post-image

The Best Streaming Stocks You’ve Never Heard of

John Parker - May 19, 2020

If you’ve been paying attention at all, you’re probably aware of how popular streaming services are nowadays. Streaming services are popular because they bring entertainment and services directly into consumer homes, without the need to go anywhere. These streaming stocks represent excellent opportunities to invest in this rapidly-growing space. 

Netflix pioneered streaming media and demonstrated the model’s potential. However, many other companies are now following suit. Amazon, AT&T, and Disney all made major investments to launch streaming services. The industry’s rapid expansion led to incredible market penetration. According to Statista, global streaming revenues grew 13.9% YoY in 2020 and the number of global users increased by 12.5%. 

As such, streaming is a hot market right now with no signs of slowing down anytime soon. Only one-quarter of internet-connected households have streaming services, the market still has room to grow.  

Everyone knows about Netflix and the other big boys, so we’re focusing on some of the lesser-known streaming stocks. 

>>> Sign up for the Stock Dork Cheat Sheet for more of the latest hot stock picks <<<

streaming stocks

1. TiVo (NASDAQ: TIVO)

TiVo made its name when it pioneered DVR technology in the late 1990s. The company was one of the first to offer technology that allowed consumers to record and playback shows. Its name-sake device was so popular that “TiVo’ed” became common slang for recording TV programs. 

TiVos reign didn’t last long. The device was largely displaced by in-home DVRs and streaming services. In 2019, TiVo’s CEO Dave Shull told Bloomberg he wanted to split the company. In October 2019, TiVo Plus launched with 26 channels and revitalized the company. TiVo upgraded its streaming service in March 2020 and added several new features. Now, users can skip some commercials, issue voice commands, and manage antenna channels. 

TiVo survived the death of its recording device and adapted to the new market. Despite its difficulties, the firm managed to continue growing. TiVo’s recent performance hasn’t been spectacular. However, its new streaming service TiVo could provide long-term revenue growth for the company. 

2. Roku (NASDAQ: ROKU)

Roku has slowly become the standard streaming alternative to having a cable TV box. Founded in 2002, Rokus sells compact devices that allow consumers to access streaming services from almost any TV. The company also generates significant revenues from advertising and licensing its technology Smart TV manufacturers. 

Wall Street loves Roku. It’s one of the most successful streaming stocks over the past two years. The company has consistently posted impressive revenue growth and it has an uncanny ability to adapt to consumers. Roku is uniquely poised to take advantage of the post-TV market because they are a major player in all corners of the market. Roku’s streaming devices are only a small part of the business. It’s licensing deals, advertising revenues, and data services are the real highlights of the business. Over the next few years, Roku has the potential to leverage its unique position for continued revenue growth. Roku could become a major player in the streaming media market for years to come. 

3. Comcast (NASDAQ: CMCSA)

Comcast is one of the top up-and-coming streaming stocks. The company used to primarily focus on broadband but it recently began diversifying its operations. For example, Comcast recently acquired Sky, a European satellite company and news outlet. It’s also launching a new streaming service for its NBCUniversal properties called Peacock.

This company could become a major presence in the streaming sector. It’s Peacock service could become a major competitor for Amazon and Netflix. Plus, Comcast has the financial firepower to take on just about anyone. The company plans to release its Peacock streaming service by the end of 2020, but it could come out earlier.  

Comcast is an attractive investment for several reasons, and its streaming business makes it even more interesting. The company is massive, so it’s not exactly a pure-play streaming stock. However, it’s an excellent company with several lucrative businesses. 

4. iQIYI (NASDAQ: IQ)

iQIYI is a Chinese streaming service that made its US IPO in 2018. iQIYI’s users watch over 6 billion hours of content each month. The company is commonly referred to as the “Chinese Netflix” because of its similar revenue and content structure.  

This streaming service is unique because it’s specifically designed for smartphones. Its shows are highly interactive, and they’re designed for short spurts of viewing. As of 2019, its subscription rates were growing at 38% YoY. The company also took great strides to bolster its library of original content and expand its international reach. 

IQ is a tempting investment because it has a major presence in China’s rapidly-growing consumer market. China’s strict censorship makes it hard for other streaming stocks to tap the market. IQ’s streaming service could become a massive revenue source with a virtually untapped user base. 

>>> Get Regular Stock Picks in Your Inbox with the Stock Dork Cheat Sheet <<<

Conclusions

In the post-TV age, streaming does not seem to be going anywhere anytime soon. As more companies release their own streaming services and the demand for in-home streaming increases, we can safely expect to see the current trend of streaming growth to continue for the foreseeable future. What streaming stocks are you trading this month? Let us know in the comments below!

post-image

These Are The Best Stocks Under $5

Chris Dios - May 1, 2020

If you’re investing on a small budget, you can appreciate the value of cheap stocks. The best stocks under 5 dollars are a great place to start for many new investors. They’re cheap enough that most investors can afford to buy a round lot of 100 shares. You won’t pay any more than 500 dollars for a lot of any of the best stocks under 5 dollars, so they’re perfect for new traders.

Be sure to check out this article for more low-cost options, and the best stocks for under 10 dollars offer even more great picks for everyday traders. You can also find our monthly rankings for the best penny stocks on this page.

Many blue-chip stocks are too expensive for most retail investors. A thousand bucks will only get you about 5 shares of Apple (AAPL).  You could buy 200 shares of a five-dollar stock for the same price, and if share prices went up by only one dollar you would net a 200-dollar gain. Therefore, in our hypothetical Apple trade, share prices would have to make a 40-dollar move to net you the same gains as low-priced stocks. 

The best stocks under 5 dollars are some of the top cheap stocks on the market. Here’s what we’ve picked out for you this month:

>> Stay Up To Date On The Best Stocks Under $5 + Market Moving Updates 100% Free. Join Today! <<

Best Stocks Under 5 Dollars: May 2020

To get you started on your investing journey, we’ve listed our top-5 low priced penny stock picks. These stocks are high-risk high-reward assets, so remember to consult a professional financial advisor before making any investments. All of our best stocks for under 5 dollars are also based in the United States.

Fortuna Silver Mines Inc. (FSM)

Many investors are flocking to precious metals in the wake of the pandemic sell-off. Gold gets all the headlines, but silver can also post significant gains when the market turns bearish. Silver miners directly benefit from any increase in the spot price of silver, so many investors are shopping the sector for bargains.

coal stocks

Fortuna Silver Mines is a Canadian-based public silver mining company. It currently has two operating mines in Peru and Mexico, plus another mine that’s under construction in Argentina. Shares of Fortuna Silver Mines performed excellently over the past week and they could continue to rally in the coming weeks.

The company recently halted mining operations in Argentina because of the coronavirus outbreak. However, the stock continues to perform well. Silver prices made significant gains over the past week and, if the rally continues, it could be a significant tailwind for FSM moving forward.

Eros International Plc (EROS)

Eros International PLC is like the Indian version of Netflix. The company produces Bollywood motion pictures and distributes them through its streaming platform. It’s currently one of the streaming content platforms in India.

Eros International Plc currently has over 26 million paying subscribers, and the numbers could go higher during this period. Late last month, Eros Now expanded its partnership with the state-owned Indian telecommunications company Bharat Sanchar Nigam Ltd. This partnership allows more Indians to access prepaid recharge packs for the Eros Now platform. Now, users in India can pay for their subscriptions with cash by purchasing a recharge card. India has a very large cash economy so this move could help the company grow its subscriber base even further.

Tenneco Inc. (TEN)

This company produces designs, manufactures, and sells parts for light vehicles, commercial trucks, and aftermarket automobile components for customers worldwide. The stock has struggled since the onset of the COVID-19 pandemic, but the pullback could be a buying opportunity for long-term investors.

tenneco

To cope with the COVID-19 pandemic currently affecting the economy, Tenneco reduced second-quarter salary costs by 25%, including furloughs and pay cuts. Company executives will take a 50% pay cut during the quarter. Tenneco hopes the cost cuts will help the company survive the looming economic downturn. Investors seem to like the strategy because share prices are on the rise since the company announced the cuts on April 3.

Rattler Midstream LP (RTLR)

Rattler Midstream LP is a midstream oil and gas company that provides crude oil, natural gas, and water-related midstream services. The company had a rough couple of weeks as a result of the downturn in the oil market, but it seems to be turning around. Late last week, the world’s leading oil-producing countries agreed to make major cuts to crude oil production, and the news was a major catalyst for U.S. oil producers. Rattler and many other U.S. oil stocks are rallying this week as a result of the agreement.

The company recently entered into a partnership with ArcLight Capital Partners to own, operate, and expand a gas gathering and processing system in the Midland Basin. The two partnership is a 50-50 split, so it could help Rattler mediate costs and give the company a chance at long-term revenue growth.

Prospect Capital Corporation (PSEC)

Prospect Capital Corporation invests is a small-cap financial firm that provides types of financial services for businesses in the U.S. and Canada. The firm is best known for investing in U.S. middle-market businesses across a range of industries.

The asset management firm has experienced an increase in hedge fund interest recently. PSEC recently became one of the 30 most popular stocks among hedge funds, indicating a bullish stance from industry insiders. Hedge funds represent some of the smartest money on Wall Street, so paying attention to where they’re putting their money can pay off big time. If the increase in hedge fund interest is any indication, this stock could be headed higher in the future.

LATEST INVESTMENT REPORT: “Best Uranium Stocks

viewray blog graphic

A ViewRay MRIdian Machine.

ViewRay Inc. (NASDAQ: VRAY)

ViewRay makes a revolutionary new MRI machine that allows doctors to read real-time MRI images during focussed radiation treatments. Focussing the radiation allows doctors to better target the affected tissues, and it helps reduce harmful side effects for patients.

Right now, ViewRay is in a bit of a slump. It missed badly on its first earnings report for 2020, but we still think this stock has long-term potential. ViewRays MRIdian technology is a real game-changer, and it’s already available in a handful of hospitals around the U.S. Healthcare providers rave about these machines, and patients appreciate that they reduce radiation exposure in comparison to traditional treatments.

ViewRay was riding high last year, but it came crashing down along with the rest of the market last February. Investors must be assuming that the hospitals are more focussed on their COVID-19 response than buying fancy new MRI machines. However, this slide could be a long-term buying opportunity. Shares are down nearly 50% from their 2019 highs, so it could be a long ride back up if things work out.

Any way you slice it, ViewRay has a valuable technology on their hands, so there’s a good chance it will rebound when the market comes back to its sense. Even if it doesn’t bounce back, ViewRay could be a possible buyout target for a larger company.

>> Stay Informed With Hot Stock Picks. Join The Stock Dork Cheat Sheet For Free Now! <<
plug power charging statin

Plug Power hydrogen fuel cells can be adapted for use in various types of equipment, including electric pallet jacks. (Above: Plug Power charging stations)

Plug Power Inc. (PLUG)

This company manufactures hydrogen, fuel cell systems, and other alternative energy technologies for material handling and stationary power applications in North American and Europe. Its primary products are proton exchange membrane (PEM) fuel cell and fuel processing technologies.

Renewable energy is the future, but we don’t know which technologies will be adopted on a mass scale just yet. Right now, EVs look like they will be the next generation of transportation, but hydrogen fuel cell vehicles are giving them a run for their money. This technology has several benefits over battery-powered EVs, and some argue that they are a better long-term solution for the environment because they don’t have massive, toxic batteries like EVs. Some people have even called hydrogen-powered vehicles “Tesla Killers”. Outsider Club has a great presentation on hydrogen vehicles. Check it out here.

Recently, Power Plug announced its partnership with Lightning Systems. The two companies partnered to build the world’s first electric, fuel cell-powered, zero-emission Class 6 truck. Demand for zero-emission commercial fleet vehicles is expected to sky-rocket over the next few years, so there is potentially a massive market for these vehicles. 

Like many highly-touted startups, Plug is not profitable and it’s trading at a big premium to its book value. However, this stock could be a great speculative investment for investors who believe in the product. Plug Power could become a major player in the market over the next decade if hydrogen fuel cell technology takes off, so investors could net massive gains if they get in on the ground floor.

Colony Capital (CLNY)

Colony Capital is a real estate investment trust (REIT) that focuses on industrial properties. With over $50 billion in assets, it’s a stable stock that pays steady dividends. However, it also has an interesting case for its long-term growth potential.

The firm recently expanded into the digital real estate sector. The new initiative includes investments in high-tech assets like data centers, cell towers, and fiber optics. Colony hopes that 5G will give these types of holding a major lift over the next decade and, if they’re right, these investments could generate major gains for shareholders.

Investors usually buy REITs for their relatively stable price action and above-market dividends. However, Colony Capital’s 5G initiative gives it the added possibility of long-term asset appreciation, so investors get the best of both worlds.

Iamgold Corp (IAG)

IAMGOLD is a Canadian company that owns and operates gold mines in various countries like Burkina Faso, Suriname, and Canada. It previously operates in Botswana and Mali. IAMGOLD engages in the exploration and evaluation work of mineral resources in South America, Africa, and North America.

The company planned to ramp up production on its Westwood project, but the coronavirus pandemic turned those plans upside down. However, the company could boost production in this region once the outbreak is over. IAMGOLD started production at its Saramacca facility last year, which could also increase its output.

facial recognition stocks

Facial recognition software is a controversial technology, but there are significant opportunities for companies that can master the technology.

RealNetworks (RNWK)

RealNetworks provides software and services for streaming media producers and content creators. They also offer subscription-based entertainment and mobile messaging products.

In October last year, RealNetworks joined NVIDIA’s Metropolis Software Partner Program with its Secure Accurate Facial Recognition (SAFR) system. SAFR uses advanced AI to instantly detect and match people with an underlying database. The system can detect and identify millions of people with nearly perfect accuracy in a fraction of second. It can also assess demographic information, sentiment, and line-of-sight without collecting any personally identifiable information. 

SAFR is intended for use in smart cities, transit hubs, retail, and locations to enhance security and provide improved visual intelligence. Under the terms of the Metropolis Software Partner Program, NVIDIA will provide the chips to power the technology. 

There’s a lot of controversy surrounding the use of facial-recognition programs in cities, but it seems likely that the technology will be adapted in some form or another. Critics argue that facial-recognition software in public places derides personal privacy, and some cities – including San Francisco – have banned the technology outright. If other cities follow San-Fran’s lead, it could be a major obstacle for RealNetwork’s long-term growth plan, but the upside potential might make it worth taking a chance with a speculative position.

 

>> Ready To Take Your Trading To The Next Level? Join The Stock Dork Cheat Sheet Today! <<

Cemex SAB (CX)

Cemex is an international building materials company based in Mexico. The company currently holds the title of the world’s third-largest cement manufacturer. Cemex manufactures and distributes cement and ready-mix concrete, and the firm operates in over 50 countries.

Currently, Cemex pays a $0.0995 annual dividend that yields about 5.2%. However, its payout ratio is 166% so it doesn’t appear to be sustainable in the long-term. As a result, the company could slash the dividend at some point this year. 

The company had a challenging 2019, and the global pandemic could create more problems for Cemex this year. The outbreak is choking off demand for building materials like cement, so Cemex could have difficulties meeting its numbers. However, the company could be a great long-term value play. Share prices are resting near multi-year lows, so the stock looks like a bargain at these prices. 

Despite a potentially difficult road ahead, Cemex is still trading slightly above its 5-year P/E average, so the market seems to have some long-term optimism. In any case, the company is very healthy financially, so it’s in good shape to weather a downturn. Cemex could be an interesting long-term value play in the materials sector. 

Best Stocks Under $5:  Credibility Check

Pay attention to market capitalization. Generally, stocks with market caps below $500 million tend to be more volatile. In addition, it’s also important to consider which exchange lists the stock. 

OTC markets have less stringent listing requirements than NASDAQ or NYSE, so it’s important to pay attention to exchanges when considering a trade or buy. Most stocks under 5 dollars are not in the S&P 500 or other major indices. 

Finding The Best Cheap Stocks

To find your own 5-dollar stocks, use a stock screener. Most brokers have a stock screener built into their trading platforms. Screeners are a great tool for finding new trade opportunities to buy.

Screening tools help investors sort through stocks and find the ones that meet their criteria. It’s like a search engine for stocks. Finviz has a free screening tool that offers tons of features and works well enough for most retail traders. You can also search for buy recommendations.

Best Stocks Under 5 To Buy: Expect Volatility

Even the best stocks under 5 dollars are not a sure thing. Small-cap stocks are even more volatile, so you have to keep a close watch on your positions in the market when trading stocks this cheap. For more interesting stocks, read here.

post-image

Best Penny Stocks: Our Top Picks for May 2020

John Parker - May 1, 2020

Based on our research and reviews, here are our picks for best penny stocks to buy in April 2020:

  1. Top Ships Inc.
  2. SuperCom Ltd.
  3. Plus Therapeutics
  4. Pluristem Therapeutics

Penny Stocks To Watch This Month

The market has rebounded over the past two weeks, and these penny stocks have been some of the top performers. For more stock market news and penny stock watchlist, be sure to check out the Stock Dork Cheat Sheet. Cheat Sheet is jam-packed with expert analysis, stock picks, and much more. Click here to sign up now for free.

If you’re looking for more cheap stocks, be sure to check out the best stocks under 1 dollar and the best stocks under 5 dollars. Also, be on the lookout for these under $10 on this page, set for release next week.

>> Stay up to date on the hottest penny stocks + market moving news. Join The Stock Dork Cheat Sheet Today For Free! <<

Penny Stocks: Top for May 2020

Top Ships INC. (TOPS)

This penny stock is leading the charge this week. Top Ships is a Greece-based oceanic shipping firm that owns and operates a fleet of modern, fuel-efficient “ECO” tanker vessels. Shares skyrocketed 130% on Monday, and they were up nearly 4% during pre-market trading on Tuesday.

hot penny stocks top ships

A Top Ships subsidiary sold one of its major tankers to reap a major cash return.

The rally came after the firm announced that its 50% subsidiary, City of Athens Pte, sold one of its vessels, the M/T Holmby Hills. Top Ships will receive $10.2 million as a result of the transaction. The company expects to sell an additional partly-owned vessel in the second week of April. Top Ships expects to receive an additional $10 million from the deal, depending on foreign exchange rates.

SuperCom Ltd. (SPCB)

SuperCom is an Israeli-based biotech stock that provides security solutions for the government, public safety, healthcare, and finance sectors. Shares surged 120% on Monday after the company made a major announcement.

Early Monday morning, the company announced that it was shipping an early pilot of ground-breaking software that could help contain the coronavirus outbreak. The SuperCom system uses an ankle bracelet to monitor citizen quarantine compliance. Government officials can leverage the SaaS-based product to monitor quarantine patients so they know they’re complying with government guidelines.

Plus Therapeutics Inc. (PSTV)

Plus Therapeutics is a clinical-stage pharmaceutical company that primarily develops treatments for rare cancers. Shares rallied 57% on Monday after the company released an upbeat earnings report before the market opened.

supercom hot stocks

SuperCom’s quarantine compliance technology uses an ankle bracelet to help officials monitor citizens with mandatory quarantine orders, similar to the technology used by courts to monitor house arrest cases.

Plus Therapeutics released its fourth quarter and full fiscal rear reports on Monday. In the fourth quarter, the company generated a net income of $920,000 or $0.12 per share. This marked a significant improvement from last year when the company reported a net loss of $2.0 million or -($7.28) per share. Investors applauded the report and the news helped power the rally in share prices.

Pluristem Therapeutics Inc. (PSTI)

Shares of this Israeli-based biotech firm surged 37% during Monday’s trading session. The company is best known for developing innovative therapies for disease treatment.

Pluristem stock spiked on Monday after the company revealed more information relating to its development of a potential treatment for COVID-19. The company announced that it had dosed three high-risk COVID-19 patients in Israel with its therapy under the Israeli Ministry of Health Approved Compassionate Treatment program. Pluristem hopes to enroll more patients in the program soon, and it says it will provide continuous updates on outcomes once they have significant clinical data.

More on Penny Stocks

“Find out how an ordinary accountant quit his job after making it big with penny stocks.”   “Discover how you could turn $10,000 into $100,000 with penny stocks.”  “Here is how to make your first million in under a year by trading penny stocks.”

This is the kind of language that surrounds penny stock trading.  It is a glamorous, fast-paced world, and many of the success stories you hear truly are jaw-dropping.  A few of them are even true.

 You can make a ton of money trading penny stocks, but it isn’t easy, and it isn’t for everyone.  Penny stock trading is highly volatile, and as such, is more speculative than other more traditional forms of investing.  That means that the stocks you invest in do have the potential to soar—but they also may crash and burn.

In this guide, I am going to teach you everything you need to know to get started with penny stock trading.  Let’s start with the very basics, and talk a bit more about penny stocks and why they are different from other financial instruments.

>> Want To Improve Your Trading? Join The Stock Dork Cheat Sheet For Free Today! <<

What Are Penny Stocks?

The definition of a penny stock is simple:

Penny Stocks(n)=Any publicly-traded security with a current value of under 5 dollars.

Most penny stocks cost much more than a penny, but that’s a misnomer. Traders generally use the term to label stocks that are cheap and risky. Once stocks trade for more than five dollars per share they technically stop being penny stocks.

Not all penny stocks trade on major exchanges like NASDAQ or NYSE.  There are some cheap stocks on NASDAQ and NYSE, and these do count as penny stocks—but they are just the tip of the iceberg.

buy-penny-stocks-stock-dork

Are Penny Stocks Worth It?

Major exchanges have stringent listing requirements, so only the best companies make the grade. However, there are thousands of companies that trade outside of the NYSE and NASDAQ. Stocks that aren’t exchange-listed are usually referred to as OTC stocks.

OTC stocks come in several different flavors. There are several OTC exchanges with different listing requirements. For example, Over-the-counter Bulletin Board (OTCBB) stocks have to meet some basic listing requirements. Conversely, Pink Sheets stocks have almost no listing requirements. There are also other OTC markets with stricter listing requirements. OTCQX is the highest tier of OTC markets and it’s often used as a stepping stone to the major exchanges. There’s also the OTCQB, which is a mid-tier OTC exchange for companies that don’t meet the OTCQX requirements.

These stocks are easy to buy, but they’re not available on every brokerage platform.  Some mobile trading platforms, like Robinhood and WeBull, don’t offer access to OTC stocks. However, once you find a broker that accepts OTC trades, the process is identical to buying NASDAQ or NYSE stocks.

Pros of Penny Stocks

Why invest in penny stocks?  Find out below.

Volatility

Penny stocks are volatile.  Sometimes they take off, and when they do, they can skyrocket.  You could buy a penny stock that is worth a penny and watch it go up to $10 in a matter of weeks.  If you purchased $10 worth of those stocks instead of a penny’s worth, you could’ve earned $10,000 on one trade with minimal risk. It’s hard to find rapid gains like this in more established stocks.

Cheap

You can invest in penny stocks with a very small bankroll.  You don’t need tens of thousands of dollars to start trading.  The entry barriers for penny stock trading are incredibly low.

Ground-Floor Opportunities

Real opportunities exist. There are solid companies out there that haven’t made their name yet. Some of the world’s most valuable tech companies began their lives as penny stocks. If you get in on the ground floor, you can make an absolute killing.

Cons of Penny Stocks

Risky

Penny stocks are highly speculative, and as such, are risky.  Volatility is a two-edged blade.  It can make you rich, but it can also break you overnight (which is the more likely outcome).  It does not help that it can be hard to sell a penny stock once you have purchased it.  You might think, “That is not a big deal if I am just investing a few dollars,” but it can all add up if you do not manage your money with care.

Poor Selection

It’s hard to come by quality stocks.  While there are some amazing penny stocks out there, the majority are not sound investments.  Many of these companies are in financial or legal trouble.

Limited Regulation

This industry is practically unregulated, so it’s plagued by pump-and-dump scams.  You can avoid these if you are careful, so take the time to learn a good investment from a bad one.

How to Find Penny Stocks to Buy

  • Check penny stock listings like the aforementioned OTCBB and Pink Sheets.  Then, start conducting your own independent research on the companies you like.
  • Search for lists of the 10 best penny stocks or the top 100 active penny stocks.  These posts can be a great way to find trade ideas, but make sure you check publications you can trust. Also, always take any third-party advice with a grain of salt. Do your own research.
  • Sign up for an investment research service.  Alerts services deliver high-quality stock picks and research for a monthly fee. Many services also include a treasure trove of bonus reports and other helpful materials, including video lessons, community support, individual coaching, and more. If you want to learn more about investment research services, read our reviews section to get the inside scoop on some of the best companies in the business.

A lot of traders buy whatever penny stocks are trending on Twitter, but there’s a better way to trade.  If you want to win this game, you need to do your homework.

>> Get The Best Stock Tips + Market Moving Updates. Join For Free Today <<

How To Buy Penny Stocks

You can buy penny stocks with a brokerage account. Almost every broker allows users to trade exchange-listed penny stocks, but certain brokers don’t offer access to the OTC Markets. If you want to trade penny stocks that aren’t listed on the Nasdaq or New York Stock Exchange, you’ll have to find a broker that offers OTC trading.

Where To Buy Penny Stocks

Penny stocks trade on every major exchange, including the Nasdaq, NYSE, and OTC Markets. Once you open and fund your brokerage account, you can begin buying penny stocks. Before you choose a broker, you should compare their relevant features and resources. Check out the charting features, user interface, fee schedule, and other key factors before making a decision. You can also request a free demo so you can try out the trading platform before committing. Some traders even keep accounts with more than one brokers so they can take advantage of all the best features.

Best Penny Stock Broker

The best answer really depends on your needs. You should look for a broker with no commissions, low fees, a feature-rich platform, and an easy-to-use interface. Robinhood is a popular choice for beginners, but you can’t trade OTC penny stocks on the platform. More established brokers, like eTrade, Fidelity, and Interactive Brokers are among the most popular for trading penny stocks. You can also go with TD Ameritrade and Schwab, who have agreed to a merger that should close sometime this year. 

Last year, most of the major brokers switched to a zero-commission business model. Now, trade commissions are a product of a bygone era, but there are still plenty of things to consider. Most of the established brokers offer a variety of educational resources, features, and other extras. Some brokers offer more inclusive financial services than others, so you should also consider your long-term financial needs. If you’re in it for the long haul, you should consider choosing a firm that offers wealth management services and retirement accounts.

Robinhood and WeBull are two of the best penny stock platforms for beginners. Check out our comparison review to see which platform is best for you, and don’t forget to use the invite link to get free stocks when you sign up.

small cap stocks stock dork

Investing in Penny Stocks

If you are serious about winning with penny stocks, you need to do your homework. Here are some questions to consider:

Legitimacy

A lot of penny stocks are in shell companies. Shell companies do not actually do anything, despite being legally incorporated.  They are set up either for reasons relating to the branding or finances of the company which owns them, or they are reserved for future use.  The point is that they are inactive.  Stay away from shell companies; only invest in real companies that are producing real products or offering real services.

Financial Viability

Check out the statements to see if they are being filed on time and if the figures are robust.  Also see if you can find out whether there is any independent auditing, and if so, what the auditors have discovered.  Make sure that the fundamentals are intact, and that the company’s business structure makes sense.  See if they can actually deliver in their industry.

Company Story

Investing involves a lot more than financial figures. There’s a story behind every company, and it can tell you a lot about where a company is heading. You should review company press releases and earnings call transcripts to get a better idea of the company’s priorities. Professional analysis is also an important piece of the puzzle. You can’t rely on the little company bio that’s listed on your brokerage platform because that information can be vague, outdated, or completely incorrect.

Search engines can help you find recent news involving the company. You can also check investor communities like StockTwits or SeekingAlpha to see how traders are viewing the company. You should consider all of the information that’s available before making an investment.

Examples of Penny Stocks That Won Big 

Need proof that penny stocks really can soar?  Here are a few that have made headlines:

  • Concur Technologies is a company that was trading at $48.50 per share during the 90s tech bubble.  When NASDAQ crashed, shares dropped to $0.31.  Eventually, share prices soared rebounded to $107.
  • Have you ever shopped at Pier 1 Imports?  The last recession hit this retailer hard. Shares dropped as low $0.11 apiece at the time, but they eventually bounced back to over $20.

You can make a killing if you pick up on opportunities like these. The market doesn’t always get it right, so you won’t make any money by following the crowds. If you want to make it as a penny stock trader, you have to keep an independent perspective.

risk tolerance - reward

Penny Stock Scams Exposed

The penny stock market is frequently targeted by scammers. Scammers frequently use “pump and dump” schemes to net big profits.  It’s a common term for a when shareholders make a concerted effort to artificially inflate the stock’s price through circulating misleading information.  When the price goes up, they sell and cash out.

The sites and materials distributed by pump and dump scammers often look official and trustworthy.  But if you buy into their stocks, you will end up losing a ton of money by investing in worthless stocks.

Thankfully, the trick to avoiding this is pretty simple.  Just do the research I recommended earlier every time you are considering buying a penny stock.

>> Ready to get the best penny stocks delivered to your inbox for free? Join Now <<

Are Penny Stocks the Right Fit For You?

Penny stock trading isn’t for everyone, but if you have the right personality and mindset, you could make great money in this market.  Ask yourself if you have the following traits:

  • Patience to wait for solid investments to come along and only solid investments.
  • Research skills, critical thinking, and attention to detail.
  • Discipline and perseverance to stick with penny stock trading over the long haul.
  • A handle on your emotions.  While penny stock trading is exciting, you should not get into this game for the thrills.
  • Honesty.  The most profitable investors are always those who can be honest with themselves about the decisions they make.  This is the only way to spot mistakes and make improvements.

If that sounds like you, penny stocks could be your road to riches.

Penny Stocks To Buy Today

When you’re trying to figure out what penny stocks to buy today, you’ll want to develop a watch list. Generally speaking, you’ll want to buy penny stocks that have a catalyst. The reason being is that stocks that have catalysts are usually volatile.

As a trader, volatility helps you net short-term profits. A real-time news service can help you with stocks that reacting to recent news. Many analysts don’t cover penny stocks, and headlines create lots of volatility for otherwise obscure stocks.

List of Penny Stocks

Creating a list of penny stocks is a savvy way to prepare yourself for whatever lies during the trading day. For example, you can create lists based on percentage movers, largest gainers/losers, 52-week highs/lows, etc. Find penny stocks with high short-interest ratios to create a short-squeeze watchlist. You can also list by category, so you can quickly zero in on opportunities when a particular industry – like cannabis or cryptocurrency – is in the news. Lists can help you make better and faster decisions.

day traders nasdaq

Penny Stocks Trader Checklist

Before you trade, follow these steps to give you the best chance of success

  • Screen stocks based on parameters that fit your investment strategy and identify appropriate candidates.
  • Conduct due diligence research on your trade candidates to ensure you fully understand the risks.
  • Determine how much you will invest. Don’t spend more than you can afford to lose. If you’re having anxiety or obsessing over a trade you’re probably investing too much.
  • Formulate a trading strategy. Set profit goals and identify your entry and exit points in advance. This allows your to act decisively in case you’re forced with a split-second decision. Remember, the markets move fast, so it’s best to identify your expectations in advance.
  • Make the buy. Use limit orders to ensure you build your position within your targeted entry point.
  • Maintain strict trade discipline. Stick to your strategy and try not to obsess on the day-to-day price action.
  • Monitor day-to-day news to ensure nothing arises that affects the outlook for your trade.
  • Make your exit in an orderly fashing. Whether you lose or gain, stay calm and don’t make impulsive decisions.
  • Conduct post-trade analysis to identify reasons for success or areas where you can improve.
>> Get The Best Penny Stock Tips For Free. Join Now! <<

More Trading Tips

Following this list will help you become a more effective trader, but it’s only the beginning. You need to constantly assess and reevaluate your strategies to ensure you’re making the right moves. Here are a few more things to take into consideration.

Paper Trade

You can practice trading before you start risking your hard-earned cash. Paper trading is the practice of working theoretical trades out on paper but, these days, most traders use trading simulators to practice these days. Some brokers, like WeBull, even have trading simulators built into their trading platforms. Making simulated trades is a great way to get accustomed to stock trading without blowing through your nest egg.

Cut Your Losses

Don’t stick with a losing trade for too long. In certain cases, you just have to cut your losses and move on. Oftentimes, patience pays off, but sometimes you have to identify a bad trade for what it is and get out of your position. It’s hard to walk away if you really believe in a company, but don’t let your personal bias drag you into more losses. Identifying an exit point in advance is the best way to avoid getting sucked into serious losses.

Day Trading Penny Stocks

Many day traders prefer penny stocks over traditional blue-chip stocks.  Smaller-cap penny stocks don’t get a lot of coverage on Wall Street, so they tend to react to news events more drastically.

Investing in a service that alerts you on breaking news might be worthwhile if you intend to day trade penny stocks. Of course, that is not the only thing that matters. In fact, you can even use alerts created from your trading platform that point out large daily moves.

Closing Thoughts

Investing in penny stocks is a high-risk, high-reward game. Many of these companies are just getting started, so it’s a toss-up whether they will be successful over the long-run. However, you can net major gains if you get it right. Penny stocks are affordable for low-budget traders, and there are thousands of companies to choose from. If you do your research and make disciplined trades, you can earn major gains by trading these cheap stocks.

For more on the best penny stocks, signup for the Stock Dork Cheat Sheet. Our easy-to-read reports keep you informed with the latest hot penny stocks watchlist, plus stock market news, expert analysis, and much more. Signup today so you don’t miss any of these red-hot penny stock picks.

post-image

The 5 Best Stocks Under $1 For May 2020

Chris Dios - May 1, 2020

Cheap share prices allow smaller-budget investors to load up on shares and, therefore, get a bigger payoff if the shares gain value. Owning more shares creates greater risks and greater rewards, and penny stocks under 1 dollar are affordable enough for small-budget traders to get in on the action on penny stocks. Based on our research and reviews, these are the greatest penny stocks under the low price of $1:

Best Stocks Under $1.00 for 2020

For more low-cost opportunities, be sure to check out the list of best penny stocks, best stocks under 5 dollars, and the best stocks under 10 dollars. Plus, check out our coverage of the best buying opportunities created by the sell-off in our article on the best coronavirus stocks.

In this brief article, we will explore some of the best penny stocks under $1, and teach you the skills you need to find these stocks on your own.

coronavirus stocks

The COVID-19 outbreak is taking center stage in the stock market this week, but there are still buying opportunities for cool-handed investors.

>> Get Top Stock Picks & Market Updates. Join The Stock Dork Cheat Sheet Newsletter 100% Free Now <<

The Best Stocks Under $1 That Could Take Off In May 2020

Unsurprisingly, biotech stocks continue to dominate the ranking. However, the pandemic is also creating opportunities in other sectors. These stocks under 1 dollar could be big winners when the economy reopens, so be sure to add them to your watchlist.  Sign Up for the new and improved Stock Dork Cheat Sheet for more stock market coverage, stock picks, expert insights, and more.

Fuel Tech (FTEK) – Last Close $0.47

Fuel Tech is a small, highly-specialized company that specializes in advanced engineering solutions for optimizing combustion systems for pollution and treatment controls. On May 7, the firm announced it secured two demonstration orders for its proprietary TIFI Bio (Targeted in-Furnace Injection) technology.

Successful demonstrations could lead to on-going commercial programs worth $500,000 to $750,000 in annual revenues per site. That’s major revenue growth for a company that’s only worth $11.55 million. Today, FTEK is rallying on the news. It’s one of the premarket’s top gainers with a 111.78% gain.

Fuel Tech released its quarterly earnings report on May 13. The firm reported a net loss of $0.10 per share and revenues of $3.8 million. Both figures were down significantly from last year’s totals, but share prices held up surprisingly well. The stock’s resilience could indicate that investors believe the company has long-term growth potential despite its shorter-term financial performance.

Ritter Pharmaceuticals Inc. (RTTR)

Ritter is a California-based company that develops novel therapeutic products that modulate the microbiome for the treatment of gastrointestinal diseases. The FDA is close to potentially approving the company’s leading product, RP-G28, for the treatment of lactose intolerance. Millions of people suffer from this condition, so the treatment could tap into a massive commercial market. 

On May 1, Ritter Pharmaceuticals reported financial results for Q1 2020. Ritter recorded a net loss of $1.7 million or $0.05 per share. It was a significant improvement over the $4.7 million / $0.58 per-share loss reported in Q1 2019.

Ritter is also working on closing its merger with Qualigen. The firm believes the move will provide meaningful value for Ritter stockholders. 

facemask stocks

The COVID-19 outbreak is creating significant opportunities in the biotech, pharmaceutical, and medical supply industries.

NovaBay Pharmaceuticals (NBY)

This tiny company produces specialized pharmaceutical products that are specifically geared towards eye care. NovaBay has a market cap of only $24.3 million, so it’s a very small company. However, the firm has consistently performed well on its earnings reports, and it recently crossed over a key technical threshold that could indicate the beginning of a long-term bull cycle.

NovaBay traded sideways for most of last year, but it skyrocketed in March it had an excellent fourth-quarter / full-year earnings call. Share prices jumped over 394% in one day. That move caused it to cross over its 200-day SMA and, since then, share prices seem to have found new support around $0.75 per share. NovaBay could be a long-term winner if it keeps the hits coming.

Helius Medical Technologies Inc. (HSDT)

This micro-cap medical device firm develops technology that boosts the brain’s ability to heal itself. The pandemic wreaked havoc on Helius share prices. However, it’s become one of the best-performing stocks over the past couple of weeks. 

On May 12, Helius announced that it had received an FDA Breakthrough Designation for its PoNS device. The device can treat gait deficiencies that are symptomatic of Multiple Sclerosis. Supervised therapeutic exercise programs could use the device as an adjunct to traditional therapy. The FDA awarded the breakthrough designation after clinical trials for PoNS produced promising results. The results were initially published on April 29. 

The breakthrough designation demonstrates the viability of Helius’s technology. If the device realizes its full commercial potential, it could be a major catalyst for long-term growth.

Document Security Systems (DSS)

This might be the most promising pick on our list, given the recent trends that are developing in the economy. Document Security Services focuses on developing counterfeit prevention products for businesses. Given the recent shift towards remote work, this company’s core business could get a lift. DSS had a very bad year and it’s down more than 80% over the past 12 months. However, shares seemed to have hit a major pivot point in March after gaining over 48% during the month.

