Facebook Instagram Twitter Youtube
    Latest

    Stock Watch Lists

    Three Stocks to Watch for the Week of December 12th

    By
    Editorial Staff
    -
    0

    After two positive weeks in a row, the major U.S. stock indexes fell last week on mixed economic data as recession concerns intensified. Investors are worried that recent mixed inflation data could challenge the Federal Reserve’s expectations of slowing the pace of interest-rate increases. For the week, the Dow shed 2.8%, the S&P 500 fell 3.4%, and the Nasdaq lost 4%. 

    In the coming days, investors will be focused on the latest inflation data due for release and the two-day Fed policy meeting, with central bankers expected to announce an interest rate decision and near-term projections for the U.S. economy on Wednesday. Fed policymakers are widely expected to hike interest rates by an additional 50 basis points in their ongoing effort to tamp high inflation. This will be the seventh and final rate hike for 2022. The Fed has raised its benchmark rate by a cumulative 375 basis points so far this year, in the fastest tightening cycle in over 40 years.

    Since the U.S. government officially introduced the first-ever tax credit for clean energy storage projects, there have been remarkable positive business developments in the industry. At the end of 2021, the global installed energy storage capacity measured about 46 GWh.  According to InvestorPlace, a meager 1.5% of renewable energy production in the world is backed by energy storage today. As governments and corporations worldwide strive toward carbon neutrality, that figure is set to grow exponentially. This week’s first recommendation is a pure play on advanced energy storage with enormous upside potential.  

    Stem Inc (STEM) is a pure play on the smart energy storage space offering artificial intelligence-driven clean energy storage systems. The company’s advanced energy storage solutions with Athena(TM), an artificial intelligence-powered analytics platform, enables customers and partners to optimize energy use by automatically switching between battery power, onsite generation, and grid power.

    The company has already built up considerable infrastructure with established names. STEM’s Athena Software seems likely to become mission-critical for many electric utilities because of the rapidly increasing supply and demand for renewable energy.  

    For the third quarter, Stem reported a record-breaking backlog of $727 million, up 191% from $250 million at the end of Q2 2021. Bookings were up 402% from $45 million to $226 million, and the 12-month pipeline increased 8% from the previous quarter to $5.2 billion. Revenue grew a whopping 246% year-over-year and came in 5% above the high end of guidance at $67 million. 

    We are encouraged by Congressional support for the Inflation Reduction Act of 2022. The climate provisions in the Act would drive continued investment in America’s aging power grid, support customer adoption of renewable energy, and improve energy security by incentivizing development of our domestic supply chain. Importantly, a stand-alone Investment Tax Credit (ITC) for energy storage, and the extension of the solar ITC, would improve the economic returns for our customers.”  

    “Supply chain constraints, permitting and interconnection delays, and certain regulatory actions continue to pose challenges, but we believe we remain well-positioned to manage these risks and continue with our strong execution through the rest of 2022,” commented John Carrington, Chief Executive Officer of Stem.

    STEM has high growth potential and looks like an ideal long-term investment. The company’s Athena platform seems like an industry changer with wide-ranging applications. STEM’s infrastructure is far ahead of its competitors and will likely prove to be a crucial piece of the investment thesis moving forward. Of the 11 analysts covering the stock, 9 rate it a Buy, and 2 rate it a Hold. There are no sell ratings for STEM. A median price target of $19.50 represents an increase of 85% from Friday’s closing price.  

    37 U.S. states and four U.S. territories have laws that permit the use of marijuana. While it is still  illegal on a Federal level, President Biden’s recent proclamation included a request for the attorney general “to initiate the administrative process to review expeditiously how marijuana is scheduled under federal law.”  Many see this as a significant step in the right direction, but it’s expected to be a slow road.    

    Potential legalization of cannabis is likely to be a major positive catalyst for the leader in net cannabis revenue, Tilray (TLRY). The company has a presence in all key markets, with a focus on recreational and medicinal cannabis; the addressable market is significant and expanding. 

    TLRY surged following the recent announcement that President Biden would encourage the reassessment of marijuana laws but gave back some of those gains when the company reported Q1 2023 revenue and EPS misses. The company has its sights set on Revenue of $4 billion by 2024, a realistic target if regulatory hurdles wane. At $3.48 per share, TLRY currently trades at -6.5x forward earnings.   The stock remains deeply oversold and is worth buying even after the recent uptick.

    Global healthcare leader Eli Lilly And Company (LLY) has been creating high-quality medicines for over a century. The drug firm focuses on endocrinology, oncology, neuroscience, and immunology. Key products include Trulicity, Jardiance, and Humulin for diabetes; Taltz and Olumiant for immunology; and Verzenio and Alimta for cancer.  

    The mega-cap pharmaceutical giant’s pipeline is locked and loaded with promising advancements, which means plenty of potential upcoming opportunities for investors to benefit from. In the first half of 2022, Lilly received word that the FDA was fast-tracking its investigation of tirzepatide. A drug designed to treat adults who are overweight with weight-related comorbidities such as diabetes. Eli Lilly expects its rolling application to be completed by April 2023.

    JPMorgan analyst Chris Schott recently summed up his bullish outlook on LLY. The analyst believes that Eli Lilly remains the best-positioned growth story in his coverage and one of his top picks following the stock’s pullback over the past month. The analyst sees a “significant opportunity” for Tirzepadite in type 2 diabetes, and obesity, which in his view “warrants increased attention.”  Schott currently gives the stock an Overweight rating and a $300 price target.  

    Lilly’s share price is up nearly 33% in 2022 and seems likely to continue to gain steam into the new year. The stock sports a dividend of $0.98 or 1.21% annually. LLY’s dividend payout for the year is set for the low 40% range, which should allow for robust future dividend growth.

    A strong pipeline and a stable dividend make Eli Lilly an attractive consideration. The pros on Wall Street also think so. Among 17 polled analysts, 14 say to Buy LLY, 2 call it a Hold, and only one rates the stock a Sell. A median 12-month price target of $351 represents a 9% increase from its current price.

    Three Stocks to Avoid Next Week

    By
    Editorial Staff
    -
    0

    Seeking out great stocks to buy is important, but many would say it’s even more essential to know which stocks to steer clear of. With fears of a global recession escalating, now is the time to prepare for the worst because a losing stock can eat away at your precious long-term returns. So, determining which stocks to trim or eliminate is essential for proper portfolio maintenance, especially now.  

