hit list’ are Qualcomm and Intel (Nasdaq: INTC). Both provide baseband modem chips responsible for mobile communications to Apple. The ongoing legal battle between Apple and Qualcomm over the latter’s licensing fee model for the modem chip tells you all you need to know there. Qualcomm got 40% of its revenue last year from Apple and Samsung.

Intel, in addition, may be on the way out not only with regard to modem chips but also with chips for the iPad. Notebooks are becoming thinner and consumers are demanding longer battery lives. This tilts the playing field away from Intel chips and toward the architecture from ARM Holdings, which is now owned by Japan’s Softbank (OTC: SFTBY).

Other companies possibly in Apple’s firing line in the future are Analog Devices (Nasdaq: ADI) and Synaptics (Nasdaq: SYNA), which are Apple’s key suppliers for touch sensors and display-driver integrated circuits currently.

And don’t forget about Apple’s radio frequency chip supplier, Skyworks Solutions (Nasdaq: SWKS), or its audio and voice chip provider, Cirrus Logic (Nasdaq: CRUS). They may also be at risk.

Are there any possible winners here from Apple’s aggressive push into semiconductors?

Yes, I believe the foundry service providers that actually make the chips for Apple are safe for now since it has no plans at present to actually move into manufacturing.

That points to the company that currently dominates Apple’s chip production – the world’s largest contract semiconductor manufacturer, with 56% of the market – Taiwan Semiconductor. Apple became the company’s biggest client in 2015 and it accounted for 17% of its revenues at just under $30 billion for 2016. This year, Apple should make up about 20% of TSM’s revenues. And Apple has already engaged TSM to begin work on its core processor iPhone chips for 2018.

Taiwan Semiconductor’s stock is up 33% year-to-date and 25% over the past year, and it has a dividend yield of 3%.

There is no doubt about Apple’s new and almost ruthless aggressiveness regarding its supply chain. One of the very few beneficiaries will be Taiwan Semiconductor.

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Source: Investors Alley

Technology

Tesla Is Going to Embarrass Warren Buffett

“I’ll meet you at Pilot” my future wife said to me before hanging up the phone.

She was explaining to me how to get to her parents’ house. (This was before our phones were a GPS device.)

But by meeting me at the Pilot gas station, I knew exactly where that was.

In the town she grew up in, it was a local landmark. Right off the highway, Pilot always had the cheapest gas and was a spot everyone knew of.

That was over 10 years ago, though.

Now it’s just another gas station along the Interstate 40/Interstate 85 corridor in the middle of North Carolina.

However, even though it is just one of many gas stations with competitive gas prices across the country, legendary investor Warren Buffett felt the value was now ripe for an investment.

Last Tuesday, he announced his company, Berkshire Hathaway, would buy a 38.6% stake in Pilot Flying J, which operates the little truck stop I was meeting my future wife at.

To me, he is clearly going against one of his investing rules — never buy a stock you are not comfortable owning for 10 years.

And if you typically follow Buffett’s investments, this is one you should pass on. Here’s why.

The Oracle of Omaha

I have a lot of respect for the Oracle of Omaha. Who wouldn’t? He is the world’s third-richest person, and his success story is one of the greatest.

Many investors idolize him and simply buy whatever he buys.

However, I think he is making a mistake on his latest acquisition, Pilot Flying J.

It actually goes against one of his main rules, if you ask me.

I have used his No. 1 rule before, which is to never lose money, but he has a few other rules to invest by. One of them is to never buy something you don’t want to own for 10 years.

That’s his investment time frame in a nutshell. “If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.”

But Buffett’s latest acquisition is one I am uncertain about in just five years, and I question its existence 10 years from now.

Still, that hasn’t stopped investors from chasing his trade.

TravelCenters of America LLC (Nasdaq: TA) jumped 10% on the news, without even knowing the financial details of the transaction. That’s partly because the announcement of the Pilot acquisition mentioned Berkshire Hathaway’s capital and ability to expand, and TravelCenters may be one acquisition it is eying.

However, I doubt the usefulness of a truck stop/gas station in a future that is going electric and self-driving.