In early March, DSS entered into a letter of intent to acquire Impact Biomedical Inc., and the news sent shares of DSS skyrocketing by 80%. It also announced plans to establish a medical real estate investment trust fund in the U.S. as part of a joint venture with another company. REITs have performed well since the COVID-19 outbreak began, so this decision could’ve been a catalyst for the rally. 

>> Want More Hot Stocks Under $1 + The Latest Market Moving Info? Join The Stock Dork Today For Free <<

The Pros Of Trading Stocks Under $1

Typically penny stocks under 1 dollar receive little to no coverage by Wall Street analysts. That means the stock is volatile in nature. However, this volatility of the low priced stock is what creates tremendous opportunity to see extraordinary returns.

UBIA DECFor example:

On February 3, UBI Blockchain Internet LTD (OTC: UBIA) was trading stock at around a low $0.55 in price per share.

In less than 8 months, the penny stock traded as high as $115 in price per share. If you bought $1k worth of stock back on February 3 and sold the highs on December 15, you would have made over a high $200K in profits.

The potential stock returns are extremely attractive when you can get in for cheap. Penny stocks that trade for under one dollar give every trader the power to generate big gains.

Robinhood stocks under $1

Robinhood, a top commission-free broker, does not support OTC stock trading. For this reason, using Robinhood to trade penny stocks can be a little prohibitive.

With that said, there are still many cheap penny stocks, trading for a price under $1, that can be traded using Robinhood. The problem is that you can only trade exchange-listed penny stocks, like those trading on the NASDAQ and NYSE, so there aren’t many penny stocks under $1 price to choose from.

Don’t worry, if you’re a Robinhood trader you can still trade many of the top stock picks on our list. Just look for the penny stocks list that trade on NASDAQ or NYSE and you should be able to find the stocks and the price on your Robinhood app.

Why Do Penny Stocks Under $1 Sometimes Fly?

These companies don’t have a lot of institutional ownership, so these penny stocks get practically no media attention and go virtually unnoticed by the general public. This atmosphere of indifference creates a high level of opportunities for savvy traders that are willing to do their own research.

You can find penny stocks trading for less than $1 share price on all of the major stock exchanges, including the NYSE, Nasdaq, and AMEX. In order for a company to list on the NYSE and NASDAQ, they must first meet certain accounting and compliance metrics. However, listing on an OTC market gives smaller companies more flexibility, so many of the best penny stocks trading under $1 share price are not on the list of major exchanges.

>> Ready To Take Your Trading To The Next Level? Join TheStockDork.com Cheat Sheet Today For Free <<

The Negative Side To Trading Stocks Under $1

Most analysts don’t bother with cheap penny stocks, so it’s up to you to do your own research. Many “analyst” opinions of these penny stocks come from newsletters and bloggers. Most of them are not professionally qualified to give you financial advice, so you shouldn’t place too much importance on many of the analyst ratings floating around the internet for these penny stocks.

You have to become savvy at reading press releases, earning statements, and financial documents to play in this space effectively. That’s where most of the information on these types of companies can be found. Unreputable companies will often issue press releases to pump up their share prices. However, genuine press releases often give shareholders important information that can have a big impact on share prices.

If you’re new to trading it will take some time before you’re able to differentiate hype from genuine, useful information.

How To Find The Best Penny Stocks Under $1

Read and follow trends. The fastest-moving penny stocks are ones that are “trending.” If you spot a hot sector or a stock that has had an explosive upside move, look for companies in the same sector that have yet to follow the trend. For example, UBI Blockchain Internet LTD. skyrocketed after the parabolic rise of bitcoin. For most traders, it was easier to buy shares in UBI than to buy actual bitcoin. As a result, traders scrambled into UBI to try and get in on the craze.

The OTC Market website is a good place to state. You can easily see a list of the largest gainers and losers in the OTC markets. Look for penny stocks that are in the same sector making big gains. Then, look for other penny stocks in the same sector that have not yet followed along with the uptrend.

You can also go with a free stock screener for penny stocks. A stock screener helps you find the best companies meeting your criteria. When you enter the penny stock criteria, the stock screener will show you a list of stocks. You can also use it to find high volume stocks, or ones on NASDAQ and NYSE. However, take the free stock screener results you find as only a first step. Do your research to get a grasp of gainers and losers.

You can also join Stock Dork Alerts to get trending penny stocks and market news delivered directly to your inbox.

Research

Be wary of social media. There are jewels of free knowledge on penny stocks that are hidden amongst the deluge of armchair opinion on social media platforms, like Twitter and StockTwits. However, always consider the source and always do your own due diligence to find the best info or list.  Make sure to visit the company website and verify cited facts with legitimate sources. If you’re searching for a list of companies trading on the major exchanges, you can use a scanner like one found on finviz.com.

ALWAYS HAVE AN EXIT STRATEGY. If you’re buying penny stocks for a quick trade, don’t fall in love with your position. Ride the wave and move on. If the share price of the penny stocks don’t behave as you expected, don’t hesitate to exit your positions.

I hope these quick tips can help you find your own cheap penny stocks under $1! But, we want to know what you think! What penny stocks under $1 are you keeping an eye on? Leave a comment below and let us know whether you’re trading or fading dollar stocks.

post-image

Best Stocks Under 10 Dollars: Top Picks for May

Chris Dios - May 1, 2020

Stocks under 10 dollars appeal to many retail investing budgets. These low-priced stocks are within the means of most investors. A round, hundred-share lot of a 10-dollar stock costs $1,000. One hundred shares of Amazon (AMZN) costs over 200 grand, which is a big allocation for all but the largest portfolios.

If you’re looking for even cheaper options than stocks under 10 dollars, check out our top picks for stocks under 5 dollars; stocks under 1 dollar; and the top penny stocks. Make sure to check our lithium battery & mining stocks page.

To help introduce you to the world of ten-dollar stocks, we’ve laid out our top 5 picks for the best stocks under ten dollars. These stocks are all based in the United States (Aurora Cannabis is based in Canada) and trade on either the NYSE or NASDAQ exchange.

  • Sign Up For Dork Alerts and Get a FREE Cannabis Investing eBook!

ADT Security Services (ADT)

Formerly known as ADT Corporation, ADT Security Services is a leading provider of security services. The firm offers security services for residential customers, as well as small and large businesses. Its products include electronic security and fire protection systems, and it also offers alarm monitoring services for customers throughout the country.

ADT debuted at an IPO price of $14 in 2018, but it now trades at just above $4. Despite the startling decline in the share prices, ADT could be a promising long-term investment.

The company acquired Defenders, a small firm that specializes in selling and installing ADT systems, in January this year. The acquisition could yield a variety of benefits for ADT, including streamlined marketing efficiencies, customer segmentation, and improved customer experience. ADT is also refinancing debt to take advantage of historically low interest rates, which could positively impact the company’s financials moving forward. ADT has also recorded positive growth in areas such as home automation and mobile security offering.

Sirius XM Holdings Inc. (SIRI)

Sirius XM Holdings has been a leading player in the satellite radio market for over a decade now. While satellite radio has largely been displaced by streaming music providers, the company has taken steps to remain relevant.

The company acquired the streaming music platform Pandora last year, and the transaction added 1.1 million customers to its customer base. Today, Sirius boasts a total of about 30 million paying subscribers. In response to widespread quarantine restrictions, Sirius is offering free access to its online streaming services through May 15. This special offer could attract more customers to the platform and, at the very least, its an excellent publicity move. Sirius’s strategy of partnering with carmakers to pre-install SiriusXM in new model automobiles could also help them record steady business growth.

Century Casinos, Inc. (CNTY)

The coronavirus outbreak punished the gaming sector, and Century Casinos is among the hardest-hit casino stocks. However, the dip could be a buying opportunity for investors who are willing to hold on. Century Casinos is a Colorado gaming company that owns and operates racetracks and casinos in the United States, Poland, and Canada.

The company closed down most of its locations in the US, Canada, and Poland as a result of the pandemic. However, Century Casinos could bounce back quickly once the outbreak subsides.

In December, Century Casinos announced the acquisitions of Isle Casino Cape Girardeau, Lady Luck Caruthersville, and Mountaineer Casino. They also bought The Mountaineer racetrack and resort from Eldorado Resorts, Inc. for a combined $107 million. These acquisitions could stimulate revenue growth for Century Casino if the company survives the effects of the Coronavirus outbreak.

Zynga Inc. (ZNGA)

This is a California-based social game developer focuses on developing apps for mobile devices and social networking platforms. Zynga is one of a relatively small segment of stocks that are trading in the green this year. The stock continues to perform well, despite the drastic impact of COVID-19.

In its most recent quarterly report, Zynga’s revenues grew by roughly 48%. The figures set a new company record for quarterly revenue growth, and Zynga’s quarterly bookings also increased by 59%. Many analysts expect Zynga will continue to record double-digit revenue growth this year.

Zynga’s best-known franchises include Zynga Poker, CSR Racing, Words With Friends, and FarmVille. These games could benefit from increased user traffic this quarter because estimates predict that more people will play mobile games while they’re stuck in the house.

Nokia (NOK)

Nokia is one of the most affordable 5G stocks on the market. The Finnish company is a multinational telecommunications, information technology, and consumer electronics entity that has been around for more than 150 years. Nokia is also one of the leading manufacturers of 5G infrastructure gear. Its position in the 5G market could become a significant advantage once the technology sees mass adoption.

The shares of Nokia are underperforming this year as the global market takes a hit from the pandemic. At the moment, NOK is trading just above the $3 mark, making it an interesting option for investors.

Analysts believe that Nokia will record impressive growth in the future. This year, consensus estimates predict revenues will only grow by 8%. However, that figure is expected to spike to 30% by next year. The analysts offering 1-year price forecasts for Nokia have a consensus price target of $4.83 per share by the end of the year. The most bullish analysts predict share prices could reach $6.59 by year-end, while more conservative projections anticipate $2.98 per share. The median price represents a 57% increase from its current trading price.

Due to the expected growth, most analysts rate NOK as a Buy at the moment. Although it is a cheap stock, Nokia is by no means a small company. Nokia is worth $15 billion, and it has been experiencing an average of 14% annual increase in sales for the last five years. Also, Nokia pays up to an 8% dividend to its investors.

Best Stocks Under 10 – Value Vs. Price

Thanks to low prices, these stocks are accessible to most investors. Don’t confuse low prices with low value, many stocks under 10 dollars have significant long-term potential. Oftentimes, it’s easy to find overlooked companies in stocks under 10 dollars.

In this context, value isn’t limited to traditional value-gauging metrics. For example, rapid revenue growth and price momentum can both be valuable traits for stocks under 5 dollars. Our list of the best 5-dollar stocks includes both value and growth stocks that could be worth watching.

How To Find Stocks Under 10 Dollars

There are hundreds of stocks that trade for under 10 dollars, and it’s easy to find additional opportunities by using a stock screener. Stock screeners help traders find stocks that meet certain criteria. It’s like a search engine for stocks.

Most brokers have stock screeners built into their platforms. However, Finviz offers a free stock screener that is good enough for most investors, and more advanced features are available with Finviz Elite. You can find the Finviz stock screener here.

More Cheap Stocks

The market pullback has created a lot of opportunities for long-minded traders, but you can’t cash in if you’re sitting on the sidelines. Sign up for the Stock Dork Cheat Sheet to get an inside track on all the latest stock market moves, including regular watchlists on the best buying opportunities in the market. Click here to sign up now.

post-image

Coal Stocks: Best Picks for Long-Term Value

Larry Davidson - April 21, 2020

The coal industry has suffered harsh criticism over the past decade because of its environmental impact. However, coal is still an essential industrial commodity and it’s not going to disappear anytime soon. Coal fuels millions of homes and is a vital component in steel production, so international demand remains steady despite the controversy surrounding the industry. As a result, coal stocks remain a viable option for value-minded investors.

The Best Coal Stocks

Alliance Resource Partners LP (ARLP)

Alliance Resource Partners LP is one of the best options in the coal sector. The Oklahoma-based company is a diversified energy company with significant coal operations. Alliance also produces and markets coal to major U.S. utilities and industrial consumers.

The pandemic significantly decreased industrial demand for coal and other energy commodities. Rampant demand reduction created severe issues for the coal market, so Alliance decided to cease coal production from some of its mines to reduce costs. The affected mines include Alliance’s Illinois Basin and MC Mining operation in east Kentucky.

Warrior Met Coal Inc. (HCC)

Warrior Met Coal Inc. is based in Alabama, and the firm is a major supplier to the global steel industry. The firm focuses on mining non-thermal metallurgical (met) coal, also known as coking coal. This type of coal is the primary source of carbon used in the steel production process, so it’s a valuable commodity for the world’s metal manufacturers.

Arch Coal Inc. (ARCH)

Headquartered in Missouri, Arch Coal mines and processes various types of coal, including bituminous and sub-bituminous, low-sulfur coal. The company currently operates eight active mines and has active leases in several states, including Ohio, Virginia, West Virginia, and others. Arch’s customers hail from a variety of sectors, including utilities, industrials, and steel producers. 

Arch has excellent value ratios and looks like a bargain at its current price. Shares are currently trading at only 2.18 P/E, which represents a significant discount to the sector at-large. It’s 6.93% dividend also looks attractive in comparison to the market median for the energy sector. That high-yielding dividend is also surprisingly sustainable and represents only 12% of the company’s earnings over the past 12 months. 

Peabody Energy Corporation (BTU)

Peabody Energy Corporation is an end-to-end producer whose operations include mining, sales, and distribution. The company mines various types of coal and supplies electricity generation and steelmaking.

In February, Peabody Energy Corp and Arch Coal announced a partnership to increase coal’s competitiveness against other energy sources. The two companies will move forward with the venture despite challenges from the U.S. Federal Trade Commission (FTC). If the partnership passes regulatory scrutiny, the two companies could benefit from improved dynamics in the coal market.

teck resources coal stocks

Source: Teck Resources Limited

Characteristics Of the Best Coal Stocks

There are a few things to consider when shopping for coal stocks, namely:

Valuation

Coal stocks generally have P/E ratios ranging in the low-to-mid teens.

Financial

Most coal companies pay decent dividends and yield double-digit returns on equity (ROE).

Investors

Look for companies with a large portion of institutional ownership.

Trading

The best coal stocks trade on high volume and have tight bid-ask spreads.

Understanding the Coal Market

Government and politics have the potential to influence coal prices.  Certain aspects of coal have been on the decline for years. For example, the public widely views coal as an environmentally harmful fuel source. Burning coal creates air pollution and emits carbon dioxide into the atmosphere.

However, coking coal is still in high demand because it’s an essential ingredient in steel production. Emerging economies, in particular, need coking coal to produce steel for their rapidly expanding infrastructure.

One of the best sources to find data on coal is the U.S. Energy Information Administration. It releases weekly data along with a slew of analysis and projections.

EIA data best coal stocks

“Impact Investing” Hurt Valuations

The rise of impact investing in the U.S. has led many firms to shy away from investing in coal projects, which has had an adverse effect on company valuations over the past few years. Wall Street doesn’t want to sully its public image, so many large firms fear the public outcry that could result from coal investments. Since the big money is hesitant to play around in this sector, valuations have tumbled in recent years. Now, you can find many coal stocks that have excellent value ratios and solid fundamentals. However, the ESG investing movement has almost guaranteed that you will never see runaway gains in these stocks.

Regulatory Risks

There is a significant risk that regulations could choke off the industry over the next few years. Climate change movements are gaining momentum in the U.S. and abroad, and the coal industry is number-one on their hit list. It could spell disaster for the U.S. coal industry if the Democratic Socialists gain more political influence over the next few years. Currently, regulatory risks are the biggest threat facing the coal industry.

Bottom Line

Coal stocks are best suited for long-term investors with an eye for value. These assets tend to have stable business models, high dividends, and strong balance sheets. However, the industry is facing significant regulatory headwinds over the next few years. If an unfavorable crop of politicians is elected, they could literally dismantle the industry. That could spell disaster for coal stocks. However, steel producers still need coking coal to make steel and other metals, and many regions rely on coal to produce their power. Until the politicians can find a way to replace coal entirely, there will always be a demand for this widely misunderstood commodity.

post-image

Best Infrastructure Stocks for Value and Growth

Larry Davidson - April 16, 2020

Infrastructure has been a hot topic on the stage of American politics over the past few years, and it’s one of the few issues that’s earned bipartisan support. The United States desperately needs to make a major investment in its infrastructure, and Washington knows it. Much of the nation’s infrastructure is over 50 years old and it will cost a lot of money to get everything back up to standards. An infrastructure spending bill is expected to pass through congress some time in the near future, and it could create a major opportunity for infrastructure stocks that manage to land government contracts.

The coronavirus outbreak slammed the brakes on much of the legislative agenda in 2020, but the country still needs to revive its crumbling infrastructure. Eventually, lawmakers must address the infrastructure issues and, when they do, certain infrastructure stocks stand to benefit tremendously. These companies are some of the top players in the sector

infrastructure stocks

American Water Works (AWK)

American Water Works is a public water and utility company operating in the United States and Canada. Founded in 1886, the company is the largest investor-owned water and wastewater services company in the U.S. The company’s large customer base and stable business model make it an attractive investment for many value investors. 

The company has continued with some expansion operations despite the pandemic. In April, American Water Works announced that its subsidiary, Illinois American Water, would continue with planned infrastructure projects. Illinois American Water currently provides water service to 1.3 million people and the firm wants to grow its customer base even further.

Pennsylvania American Water is another AWK subsidiary with expansion plans. It’s currently investing $14.2 million in three infrastructure projects across its service areas. The initiative will replace and upgrade water lines and other assets.

American Water Works is placing itself strategically to continue recording growth despite the current lockdown of most parts of the country. American Water Works’ stock has been performing well so far, and it could remain one of the top infrastructure stocks to keep an eye on this year.

Brookfield Infrastructure Partners (BIP)

Company management is confident that coronavirus will have a minimal impact on its business. Brookfield doesn’t operate in China and it sources most of its supplies from other parts of the world. All and all, Brookfield Infrastructure Partners says it has a positive outlook on for 2020.

This company is one of the largest diversified infrastructure firms on the planet. It offers services both domestically and abroad, and its asset portfolio includes a wide range of infrastructure assets. Brookfield could be a bastion of stability in the near future because its businesses are largely recession-resistant. This could be an interesting large-cap pick for infrastructure investors.

concrete stocks

NV5 Global (NVEE)

NV5 Global is a Florida-based leading provider of technical engineering and consulting solutions. The firm works with both private and public sector organizations to design and build large-scale infrastructure projects. Shares of NV5 performed well since the outbreak began and the performance could carry through an economic downturn.  

In March, NV5 Global was awarded two new contracts valued at $8 million. The firm will design two liquefied natural gas (LNG) projects for utility providers in the eastern U.S. One contract is for a $6 million LNG facility expansion, and the other is a $2 million project that will provide a boil-off compressor for another LNG facility.

NV5’s team of industrial hygenist is also helping clients confront the coronavirus threat. The company’s team of experts is working with various organizations to help them develop better health and safety protocols in order to mitigate the risk of a COVID-19 outbreak.

Vulcan Materials Company (VMC)

Vulcan is an Alabama-based company that principally produces, distributes, and sells building materials. The firm primarily focuses on construction aggregates, asphalt mix, and concrete. Vulcan is a major supplier of concrete for government projects, including highways, airports, and government buildings.

In March, Vulcan Materials elected a new director to its board. George Willis joins the company’s board of directors and will serve on the Audit and Safety, Health, and Environmental Affairs Committees of the Board.

Willis has 35 years worth of experience and expertise in the logistics industry. He formerly served as an operations director at UPS. The company hopes Willis will be a valuable addition to the executive team, and investors seem to agree. The stock performed well after the company announced the hire. 

Best Infrastructure Stocks: Closing Thoughts

Global demand for infrastructure is expected to increase over the next decade. A new middle class is emerging in developing economies and it could lead more people to move to urban areas. They will need new infrastructure to support them, so the outlook for infrastructure demand remains strong.

Infrastructure stocks are highly sensitive to politics and global economics, so you should pay attention to the news if you want to invest in this sector. The Stock Dork Cheat Sheet can keep you informed will all the latest stock market news, plus weekly watchlist, hot stock alerts, and much more. Click here to sign up today.

post-image

Best Biotech Stocks 2020: Our Top 10 Picks

Chris Dios - April 1, 2020

The biotech sector is known for raising pulses. Even the best biotech stocks can be very volatile assets, and most companies aren’t even profitable! Share prices are more influenced by sentiment than substance, so you can’t evaluate a biotech stock simply by glancing at financials. To truly understand where a company is headed, you need to know what’s driving the stock.

Most biotechs are small companies that focus exclusively on developing a handful of drugs. The fate of these companies is linked inexorably to the drugs they are studying. Millions of dollars go into researching and developing biotech treatments, and that money goes down the drain if the drugs don’t pass clinical trials. Unexpected bad results from trials can render a biotech company practically worthless overnight.

It’s a high stakes business but there are many opportunities for those who are willing to take chances. Biotech stocks can make huge upward moves when a clinical trial produces favorable results, and share prices can double or even triple in a relatively short amount of time. The margin between success and failure is razor thin in this industry. It’s a tough place for even the most informed investor to turn a buck, but you can make successful investments if you take the time to study companies you’re investing in.

Even the best biotech stocks can be an intimidating place to invest. With all the medical terminology and technical jargon, it can be a chore just reading about these companies. However, if you take the time to study the biotech stocks on your watchlist, you can spot the winners. Picking the right biotech stock can net you insane gains, but there are a dozen losers for every winner.

best biotech stocks

Biotech, Not Pharma

Don’t confuse the biotech sector with the pharmaceutical space. Biotech companies create drugs that are derived from living organisms. It’s the cutting edge of the drug development space. Biotech companies are producing ground-breaking medications for previously untreatable diseases, like Hepatitis C, cancer, and rare genetic disorders. Creating these drugs is capital-intensive and success is extremely uncertain. When comparing biotech companies for investment, make sure you are using similar businesses to make your comparison. Ratio averages differ significantly between the biotech and pharma sectors, so it’s like comparing apples to oranges. Be aware of the difference so you can accurately analyze the technicals behind each stock.

How to Play the Best Biotech Stocks

Study, study, and study some more. Don’t buy a company unless you know what they’re doing and how it’s coming along. This is an extremely complicated sector but you too can score big gains in biotech stocks if you take an educated approach. Biotech investors are a savvy bunch and your head needs to be in the game if you plan to keep up. Most of the best biotech stocks are high-growth, high-risk investments that should be approached cautiously.

Best Large-Cap Biotech Stocks

Pfizer (PFE)

best biotech stocks

One of the largest and most stable biotech companies, Pfizer is largely known as a big pharma player, but it has invested billions of dollars into its biotech business. This company is a corporate juggernaut, ranked 57th in Fortune’s 2018 ranking of largest U.S. corporations by total revenue. Pfizer’s scale makes it a pretty stable investment. It’s one of the few companies on the list that pays investors a dividend, and theirs yields 3.55%. Pfizer is a solid blue chip company, but most biotech investors are willing to risk more for a chance at big gains.

Pfizer has a ton of actively distributed products, and they also have a thriving clinical segment. Currently, Pfizer has 37 clinical-phase products developed from biological compounds. With so many clinical-phase drugs, the risk of failure is spread more evenly. Unlike smaller companies, Pfizer isn’t pinning its hopes on one or two products.

Amgen (AMGN)

Another massive corporation, Amgen boasts a market capitalization of over $110 billion. Amgen is a textbook biotech stock success story. If you had bought Amgen before the close on its IPO day, you would have paid 34 cents per share. Today, your shares would be worth over 500 times what you paid for them. Now, Amgen is a mature biotech company, but its stock doesn’t have the explosive growth potential it had while it was in its infancy. Amgen has been a steady long-term performer and they pay a decent dividend that yields 3.23%.

Amgen produces several popular drugs that treat a variety of diseases and genetic disorders. Most of their drugs are already being actively distributed to customers, so there is more certainty in this company than with smaller biotech developers. Currently, Amgen has six products undergoing the third phase of clinical trials, including Enbrel and Imlygic

Bristol Myers Squibb (BMY)

Bristol Myers Squibb is a large-cap biopharmaceutical firm that develops, manufactures, and sells therapy products across the globe. The company has been in the news lately after its acquisition of Celgene (CELG). Shareholders had a bad reaction to the deal at first, and movement formed amongst shareholders to vote down the transaction. The rebellion was eventually quelled and shareholders approved the transaction on April 12th, 2019.

It’s still unclear how the Celgene Acquisition will affect Bristol’s bottom line, so there is some uncertainty in this stock moving forward. However, that uncertainty has made the stock an excellent value in terms of price per earnings (PE) and price per earnings growth (PEG). At first, several prominent investors came out against the deal, but sentiment has been gradually shifting the other way. If you think Bristol’s acquisition of Celgene will be a success, the shakeup in share prices is a great buying opportunity for intermediate and long-term investors looking for value.

Best Small-Cap Biotech Stocks

best biotech stocksAkebia Therapeutics (AKBA)

Akebia develops and monetizes pharmaceutical therapies. The company focuses most of its efforts on developing treatments for kidney diseases. Its lead product – Auryxia – helps patients suffering from chronic kidney disease manage their phosphorus levels. Akebia is also developing a treatment for anemia associated with kidney diseases. The product is called Vadadustat and it’s currently in its third phase of clinical testing.

This company is operating at a loss, but they have collaborative agreements with other biotech companies across the globe. Uncertainty is a big part of an AKBA investment, but there are opportunities for huge rewards as well. The fate of Akebia’s flagship therapies will ultimately determine share prices.

Aerie Pharmaceuticals (AERI)

This company specializes in ophthalmic therapies for the treatment of glaucoma and other retinal diseases. Aerie is based in Durham, North Carolina and has a market capitalization of about $1.73 billion. The company’s flagship treatment is Rhopressa, daily eye drops that relieve elevated levels of intraocular pressure (IOP) associated with glaucoma. The company’s other mainstay product, Roclatan, has also been approved by the FDA. Roclatan is also a once-daily eyedrop, but it treats IOP associated with a different form of glaucoma.

The company has successfully obtained FDA approval for their first two drugs, and that reflects well on the Aerie research team. The company has obtained FDA approval to begin preclinical research on one of their newest drugs, AR-13503, and they have two other products in development as well. CEO Vincente Anido projects that the company will be making money by mid-2020, but nothing is certain in the biotech space.

Audentes Therapeutics (BOLD)

Audentes develops gene therapies for patients suffering from dangerous diseases caused by single-gene defects. Researchers at Audentes are developing treatments for X-Linked Myotubular Myopathy (XLMTM), Crigler-Najjar syndrome, Duchenne muscular dystrophy, and more.

One of their most promising drugs is Aspiro – or AT132. It’s being studied for the treatment of XLMTM and it showed promising results on its Phase 1/2 clinical trials. Using 48 weeks of follow up data, the clinical study concluded that treatment with Aspiro significantly improved the symptoms of several patients who took the drug.

Tandem Diabetics (TNDM)

Though it isn’t a traditional biotech company, Tandem is a leading developer of high-tech medical devices for insulin-dependent diabetes sufferers. Tandem is most known for its flagship product, the T: Slim X2 insulin pump. The pumps Tandem produces are packed with high-tech features. They can automatically adjust dosage with onboard AI, store therapy data securely on cloud servers, and much more.

Tandem opened its doors in 2006, but it’s still not profitable. Although they managed to squeak out a small $0.02 EPS during Q4 2018, the company has been under pressure to rein in its costs. Tandem is participating in an NIH-funded study to develop a hybrid closed-loop (HCL) system that uses treat-to-range algorithms that will enable pumps to apply insulin therapy more effectively.  

Nektar Therapeutics (NKTR)

Nektar is a mid-cap biotech company that develops treatments for cancer, chronic pain, and auto-immune diseases. Shares of Nektar have seen better days. In 2018, NKTR was trading above $100. Since then, it has been a rough ride for Nektar shareholders. The stock lost over 60% of its worth in the 52 weeks following the all-time highs. Share prices have been calming as of late, however, so this bear run could end up being a buying opportunity if Nektar can get it together.

Prescription opioid painkillers jump-started the American opiate epidemic, and heightened awareness has led to increased research into chronic pain treatments with lower potential for abuse. Nektar is one of the companies developing the next generation of chronic pain treatments. It is developing a partial analgesic opioid pain medication that is currently in Phase III trials for the treatment of moderate to severe chronic pain. Partial analgesics have less potential for abuse than full analgesic opiates, like oxycodone and heroin. It’s only one of several drugs the company is currently developing.

best biotech stocksNovocure Ltd. (NVCR)

Novocure is the only international biotech firm on our list of best biotech stocks. The company is based in the United Kingdom island of Jersey, and it has a market cap of about $4.2 billion. Founded in 2000, Novocure does business in several major international markets, including the EU and Japan. In addition to development, the company also manufactures and markets its drugs.

Currently, Optune is Novocure’s primary therapy product. Used to treat different types of solid tumors, Optune is a “Tumor Treating Fields delivery system” for adults with Glioblastoma. The company also has products undergoing clinical trials. It’s researching drugs for the treatment of diseases like brain metastases, pancreatic cancer, mesothelioma, and more.

iShares NASDAQ Biotech ETF (IBB)

If you want biotech exposure without biotech risk, consider buying an ETF like the iShares NASDAQ Biotech ETF from Blackrock. It’s a weighted fund that holds every company in the NASDAQ Biotechnology Index. The fund’s largest holdings include some of the best names in biotech. Its top three holdings are Celgene, Gilead Sciences (GILD), and Amgen. An exchange-traded fund like IBB allows you to reduce single-stock exposure while holding the best companies in the sector.

If you like the biotech sector and you think the industry will grow over the coming years, the IBB is a lower-risk way to play that trend. The IBB tracks the NASDAQ Biotechnology Index, so buying it is a great way to make a diversified investment in the whole sector. If you have a low appetite for risk but want biotech exposure in your portfolio,  the IBB is the type of biotech stock that you should be considering.

Closing Thoughts

The biotech sector is an exciting place to make an investment. These companies are on the cutting edge of the medical sector, and they are developing medications that are improving the quality of life for millions of people around the world. However, a noble pursuit is not necessarily a profitable one. The majority of biotech startups do not mature into profitable companies. Developing new treatments is expensive, so biotech companies tend to burn capital quickly. It’s not uncommon for small startups to close their doors because they simply ran out of money. The biotech sector takes the phrase, “here today, gone tomorrow” to another level.

If you’re going to invest in biotech, it’s extremely important that you do your homework. Learn about the businesses and the product pipelines before you make an investment. You need to understand the products, the clinical testing process, and the company’s business model if you want to get a complete picture of your investment. Fortunes are made and lost in biotech stocks, so it’s extremely important that you stay skeptical and informed. Buy quality companies and stick to your trading strategy if you want to make profitable trades in the biotech sector. With a little luck, you could be in the next biotech stock that explodes into new all-time highs.

What do you think of our picks for the best biotech stocks? What small-cap biotech stories are you following? Whatever you think, let us know by leaving a comment below.

post-image

Best Bluechip Stocks to Buy on the Dip

Chris Dios - March 23, 2020

It’s hard to think about buying when the market is in hysterics, but bear markets can create lots of long-term opportunities for patient investors. The COVID-19 sell-off knocked down valuations for many of the best blue-chip stocks on the market, so now could be a great time to build positions in your favorite companies. There’s no telling how long it will take for this correction to run its course, but you can be ready for the rebound by identifying your top buy candidates in advance.

bluechip stocks

Best Bluechip Stocks

These stocks are down significantly over the past few weeks and so are their valuations. As a result, these bluechip stocks are significantly better values than they were just a few weeks ago. Add them to your watchlist now and get ready to pounce in case the market starts to come back.

Apple (AAPL)

Apple is one of the most valuable companies on the planet for good reason. This company has over $207 billion in cash on hand.  With reserves like that, Apple is well-equipped to handle an economic downturn.

Unfortunately, profits are definitely going to take a hit next quarter. COVID-19 wreaked havoc on Apple’s supply chains in Asia, and Apple closed all of its retail stores to help curb the spread of the virus. Apple while probably miss its earnings estimates this quarter, and share prices could go down even further.

Apple is a great long-term holding, but don’t jump in too early. The stock market is overwhelmingly bearish right now, so there’s a good chance that Apple shares will be even cheaper in the near future.

Microsoft (MSFT)

Microsoft is another one of the country’s leading tech stocks, but it might fare better during a downturn than Apple. A large portion of Microsoft’s revenue comes from cloud-based services, so the COVID-19 disruptions shouldn’t hit Microsoft as hard as it will other companies. In fact, the massive influx of remote workers could give Microsoft’s cloud business a boost this quarter.

Despite solid financial footing, Microsoft is down with the rest of the market this year. However, it could go up quickly if the market starts to turn optimistic. Antitrust officials are taking a close look at most of the big tech companies, but Microsoft isn’t on their hit list. Plus, Microsoft’s Azure cloud business is starting to take market share from Amazon Web Services, so profits could continue to grow despite a likely recession.

If you can get Microsoft while it’s close to its bottom, it’s likely to be an excellent investment for years to come. Keep a close eye on this one.

disney bluechip stocks

Disney (DIS)

Disney has been a Dow component since 1991, and it’s one of the best bluechip stocks money can buy. Unfortunately, Disney had to shut down most of its major parks due to the risk of spreading COVID-19, but this company still has a lot going for it.

In addition to its parks and other properties, Disney is a blockbuster film-making machine. It controls some of the most valuable intellectual properties in show business, including Star Wars and Marvel Universe. Just last year, Disney launched its new streaming service, Disney Plus. With millions of people sitting in their homes because of government restrictions, Disney could generate a lot of revenues from digital movie sales and streaming subscriptions.

If the economy goes into recession, Disney’s media business could help it weather the storm. An economic downturn would likely hurt park attendance, but Disney’s other revenue streams could pick up the slack. In the long-run, this company will be just fine.

JPMorgan-Chase (JPM)

Chase is the undisputed king of the bank stocks. Despite historically low interest rates, the company consistently grew profits and revenues over the past few quarters. However, a recession is probably just around the corner, and a widespread economic downturn could have a major impact on a massive financial institution like Chase. Interest rates are practically zero, so Chase will have a hard time maintaining solid growth through a slowdown.

However, Chase is probably a good buy candidate as a long-term investment. It’s the leading U.S. bank, and it has one of the best strongest management teams in finance. Chase is one of the best bluechip stocks for a reason. It survived the depression and the ’09 financial crisis in one piece, and it’s a major player on the global financial stage. In terms of business fundamentals, you can’t beat Chase as a long-term holding.

Visa (V)

Even the major credit card stocks are taking a beating from COVID-19. However, Visa’s core business could get a lift from the coronavirus restrictions. After all, Visa gets paid transaction fees whenever someone uses one of its cards. Millions of people are stuck in their homes and many of them are shopping online. If they have to shop in person, many consumers are paying with their cards in order to avoid handling cash.

Thousands of people have tried new online delivery services since the outbreak began. Statistics suggest that many of these first-time shoppers will keep using these online services once the outbreak is over. Many online shoppers will pay with a Visa card, so the increase in online sales volume could benefit Visa in the long-term.

However, there’s a high likelihood that overall consumer spending will be down significantly as a result of the outbreak. Visa earnings will almost certainly take a hit this quarter, so there could be more pain ahead for shareholders.

restaurant stocks

McDonald’s (MCD)

Restaurants across the country are closed due to COVID-19, and McDonald’s had to restrict its operations to drive-through and takeout. However, McDonald’s could bounce back faster than other restaurant stocks once the restrictions are lifted. McDonald’s emphasizes affordability and convenience, so it’s one of the most recession-resistant restaurant stocks on the market.

When the economy slows down, many Americans start to cut back on eating out. However, McDonald’s fared better than other fast-food stocks during the last recession. Sometimes, an economic downturn will actually cause more people to eat at value eateries like McDonald’s as a cheaper alternative to higher-end restaurants.

Fast food definitely isn’t as exciting as cloud services or fintech, but it’s a tried and true business with a massive consumer market. After all, everyone has to eat, so the food industry is particularly recession-resistant

More Cheap Bluechip Stocks

These bluechip stocks would make great additions to any portfolio, but timing is everything during a bear market like this. Don’t jump into a trade just because you see the price went down so many points. You need to be patient and, most important, objective. Don’t let your bias pull you into a bad trade. Always do your due diligence by analyzing charts, financial data, and analyst reports so you know what to expect before you start building a position.

Follow all the latest buying opportunities in the newly redesigned Stock Dork Cheat Sheet. We will keep you up to date on all the latest stock market news, including hot stocks watchlist, buying opportunities, trading tips, and much more. Sign up today and get our 2020 Growth Stock Guide for free.

post-image

These Are the 5 Best Coronavirus Stocks

Chris Dios - March 12, 2020

Coronavirus hysteria is officially sweeping the country, and the stock market is bearing the brunt of its economic impact so far. Stocks have been locked in a steady downtrend for weeks, but some companies have managed to hold up against the onslaught. These surprisingly resilient stocks all have one key attribute in common, they stand to benefit from the hysteria surrounding the coronavirus outbreak. These so-called coronavirus stocks could outperform the overall market throughout the course of the next few months.

coronavirus stocks

The coronavirus outbreak is expected to have a major impact on the global economy.

COVID-19 Vaccine Stocks

The biotech firms are leading the race to develop an effective coronavirus vaccine. Whichever company can get there first will make a boat-load of money. These stocks are leading the charge towards a vaccine for COVID-19.

Inovio Pharma. (NASDAQ: INO)

Inovio is in the process of developing a vaccine for the novel coronavirus disease. The firm calls the treatment INO-4800, and phase-one studies should begin in April. Be aware that Inovio is a micro-cap biotech stock, so share prices could exhibit drastic reactions to both favorable and unfavorable headlines.

This company has lots of experience developing these types of vaccines. In fact, it already has a coronavirus vaccine in phase-two studies, but that vaccine targets Middle East Respiratory Syndrome (MERS), which is different from COVID-19. Inovio’s experience with coronavirus vaccines could give it a potential advantage in the race towards a viable preventative treatment.