    Even the best gardens need pruning, and our team has spotted a few stocks that seem like prime candidates for selling or avoiding. Continue reading to find out which three stocks our team is staying away from this week. 

    The dramatic shift from brick-and-mortar shopping to e-commerce over the past two years has been a tremendous obstacle for investors in retail. With interest rates marching higher as the economy slows, this is likely just the beginning of the pain for retailers.  

    Recent data suggests that 25% of America’s 1,000 malls will be closed in the next 3-5 years. As a cornerstone to shopping malls across the country, department store chain Macy’s (M) has been among the stocks to suffer. Over the past twelve months, M stock has declined 36% to trade at $22.23 a share.     

    Although Macy’s delivered a solid third-quarter report along with an increase to its earnings outlook, there are obstacles ahead for the iconic retailer. With the Federal Funds Rate at its highest level since 2008 and no sign of slowing down, the consumer economy faces unprecedented challenges. While anyone left holding M stock could enjoy a holiday bump, in the face of a looming recession, any increase seems likely to be short-lived. 

    Despite rising consumer prices, Americans kicked off the holiday season with record spending on Black Friday and Cyber Monday. As a result, many retail and e-commerce stocks are seeing a nice holiday boost. However, some names will enjoy the holiday cheer more than others.  

    One e-commerce firm to be cautious about is online furniture and home goods seller Wayfair Inc. (W). Wayfair saw a dramatic recovery from its pandemic lows as consumers focused on their homes. With shelter-in-place orders in effect and mortgage rates at record lows, Americans snapped up spacious family houses, leaving behind once-desirable apartments in the city. As a result, Wayfair’s share price rocketed 572% from its March 2020 low to a high of $340 by August 2020. Sadly, W stock has fallen nearly 90% since then and is currently trading at $42.10, 50% below its pre-pandemic price. 

    Opportunistic bargain hunters may be eyeing the stock’s momentum due to a 12% increase over the past four weeks. However, those looking for e-commerce stocks to ride the holiday wave would do better looking elsewhere. Not only has demand shifted, but consumers are also now met with economic pressures, which inevitably affects discretionary spending, and Wayfair is feeling the pinch. The online retailer’s active customers shrunk by 1 million quarter-over-quarter in Q3 or more than 4% to 22.6 million, down a whopping 22.6% from the year-ago period. The trend of dwindling customers may continue amid rising consumer prices. 

    Wayfair has only managed to turn an annual profit once – in 2020. From the looks of it, 2022 will not be the year that changes. Operating loss for the year has already surpassed $1 billion, while the year-to-date net loss is $980 million. Over the past 6 weeks, the median consensus forecast has been slashed by nearly 25% to $40, representing a loss of 5% from its current price. 

    Food delivery leader and pandemic darling DoorDash (DASH) was one of the big winners in the shift to stay-at-home culture. Between 2019 and 2021, DASH revenue increased by 451% from $885 million to $4.88 billion. But once the economic reopening was complete, Wall Street’s enthusiasm over the stock sharply halted. Since hitting its peak in November of last year, the stock has plunged more than 75%. Now that the tide has washed out, investors are left to access what’s left, searching for an answer to the looming question – is profitability in the cards for DoorDash?

    DoorDash has never generated a profit, with the exception of the second quarter of 2020, where it made a profit of $23 million. “It took a global pandemic to drive the firm’s one-quarter of profitability. The firm has not been profitable since, and we think it may never be,” said David Trainer, the CEO and founder of New Constructs. The company reported third-quarter revenue and EBITDA 4% and $29M above consensus expectations, but  DASH’s EPS is estimated to remain negative in 2022 and 2023. The company expects $49 to $51 billion in gross order volume in 2022, implying a modest 14% increase from $41.9 billion last year. However, that’s not enough to justify DASH’s lofty valuation. Currently, the stock trades at a trailing twelve-month price-to-sales multiple of 3.7, expensive compared to top competitors like Uber Technologies (UBER), which trades at a price-to-sales multiple of 1.9 – almost half that of DASH. 

    One Fintech Stock to Buy and One to Avoid Like the Plague

    By
    Editorial Staff
    -
    0

    A rebound for fintech may be on the way in 2023, but some names are positioned to recover ahead of others.

    Amid rising interest rates and a drastic rotation out of technology, fintech stocks have taken a beating this year, vastly underperforming the overall market. Global X FinTech ETF (FINX), which tracks an index of up to 100 fintech stocks, has plunged over 50% this year versus the S&P 500’s loss of 17%. Many fintech names are also feeling the pressure from the recent plunge in digital currency prices resulting from the FTX bankruptcy. Meanwhile, competition in the space is intensifying as a wave of fintech startups aim to draw in merchants.  

    Nevertheless, the shift in consumer spending habits to online and mobile platforms is undeniable. Expansion of the adoption of contactless payment and the growing popularity of “buy now, pay later” transactions should serve as significant tailwinds for the strong names in the industry. But not all fintech companies will stay in the race.  

    With a potential rebound for fintech stocks on the horizon in 2023, many investors are considering fintech stocks that have had their prices recently slashed. However, not all tickers from the space are equal. Some companies are likely to recover more robustly than others, while others may have further to suffer before making a turnaround. In this article, we’ll look at two firms from the fintech space. One that has several positive qualities that are likely to give it steam for a healthy rebound. The other – not so much.  

    StoneCo Ltd. (STNE) provides back-office software, loans, and other financial services to small and medium-sized businesses with a focus on reinvesting the cash it generates to acquire or build new financial products for its customer base. Since early 2019, the company has grown the number of small and medium business clients by 3x, revenue by 2.3x, and net income by 2.2×. 

    StoneCo has developed a range of payment solutions utilized by e-commerce for businesses and merchants all over Latin America. StoneCo reported about $390 million in revenue and earnings in the third quarter. Small and medium-sized businesses using the platform surpassed 2.3 million, and total payment volume in the quarter grew to nearly $14 billion.

    StoneCo stock is down close to 47% this year on news of rising interest rates, macroeconomic risks in Brazil, and some operational blunders. But base interest rates in Brazil seem to have peaked, and a potential decline in the second half of 2023 is expected as Brazil’s inflation normalizes, reducing the margin pressure from rising financial expenses. Meanwhile, StoneCo’s revenue growth should benefit from rising digitization of payments, higher take rates, and elevated growth in banking and software. STNE stock currently trades at roughly 1.4 times projected forward revenue and 33 times forward earnings, which seems fair for a disruptive, fast-growing company in a developing market.  