Going Electric

I find it extremely ironic that Buffett made this acquisition in the same month that Tesla planned to unveil its electric, self-driving semitruck. Granted, it is several years away from being operational, but the fact remains that in five years, almost all of the new cars being released will be electric, as indicated by the major automobile manufacturers.

I’m sure Buffett has thought about this, and still finds the real estate that Pilot owns to be a worthy acquisition. But to me, in just five years this is a company that will be searching to find its place in a world that is going electric and autonomous.

Does Pilot just become a place to stop on long trips and use the restroom? Somewhere to get junk food? Or will it be branded as a completely different use? I don’t know.

But I do know that when major manufactures like Ford, General Motors and BMW make the shift over the next few years to an almost entirely electric and automatic fleet, the amount of charging stations will multiply. And I may be five years off, but that brings up Buffett’s 10-year time frame, and I don’t know what a gas station will be like in 10 years.

I just know it won’t be your typical gas station anymore. Because instead of having to stop at a gas station before you get home, you’ll simply charge up at your house.

And instead of having to stop for gas after a 300-mile trip, you’ll simply pull into the hotel and charge up while you stay there.

So this is not an investment I would want to own for the next 10 years. And I think trading TravelCenters is a risky bet at the moment too.

If you buy it, you’re hoping Berkshire Hathaway has its sights set on that company. Because if it doesn’t, TravelCenters will likely fall back. But betting against it is too much of a risk because of the possible acquisition.

For now, this is simply not the investment to follow Buffett on. And I don’t say that often.

Regards,

Chad Shoop, CMT
Editor, Automatic Profits Alert

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Source: Banyan Hill

REITS

The 6 Stock High-Yield Portfolio in an Amazon World

The Amazon.com, Inc. (Nasdaq: AMZN) juggernaut has been and continues to be a disruptive force across a wide sector of the U.S. economy. Much of the financial news focuses on how Amazon’s growth may put traditional retailers out of business. The perception of massive e-commerce growth has hurt retail store and mall owning real estate investment trust (REIT) values. For the conservative income focused investor, a six stock REIT portfolio can be built to take advantage of the Amazon effect on the economy.

In spite of its two decades of rapid growth, as of mid-2017 Amazon had a 5% share of total retail sales, excluding food. In August, the company completed its acquisition of Whole Foods Markets, giving Amazon a foothold in the grocery sector. However, Whole Foods accounts for less than 2% of the grocery market. These facts lead to a pair of competing investment themes. First, with less than 5% of the total retail market, there is lots of room for Amazon to grow revenues. Second, the idea that more than 95% of retail sales happens away from the Amazon machine indicates that people still like to touch and feel before buying, that some types of retail are immune from e-commerce competition, and product companies want to have multiple outlets for the sales of those products.

Predicting the future is tough, and Amazon may succeed in taking over the world, but that is unlikely. Retail will evolve, and Amazon will be a major player and likely the biggest influence on that evolution. Let’s start two REITs each from three themes related to Amazon’s effect on the economy.

Theme #1: The financial news experts are wrong: brick-and-mortar retail will not be decimated. However, store based retail must evolve and adapt to a world of mixed direct and ecommerce sales. The one-sided reporting on this subject has led to a sell off retail property REITs and now the better companies are attractive value investments.

  • With a $50 billion market cap, Simon Property Group Inc (NYSE: SPG) is the largest publicly traded REIT. Simon owns and operates premium shopping and outlet malls. If a company needs to have retail stores, it wants to locate them in Simon run malls. The SPG dividend has been increased 15 times in the last five years, with the payout growing by 80%. This is a very successful mall operator. This stock is on sale, with a current share price down 30% from the July 2016 peak. Yield is 4.6%.
  • National Retail Properties, Inc. (NYSE: NNN) is a $6.1 billion market cap REIT that focuses on single tenant retail properties. The company owns over 2,500 stores, leased to 400 tenants operating in 40 different retail categories. Most of these categories are businesses which cannot be replaced by ecommerce alternatives. Business such as restaurants, health clubs, fuel and convenience stores and auto parts stores. National Retail Properties has increased its dividend for 28 Sconsecutive years. Dividend growth will be in a 3% to 5% annual range. NNN shares are down 19% since the 2016 high and yield 4.5%.