Coronavirus Cure Stocks

Vaccines are preventative treatment, so they can’t help people that are already infected. As a result of the limited usefulness of vaccinations, many companies are trying to develop drugs that directly treat the disease instead. If one of these firms can roll out a coronavirus cure, their valuations will probably sky-rocket and so will their share prices.

Gilead Sciences (NASDAQ: GILD)

With a valuation of over $93 billion, this biotech stock is an absolute giant. Gilead is best-known for developing a breakthrough treatment for Hepatitis-C, and its experience combatting viral disease could prove to be very valuable in developing a COVID-19 vaccine. Right now, it has at least one potential treatment that’s already being evaluated as a possible COVID-19 treatment.  In February, Gilead revealed that its drug remdesivir is undergoing phase-3 clinical trials targeting COVID-19. These clinical trials could include as many as 1,000 patients.

The assistant director-general of the World Health Organization (WHO), Bruce Aylward, said that his organization believes that remdesivir has the potential to be an effective treatment. Hopefully, the treatment proves effective and Gilead can get it out to the public soon. However, RBC Capital Markets puts remdesivir’s chance of success at only 50%, and Gilead is such a large firm that a cure is unlikely to have as large an impact on share prices as it would for a smaller biotech firm.

facemask stocks

Demand for face masks and respirators have sky-rocketed since the coronavirus outbreak began.

Facemask Stocks

This spring’s hottest fashion accessory is a surgical mask. Pardon the dark humor, but it’s true. Individuals, government entities, and businesses are buying these things in droves. The mask-buying frenzy could benefit the companies that manufacture, distribute, and sell these products.

3M (NYSE: MMM)

3M is an industrial conglomerate that produces and sells hundreds of different products. However, the firm is particularly well-known for its line of protective face masks and respirators. Right now, there is an unbelievable demand for these types of products. Stores all over the globe are selling out of these protective products, so there is a significant gap between demand and supply. 3M is one of the largest companies with a notable presence in the face mask and respirator market, so it has the potential to bridge the gap by expanding the production of these products.

Facemasks and respirators might seem a bit trivial in the face of all this epic doom and gloom, but it’s important to remember that coronavirus concerns know no borders. This is a truly global problem, so the sheer scale of the market for these items right now is massive. Few companies have the capability to supply the international demand for protective products, but 3M is one of them. 3M is widely recognized as one of the world’s foremost producers of these types of items, so the firm also has brand recognition and perceived credibility on its side. The company could be a huge beneficiary of the global face mask shortage.

coronavirus on GDP

Volatility ETFs

It looks like the market is going to be very volatile for the foreseeable future. One way to capitalize on this is by buying VIX ETFs. These funds track the movement of the CBOE Volatility Index, which measures the spread between bullish and bearish bets on the market. Buying VIX ETFs is the easiest way to capitalize on volatility, but these stocks can also be very unpredictable at times. However, traders that time the market correctly could generate massive gains by trading VIX ETFs.

VelocityShares Daily 2x VIX (NASDAQ: TVIX)

This leveraged VIX ETF is one of the most aggressive ways to bet on volatility. It’s up well over 500% since the coronavirus crisis kicked into gear. However, like any leveraged ETF, this fund carries significant risks. This fund is very susceptible to after-hours gaps, so you could find yourself stuck with big losses without even having an opportunity to sell.

This ETF is not for the faint of heart. It is extremely erratic and it can fall just as fast as it rallies. However, traders who get it right could reap truly massive rewards. If you’re thinking about making a play on TVIX, compensate for the added risk by only purchasing a small, speculative position

More Coronavirus Stocks

The Stock Dork Cheat Sheet is the best source for the latest stock market and insights. Our team is always on the lookout for opportunities, especially during a bear market. We can help you win while the rest of the market is losing by showing you the best coronavirus stocks that no one is talking about. Signup today for free and start getting ahead of the market with the Stock Dork Cheat Sheet. It’s totally free, and you’ll even get our 2020 Growth Stock Guide just for signing up. Click here to get started now.

post-image

4 Restaurant Stocks to Buy in 2020

Larry Davidson - March 3, 2020

The food services industry is vast and diverse. Everyone needs to eat, so these companies have huge addressable markets. The best restaurant stocks have great service, tasty food, and a loyal customer base. Companies that operate in the restaurant space include full-service eateries, fast food chains, diners, and more.

Restaurant stocks suffered through a downturn in 2016 and much of 2017.  However, the industry has performed well since the Trump tax cuts went into effect. The restaurant industry is thriving under a historically strong U.S. consumer, and the recent growth in the sector suggests that it’s well along on its path of recovery.

TDn2K’S Restaurant Industry Snapshot revealed that growth was healthy for the industry last year and momentum is likely to continue in 2019.

These days, the restaurant industry is getting its best revenue growth through digital ordering options and delivery sales. Smartphones changed the landscape of the business over the past few years. Some analysts argue that 25% of all restaurant sales will be generated from online and delivery orders over the next four years. That’s roughly a $200 billion chunk of an industry that’s worth $800 billion.

Many restaurants are altering their value proposition to growing social trends like sustainability. The companies that incorporate cutting-edge digital innovations into their business model could grow faster than comparable rivals.

Here are four stocks that will likely outperform the sector.

restaurant stocks

McDonald’s has an international presence with a significant footprint in China, one of the world’s fastest-growing international markets.

McDonald’s (NYSE: MCD)

Known affectionately as Mickey Dee’s, McDonald’s is the world’s biggest food-service retailer. It has over 37,000 locations catering to an estimated 69 million customers daily in more than 100 countries. The stock delivered stellar earnings over the last few years, including 16 consecutive quarterly earnings beats. Meanwhile, shares are up 57% over the same period. McDonald’s has a proven track record for stability and industry-leading innovation.

McDonald’s global comparable sales growth has been positive for 13 consecutive quarters. In the last quarter, comp sales increased 4.2% globally to beat consensus expectations of 3.6%. Interestingly, much of McDonald’s recent growth comes from its revamped menu, which focuses on healthy eating and value prices. These menu changes highlight the agility of McDonald’s management and prove that the chain can make proactive decisions to maintain its competitive advantages.

Domino’s Pizza Inc.(NYSE: DPZ)

Domino’s Pizza Inc is one of the most popular pizza delivery and take-out restaurant chains in the world. Delivery service is a foundational part of its business model. The company has proven its resilience year after year, and its long-term growth narrative is still intact.

In its fiscal first-quarter earnings report. The company posted significant improvements across several areas of its business. Sales jumped 8% last quarter, marking a 4% gain from last quarter’s totals. Its franchise business model helped the company increase operating margins from 38% from 31%. The company plans to drive even more sales growth by expanding on its existing locations, but its long-term focus is penetrating deeper into the U.S. and international markets.

fast food stocks

Chipotle added carne asada to its menu in 2019 and the new dish helped fuel excellent sales growth last year.

Chipotle Mexican Grill(NYSE: CMG)

Known for its high-quality food, Chipotle Mexican Grill is a favorite destination for many diners. The company operates more than 2,400 fast-casual Mexican restaurants that feature freshly made burritos, tacos, salads, and more.

Chipotle’s average unit volumes are much higher than its competitors. In Q3 2018, Chipotle reported nine-month revenue growth of 9% while comp-store growth came in at 3.3%.

Former Taco Bell CEO Brian Niccol came on board in 2018, and his leadership helped turn the company into a perennial winner. Chipotle has been a Wall Street favorite for a few years now, but this company isn’t satisfied just yet. It plans to add between 140 and 160 new stores in 2019.

Starbucks Corp.(NASDAQ: SBUX)

Starbucks Corp. is the world’s leading marketer and retailer of specialty coffee worldwide. Starbucks cafes sell a variety of coffee and tea beverages, along with food and other beverages. The firm also sells consumer products, like packaged coffee and drinkware.

Starbucks also licenses its trademarks through grocery stores, food service companies, and other retailers. Within 47 years, Starbucks has grown from a single store into an $80 billion giant. It was named as one of the world’s most innovative companies in 2018.

Final Words

The four restaurant stocks profiled here have successfully revamped their menu, service, messaging, and physical store design. They’ve also adopted the use of consumer-facing technology to appeal to their consumer preferences. People will always eat, and they’ll spend more money on better food as their income increases. Buying restaurant stocks is one of the smartest ways to play the historically-strong U.S. consumer, and these companies are the best around. For more hot stock picks, click here to sign up for the Stock Dork Cheat Sheet.

post-image

The Best Gold Stocks to Buy Before a Downturn

Chris Dios - February 25, 2020

As the decade-long bull market charges ahead, many investors are wondering when the inevitable downturn is coming. It’s hard to say, but the market will certainly turn bearish at some point. Fortunately, gold stocks can provide a solid safety net in the event of a slowdown.  Investing in gold now, while the market is still running hot, could be a prudent move. However, the gold market is unique so there are a few things to consider before you start buying gold stocks.

How to Invest in Gold Stocks

When it comes to buying gold, investors have a lot of options.  

Making direct investments in physical gold is the most straightforward way to go. Direct investing involves purchasing actual gold bars or bullion. 

You can also invest indirectly with a variety of other financial instruments, including gold miner stocks and gold-focused funds.

If you’re an advanced trader, you can also use gold price futures or options to gain exposure to the yellow metal. However, this technique is complex so it should be reserved for more experienced investors.

gold stocks bullion physical

Why Buy Gold?

Many investors view gold as a hedge. It can provide valuable protection against an economic downturn, stock market decline, or inflation. Other benefits of investing in gold include portfolio diversification and risk reduction. On the downside, the asset class may significantly underperform during periods of sustained economic growth. Gold futures and options can be volatile and as such investing in gold stocks or funds is the more conservative approach for the average investor.

Best Gold Stocks

iShares Gold Trust (NYSE: IAU)

One of the ways to invest in gold is through a gold ETF. The iShares Gold Trust is one of the best mechanisms to get gold into your portfolio. It tracks the price of gold bullion, so it offers the same returns as holding physical gold. The IAU offers protection against inflation and gives you a way to invest in physical gold without stashing gold bars in your basement. The fund launched in 2005 and it’s generated a 10-year annualized return of around 3%, which outpaced inflation during that period. It is perhaps the most cost-effective way to invest in gold.

SPDR Gold Shares (NYSE: GLD)

State Street’s SPDR Gold fund is another great way to gain access to the price of gold. Gold bullion’s spot price is based on the supply and demand forces that dictate the 24-hour gold market. SPDR Gold Shares is also very liquid, and millions of shares trade on a daily basis. 

Gold Mining Stocks

Gold miners typically have more upside than gold trusts. However, they also have more inherent risks. These businesses tend to perform well when gold prices go up, but there is always the chance that they can encounter other operational issues that impact share prices. 

Barrick Gold (NYSE: GOLD)

Barrick Gold, the world’s largest gold mining company, has several interesting growth projects spread across five continents. However, its gold exploration plans are largely focused around Nevada. The exciting new Turquoise Ridge, Goldrush, and Cortez Deep South projects are slated to start production in 2021. 

Barrick’s recent merger with Randgold formed a gold powerhouse. The deal gave Barrick ownership of five of the top-ten gold mines in the world, and the company has the lowest cash-cost position in its peer group.  Moreover, the company’s joint venture with Newmont Goldcorp is expected to generate significant cost synergies. Together, their combined Nevada operations could become the largest gold production complex on the planet.

Franco Nevada (NYSE: FNV)

Franco Nevada is a Canadian gold mining stock. It makes money from a series of agreements, including net smelter royalties and output pacts with gold mining properties. The firm is primarily focused on generating revenues from gold and other precious metals. It also invests in silver, platinum, oil, and gas, so it’s one of the most diversified gold miners.

 The company’s much-touted Cobre Panama project went live this year, and it’s expected to add 40,000 ounces of gold to its annual production. Franco-Nevada’s roughly half-million gold equivalent ounces (GEOs), royalty agreements, and business diversification make it a unique gold mining stock.

US gold production

Investing in Gold

Gold can protect your portfolio from market volatility because it’s a relatively stable asset. Positions in gold typically perform well when investors aren’t confident in traditional currencies. Investors lose confidence when things aren’t going well.  Geopolitical tension, war, and poorly performing markets can all create uncertainties that may cause gold prices to rise. Ultimately, gold stocks can protect investors from economic uncertainty and volatility.

Gold prices rose 18% in 2019, marking the highest annual increase since 2010.  Low global interest rates and economic uncertainty helped fuel the rally. In fact, gold outperformed most short-term asset classes last year, and it even managed to post better returns than emerging markets. 

The outlook for gold stocks remains bright heading into 2020. Gold typically performs well during periods characterized by low-interest rates and uncertainty. Dovish central bank policy and lingering economic risks could support gold stocks for at least the next year.

Like Treasury bonds, gold is a safe haven asset, so traders often buy gold when they are worried about the global economy. The ongoing U.S.-China trade dispute, coronavirus outbreak, and other uncertainties could make gold more appealing.  Trade issues seem to be moving towards a resolution, but the Federal Reserve is taking a loose stance towards monetary policy and the coronavirus is still spreading throughout Asia. Combined, these uncertainties could support higher gold prices over the next few months. 

US Gold consumption

Industrial Use of Gold

Gold has more uses than you think. It’s an integral component of many sophisticated electronics, computing equipment, and high-end audio/video equipment. Gold also has a variety of industrial uses.

As a result, spot prices can be affected by the supply and demand for industrial-use gold. The vast majority of gold is held for value, but fluctuations in industrial demand for the element can have some effect on prices.

How To Get Exposure To Gold

Now, there are many ways you can gain exposure to the gold market. The first is buying physical bullion. However, most investors don’t really want to bother with storing and securing physical gold. Also, it’s harder to buy and trade than stocks.

You can also trade gold futures through your broker, but margins are relatively high. It’s not suitable for smaller trading accounts.

The easiest way to buy gold is through the stock market. The SPDR Gold Shares ETF (GLD) tracks the spot price of gold bullion.  It’s the most popular investment vehicle for most traders.

But if you’re looking for better returns, your best bet is in individual gold-related stocks.

Gold stocks come in a variety of flavors, including miners, junior miners, and developmental-stage gold miners. There are even a few gold miner penny stocks. However, these smaller companies tend to be uncertain investments.

Finding and extracting gold is not cheap, so you need to do your homework when screening for gold stocks. It takes time and money, so you want to look for firms that are well-capitalized and have little to no debt. Also, avoid companies that do the majority of their business in politically unstable countries.

Gold Stocks: Closing Thoughts

Market downturns are unpredictable, but the market will invariably turn bearish at some point. Buying gold stocks before the swoon begins is a prudent move for risk-minded investors. Gold stocks lower portfolio risk and protect against rising inflation. 

Gold stocks are an important part of any well-balanced portfolio. Miners offer a higher risk-reward ratio, but ETFs are a slower and steadier bet. Either approach can help you bunker down and protect your wealth. Gold stocks can even outperform the market during difficult times.

For more on gold stocks and the latest hot stock alerts, sign up for the Stock Dork Cheat Sheet today. Our easy-to-read reports will help you navigate the market and become a better trader. Click here to sign up now and get our 2020 Growth Stock Guide for free!

post-image

Stabilize Your Portfolio With Insurance Stocks

Chris Dios - February 19, 2020

Insurance companies offer various types of property-related and health insurance products. Many of these companies are available on the stock market, so you can invest in them directly. However, the insurance business can be complicated, so identifying the best companies is not an easy task. This sweeping overview of insurance stocks will help you get started on the right foot. 

We’ve laid out all the most important facts and figures so you can get a feel for the sector, and understand what you’re dealing with. Our insurance stocks report includes a complete analysis of the best health and car insurance stocks available on the public market.  You’ll also find a breakdown of all the most important factors you should consider before investing in insurance stocks.

Investing in Insurance Companies

If you are a long-term investor, then insurance companies are right up your alley. Insurance stocks are usually low-volatility investments that can provide steady returns over long periods of time. Many insurance companies also pay decent dividends, adding another incentive to buy and hold these stocks for the long haul.

health insurance stocks market share

The insurance sector is also a favorite amongst value investors, including the world’s most notable value investor, Warren Buffet. Buffet is a major player in the insurance sector. He owns controlling stakes in several notable insurance firms, including GEICO, and his company, Berkshire Hathaway, is very active in the insurance industry as well. 

Buying insurance stocks might not be as exciting as investing in the tech sector, but these slow-and-steady gainers can play an important role in a well-balanced portfolio.  Insurance stocks probably won’t sky-rocket like high-growth tech stocks, but they tend to be more predictable and stable.

Best Health Insurance Stocks

SymbolNameMarket Cap ($ Billions)Insurance Type
RLIRLI Corp.4.31Life and Non-Life
UNHUnited Health286.31Health
GLGlobal Life11.98Life and Health
THGHanover Insurance Group 5.29Life
CINFCincinnati Financial18.76Life and Non-Life
METMetLife48.08Life and Non-Life
UNMUnum Group6.09Health

United Health Group (UNH)

United Health is the world’s largest health insurance company by market cap, and health insurance sales comprise over 80% of its total revenues. UNH is an excellent value pick. It has a low P/E ratio, steady earnings, and a rock-solid business model. However, it could be very sensitive to political headlines around the 2020 election because it’s such a prominent insurance stock. Healthcare is expected to be a major issue on the campaign trail this season, and United could be very volatile, depending on who gets the Democratic nod. 

Globe Life. (GL)

Globe Life provides healthcare for middle-income households across the US. The company divides its operations into four separate divisions: life insurance, supplemental health insurance, annuities, and investments.  Share prices have performed well over the last few months. However, it missed its earnings estimates for the final quarter of 2019. It pays only a small dividend yielding 0.63%, but its chart shows a strong uptrend which could continue well into 2020.

property insurers by market share

Car Insurance Stocks

The vehicle insurance industry operates much differently than the health/life sector. Costs associated with vehicles, homes, and properties can be a little more predictable. Also, healthcare reform is a major issue on the campaign trail this year, so the ups and downs of the presidential election could create significant headline-related volatility for health insurers. Property insurers are less susceptible to headline risk so, all and all, these car insurance stocks could be more stable than the major health insurance stocks.

Berkshire Hathaway’s GEICO 

The second-largest automobile insurance writer, GEICO, isn’t traded publicly, but it’s a subsidiary of Berkshire Hathaway. With industry maven Warren Buffet at the helm, Berkshire is an incredibly stable investment. Class A shares (BRK.A) are among the world’s most expensive stocks but, with the increasing availability of fractional-share trading, even low budget investors can buy a piece of the Berkshire empire. However, if you’re looking for dividends, look elsewhere. Berkshire only paid one dividend and it was back in 1967.

SymbolNameMarket Cap ($ Billions)Insurance Type
AIZAssurant8.64Mortgage, Renter's, Property
BRK.BBerkshire Hathaway555.69Automobile, Property, Renter's
PGRProgressive49.02Automobile, Property, Renter's
NMIHNatl. Mortgage Insurance Holdings.2.00Mortgage, Renter's, Property
ESNTEssent Group5.12Mortgage, Renter's, Property
ALLAllstate18.76Automobile, Life, Property

Progressive Corp.

 Best known for its quirky advertisements, Progressive is one of the largest vehicle insurers in the US. It’s a large-cap company that’s currently valued at over $48.7 billion. In addition to personal and commercial car insurance, Progressive also offers residential insurance and other specialized property-casualty insurance. 

In terms of P/E, Progressive appears to be an excellent value. It’s current P/E ratio is only slightly above the industry average at the moment, and that’s a bargain valuation considering the firm’s position in the national car insurance market. Progressive pays a small, 10-cent dividend on a quarterly basis. However, it recently paid a special dividend of $2.65, bringing its total TTM dividend yield to 3.16%. This stock looks like a strong value pick that could 

Other Insurance Stocks

Assurant Inc. (AIZ)

Assurant offers a wide array of property-related insurance products, including mortgage, renter’s, and property. They even insure mobile devices and other electronics. This stock has been an excellent performer as of late and grew steadily last year. However, it’s  P/E ratio has become relatively high at 24.40. That’s significantly higher than the industry average of 13.52. Assurant pays a 1.78% dividend which is below the market median. The company closed 2019 with a miss on earnings, but share prices recovered quickly. At current price levels, Assurant’s valuation is becoming stretched. However, it’s been rallying since the start of February 2020 and the momentum could help it follow through on its uptrend from last year. 

US premium growth

Understanding the Insurance Market

Like banks, insurance involves a lot of risk in its business. They transfer the risk of many individuals to a single company in exchange for a premium. This pool of risk then gets redistributed across a larger portfolio. The best part about this business is the huge floats, i.e., the combination of the advance premium paid against the risk and the future payout claims. This float is used to generate investment income. 

Insurance is a unique business. Basically, insurance companies gamble that they can make more in premiums than they will payout in coverage. It’s a finesses business, but you should consider the following factors when evaluating an insurance stock investment.

  • Is the company utilizing emerging and disruptive technology?
  • Does the company have a strong brand image?
  • Does it offer innovative products?
  • How well does the firm manage regulatory pressure?
  • Is the operation efficient in terms of margins? 

Also, there are some metrics that you should be aware of before you start evaluation insurance stocks. These ratios are commonly used in the industry to measure a company’s financial health and business performance.

Persistency Ratio

The persistency ratio is an indicator of revenue flow and customer retention. It measures continuing policies that have carried over from the previous year. 

Embedded Value

This ratio is similar to price-to-book-value (P/B). EV measures a company’s actual asset value in comparison to its share price. Unlike P/B, EV’s value measurement also includes future profits along with adjusted net asset value, so this metric is better-suited for evaluating insurance stocks.

Combined Ratio

This ratio measures underwriting performance. First, it takes all claim-related and business losses. Then, it divides that figure by premium earnings over the same period. This metric basically tells you how successful a company’s ‘gambles’ have been. A figure over 100% indicates profitability, while ratios below that benchmark indicate poor underwriting performance and financial losses. 

Insurance Market Size

According to a 2019 study, the market size of global life insurance in 2018 was $2600 billion. It is likely to hit $3526.8 billion at 7.9% CAGR by 2022. Insurance companies hold a lot of their assets in treasury bonds, so low-interest rates could have a negative impact on earnings this year. However, the overall outlook remains strong for the industry at large.

Insurance Stocks: Closing Thoughts

Insurance stocks are great value holdings and they can be an excellent defensive holding for many investors. Although they lack strong growth attributes, they compensate for it by offering stability and a higher level of certainty. Insurance stocks also make great hedges against possible economic hiccups, so they could get a boost if the market starts to take a turn this year. If you’re not holding any insurance companies, you should consider allocating a portion of your assets to this industry. 

To keep up with all the latest stock market news, sign up for the Stock Dork Cheat Sheet today. It’s your quick and easy guide to everything going on in the market. Join today and get our 2020 Growth Stock Guide FREE.

post-image

These Airline Stocks Could Be Great Buys in 2020

Chris Dios - February 11, 2020

Air travel has become the preferred form of long-distance travel for millions of people across the planet. With over 2.6 million passengers flying in and out of U.S. airports every day, it takes hundreds of airlines to meet the demand for air travel worldwide. Some of the largest airlines in the world are American companies, but many smaller operators are interesting investment opportunities too. Our picks for the best airline stocks include stocks from both large-cap and small-cap operators.

The airline industry is a tough place to do business. Pricing is extremely competitive and fuel costs comprise a huge portion of operating expenses. Even a small jump in jet fuel prices can have a huge impact on earnings. In most cases, airlines are working on razor-thin margins, and they encounter pressure from labor disputes. In fact, labor is the airline industry’s number-one cost, on average, so collective bargaining negotiations are a major part of the business. There’s a lot of operational uncertainty facing the average airline, so successfully investing in airline stocks is no simple task.

airline stocks net profits

Best Airline Stocks for 2020

American air carriers are some of the largest airlines in the world. Shares of these larger airlines offer some of the best airline investment opportunities available to traders.

Delta Air Lines Inc. (DAL)

Delta runs both international and domestic passenger flights; maintaining a fleet of about 800 aircraft. It operates hubs at airports across the world that serve as the framework of their flight offerings. Delta also provides maintenance & repair services for aircraft fleets.

The company is working on new products that it hopes will improve its margins, like premium lounges for high-paying customers. Its partnership with Air France, Virgin Atlantic, and KLM could also help Delta make its operations more efficient this year.

american airlines 737

American Airlines Group (AAL)

One of the largest airlines in the U.S., American Airlines runs over 7,000 flights to more than 350 destinations in 50 different countries. American Airlines became the largest carrier in the U.S. when they absorbed U.S. Airways several years ago.

American Airlines Group has recently partnered with GOL, an airline company in Brazil. The partnership will open up 20 new destinations in South America, making it a massive deal for American Airlines Group. With such developments, American Airlines Group could be a great stock to consider for this year.

United Airlines Holdings (UAL)

With a fleet of over 1,329 aircraft, United Continental is one of the largest aircraft operators in the world. In addition to providing passenger flights to destinations around the world, United uses its mainline and regional operations to transport cargo. They also sell fuel, maintain aircraft, and provide ground upkeep services for third-parties.

SkyWest Inc. (SKYW)

Despite being a small-cap company, SkyWest is a major airline in the U.S. They currently operate 68 different routes utilizing 10 hubs that they lease through third parties, like Delta and American. The company makes a significant portion of its revenues through codesharing agreements – a common practice in the airline industry – in which SkyWest is paid to operate and maintain aircraft used on flights that are marketed and scheduled by a partner airline, like American and Delta.

JetBlue Airways Corp (JBLU)

JetBlue Airways, popularly known as JetBlue, is a major American low-cost airline. At the moment, it is the sixth-largest in the United States by passengers carried. Their headquarters is in New York but they maintain other offices in Utah and Florida. JetBlue offers flights to more than 90 destinations.

Their biggest attraction remains free inflight entertainment, free brand-name snacks and drinks, and lots of legroom. JetBlue’s stock has been performing well so far in 2020 following an interesting 2019. The increase in bag-check fees could factor into the performance of JetBlue this year.

Spirit Airlines Inc. (SAVE)

Spirit provides low-cost air travel for passengers flying within the U.S., Carribean, and South Americal. This airline is the seventh-largest commercial airline in the U.S., and its offering of low-priced fares has made it a favorite amongst frugal flyers. The airline runs about 600 flights daily to 72 destinations within and nearby North America.

Spirit Airlines is one of the fastest-growing airline companies in the world. it increased its capacity by 16.6% last year, and it plans to expand available seat miles by 17% to 19% in 2020. The extra capacity could improve margins and generate more revenues for Spirit.

Southwest Airlines Co. (LUV)

Southwest primarily runs domestic flights passenger flights services to 99 destinations in 40 different states. The company also offers international flights to a handful of destinations in the Caribbean and Central America, but it offers no transoceanic flights to Europe or Asia.

Small-Cap Airline Stocks

These smaller airline stocks have more inherent uncertainty than their larger counterparts, but they also can have greater growth potential than established airlines. These are the best airline stocks to buy if you’re looking for high-growth opportunities.

Alaska Air Group (AIR)

Alaska Air Group owns two domestic airlines: Alaska Airlines and Horizon Air. They also have an aircraft ground handling company, McGee Air Services.

The increase in traffic and capacity over the past few months could be vital in driving the company forward in 2020. If it maintains this momentum, it could be a promising small-cap airline stock to consider this year.

Air Transport Services Group, Inc. (ATSG)

Another small-cap airline stock you could consider is Air Transport Services Group. They are an aviation company that provides air cargo transportation and related services to air carriers. They also offer cargo services to companies looking to outsource.

Understanding the Airline Industry

Many investors look at the airline industry as a minefield. The sector had tons of bankruptcies between 1980 and 2000, so investors got gun shy about buying airline stocks.

However, regulatory changes over the past two decades stabilized the sector and allowed it to flourish. Numerous mergers and acquisitions have seen the aviation sector become one of the strongest in the country.

At the moment, airline companies usually deal with two significant issues: rising fuel costs and labor costs. As an investor, you have to consider a few things before you invest in this sector. During a recession, airline companies take a hit as companies schedule fewer business trips and people take fewer vacations due to costs. Thus, you have to consider the economic outlook before you invest in airline stocks.

Also, airline stocks are highly reactive to the prices of crude oil. A drop in oil price usually leads to an increase in the value of airline stocks as they get to enjoy a reduction in operational costs. As an investor, you also have to consider the possibility of acquisitions or mergers. The airline sector has seen one of the highest numbers of acquisitions and mergers in recent years. This is because companies in this sector realized they are more efficient when they combine.

Airline Industry Analysis

The airline industry faces uncertainties so significant that they make or break profits, but you can find good value in airline stocks if you do your homework. If you want to learn how to spot quality airline stocks, here are some performance metrics commonly used in the airline industry.

Available Seat Mile

(total number of available passenger seats) x (total number of miles flown)

This number is used to measure an airline’s capacity. It tells us the airline’s total revenue-generation capacity for the period in question.

Revenue Passenger Mile

(number of revenue-generating passengers) x (miles flown)

This figure tells us many paying passengers attended each flight per mile. When compared with the available seat mile, it shows how efficiently an airline is filling its flights.

Revenue Per Available Seat Mile

(total revenues) ➗ (number of available seats)

Revenue per available seat mile measures how well an airline is monetizing its available seats.

The most efficient airlines tend to be the most successful. Good operating margins give airlines more flexibility in the case of elevated costs. With higher margins, airlines can absorb increased costs and still turn a profit. Remember these three ratios when you are analyzing airline stocks so you can form a clear picture of each airline’s business performance.

Airline Industry Overview

Domestic airlines in the US have been experiencing an annual growth of 3.2% between 2015 and 2020. During that time, the market grew by an astonishing $146 billion. In 2020, experts believe the airline sector will expand by 0.7%.

The global airline sector expanded dramatically over the past two decades. In 2003, the total market size of the worldwide airline sector stood at $322 billion. However, it expanded by more than $500 billion since then to reach $872 billion in 2020.

worldwide airline profits

The largest markets for air travel are the United States, Brazil, China, and the European Union, but the US lays claim to the busiest airport. Hartsfield–Jackson Atlanta International Airport, in Georgia, handles over 104 million total passengers each year. London’s airport system is also one of the world’s busiest by passenger count.

When it comes to annual revenues, US airlines still lead the way. American Airlines, Delta Air Lines and United Continental Holdings currently generate more revenue than other airline companies across the globe.

Airline Industry Trends

Mergers and acquisitions have become a popular trend in the airline sector. Companies realize that they are more effective when they combine their resources. Due to the mergers and acquisitions, the number of businesses in the international airline industry has dropped from roughly 260 in 2010 to 233 in 2020.

Low-cost carriers are also becoming more popular. Value flights have become more common because they are more affordable for passengers and they allow companies to service more locations. In 2016, the global low-cost airline market was valued at around $117 billion. That figure has been rising and is set to reach $207 billion by 2023.

These cheaper fliers are mostly passenger airlines that offer cheaper rates than traditional airlines. More companies are exploring the value flight space as an option to boost revenues and offer more flights.

Air Carrier Stocks: Closing Thoughts

For more on the best airline stocks, you should subscribe to the Stock Dork Alerts. Our reports are written in plain English, so they’re easy to understand. Sign up today and get our 2020 Growth Stock Guide for free when you join. Click here to join and claim your copy now.

post-image

The Best Pharmaceutical Stocks May Surprise You

Chris Dios - February 7, 2020

Pharmaceutical stocks are a major component of just about any balanced portfolio. America’s pharma industry is responsible for some of the biggest healthcare breakthroughs in history. However, they don’t all trade the same. Most major pharma stocks are slow-and-steady assets that offer decent dividends. On the other hand, small-cap drug stocks can be extremely volatile, but they can generate incredible returns in a short time. Whether you’re a long-term investor or speculative trader, you can find dozens of quality opportunities in the pharmaceutical sector.

Best Pharmaceutical Stocks to Buy Now

Pfizer Inc. (PFE)

Pfizer is one of the largest multinational pharmaceutical corporations on the planet. It operates in virtually all countries across the globe. Pfizer develops, manufactures, and markets drugs and healthcare products. Its global portfolio features a both drugs and vaccines.

AbbVie Inc. (ABBV)

AbbVie is an Illinois-based company that originated as a spin-off of Abbott Laboratories in 2013. They actively carry out research, develop, manufacture, and distribute drugs. They tackle today’s health issues, ranging from life-threatening illness to chronic conditions.

The company has been making progress with its RINVOQTM drug. They also reported positive developments regarding Allergan, which AbbVie aims to acquire. Positive developments on both ends could make AbbVie an even more attractive pharmaceutical stock.

Eli Lilly And Co (LLY)

Eli Lilly develops,  manufactures, and markets pharmaceuticals. The firm offers drugs for human and animal use.

Eli Lilly has been making available a few drugs such as REYVOW™ (lasmiditan) C-V. It is also working on clinical trials for a few other medicines. The development of new drugs for conditions such as migraines, diabetes, and more would help boost demand for its products.

Bristol-Myers Squibb Co (BMY)

Bristol Myers Squibb focuses on discovering, developing, and delivering innovative medicine to patients with serious diseases. The New York-based company is famous for its work with rheumatoid arthritis, diabetes, arthritis, HIV/AIDS, and more.

Novartis AG (NVS)

Novartis is one of the largest Pharma companies in the world in terms of both market cap and annual sales. The company manufactures generic drugs, over-the-counter drugs, vaccines, diagnostics, contact lenses, and more.

Novartis’s partnership with the likes of Gilead will help them explore new areas. Thus, making it highly likely that they record growth this year.

Cheap Pharmaceutical Stocks

Alimera Sciences Inc. (ALIM)

The Georgia-based company specializes in the commercialization and development of prescription ophthalmic pharmaceuticals. Alimera mainly focuses on drugs for diseases affecting the back of the eye, or retina.

The company works on serving our aging population, ensuring that its drugs correct the eye defects older people have.

Adamas Pharmaceuticals Inc. (ADMS)

Adamas Pharmaceuticals has become famous for developing and manufacturing pharmaceutical products for chronic neurologic diseases. The patent litigation with Sandoz Inc. has been settled and the company announced a new employment inducement grant. These latest developments could be key to Adamas building a strong portfolio for the remainder of the year.

Adamas Pharmaceuticals had a rough run last year, but it’s starting to turn things around in 2020. It’s very affordable and could record profits before the year is through.

Pharmaceutical Penny Stocks

China Pharma Holdings, Inc. (CPHI)

China Pharma Holdings is a Chinese company that trades on the NYSE. The firm manufactures and markets a wide range of products in China. Their primary markets are hospitals and retailers. Their drugs focus on cardiovascular applications, brain diseases, and infectious diseases. In addition to manufacturing and marketing, China Pharma Holdings has a very active research and development unit.

China Pharma sells several types of products, including prescription drugs, OTC, and nutrition products. Its drugs can be found in over 30 provinces and regions across China.

Agile Therapeutics Inc. (AGRX)

Agile Therapeutics regards itself is a forward-thinking women’s healthcare company. Their primary focus is to fulfill the unmet health needs of women. The firm offers female contraceptive options that don’t involve taking daily pills.

Acasti Pharma Inc. (ACST)

Acasti Pharma Inc. is a Canadian pharmaceutical company that trades on the NASDAQ exchange. This firm is a strong proponent of omega-3 fatty acids derived from krill oil. According to their official website, omega-3 fatty acids are a safe and effective means of lowering triglycerides in patients suffering from hypertriglyceridemia.

Investing in Pharmaceutical Companies

The pharmaceutical industry is very unique. It’s highly regulated and technical, so it can be intimidating for newer traders. However, you can find a lot of quality trade opportunities if you take the time to understand the industry.

Branding

In the pharma industry, the clock starts ticking as soon as a new drug hits the market. Drug firms have 20 years to take advantage of their exclusive patents, then it becomes a free-for-all. Pharma companies get the best margins on branded medication that is under patent. Patents give pharma firms pricing power, so they usually generate excellent returns from these drugs. Pharmaceutical firms have to constantly roll out new branded drugs if they want to maintain high margins.

Product Pipelines

Investors pay a lot of attention to product pipelines. Pharma stocks with a lot of promising drugs in development often support higher much higher valuations. Product pipelines are one of the most important aspects of a drug companies future, so long-term investors should pay close attention to product pipelines.

Market Presence

Although the United States remains a leading country in terms of pharmaceutical revenues, the global pharmaceutical market has been witnessing massive growth over the past few years.

A report from IQVIA shows that the global pharmaceutical market was worth $1.2 trillion in 2018. The market is set to reach around $1.3 trillion by 2023. Thus, as investors, you could also look at pharmaceutical companies and their market presence.

crm best pharmaceutical stocks

Source: Consumer Reports

Pharmaceutical Industry Overview

The pharmaceutical sector is responsible for the development, production, and sales of medications. Obviously, this is an extremely important part of the economy that directly impacts the quality of life for billions of people across the globe. The importance of this industry cannot be overstated.

The global pharmaceutical market grew significantly over the past two decades. In 2001, global Pharma sales were around $390 billion. That figure reached $1.2 trillion in 2018, and it’s expected to climb even higher over the next few years.

pharmaceutical industry market value

Worldwide Pharmaceutical Market Revenues [in billions of $]

The leading pharmaceutical companies are based in the United States and Europe. Pfizer is one of the most notable pharma firms on the planet, with over $53 billion in revenues 2018. Other top American pharma stocks include Johnson & Johnson, AbbVie, and Merck & Co.

On the international front, Europe has its own class of top-rate pharmaceutical companies. Some of the leaders in the European pharma industry include NovartisGlaxoSmithKline (GSK), AstraZeneca, and Sanofi.

Pharmaceutical Industry Trends

Drug companies need to constantly innovate in order to earn consistent profits. Federal law stipulates that drug patents become public domain after 20 years, so drug companies need to keep rolling out new patents in order to support their high margins. This constant pressure to innovate leads to significant spending on research and development. In 2010, the pharma industry spent $129 billion on R&D. This figure grew to $182 billion in 2019 and is expected to reach $213 billion by 2024.

Artificial Intelligence

Pharma companies are starting to leverage AI in drug development and research. These applications can crunch billions of data points much more rapidly than was previously possible. AI has the potential to significantly reduce development time and research costs. In a few years, AI technology could totally transform the pharma sector

How to Trade Pharma Stocks

When it comes to pharma stocks, it’s all about the pipeline, especially for small-cap pharmaceutical stocks. However, the drug industry is highly regulated, so new medications need to undergo an extensive review process before they hit the public market. In order to be approved, drug companies must put their products through a series of FDA-regulated clinical trials to prove the drug’s effectiveness and safety.