    Institutional investors can provide valuable insights about where a stock may be headed. At the end of the third quarter, Berkshire Hathaway disclosed a new $110 million position in the company. Warren Buffett isn’t the only institutional investor who’s recently raised an investment in StoneCo.  Cathie Wood’s Ark Innovation fintech exchange-traded fund (ARKF) owns roughly 2.55 million shares of the payments company valued at more than $26.5 million. STNE has a Hold rating from the pros who cover it and a median target price of $12.20, representing a 19% increase from Friday’s closing price.  

    While a winning fintech stock could boost your portfolio significantly, the wrong fintech stock could be detrimental to your precious long-term returns. That’s why avoiding tickers from the group that seem especially vulnerable is critical. One stock we’re avoiding is Upstart Holdings (UPST). 

    Upstart’s management provided less than inspiring Q4 guidance during the company’s disappointing third-quarter earnings call, sparking yet another sell-off for the stock. UPST’s share price is down more than 95% from its October 2021 ATH, and it may have more to go as bank partners tighten their fists.  

    In the midst of aggressive shifts in monetary policy, institutional lenders are less willing to fund Upstart’s loans than ever. It makes sense for backers to be so cautious in the current macroeconomic environment. Rising interest rates will continue to pressure consumers, leading to more defaults. Upstart is especially vulnerable as its AI models have yet to be tested during a significant down period in the credit cycle.  

    Making matters worse, Upstart more than doubled the amount in loans it funded with its own cash in Q2 in just a single quarter. The company reported $600 million in loans on its own balance sheet, up from $250 million in the previous quarter, severely exposing its balance sheet to credit risk at a terrible time. This was one contributing factor to Upstart’s third-quarter revenue miss and management’s decision to lower Q4 guidance.

    Management sees Q4 revenue in the range of $125 million to $145 million. That implies revenue growth of roughly 18%, representing a sharp deceleration from the 252% revenue growth UPST delivered in Q4 2021. With growth momentum slowing while competition in the space is simultaneously growing, UPST is one fintech stock to stay away from for now. 

    Three Warren Buffett Stocks for 2023 and Beyond

    By
    Editorial Staff
    -
    0

    Warren Buffett is one of the most successful investors on Wall Street. The Berkshire Hathaway CEO is known for a long track record of market-beating returns, evident in the exemplary gains in Berkshire’s Class A shares since 1965. Over the past 57 years, the widely followed Berkshire Hathaway portfolio has generated returns of over 3.64 million percent. In other words, if you had invested $100 in Berkshire in 1965, that investment would be worth more than $3.64 million today. That works out to be an increase of around 20% compound annually, more than twice that of the S&P 500 over the same period. That stellar performance is why investors may want to take a page out of Buffett’s playbook and consider striking up a position in some Berkshire-held potential long-term winners themselves. 

    The 92-year-old investing legend maintains the same buy-and-hold investment philosophy that has defined much of his success over the past six decades. Historically, the Oracle of Omaha has favored reliable blue chips in industries like healthcare, consumer goods, financials, and energy and tended to avoid unprofitable, speculative, high-growth potential stocks. However, that doesn’t mean there aren’t any growth stocks in Buffett’s collection.  

    Buffett made waves on Wall Street when the most recent addition to Berkshire’s $700 billion portfolio was disclosed. In this list, you’ll get all the details on this tech winner, plus two more Buffett stocks that should not be ignored. 

    It should be no surprise that Buffett owns a major stake in Apple (AAPL) stock, considering its strong earnings, returns, and management. As the Number 1 stock in Berkshire’s portfolio by market value (worth a whopping $123.66 billion at the end of September), Apple makes up nearly 41% of Berkshire’s total equity portfolio. In the third quarter of 2022, Buffet added to the firm’s tech investment with a sizeable stake in the world’s largest contract chipmaker Taiwan Semiconductor (TSM).

    Also known as TSMC, Taiwan Semi is at the top of the list when it comes to the semiconductor manufacturing group. The company makes chips for the likes of AMD (AMD), Nvidia (NVDA), Qualcomm (QCOM), and it’s a key chip supplier to Apple.  

    After hitting a two-year low due to a sharp slowdown in global chip demand, TSM’s share price jumped when Berkshire disclosed its more than $4.1 billion position in the stock. Still down more than 40% from its January 2022 peak, anyone on the sidelines might consider now an appropriate time to strike. “Only a small number of companies can amass the capital to deliver semiconductors, which are increasingly central to people’s lives,” said Tom Russo, a partner at Gardner, Russo & Quinn in Lancaster, Pennsylvania, when he reiterated the bullish case for TSM.  

    US investors have been cautious when betting on the Taiwan-based chipmaker as it would lose all Western contracts in the event of a Chinese takeover of the island. However, the company is working to reduce its geopolitical risk with a new $40 billion foundry in Arizona, expected to be operational by 2024. The investment has Washington’s support as it comes amid a U.S. push to boost domestic supplies of semiconductors and Congressional passage of the $52 billion CHIPS and Science Act. 

    Taiwan Semi reported earnings of $1.79 per share from $20.23 billion in revenue in the third quarter, surpassing consensus expectations of $1.41 EPS from revenue of $19.96. Management reiterated its outlook of Q4 revenue in the range of $19.9 billion to $20.7 billion. The gross profit margin is expected to be between 59.5% and 61.5%, and the operating profit margin is expected to be between 49% and 51%.

    TSM has a 90% Buy rating from the 38 analysts offering recommendations and zero Sell ratings. Anyone on the sidelines may want to consider striking up a position in this Buffett stock and holding on for years.  

    At the end of the third quarter, Berkshire also disclosed its position in the leading Brazilian fintech company StoneCo Ltd. (STNE). The firm reported owning close to 10.7 million shares, currently valued at more than $110 million, amounting to a roughly 3.4% stake in the company.

    Stoneco provides back-office software, loans, and other financial services to small and medium-sized businesses with a focus on reinvesting the cash it generates to acquire or build new financial products for its customer base. Since early 2019, the company has grown the number of small and medium business clients by 3x, revenue by 2.3x, and net income by 2.2×. 