Theme #2: Most products sold by Amazon can’t be delivered over the Internet. Amazon’s business requires large amounts of warehouse space to fulfill and ship orders. Processing e-commerce orders takes up to three times as much warehouse space compared to the amounts needed by traditional retail for the same amount of product. Amazon possesses its own order fulfillment centers and also leases warehouse space. Companies that generate the other 50% of e-commerce sales also need warehouse space and services. These two REITs are the two largest Amazon landlords when it comes to owning large-scale fulfillment facilities.

  • Prologis, Inc. (NYSE: PLD), with a $33 billion market cap, is a global logistics giant. The company owns or partially owns properties and development projects across 676 million square feet in 20 countries spanning four continents. Industrial/warehouse REITs are one of the hot REIT sectors. These companies can easily fill new projects and realize nice rental rate growth on existing properties. Prologis has increased its dividend by 50% over the last four years. The stock yields 3.4%.
  • Duke Realty (NYSE: DRE) is an industrial REIT with a large US portfolio. Duke Realty is the largest, pure play, domestic only industrial REIT. The company owns 475 facilities in Tier 1 markets. Duke is highly focused on serving e-commerce sales and fulfillment. The company notes that projected e-commerce growth through 2020 will require almost 300 million square feet of additional industrial space. Amazon.com is Duke Realty’s largest tenant. The DRE dividends should grow by about 6% per year. The stock yields 2.6%.

Theme #3: Growth in e-commerce means growth in Internet connectivity and data storage. Amazon Web Services is the company’s primary profit source. AWS is a secure cloud services platform, offering compute power, database storage, content delivery to help businesses scale and grow. Data center REITs are the high growth beneficiaries of the paradigm shift toward cloud computing and the trends toward distributed IT architecture, co-location and connectivity. Two data center REITs offer high-speed on-ramps to Amazon Web Services, including Direct Connect in many metros areas.

  • Equinix, Inc. (NASDAQ: EQIX) is a 19-year old S&P 500 company which became a REIT in 2015. Equinix owns and operates the largest global network of data centers, which focuses on connectivity and interconnection. The company’s revenues and EBITDA are growing at a high teens annual rate. AFFO (adjusted funds from operations) per share is increasing by over 20% per year. The dividend was increased by 14% this year. Equinix also has a history of paying large stock + cash special dividends. EQIX yields 1.8%.
  • CoreSite Realty Corp. (NYSE: COR) focuses on connectivity, primarily in eight major US markets. Here are the company’s amazing annual compound growth rates for the last six years.
    Revenue: 18%
    Adjusted EBITDA: 26%
    Funds from operations: 25%
    Dividends: 35%.
    This is outstanding growth from any type of business. COR yields 3.2%.

Companies able to adapt to changing economic and business environments – like Amazon encroaching on just about every business sector – are able to not only grow when everyone else is panicking but also reward investors. The six stocks above have a history of generously raising dividends so that for early investors their yield on cost can quickly become many times higher than the advertised regular rate.

Its high flyers and high-yield dividend stocks for income that constitute the core of the portfolio holdings in my Monthly Dividend Paycheck Calendar, a system used by thousands of income investors.

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The Calendar tells you when you need to own the stock, when to expect your next payout, and how much you can make from these low-risk, buy and hold stocks paying upwards of 12%, 13%, even 18%. I’ve done all the research and hard work, you just have to pick the stocks and how much you want to get paid.

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Source: Investors Alley

Uncategorized

This Early Warning Sign Shows That All Is Not Well

On Friday, the employment report for September will be released. This report often moves the stock market. On average, daily volatility is three times more than normal.

But not all employment report days see large moves. The big days tend to follow unexpectedly good or bad data.

Stocks can rally on bad news, or they can fall on good news. The news isn’t as important as how it compares to expectations.

This month, analysts are expecting a small gain in employment and no change in the unemployment rate. Payroll tax receipts growth confirms that outlook. Given the data, there’s likely to be little movement on Wall Street this week.

Stocks can rally on bad news, or they can fall on good news. The news isn’t as important as how it compares to expectations.

(Source: Mathematical Investment Decisions)

Payroll taxes are a leading indicator of the unemployment rate. When businesses hire more workers, they pay more taxes. Declines in hiring, or replacing high-wage workers with lower-paid workers, result in less money for the government.