This is where things get tricky. No one can predict how clinical trials will play out. This creates significant uncertainty for pharma investors. The FDA review process includes three phases of clinical trials. New drugs must pass through each stage of the process before the FDA will consider approving them.

On any given week, there could be dozens of high-stakes clinical trials unfolding across the country. Each trial can be a catalyst for drastic movements in share prices. If a trial goes unexpectedly well, it’s not uncommon to see a small-cap pharma stock double in price overnight. On the other hand, bad results can bankrupt companies in a matter of days.

How to Follow Clinical Trials

If you want to trade pharma stocks successfully, you have to follow clinical trials. They are so important that there are entire websites devoted to tracking them. These types of resources can be a tremendous value for pharmaceutical investors.  One website that can help you keep track of all the latest pharma stock news is BioPharmCatalyst.  The site has an FDA calendar that breaks down all of the latest clinical trial news, so it’s a great resource for traders who want to stay on top of the market.

bc best pharmaceutical stocks

BioPharmCatalyst.com

Bottom Line

The best pharmaceutical stocks have a strong and steady product pipeline. For large-cap pharma stocks, look for companies with lots of free cash on the sidelines. Large pharma companies will often buy out smaller firms for the sake of acquiring their drug patents and intellectual property, so extra cash can make all the difference in this industry.

On the small-cap side, look for companies with high-potential product pipelines. These smaller firms have the best chance at clinical trials and they’re also major acquisition targets for the larger firms. Either way, they have the potential to skyrocket if they can come up with a promising new drug.

A word of caution though, most pharma startups never make it. These firms go bankrupt all the time. Investing in small pharma startups is like playing the lottery. Even professional traders with decades of experience have a hard time getting it right. However, when you pick a winner, it pays off big.

More On the Top Pharma Stocks: Closing Thoughts

Pharmaceutical stocks have been delivering significant returns to investors over the years. However, choosing the best pharmaceutical stocks to trade is a massive task for some investors. If you’re ready to learn more about the best pharmaceutical stocks, you should subscribe to the Stock Dork Alerts. We provide traders with a steady stream of stock market news and analysis that will help keep them informed on everything happening in the world of Wall Street. Plus, our reports are written in plain English, so they’re easy to understand. After just a few weeks reading Dork Alerts, you’ll sound like the smartest guy at the water cooler. Sign up today and get a jump on the New Year with our 2020 Growth Stock Guide, it’s yours free when you join. Click here to join and claim your free copy now.

post-image

NASDAQ ETFs That Should Be In Your Portfolio

Hassan Maishera - January 30, 2020

The NASDAQ is one of the premier stock exchanges in the world. Some of the most valuable companies in the world trade on this exchange, including GoogleApple, and Microsoft. NASDAQ ETFs allow investors to hold the exchange’s top stocks without spending thousands to buy individual shares. The accessibility of ETFs, combined with the emergence of the US tech industry, makes NASDAQ ETFs some of the most popular holdings for retail investors.

Exchange-traded funds, also known as ETFs, are tradable securities that represent large funds with diversified holdings. ETFs have become a popular investment vehicle amongst investors from all parts of the world. The NASDAQ exchange includes some of the best tech stocks in the world, so NASDAQ ETFs are very valuable assets.

The Best NASDAQ ETF

Perhaps, one of the hardest things for investors is knowing what to look for in an asset. This is even more difficult because ETFs are comprised of several stocks or securities. However, to determine the best NASDAQ ETFs to trade, there are some things you have to look for.

Expense Ratio

The best NASDAQ ETFs have low expense ratios. Most of these funds are passively managed, and passive funds usually have low expense ratios. However, leveraged funds often have higher expenses. Investors should look for funds with lower expense ratios to maximize their returns.

Assets Under Management

Assets under management measure the total value of a fund’s holdings. Larger funds are usually more stable than smaller ones, and their shares usually trade with more volume and liquidity than their smaller counterparts. Investors should target larger funds because these are usually the most established and stable options.

Liquidity

Liquidity measures the demand for a particular asset. High liquidity stocks can be easily sold at a price that’s close to the market rate. However, traders often have difficulty exiting lower-liquidity stocks without taking a small loss from the bid-ask spread. As a result, highly liquid NASDAQ ETFs with tight bid-ask spreads are usually the best choice.

ETF for NASDAQ 100

Here are the top ETFs for NASDAQ 100.

Invesco QQQ (QQQ)

Invesco QQQ is one of the best NASDAQ 100 ETFs currently available to investors. The NASDAQ 100 tracks the 100 most extensive stocks on the NASDAQ stock exchange. The assets under management for this ETF is roughly $90 billion. Meanwhile, its expense ratio is 0.20%, making it very affordable to investors.

The ETF is highly liquid, as it has an average trading volume of over 20 million. Since this ETF only tracks NASDAQ stocks, it’ll be disproportionately impacted by tech news.

ProShares UltraPro Short QQQ ETF (SQQQ)

The SQQQ is another exchange-traded fund that tracks the NASDAQ 100 index. The index contains the largest stocks, both domestic and international that are listed on the exchange. The SQQQ uses an inverse-leveraged strategy, which means that the asset attempts to replicate the daily investment result opposite the daily performance of the underlying index.

The assets under management here are over $1 billion. However, its expense ratio is high, currently standing at $0.95%. With a yield of 3.36%, SQQQ is an interesting NASDAQ 100 ETF for investors to consider.

ProShares UltraPro (TQQQ)

The ProShares UltraPro is another large ETF that tracks the performance of the NASDAQ 100 index. The assets under management for this ETF currently stands above $4 billion. Meanwhile, its expense ratio is similar to that of the SQQQ, 0.95%. The TQQQ is highly liquid, as it records an average trading volume of 14 million.

TQQQ is a leveraged ETF, which means that it is best used for short-term trades. It’s not suitable as a buy-and-hold investment, so you shouldn’t buy it unless you’re an active trader.Nasdaq etfs

Equal Weight NASDAQ ETFs

Equal weight ETFs give the same importance or weight to each stock in a portfolio or index fund. In an equal-weight ETF, the smallest companies are given the same significance as the largest companies in the index. Equal weight ETFs sometimes offer higher returns because smaller companies sometimes grow at a faster rate than larger, more established firms.

First Trust NASDAQ 100 Equal Weight (QQEW)

The First Trust NASDAQ 100 Equal Weight is a leading NASDAQ ETF with nearly $1 billion in assets under management. The ETF has an expense ratio of around 0.6%, which is still high. The trading volume for the First Trust NASDAQ 100 Equal Weight is low, approximately 85,000 volumes.

The QQEW provides investors with an equal-weight exposure to the NASDAQ 100 index, which comprises of tech-focused, non-financial stocks. This ETF presents a good approach for investors who wish to get pure exposure to the non-financial sector with less concentration. The QQEW trades actively and has tight spreads.

Direxion NASDAQ-100 Equal Weighted Index Shares (QQQE)

The QQQE is another equal weight ETF that tracks the NASDAQ 100 index. It weighs the stocks and balances them every quarter. At the moment, Direxion NASDAQ-100 Equal Weighted Index Shares has a net asset of $239 million. The ETF’s expense ratio is 0.35%, which is lower than what you would obtain on QQEW. The average trading volume is around 33,000.

Similar to the other NASDAQ ETFs, the QQQE majorly focuses on tech stocks (currently around 40%). This ETF is also a good option for investors who wish to have a broad-based large-cap exposure. Despite that, the weak yield of the Direxion NASDAQ-100 Equal Weighted Index Shares causes concerns amongst some investors.

Leveraged NASDAQ ETFs

A leveraged ETF is a security that amplifies the returns of an underlying index using financial derivatives and debt. Regular ETFs seek to mirror their underlying index, but leveraged ETFs aim to multiply movements by a 2:1 or 3:1 ratio. Leveraged funds can offer better returns than traditional ETFs. However, losses are also multiplied so these holdings have greater inherent risks.

NASDAQ ETF 3x

ProShares UltraPro (TQQQ)

The ProShares UltraPro has an asset under management of over $4 billion. The ETF seeks a return of 3x its underlying benchmark per day. Because of the compounding daily returns, the ETF’s returns over periods more extended than a day will vary in amount and sometimes in direction. Thus, the reason why it is best for intraday traders.

This ETF has an expense ratio of nearly 1%, which makes it expensive to manage. However, it is highly liquid with an average volume of 14 million shares traded per day on NASDAQ. As a leveraged ETF, ProShares UltraPro comes with additional risks for the traders.

ProShares UltraPro Short QQQ ETF (SQQQ)

The SQQQ is another NASDAQ ETF that seeks a return of -3x the return of its underlying benchmark per day. The compounding daily returns mean that the gains over a period longer than one day will vary in amount and possibly in the direction from the target.

Similar to the TQQQ, the expense ratio for this ETF currently stands at 0.95%. However, the assets under management are just a little above $1 billion. With a yield of 3.36%, SQQQ is a leveraged NASDAQ ETF that investors could consider.

Short NASDAQ ETFs

The short ETFs are those funds that use various derivatives to profit from the decline in the price of an underlying index. They are also known as inverse ETFs and investing in these types of ETFs is similar to holding various short positions in an index. Here are some Inverse NASDAQ ETFs to consider.

ProShares UltraPro Short QQQ ETF (SQQQ)

The UltraPro Short QQQ ETF seeks an inverse return of -3x the performance of its underlying index each day. This means that investors would get 3 times the gain when the price of the underlying index.

The expense ratio of this UltraPro Short QQQ is 0.95%, which is expensive even for the high leverage. The assets under management for this is just a little above $1 billion, and it has a yield of 3.36%,

ProShares Short QQQ (PSQ)

The ProShares Short QQQ seeks a yield of -1x return of its underlying index per day. It is also a large ETF as it has net assets worth over $500 million. The expense ratio here is similar to that of the SQQQ, 0.95%. However, it has a lower yield, 1.83%, compared to the SQQQ ETF.

As an inverse ETF, investors make returns when the price of the underlying index drops. However, due to its leverage, the ProShares Short QQQ is volatile, and investors could lose more when the price of the index moves in the positive direction.

ProShares UltraShort QQQ (QID)

QID is an inverse NASDAQ ETF that seeks -2x return on the yield of its underlying benchmark per day. The QID ETF has the same expense ratio as the other two above, 0.95%. However, its yield is slightly higher than that of the PSQ as it currently stands at 2.78%. The assets under management here are over $300 million.

With its inverse leverage of -2x, investors here make twice the profits when the price of the underlying index drops. However, because of its leverage, the ETF carries more risk as investors would lose more when the price of the index moves in the positive direction.

Reasons to Buy The NASDAQ

Over 40% of the NASDAQ is comprised of tech stocks. The high concentration of tech stocks makes the NASDAQ very attractive. American tech stocks include some of the most valuable companies in the world, and the NASDAQ allows investors to get excellent exposure to these companies without breaking the bank.

NASDAQ ETFs: Closing Thoughts

If you’re ready to know more about NASDAQ ETFs, you should sign up for Stock Dork Alerts. We offer a steady stream of stock market news and analysis that will help keep you informed on everything happening in the world of Wall Street. Plus, our reports are written in plain English, so they’re easy to understand. Click here to join and claim your free 2020 Growth Guide now.

post-image

This Year’s Highest Dividend Stocks

Hassan Maishera - January 29, 2020

Stocks that pay dividends offer unique benefits that non-dividend stocks can’t match. Dividend stocks offer more stable returns, and investors can collect income from these holdings without having to liquidate their position. As a result, income investors favor these types of investments. However, practically every type of investor can benefit from having a few dividend stocks in their portfolio. The highest dividend stocks offer much larger payouts than average, but sometimes you should be wary of extra-high yields.

Sometimes, companies that are facing difficulties will offer unsustainable dividend payouts to lure in investors. However, these types of stocks are often headed for trouble. Despite the high dividend, you’ll probably lose more from the depreciating value of the stock than you will gain from the lucrative payout. Traders call this type of setup a ‘yield trap’. Dividend investors need to learn how to tell the difference between quality high-yield dividend stocks and yield traps, but that’s easier said than done.

What Is Dividend Yield?

The dividend yield measures a company’s annual dividend payout in comparison to its share price. Usually, the dividend yield is represented as a percentage and you can calculate it as follows:

Dividend Yield = Share Price/Annual Dividend

Since share prices factor into the overall yield, these figures can change over time. Even though the actual dividend payout doesn’t change, changes in stock price directly affect dividend yields.

The Best Dividend Stocks

If you’re investing in stocks for long-term stability and regular dividends, then large-cap stocks are your safest bet. These companies usually have more predictable income flows and better free cash flows. As a result, larger companies can offer consistent dividend payments and stable price action. This is a perfect setup for income investors because it allows them to generate predictable returns from their holdings so they can better plan their finances.

Growth stocks don’t usually pay dividends because they usually reinvest profits into the company. However, mature companies tend to have less growth potential, so they’re more willing to distribute profits to their shareholders by way of dividends. Dividends provide steady returns for investors so they’re more motivated to hold onto their shares. These distributions also help create more demand for stocks that, otherwise, wouldn’t be attractive investments because of low revenue growth. As a result, dividends can be a win-win for both the company and its shareholders.

Large-cap companies usually have massive businesses, so it takes extreme circumstances to affect revenues enough to disrupt dividend payments. However, small and mid-cap companies have less room to breathe because they’re smaller. A slow quarter or operational hiccup could easily disrupt revenues enough to affect dividends, so there smaller companies present more inherent risks than their larger counterparts.

Dividend Payout Ratio

The dividend payout ratio measures the total sum of paid dividends in relation to a company’s net income. This ratio represents the percentage of earnings that are returned to shareholders as dividends.

To calculate the dividend payout ratio, use this formula;

Dividend payout ratio= Dividends paid/net income

If you wish to calculate this per-share basis, you can use this formula;

Retention ratio= dividends per share/earnings per share (EPS)

Growth companies tend to reinvest most of their dividends into expanding their operations or developing new products. Companies that don’t pay dividends have a payout ratio of 0%.

What is Free Cash Flow?

According to Investopedia, free cash flow “represents the cash available to creditors and investors in a company, after accounting for all operational expenses and investments in capital.” This figure accounts for cash outflows, including equipment spending, capital assets, and changes in working capital.

When free cash flow is low, companies can run into problems covering their dividend payments. Low levels of free cash could be a red flag for dividend investors. Dividend payments are often the first place cash-strapped companies look to make cuts.

S&P 500 Stocks With High Dividend Yield

Currently, these S&P500 companies are the highest dividend stocks.

Macy’s Inc. (M)

Macy’s is an international departmental store with its headquarters in Ohio. It is currently one of the largest department stores in the US and has an annual revenue of over $20 billion. For investors, Macy’s is an excellent stock for dividend payments.

This is one of the highest dividend stocks for 2020. Macy’s has a dividend yield of 9%, which is substantially higher than the Retail – Regional Department Stores industry’s yield of 1.24%. This is also higher than the S&P 500’s current dividend yield to investors.

Iron Mountain Incorporated (IRM)

Iron Mountain Inc. is another high dividend-paying S&P 500 stock. It is an enterprise information management services company that has been around since 1951. The headquarters of Iron Mountains is in Boston, Massachusetts and they earn over $3 billion annually.

The dividend yield for this stock currently stands at 7.84%. This is higher than the REIT and Equity Trust – Other industry’s dividend yield of 4%. It is also higher than that of the S&P 500.

CenturyLink, Inc. (CTL)

CenturyLink is another high dividend-paying stock. They are an integrated communications company known for providing communication services to both business and residential customers. CenturyLink has a global presence as its vast fiber optics network is found in all parts of the globe.

The dividend yield for CenturyLink is currently around 6.8%. This dividend yield makes it one of the highest dividend stocks presently available to investors. It delivers a better return than the S&P 500 average at the moment.

Occidental Petroleum Corporation (OXY)

Occidental Petroleum has been around for a century now and is one of the largest oil and gas companies in the U.S. The company actively explores and produces oil and gas, with over 2.7 billion barrels of oil equivalent at the moment. They also operate chemicals and midstream and marketing businesses.

For Occidental Petroleum, the stock dividend yield is currently 7.48%. This is substantially higher than the Oil and Gas – Integrated – United States industry’s return of 0.58%.

High Dividend Stocks: Blue Chip

For the blue-chip stocks index, these top-yielding dividend stocks take the cake.

Exxon Mobil Corporation (XOM)

Exxon Mobil is one of the largest oil and gas companies in the world, with a massive presence in several parts of the globe. The Texas-based company generates over $200 billion in revenue annually, making it one of the leading corporations in the world.

The dividend yield for Exxon Mobil is also very attractive for investors. The dividend yield for Exxon currently stands at 5.25%, which is higher than the 2.55% of the oil and gas sector.

International Business Machines Corporation (IBM)

IBM is another blue-chip stock that delivers excellent dividends to its investors. The American multinational information technology company has a vast presence in over 170 countries around the world and generates billions of dollars in revenue annually.

The company has a dividend yield percentage of 4.61%, which places it as one of the leading dividend stocks on the Dow. IBM is massive and has very stable businesses, so investors could earn consistent dividends by holding this stock.

Chevron Corporation (CVX)

This is another multinational energy corporation that has massive investments in the oil and gas sector. The California-based Chevron is active in more than 180 countries globally and generates over $150 billion per year.

Similar to Exxon, Chevron has a higher dividend yield compared to the Oil and Gas – Integrated – International industry’s return. Chevron’s current dividend yield stands at 4.26%, compared to the 2.10% of the oil and gas sector.

Highest Dividend Yield Stocks on Robinhood

Robinhood offers a full selection of NASDAQ and NYSE-listed stocks. These are the highest dividend stocks you can buy on Robinhood.

Omega Healthcare Investors, Inc. (OHI)

Omega Healthcare Investors holds several properties in over 30 states across the United States. Their presence continues to expand, as they also hold some investments and properties in the United Kingdom.

This stock has a high dividend yield of 6.19%, which is higher when compared to the REIT and Equity Trust – Other industry’s yield of 4%. The company’s business model is simple as all they demand is for their customers to be able to afford rent. This is relatively certain and allows them to pay dividends to their investors regularly.

Broadmark Realty Capital (BRMK)

Broadmark is a Real Estate Investment Trust (REIT) that boasts one of the best dividend yield percentages at the moment. As a REIT firm, it is required to return a large chunk of its profits back to the shareholders. Hence, the reason why it has a high dividend yield.

While the REIT and Equity Trust industry’s yield of 8.49% is high, Broadmark has a higher yield percentage. At the moment, Broadmark’s dividend yield of 11.33%. Thus, investors in this company will receive most of the profit as dividends thanks to the current tax laws.

Enviva Partners LP (EVA)

Enviva is the largest producer of industrial wood pellets in the world. The pellets are renewable and sustainable energy sources that help generate electricity and heat. The Maryland-based company has one of the best dividend yield ratios at the moment.

The company’s current dividend yield percentage stands at 7.1%. This is a substantial return for investors despite the company’s continued expansion into the UK and Europe at the moment. Similar to the other stocks reviewed in this post, Enviva could be an excellent dividend stock to buy and hold for 2020.

More on the Best Dividend Stocks

If you want to learn more about dividend stocks, check out our cornerstone piece on the best dividend stocks here. You can also follow all the latest highest dividend stocks new by signing up for Stock Dork Alerts. With the latest stock market news and expert analysis, our easy-to-read reports can help you become a better trader. If you sign up now, you’ll also get our 2020 Growth Stock Guide as a ‘thank you.’ Click here to join now for FREE.

post-image

8 IoT Stocks to Invest In for 2020

Hassan Maishera - January 23, 2020

The internet of things (IoT) alongside a few other technologies such as Artificial Intelligence (AI) and blockchain technology are regarded as the future. They are expected to play a massive role in our everyday lives in the years to come. However, people find it hard to choose the IoT stocks to invest in.

The Internet of Things will be vital to the New economy, so it’s not a surprise that many investors want to buy IoT stocks early. However, choosing the IoT stocks to invest in for 2020 is no easy task. Many of these companies are still relatively obscure, so it’s hard to pick winners without doing a whole lot of research.

What Does IoT Mean?

Here is a definition of IoT and its devices. Click here to jump straight to the picks, or keep reading to learn more about the IoT industry.

IoT Definition

The Internet of Things (IoT) refers to the billions of physical devices around the world that are connected to the internet. The devices collect and share data, making it easy for people from all parts of the world to get access to various information with ease.

The emergence of cheap processors and wireless networks makes it possible to turn any device into a part of the IoT. Once they’re connected, devices can communicate real-time data without any human involvement. As a result, IoT devices can convey information effectively.

Several industries are already deploying IoT networks, including healthcare, logistics, and industry. For example, manufacturers use sensors to monitor their machines so they can read real-time performance data. These sensors allow operators to know when a device is about to fail so they can react accordingly without waiting for a potentially catastrophic breakdown.

In addition, consumers are also using IoT technology to turn their houses into fully-connected smart homes. Data shows that roughly 60,000 people shop for smart-home devices every month. The IoT network also includes wearables like smartwatches, plus connected cars, integrated supply chains, and much more.

What Are IoT Devices?

IoT devices are nonstandard computing devices that connect wirelessly to an internet network so they can transmit data. Onboard processors and sensors extend internet connectivity beyond communication devices, like smartphones and computers, to other devices that are not traditionally connected.

Once these ‘dumb’ devices have microprocessors within them, they can transmit data and interact over the internet. Thus, allowing the tools to be remotely monitored and controlled. What makes a device an IoT device is if it has chip processors, wireless networks, and can transmit information across the internet.

At the moment, we have several IoT devices we use in our daily lives. Some of these devices include smart TVs, toys, smart speakers, wearables like wristwatches, and smart appliances. Other devices include smart meters, commercial security systems, and several other smart city technologies such as those used in monitoring traffic or weather situations.

IoT Technology

Here are some examples of IoT solutions.

Smart Homes

Consumers primarily use IoT technology to connect devices in their homes. Smart speakers and connected sensors allow users to control their homes remotely. Consumers can also use these devices to monitor their homes while they’re away, so users can improve home security with IoT devices as well.

Wearables

Wearables such as Apple Watch, Sony Smart B Trainer, LookSee bracelet, and more are all developed thanks to the internet of things.

Smart City

Smart cities are springing up in several parts of the world. At the moment, we have smart cities in places such as Singapore, India, Dubai, Milton Keynes, Southampton, Amsterdam, Barcelona, Madrid, Stockholm, Copenhagen, China, and New York.

Connected Car

Modern vehicles connect to the internet and share data with a network of devices, both within and outside the vehicle. This technology will be essential to mastering autonomous vehicles.

Healthcare

This is one of the most prominent applications of IoT. The technology helps physicians improve health care and monitor their patients remotely. For example, a connected heart monitor could alert emergency services if a patient goes into cardiac arrest.

Smart supply chain

Connected supply chains will help businesses track their goods and organize their logistics more efficiently.

Smart Retail

Retailers can use connected technology to improve store operations, reduce theft, and enhance their customer experience.

IoT Stocks to Invest In Today

Here are the Internet of Things stocks you can buy now.

Best IoT Stocks of 2020

Akamai Technologies, Inc. (AKAM)

The shares of Akamai Technologies was one of the best performers in the IoT sector last year. Akamai Technologies is a Massachusetts-based company that specializes in content delivery networks, cybersecurity, and cloud service. Its content delivery network is one of the largest in the world, responsible for serving roughly 30% of all web traffic.

Akamai Technologies’ network allows real-time data collection and application messaging. In addition, these services offer scalable security for growing companies. The unveiling of new solutions such as Edge Cloud will see Akamai Technologies boost its stance in the IoT sector and reach more customers across the globe.

Zebra Technologies Corp. (ZBRA)

This IoT stock performed well in 2019, and it could outdo itself this year. Zebra Technologies manufactures and sells marking, tracking, and computer printing technologies. Its devices use passive Radio-Frequency Identification (RFID), so companies can track and manage their assets with ease.

Zebra prides itself on creating IoT solutions that lead to actionable data and insight. Thus, giving businesses unprecedented visibility into their businesses. Zebra recently launched SmartSight, one of its newest IoT solutions. Continued innovation and new product releases could help fuel demand for Zebra products as the IoT industry grows.

Small-Cap IoT Stocks To Invest In

Here are small-cap IoT stocks that were excellent over the past few months.

Adesto Technologies Corp (IOTS)

Adesto Technologies is one of the leading small-cap IoT stocks currently available to investors. The company is based in California, and it is a global provider of advanced semiconductors and embedded systems for IoT. At the moment, they have over 5,000 customers worldwide and are looking to build on that figure.

The company’s devices are used in several sectors, including industrial, transportation, and communications. Its collaboration with Microsoft will continue to drive growth for the company over the coming months.

Ambarella Inc. (AMBA)

Ambarella is another small-cap stock that has been performing well in recent months. The company, with its headquarters in California, has been around since 2004 and designs semiconductors. It majors in low-power, high-definition and Ultra HD video compression, image processing, and computer vision processors.

At the moment, Ambarella technologies are used in several areas such as automotive, security, consumer, and industrial & Robotics. The company also recently partnered with Lumentum and ON Semiconductor to provide better video solutions.

Cheap IoT Stocks To Invest In

For investors looking to buy the cheap IoT stocks, here are our best picks.

IoT Stocks To Invest In Under $10

CalAmp Corp. (CAMP)

CalAmp is a popular name in the IoT sector, and its stock is currently available below $10. Based in Irvine, CalAmp is a global provider of IoT software applications, cloud services, data intelligence, and networked telematics products and services.

It offers several solutions to businesses and governments, such as edge computing devices and SaaS-based applications. CalAmp’s technologies help in remotely tracking and managing vehicles and consumer products. The company majors in mobile gateways, an industry that is set to be worth billions of dollars over the next three years.

ORBCOMM Inc. (ORBC)

ORBCOMM is another cheap IoT stock to consider. The New Jersey-based company provides industrial Internet-of-Things applications and machine-to-machine communications solutions. The firm’s products help monitor and control various assets. The market for these products includes various industries, including transportation, utilities, and government.

The company expanded its operations over the past few months, including a launch of its in-cab mobile solutions for fleets. The new initiative will help improve efficiency and productivity in machine-to-machine communication.

IoT Penny Stocks

Bsquare Corp. (BSQR)

Bsquare is a leading IoT stock that is trading below the $5 mark. The company, with its headquarters in Washington, is an IoT provider, tech distributor, and system integrator. Bsquare is known for supporting OEMs, ODMs, and enterprises with professional development services. It has a global presence, which makes it an attractive IoT stock.

They offer a wide range of IoT services, including B2IQ Edge to Cloud Suite, B2IQ Cloud Base, IoT Engineering Services, B2IQ Gateway, B2IQ Edge, and Edge Modules.

Lantronix Inc. (LTRX)

Lantronix offers secure data access and management solutions for IoT and other information technology (IT) assets. They currently focus on providing IoT and IT management services to their customers around the world.

The recent acquisition of Intrinsyc Technologies Corporation will help Lantronix expand its presence in the IoT sector. Their vast ventures in areas such as blocks & gateways, application development platforms, mobility solutions are assisting businesses to learn and connect more with their customers.

Understanding the IoT Industry

The IoT industry has been experiencing rapid growth over the past few years. In 2017, the size of the IoT industry stood at $109 billion. It rose to $212 billion in 2019 and is set to a massive increase to $1.6 trillion by 2025. The market could exponentially grow by 2026, according to research reported by Business Insider.

In terms of the number of connected devices, the figure stood at 22 billion in 2018. At the moment, there are more connected devices worldwide than we have people. This figure will rise to more than 50 billion devices over the next few years.

A large number of IoT devices will come with cellular connections. According to research by Ericson, 70% of IoT devices by 2022 will use mobile technology. This means that more cellular-based IoT devices will be manufactured over the coming years.

Currently, the consumer sector accounts for the vast majority of IoT devices. Many companies are investing in smart devices because they can collect real-time information on their customers. The data collected from these devices is extremely valuable, so many companies want to break into the space. The industrial use of IoT is still well behind the consumer segment.

IoT and Cybersecurity

While the IoT sector is growing, incorporating proper cybersecurity capabilities is essential. IoT devices are extremely susceptible to cyber-attacks because they can be accessed and controlled remotely. Once IoT is fully deployed, practically everything will be network-connected. As a result, vital infrastructure systems could be at risk of an attack.

The IoT industry will rely on the cybersecurity sector to secure its flanks and protect it from malicious threats. The cyber squad will have to step up its game to protect the IoT network as it grows.

IoT Applications & Projects

IoT applications and projects are springing up in several parts of the world. The solutions and technologies in this sector are gaining applications in several industries.

IoT Security

IoT will improve security systems by allowing sensors and other devices to communicate more efficiently. As a result, the integrated network will make homes and businesses more secure. Cameras, sensors, and other connected devices could automatically alert law enforcement so they can respond quicker. Their presence alone can sometimes deter criminals from committing crimes in the first place.

IoT for Healthcare

The Internet of Things is having a meaningful impact on our healthcare system. IoT in this sector improves the time and ways patients interact with their doctors, allowing the physicians to deliver better healthcare.

IoT Blockchain

Blockchain can be the lynchpin that holds the Internet of Things together. The two technologies will need to grow together to develop a truly integrated network. Further development of blockchain could accelerate the mass adoption of IoT technology. Only blockchain networks can offer the security and scalability that the IoT sector needs to be truly effective.

Decentralized networks like blockchain are tamper-proof and highly secure. Blockchain’s secure architecture can help protect IoT devices from cyberattacks. In addition, blockchain distributes the processing burden across multiple devices instead of a single server, and these networks are fully transparent. These attributes make blockchain a perfect match for IoT, so these two industries will likely grow hand-in-hand.

IoT Stocks: Closing Thoughts

The IoT sector has been experiencing massive progress in recent years and it could continue to get bigger over time. If you’re ready to know more about IoT stocks to invest in, you should sign up for Stock Dork Alerts. We write our reports in plain English, so they’re easy to understand. Sign up today and get our 2020 Growth Stock Guide for free when you join. Click here to claim your free copy now.

post-image

Here Are The Best Esports Stocks to Buy Now

Hassan Maishera - January 22, 2020

Esports stocks are on the rise. The industry grew steadily over the past few years, and experts believe the future is even brighter. Pro gaming’s popularity amongst younger consumers could fuel growth in the industry for decades to come. It’s no wonder that a lot of investors want to get a piece of this young and exciting industry. However, it can be difficult to get started if you don’t know where to start.

Aspiring esports investors should know what they’re getting into. Before you buy stocks, you should understand the esports industry. Start your esports investing journey with a quick dive into the industry.

esports stocks revenue graph

Investing in E Sports

According to studies by Newzoo, worldwide esports audiences totaled about 380 million viewers in 2018. That figure grew to 454 million in 2019, and it could rise to 654 million by the end of 2022.

Revenues also rose steadily over the past few years and could hit nearly $2 billion by 2022, according to Statista. However, esports companies are still exploring new ways to grow their businesses. If viewership continues to grow and esports stocks find sustainable ways to grow their businesses, it could result in prolonged growth for the sector.

For investors, the massive growth forecast of the esports sector is a great thing. With the expected growth of the industry, this could be the perfect time to buy esports stocks.

How Do Esports Companies Make Money?

Esports events make money by licensing their broadcasts, selling tickets, merchandise, and more. Video game developers also sell franchise rights to esports teams, so the actual game producers generate profits from esports too. For example, Activision Blizzard recently sold franchise rights to five teams for its Call of Duty League. These types of sales can fetch millions of dollars for gaming companies.

Large esports events also attract sponsorship deals and third-party advertisers. As the global esports audience grows, these channels could grow in popularity with advertisers and become more lucrative revenue streams as a result.

Esports IPO: Gaming Goes Wall Street

Last year, one of the world’s leading eSports teams – Astralis Group – made its public market debut, making it the first pro video game team to list publicly.

Most investors know that the eSports market is growing rapidly but there’s no pure-play eSports option that really taps the market.

However, now that mainstream investors have opened their doors to Astralis, that could change soon.

If Astralis Group’s Denmark-listed shares perform well, the listing could be the precursor to a wave of eSports IPOs.

Astralis opened trading at about $1.33 per share on the Danish market.

  • Astralis Group trades under the ticker symbol [ASTGRP] on the Nasdaq First Growth Market Denmark.

How To Invest in Esports: Pure-Play Stocks

A lot of companies have a presence in the esports industry. However, there are only a few pureplay options. The industry is still young and growing, but there are a few companies that specifically run esports operations.

Enthusiast Gaming – [EGLX:TSXV (Canada)]

Enthusiast Gaming listed in Canada in October of 2018. The company operates eSports teams, but it also has a gaming media business as well. Since it runs several businesses, it doesn’t offer the kind of pure-play exposure as Astralis.

ePlay Digital Inc. [EPY:CSE (Canada)]

ePlay Digital develops and operates live broadcasting equipment that’s designed specifically for the eSports industry. It also develops mobile games with a focus on sports and augmented reality (AR). The firm maintains several marketing platforms and offers white-label videos.

Best E-Sports Stocks to Buy

These companies don’t have the pure-play exposure as the e sports stocks listed above but are all related to the gaming industry. However, these gaming stocks benefit from the industry’s growth. These are larger, more established companies so they could be better long-term investments.

Activision Blizzard (ATVI)

Activision Blizzard is a California-based video game developer. With a market cap of over $40 billion, it’s one of the largest video game companies on the planet. The firm has a substantial esports presence and its esports operations could be a key growth engine in the future.

esports stocks activision

Game developers like Activision have an advantage because they design the actual games and control the licenses. As a result, companies like Activision have end-to-end control over there products, and they stand to reap significant benefits if they can effectively leverage their games into the esports world.

In January 2020, Activision Blizzard announced a partnership with ESL and Dreamhack. The partnership will last for three years and includes Hearthstone, Starcraft II, and Warcraft III: Reforged. Similar collaborations could help Activision Blizzard grow its esports revenues over the coming years.

Take-Two Interactive (TTWO)

This New York-based firm is one of the leading game developers in the US. Take-Two Interactive’s annual revenues exceed $1 billion, making it one of the largest video gaming companies in the world.

Take-Two is known for producing A-list hits. Its game portfolio includes blockbusters like Grand Theft Auto, NBA 2K, Red Dead Redemption, WWE 2K, and more. The company is also making moves to boost its presence in the esports sector.

In December 2019, Take-Two Interactive opened its Cloud Chamber, a new game development studio under their publishing label. The studio will allow them to provide more interactive entertainment solutions and create games that offer unique and engaging user experiences.

Electronic Arts (EA)

EA is one of the biggest names in sports gaming, and its also one of the world’s leading game studios. Thanks to its presence vast pro sports gaming portfolio, Electronic Arts is has an established presence in the esports sector.

FIFA and Madden are some of the biggest games in esports. EA’s FIFA eClub World Cup tournament is one of the most world’s most prestigious gaming events. The competition continues to grow in terms of both tournament participants and viewers.

esports stocks EA madden

The partnership between the NFL and Madden Championship Series was another big win for EA. The gaming event continues to get famous and records an increase in unit sales. Madden’s collaboration with Tentpole events also helped boost the competition’s reputation.

The launch of more esports events by EA could see the company grab a large percentage of the industry, both at home and abroad.

HUYA Inc. (HUYA)

This is a Chinese-based broadcasting company that has a large presence in the video content streaming industry. Huya is often called “the Twitch of China” since it offers products similar to Amazon that allows people to stream gaming videos.

The company has a platform that allows users to broadcast their video gaming sessions to millions of people on social media. Huya monetizes its services by allowing the viewers to tip broadcasters and collect a commission from the tips.

Huya’s game streaming revenue grew substantially over the past few years. The platform is especially popular in China. However, the firm wants to extend its reach internationally.

Recently, Huya revealed that content diversification and globalization are the critical short-term focus of the company. In the long-term, they are focusing on cloud gaming and virtual broadcasting.

Sony Corp (SNE)

This Japan-based multinational conglomerate has a formidable gaming business. Sony is famous for manufacturing the PlayStation video gaming console, which helped lead the gaming revolution through the late 90s and early 00s. PS4 console hit a sales record of over 90 million units last year. Millions of gamers across the world play games on the system.

gaming stocks sony ps5

It is conceivable that Sony will control the platform for several esports tournaments, making it a great esports stocks to buy now. In 2019, Sony filed a patent for In-VR Esports tournament spectator system. The company is looking to push for new experiences in esports viewership using virtual reality.

Sony’s plans to improve its viewership through virtual reality could be a smart move. The company already has seasonal PS4 tournaments with cash prizes for the winners. The PS5 could attract more participants to its tournaments once it hits the shelves.

Tencent Holdings (TCEHY)

Although found on OTC platforms in the US, Tencent is currently the largest gaming company in the world. The Chinese multinational company has a presence in several sectors and is very much active in gaming and esports. With a revenue of over $15 billion in gaming software sales, Tencent is an esports stock you could buy.

The Chinese firm has stakes in several game publishers, developers, and esports platforms. Some of its ownerships include; Ubisoft, Epic Games, Activision Blizzard, Riot Games, Supercell, Kakao, Bluehole, Funcom, Frontier Developments, Grinding Gear Games, Paradox Interactive, and many others.

While it is not a traditional gaming live streaming company, its large stakes in several esports and gaming companies make Tencent an essential player in the sector. It sponsors League of Legends Championship, which records over 100 million unique viewers each time.

In addition to that, Tencent owns a piece of some of the most popular games in the world. Household gaming names like Fortnite, League of Legends, and Honor of Kings all record millions of players around the world. And Tencent has a share in all of them.

While esports is a small part of Tencent’s business at the moment, the company could record further growth and become more involved as the esports sector grows. Tencent’s entry into the cloud gaming sector with Nvidia would also help boost its presence in the esports industry.

NVIDIA (NVDA)

The video gaming sector has been able to develop rapidly because of the high-end graphics players use. Thus, semiconductor companies play a crucial role in the development of esports. One such company is Nvidia.

The company creates a wide range of chips and gaming rigs to help people play video games. Some of the best esports participants spend hours practicing each day, and they use the best equipment to do that. Nvidia is responsible for manufacturing some of the best gaming rigs available to players. Thus, making it a valuable esports stock.