    Stoneco has developed a range of payment solutions utilized by e-commerce for businesses and merchants all over Latin America. In the third quarter, Stoneco reported about $390 million in revenue. Small and medium-sized businesses using the platform surpassed 2.3 million, and total payment volume in the quarter also grew to close to $14 billion.

    Despite its steady progress, Stoneco stock is down close to 47% this year on news of rising interest rates, macroeconomic risks in Brazil, and some operational blunders. But base interest rates in Brazil seem to have peaked, and a potential decline in the second half of 2023 is expected as Brazil’s inflation normalizes, reducing the margin pressure from rising financial expenses. Meanwhile, StoneCo’s revenue growth should benefit from rising digitization of payments, higher take rates, and elevated growth in banking and software. STNE stock currently trades at roughly 1.4 times projected forward revenue and 33 times forward earnings, which seems fair for a disruptive, fast-growing company in a developing market.

    Buffett isn’t the only institutional investor who’s recently raised an investment in StoneCo.  Cathie Wood’s Ark Innovation fintech exchange-traded fund (ARKF) owns roughly 2.55 million shares of the payments company valued at more than $26.5 million. STNE has a Hold rating from the pros who cover it and a median target price of $12.20, representing a 19% increase from Wednesday’s closing price. 

    Three Stocks to Watch for the Week of December 5th

    By
    Editorial Staff
    -
    0

    A mid-week rally lifted stocks last week, but by Friday, the market had given back much of the gains. The moves higher were driven by comments from Fed Chair Jerome Powell signaling smaller interest rate hikes could start as early as the December 13 – 14 FOMC meeting. However, a stronger-than-expected jobs report on Friday raised concerns about prolonged aggressive Fed tightening, taking the wind out of the market’s sails. The major indices finished with modest weekly gains, with the Dow gaining 0.2%, the S&P 500 rising 1.1%, and the Nasdaq climbing 2.1%. The S&P 500 recorded its second positive month in a row in November, posting a 5.4% total return. All 11 sectors were positive; materials were the strongest performer, and consumer discretionary was the weakest, according to S&P Dow Jones Indices.  

    The week ahead will bring more updates on inflation and the state of the economy. Market watchers will be looking for clues on how high inflation, rising interest rates, and an economic slowdown are impacting consumer confidence when the University of Michigan releases the preliminary December reading of its Consumer Sentiment Index (MCSI). Also, on Friday, the Bureau of Labor Statistics (BLS) will release its Producer Price Index (PPI) for November. The PPI tracks inflation from the standpoint of goods-producing businesses and is considered a bellwether for the trajectory of consumer inflation.   

    The decline in tech has brought investors what many would consider a once-in-a-lifetime opportunity in some notable names. Our first recommendation for this week is one such company with many positive attributes, including a deep economic moat, high operating margins, and a strong balance sheet to boot.

    Google parent Alphabet (GOOG, GOOGL) shares traded for as low as $83.49 in the days following its recent 20-for-1 stock split. The stock has been steadily recovering, stacking on more than 20% over the past month.   At around $100 a share, the stock is still accessible for investors seeking big tech at a fair price. The company has multiple catalysts in the wings, which should keep momentum strong as enthusiasm for big tech stocks re-accelerates.   

    Over the last five years, GOOGL is up 101%, crushing the Nasdaq’s 64% gain and the Internet Services Market’s 72% gain over the same period. The company posted earnings per share of $1.21 on revenue that grew by 12.6% year-over-year to $69.69 billion. The consensus sees earnings dropping 7% in 2022 but rising in 2023 at $5.80 a share. Top-line growth is expected, with 2022 sales expected to climb 11% and another 10% in 2023 to $260.44 billion.

    Key catalysts to watch out for include its artificial intelligence tools that help users search in new ways, such as Google Lens, which is currently being used over 8 billion times a month.   Google also recently introduced a new multi-search feature to help users search with both words and images simultaneously. Shares also have a strong rebound potential once the digital ad market recovers.   

    At 20 times forward earnings, Alphabet shares are trading in line with the S&P 500. Still, the current multiple may underestimate the company’s potential to re-accelerate earnings once its many growth catalysts start to play out.

    A name offering defensive growth from the desirable sector currently is UnitedHealth Group (UNH). As the most significant health insurance company by market cap and market share, UNH’s size gives it built-in advantages over peers from the group.   

    Despite the market slowdown this year, UNH’s share price is up more than 6%, outperforming its peers and the broader market. The Health Care Select Sector SPDR Fund (XLV) is up a fraction of a percent YTD, while the S&P 500 is still down more than 15%.  

    Due to UnitedHealth’s rapidly expanding reach, Q3 revenue was up 12% from the same quarter last year to $80.89 billion. Earnings came in at $5.79 a share, surpassing the consensus estimate of $5.42 per share. In the third quarter, the company reported expanding its customer base by approximately 850,000, including 185,000.   “The strength of our performance reflects the diligence and determination of our colleagues to improve people’s experience across the health care system and make high-quality care simpler, more accessible, and more affordable,” said Andrew Witty, CEO of UNH. The company also increased its 2022 EPS view to $21.85-$22.05 from $21.40-$21.90. The consensus expectation is at the low end of the company’s forecast, at $21.87, suggesting that the pros on Wall Street may not give enough credit to the health insurance giant.   

    Momentum should be supported in the coming years thanks to UNH’s strong market position and attractive core business. Its international business expansion provides substantial diversification benefits and shields against the impact of tightening U.S. regulations while allowing the Dow giant to tap into the $8.3 trillion spent annually on global healthcare.

    UnitedHealth has a solid history of rewarding investors with a steady paycheck. The company went to a quarterly dividend in 2010 and, since then, has increased its dividend every year. That includes a 16% bump last year to $1.45 a share, which works out to a yield of 1.10% at its current price. UNH’s payout has increased 31% over the past five years, and the stock has a 5-year annualized dividend growth rate of 17.18%. The stock looks like a value at about 26 times earnings, compared to the healthcare industry, where the average P/E is around 34.

    Vertex Pharmaceuticals (VRTX) is the undisputed leader in cystic fibrosis therapies. The company’s portfolio of approved CF drugs will deliver at least an estimated $8.4 billion this year, made possible by intense market penetration and decades-long devotion to research and development in the space. 