The growth rate of payroll taxes started declining even before hurricanes destroyed businesses in Texas, Florida and Puerto Rico.

For now, there is no sign of a recession. But this indicator could be an early warning sign that all is not well.

It’s important to watch the economic news. In the long run, that will warn us before there’s a bear market.

In the short run, stocks have run up pretty fast in the past month. Like a runner after a sprint, they need a rest. Friday could be a day for stocks to rest after the employment report shows the economy is growing slowly.

Next week, after reading the details of the report, the uptrend in stocks should continue.

Regards,

Michael Carr, CMT
Editor, Peak Velocity Trader

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Source: Banyan Hill

Growth Stocks, Technology

Warren Buffett Bought These 3 Airline Stocks for Their Wifi

One certainty I discovered when conducting my Singularity research project is this. . .that new technologies will disrupt nearly every industry.

Take the stodgy airline industry. The Internet of Things (IoT) is about to make airlines more profitable than they’ve been in the past. I’m sure you wondering how this will be accomplished. Simple – instead of treating their passengers as travelers, consider them online consumers.

Before I go into more detail, let me fill you in on more background on the industry.

Low-Cost Carriers and Services

In this age of low-cost airlines, the days of when airlines made the majority of their money from airfares are largely gone.

Today, so-called ancillary services have become an important source of revenues. On average, airlines today earn about $17 per passenger from add-on services such as food and drink, and duty-free goods purchases. The estimated total for the entire industry is $60 billion from add-on services.

Looking more closely at the top 10 airlines (ranked by add-on services), just 10 years ago, they earned only $2.1 billion from ancillary services. But research from IdeaWorksCompany and CarTrawler found that last year these airlines earned $28 billion from add-on services.

However, the lure of buying duty-free goods on airlines has become stale for passengers. A 2016 report from m1nd-set Generation forecast such sales would experience an annual growth rate of minus 1.5% for airlines through 2025.

Another revenue source has to be found and quickly. And it’s there. . .awaiting the airlines that adopt in-flight broadband and Wi-Fi – the Internet of Things in the air.

Passengers Want to Be Connected

Passengers’ expectations of the in-flight experience have changing rapidly. They now expect the same level of connectivity at an altitude of 30,000 feet as they do on the ground.

That much was pretty clear in a study conducted by the market research firm GfK and Inmarsat PLC (OTC: IMASY), the world’s leading provider of global mobile satellite communications. Here are the most interesting results:

  • 60% of passengers believe in-flight WiFi is a necessity, not a luxury.
  • 61% of passengers said Wi-Fi is more important than onboard entertainment.
  • 45% of passengers said they would gladly pay for WiFi rather being stuck with the onboard entertainment options.
  • 66% of passengers traveling with children would consider in-flight internet a “life saver”.

Connectivity now ranks behind only ticket prices and flight slots as a priority for passengers. That could be seen when that same survey revealed 44% of passengers would switch airlines within a year if what they considered to be a minimal level of connectivity was available. This is especially true of business travelers, as 56% said they want the ability to work while in flight.

Shopping at 30,000 Feet

Yet, most airlines still lag in offering connectivity to their passengers. The aforementioned report from IdeaWorks found that a mere 53 of the world’s estimated 5,000 airlines offer “in-flight broadband connectivity.”

Many seem unaware that they now have access to a global, reliable broadband network in-flight. As David Coiley of Inmarsat Aviation told the Financial Times, “Airlines have to adapt to this new opportunity.”

And it is an opportunity. Consider shopping an online store at 30,000 feet filled with everything from ground transport options to tours to other destination-related activities. Or returning passengers could do their grocery shopping while in-flight to have the groceries delivered when they arrive home. The possibilities are almost endless.

A study conducted by the London School of Economics and Inmarsat said that in-flight broadband – offering streaming and online shopping to passengers could create a $130 billion global market within the next 20 years. The study estimated that the airlines’ share of that total could amount to $30 billion in 2035. That’s quite a jump from the forecast $900 million in 2018.