In January 2020, Nvidia unveiled G-Sync, a new technology that supports 360Hz refresh rates for PC users. The high-performance graphics boast extreme responsiveness, so the technology is ideal for pro gaming.

esport investing nvda nvidia

Nvidia is also working with Tencent Holdings to develop a cloud gaming service in China. Cloud gaming is seen as the future of esports. Nvidia venturing into cloud gaming means that the company is looking to expand its business in the esports sector.

The launch of the START program and a few other developments make Nvidia a sturdy esports stock to considering buying.

Turtle Beach Corp (HEAR)

This is another popular esports accessories company. Turtle Beach Corp is known globally for manufacturing and selling gaming headsets and other peripheral accessories to esports professionals and other gamers.

Turtle Beach has been in the esports business for long. Its partnership with the likes of English Premier League club Manchester City has helped boost its popularity. Thus, making it a good esports stock to consider.

The company is expanding operations after it acquired Roccat in May 2019. With Roccat, Turtle Beach now provides PC mice, keyboards, headsets, and software. Thus, Turtle Beach has ventured into PC gaming and has a strong presence in Europe and Asia.

If Turtle Beach continues to release gaming headsets and accessories as seen in recent history, the company will remain one of the best esports stocks available to investors.

Esports Stocks: Closing Thoughts

If you want more esports stocks, you should sign up for Stock Dork Alerts. Our in-depth investing reports are written in plain English, so they’re easy to understand. Sign up today and get our 2020 Growth Stock Guide for free when you join. Click here to signup join and claim your free copy now.

post-image

Best Solar Stocks to Buy for 2020

Hassan Maishera - January 16, 2020

Environment conscious consumers want eco-friendly alternatives to fossil fuels, and the attitude shift is driving demand for renewable energy options. Solar is one of the most efficient forms of renewable energy, and the sector has expanded drastically over the past decade. As a result, solar stocks could be primed for a big future, but picking the best solar energy stocks to buy for 2020 is no easy task.

Investing In Solar Stocks

The solar space is still relatively young, so many solar energy stocks are more volatile in comparison to traditional energy stocks. As always, investors should aim to buy low and sell high. However, solar stocks tend to be very volatile, so be prepared.

Most solar companies rely heavily on government subsidies. As a result, politics play a major role in influencing prices. Government policies can make or break stocks for solar energy, so you need to do your research if you want to play in this sector. If the wrong candidate wins an election, it could torpedo the entire sector. This goes for state government too, so you need to be aware of where your investments operate and the political scene in those regions.

The demand for solar energy will most likely rise over the coming years. Building positions in solar stocks could be an excellent play for long-term investors. However, make sure you’re committed before you place your ‘buy’ order. The sector is volatile and you need to be patient to be successful. Choosing the best solar energy stocks starts with identifying stable companies that are best equipped for long-term success.

Best Solar Stocks To Buy Now

The solar energy sector has been booming over the past few years because of the rising need for renewable energy. With several options available to investors, it becomes confusing to choose the best solar stocks to buy. However, we will discuss some of the leading stocks in the solar energy generation industry.

Here are the best solar stocks we believe investors should buy in 2020. These stocks could perform excellently over the coming year.

Tesla (TSLA)

Tesla is known for manufacturing electric vehicles. However, the company acquired SolarCity for $2.6 billion in 2016. Tesla CEO Elon Musk is determined to eliminate fossil fuel usage on Earth, so it’s no surprise that Tesla acquired a solar energy company. Now, Tesla is actively involved in several the solar sector and currently sells several solar-related products, including Powerwall and Solarglass Roof.

solar panel stocks solarcity

SolarCity is currently the largest solar energy provider in the United States. The company wants to make clean solar energy available to everyone. At the moment, SolarCity’s customer base includes more than 300,000 homeowners and over 400 schools and universities. That doesn’t even include the thousands of businesses and government agencies that use the company’s solar devices.

The stock could be one of the leading performers in the industry this year. Late last year, SolarCity appointed Yogesh Chand as the chief operating officer. Chand, who previously worked at Pulse Energy, is coming to SolarCity with over two decades of experience. He is known for is active strategic management and helping market products both at home and abroad.

Unfortunately, this is not a pure-play solar stock because it’s tied in with Tesla’s electric vehicle business, which has been notoriously volatile over the past few years. If you want to get into this solar energy stock, you’ll have to deal with the potential risks associated with the auto business too.

First Solar Inc. (FSLR)

First Solar is an American solar panel stock known for manufacturing rigid, thin-film modules for solar panels. The company also provides utility-scale PV power plants and supporting services, such as finance, construction, maintenance, and end-of-life panel recycling.

The company designs, manufactures, and sells cadmium-telluride solar modules, which are used to convert sunlight into electricity. First Solar’s ‘Systems’ segment provides turn-key photovoltaic solar power systems for plant operators. The company also assists with solar project development, engineering, procurement, and construction.

First Solar is an S&P 500 stock and currently has the best balance sheet in the solar energy sector. The company was the subject of a recent class-action lawsuit, however, it settled the case not too long ago. Now, the company can focus on growth and other aspects of its businesses.

Due to its strong stance in the solar energy sector, First Solar remains one of the best solar stocks you can buy for 2020.

SunPower Corporation (SPWR)

This California-based energy company designs and manufactures crystalline silicon photovoltaic cells and solar panels. The panels developed by SunPower are based on an all-back-contact solar cell. It’s one of the leading solar panel stocks on the market.

The company’s primary customers include governments, homeowners, and businesses. SunPower is one of the oldest solar energy companies and generates over 3 gigawatts of electricity from its solar panels across the globe.

Its market cap is around $1 billion, which is below that of Tesla and First Solar. However, SunPower remains one of the best solar panel stocks available. In December 2019, SunPower announced a plan to restructure its operations to reduce costs. The plan includes cutting 3% of its global workforce this year.

As part of the restructuring plan, SunPower will spin-off its Maxeon Solar segment. However, the two companies will continue to be strategically aligned and share common ownership. The move will result in some restructuring costs, but it could make SunPower much more efficient. Investors should take a close look at this solar panel stock.

Solaredge Technologies Inc. (SEDG)

Solaredge was one of the best performing solar stocks of 2019, gaining 170% over the past 12 months. It could continue on that trajectory this year, so it remains one of the best solar stocks to buy in 2020.

This Israel-based company is listed on the NASDAQ. Solaredge produces power optimizers, solar inverters, and monitoring systems for photovoltaic arrays. These products help boost energy output via module-level Maximum Power Point Tracking.

Solaredge released a wide range of products and services that helped it become a leading renewable energy stock in 2019. Its residential StorEdge product and other innovations could help Solaredge carry its momentum into the coming year.

Vivint Solar Inc. (VSLR)

Vivint is a Utah-based solar energy company that has been around since 2011. The company is a residential solar energy provider that installs, designs, and maintains photovoltaic systems. At the moment, the company operates in 24 states across the United States.

What makes Vivint an exciting solar stock is the availability of several options for consumers. The fact that they are expanding their services means that there is enough room for growth for Vivint over the coming year.

Vivint is focusing on growth in 2020. The company recently obtained a $200 million loan to fund its expansion efforts. The funds are set aside for the purchase of safe-harbor equipment and other strategic efforts.

Their focus on growth in 2020 and beyond makes Vivint one of the best solar stocks to buy this year. For those looking to enter the solar sector, Vivint should be on your watchlist.

Sunrun Inc. (RUN)

Another California-based solar energy stock, Sunrun provides solar electricity for residential customers. They also offer the Brightbox Battery, which makes it easy for consumers to store and manage their solar energy.

Sunrun is currently expanding its services, so it could be on the path to significant growth in the future. A new California law requires all new homes to have enough solar panels to satisfy their electricity needs. The law officially went into effect in 2020, and it applies to all homes under four stories tall. Sunrun is talking with several leading homebuilders in an effort to nail down supply contracts. They already have some deals in place but, if they can secure more, it will be a big lift for share prices.

The company already has a deal with Citadel Roofing & Solar. Sunrun will provide roofing, solar systems, installation, and financing. Partnerships like these could lead to strong revenue growth for Sunrun in 2020.

Enphase Energy Inc. (ENPH)

The solar energy stock designs and manufactures software-driven home energy solutions. Enphase’s product line includes solar generation, web-based monitoring and control, and home energy storage.

The company’s revolutionary microinverter technology is transforming the solar sector. Enphase currently has the only truly integrated solar-plus-storage solution on the market.

solar energy stocks enphase

This solar energy stock is one of our top picks for 2020. In addition, the firm recently partnered with Solair LLC and Orbit Energy & Power to supply microinverters for homes across the country.

Enphase’s microinverters are flexible, reliable, and manageable. With over 23 million microinverters sold over the years, there is a strong demand for these cutting-edge devices. Enphase could land more partnerships soon, and the deals could create significant revenue growth.

The Solar Energy Market

Renewable energy is slowly replacing fossil fuels in several parts of the world. The industry expanded significantly over the past decade, and it’s likely to continue on that path for some time. In 2017, the renewable energy market was worth over $900 billion, and some estimates predict it will grow to $1.5 trillion by 2025.

In addition, environmental concerns led several government bodies to enact climate change policies that limit fossil fuel consumption. As a result, renewable energy stocks could benefit from growing demand over the next few decades. Solar is clean, cheap, and efficient, so solar energy stocks will be at the forefront of the renewable energy revolution.

Renewable Energy Investment

Many countries are recognizing the harmful effects of fossil fuels, so they want to shift to more eco-friendly alternatives. The demand for renewable energy systems could also grow as a result. Stringent government regulations are also forcing many countries to shift to renewable energy sources so they can meet their emissions goals. In the US, renewable energy accounted for 23% of power generation in 2019. That’s enough to surpass coal’s 20% market share.

According to Marlene Motyka, Deloitte’s Global and US Renewable Energy Leader, the renewable energy market will become more competitive in 2020. More consumers want to use renewable energy sources, so the market could expand over the coming years.

Demand for Solar Power

Solar energy is one of the efficient renewable energy resources. The sun is an inexhaustible and source of free renewable energy. In 2018, the global solar energy market was worth around $52 billion. This figure is set to increase to $223 billion by 2026.

Solar stocks market demand graph

Many experts believe that solar energy will be the premier renewable energy source in the coming years. The demand for solar energy is on the rise, and it’s likely to surge higher in a few years.

In 2015, the global solar energy consumption was around 51 gigawatts. By 2019, the consumption has surged to 114.5 gigawatts. However, solar energy consumption could increase by 10 gigawatts over the next five years.

Solar energy costs decreased significantly over the past few years, mostly due to improvements in technology. China, the United States, and India are leading the charge for solar energy. These three countries have the highest demand for solar panels.

If you buy into a few solar stocks now, it could pay off big in a few years. Solar energy stocks could benefit from near-certain demand growth in the coming years.

Best Solar Stocks: Closing Thoughts

Ultimately, the solar energy market seems destined for a drastic expansion in the near future. As a result, it might be the perfect time to buy solar stocks. If you want to stay informed on solar energy stocks and the renewable energy sector, sign up for Stock Dork Alerts. We’ll keep you informed on everything Wall Street. Plus, we write our reports in plain English, so they’re easy to understand. Sign up today and get our 2020 Growth Stock Guide, it’s yours free when you join. Click here to join and claim your free copy now.

post-image

The Best Oil ETFs for Bulls and Bears

Chris Dios - January 14, 2020

The oil market is notoriously volatile, but savvy investors can make big profits by playing the swings. However, investing in crude and other commodities can be intimidating for the uninitiated. Traditionally, investors used futures and options to bet on crude prices, but these days, oil ETFs make it easy for beginners to get involved.  No matter which way you think oil prices are headed, there is an oil ETF that will make you money if you’re right.

The best oil ETFs come in various forms and they serve various purposes. Some funds hold a basket of oil companies, while others invest in commodity futures. You can make bearish bets with inverse oil ETFs or double down with leveraged ETFs. There are dozens of funds to choose from, so there is sure to be one that fits your investment objectives and risk tolerance.

Best By Category

We’ve separated our top picks into several categories, so you can easily find what you’re looking for.

Best Oil ETFs

There are various types of crude ETFs, but the most basic funds track the price of oil through the use of commodities and options. Since these funds track oil prices, they increase in value when oil prices go up. These are some of the best Oil ETFs on the market.

best oil etfs

WTI Funds

These funds track the price of West Texas Intermediate, which is the benchmark price for US crude oil. WTI is the primary index for all oil sourced in the United States, so don’t let the name fool you. Any oil produced domestically is usually classified as WTI, so the “West Texas” handle is a bit of a misnomer.

United States Oil Fund (USO)

The United States Oil Fund tracks the price of West Texas Intermediate light crude oil through futures contracts. This is one of the highest-volume oil ETFs in the US, so it’s very liquid and a good choice for newer oil traders. It’s also one of the largest Oil ETFs in the US with over $1.4 billion in net assets.

USO follows the Bloomberg WTI Cushing Crude Oil Spot Index by way of WTI futures. WTI futures comprise 100% of this fund’s holdings, so this is a pure-play option for oil bulls. The gross expense ratio for this stock stands at 0.84%.

Invesco DB Oil Fund (DBO)

The Invesco DB Oil Fund also trades WTI futures, but it’s designed to track a different benchmark index. However, it tends to move similarly to the USO. This fund uses the Deutsche Bank Liquid Commodity Index (DBCLI) Optimum Yield (OY) Crude Oil Index as its primary benchmark.

This index utilizes futures differently than the Bloomberg WTI index, so there is sometimes disparity between it and the USO. However, they both trade WTI futures as their sole holding, so the differences tend to be minimal.

The DB oil fund currently has over $238.2 million in net assets and a 0.75% expense ratio.

Brent ETFs

Brent is a different type of oil that is sourced mainly in Europe. The name comes from the Brent oil basin, located in the North Sea. Brent oil is significantly different than WTI. It tends to have higher sulfur content, so it’s ‘darker’ or more ‘sour’ than WTI. Brent has its own unique market, so there’s an entirely different set of supply & demand considerations that can affect prices. The difference between the price of Brent and WTI is measured by the Brent WTI spread

WTI is the highest-quality sweet crude available, but Brent is actually the most used oil globally.

The fracking boom unlocked a wealth of oil in the United States, but it can be very expensive to transport and ship. In fact, there was an export ban on oil produced in the US until 2015, so we’ve only been shipping oil abroad for a few years. US oil infrastructure is far behind that of Europe. Delivering WTI to high-demand markets in Europe and Asia can be so expensive that it can’t compete with Brent in terms of pricing.

Locally sourced Brent oil is closer and cheaper to ship, so international consumers tend to go with the option that offers the most value. It’s one of the reasons Brent is the most used oil on the planet.

United States Brent Oil Fund (BNO)

This fund tracks the price of Brent oil. It’s a small fund in comparison to the USO, with only $83.4 million in net assets. It has the same ownership as the USO, so it operates in a similar fashion. It used futures to track the price of Brent oil, and these futures comprise 100% of its total holdings.

BNO’s expense ratio is slightly higher than its counterparts. The fund charges 0.9% for annual expenses.

Oil Services ETFs

The oil equipment and services sector consists of companies that provide ancillary services to oil and gas producers. Oil services companies offer a variety of energy-related services, including exploration, equipment maintenance, refining, and much more. The energy sector is vast and intricate, so there are hundreds of companies that provide dozens of different services in this industry. Oil services ETFs hold stocks from these companies, so they tend to perform well when the oil sector is riding high.

VanEck Vektors Oil Services ETF (OIH)

This oil services ETF tracks the MVIS US Listed Oil Services 25 Index, which is a cap-weighted index that tracks the top oil services firms listed on US exchanges. It’s like the Dow Jones of oil services stocks. The 25 companies it holds are the largest, most notable companies in the oil equipment and services sector, so they represent some of the top picks in the category. This fund invests in both local and foreign companies, but all of its holdings are listed on US exchanges.

Unlike the oil ETFs listed above, these funds hold company stocks. They don’t hold any crude futures or options, so oil prices don’t directly affect share prices. However, oil prices have a direct effect on these companies in terms of their bottom line, so wide swings in crude prices have a significant impact on these stocks.

The gross expense ratio for this ETF is 0.35%, and the fund manages over $688 million in assets.

SPDR S&P Oil & Gas Equipment and Services ETF (XES)

This fund includes companies that service the natural gas industry too. For its benchmark, it tracks the S&P Oil & Gas Equipment and Select Industry Index. As opposed to the MVIS US 25, this is an equal-weight index.

This gas and oil services ETF holds 32 different companies that service the energy sector. It’s top three holdings are Nabors Industries LTD (NBR), Valaris PLC (VAL), and Helmerich and Payne Inc. (HP). The fund is on the smaller side, with only $175.3 million in net assets. This ETF is passively managed and it has a 0.35% expense ratio.

oil services etfs

ETF for Oil and Gas

Energy Select Sector SPDR Fund (XLE)

The Energy Select Sector SPDR Fund follows the performance of the Energy Select Sector Index. This fund aims to passively track the energy sector by holding a basket of select stocks.

The fund contains companies in the oil, gas, energy, and service & support sectors. This is a market-cap weighted fund, so its holdings are highly concentrated in larger companies. Roughly half of the fund’s net assets consist of only two companies, Chevron Corporation and Exxon Mobil. Due to its high concentration in these stocks, the Energy Select Sector SPDR Fund carries more individual stock risk than other, more diversified ETFs.

iShares U.S. Energy ETF (IYE)

The iShares U.S. Energy ETF tracks a collection of US energy stocks. The fund primarily invests in companies that produce, process, and distribute oil and gas.

Similar to the Energy Select Sector SPDR Fund, the iShares U.S. Energy ETF holds most of its investments in Exxon Mobil Corp and Chevron Corp. About 47% of the fund’s total investments are in those two companies.

The expense ratio for this fund is around 0.42%

Leveraged Oil ETF 

ProShares Ultra Bloomberg Crude Oil (UCO)

ProShares Ultra Bloomberg Crude Oil is a leveraged ETF that offers twice the returns as a normal index-tracking ETF. Similar to most leveraged ETFs, the ProShares Ultra Bloomberg Crude Oil accurately tracks the benchmark only for a day.

Thus, investors could see divergence if they hold this ETF longer than a day. This makes the funds suitable for day trading rather than long-term investing.

The expense ratio of this fund is 0.95%

oil etfs

Inverse Oil ETFs

ProShares UltraShort Bloomberg Crude Oil (SCO)

This ETF tries to produce twice the inverse daily performance of the Bloomberg WTI Crude Oil Subindex. It is an option for traders who want to short the oil market without having a futures account or to post margin either.

The expense ratio of this fund is 0.95%

What To Consider Before Investing In An Oil ETF

Oil price is dictated by supply and demand for the product. According to market analysts, fluctuations in oil prices could help determine changes in inflation. This implies that customer prices usually decline when oil prices fall and vice versa.

The increase in oil prices usually sees people travel less, which negatively affects the airline sector. The report by the Energy Information Agency every Wednesday is something oil traders look forward to.

The Weekly Petroleum Status Report tells market participants the changes in the sector. Some of the captured modifications include those in the gasoline and distillate inventories and crude oil inventories. It also captures the operating rate of US refineries.

Despite that, the Organization of Petroleum Exporting Countries (OPEC) remains a crucial player in determining the price of oil fluctuations. OPEC nations control roughly 40% of the world’s oil supply. They meet at least once a year to talk about production levels.

Best Oil ETF: Closing Thoughts

The energy sector plays a crucial role in the overall economy. Investors interested in gaining access to the oil sector should do so via an Oil ETF. They can choose a fund that resembles the performance of crude oil or one that invests in oil-related stocks.

Oil ETFs give investors access to a wide range of companies in the oil sector. If you’re ready to know more about the best oil ETFs, you should sign up for Stock Dork Alerts. Our reports are written in plain English, so they’re easy to understand. Sign up today and get a jump on the New Year with our 2020 Growth Stock Guide, it’s yours free when you join. Click here to join and claim your free copy now.

post-image

Webull vs Robinhood: Which is the Best?

Hassan Maishera - January 7, 2020

In this day and age, free trading is the new standard for stock market trading. Robinhood led the way, but now many major brokers offer commission-free stock trading. Despite pioneering free trades, Robinhood is facing stiff competition now that other brokers have adapted their business models. WeBull is another popular investing app that competes directly with Robinhood. Instead of making money from commissions and fees, these companies make money through investments and paid subscriptions. But which is the better mobile app for stock market trading? We’re asking the question, WeBull vs. Robinhood: Which one is the best?

Webull and Robinhood

These two discount brokers offer a lot of features and they’re both virtually free. On the surface, Robinhood and Webull may seem very similar investing apps. However, they each feature their own set of pros and cons. Understanding their differences would help you make better financial decisions in terms of investments and trades.

What is Robinhood?

Robinhood is the trading app that first started commission-free trades. It allows users to trade stocks, options, and some cryptocurrencies without paying huge fees. There are no commissions and you can open an account with no minimum deposit. This app basically started the free trades frenzy and the older brokers have struggled to keep up.

This trading platform has a simple design and it’s extremely beginner-friendly. If you want the paid version of this investing app, there’s also Robinhood Gold. Users of Robinhood Gold have free margin trading and more. You do need a minimum balance of $2,000 for this, and the Gold would just cost you a bit of money at $5 a month. Take note though, that the first $1,000 margin is interest-free. But after that, there’s a 5% rate.

In terms of security, it uses industry standards to keep accounts protected. Your bank information is never saved and authentication procedures are in place as well.

What Is Webull?

Webull allows free trading for stocks and ETFs. It’s been on the market for a few years and has seen incredible growth since the time it was launched. However, it doesn’t enjoy the same name recognition as Robinhood. However, Webull offers tons of great features, like advanced analytics, simulated trading, and much more.

The platform design is exceptional for active traders who wish to have a dynamic user interface. Webull offers several features for traders, including technical indicators, financial calendars, research agency ratings, live market data, research tools, and more. You will also see information like cash flow reports, income statements, and balance sheets too. As such, you don’t even need to find these market data ahead of time. And like Robinhood, Webull also protects your data with encryption.

As for fees, you won’t be charged for any stock or ETF trade. There are also no fees for transferring money in and out of your account using ACH. If you do wish to transfer money via domestic wire transfer, the fees are $8 per deposit and $25 per withdrawal. Internationally, the wire fees are $12.50 for deposits, and $45 for withdrawals.

Now looking at security, Webull offers SIPC protection for accounts. Passwords and personal information on accounts are encrypted too.

Overall, it’s a great choice for active traders who want to be able to enjoy a full suite of tools and resources even while they’re on the go. If you’re an advanced trader looking for an all-around app, Webull is an awesome choice.

Webull and Robinhood: Common Ground

  • Both platforms offer commission-free trades and zero account fees.
  • Margin trading feature is available on both platforms, but both still lack investing on mutual funds
  • New users can get a free share(s) of stock just for signing up.
  • Both platforms offer account accessibility through mobile app and web.
  • Extended hours is included with all accounts.

Webull and Robinhood: Best By Category

While these free investing apps are very similar, they’re different in a few key ways. We compare Robinhood vs. Webull in different aspects.

Technical Analysis & Research Tools

Winner: WeBull

Webull is loaded with technical features for traders. For any given stock, you will find tons of in-depth analysis. It’s jam-packed with indicators and other research tools, including analyst ratings and more. Robinhood offers pretty basic charting and research tools only. Though they have stepped their game up as of late, it is still behind WeBull in this category.

Investment Options

Winner: Robinhood

Robinhood users can access a broad range of investment options, including stocks,  cryptocurrencies, ETFs, and options. However, Webull offers exchange-listed stocks and ETFs only.

Ease of Use

Winner: Robinhood

When you’re looking for a platform that’s easy to use, Robinhood is great as it’s targeted at novice investors. What it lacks in sophistication, it does make up for it with simplicity. Webull is one that’s more advanced and it may be confusing for newbie traders. Beginners may not be able to make sense of everything the app offers. You might need some form of help when navigating the trading simulator, feeds, financial calendars, and market data.

Access to Short Selling

Winner: WeBull

Margin trading is available for Webull users when their account balance exceeds $2,000. Then, they’ll have the option to short select stocks. Robinhood offers margin trading, but investors can’t short stocks on the platform.

Bonus Stocks

Winner: WeBull

Brand-new users to either platform can get a free share of stock for opening an account, but WeBull users may get up to two shares of stock for opening and funding an account. Robinhood only offers one share.

Get Free Stocks

You can use this link to get 2 free stocks from webull worth up to $1200 each.

Webull vs Robinhood: Pros and Cons

Despite being great companies that offer great services, each platform also has its ups and downs. Here’s the best, and the worst, of each one.

Robinhood Pros

  • It is easy to use, making it perfect for beginners.
  • You can trade cryptos, stocks, ETFs, options, and more.
  • Very user-friendly
  • Robinhood is preparing to release fractional-share trading soon.
  • Get a free stock on signup.

Robinhood Cons

  • Supports only basic order types.
  • Basic research and charting tools.
  • No simulation you can use
  • There is no dividend reinvestment plan.
  • Retirement accounts are not available.
  • Users must make a payment to have margin trading.
  • No short selling.
  • No mutual funds

WeBull Pros

  • Open and fund an account with at least $100 and get two free stocks.
  • Advanced research and charting tools.
  • Level-2 data access available for a fee.
  • You can use a trading simulator. Protects your data with encryption like Robinhood does
  • Paper trading allows you to practice first without risking real cash, so you can see what it’s like before actually investing money
  • Users can open and manage IRAs.
  • Great customer service

WeBull Cons

  • It may be complicated for beginner investors.
  • You can’t trade cryptocurrency or options
  • Absence of a dividend reinvestment plan
  • No plans to offer fractional shares
  • No mutual funds

Webull vs Robinhood: Final Thoughts

These trading apps are remarkably similar and extremely evenly matched. Robinhood and Webull are both companies that offer security for your information and money. However, there are a few key differences between them. It’s so close that it’s hard to call a winner. Ultimately, you should try both companies to see which app works best with your style. Whichever you want, each app does make it easy for investors to invest and also learn about the financial world.

Since there are many apps out there, our comparison between Robinhood and Webull is only the beginning. The Dork has all the latest stock market news, in-depth analysis, and much more for you to see. Our reports are fun, informative, and easy to read. Sign up today and get a jump on the New Year with our 2020 Growth Stock Guide, it’s yours free when you join. Click here to join and claim your free copy now.

 

post-image

Best Monthly Dividend Stocks for Income Investing

Hassan Maishera - January 2, 2020

While most companies pay quarterly dividends, monthly dividend stocks offer more cash-flow flexibility. Income investors often prefer monthly dividend payouts because they offer more regular income. However, almost any trader can appreciate the value of monthly dividend payments.

Traders have hundreds of monthly dividend stocks to choose from, but they each have their own set of risks and benefits. They each pay varying rates of return, but that’s just the beginning of the differences.

Most monthly dividend stocks represent funds or REITs. Each fund focuses on a particular area of investment, and they have different strategies and risk levels. To determine which one is best for your portfolio, you’ll need to identify which one fits best with your overall investment strategy.

Monthly Dividend Stocks: Our Top Picks

If you’re looking to add some monthly dividend stocks to your portfolio, you might not know where to begin. You should look for picks that fit with your investing goals. This list of the best monthly dividend stocks provides a solid starting point for investors of all skill levels.

Realty Income Corporation (O)

This San Diego-based REIT has properties in the United States, Puerto Rico, and the United Kingdom. The fund primarily invests in freestanding, single-tenant commercial properties. Property rents provide most of the fund’s cash flow, and the income is distributed as monthly dividends.

Realty Income Corporation has long-term lease agreements with its tenants, and its properties provide over $20 billion in annual income. Dividend payments currently yield about 3.7% monthly.

This fund has made good on over 500 consecutive monthly dividends over the past few decades. Since it listed on the NYSE over 20 years ago, it raised its dividend 102 times. Realty Income Corp. is a rock-steady company and it’s a reliable option for income investors.

STAG Industrial, Inc. (STAG)

Founded in 2011, this Boston-base REIT focuses on single-tenant industrial properties in the US. The company’s investment strategy offers a good balance of income and growth.

STAG’s enterprise is worth more than $5.5 billion. Currently, STAG’s monthly dividend payout yields about 4.6%. Thus, making STAG one of the most lucrative monthly dividend stocks available to investors.

Over the past few years, STAG Industrials increased its monthly dividends regularly. This fund posted an excellent performance in 2019, and share prices could be heading higher over the next few months.

Shaw Communications Inc. (SJR)

Shaw Communications Inc. is a Canadian cable company that primarily operates in North America. The company offers telephone, Internet, television, and mobile service. Their services are backed by a fiber-optic network. Shaw Communications Inc. also operates via its subsidiary Freedom Mobile, allowing it to provide services in more regions on the continent.

Over the past few years, Shaw Communications has shown a strong commitment to maintaining its dividend payments. Despite having cashflow troubles between 2013 and 2015, the company managed to make all of its dividend payments. If you’re an income investor, that’s the kind of reliability you’re looking for.

Shaw’s annual revenues add up to about $9 billion, and its monthly dividend yields about 4.4%. Shaw Communications Inc. could be set for another fantastic year following recent developments by Freedom Mobile. The firm recently launched home internet services, and the new offering could be a major growth engine for the company this year.

Pembina Pipeline Corporation (PBA)

Pembina Pipeline Corp is one of the best Canadian monthly dividend stocks. Though it trades on the NYSE in the US, the firm offers various services for the oil and natural gas industry.

The company is worth over $18 billion, and its dividend yields about 4.9%. While that’s an excellent yield, it’s a few points lower than the production and pipeline industry’s average yield of 5.29%. However, monthly payments somewhat compensate for the lower yield. Currently, it’s one of the best monthly dividend stocks.

Pembina share prices are also up over the past few months. The firm’s recent acquisition of the outstanding common equity of KML could help boost its output this year. The expansion could fuel more gains over the coming few months.

EPR Properties (EPR)

This real estate investment trust is based in Kansas City, Missouri. EPR Properties focuses its efforts on the commercial property market. Its primary interests lay in the entertainment, recreation and education sectors. Shares of EPR performed excellently in recent months, and it returned a lot of revenues to its investors via monthly dividends.

The current monthly dividend yield for this stock stands at 6.4%, which makes it one of the highest-yielding monthly dividend stocks on the market. The annual dividend payout amount is up by 150% over the past two decades, despite slashing its payments after the 2008 financial crisis.

Increases in capital gains helped EPR maintain its record of dividend increases. The company’s capital gains are up 12% over the past year. Similarly, it’s up by roughly 30% and 70% over the last three and five years respectively.

Recent developments such as the sale of its Charter School portfolio could rally share prices over the net few months. This earnings boost could, in turn, lead to increased dividends.

shipping REITS monthly dividend stocks

©New York Times

Gladstone Commercial Corporation (GOOD)

Gladstone Commercial Corporation is leading real estate investment trust. The trust invests in single-tenant and anchored multi-tenant net leased industrial, and office. It also invests in medical properties across the United States.

The company has been paying regular monthly dividends since 2005. Gladstone Commercial Corporation has had over 170 consecutive monthly cash distributions on its stock. Also, the company has paid 160 consecutive monthly cash distributions and 36 consecutive monthly cash distributions on its Series D Preferred Stock.

For its Series B Preferred Stock, the company has paid 151 consecutive monthly cash distributions to investors. The annual revenue of Gladstone Commercial Corporation is over $600 million. Its dividend yield currently stands at 6.9%, which is higher than the REIT and Equity Trust yield of 4.11%.

The share price of Gladstone Commercial Corporation has been performing well over the past decade. This has helped the company boost its dividend payout to investors during that period.

Gladstone Commercial Corporation is expanding its portfolio into the industrial sector. At the moment, the company has a few industrial properties across the United States. The acquisition of an industrial portfolio in several parts of the US could open up the business for the company. Thus, it could boost the earnings of the company and subsequently the dividend.

Gladstone Investment Corporation (GAIN)

This is a private equity fund that has been around since 2005. The company specializes in the purchase of mature, lower middle-market companies. The companies they acquire usually have $20 to $100 million in revenue, attractive fundamentals, and strong management teams.

The company has seen massive returns over the past decade, following the 85% drop it experienced after the 2008 financial crisis. The current monthly dividend yield for this stock is 5.9%, which makes it one of the best options for investors. In 2018, Gladstone Investment Corporation increased its monthly payout three times. It did the same thing twice in 2019.

In addition to these, Gladstone Investment Corporation has been increasing its annual dividend payout each year since 2010. These moves make it one of the best monthly dividend stocks for investors. In the past three years, shareholders of Gladstone Investment Corporation have received a 106% total return. Over the past five years, the total return on this stock stands at 151%. Thus, Gladstone Investment Corporation is an excellent stock to look at if you wish to earn high monthly dividends on your investment.

At the moment, Gladstone Investment Corporation’s investment portfolio consists of 27 companies. It could increase this number in the coming year, which could further boost investor payout.

Stellus Capital Investment Corporation (SCM)

Stellus Capital Investment Corporation was founded in 2012 as a spin-off from the D. E. Shaw & Company. It is a middle-market investment firm that has over $1.6 billion in assets under management and is active in roughly 20 industries.

Stellus Capital Investment Corporation has one of the best monthly dividend payouts. The currently monthly dividend yield for this stock stands at 9.4%, which is quite impressive. The rising share price since 2012 has been responsible for the growth of its dividend rate. The five-year average dividend rate is 11%, which makes it an exciting option to consider. The total return over the past year is 17%. Meanwhile, the dividend growth rate is up by 63% over the past five years.

The company’s involvement in the acquisition of a few companies could see it perform well over the next few months. Stellus Capital Investment Corporation has provided financing to aid the acquisition of Numet, FTC FBO, Naumann/Hobbs, and more. The expansion of its portfolio could lead to more revenue and, subsequently, more massive payout to investors.

Monthly Dividend Stocks: Closing Thoughts

Monthly dividend stocks have become an attractive option for investors who wish to get regular returns to take care of their needs. Several companies now pay monthly dividends. However, this has made it harder for investors to decide which ones to invest in at the moment. We believe the monthly dividend stocks mentioned in this review could generate good yields to investors over the coming months.

If you’re ready to know more about monthly dividend stocks, you should sign up for Stock Dork Alerts. We provide a steady stream of stock market news and analysis that will help keep you informed on everything happening in the world of Wall Street. Plus, our reports are written in plain English, so they’re easy to understand. After just a few weeks reading Dork Alerts, you’ll sound like the smartest guy at the water cooler. Sign up today and get a jump on the New Year with our 2020 Growth Stock Guide, it’s yours free when you join. Click here to join and claim your free copy now.

 

post-image

Best Free Stock Screeners for Everyday Traders

Hassan Maishera - December 31, 2019

The stock market is comprised of hundreds of even thousands of stocks available to investors. Due to the large number of shares available, investors need tools that would help them distinguish the stocks. One such tool is the stock screener. We have the paid and free stock screeners available to investors.

Stock screeners have become handy tools for investors and traders. However, with several stock screeners to choose from, investors often find it hard to decide on which ones to use. Here, we have put together some free stock screeners we believe will be best for you.

What is a Stock Screener?

They are trading tools that traders and investors use to filter stocks based on pre-defined metrics. The tools enable traders to categorize stocks according to a set parameter. For example, traders can use stock screeners to see stocks based on their price, market cap, P/E ratio, dividend yield and more.

Stock screeners are helpful to investors in several ways. They can help with trading strategies as investors filter stocks to fit their trading criteria. Thanks to stock screeners, investors and traders can analyze hundreds of stocks within a short period of time. Thus, enabling them to eliminate stocks that don’t meet their requirements and focus on those that meet their standards.

How Do Stock Screeners Work?

Platforms that offer stock screeners allow investors and traders to search for a vast number of stocks. To do that, the stock screeners have three major components:

  • A database of stocks and their company details
  • A set of variables to help investors with their search
  • A screening engine that helps identifies stocks that fit the criteria a trader is searching for

The stock screeners have these three components, making it easier for investors to find the stocks they are searching for. You could search for stocks in a particular industry, large or small-cap stocks, stocks within a specific price range, those with an acceptable P/E ratio, and a host of other metrics.

When you finish inputting your criterion, the stock screener will display a list of stocks that meet your requirements. Stock screeners help investors carry out quantitative analysis by focusing on measurable factors affecting a stock’s price.

What Makes a Good Stock Screener?

There are some features you have to look out for when searching for a good stock screener. Here are the features:

Diversification

The leading stock screeners have a wide range of stocks available to traders. The higher the number of stocks available on a screener, the better the results the tool will give investors based on their criteria.

Data accuracy

This is perhaps the most essential feature of a stock screener. The best stock screeners present accurate data to investors, making it easy for them to work with such information.

A large number of criteria

The number of measures available should be considered when picking a stock screener. The larger the number of criteria available, the more accurate search results would be. The best stock screeners help group stocks into several groups, based on the measures available.

Five Best Free Stock Screener

Finviz

Finviz is one of the best free stock screeners currently available. The ease of use of Finviz makes it a favorite amongst investors and traders. It has three popular segments; fundamental, descriptive, and technical.

You can choose any of the segments or use all of them when you select the ‘ALL’ tab. Finviz has several criteria from which you can choose from. The dropdown menus on each criteria indicate the different options available.

Finviz has a swift response. In addition to building your own portfolio, Finviz has other features, including the news and technical analysis relating to stocks.

Yahoo Finance

Yahoo also offers a popular free stock screener. it’s easy to use, so it’s an excellent choice for beginners. It’s made up of a simple segmentation widget, which churns our results based on your search criteria.

Users can filter stocks for many attributes, including market cap, region, P/E ratio, and more. Yahoo also has pre-built scans that search for common categorical selections, like daily gainers, most active stocks, and more.

These preset filters are perfect for beginner traders, and the screener also has fast response speed.

Zacks Stock Screener

Although Zacks is famous for its rating system, its free stock screener offers a wide array of functions. Zacks Stock Screener allows users to specify custom figures for screening. Most other screeners, including Finviz, only allow users to select from preset values unless they upgrade to the paid version.

Zacks Stock Screener also offers some unique filters, like analysts’ views, earnings surprises, and other highly specific attributes.