    So far, the company has remained strongly profitable and has continued to expand revenue within the CF market at a steady pace. If management’s plans for expanded approvals for younger age cohorts continue to come to fruition over the next few years, Vertex will eventually be treating as many as 90% of all people with CF.

    The company is moving its pipeline beyond CF with a handful of mid-stage clinical programs for pain relief, kidney disease, and genetic hematologic disorders like sickle cell disease. In other words, even if it eventually corners the entire CF therapy market, there will still be other growth opportunities.  

    One potential catalyst is its partnership with CRISPR Therapeutics (CRSP) in developing gene-editing treatments for two rare blood disorders, which is expected to begin regulatory studies in March 2023. This means investors can look forward to a steadily increasing flow of new revenue and expanded approvals, which should significantly support the stock’s price.   

    Of 26 analysts offering recommendations for VRTX, 18 give the stocks a Buy rating, and nine rate it a Hold. There are no Sell ratings. It seems likely that Vertex will reward patient investors as the steadily growing biopharma company seems ripe for expansion for years to come.  

    Three Stocks to Avoid Next Week

    By
    Editorial Staff
    -
    0

    Seeking out great stocks to buy is important, but many would say it’s even more essential to know which stocks to steer clear of. A losing stock can eat away at your precious long-term returns. So, determining which stocks to trim or eliminate is essential for proper portfolio maintenance.  

    Even the best gardens need pruning, and our team has spotted a few stocks that seem like prime candidates for selling or avoiding. Continue reading to find out which three stocks our team is staying away from this week. 

    Despite rising consumer prices, Americans kicked off the holiday season with record spending on Black Friday and Cyber Monday. As a result, many retail and e-commerce stocks are seeing a nice holiday boost. However, some names will enjoy the holiday cheer more than others.  

    One e-commerce firm to be cautious about is online furniture and home goods seller Wayfair Inc. (W). Wayfair saw a dramatic recovery from its pandemic lows as consumers focused on their homes. With shelter-in-place orders in effect and mortgage rates at record lows, Americans snapped up spacious family houses, leaving behind once-desirable apartments in the city. As a result, Wayfair’s share price rocketed 572% from its March 2020 low to a high of $340 by August 2020. Sadly for anyone who jumped on the post-pandemic bandwagon, W stock has fallen nearly 90% since then and is currently trading at $42.10, 50% below its pre-pandemic price. 

    Opportunistic bargain hunters may be eyeing the stock’s momentum due to a 12% increase over the past four weeks. However, those looking for e-commerce stocks to ride the holiday wave would do better looking elsewhere. Not only has demand shifted, but consumers are also now met with economic pressures, which inevitably affects discretionary spending, and Wayfair is feeling the pinch. The online retailer’s active customers shrunk by 1 million quarter-over-quarter in Q3 or more than 4% to 22.6 million, down a whopping 22.6% from the year-ago period. The trend of dwindling customers may continue amid rising consumer prices. 

    Wayfair has only managed to turn an annual profit once – in 2020. From the looks of it, 2022 will not be the year that changes. Operating loss for the year has already surpassed $1 billion, while the year-to-date net loss is $980 million. Over the past six weeks, the median consensus forecast has been slashed by nearly 25% to $40, representing a loss of 5% from its current price.   

    According to CME data, investors expect to see short-term interest rates jump to a range of 4.25% to 4.5% by the end of the year, pointing to an increasingly likely recession in the wings. According to The Economist, a recession formed within two years in six of the past seven rate hiking cycles where rates increased this rapidly.  

    One stock that has been especially vulnerable during recessions that may surprise you is aircraft maker Boeing (BA). The share price has dropped an average of 40% in the past five recessions, underperforming every other S&P 500 stock by the same metric. Shares of Boeing sank 56% in the recession that began in 2020, 43% in the one that started in 2007, and 47% in the 2001 recession. 

    Despite its role as a leader in commercial airplanes, demand seems to evaporate for Boeing products during recessions, along with its typically healthy backlog and demand for the stock. That presents a real hazard for anyone eyeing BA after plunging 37% so far this year. This could be just the beginning of Boeing’s losing streak if a recession is forming.  

    At their September lows, Boeing shares were approaching levels comparable to the early days of the pandemic.   If the economy is indeed heading toward an extended slowdown, it could take years for Boeing to reach previous heights. Given all of the uncertainties combined with the lack of any significant positive catalyst for the company heading into 2023, we’re sticking to the sidelines on the stock.  

    Over the past two years, the dramatic shift from brick-and-mortar shopping to e-commerce has been a tremendous obstacle for investors in malls and shopping centers. The demise of cornerstones like Sears and JCPenny hastened the decline as shopping malls are now left without anchor tenants.   Recent data suggests that 25% of America’s 1,000 malls will be closed in the next 3-5 years.  

    Rising interest rates are cooling off the entire housing sector, with mortgage applications in their fourth month of declines, dropping to the lowest level since 1997. The 30-year fixed mortgage rate is currently 6.46%, more than double what it was just one year ago. Home resales are sitting at a two-year low. According to the latest data from the US Department of Housing and Urban Development,  new residential construction fell 8.1% month over month across the US in November. More pain is expected as the Federal Reserve is widely forecast to continue lifting interest rates through the remainder of 2022 and into 2023 to dampen inflation.

    As the largest homebuilder in the U.S., Texas-based D.R. Horton (DHI) is likely to be impacted by the slowdown in the housing market. DHI’s share price is down 33% already this year, outpacing the decline of the S&P 500. As the housing market slows further heading into winter, more declines can be expected. The company has been slowing its number of housing starts in response.

    In its most recent Q3 earnings, D.R. Horton forecasted a slowdown, saying it now expects full-year revenues from $33.8 billion to $34.6 billion, down from its previous guidance of $35.3 billion to $36.1 billion. The company also reported a Q3 cancellation rate of 24%, up from 17% the previous year. With an increasing number of analysts predicting a housing recession, the company could be forced to further lower its earnings forecast.

    Two Stocks to Buy and One to Sell Next Week

    By
    Editorial Staff
    -
    0

    After a midday turnaround on Friday, stocks erased early losses and finished the week little changed. The S&P 500 and the Nasdaq logged modest weekly gains, while the Dow was down for the week. After a week of mixed economic data, our team has two recommendations of stocks to buy and one to sell heading into the close of the year.   