Investing in Airlines

With this possibility of e-commerce revenue streams in the not too distant future, it may be time to look at the airlines. Even long-time skeptic Warren Buffett now owns airline stocks including Southwest Airlines (NYSE: LUV), American Airlines (Nasdaq: AAL), Delta Air Lines (NYSE: DAL) and United Continental Holdings (NYSE: UAL).

I would stick with the airlines that have the best Wi-Fi connectivity. Conde Nast Traveler magazine reports that a survey from Routehappy found that U.S. airlines are leading the way, with at least a chance of Wi-Fi on 83% of the total seating capacity.

Two of the top three airlines globally with the highest percentage of seats with Wi-Fi connectivity, according to the survey, are Delta Air Lines and United. Other smaller airlines with good connectivity are JetBlue (Nasdaq: JBLU)and Virgin America, which was sold to Alaska Air Group (NYSE: ALK). I would focus on Delta,United, and Alaska Air.

Delta operates a fleet of over 700 aircraft and serves more than 170 million customers annually. Its revenues fell 3% in 2016 to $39.64 billion, giving its efforts to reduce its debt levels more urgency. Its management is also maintaining capacity discipline while simultaneously trying to modernize its fleet and expand its operations.

The company is trying to enhance its shareholders’ wealth through dividends and share buybacks. In May 2017, Delta announced that its board of directors approved a new share repurchase program worth $5 billion and raised its quarterly dividend by more than 50%.

United is the world’s largest airline, operating about 5,000 flights a day. However, the merger of UAL with Continental has left the merged company with a significant debt load. Its significant exposure to Houston also means it was greatly affected by Hurricane Harvey.

Its return on equity (ROE) is 29.5%, above the industry average of 27.6%, offering growth potential. And it is cheap. Its trailing 12-month enterprise value to earnings before interest, tax, depreciation and amortization ratio is only 3.9. That compares to the value for the S&P 500 of 11.1.

Alaska Air operations cover the western U.S., Canada and Mexico as well as, of course, Alaska. I like the purchase of Virgin America, despite the rise in the amount of debt it now has. The company’s August traffic report showed that its load factor (percentage of seats filled by passengers) increased to 86.2% from 85.8% in the year ago period as traffic growth exceeded capacity expansion.

I think that is due to the company’s expansion efforts. One example is the frequent-flyer partnership with the European airline Finnair, announced in May 2017. This customer friendly move aims to provide the members of the program, at Alaska Air Group as well as Finnair, the opportunity to earn miles/points on flights of either carrier.  

It has been a turbulent year for airline stocks as the combination of natural disasters and terrorist attacks have taken their toll. Not to mention overcapacity, high labor costs, and now rising fuel costs. That’s largely why the three stocks are down respectively.

But now may be the time for contrarian investors to look past the short-term turbulence and take a small position in the airlines that are forward-looking. I fully expect we won’t recognize the industry in a decade as technology disrupts it.

source: Investors Alley

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Technology

China Leads the Robot Revolution

When it comes to factory automation, China is way ahead of the game.

In fact, the demand for robots in China is more than twice as high as any other country. As the chart below shows, it is seeing huge growth in the field of factory automation.

When it comes to factory automation, China is way ahead of the game. In fact, the demand for robots in China is more than twice as high as any other country.

By 2020, an estimated 1.7 million new robots will be “hired” by factories all over the world.

An example of this revolution is a Chinese factory that recently cut its number of employees from 650 all the way down to 60. About 90% of the laid-off workers were replaced by robots.

The factory’s general manager predicts that the number of employees will drop to 20.

Things have only gotten better for that factory since the robots took over. Defects in their products have been reduced by 80%, while efficiency has gone up by 250%.

This is just one example of the many factory transformations going on today. Foxconn, a manufacturer of iPhone parts, has set a goal of 30% automation in its factories by 2020.

Robots taking jobs may seem scary, but when they can work around the clock without getting tired, and assuming maintenance costs are less than hourly wages, it makes sense.

To profit from the robot revolution, you can buy the Robo Global Robotics and Automation Index ETF (Nasdaq: ROBO). This exchange-traded fund is already up 34% since the start of the year.

Regards,

Ian Dyer
Internal Analyst, Banyan Hill Publishing

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Source: Banyan Hill 

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