Stock Fetcher

The Stock Fetcher screener is complicated to use but remains one of the best free stock screeners available. The website offers full-scale investment research tools, and traders can find plenty of information on potential investments.

Stock Fetcher is an ideal tool for technical and fundamental analysis. Users can even create stock screens by themselves, a feature usually limited to paid screeners.

Furthermore, the high-end visualization makes this screener a great one for discovering quality stocks to trade.

ChartMill

ChartMill gives traders the option of finding day trading stocks depending on the various criteria available. The screener offers most of the same common filters you find on other options, including market cap, P/E, and other indicators.

ChartMill is free to use, but it works based on a credit system. The site gives users 6,000 free credits to use every month. The credits roll over when they’re not used, so users can redeem them on a later date.

Free Stock Screener: Closing Thoughts

These free stock screeners help investors find new investment opportunities. Investors need to walk their own path, and screeners are an essential tool for independent-minded traders. Traders can only go so far by picking the same old stocks that are blasted all over CNBC and Bloomberg. To become a true trader, you need to do your own research and find your own opportunities. The best free screeners are invaluable tools for finding new and exciting investments.

For more trader resources like the best free stock screeners, signup for free Dork Alerts. Our reports are written in plain English, so they’re easy to understand for beginners. After a few weeks reading Dork Alerts, you’ll be the smartest guy at the water cooler. Sign up today and get a jump on the New Year with our 2020 Growth Stock Guide, it’s yours free when you join. Click here to join and claim your free copy now.

post-image

The Best Cybersecurity Stocks to Buy for 2020

Hassan Maishera - December 27, 2019

The cybersecurity sector could be positioned for long-term success. Cybersecurity stocks will continue to grow in value as societies become increasingly connected. These companies are laying the groundwork for our digital future.

The cybersecurity sector will not only grow but will experience progression over the coming years. Buying these underrated cybersecurity stocks now could pay off big in a few years.

Check out our other top tech stocks here and sign up for Dork Alerts to get our “2020 Growth Stock Guide” as our free gift. With the latest stock market news, hot stock alerts, expert analysis, and more, it’s the best way to track the market.

Best Cybersecurity Stocks to Buy Today

Cybersecurity is one of the hottest industries in the tech sector. It’s already up big for the year, but that may only be the tip of the iceberg. This industry is primed for massive growth in the coming years.

Cybersecurity has become an essential part of our lives. Businesses all over the world are moving most of their operations online. This has created a massive demand for cybersecurity. Thus, making cybersecurity stocks of high value to investors.

2019 has been an astonishing year for the stock market, and cybersecurity stocks also recorded massive gains. Heading into 2020, it is tough for investors to determine the best cybersecurity stocks to buy now. Here, we have put together a few shares in that sector that we believe could perform well over the coming year.

Cybersecurity Stocks: Our Best Picks

The cybersecurity industry grew significantly over the past few years, and it could continue in that trend. However, with so many stocks in the cybersecurity industry, it is tough to decide which ones to buy. Thus, we put together a few cybersecurity stocks we believe could perform well in 2020.

Fortinet Inc. (FTNT)

Fortinet is a California-based multinational corporation. The company develops and markets cybersecurity software, appliances, and services. Its major focuses are anti-virus, firewalls, endpoint security, and intrusion prevention. It has a wide range of products and solutions available to both retailers and institutions. Thus, making it one of the most significant cybersecurity companies in the world.

Over the past two decades, Fortinet has grown into one of the leading cybersecurity stocks. Innovative software engineering and astute acquisitions helped the company record massive growth in recent years.

The firm’s partnership with Google Cloud could drive even more revenue growth in the near future. Google Cloud will use Fortinet’s services to boost its security, so it can attract more enterprise customers.

Fortinet also acquired a SOAR provider, CyberSponse, in an effort to boost its incident response business. The company has even surpassed Cisco in the number of SD-WAN customers. It hit over 21,000 customers, as businesses recognize the importance of integrated security.

These latest developments make Fortinet an attractive cybersecurity stock to consider. It could record massive gains over the coming months.

Palo Alto Networks Inc. (PANW)

Palo Alto Networks is another cybersecurity stock that could perform well over the coming years. It has had a fantastic 2019 and could be set to repeat the same feat in 2020. With operates in more than 150 countries around the world. Palo Alto Networks is a specialist in firewalls and other cybersecurity services.

Similar to Fortinet, Palo Alto Network has been able to grow over the years due to several acquisitions and partnerships. Recently, the company entered an agreement to purchase Aporeto Inc., a machine identity-based micro-segmentation firm.

The agreement would see Palo Alto Networks venture into the micro-segmentation sector. Thus, allowing them to help customers secure their applications and software at scale. The acquisition could see Palo Alto Networks gain more customers as they provide further cybersecurity services to individuals and organizations around the world.

Also, the introduction of a new version of the Prisma Cloud cybersecurity platform would help Palo Alto Networks become more productive. The platform will incorporate the technologies it obtained from its recent acquisitions. Thus, making it easier for customers around the world to access the services via the platform. Other recent acquisitions by Palo Alto Networks include Twistlock Ltd. and PureSec Ltd.

FireEye Inc. (FEYE)

FireEye is another California-based cybersecurity company. Over the past fifteen years, the company is known for manufacturing cybersecurity hardware and developing software. Their products and services help protect against malicious software. Furthermore, they analyze IT security risks.

Similar to the other leading cybersecurity companies, FireEye has been innovative in terms of acquisitions, partnerships, and the release of new products and solutions. Thus, allowing it to remain one of the best cybersecurity stocks available to investors.

In 2019, the company made available several new cloud security capabilities on Amazon Web Services. The launch of cloud versions of FireEye Network Security, Forensics, and Detection On-Demand on AWS would help boost demand for their products. Its acquisition of Mandiant a few years back allows FireEye to help clients identify a security breach that has been helpful in expanding its business.

FireEye is also offering cyber-physical threat intelligence subscriptions. The subscription covers context, data, and actionable analysis on threats to cyber-physical systems. It also covers other areas including; industrial control systems (ICS), Internet of Things (IoT), operational technology (OT), and more.

The launch of the new services and products could help FireEye record gains by 2020. Thus, enabling the stock to perform well over the coming months.

Cyberark Software Ltd (CYBR)

Cyberark is another cybersecurity company that has been amazing in the past. However, it has the potential to perform well over the coming few months. The company provides cybersecurity security to companies in the financial, energy, retail, and healthcare industries, including Fortune 500 entities. It also provides services to governments across the world.

The Massachusetts-based company provides a variety of cybersecurity services, including cloud-based, on-site, endpoint, and DevOps.  Cyberark is one of the leading firms in the Privileged Access Management market. The firm’s work in the field has helped make it one of the leading cybersecurity stocks on the market.

Over the past few months, Cyberark has made some crucial changes and improvements to its Privileged Access Security service. The launch of the Global Privileged Access Security opportunities will help boost business opportunities across the CyberArk Partner Network.

By securing its Amazon Web Services (AWS) Security Competency status, Cyberark expanded its association with Amazon. The certification recognizes CyberArk’s Privileged Access Security Solution as a legitimate means to limit security risks on AWS.

These achievements over the past few months could set the template for further gains for the company. Thus, ultimately leading to its stock achieving another excellent performance in 2020.

Check Point Software Technologies Ltd. (CHKP)

Check Point Software Technologies is an Israeli-company that is listed on NASDAQ. It is a multinational cybersecurity company that specializes in both hardware and software development. It is involved in network security, endpoint security, cloud security, mobile security, data security, and security management. With an annual revenue of over $1 billion, Check Point Software is a cybersecurity company to keep an eye on.

A series of acquisitions and product launches made Check Point Software perform well over the past few years. It could continue on that path over the coming few months as the market grows. It recently acquired Protego, a new Serverless security technology company.

With this acquisition, the company has become the first cybersecurity vendor with a consolidated security solution for cloud workload protection (CWPP) and security posture management (CSPM). Thus, Check Point would be able to provide continuous serverless security with unmatched run time protection and application hardening.

Check Point also acquired Cymplify, a startup based in Tel Aviv. With this acquisition, Check Point can provide a consolidated security solution that hardens and protects the firmware of IoT devices. Thus, making the devices secure against the most complicated attacks.

These acquisitions have enabled Check Point to roll out new products and services. Thus, broadening their customer reach and targeting new businesses and organizations. They could also be templates for further growth of the company and its stock over the coming months.

Proofpoint Inc. (PFPT)

Proofpoint Inc. is a California-based enterprise security company. Its services are focused on inbound email security, outbound data loss prevention, social media, mobile devices, digital risk, email encryption, electronic discovery, and email archiving.

Proofpoint’s acquisition of ObserveIT will see the company boost its cybersecurity services. The addition of ObserveIT’s lightweight endpoint agent technology and data risk analytics to Proofpoint’s industry-leading information classification, threat detection, and intelligence could help enterprises gain further insight into user activity regarding their sensitive information.

The company won several awards for its exceptional security services in 2019, so the industry clearly appreciates what this company is doing. The firm has a strong rapport with its business clients, so it’s in an excellent position to grow as the cybersecurity industry expands. Proofpoint is also pursuing acquisitions that could help it continue its hot streak. This is a stock worth watching in 2020.

Cisco Systems, Inc. (CSCO)

Cisco Systems, Inc. is an American multinational technology company based in California. In addition to cybersecurity services. Cisco Systems develops, produces, and sells networking hardware, telecommunications equipment, and other high-technology products and services. With billions of dollars in annual revenues, Cisco is one of the largest cybersecurity companies in the world.

2020 could be a pivotal year for Cisco Systems as the company makes strategic moves to enhance growth. The company will acquire Exablaze, an Australian-based designer and manufacturer of network devices.

The addition of Exablaze’s segment-leading ultra-low latency devices and FPGA-based applications to Cisco, financial and HFT customers will enjoy the services the company provides. The acquisition would help boost Cisco’s next-generation low latency solutions for Intent-Based Networks.

cybersecurity stocks | cisco systems

Cisco is one of the pioneers of the tech industry. Its servers are primary components in thousands of data centers across the world, and they comprise a large portion of the enterprise network grid.

Cisco is also making headway in other aspects of its businesses. The firm’s Silicon One design, a single-chip architecture, is expected to be a major growth engine for years to come. It will help enterprises better manage their data, and it’ill be used in crucial network equipment by big-name companies like Facebook and Microsoft.

The growth expected from these latest developments could see Cisco record excellent gains next year. Thus, making it most likely for its share price to surge higher over the coming months.

Importance of Cybersecurity

Cybersecurity has become an essential part of our lives, both individuals and corporations. Cybersecurity companies help protect sensitive data, personally identifiable information (PII), protected health information (PHI), personal information, intellectual property, and information. Furthermore, they help preserve governmental and industry information systems from theft and damage caused by criminals and adversaries.

As more companies and businesses go digital, cybersecurity is becoming more critical. The number of breaches and cyberattacks have risen tremendously over the past few years. Deploying antivirus software is no longer enough to secure your online information. Thus, cybersecurity companies have been rolling out new solutions and products to help individuals and enterprises cope with rising threats.

As our society becomes more technologically reliant, the importance of cybersecurity continues to increase. Thus, for investors, investing in cybersecurity companies could be a great move as their products and services gain more global adoption.

cybersecurity stocks growth chart

Growth of the Cybersecurity Sector

The cybersecurity sector has been steadily growing over the past few years. As of 2018, the cybersecurity industry was valued at $118.78 billion. The valuation is set to increase to over $260 billion over the next four years.

Cybersecurity trends are focusing more on IoT, BYOD, AI, and machine learning. These emerging technologies are becoming key to the daily operations of businesses and companies around the world.

The number of companies falling prey to data breaches and other cyberattacks is increasing. Thus, businesses and organizations are paying more to secure their information. As more enterprises deploy security services and purchase products, the cybersecurity sector would continue to expand.

The critical growth in the cybersecurity trend would be in enterprise solutions. Government agencies and companies are seeking better ways to protect their information. Thus, solutions targeting them will increase over the next few years.

cybersecurity stocks acquisitions

Cybersecurity Stocks: Closing Thoughts

The cybersecurity sector is growing in importance as businesses and governments move their operations online. With so many cybersecurity stocks to choose from, it is tough for investors to decide which ones to purchase. However, we believe the cybersecurity stocks in this post could head higher over the coming 12 months.

If you’re ready to find out more about cybersecurity stocks, you should sign up for Stock Dork Alerts. We provide a steady stream of stock market news and analysis that will help keep you informed on everything happening in the world of Wall Street. Plus, our reports are written in plain English, so they’re easy to understand. After just a few weeks reading Dork Alerts, you’ll sound like the smartest guy at the water cooler. Sign up today and get a jump on the New Year with our 2020 Growth Stock Guide, it’s yours free when you join. Click here to join and claim your free copy now.

More Cybersecurity Stocks to Buy Today

Stay tuned to the Dork to keep track of all the latest cybersecurity stocks. Follow Stock Dork on Twitter and Facebook to keep up with all the latest stock market news. Also, don’t forget to sign up for mobile Dork Alerts to get all the hottest stock picks, insights, and analysis delivered to your cell.

post-image

Best Marijuana ETFs to Buy in 2020

Hassan Maishera - December 26, 2019

The cannabis sector is a growing industry that could produce many winning stocks over the next few years. Canadian legalization and loosening US regulations are creating opportunities for investment on both sides of the border. As the industry expands, more investors are looking towards marijuana ETFs as the best way to profit on cannabis stocks.

There are dozens of cannabis stocks to choose from, and it can be hard to predict which will be long-term winners. Marijuana ETFs allow traders to invest in groups of hand-picked cannabis stocks, instead of concentrating everything into a few companies. Since ETFs trade just like stocks, marijuana ETFs are highly liquid and easy to acquire. Buying marijuana ETFs could be the best way to invest in the growing cannabis industry.

cannabis etfs

Best Marijuana ETFs: Our Top Picks

These marijuana ETFs hold a basket of some of the best up and coming cannabis stocks on the market. They could be the best way to play the sector.

ETFMG Alternative Harvest ETF (MJ)

ETFMG Alternative Harvest is the first ETF in the US that focused on cannabis. This ETF tracks several pot stocks around the world. The index consists of shares of companies involved in the legal cultivation, production, marketing or distribution of marijuana products. The products could be for medical or nonmedical purposes.

In addition to that, ETFMG Alternative Harvest also holds stocks of companies engaged in the trading or production of tobacco or tobacco products. Other companies include those manufacturing fertilizers, plant foods, pesticides, or growing equipment for cannabis or tobacco.

Furthermore, Alternative Harvest holds stocks of pharmaceutical companies that produce, market, or distribute drug products that use cannabinoids. It is worthy to note that the fund only owns shares of legitimate companies. Its top four holdings at the moment include Tilray, GW Pharmaceuticals PLC ADR, Cronos Group, and Canopy Growth.

The fund holds over $600 million in assets, and its expense ratio currently stands at 0.75%. In 2016 and 2017, the fund returned 19.33% and 38.97%, respectively. However, it was down 21.75% in 2018.

Alternative Harvest only invests in companies that get more than half of their earnings from the marijuana-related business. The fund holds over 30 stocks and it rebalances its holdings quarterly

Horizons Marijuana Life Sciences (HMLSF)

Horizons Marijuana Life Sciences is another ETF that mainly focuses on marijuana stocks. The buys stocks of companies that make most of their revenue from cannabis production, distribution or sale. The Index is designed to provide investors exposure to the performance of several North American publicly traded firms with significant business activities in the pot industry.

Horizons is a Canadian ETF provider that is headquartered in Toronto. Its family-oriented ETF is listed on the Toronto Stock Exchange. At the moment, the fund is not registered with the U.S. Securities and Exchange Commission and cannot be traded on any major US exchanges. However, the ETF is available to US investors on the OTC market.

In terms of the individual holdings, Horizons marijuana ETF has more than Alternative Harvest. Horizons marijuana ETF holds more than 50 stocks in its portfolio, which is higher than the Alternative Harvest’s 30. The fund focuses on companies that make more than 50% of their revenue from cannabis-related businesses.

Some of their holdings include the five top cannabis-cultivation stocks, pharmaceutical companies, and fertilizer stocks. The total assets under the Horizons Marijuana ETF stand at over CAD$428 million. Thus, making it one of the largest cannabis ETFs.

The Horizons ETF has become preferred by several investors due to its focus on companies with exposure to the medical cannabis sector. This is better than the Alternative Harvest’s portfolio, which holds some tobacco stocks.

The Cannabis ETF (THCX)

The Cannabis ETF was launched in July 2019. Over the past few months, it has raised over $17 million in assets. Similar to its competitors, the ETF was created to make it easy for average investors to venture into the cannabis market. It allows people to invest in cannabis stocks and benefit from the growing industry.

The Cannabis ETF concentrates its holdings in the United States. However, it has some assets in the UK and Canada. Most of the companies under this index are from the pharmaceuticals and biotech sector. At the moment, the fund’s most significant holdings are in Canopy, Cronos, GW Pharmaceuticals, Aurora Cannabis, and Scotts Miracle-Gro.

The expense ratio of 0.75% is similar to what is obtainable in other marijuana ETFs. The waiver fee of 0.25% is also what you can get in several cannabis investment funds.

The ETF was created to provide investment results that, prior to fees and expenses, have a net yield performance of the Innovation Labs Cannabis Index. The ETF invests roughly 80% of its net assets in the component securities of the index.

Under normal circumstances, the Cannabis ETF investors more than 80% of its total assets in addition to plus borrowings for investment purposes, in exchange-listed common stock (or corresponding American Depositary Receipts (“ADRs”) of marijuana companies.

What makes the Cannabis ETF unique is that it is non-diversified. The fund focuses on only cannabis-related companies and doesn’t invest in any other industry.

Cambria Cannabis ETF (TOKE)

This marijuana ETF launched in 2019. Currently, it has around $9 million in assets under management, so it’s one of the smallest cannabis ETFs around. The fund invests in the cannabis sector globally. Under normal circumstances, the fund invests at least 80% of its total assets into cannabis stocks.

The advisor invests in cannabis companies all over the world. However, they focus on the micro-, small-, and mid-capitalization stocks. This model of investment makes Cambria Cannabis a unique ETF. Similar to the others, Cambria only invests in companies that are legal and make most of their revenue from cannabis-related businesses.

While the fund is small in nature, it holds aims to hold roughly 20 to 50 stocks. The next expense here is 0.42%, which is lower than the usual 0.70% recorded by most marijuana ETFs. The small expense fees and investment rate makes it one of the cheapest ETF funds in the cannabis sector. The fund invests in cannabis stocks in four countries. Most of them are in Canada, while the others are in the US, the UK, and Australia.

Cambria Cannabis’s most substantial holdings are in Aphria, Constellation Brands, GW Pharmaceuticals, MediPharm Labs Corp, and British American Tobacco.

AdvisorShares Vice ETF (ACT)

Similar to the other ETFs, the AdvisorShares Vice ETF is an investment fund that seeks long-term capital appreciation. To qualify for this fund, companies must generate at least 50% of their revenues from cannabis. Its other holdings operate in the tobacco and alcoholic beverage industries. The fund also includes marijuana research and development companies.

The AdvisorShares Vice ETF was founded in 2019, and it primarily invests in US-listed equities. Its total assets under management total over $12 million, with an expense rate of 0.75%. Despite the poor performance of the cannabis sector this year, the returned 18% gains in 2019. This performance could indicate that this is a very well managed fund.

AdvisorShares Pure Cannabis ETF (YOLO)

AdvisorShares Pure Cannabis is the first actively managed marijuana ETF. The fund invests roughly 80% of its total assets in companies that earn more than 50% of their income from cannabis, hemp, and derivative products.

Unlike the other ETFs, the AdvisorShares Pure Cannabis doesn’t track any underlying index. Instead, it focuses on mid- and small-cap companies. The companies are mostly in the pharmaceutical, biotech, and life-science sectors.

This marijuana ETF invests in both domestic and international companies. Some of its overseas holdings include; CannTrust, OrganiGram Holdings Inc., and HEXO Corp.

With assets under management of over $40 million, it is one of the largest cannabis ETFs. The expense ratio of 0.74% is in line with the industry average. AdvisorShares Pure Cannabis is a unique ETF is that offers simultaneous exposure to cannabis and other consumer stocks.

Global X Cannabis ETF (POTX)

Global X Cannabis launched just last year, and the fund invests in companies from across the pot industry. The fund invests in companies involved in the production and distribution of cannabis, and it also invests in companies that provide financial services to the marijuana sector. Companies have to make at least 50% of their income from cannabis-related businesses to be considered.

The fund manages just over $4 million in net assets, so it’s one of the smallest cannabis ETFs on the market. However, the expense ratio of 0.5% is somewhat lower than the 0.7% industry average.

The top holdings of this fund include Hexo Corp, Aphria Inc., Canopy Growth Inc., Cronos Group Inc., Aurora Cannabis Inc., and more.

american weed stocks

Some analysts are calling for investors to cycle into American weed stocks. Only 9 states remain where cannabis is completely illegal. Above: U.S.A. cannabis laws by state map, up to date as of October 2019.

Understanding the Marijuana Sector

The marijuana sector is very diverse. It includes several types of companies involved with the cannabis plant. Producers grow marijuana and they’re often the most notable companies. Many marquee cannabis stocks, like Aurora, Canopy Growth, and Tilray, produce cannabis. However, there are lots of other ways to make money in the cannabis industry.

Some cannabis firms don’t grow cannabis, but they use it for other purposes. Investors refer to these companies as cannabis derivative firms. Usually, these companies hail from the pharmaceutical space.

The cannabis sector also supports an entire ancillary support industry. The support specialists provide services to cannabis growers and users. They are usually real estate and packaging companies that rent spaces and offer other services to the industry players.

Overall, the cannabis industry grew significantly over the past few years. It could continue expanding if cannabis becomes legalized in more US states.

cannabis etfs

Growth of the Marijuana Sector

Marijuana is still illegal at the federal level. However, the plant is somewhat legal in several states. 33 states in the US have legalized cannabis for medical use, and there are currently ten states with recreational use for adults.

The cannabis industry was worth $10.4 billion in 2018, and it’s expected to grow over the coming years. As the sector expands, there will be more investment opportunities available.

Marijuana ETFs: Closing Thoughts

If you’re ready to find out more about marijuana ETFs, you should sign up for Stock Dork Alerts. We provide a steady stream of stock market news and analysis that will help keep you informed on everything happening in the world of Wall Street. Plus, we write our reports in plain English, so they’re easy to understand. After just a few weeks reading Dork Alerts, you’ll sound like the smartest guy at the water cooler. Sign up today and get a jump on the New Year with our 2020 Growth Stock Guide, it’s yours free when you join. Click here to join and claim your free copy now.

post-image

Best Bond Funds for Steady Returns

Hassan Maishera - December 20, 2019

Bond funds offer a simple way to invest in bonds without buying individual securities. These funds are similar to mutual funds, except they solely hold bonds instead of mixing their holdings with equities.

Some bond funds make monthly coupon payments. The yield is low, but the payments are consistent. Bonds have less inherent risk than stocks, so they tend to perform well during times of uncertainty. Bond funds generated excellent money returns in 2019,  and bonds are closing in on a record-breaking year.

With so many bond funds available to investors, it’s tough to determine which bond funds are great. Investors may turn to personal finance coaches to find the best bond funds with high but steady returns. Here, we will discuss some of the best bond funds that could guarantee stable returns for investors.

Bond Funds for Steady Returns: Our Best Picks

For the best bond funds, we looked at funds that guarantee sizeable and steady yields for investors. These have a substantial net asset and invest in bonds both within and outside the US.

Vanguard Wellesley Income (VWINX)

The Vanguard Wellesley Income has been around since 1970. It’s one of the most successful bond funds in the country designed for conservative investors. The fund invests in investment-grade fixed income securities and common stocks with above-average dividends.

This bond fund is one of the best due to its ability to deliver steady returns. As of 2018, over the past three years, the average annualized returns of the fund stood at 6.97%. Meanwhile, its five-year annualized return was 6.26% and the 10-year return was 7.91%.

best bond funds | vanguard group

Vanguard revolutionized investing by being among the first firms to offer low-fee, passive bond index funds.

Over the past decade, the Vanguard Wellesley bond fund has outperformed the general market. Even when the market recorded losses, the losses of the fund were smaller than the average.

The minimum initial investment for the fund is $3,000. However, it has a low expense ratio of 0.22%. With over $50 billion in assets, the Vanguard Wellesley Income Fund is one of the best bond funds. It invests in fixed income securities, like investment-grade corporate bonds. Aside from fixed income securities, it also invests in large-cap, dividend-paying stocks.

Since its inception, it has generated an average annualized return of 10%, making it one of the most stable bond funds currently available.

Fidelity Capital & Income Fund (FAGIX)

The Fidelity Capital & Income Fund is one of the bonds found in Morningstar’s High-Yield Bond category. It’s a $12.38 billion portfolio (assets under management) that has received excellent ratings over the years. As a conservative bond fund, Fidelity Capital & Income Fund is comprised of a mix of equities and fixed income securities. The fund primarily holds bonds rated below investment-grade. The initial investment for the fund is $2500.

This Fidelity fund balances income and capital appreciation for its investors, so they make some speculative investments for a chance at higher returns. The investment is not restricted to domestic issuers as they also target foreign issuers.

The bond fund has outperformed its category over the past few years and could continue to do so. It’s currently amongst the leading bond funds in its category. Fidelity Capital & Income Fund’s annual income rate of roughly 5% is a consideration as it provides stable income.

Vanguard High-Yield Corporate Fund Investor Shares (VWEHX)

The Vanguard High-Yield Corporate Fund Investor Shares is another bond fund that has over $26 billion in net assets. It’s a corporate fixed income portfolio that seeks to provide a high level and consistent income. The Wellington Management Company currently manages the fund. The initial investment required for this bond fund is $3,000, with an annual expense ratio of 0.23%. This is a low expense ratio for this fixed income portfolio. For investors who can afford the minimum of $50,000 for Admiral Shares, it has an expense ratio of 0.13%.

More than 80% of the total assets under the Vanguard High-Yield Corporate Fund Investor Shares are invested in corporate bonds rated below Baa by Moody’s. The fund also invests in bonds with equivalent ratings by independent bond rating agencies. The Vanguard High-Yield Corporate Fund Investor Shares invests in mostly higher risk, high-yield bonds.

High-yield bonds seek to provide investors with consistent income while reducing losses. The annualized average return on this fund is roughly 5%. The fund has maintained this over the years, making it a consistent and stable bond fund.

High-yield bonds come from companies or countries with low credit ratings. Therefore, high-yield bonds have higher risk than higher-rated bonds. High-yield bonds or ‘junk bonds’ yield much higher returns than traditional investment-grade bonds, but there’s a higher risk that the bond issuer could default. If that happens, you’re at risk of losing your principal investment.

Also, you can try Vanguard’s High-Yield Tax Exempt Fund (VWAHX) if you’re interested in municipal bonds. Generally, municipal bonds are less likely to default than corporate bonds.

BlackRock High-Yield Bond Fund (BHYCX)

BlackRock High-Yield Bond Fund is a high-yield Bonds according to Zacks Investment. The fund invests in junk bonds and has a higher risk compared to its other investment grades. However, the yield is high and consistent.

This best bond fund is managed by BlackRock, with total assets of over $17 billion. While the average performance of the fund over the past five years hasn’t been excellent, the high yield fund has performed excellently in recent years.

Blackrock is one of the biggest names in bond funds. They offer a wide variety of bond funds that cover several different categories and strategies.

The BlackRock High Yield Bond Fund has a modified duration of 3.16 years, similar to other high-yield bonds. Its initial investment is $2500 and it has a net expense ratio of 0.61% annually, which is below the category average of 1.17% expense ratio. This is low expense ratio that makes the BlackRock High Yield Bond Fund cheap compared to its peers. For individual investors, the fund has an expense ratio of 1.64%.

iShares iBoxx $ High Yield Corporate Bond ETF (HYG)

The iShares iBoxx $ High Yield Corporate Bond ETF has been focusing on tracking the investment results of an index made up of U.S. dollar-denominated, high yield corporate bonds. The fund invests roughly 90% of its total assets in component securities of its Underlying Index. The fund has greater volatility than some more conservative bond funds.

The fund is an ETF that provides investors broad exposure to high-yield bonds in the United States. The iShares iBoxx $ High Yield Corporate Bond ETF has total assets of over $19 billion, with a paid a 30-day SEC yield of around 4.83% as of December 2019. They have over a thousand holdings with an expense ratio of 0.49%. This expense ratio of 0.49%  makes it one of the cheapest bond funds in high-yield bonds.

The average annualized return of the iShares iBoxx $ High Yield Corporate Bond ETF fund has been impressive. Its 1-year yield is 6.42%, 5.43% for 3 years, and 4.40% for 5 years. Meanwhile, its 10-year average annualized return currently stands at 6.66%. That’s a good gauge for management. Although high-yield bonds have a higher risk, the fund’s ability to consistently deliver an annual return of 5% of more makes it stable.

SPDR Bloomberg Barclays High Yield Bond ETF (JNK)

The SPDR Bloomberg Barclays High Yield Bond is an ETF that has been focusing on providing investment that is appropriate for investors looking at fees. The fund provides results in line with the price and returns of an index that tracks the high-yield corporate short-term bond market.

The JNK High Yield Bond fund avoids several of the expenses and minimums that can be found in mutual funds. It follows the performance of the SPDR Bloomberg Barclays High Yield Very Liquid Index. The total assets under this fund currently stand at over $11 billion. It has $10.02B assets under management.

This high yield bond fund primarily invests in the industrial sector, which comprises 87% of its total assets. It has an expense ratio of 0.4%, a very low expense ratio for its category. Yield has been impressively consistent in this fund over the past few years. The average annual return in ten years was 6.64%, which is above the category average for funds during the period.

Similarly, its 1-year yield stands at 13.2%, while 6.07% and 4.94% are the average returns for 3 years and 5 years, respectively. With an average annual return of over 5% over the past few years, the SPDR Bloomberg Barclays High Yield Very Liquid Index is one of the most stable bond funds for investors. So while there’s a high risk in yield bonds, JNK has pretty good management and is one of the best you can invest in.

USAA Tax-Exempt Intermediate-Term (USATX)

The USAA Tax-Exempt Intermediate-Term is a municipal bond fund that has been providing investors with interest income that is excluded from the federal income tax. The municipal fund primarily invests in investment-grade securities. The interests that accrue from such investments are exempt from the federal income tax.

While the municipal fund has an extensive portfolio, the fund invests roughly 80% of its total assets in tax-exempt securities. The total assets under management in this municipal fund are $5.14B. The securities have an average maturity of between 3 and 10 years. The net assets under the USAA Tax-Exempt Intermediate-Term are over $5 billion, with a net expense ratio of 0.48%.

The USAA Tax-Exempt Intermediate-Term Municipal Fund outperformed the benchmark average in almost every category. With a consistent annualized return of roughly 4%, it provided a steady yield for investors for the past few years. The minimum initial investment is $3000.

It gained significantly in recent quarters. If the management continues along that trend, it could provide superior money returns in the coming years. Keep in mind that investing in municipal funds carry inflation risk and interest rate risk, but this municipal bond fund is a great addition to your portfolio.

Vanguard Total Bond Market (BND)

The Vanguard Total Bond Market tracks the performance of the Bloomberg Barclays U.S. Aggregate Bond Index. Most of the bonds in this index are US Dollar-denominated bonds with one year before maturity. The fund balances the bonds every month.

Investing in the Vanguard Total Bond Market is wise because it’s one of the largest bonds funds on the market, with assets totaling $247 billion. This portfolio has an expense ratio of 0.03%. This expense ratio makes it one of the cheapest bond funds in its category, and low expense ratios are important when choosing funds. The 10-year yield of the Vanguard Total Bond Market is 3.51%, which is below the category average of 4.65%. However, it outperformed the category in other performances. The minimum initial investment for BND is relatively high at $3000.

Overall, the Vanguard Total Bond Market is a low-cost vehicle for people looking to invest in US bonds. It’s an excellent diversification option. With yields around 3%, the Vanguard Total Bond Market is one of the best bond funds for steady returns.

But if you’re into investing in bond index funds, take a look at the Vanguard Total Bond Index, Fidelity Total Bond Index, and Vanguard Intermediate-Term Bond Index. Bond index funds are great for covering a large market segment while costs are kept low.

What Are Bonds?

Bonds are a form of debt. In return for a set-term loan, bond issuers pay regular coupon payments until the pre-set term expires. Then, the principal investment is returned to the investor. When a bond reaches its target date, it’s called a “matured” bond. After a bond matures, the bond issuer is obligated to return the full principal investment or “face value”. A bond is a type of fixed income investment.

So, a $1,000 five-year bond with a 3% coupon rate will pay $30 per year for five years. Once the bond matures, the issuer returns the $1,000 and the investor keeps the coupon payments for a total return of $150.

Basically, when you buy a bond you’re renting your capital for a pre-determined fee. Unlike stocks, you know how much you’ll make on your investment before you put the money down. Therefore, bonds offer a lot more certainty than stocks. That’s why bonds are considered to be “risk off” assets.

So although the interest rates in bond investing are not at par with the stock market returns, investing in bond funds is still the best foundation for an investment portfolio.

There’s also short-term bond and long-term bond. A short-term bond matures in less than five years, while a long-term bond lasts 10-30 years.

Expense ratios are also important. Having an expense ratio of 0.5% to an expense ratio of 0.75% is good for an actively managed portfolio.

Trading Bonds

You don’t have to hold a best bond until it matures, you can always sell it to someone else. However, the prices of bonds fluctuate just like stocks. If you buy or sell bonds, you’re subjected to the conditions of the free market, so you may not be able to sell your bond for face value. However, it works both ways. If your bond is in high demand, you could get even more than you paid for it.

This is the essence of bond trading. Just like stocks, traders want to buy low and sell high. However, many people consider the bond market to be “smarter” than the equity market. The market tends to undergo fewer knee-jerk reactions than equities, and price movements are usually more rational than in the stock market.

If you can buy a bond for less than face value, you still receive the full principal upon maturation and the coupon rate remains the same. Therefore, the payout yield fluctuates along with prices.

What Is Bond Yield?

Yield measures how much your investment will return on an annual basis. It factors in the current price of the bond and the coupon payments. Here’s a formula you can use to calculate bond yields:

bond yield formula infographic

Yields also factor into bond funds, and they work the same way too. Bond yields move inversely to price. As prices go up, bond yields go down. The opposite is true when prices go down. The less you pay for a bond, the more you get out of the coupon payments.

Understanding Bonds

Bonds don’t usually offer a high return rate as stocks do, but they still play an important role in investment strategy. A balanced portfolio should have a mix of bonds and equities. The less tolerance for risk, the more bonds you should hold. Your bond holdings don’t have as high of a potential for sky-rocketing returns, like stocks, but they’re a much safer play. They pay steady dividends and their prices tend to be more stable than equities. There are many types, but here are some common types of bonds you should be aware of.

Corporate Bonds

Corporate bonds are issued by private companies. Various companies issue bonds in order to attain capital, but the risk varies greatly for investors. Bonds from quality companies are often referred to as investment-grade. Interest rates are also almost always higher. While these are the most reliable options, the returns are pretty timid. Companies with lower credit ratings offer higher yields, but there may be a higher risk of default.

Government Bonds

Governments also issue bonds, commonly referred to as sovereign bonds or sovereign debt. These securities are usually regarded as the safest type of investment. However, there is still a significant amount of variance. US Treasury bonds are the cream of the crop, but smaller countries with lower credit ratings often pay higher yields. If you’re considering buying international bonds, make sure you’re aware of every risk. If a country defaults on its bonds, you’re pretty much beat. Plus, currency exchange rates can also eat into your returns. Risks in interest rates are also present when the Federal Reserve lowers rates. Don’t invest in foreign bonds unless you’re an experienced investor.

TIPS Bonds

The US Treasury also offers TIPS bonds or Treasury Inflation-Protected Securities. These bonds are indexed to inflation, so the coupon rate varies based on the current USD inflation rate. These assets are designed to protect investors from the negative effects of rising inflation. TIPS bonds determine payout rates via the Consumer Price Index (CPI), which tracks the price of common consumer goods in the US and serves as an inflation gauge. When inflation accelerates, TIPS bonds prices tend to go higher. In TIPS Bonds, interest rates are fixed and determined at an auction. However, the payments vary due to the adjusted principal.

Bond Funds vs. Individual Bonds

Bond funds offer many advantages over individual bonds, but there are some instances where the latter may be a better play. First off, bond funds never mature. They make regular payments based on the value of your investment. Many investors can stay in a bond fund indefinitely and keep receiving regular payments. If you want to cash out, you have to sell your stake. Therefore, bond funds are always subject to free-market conditions.

Individual bonds have a set maturity date. When that day comes, bondholders are guaranteed to receive the bond’s face value upon maturation, as long as the bond issuer doesn’t default. If there is a default, investors don’t usually get squat. As long as you hold an individual bond to maturation, you don’t have to worry about market prices. If a $1,000 bond was trading for $900 on the open market, you’d lose $100 if you sold. However, if you held until maturation, you’d get the full $1,000 regardless of current market-set prices. Conversely, you won’t get anything if the company goes out of business or files for bankruptcy.

Individual bonds have a different risk than bond funds, but neither may be entirely safe. However, most income investors find that bond funds are more convenient.

If you’re also wondering about the difference between bond funds and mutual funds, know that a mutual fund holds a group of securities. A  bond mutual fund is basically a mutual fund that holds a group of individual bonds. A mutual fund is overseen by a money manager. The manager allocates the assets, and the CEO is the fund manager if a mutual fund is construed as a virtual company. The manager may also employ analysts for research. A bond mutual fund never matures because the money manager keeps adding to it once old ones are mature or sold. The funds above are examples of a bond mutual fund.

Bond Funds: Closing Thoughts

Bond funds have been around for decades, providing a way for investors to invest in bonds without buying the individual bond securities. Many offer steady returns to investors, best management, and usually outperform their category. They can be as attractive as mutual fund options. We’ve given you information on the best bond funds above.