    Since the U.S. government officially introduced the first-ever tax credit for energy storage projects, there have been remarkable positive business developments in the industry. Our first buy recommendation for today is a company gaining traction as plans for much-needed upgrades to the nation’s aging power grid unfold.    

    NextEra Energy (NEE) is the world’s largest solar and wind energy producer. They’re owners of Florida Power & Light, along with some other utilities and businesses that do wholesale energy. They’re also the sponsor of NextEra Energy Partners, which is primarily renewable energy focused. Renewables are a big part of NextEra’s business. NextEra has emerged as the world’s most valuable utility, primarily by betting on utilities, especially wind.  

    NextEra had about 30 gigawatts of wind and solar farms at the end of last year, enough to power 17 million homes. And it’s expanding significantly, with contracts to add another 10 gigawatts of renewables. 

    For decades, NextEra Energy has been reducing emissions through the development of renewable energy and the modernization of its generation fleet. The company’s goal is to reduce the CO2 emissions rate by 67% by 2025 from a 2005 baseline. This equates to a nearly 40% reduction in absolute CO2 emissions, despite the company’s total expected electricity production almost doubling from 2005 to 2025. Working toward this goal, as of year-end 2021, NextEra has reduced its CO2 rate by 62.2%  and the absolute CO2 tons by 20% while their generation increased by 67.5%. That’s pretty impressive.  

    NextEra Energy has more energy storage capacity than any other company in the U.S., With more than 180 MW of battery energy storage systems in operation. The company leads the industry with storage innovations such as its Babcock Ranch Solar Energy Center – the largest combined solar-plus-storage facility in the country. This cutting-edge project incorporates a 10-MW battery storage project into the operations of a 74.5-MW solar power plant.

    NextEra has a solid track record of success. Between 2006 and 2021, their adjusted earnings per share grew at a compound annual growth rate of 8.4%, while dividends grew at a compound annual growth rate of 9.4%, that’s incredible growth over 15 years. Over the past five years, the stock is up 137% on a total return basis. That type of performance is not typical for a utility company, indicating that NextEra is an outlier in the industry. 

    The undisputed global leader in identity security, CyberArk (CYBR), has been gaining attention on Wall Street. The stock is up 26% over the past six months and could continue to gain heading into 2023. Regardless of any short-term earnings volatility, the potential for long-term, steady growth is too great to ignore.  

    CyberArk’s innovations occur across its self-hosted solutions and expanding SaaS portfolio of privileged access management, secrets management, and cloud privilege security offerings, helping its customers enable “Zero Trust” by enforcing least privilege. Under the framework of its Zero Trust approach, its teams can focus on identifying, isolating, and stopping threats from compromising identities and gaining privilege before they can do harm.

    The Israel-based company was recently named a leader in the Gartner Magic Quadrant for Privileged Access Management for 2021. It was positioned both highest in the ability to execute and furthest in the completeness of vision for the fourth time in a row. It comes as no surprise the business has been attracting customers to its subscription-based services, which means tremendously reliable cash flow, a good sign for anyone eyeing the small-cap.  

    For its third quarter, CyberArk reported a 133% growth acceleration from the previous year’s quarter of the subscription portion of its annual recurring revenue (ARR) to $255 million. Total ARR came in at $465 million, with growth Accelerating to 48%. Management also increased the full-year 2022 ARR Guidance Range to  $589-$601 million, up from a prior estimate of $583.5-$598.5 million.

    Over the past two years, the dramatic shift from brick-and-mortar shopping to e-commerce has been a tremendous obstacle for investors in malls and shopping centers. The demise of cornerstones like Sears and JCPenny hastened the decline as shopping malls are now left without anchor tenants.   Recent data suggests that 25% of America’s 1,000 malls will be closed in the next 3-5 years.  

    Leading shopping mall REIT Simon Property (SPG) is struggling to pivot amid the inexorable decline of its core asset group. The REIT has been aggressive in diversifying into outlets and foreign real estate, which may help to hedge against increasingly substantial losses from their shopping mall category. But given current inflation and the possibility of an economic slowdown, both shoppers and retailers may be in a tight spot this holiday season which will inevitably weigh heavily on SPG.

    Investors choose REIT stocks because of their income-producing abilities and yields. The fact that SPG is concentrated in brick and mortar retail is tangential to its income feature. Anyone looking for the reliable income that real estate and mortgage investments can bring would be wise to steer clear of Simon Property for now. 

    Earn Gold Mine Royalties Just By Holding These Stocks

    By
    Editorial Staff
    -
    0

    Investing in precious metals often seems to be reduced to two options. You can either buy physical gold/silver – the more straightforward, less risky option but often with the lowest returns, or invest in specific mining companies – which requires significant research and generally carries more risk.

    But there is another option that often goes overlooked– royalty companies. On the spectrum of risk for precious metal investing, royalty companies fall somewhere between metal and miner. But when it comes to returns, gold royalty companies have been outperforming for quite some time.

    Over the past seven years, royalty and streaming companies have significantly outperformed in both bull and bear markets. An index of five central precious metals royalty and streaming companies vastly outperformed gold and the GDX over the past seven years with a return of 128% versus gold’s return of 47% and the GDX’s return of 51%.  

    In this article, we’ll explain how precious metals royalty investments work and discuss some of the most desirable tickers in the group.  

    So what is a royalty company? A royalty company provides funding to the mining company for the tremendously expensive task of building a mine. Once the mine is producing, the royalty company receives a percentage of that production at a predetermined price or a share of the profit after the gold is sold.  

    Since the prices for mining output are already set, royalty companies can still make money even when gold prices are falling. Plus, they don’t participate in the operations of the mines themselves, so royalty companies don’t have to deal with the burden of operating costs and therefore take on much lower levels of debt than producers.

    Royalty companies also can pick and choose their projects and typically hold a diversified portfolio which minimizes concentration risk. If things take a turn for the worse with one project, the company usually has several more to fall back on. Plus, dividends of royalty companies are much more consistent and less affected by precious metal price movements compared to mining companies.  

    Royalty and streaming companies’ unique business model supports miners and produces cash flow, offering investors stability and returns even during gold price downturns. This is possible thanks to high-profit margins and exposure to a diversified investment portfolio with built-in upside. Without further ado, here are a few of the best precious metal royalty investment opportunities currently available.  