For more on the best bond funds, mutual funds, and personal finance, sign up for Stock Dork Alerts for a steady stream of stock market news and analysis. Our easy-to-read reports can help you make a mint in the market and make great personal finance decisions. After a few weeks of Dork Alerts, you’ll be the smartest guy at the water cooler. Sign up today and get a jump on the New Year with our 2020 Growth Stock Guide, it’s yours free when you join. Click here to join and claim your free copy now.

post-image

Healthcare Stocks: How to Buy the Medical Sector in 2020

Chris Dios - November 6, 2019

Healthcare has been a hot-button political topic in America for years. However, the debate is really heating up for the 2020 election. A field of left-leaning candidates is pushing for major healthcare reform. Some politicians are even calling for the government to take over the private health insurance sector entirely. As you can imagine, this high level of uncertainty weighed heavily on healthcare stocks this year. It could be a great time to pick up the best healthcare stocks for cheap.

However, few doubt the long-term stability of these businesses. As long as socialists don’t take control of all three branches of the U.S. government, there is next to zero chance that the private healthcare sector will be dissolved. Despite the low likelihood of full-blown annihilation, healthcare stocks are some of the worst-performing investments of the year. For contrarian investors, a set up like this screams long-term opportunity.

Medical Industry Outlook in 2020

Politics are driving the sell-off in the healthcare sector, but these businesses face other challenges in the years ahead as well.

Baby boomers are getting old. The generation born immediately after World War II comprises a huge portion of the U.S. population, and Americans born during that period are entering their Golden Years. Many of these aging Americans will naturally encounter health problems, and that creates more expenses for U.S. insurance companies. Experts predict that the aging population will put the squeeze on insurance profits for years to come.

health care stocks-senior care

The ‘2030 Problem’

In the year 2030, all baby boomers will be between 66 and 84 years old. According to the U.S. Census Bureau, there will be over 77 million retired-aged people in the U.S. by 2030; over one-fifth of the entire population. This approaching problem is commonly referred to as “The 2030 Problem”.

On the bright side, 2030 is still 10-plus years away, so there’s time to prepare. However, experts expect this massive influx of elderly will pressure the financial and physical resources of the healthcare sector. More elderly people equals more insurance claims, so the 2030 Problem is likely to put the squeeze on insurer profits. However, one business setback is another’s opportunity and home healthcare providers could be the ultimate winners as the population gets older.

Opportunities in Home Healthcare Stocks

An aging population is a bad thing for insurance company profits, but it could create more opportunities for outpatient and home healthcare providers. This sector is expected to expand significantly in the coming years. Grandview Research predicts the global home healthcare market will grow to over half-a-trillion dollars by 2026.

Health insurance stocks paid off big for investors over the past decade, but the insurance bull market could be close to topping out. Insurer profits are under pressure and there are significant regulatory risks to their business models. However, the home healthcare and outpatient services sector seems almost certain to expand significantly in the near future.

Best Health Care Stocks

The healthcare industry is complicated so you might need some help to get started. To give you some ideas, we’ve laid out our top healthcare stocks from across various sectors. These are some of the most successful medical companies on the public market. Read up on our top healthcare stocks and start following the health care market today.

Health Insurance Stocks

These companies provide health insurance services for corporate and private clients. If you want to make a bet on insurance stocks, these companies should be near the top of your watchlist.

best medical stocks

United Healthcare (NYSE: UNH)

With a market capitalization of over $237 billion, this healthcare heavyweight is one of the largest insurers on the planet. This gigantic healthcare stock is the type of company that is extremely threatened by the democratic fields proposed healthcare policies, so it will likely be especially volatile throughout the course of next year’s campaign. However, any significant dip could be a buying opportunity for big-picture investors. This company is extremely large and stable, but its profits could be squeezed as the ‘2030 problem’ becomes more pronounced.

CVS Health Corp. (NYSE: CVS)

A few years ago, classifying CVS as a retail or pharma stock would have probably made more sense. However, after the company’s acquisition of Aetna, CVS also has a major stake in the insurance business. The Aetna merger got off to a rough start, and shares of CVS took a major hit in early 2019 after it reported significant expenses relating to the acquisition. The stock started to rebound later in the year, and it’s now up significantly from its bottom in early 2019. This could be one of the best straight plays on consumer healthcare on the market.

Medical Technology Stocks

These healthcare companies are the leading innovators in the medical sector. Healthcare information management is a massive industry and it’s only going to grow as the number of patients in the system continues to increase.

Cerner Corporation (NASDAQ: CERN)

This company is one of the leading providers of healthcare information technology services. It provides a full suite of compliant software solutions for care providers. Cerner’s products allow providers to manage clinical documents, finance, and human resources much more efficiently. This company has a market cap of over $20 billion, making it one of the largest healthcare technology stocks on the market.

Veeva Systems, Inc. (NASD: VEEV)

Veeva offers cloud-based software to the domestic healthcare industry and international healthcare markets. The firm offers a multichannel, healthcare-compliant CRM that is extremely popular with providers. The software includes patient data management solutions and applications for managing commercial functions, like sales, marketing, research, and much more.

medical industry

Home Healthcare Stocks

As you read above, healthcare stocks are facing a huge influx of elderly patients in 2030. A recent survey revealed that 60% of Boomers want to stay in their current home or apartment, even if they develop a physical disability. That’s going to create a huge demand for stay-at-home healthcare services.

Amedisys, Inc. (NASDAQ: AMED)

Amedisys is one company that could be positioned to benefit from an increase in the population of elderly Americans. They provide a variety of home healthcare and hospice services that could be in high demand after the 2030 problem starts to impact the market significantly. In addition to health services, Amedisys’s personal care segment assists patients with carrying out daily living activities.

Chemed Corporation (NYSE: CHE)

Chemed provides hospice and palliative care services to patients throughout the United States. In fact, It’s the country’s largest provider of end-of-life hospice care.

  • Palliative Care (n): Medical treatments intended to alleviate the symptoms of a disease or disorder, especially one that is terminal, when a cure is not available.

The company organizes its operation into two primary operating segments. VITAS is Chemed’s healthcare services segment, and it employs a vast network of health professionals. The network includes physicians, registered nurses, social workers, clergy, and a variety of other support personnel. As the market leader in end-of-life hospice, Vitas and Chemed could generate significant revenue growth as the population ages.

Interestingly, this company has ties to a totally unrelated industry. In addition to VITAS, Chemed’s other primary operating segment is Roto-Rooter. Yes, the plumbing services provider. It’s an unusual dichotomy but, none the less, Chemed’s VITAS healthcare services business looks like a long-term winner.

Hospital Stocks

Even if the majority of baby boomers want to avoid managed care settings, shorter-term health problems are unavoidable for many Americans. People have health problems more frequently as they age, and many of those problems will inevitably lead to hospital stays. Hospital operators don’t usually trade on public exchanges, so many hospital stocks represent companies that own and lease hospital facilities to healthcare providers. These companies are mostly organized as real estate investment trusts (REITs).

  • Check out our picks for the top REIT stocks, sector-by-sector, here.

Welltower Inc. (NYSE: WELL)

Welltower is the largest healthcare REIT currently trading on public markets. It has a market capitalization of over $34 billion and pays $3.48 in annual dividend payments. This firm owns hospitals and senior care properties in the United States, Britain, and Canada. It also owns post-acute care and outpatient facilities. Welltower has a diversified portfolio of holdings that make it an exceptionally well-suited financial vehicle for investors looking for exposure to the senior healthcare market.

How To Find The Best Healthcare Stocks

The healthcare sector is vast. However, large companies have a distinct advantage because they typically have diversified portfolios. On the other hand, small-cap healthcare stocks may offer a greater reward, but investors must have the stomach to deal with the volatility. For example, if a drug fails to get FDA approval and the company doesn’t have other drugs in the pipeline, it could severely damage the value of its share price.

It’s important to pay attention to politics, especially if you’re looking to invest in a healthcare benefits company. Also, take the time to visit the FDA.ORG, the website for the U.S. Food & Drug Administration. Pay attention to the FDA calendar (biopharmcatalyst.com is an excellent resource). Keep in mind trading drug healthcare stocks around an upcoming event can be extremely volatile.

Sign up for Stock Dork alerts to learn more about the best healthcare stocks, including home healthcare stocks. Don’t forget to follow the Dork on Twitter for the latest stock market news and much more.

post-image

Best REIT Stocks: Our Top Picks in Every Sector

Larry Davidson - November 5, 2019

In a low-rate environment, real-estate investment trusts (REITs) start to look attractive. REITs trade on the open stock market, so there are few barriers for traders who want to start investing. These assets offer some of the highest yields on the market, with many paying out over 5%. Most REITs center around a particular category of real estate.

Since these companies get most of their earnings from rent payments, their businesses tend to be remarkably stable. However, don’t underestimate how much REITs can fluctuate. While these assets tend to be less volatile than traditional stocks, prices can still move drastically over time. Once they understand the associated risks, yield-seeking investors should watch these high-yield REITs.

American Tower Corp. (AMT)

Cell Phone Towers

American Tower Corp. was one of the hottest plays on 5G this year. This firm owns cell phone towers and other telecommunication infrastructure, and It leases its properties to providers like AT&T (T) and Verizon (VZ). This one started rallying early in the year, as traders anticipated big infrastructure spending from telecom companies building out their 5G networks.

Currently, this REIT isn’t yielding very much because its had such a good year. Share prices are up 41% over the past 52 weeks and that’s a pretty spectacular performance for a REIT.

Annual Dividend Yield: 1.75%

Prologis Inc. (PLD)

Warehouses

This is one of the leading warehouse REIT stocks on the market. This company owns and leases warehouse space and – in case you haven’t heard – warehouses are the hottest properties in real-estate this year. Companies are spending big to bolster their e-commerce business, and a large part of that spending is going into last-mile delivery centers near major metropolitan areas. As a result, warehouse property is in high demand, and the outlook for the future remains strong.

Growth potential is high for this stock but, as a result, yields are aren’t as high as some of the other high-yield REITs. However, this company’s growth seems pretty stable and there is a good chance that shareholders will get solid gains to go along with their dividend payments

Annual Dividend Yield: 2.42%

spg reit stocks
Many experts believe shopping malls are going extinct, but long-term investors might see an opportunity for these down-and-out assets. Above: Simon Property Group is one of the largest shopping mall owners in the U.S.

Simon Property Group Inc. (SPG)

Retail Space / Malls

If this name sounds familiar, you’ve probably seen it somewhere at your local mall. This company has a vast portfolio of large indoor malls across the U.S. However, the outlook for these types of properties is not great, so this stock hasn’t performed well over the past year. It’s in the midst of a long-term down that began about 12 months ago. Shares are down over 15% this year.

Smart investors don’t always go with the crowd. If you think the ‘mall massacre’ fears are overblown, you can get in this one for cheap. At the very least, the company is financially stable and pays a decent dividend.

Annual Dividend Yield: 5.56%

hst-hotel-reits
Hotel REITs can be a great option for playing a booming consumer economy. Above: The St. Regis Hotel in Dubai. St. Regis rents some of its properties from HST.

Host Hotels and Resorts Inc. (HST)

Luxury Hotels

This company owns high-class hotels and resort properties across the U.S., along with five international properties. It leases its properties to classy hotel operators like Ritz-Carlton, St. Regis, and more. It has 83 properties across 50 major markets. Hotel REIT stocks are a popular way to play

Value investors will appreciate Host’s discounted P/E and high dividend. HST is down over 10% for the year, but earnings are projected to grow in the second quarter and the dividend yield is attractive.

Annual Dividend Yield: 4.80%

Senior Housing Property Trust (SNH)

Healthcare / Senior Housing

Healthcare REIT stocks usually center around hospitals, but Senior Housing is a specialized play on the senior housing market. The company owns medical offices, senior living communities, and wellness centers throughout the U.S. America’s baby boomers are aging and experts expect there will be a huge influx of demand for senior housing. Many real estate investors believe that senior housing will be one of the hottest corners of the market in the near future.

Despite the sunny outlook, this company has its issues. This firm is having problems turning a profit. The company posted negative earnings in two of the last three quarters, and share prices nosedived as a result of the misses. However, the declines make this REIT more attractive for long-term value investors.

Annual Dividend Yield: 6.05%

REIT-stocks-Public-storage
Self-storage is in high demand amongst Millenials and other younger Americans. Above: A Public Storage facility.

Public Storage (PSA)

Self Storage

Americans like to buy stuff and many are renting extra space to store their accumulated treasures. The outlook is strong for self-storage companies, and Public Storage is one of the leading companies in the industry. Demand for storage space remains strong in the U.S., especially among Millennials.

Public Storage pulled back in September, and its been trending downward ever since. It might not be the best time to pull the trigger on this one, but keep an eye on it for signs that the trend might be turning positive.

Annual Dividend Yield: 3.58%

More Hot Stocks

Stay tuned to the dork for all the latest high-yield REIT stocks. Follow us on Twitter and Facebook to keep up with all the latest stock market news, and don’t forget to sign up for Dork Alerts to get all the hottest stocks, insight, and analysis delivered right to your inbox.

One way investors can diversify their portfolio and collect income is by buying REIT stocks. REIT stands for ‘real estate investment trust’. These types of companies own and operate income-producing real estate or other related real estate assets.

In other words, this type of investment gives individuals an opportunity to profit from commercial real estate ownership, without actually owning the property.

Of course, for a company to be classified as a REIT, it must meet several criteria.

Qualifying As A REIT Stock

The firm must invest at least 75 percent of its total assets in real estate assets and cash. In addition, it must derive at least 75 percent of its gross income from real estate related sources, including rents from real property and interest on mortgages financing real estate property.

REIT stocks must distribute at least 90% of its taxable income to shareholders annually in the form of dividends.

In addition, REIT stocks must be:

  • Taxable as a corporation
  • Have no more than 50% of its shares held by five or fewer individuals during the last half of the taxable year
  • Derive at least 95% of its gross income from real estate activities and dividends or interest from any source
  • Have no more than 25% of its assets consist of non-qualifying securities or stock in taxable REIT subsidiaries.

Types Of REIT Stocks

Equity REITs

Equity REITs own properties and charge rent to generate revenues. These organizations engage in various types of real-estate-related activities, including property management, renovation, and property flipping. Revenues can be generated through rental properties or capital gains. Equity REITs invest in various types of real estate, including hotels, residential, industrial, commercial and retail.

Nariet REIT Stocks

Key statistics about the real estate investment trust (REIT) sector.

Mortgage REITs

These types of REIT stocks are back by mortgages and mortgage-backed securities. Mortgage REITs generate revenues through interest income on mortgages. You may remember that mortgage-backed securities played a leading role in the 2009 Financial Crisis. However, don’t be shy about investing in mortgage REITs. Regulators closed most of the loopholes that contributed to the ’09 Crisis

Hybrid REITs

The best of both worlds. These REITs combine an equity REIT and mortgage REIT. These companies generate revenues from investing in real estate and mortgage loans / mortgage-backed securities.

Best Mortgage REIT Stocks

These REITs own mortgages and mortgage-backed securities. They generate most of their revenues through interest payments.

Annaly Capital Management REIT (NYSE: NLY) – 

The firm invests in and finances residential and commercial assets. In addition, Annaly invests in mortgage-backed securities and similar derivatives to hedge its investments.

The company uses its capital and other structured financing products to invest in assets in both commercial and residential markets, earning the spread between the yield on its investments and the cost incurred from borrowing and hedging.

Annaly has a market cap that exceeds $12B. The firm also offers investors an annual dividend of $1.20 per share.

AGNC Investment REIT Corp (NYSE: AGNC) – 

An internally managed REIT that invests in residential mortgages through leveraged investments. Financing is structured as repurchase agreements.

The firm has a market cap of more than $7B and offers investors an annual dividend of $2.16 per share.

New Residential Investment REIT (NYSE: NRZ)

The firm invests in, and actively manages assets related to residential real estate. It invests in excess mortgage servicing rights on residential mortgage loans, and in servicer advances, including the basic fee component of the related mortgage servicing rights.

A mortgage servicing right provides a mortgage service with the right to service a pool of mortgage loans in exchange for a fee. The company believes it has an edge due to its capital, experience, and business relationships to take advantage of market conditions caused after the financial crises.

The firm has a market cap of more than $5B and gives investors an annual dividend of $2 per share.

Risks Involved Trading REIT Stocks

During the financial crisis in 2009, REIT stocks got slammed. Mortgage-backed securities helped cause the crisis, so equity REITS lost approximately 50% of their value during the fiasco. In fact, many REIT stocks were trading for below book value.

Before investing in REITs, it’s important to monitor the health of the real estate market. Consider the types of properties the company holds and whether the market for those properties is strong enough to warrant an investment.

Using Economic Indicators to Trade REIT Stocks

Investors can use economic indicators to gauge the health of the market. The housing starts report counts the number of new residential construction projects, and it can be a good benchmark for judging the strength of the homebuilding market. The consumer sentiment survey is also helpful because it analyzes consumer buying habits.

Some of these REIT stocks invest in commercial and retail property. If the economy is booming, its more likely that people visit malls, go out and shop. However, during tough economic times, consumers become more conservative and spend less money. This can affect occupancy rates, as well as property rents.

How Do Interest Rates Affect the Real Estate Market?

Traders also need to be aware of Federal interest rate policies. The Federal Reserve can have a huge impact on the housing sector. Generally, lower rates create more demand for homes because they allow for cheaper mortgages rates. In addition, lower rates make it harder for investors to generate yields with U.S. Treasury bonds

In addition, when interest rates rise borrowing becomes more expensive. This has the potential to slow down the commercial real estate market. Of course, when interest rates drop, money becomes cheaper to borrow.

Bottom Line On REIT Stocks

During the financial crisis of 2008, REIT stocks got crushed. After that, the Federal Reserve Bank decided to cut interest rates, making money cheaper to borrow. This low-interest rate policy allowed for the real estate market to make a comeback.

Using REITs, investors can buy the real estate market without investing in physical property. In addition, income investors can generate higher yields using REITs. REITs trade like stocks, so they are very liquid assets that investors can shuffle around easily.

If you’re looking for exposure to the real estate sector but you don’t have the budget for a property, REIT stocks could be the way to go. These securities often yield much more than bonds, so they’re great for income investors too. You can start your search for the best REIT stocks with our top picks. However, always remember to do your own due diligence and consult with a financial advisor before making any significant investments.

post-image

The Best Bank Stocks and Their Outlook for 2020

Chris Dios - November 1, 2019

Banks are the foundation of just about every modern economy. These companies offer a variety of services that are integral to business owners, employees, corporations, and much more. Every business intends to make money, but banks are in the business of making money. Investors love bank stocks because they have stable business models and tons of free cash flow, but the biggest banks stocks aren’t always the best.

For more of the latest hot stock picks, check out The Dork’s top penny stock picks. If you’re looking for more cheap stocks, check out our monthly rankings for the Best Stocks Under $1 here

Banks are a vital component of every modern economy. Above: The Federal Reserve Bank of New York. (Courtesy Getty Images)

How Do The Best Banks Make Money?

Banks have various means of collecting revenues, but some banks only focus on certain types of financial services. Some banks focus on consumers, and others cater to corporate clients. Other banks specialize in a narrow range of select financial services. Despite their differences, banks share common means of generating revenues.

Fees

Anyone who’s ever had a checking account will tell you, banks charge fees for everything. Overdraft fees, non-sufficient funds fees, balance transfer fees, ATM fees, card fees; the list goes on and on. Banks generate some of their revenues with service fees but, proportionately, fees only make up a small portion of total bank revenues.

Interest Revenues

Banks have tons of cash, but the majority of it isn’t just sitting around. One way banks put their cash to use is by making loans and buying bonds. The money banks collect from the interest earns on loans is interest revenues. Banks earn interested revenues on a variety of different financial products, and they receive regular payments from their bond holdings. 

Capital Gains

Ideally, investments should increase in value over time. Banks trade stocks, invest in real estate, fund businesses, and make a variety of other investments. When these assets increase in value, the bank profits on its investment. When the assets are sold for profit, the profits are recorded as capital gains. 

Mega-Cap Bank Stocks

These banks are the largest banks in the U.S. and they’re in a class all their own. They’ve got mountains of cash and invest billions of dollars every year.

best banks stocks-JPM

JP Morgan Chase is one of the world’s leading financial institutions. Above: Chase CEO Jamie Dimon is practically Wall Street royalty.

JP Morgan Chase & Co (NYSE: JPM)

One of America’s oldest – and largest – banks, JP Morgan Chase is a global financial powerhouse. Chase has its fingers in practically every corner of the finance sector, and it also has a robust consumer banking division. It’s arguably the most powerful bank in the United States and possibly the world. The bank’s enormous scale gives it a tremendous advantage over many of its smaller competitors, and its management team has been the best in the business for decades.

JPM earns revenues from a wide variety of financial services, including investment banking, credit cards, and underwriting. Few banks can match JPM’s consistently excellent performance over the past couple of decades. The executives at Chase always seem to be at the right place, making the right moves, at the right time.

Bank Of America (NYSE: BAC)

One of Stock-Picker Extraordinaire Warren Buffet’s largest holdings, Bank of America is another leading U.S. bank. Consumer banking is Bank of America’s bread and butter. It’s one of the leading retail banks in the U.S. and it also offers wealth management services on a nationwide scale. However, its 2008 acquisition of Merrill Lynch spearheaded the firm’s expansion into investment banking over the last decade. 

Bank of America was a bit of a mess a few years earlier, but it’s turned a corner as of late. Its acquisition of Merrill Lynch and Countrywide Financial created a lot of headaches for shareholders, and the bank spent billions cleaning up a mess of legal and regulatory issues that resulted from the deals. However, CEO Brian Moynihan has done an excellent job of trimming the fat and making the bank more efficient. Management is making much better capital allocation decisions and the improvements have contributed to the bank’s long-awaited turnaround.

Citigroup Inc. (NYSE: C)

Citi is the smallest bank out of the Big 4, but it’s still a major player with a market cap of over $160 billion. The bank has become much more disciplined over the past few years, and its operational efficiency improved drastically as a result. The bank spent the last few years transforming itself into a leaner, meaner company but it’s finally shifting to a more offensive game plan. Management is waging a multi-front campaign to increase capital returns, cut costs, and build shareholder value. 

Citigroup’s huge presence in emerging markets gives the firm a unique advantage over its competitors. It has extensive capital investments in Asia, Latin America, and other emerging markets. These holdings could pay off big over the next few years, especially since U.S. economic growth is slowing to a more modest pace. Global growth is currently in the midst of a downturn, but that could change rapidly. If higher growth returns to emerging markets, Citi could be reaping big returns.

regional bank stocks

Regional banks are smaller-scale operations that cater to consumers and smaller businesses, they are commonly referred to as Main Street Banks. Above: A downtown strip in Anytown, USA.

Regional Banks

Not every bank is a gigantic multinational corporation. Some smaller banks focus on a specific geographical region of the country. These banks are commonly referred to in the industry is regional banks, but many of them have branches across the U.S. so the term is a bit of a misnomer. They aren’t established as the big boys, but smaller regional banks have more room to grow. Since regional banks tend to have more potential for growth, they often trade at higher price-to-earnings multiples than their big brothers.

First Republic Bank (FRC)

First Republic is a consumer-focused bank with operations across the U.S. This is a good example of a regional bank that’s valued at a much higher multiple than its peers. The U.S. consumer is historically strong, so that might be one reason that this mid-cap bank is valued so highly. Its emphasis on private banking means it has excellent exposure to consumer trends, so its growth outlook is strong. However, a high valuation also means that this bank stop has a lot of room to fall if sentiment takes a downturn. 

Citizens Community Bancorp (CZWI)

This bank stock had a rough year, but it looks like it might be ready for a rebound. Analysts are mostly bullish on this micro-cap bank stock. Citizens Community Bancorp is a regional bank in the truest sense of the term, it provides various consumer, commercial, and agricultural banking products to clients in Wisconsin, Minnesota, and Michigan. The bank operates 27 full-service branches across the region, and it’s based in Eau Claire, Wisconsin.

digital banking

A new wave of banks if forgoing the traditional model to offer their services digitally, with no physical branches. These digital banks have lower overhead costs and are potentially more efficient than banks with brick-and-mortar locations.

Digital Banks

The newest wave in the banking sector is all-digital, mobile banking. These companies don’t have any physical branches, but they usually offer customers enhanced convenience and value to compensate for their lack of a brick-and-mortar presence.  

Ally Financial Inc. (NASDAQ: ALLY)

Ally is one of the pioneers of the digital banking industry. This bank has no branches, it delivers all services to customers digitally. Users have the same options they would at a traditional bank, but they have to do interact with their accounts electronically. Not having a physical branch might sound inconvenient, but digital banks usually offer low fees and significant incentives for customers to make the switch. 

Ally is widely considered to have excellent customer service. Plus, bank customers are getting more comfortable with the idea of an all-digital bank. This digital bank stock has been a solid performer over the past year and it might be worth watching.

Characteristics Of The Best Bank Stocks

Bank stocks tend to be conservative, value-oriented investments. Many banks, the Big 4 especially, are valued so highly that it’s hard for them to move the growth needle. To compensate for lower growth potential, most banks pay regular dividends to shareholders.

Some statistics are more important with banks than they are with other companies. Return on equity and return on capital are particularly important ratios for banks. Those statistics are basically the primary benchmarks by which banks gauge their efficiency. However, PE and other earnings-related statistics also carry weight.

What Moves Bank Stocks

Bank stocks are very intertwined with the overall market. These companies play an important role in the economy, so they can be influenced by a variety of factors. Housing, interest rates, and job data are just a few examples of events that can move bank stocks. This sector is like a sentiment gauge for the U.S. economy. If the outlook for the economy is high, bank stocks tend to do well but, in times of distress, bank stocks often perform poorly.   

Bank ETFs: The Easy Way to Bet on Banks

ETFs make it easy for an investor to gain exposure to certain sectors of the market. For example, the Financial Select Sector SPDR ETF (NYSE: XLF) invests in a basket of bank stocks.

Some of its largest holdings include JP Morgan Chase, Bank of America, Wells Fargo, and Citigroup. It also invests in other financial companies like Goldman Sachs and Berkshire Hathaway.

Bank ETFs offer traders diversified exposure to the financial sector, and they have very low barriers to entry. They trade just like stocks so it’s easy for traders to allocate funds to diversified financial holdings without overhauling their portfolios.  

The Outlook for the Banking Industry

After researching this topic, I have come to a few key conclusions. 

  • If we go into a recession in the next year, the banks could take a hit. The Fed would likely lower interest rates again and market sentiment towards the banking sector will likely exaggerate any sector-wide downside moves.
  • Consumer-oriented banks could be the biggest beneficiary of increasing business and mortgage lending. During last quarter’s earnings season, Main Street banks, like Wells Fargo and Bank of America, seemed to fare better than Wall Street banks, like Goldman Sachs and State Street.
  • If these stocks are undervalued, there is no guarantee that they will return to the previous valuations anytime soon. It could be years before we start to see P/Es over 20 in the banking sector. If a recession comes along, things could get worse before they get better.

Closing Thoughts

If you’re investing for the long-term, banks could be a strong buy right now. From a valuation perspective, the sector looks very attractive, but there’s no way to tell how long it will take P/E’s to revert to average. There’s no clear catalyst on the horizon for banks, so it could be a long, twisted road back to average valuations.

Consumer-oriented banks with strong management and cheap valuations could be a good buy for long-term investors. However, traders should beware that a short-term slowdown in the economy could hurt this group.

Don’t forget to sign up for Stock Dork Alerts to get the latest reports on the hottest bank stocks and much more, and follow The Dork on Twitter and Facebook to keep up to date on all the latest trending stock market news!

post-image

The Best Tech Stocks to Buy in 2020

Chris Dios - October 28, 2019

Tech stocks powered most of the growth in the U.S. economy over the past two decades, and today’s next-generation innovators are still moving markets. Technology transformed the world’s economy over the past 100 years, but it’s just getting started. A new wave of up and coming tech stocks is making its mark on the world. Some experts say we’re on the threshold of a fourth industrial revolution and technology powered by artificial intelligence will lead the charge.

The companies that powered the tech revolution practically run the world today, but the next wave of leading tech stocks has the potential to surpass even the largest tech titans. Sure, bluechip tech stocks will always be a favorite on Wall Street, but how fast can a company like Apple (AAPL– with a market cap of over $1 trillion – really grow its revenues? Instead, savvy investors should be looking for the under-the-radar, small to mid-cap players. While these up and coming tech stocks might not be as sure of a bet as Apple or Microsoft (MSFT), the potential upside is often greater.

Up And Coming Tech Stocks To Watch

These companies aren’t the largest, but they could be primed to take over the market. No one can mess with Alphabet (GOOGL) Facebook (FB) and the other Big Tech Titans, but these companies could offer better long-term revenue growth at this stage in the game.

slack nyse ipo

Slack Technologies debuted in early 2019 via a direct listing. Above: The NYSE decked out for Slack’s IPO. Photo credit: Bloomberg.ca.

Slack Technologies, Inc. (NASDAQ: WORK)

Slack is pioneering an entirely new category of software, and it’s leading the market in this developing space. Collaboration hubs are changing the way modern businesses operate, and Slack boasts the most innovative platform in the space. This company literally invented collaboration software and now it’s mastering it.

Slack is still a young company. It just completed its IPO in 2019 and it still isn’t turning a profit on paper, but investors don’t doubt this company’s market dominance and staying power. Slack could grow into a mature, profitable company, or a larger competitor could come in and buy it. Either way, early Slack shareholders will be sitting pretty if this company continues to perform and grow.

CrowdStrike (NASDAQ: CRWD)

Cybersecurity will be a huge growth driver for the technology sector over the next few years. Practically everything is hooked into the internet these days, but technology will be even more dependent on the data in the near future. The internet-of-things is already forming but, once 5G goes fully-operational, our daily lives will be practically dependent on net-connected technology. This wave of vita IoT-connected devices needs to be protected, that’s the basic, bullish growth narrative for cybersecurity bulls.

tech stocks crowdstrike

CrowdStrike is one of the world’s leading cybersecurity firms. Its stock nearly doubled on its IPO day. Above: CrowdStrike CEO George Kurtz.

CrowdStrike is one of the world’s leading cybersecurity firms. When shares hit the public market in early 2019, hungry investors snatched them up in a hurry. This company specializes in end-point device protection, and its software is almost entirely based in the cloud. CloudStrike makes it easy for businesses of all sizes to protect their network. This cybersecurity firm is definitely an up and coming tech stock, and it could easily be the market leader within just a few years.

Zoom Inc. (NYSE: ZOOM)

One of the best performing IPOs of 2019, Zoom technologies offers an easy-to-use videoconferencing platform that’s suitable for businesses of all sizes. Zoom video conferencing is extremely easy to set up and requires no additional hardware. Lyft, Uber, and several other big-name tech stocks completed IPOs in 2019, but Zoom was one of the only profitable companies among them.

Zoom allows users to meet from any device, so it’s very flexible and more usable than traditional video conferencing systems. Sign up is free, and Zoom offers solutions to accommodate businesses of all sizes. Markets love this kind of up and coming tech stock because it has mass appeal. Any sized business can use Zoom. It’s perfect for small businesses that can’t afford an IT department or a professional-grade setup. However, it’s rich with features and easily integrates into large networks so it’s popular with large-scale enterprises.

Where Will The Next Up and Coming Tech Stocks Come From?

cloud stocks forecast

Experts believe the cloud services sector will continue to grow in 2020. Above: Worldwide public cloud services revenues.

SaaS and cloud-based software are two of the hottest up and coming tech industries. In fact, SaaS technology powers most of the technology on this list. Customers love cloud-based solutions because they allow them to use high-level solutions without paying for pricey hardware, and Cloud providers love it because it allows them to offer their customers low-margin subscription services. Cloud is flexible and affordable, and developers are just scratching the surface of what’s possible.

Blockchain and AI Stocks

Blockchain stocks continue to have promise, but the hype is mostly drained out of that sector. Institutional investors don’t want to touch crypto stocks until regulators start cleaning up the industry. Until then, most blockchain stocks don’t have a chance of leading the market.

blockchain stocks sector growth

Blockchain forecasts predict the sector will grow exponentially over the coming years. Above: A chart portrays projected U.S. blockchain growth by sector. Courtesy: Grandview Research

Cybersecurity stocks could be a big growth driver for the market next year. Some of these firms are all ready to take off, but many are so early in their development that it’s difficult to pick winners. Same thing with AI stocks. While there is sure to be off-the-chart growth in the AI sector in the near future, it’s hard to pick winners outside of the traditional blue-chip tech stocks.

Closing Thoughts

Picking the best up and coming tech stocks isn’t easy. However, investors that do their research and keep an ear to the ground have a better chance than others. Don’t follow the market, do your own due diligence. Even a small investment in the right company can pay off huge in a few years.

Sign up for Stock Dork Alerts to get the latest hot tech stocks delivered directly to your inbox. Don’t forget to follow the Dork on Google News, Facebook, and Twitter to stay up on all the latest stock market news.

post-image

Up And Coming Tech Stocks to Watch in 2020

Chris Dios - October 28, 2019

Tech stocks powered most of the growth in the U.S. economy over the past two decades, and today’s next-generation innovators are still moving markets. Technology transformed the world’s economy over the past 100 years, but it’s just getting started. A new wave of up and coming tech stocks is making its mark on the world. Some experts say we’re on the threshold of a fourth industrial revolution and technology powered by artificial intelligence will lead the charge.

The companies that powered the tech revolution practically run the world today, but the next wave of leading tech stocks has the potential to surpass even the largest tech titans. Sure, bluechip tech stocks will always be a favorite on Wall Street, but how fast can a company like Apple (AAPL– with a market cap of over $1 trillion – really grow its revenues? Instead, savvy investors should be looking for the under-the-radar, small to mid-cap players. While these up and coming tech stocks might not be as sure of a bet as Apple or Microsoft (MSFT), the potential upside is often greater.

Up And Coming Tech Stocks To Watch

These companies aren’t the largest, but they could be primed to take over the market. No one can mess with Alphabet (GOOGL) Facebook (FB) and the other Big Tech Titans, but these companies could offer better long-term revenue growth at this stage in the game.

slack nyse ipo

Slack Technologies debuted in early 2019 via a direct listing. Above: The NYSE decked out for Slack’s IPO. Photo credit: Bloomberg.ca.

Slack Technologies, Inc. (NASDAQ: WORK)

Slack is pioneering an entirely new category of software, and it’s leading the market in this developing space. Collaboration hubs are changing the way modern businesses operate, and Slack boasts the most innovative platform in the space. This company literally invented collaboration software and now it’s mastering it.

Slack is still a young company. It just completed its IPO in 2019 and it still isn’t turning a profit on paper, but investors don’t doubt this company’s market dominance and staying power. Slack could grow into a mature, profitable company, or a larger competitor could come in and buy it. Either way, early Slack shareholders will be sitting pretty if this company continues to perform and grow.

CrowdStrike (NASDAQ: CRWD)

Cybersecurity will be a huge growth driver for the technology sector over the next few years. Practically everything is hooked into the internet these days, but technology will be even more dependent on the data in the near future. The internet-of-things is already forming but, once 5G goes fully-operational, our daily lives will be practically dependent on net-connected technology. This wave of vita IoT-connected devices needs to be protected, that’s the basic, bullish growth narrative for cybersecurity bulls.

tech stocks crowdstrike

CrowdStrike is one of the world’s leading cybersecurity firms. Its stock nearly doubled on its IPO day. Above: CrowdStrike CEO George Kurtz.

CrowdStrike is one of the world’s leading cybersecurity firms. When shares hit the public market in early 2019, hungry investors snatched them up in a hurry. This company specializes in end-point device protection, and its software is almost entirely based in the cloud. CloudStrike makes it easy for businesses of all sizes to protect their network. This cybersecurity firm is definitely an up and coming tech stock, and it could easily be the market leader within just a few years.

Zoom Inc. (NYSE: ZOOM)

One of the best performing IPOs of 2019, Zoom technologies offers an easy-to-use videoconferencing platform that’s suitable for businesses of all sizes. Zoom video conferencing is extremely easy to set up and requires no additional hardware. Lyft, Uber, and several other big-name tech stocks completed IPOs in 2019, but Zoom was one of the only profitable companies among them.

Zoom allows users to meet from any device, so it’s very flexible and more usable than traditional video conferencing systems. Sign up is free, and Zoom offers solutions to accommodate businesses of all sizes. Markets love this kind of up and coming tech stock because it has mass appeal. Any sized business can use Zoom. It’s perfect for small businesses that can’t afford an IT department or a professional-grade setup. However, it’s rich with features and easily integrates into large networks so it’s popular with large-scale enterprises.

Where Will The Next Up and Coming Tech Stocks Come From?

cloud stocks forecast

Experts believe the cloud services sector will continue to grow in 2020. Above: Worldwide public cloud services revenues.

SaaS and cloud-based software are two of the hottest up and coming tech industries. In fact, SaaS technology powers most of the technology on this list. Customers love cloud-based solutions because they allow them to use high-level solutions without paying for pricey hardware, and Cloud providers love it because it allows them to offer their customers low-margin subscription services. Cloud is flexible and affordable, and developers are just scratching the surface of what’s possible.

Blockchain and AI Stocks

Blockchain stocks continue to have promise, but the hype is mostly drained out of that sector. Institutional investors don’t want to touch crypto stocks until regulators start cleaning up the industry. Until then, most blockchain stocks don’t have a chance of leading the market.

blockchain stocks sector growth

Blockchain forecasts predict the sector will grow exponentially over the coming years. Above: A chart portrays projected U.S. blockchain growth by sector. Courtesy: Grandview Research

Cybersecurity stocks could be a big growth driver for the market next year. Some of these firms are all ready to take off, but many are so early in their development that it’s difficult to pick winners. Same thing with AI stocks. While there is sure to be off-the-chart growth in the AI sector in the near future, it’s hard to pick winners outside of the traditional blue-chip tech stocks.

Closing Thoughts

Picking the best up and coming tech stocks isn’t easy. However, investors that do their research and keep an ear to the ground have a better chance than others. Don’t follow the market, do your own due diligence. Even a small investment in the right company can pay off huge in a few years.