    Franco-Nevada Corp. (NYSE: FNV) is a gold-focused royalty company with additional interests in silver, platinum, oil, and other resource assets. They have a diversified portfolio of 112 producing assets, 42 advanced assets (not yet producing), and 250 exploration-stage mining properties. FNV generates around 91% of revenues from the Americas and 9% from the rest of the world and has invested $314 million in acquisitions in 2022.  

    With a global recession seemingly on the horizon, it’s a comfort to shareholders that FNV has zero debt, $2 billion in available capital, and is generating operating cash flow at a rate of $1 billion per year. Thanks to its low-risk/high-margin business model, it’s also largely immune to cost inflation. 

    Franco-Nevada actively manages its portfolio to maintain a diversity of revenue sources. However, the majority of its stakes are still in gold. In Q3, 77% of revenues were earned from precious metals, with the other 23% mostly coming from energy assets. More than 75% of revenue is expected to come from precious metals through 2025.  

    FNV stock has gained 17% over the past month, and the pros think this is just the beginning. A median price target of $161 represents a 12% upside from the current price.   The stock trades at a premium, with a forward P/E ratio of 38, and comes along with a 0.89% annual dividend.

    Canada-based Elemental Royalties (CVE: ELE) is an exceptional ground-floor opportunity in the royalties space with operations in the U.S., Australia, Africa, and South America. The emerging royalty company has acquired 12 royalties since 2017, including three gold royalties acquired in 2022 to the tune of $47.5M.

    An investment in Elemental Royalties is an opportunity to invest in high-quality royalties with exciting growth prospects. ELE’s royalties are uncapped, and no buyback options exist, so there are fewer limitations to the company’s performance. 

    It’s one of the most attractively priced precious metals royalty companies available with a trailing twelve-month price-to-revenue ratio of just 8, compared to peers like Metalla Royalty (NYSE: MTA), which currently trades at 89 times its revenue. As of Wednesday’s close, ELE traded at just CAD 1.25 per share.  

    Royalty Gold (NYSE: RGLD) is one of the world’s leading precious metals royalty companies. The Denver-based company holds 186 properties on five continents, including interests in 41 producing mines and 20 development-stage projects in some of the world’s most prolific mining regions in North America, South America, and Africa.  

    The company’s proven business model generates strong cash flow and high margins with a low-cost structure. As a result, RGLD’s solid balance sheet and access to liquidity provide the cash to finance these acquisitions without equity dilution in 2022. Last year,  Royal Gold reported an operating cash flow of $407.2 million, closing the year debt free, with net cash of $222 million and available liquidity of $1.2 billion.  

    Prospective investors with a long-term outlook should appreciate RGLD’s position as a sector leader when it comes to raising its dividend. In November 2021, the firm earned its inclusion as the first and only precious metals company in the S&P High Yield Dividend Aristocrats Index after 25 consecutive years of raising its dividend. Currently, investors enjoy a 1.35% annual yield.

    Three Stocks to Watch for the Week of November 28th

    By
    Editorial Staff
    -
    0

    The major indices inched higher for the holiday-shortened week as FOMC meeting minutes fueled optimism that the Fed may soon begin to ramp down from the historically significant 0.75% rate hikes it has implemented in the past four consecutive meetings. A “substantial majority of participants” thought that a slowdown “would likely soon be appropriate,” according to the minutes from the Fed’s mid-November meeting, released Wednesday. The Dow gained 1.7%, the Nasdaq rose 0.7%, and the S&P 500 climbed 1.5% for the week, finishing above the 4,000 level for the first time in two months. As of Friday’s close, the S&P 500 has risen 12% from its recent mid-October low.  

    This week, the labor market will be in the spotlight with October’s Job Openings and Labor Turnover Survey (JOLTS) and ADP’s National Employment Report for November due for Release on Wednesday. Then on Friday, the Bureau of Labor Statistics will release its nonfarm payrolls report for November. Market watchers will get clarity on how inflation is affecting U.S. consumer spending with PCE data due out on Thursday. We’ll also find out if the U.S. housing market continued to cool in September with the release of S&P Global’s Case-Shiller National Home Price Index, slated for Tuesday. 

    Our team has three stock recommendations for the week ahead, the first of which may not come as a surprise, considering its strong performance this year. What is surprising is that this historically recession-resistant ticker is still so cheap. 

    It should be no surprise that the defense giant  Lockheed Martin (LMT) has outperformed the market this year. There are obvious geopolitical implications with the war in Ukraine. When Russia decided to invade its neighbor, both U.S. and European forces rushed in to help Ukraine. It may be some time before LMT stock pops again, as it did at the onset of Russia’s invasion of Ukraine. However, its order books are likely to improve due to rising defense budgets in the U.S. and abroad. Along with Lockheed providing support to Ukrainian resistance fighters, the looming uncertainties in Russia could lead to massive economic problems and gaps in power in the former Soviet Union-controlled areas. 

    Given the recession-proof nature of defense contracting, Lockheed Martin should continue reporting positive results and rewarding shareholders through its quarterly 2.7% forward yield. In other words, LMT will likely stand firm even if the market dives again. The company runs a P/E ratio of 24 times, below the sector median of 28.3 times. As well, LMT features excellent longer-term growth and profitability metrics.

    Global healthcare leader Eli Lilly And Company (LLY) has been creating high-quality medicines for over a century. The drug firm focuses on endocrinology, oncology, neuroscience, and immunology. Key products include Trulicity, Jardiance, Humalog, and Humulin for diabetes; Taltz and Olumiant for immunology; and Verzenio and Alimta for cancer.  

    In September, Lilly’s immunology drug Olumiant received emergency use authorization from the FDA to treat hospitalized COVID-19 patients. Moreover, the drug has produced impressive results from phase 3 trials examining Olumiant’s efficacy as a hair loss treatment.   

    The mega-cap pharmaceutical giant’s pipeline is locked and loaded with promising advancements, which means plenty of potential upcoming opportunities for investors to benefit from. In the first half of 2021, Lilly increased research and development spending for its up-and-coming treatment for diabetes Tirzepatide by 21% to $3.36 billion. The drug is currently in phase three trials and has already proven to be more effective than competitors.

    Berenberg Analyst Herry Holford recently upgraded Eli Lilly to Buy from Hold and raised the price target from $240 to $270. “Pipeline progress has effectively locked in Eli Lilly’s long-term sales growth, which now stands at 10% annually through 2030 versus a peer average of 4%,” Holford tells investors in a research note. The analyst says a “confluence of catalysts, superior growth, and superior returns” on Research and development, compounded by the recent pullback in the stock, prompts a revisit to the investment thesis.  

    The board of directors at Eli Lilly declared a fourth-quarter dividend of $0.85. LLY’s dividend payout for the year is set for the low 40% range, which should allow for robust future dividend growth.

    A strong pipeline and a stable dividend make Eli Lilly an attractive consideration. The pros on Wall Street also think so. Among 17 polled analysts, 12 say to Buy LLY, 4 call it a Hold, and only 1 rates the stock a Sell. A median 12-month price target of $279 represents a 12.6% increase from its current price.

    Pioneer Natural Resources Company (PXD) has long viewed sustainability as a balance of economic growth, environmental stewardship, and social responsibility. Its emphasis is on developing natural resources in a manner that protects surrounding communities and preserves the environment.

    In the wake of the pandemic, when energy prices were low, PXD struck an almost perfectly timed agreement to buy fellow Permian Basin producer Parsley Energy for $4.5 billion. If you’re wondering how PXD managed to finance that transaction, the answer lies in the fact that it was an all-stock deal that ensured Pioneer didn’t have a new giant debt load hanging over its head. The fact that Parsley operated primarily in the same region of West Texas, where Pioneer had both expertise and existing staff, has paid off over time.   

    That deal was a coup for Pioneer shareholders, built on the fact it was large and well-capitalized at a time when stressed and debt-reliant shale plays were looking for a white knight. On top of that acquisition, PXD also boosted its dividend by 25% at the start of the year as further evidence of its strong balance sheet.

    Investors can look forward to upcoming tailwinds, including Pioneer’s recently announced partnership with the world’s largest renewable energy producer, NextEraEnergy (NEE), to develop a 140-megawatt wind generation facility on Pioneer-owned land. The project will supply the company’s Permian Basin operations with low-cost, renewable power and is expected to be operational next year.  

    In the third quarter, revenue was up 22% YOY to $6.09 billion, smashing the consensus estimate of 4.57 billion. The company reported earnings of $7.48 per share, beating consensus expectations of $7.27 per share. So far, in 2022, the company has rewarded its investors handsomely with $20.73 per share through its generous 10.78% cash dividend. Even after gaining 30% this year, Pioneer shares likely still have valuation upside in addition to their tremendous dividend income potential.   

    Three Stocks to Avoid Next Week

    By
    Editorial Staff
    -
    0

    Seeking out great stocks to buy is important, but many would say it’s even more essential to know which stocks to steer clear of. A losing stock can eat away at your precious long-term returns. So, determining which stocks to trim or eliminate is essential for proper portfolio maintenance.  

    Even the best gardens need pruning, and our team has spotted a few stocks that seem like prime candidates for selling or avoiding. Continue reading to find out which three stocks our team is staying away from this week. 

    While the future remains bright for renewable energy, not all solar stocks are a buy. Provider of solar engineering and construction services, iSun Inc. (ISUN), has seen operating losses skyrocket alongside revenue increases in recent years.  

    iSun reported third-quarter 2022 revenue of $19 million, representing a 185% increase over the same period in 2021. Alongside top-line growth over the past year, the company has reported $22 million in operating losses. Operating income in the third quarter was a loss of $4.9 million compared to a loss of $1.6 million over the same period in 2021. YTD operating income was a loss of $16.2 million compared to a loss of $7 million during the same period in 2021.

    Given the company’s already high debt position after a series of acquisitions in 2021, the additional losses could force it to raise equity to de-lever its balance sheet, which could mean further declines for iSun.  

    The small, unprofitable solar company’s stock is down 76% over the past 12 months, but it’s far from a bargain considering the risk factor.  

    The dramatic shift from brick-and-mortar shopping to e-commerce over the past two years has been a tremendous obstacle for investors in retail. With interest rates marching higher as the economy slows, this is likely just the beginning of the pain for retailers.  

    Recent data suggests that 25% of America’s 1,000 malls will be closed in the next 3-5 years. As a cornerstone of shopping malls across the country, department store chain Macy’s (M) has been among the stocks to suffer. Over the past twelve months, M stock has declined 36% to trade at $22.23 a share.     

    Although Macy’s delivered a strong third-quarter report along with an increase to its earnings outlook, there are obstacles ahead for the iconic retailer. With the Federal Funds Rate at its highest level since 2008 and no sign of slowing down, the consumer economy faces unprecedented challenges. While anyone left holding M stock could enjoy a holiday bump, in the face of a looming recession, any increase seems likely to be short-lived. 

    There’s no question that electric vehicles are the future, but investors looking for bargains amid the market meltdown would be wise to steer clear of third-party companies specializing in EV charging stations like Blink Charging (BLNK). It’s much too soon to predict winners in this cutthroat niche of the EV industry, mainly because it’s still unclear if third-party charging kiosks will ever be profitable.  

    Analysts don’t see Blink becoming profitable before 2026. By then, the company will likely be looking at a much different landscape – a lot can change in three years. From the current vantage point, the near future looks murky for the entire EV industry, considering the massive layoffs that have occurred this year amid supply chain pressure and production restrictions in China.  

    Blink Charging shares have fallen 82% since peaking in early 2021 and are 61% lower year-to-date, but the stock is still trading at 19 times, trailing twelve-month revenue. For perspective, the price-to-sales ratio for the S&P 500 index as of November 1 was roughly 2.5. And this was also way higher than what the ratio has been historically. The current consensus is to Hold Blink stock. We’ll stick to the sidelines on third-party EV charging companies until EV industry headwinds subside.  

    1...52535455Page 53 of 55

    Popular Posts

    My Favorites

    Three A.I. Stocks With Upsides of 40% or More According to...

    Editorial Staff - 0
    A huge buzz has been forming around AI stocks lately alongside the viral chatbot, ChatGPT’s fervent rise in popularity. Launched in November, the...

    Special Report: Three Very Bright Gold Stocks to Buy Now and Hold!

    These Three Cheap Energy Earners Offer Incredible Returns

    Bear Watch Weekly: Stocks to Sideline Now

    © Newsmag WordPress Theme by TagDiv