Sign up for Stock Dork Alerts to get the latest hot tech stocks delivered directly to your inbox. Don’t forget to follow the Dork on Google News, Facebook, and Twitter to stay up on all the latest stock market news.

post-image

Blockchain Penny Stocks to Watch in 2020

Chris Dios - October 24, 2019

Bitcoin blew up the stock market in 2017 but, since then, the crypto craze has cooled. However, there’s no stopping blockchain, the technology behind bitcoin. This technology has the potential to transform the world we live in, and the best blockchain penny stocks are hoping to capture a chunk of that market share. Here are some of the bitcoin penny stocks:

  • 1. Riot Blockchain Inc. (NASDAQ: RIOT)
  • 2. HIVE Blockchain Technologies Ltd. (OTC: HVBTF)
  • 3. DMG Blockchain Solutions Inc. (OTC: DMGGF)
  • 4. Cryptanite Blockchain Technologies Corp. (CRBTF)

Many of these companies had a rough 2019, but swinging bitcoin sentiment has affected valuations. The plus side is, you can get these stocks for a lot cheaper than you would’ve been able to just a year or two ago. From a value perspective, these companies have more investment potential than they did at the peak of the crypto craze. Here are our picks for the most interesting opportunities in blockchain penny stocks for 2020.

Bitcoin is commonly referred to as ‘digital gold’ but it’s not as stable as the real thing. Gold is a great Safehaven investment that can be a hedge against volatility and inflation.

US E-Cigarette Ban Stokes Fears Trump Could Target Bitcoin

Best Blockchain Penny Stocks

Here are the top penny stocks in the blockchain sector. For more cheap penny stocks, be sure to check out our monthly rankings. If your budget is a little bigger, check out our best stocks under 10 dollars here.

If you’ve never traded penny stocks before, you should do some research first. You can find everything you need to know about penny stocks in our trader education articles. Learn how to invest in penny stocks here, and don’t forget to check out our best penny stocks monthly rankings.

Riot Blockchain Inc. (NASDAQ: RIOT)

Riot operates the largest crypto mining network of any publically-listed company. Its Oklahoma City mining operations include Bitcoin, Bitcoin Cash, and Litecoin. Additionally, Riot develops blockchain technology and it has made several investments in crypto-related technologies. The firm’s portfolio of crypto startups includes Coinsquare, Tesspay, and Verady.

blockchain mining rig

Hive has the largest crypto mining network of any publically-listed company. Above: HIVE Blockchain crypto-mining rigs.

This stock tends to move in the same direction as the price of Bitcoin because of its massive mining operation. When Bitcoin goes up, Riot makes more money, so it’s understandable why share prices tend to follow the crypto market. However, its asset portfolio and blockchain development business provide additional revenue streams for the company.

HIVE Blockchain Technologies Ltd. (OTC: HVBTF)

Formerly known as Leeta Gold Corp, HIVE operates several blockchain-related businesses.  Based in Canada, HIVE partners with other blockchain companies to operate its flagship businesses. The company partners with Genesis Mining Ltd. – the world’s largest cloud bitcoin miner (according to HIVE’s website) – to operate a crypto mining facility in Iceland. HIVE’s Icelandic mining operation primary produces Ethereum. The company is also deploying blockchain mining rigs in Sweden and Norway.

HIVE seems to be maturing into a profitable company, despite falling Bitcoin prices. It recently reported a healthy financial quarter of positive cash flow. If HIVE is profitable with crypto at such low prices, it could be a big winner if the prices pick up.

DMG Blockchain Solutions Inc. (OTC: DMGGF)

DMG is another Canadian-based blockchain services company. The firm operates several blockchain businesses, including mining, and it’s developing creative ways to monetize its blockchain assets. It even leases bitcoin mining capacity and hosting to other blockchain developers. Taking a page from the cloud computing sector, DMG calls this option “Mining-As-A-Service” or MAAS.

The company purchased Blockseer in 2018. Blockseer is one of the leading blockchain audit and analytics platforms. Its technology helps promote a more open and legitimate blockchain environment, these services could be in high demand as regulators attempt to tame the crypto market.

cryptocurrency infrastructure

DMG recently launched a blockchain network for cannabis supply chains. Above: part of DMG’s blockchain infrastructure.

If one overhyped asset class isn’t enough, DMG must have figured that two would really break the bank. In September 2019, the company launched Wazabi, the first-ever AI-powered blockchain solution for cannabis supply chains. Share prices jumped 12% when the news broke.

Cryptanite Blockchain Technologies Corp. (CRBTF)

This is one of only consumer-oriented blockchain stock on our list. Cryptanite owns and operates ChargaCard, a p2p payment processing network that is developing end-to-end payment solutions. Company statements say it’s designing “next-generation decentralized applications for mass-market adoption”.

Cryptanite also offers a p2p trading network that’s available on Google Play and Apple App Store. The Cryptanite app allows users to purchase various digital tokens, including Bitcoin and Ethereum, and deposit them into digital wallets that are built into the app. Since the network is peer-based, the company never acts as a custodian of funds so, theoretically, it’s less susceptible to hacking than a typical, centralized exchange.

Best Stocks Under 10 Dollars

Are penny stocks a little too speculative for your tastes? Then check out our monthly rankings for the best stocks under 10 dollars. These stocks are still cheap, but they are a bit more stable and the companies are usually more established.

What is Blockchain?

Blockchain is a technology that uses cryptography to create a decentralized network for storing and transmitting information. Decentralized systems are less susceptible to attacks from hackers and it’s much harder to manipulate data. Here’s an example that can help you understand blockchain technology.

blockchain penny stocks

A basic infographic describing the inner-workings of blockchain technology.

Centralized Systems

Bill and I are accountants. We both are in charge of the books for our company. There’s only one book that has a full account of all the business transactions. Bill gets greedy and wants to cook the books to pull money out of the company. If he manipulates the books, I might not be able to figure out why the numbers are off. All he has to do is change the records in the accounting book to hide the money he stole. In order to figure out exactly what’s wrong, I have to do a full audit of the business’s accounts, receipts, bank statements, and all other financial transactions just do determine what went wrong and where it happened.

This example is similar to a centralized system that holds data all on one server. When everyone is referencing one set of data in one place, it can be easily manipulated if the proper security procedures aren’t in place.

Decentralized Systems (Blockchain Networks)

It’s the same scenario as before. Bill and I are accountants, and Bill gets greedy.

This time, we each have our own set of accounting books that we update as transactions come in. If Bill changes something in his book, all I have to do is look at mine to see what’s different. Bill would have to break into my desk, steal my copy of the ledger, and change the data to match his in order to hide his deceit. That makes things a lot more complicated for any would-be thief.

Now imagine a million copies of the books that are constantly updated with actual transaction data. There’s no way Bill can break into a million desks and alter the data in a million different accounting books. The transparency and decentralized nature of the network make it makes it less inherently vulnerable to manipulation.

This is a very basic description of blockchain networks, but it’s the core premise of the technology.

Blockchain: Not Just For Crypto

Newcomers to the crypto space often confuse blockchain and bitcoin, but cryptocurrency is only one use of this decentralized network technology. Blockchain networks can track virtually real-world objects, personal data, and virtually anything else you can think of. The technology could transform the way businesses track assets, monitor supply chains, and much more. Blockchain could be a gamechanger for virtually every corner of the economy. The public, private, and military sectors all want to master this technology, so mass adoption could fuel torrential growth in this niche industry.

Closing Thoughts

Blockchain technology has a long way to go before it adopted on a mass scale, but these companies are making progress. A small speculative investment now could pay off big time if the technology takes off. These blockchain stocks could be ready to make a comeback in 2020.

Sign up for Stock Dork Alerts to get the latest hot penny stocks delivered to your inbox, and follow the Dork on Google News, Facebook, and Twitter to get the latest stock market news and insights.

post-image

NASDAQ Penny Stocks to Buy Now

Chris Dios - October 11, 2019

The NASDAQ is known for hosting high tech companies. Once a small upstart exchange, NASDAQ started out as nothing more than an electronic quotation system. Today, NASDAQ hosts some of the world’s largest companies. The exchange is best known for listing powerhouse tech stocks, but NASDAQ hosts stock from virtually every sector. There are thousands of NASDAQ penny stocks to choose from, but many of them are going nowhere. To find winners, you’ll have to do your research. 

Best NASDAQ Penny Stocks

To choose our top NASDAQ picks, we looked at companies with high trading volume and market caps greater than $300 million. This list has some of the more solid penny stocks on the NASDAQ. If you’re looking for more speculative NASDAQ picks, be sure to check our best stocks under 1 dollar article.

Groupon, Inc. (NASDAQ: GRPN)

Groupon Inc. (NASDAQ: GRPN) is a very popular platform for businesses of all sizes to promote themselves and their products. Millions of Americans have the Groupon app on their phone and use it regularly to shop for deals on all kinds of goods and services. 

This NASDAQ stock on our list has been the subject of buyout rumors for a long time. It’s core platform boast over 46 million active users, and that kind of direct access is extremely valuable in today’s business landscape. Experts believe the Groupon Inc. penny stock would be a great buyout target for a larger tech company, like Google and Yelp

If one of the large tech companies pulls the trigger on Groupon Inc. (NASDAQ: GRPN), it could be a catalyst for a rally.

plug penny stocks

A Plug Power charging station.

Plug Power Inc. (NASDAQ: PLUG)

Penny stocks in NASDAQ are known for hosting high-tech companies, and Plug Power Inc. is on the cutting-edge of the renewable energy sector. The company develops and manufactures hydrogen fuel cell systems for material handling and stationary power markets. 

One of Plug’s flagship products is GenDrive, a fuel cell system that powers electronic vehicles for handling materials. The firm also offers hydrogen fuel delivery, storage, and dispensing via its GenFuel service. Finally, GenCare helps maintain and support GenDrive fuel cells.

Plug Power Inc. is on the list because it’s one of the market leaders in this sector in the last years. Plug Power Inc. definitely a penny stock worth watching.

TherapeuticsMD, Inc. (NASDAQ: TXMD)

Next on the list is TherapeuticsMD Inc. (NASDAQ: TXMD). This company produces women’s healthcare products and therapeutic solutions. The firm is developing several different types of hormone therapy drugs, and it also has several different lines of branded and generic prenatal vitamins. Some of the company’s brands include vitaTrue, vitaPearl, vitaMedMD, and BocaGreenMD Prena1. It also produces Annovera, a line of ring-shaped vaginal contraceptives.

penny stocks

VitaTrue prenatal vitamins are a TherapeuticsMD product.

The NASDAQ penny stock has been on fire since last August 2019, around when it released a blowout Q2 earnings report and raised its revenue forecast for the year. After a disappointment in the first quarter, investors were expecting more bad news in the NASDAQ stock. The report turned out to be a lot better than expected and the market adjusted share prices accordingly. 

Extraction Oil & Gas (NASDAQ: XOG)

It feels like most Wall Street analysts are bearish on oil and gas stocks these days, but is the business really doomed? Renewables have a long way to go before they can supply all of the world’s energy needs, so energy stocks aren’t going anywhere anytime soon. In fact, some of these are excellent value picks. 

Extraction Oil & Gas (NASDAQ: XOG) acquires, develops, and produces oil and natural gas resources in the Rocky Mountain region of the U.S. It also constructs and supports mid-stream energy assets to gather and produce crude oil and gas. The company is currently taking flak for its fracking business, but its value ratios are compelling, to say the least.

XOG trades for only 5.56 profit times earnings, and its price to book ratio is a scant 0.27. If this company can manage to survive the energy onslaught and see its valuation return to base levels, it could be a big winner in a year or two. Keep an eye on this one.

viewray blog graphic

A ViewRay MRIdian Machine.

ViewRay, Inc. (NASDAQ: VRAY)

Last on the list is ViewRay Inc. (NASDAQ: VRAY). They’re pioneering MRI machines that work in conjunction with targeted radiation therapy for the treatment of tumors. Their machines are among some of the first MRI machines than can be used simultaneously with radiation treatments. Simultaneous monitoring and treatment allow doctors to instantly correct radiation dosages and reduces damage to healthy tissue. 

The flagship machine of ViewRay Inc., the MRIdian scanner, just became one of the first of its kind in New England. A cancer hospital in Boston purchased the machine and it will now be the first hospital in the region to offer simultaneous, MRI-targeted radiation therapy for cancer patients.

Where to trade NASDAQ Stocks?

You can trade NASDAQ penny stock with just about any U.S. broker. Even mobile trading apps, like WeBull and Robinhood, offer access to the NASDAQ list. If you have a broker, you should be able to trade NASDAQ. 

If you don’t have a stock broker, you have a lot of options to trade NASDAQ. Practically every major broker on the market offers zero-commission stock trading these days, so it’s easy to get started with NASDAQ. All you need is a U.S. bank account and a smartphone to get started.

One good option for stock trading is WeBull. Check out our review here to get all the facts on this mobile app. WeBull includes a built-in paper trading platform, so you’ll find it easy to get started. You can also check our Robinhood stock trading app review here.

Keys to Trading Penny Stocks on NASDAQ 

Trading stock on NASDAQ is the same as on any other exchange. Once you have a broker, you probably won’t even notice whether stocks are listed on NYSE or NASDAQ because the procedure for trading stock stays the same. If you’re brand new to penny stocks, learn more about getting started here.

blog image

Keeping a trade journal is a great way to track your progress.

Have a Strategy.

As always, sound strategy and strict discipline are the keys to success in trading. Before entering a trade, have a game plan. Look at the stock chart, identify your entry and exit points, and figure out how much capital you’re willing to risk for the stock. 

Do Your Homework.

However, there’s a lot more to consider in stock than the daily candlestick, one-year chart. You need to do some due diligence if you plan on holding these stocks for any longer than a day or two. Read press releases, balance sheets, income statements, and other key financial data on the stock.

Know What You’re Buying.

A good way to determine if you’ve done your stock research is to try and explain your trade. If I ask you, “why did you buy that company,” you should be able to give me a good answer. Just FYI, don’t say “I heard them talk about it on CNBC” or, “my friend told me about it”. Knowing what stock you’re trading will help you make more educated decisions and, worst case, you’ll feel a lot better about taking a loss if you know you did your homework on a stock.

Be PATIENT.

One of the most fundamental skills investors can have is patience. If a stock trade isn’t going your way, don’t panic. Keep a cool hand and follow your predetermined trading plan.

If penny stocks are a little too risky for your appetites, check out our picks for the best stocks under 10 dollars. They’re more stable investments. Also, learn about safe harbor assets by reading our best gold stocks.

Closing Thoughts

If you’re thinking about trading cheap stocks, NASDAQ penny stocks are a great place to start. Since all of these companies meet NASDAQ’s highly-regulated listing requirements, they tend to be much more stable and credible than OTC. Remember, trading penny stocks is risky, so exercise an appropriate amount of caution before laying your hard-earned cash on the line. Most importantly, always do your due diligence and be sure to consult with a professional advisor before making any significant financial decisions especially in stock trading.

For the latest NASDAQ penny stock alerts, company highlights, and much more; sign up for FREE Stock Dork Alerts, and don’t forget to follow The Stock Dork on Twitter, Facebook, and Google News to stay up-to-date on the latest stock market news.

post-image

5 Best Marijuana Stocks for Growth in 2019

Chris Dios - October 2, 2019

Cannabis stocks started selling off in the second half of 2019, but this sector still has excellent long-term potential. Weed stocks may be down, but they’re not out. The sector is just getting off the ground and pot stocks could net huge returns for investors at these prices. Any good trader should be looking to buy when prices are low so, if you made a nice profit the first time around, brush up on the best weed stocks and get positioned for round two!

  • MORE ON POT STOCKS: Click Here for a FREE eBook Featuring The Stock Dork’s Top Weed Stocks of 2019. It’s Our Gift to You for Signing Up for FREE Dork Alerts!

Best Marijuana Stocks To Buy

cannabis stocks

Canopy Growth ( NYSE: CGC )

Canopy Growth is one of the leading marijuana stocks, but not even this heavyweight escaped the summer sell-off. CGC struggled with the rest of the sector in 2019, and it’s now trading close to all-time lows. Analysts are raising concerns about US$1.54 billion in goodwill assets on the company’s books, which they say could eventually result in a massive write-down if the business doesn’t pick up soon.

CGC sold off after the company’s last earnings call, after reporting a wider than expected loss for the quarter. The miss was largely attributed to a one-time expense but, nonetheless, shares plummeted following the release of the report. Interestingly, without the one-time write-off, CGC would have posted narrower-than-expected losses for the quarter, but that didn’t provide much consolation for the shareholders. Canopy shares fell over 10% in the aftermath of the report.

Despite its recent difficulties, Canopy has lots of resources and access to capital. Its partnership with Constellation Brands (NYSE: STZ) should prove invaluable when Canada finally legalizes infused beverages, which is expected to happen in December 2019. Once the smoke clears and the bodies are taken away, Canopy Growth could be one of the few original weed stocks left standing.

Cronos Group ( NASDAQ: CRON )

Cronos Group made its IPO on the NASDAQ in 2018, and the stock went for a wild ride during that course of time, along with the rest of the cannabis stocks. This company doesn’t operate any marijuana growing facilities, it’s a principal investment firm. The company, formerly known as PharmaCan Capital Group, provides equity capital to businesses that produce medical marijuana under Canadian MMPR (Marijuana for Medical Purposes) regulations.

Cronos offers cannabis and cannabis oil under the brand name “Peace Naturals”. Recently, an increasing portion of their sales revenue has come from cannabis oils, and Cronos has made several investments to promote their development of such products. Cronos is developing a new extraction lab and has announced a partnership with Ginkgo Bioworks to develop a manufacturing method that would produce organic cannabinoids without extracting them from a plant. The technology could prove to be a game-changer.

Marlboro manufacturer Altria ( NYSE: MO ) took a 45% stake in the company for approximately $1.8 billion. Share prices promptly tripled from Q2 lows but have since cooled along with the rest of the market. This deal positions Cronos Group for the future and gives them a solid financial foundation to rest on. Look for CRON to be an enduring presence as the marijuana industry continues to evolve.

Tilray ( NASDAQ: TLRY )

Tilray is a full-service cannabis enterprise. It operates in a variety of marijuana-based capacities and has international distribution streams in several countries. Based in Nanaimo, Canada; the company has a mid-sized market cap of around $7.3 billion. Tilray made its IPO in July of 2018 and, by September, the stock peaked at approximately 15 times its IPO price. The stock went to $300 per share before crashing down to Earth. This stock has been extremely volatile since its initial public offering, but the hysteria has settled as of late. Since then, Tilray’s stock has been consistently trading around $40 per share.

Tilray boasts an impressive list of international licenses and is approved to operate in Australia, New Zealand, Canada, Argentina, Germany, Chile, and more. With all their international experience, it’s likely Tilray has intentions to widen its international exposure further.

Charlotte’s Web Holdings ( OTC: CWBHF)

Charlotte’s Web has one advantage over the other companies on this list, its main product isn’t federally illegal! The company produces all-natural CBD products and it currently has a presence in over 6,000 retail stores and it’s the number-one CBD producer by market share!

The U.S. enacted the Farm Bill in 2018 and federally legalized hemp, causing the CBD market to take off. Charlotte’s Web is an early innovator and it did an excellent job building and promoting its brand. The company produced over 675 thousand pounds of hemp in 2018, and it has 700 acres planted for this season.

Charlotte’s Web is a market leader with plenty of room to grow. It’s not marijuana, but it’s a cannabis-related play that could be the best of the bunch.

marijuana stocks

Aurora Cannabis ( NYSE: ACB )

One of the most diversified cannabis stocks on the list, Aurora Cannabis boasts a diverse portfolio of cannabis operations. The company has exposure to the entire cannabis industry. The company produces cannabis, concentrates, edibles, CBD, and more. Aurora also has research operations developing an array of cannabis-related products and expertise. Aurora operates several subsidiaries and brands that cater to every imaginable niche of the consumer marijuana market. Some of its brands include CanniMed and CanvasRX. The company has collaborative agreements with PharmaChoice and Shoppers Drug Mart to help facilitate distribution to medical customers.

The stock has traded with stability in comparison to the other marijuana stocks listed here, but it still exhibits some dramatic moves. Interestingly, Aurora is possibly the only company on this list to have positive EPS numbers last year. While other companies are burning through cash, Aurora is at least netting some positive earnings.

However, the company is still in the midst of significant expansion. There are not many marijuana companies that can produce more at peak capacity than Aurora. That gives them a huge advantage in the Canadian marijuana market.

While Aurora is undoubtedly one of the largest producers, it still has some hurdles ahead. They are facing increasing competition in the Canadian cannabis market. Aurora will have to work harder to compete moving forward, but they have the output and infrastructure to make it happen.

Medical Marijuana Stocks

Some experts believe that the real opportunity is in medical cannabis stocks. Here are some of the leading companies in the field.

Curaleaf Holdings Inc. (OTC: CURLF)

Massachusetts-based Curaleaf is one of the best pure-play medical marijuana stocks on the market. It was one of the best performers in the sector for the first half of 2019 and it held up better during the sell-off than many other popular weed stocks. Shares are up 53% on the year, despite selling off with the rest of the sector in May and June.

Curaleaf introduced the first-ever line of cannabis tablets for medical use in mid-September, provoking a nice reaction in the stock. Additionally, the company is expanding into the recreational sector in order to supplement its already-robust medical marijuana business. The Massachusetts State Cannabis Control Commission recently approved several of Curaleaf’s adult-use license applications. The approval clears the way for the firm to expand operations at an existing retail location at Webster, MA and a production facility in Oxford. In addition, they’ll open two new locations in Provincetown and Cape Cod. The new locations will bring the total number of cannabis retail locations to 4.

Liberty Health Sciences (OTC: LHSIF)

Though headquartered in Toronto, Liberty Health Sciences primarily operates medical dispensaries in The State of Florida. The company boasts the second-highest cannabis flower sales in the Sunshine State, and it recently opened its 17th dispensary in Panama City, FL.

While Liberty’s $124 million market cap isn’t as beefy as the big players, it offers a direct way to play the medical cannabis trend in an established market. The company is trying to get its income statement under control, but operating losses spiked in Q2 2019. Despite the setback, revenue grew 59% from the previous quarter.

Revenue growth looks promising for Liberty, but the firm needs to get its spending under control if it wants to be a long-term player in the medical marijuana sector.

Marijuana Stocks and The Effect of Canadian Legalization

On October 17th, 2018, Canada became only the second nation to legalize marijuana. The day marked the end of one era and the start of a new one. In the US; Michigan, Missouri, and Utah enacted favorable cannabis legislation in 2018, and a wave of pro-pot candidates were elected to house and senate seats. Suddenly marijuana was becoming more and more accepted by the widespread public. Public opinion on cannabis has changed dramatically in the past 10 or 15 years. These days, we’re in the midst of cannabis craze. 2019 is expected to be an even bigger year for the still-fledgling marijuana industry. Research estimates global marijuana spending to reach $32 billion by 2022, more than tripling 2017’s $9.5 billion.

cannabis stocks growth chart

In 2018, pot stocks boomed as marijuana mania rocked the investing world. Leading up to the day Canada was scheduled to legalize, cannabis stocks saw a frenzy of activity. Law-abiding investors were seizing the opportunity to invest in the newly legitimate business. Many analysts on Wall Street blamed these retail investors for the unprecedented volatility in the stocks. Investors everywhere want to get a piece of the cannabis market.

Best Cannabis Stocks: A Complicated Space

However, investing in this space isn’t easy. There are so many weed stocks on the market that it’s hard to spot winners.  Investors should examine companies closely before purchasing marijuana stocks. Pot stocks are getting cheaper, but valuations remain compared to traditional commodity agriculture businesses.

pot stocks

Unlike commodity businesses, the industry is multi-faceted and complex. These companies sell a variety of products. In fact, some of them don’t even sell marijuana. Some companies grow hemp, the male variant of the cannabis plant that only carries trace amounts of THC, for its CBD.

The Agricultural Improvement Act of 2018, aka the farm bill, legalized the sale and cultivation of hemp and CBD on the federal level. Large, interstate companies were finally able to connect their supply chains and create efficient distribution channels. Until the farm bill was passed, hemp was banned in the U.S. because it contains trace amounts of THC.

The CBD Cure-All Craze

CBD has its own mania in 2018, and the chemical became wildly popular for its supposed health benefits. Health stores today carry CBD supplements for aches, pains, and mental anguish of all varieties. Since hemp and marijuana are essentially the same plants, it’s ideal to look for companies that have revenue streams on both sides of the industry. Hemp also has a variety of industrial uses

Cannabis Stocks: Mergers, Acquisitions, and IPOs

Many on Wall Street are predicting that 2019 will be the year that many of these half-baked cannabis companies get their acts together and become mature, profitable businesses. The industry saw a significant amount of M&A activity in 2018, and the purchasing companies are looking for those investments to start paying off in 2019. 

Though marijuana stock prices may have calmed since the wild volatility we saw over the summer of 2018, the stage is set for cannabis stocks to take off again in 2019. If you got left in the dust last year, don’t make the same mistake. We’ve listed 5 marijuana stocks to help you start building positions in quality companies today. Start your research with the five best cannabis stocks for growth in 2019.

Marijuana Stocks: The Verdict

Buying cannabis stocks is an uncertain venture. Most cannabis companies are still in their infancy. Since the industry is relatively new, the companies don’t have established track records like other, more traditional stocks.

Many marijuana stocks that on the rise today will go bankrupt. However, for discerning investors who can spot a good company, picking the right marijuana stock today may make you very wealthy one day. In the meantime, try not to get an ulcer. Owning these stocks can be like riding a rollercoaster.

Do you own any Marijuana Stocks? Let us know in the comments below!

post-image

Are FANG Stocks Losing Their Shine?

Chris Dios - September 30, 2019

If you’re new to investing, you may be watching CNBC and listening to Jim Cramer talk about FANG stocks (or FAANG stocks) and saying to yourself, “what the heck is fang?”.

Believe me, I know. I was once one among you. Today, I’m here to tell you that FANG is not a company. In fact, FANG is an acronym for the top 4 high-growth stocks that powered 2018’s epic rally.

What Are Fang Stocks

FANG represent the leading tech stocks on the market. These are the leading growth stocks on the market. These four (or five) stocks make up an enormously disproportionate chunk of the S&P 500, so the theory goes that the market will follow the FANG stocks whichever direction they go; up or down.

So what are the FANG Stocks? Let’s break it down:

facebook laptops shadows

Facebook, Inc. (NASDAQ: FB)

With a market cap over half-a-trillion dollars, Facebook is a behemoth of a company. The social media megalodon has infiltrated practically every corner of our day to day lives, and it’s still hungry for more. This company has its fingers in everything from virtual reality to crypto.

Amazon.com, Inc. (NASDAQ: AMZN)

Did Facebook’s $500 billion market cap get your attention? How about $860 billion? That’s Amazon’s valuation at current levels. Amazon briefly touched a trillion-dollar valuation before the market took a dive at the end for 2018, but who’s splitting hairs about few hundred billion dollars?

Like Facebook, Amazon is everywhere and keeps getting bigger. CEO Jeff Bezos is one of the richest people on the planet and he’s willing to try anything. In addition to the company’s ridiculous e-commerce business, Amazon Web Services is practically printing money.

Netflix, Inc. (NASDAQ: NFLX)

One of the stars of last year’s big rally, Netflix has lost a lot of its luster since this time last year. With Comcast (NYSE: CMCSA), Apple, Disney (NYSE: DIS), Amazon, AT&T-Time Warner (NYSE: T) and more throwing their hats into the streaming arena this year, the competition is starting to get thick for Netflix. The stock really hit a wall over the summer when Netflix revealed that its missed its subscriber estimates by a large margin in the second quarter of 2019.

netflix laptop

With Disney Plus and Apple TV+ retailing for less than half the cost of a basic Netflix package, things are sure to get tighter for Netflix. The market might be too down on this one but, even with the startling declines, this stock is still trading for over 100 times forward earnings.

It could get worse before it gets better for Netflix.

Google, Inc, (NASDAQ: GOOGL)

Google practically owns the internet, so it’s one of the most important stocks in the S&P 500. This large-cap tech stock is posting solid numbers in 2019, but there may be trouble on the horizon. Several factions of the government are gearing up for big tech antitrust raids, and Google is firmly fixed in their sites.

Regulatory issues haven’t hurt the company too much in the past, but the anti-corporate rhetoric heated up significantly in 2019. Google could be a risky play going into an election year with a democratic field that is sounding that battle cry against unfair corporate practices.

FAANG Stocks??

If you’ve seen the extra ‘A’ in FANG, it includes one more company in this lineup of corporate titans.

Apple Inc. (NASDAQ: AAPLE)

Believe it or not, Apple is the most valuable company on this best tech stocks list. Apple is worth just about $1 trillion dollars in market capitalization, making it one of the most valuable companies on planet Earth. Apple doesn’t just make money off iPhones and iPads, services are becoming an increasingly important part of the firm’s business model. Between the App Store, healthcare, and other services, Apple is hedging its bets against a weakening iPhone upgrade cycle. CEO Tim Cook is one of the best in the business and he’s proven the haters wrong time in and time out.

CNBC’s Jim Cramer’s favorite line: “Don’t Trade Apple, Own It.”

Are FANG Stocks Still a Buy?

Tough question. These companies comprise a huge portion of the S&P 500. It’s hard to imagine the market gaining a lot of significant ground unless these companies come along for the ride. That being said, it’s the stock market is a touch place for big tech right now. Most of these companies are under siege from anti-trust investigations and Federal, State, and even local levels.

Words like ‘break up’ are being tossed around in conversations about Facebook, one senator even asked the company to sell Instagram and WhatsApp outright. Google is under a consistent barrage of anti-competitive practices accusations. Ditto for Apple, who critics say abuses its authority over the iOS app store, and Amazon is regularly accused of unfair relating to both its labor force and its online marketplace.

Closing Thoughts

With a wave of left-leaning democrats set to hit the ballots next year, this is a tricky time to buy FANG stocks. A trade war between the world’s two largest economies is already putting the market on edge, and the economy is downshifting from its high-octane 2018 expansion. Add that in with a spreading global slowdown and you’ve got the recipe for some very anxious investors.

It all depends on your time horizon. If you’re going to hold these stocks for years, then buying might not be a bad idea. If you’re looking for short-term gains, I suggest you proceed with caution. The market for FANG stocks looks like it will be plagued with uncertainty in 2020.

Stay tuned to Stock Dork Alert for all the latest stock market news. Sign up now for a free ebook.

post-image

9 Defense Stocks That Are Built To Last

Chris Dios - September 6, 2019

Defense Stocks: Buy or Sell?

Global uncertainty is at an all-time high. As a result, many investors are buying defense stocks to ride out the volatility. International tensions are heating up on several fronts, and the government is throwing money at the defense budget. Military stocks are getting a lot of attention as a result of these long-term trends.

Drone Stocks

Interested in more high-tech military stocks? Check out our featured watchlist, the best drone stocks, for even more cutting-edge weapons systems.

Tank Stocks

Big guns and heavy metal, these companies build some of the meanest machines on the planet.

General Dynamics (GD)defense-stocks-tanks-gd

M1A2 SEP v2 Abrams Main Battle Tank, Stryker IFV

General Dynamics produces the M1 Abrams battle tank and a variety of other land systems for the U.S. military. The company is also the primary producer of artillery shells for the U.S. military.

BAE Systems (OTC: BAESY)

Bradley AFV, M1907 Paladin, ARCHER Mobile Howitzer

A merger between U.K.-based British Aerospace and Marconi Systems created BAE Systems formed this company. Today, the company is one of the largest manufactures of light armored vehicles and artillery pieces for the U.S. and U.K. military. BAE also manufactures the British Army’s main battle tank, the Challenger 2.

Aerospace Stocks

Aerospace companies produce some of the most important weapons systems in the U.S. arsenal.  The U.S. is spending heavily to develop supersonic aircraft and full stealth technology, and these defense stocks are leading the charge into the battlefield of tomorrow.

Lockheed-Martin (NYSE: LMT)

F-22 Raptor, F-35 Lightning II, Sikorsky Helicopter, SR72 Blackbird

Lockheed produces some of the most advanced aircraft the world has ever seen. The F-35 is an all-weather, stealth, supersonic fighter that’s changing the rules of combat aviation. The company also makes Sikorsky helicopters and a variety of other advanced systems.

Boeing Corp. (NYSE: BA)defense-stocks-fa-18-superhornet

AH-64 Apache, FA-18 Super Hornet, F-15, V-22 Osprey

Boeing shareholders are still reeling over the 737 MAX fiasco, but this company is a big player in the A&D space for years to come. Some of their most notable products include the Apache helicopter and FA-18 Super Hornet. Boeing and the U.S. government have a very close relationship, which should earn the firm more favorable treatment from the top echelons of government. Boeing deals closely with the civilian sector as well.

Firearm Stocks

Many of the companies producing arms for the U.S. military are privately owned. Glock, Fabrique-Nationale, Remington and many other military small arms manufacturers are closely held private companies, so there aren’t a lot of military stocks that deal solely in firearms.

American Outdoor Brands (NYSE: AOBC)defense-stocks-firearms-aobc

Firearms (Smith & Wesson, M7P, Thompson), Law Enforcement Accessories

Smith and Wesson released their first police service revolver in 1899, and cops still carry S&W revolvers 120 years later. The U.S. military doesn’t buy any of its guns from AOBC, but the company sells weapons, handcuffs, ammunition, and other accessories to law enforcement at the federal, state, and local level.

Helicopter Stocks

Helicopters changed the way wars are fought when they flew U.S. troops over the jungles of Vietnam. These days, they’re among the most important weapons in the U.S. military arsenal.

Textron Systems (NYSE: TXT)

defense-stocks-txt-cobra

AH-1 Cobra

AH-1 Cobra, UH-1 Iroquois (“Huey”), H-13 Sioux

Textron purchased Bell in 1960 and proceeded to revolutionize the helicopter industry. The AH-1 Cobra is still flying, virtually unchanged, and it’s been in the air since Vietnam. Textron is way bigger than helicopters though. The company manufactures an arsenal of high-tech weapons systems and military equipment, including missiles, UAVs,  light-armored vehicles, and much more.

General Electric (NYSE: GE)

GE doesn’t make helicopters, but the firm supplies engines for many U.S. helicopters, including the UH-60 Blackhawk. General Electric is one of the world’s leading producers of aviation jet engines for commercial, civilian, and military applications. It also supplies avionics and other military systems.

High-Tech Military Stocks

Supersonic cruise missiles and drone-killing lasers may sound like science fiction, but these cutting-edge military stocks are making technologies like these a reality.

Northrop Grumman (NYSE: NOC)

Smart Bombs/Munitions, Information Systems, Satellites, Missiles

These days, armies also need smart munitions and high-tech communications to get the job done. Northrop Grumman provides a variety of high-tech support equipment for the military. The firm breaks its product portfolio into four core sectors: aerospace systems, “innovation systems” (space/high-tech weapons), mission systems (battlefield command, etc.), and technology services (IT/back-end).

military-stocks-missiles-RTN

Raytheon Missile System

Raytheon (NYSE: RTN)

Energy weapons, Hyper-Sonic Aircraft, Missiles, Cyber/Electronic Warfare

Possibly the most advanced weapons system manufacturer in the world, Raytheon is one of the leading companies in the military-industrial complex. Raytheon makes a variety of advanced weapon systems, including the Javelin portable antitank weapon and hypersonic weapons that travel at five times the speed of sound.

The Defense Industry Landscape

Defense stocks are listed under the aerospace and defense sector. However, many of these companies make products for the civilian sector. Therefore, all military stocks fall under the A/D sector. Countless small companies are pitching innovative technologies to military clients. Just one Pentagon contract can create a whole new world for these startups and create a huge movement in stock prices.

Politics have a huge influence on this industry. As a result, an election or a new majority in congress can severely impact short-term share prices and even upset the long-term outlook for the industry. Military spending cuts also hurt the market for defense stocks.

Many companies in the aerospace and defense sector don’t get all of their revenues from defense contracts. They are industrial conglomerates that produce a variety of goods. In fact, out of the top 20 defense contractors ranked by revenue, only two companies earn 100% of their revenues from their defense business.

Small-Cap Military Stocks

There are tons of small startups that are chasing U.S. military contracts. These defense stocks behave much differently than the large-cap behemoths you see here. Many of these small startups aren’t listed in the aerospace and defense sector but, regardless, they rely on the military for most, if not all, of their revenues.

Defense Stocks: Closing Thoughts

Military stocks make great defensive positions in any portfolio. These companies have stable revenues, and the U.S. military budget is expanding to create even more opportunity for these companies. If you’re looking for some stable assets to shore up your portfolio against the market uncertainty, you need to be looking at defense stocks. The sector is outperforming the S&P 500 this year by over 5% so, if you’re not in, you’re missing out.

 

post-image

5 Dividend Stocks to Buy Now

Chris Dios - September 5, 2019

Top-5 Dividend Stocks to Buy Now

During uncertain times like these, having some dividend stocks in your portfolio never hurts. Watching your portfolio jump up and down can be rough on the nerves, but dividend payments offer returns that you can count on. Getting that extra cash makes it easier to hold on through the volatility and stick to your overall investing strategy. 

More Cheap Stocks

If you’re looking for low-priced deals, be sure to check out our hot stock watchlists. They’re updated monthly with the best stocks under 1 dollar list, stocks under 5 dollars (source), and stocks under 10 dollars here. Last but not least, our best penny stocks list has all the hottest cheap stocks.

Best Dividend Stocks 2019

These are the dividend stocks that could be the best long-term plays.

AbbVie Inc. (NYSE: ABBV)

Biotech / Pharma, Yield: 6.54%

AbbVie is a mega-cap biotech firm that is most well-known as the producer of Humira, a biological treatment for a variety of diseases. Shares are down because the firm’s exclusive patent rights are about to run out, opening the door for competitors to push generic bio-similars and shrink AbbVie’s share of the market. 

However, the market might be oversold on this one. Humira earns a huge proportion of Abbvie’s earnings and profits, but they have several promising treatments in the pipeline as well. Plus, analysts expect AbbVie’s acquisition of Allergan to close in early 2020 and further reduce the firm’s dependence on its Humira earnings. Experts project that the company generates enough cash flow to sustain the dividend yield for years to come.

Ford Motor Company (NYSE: F)

Automotive, Yield: 6.59%

It’s been a tough year for the auto sector. The industry is dealing with regulatory pressures, labor unrest, and tariff threats; just to name a few. However, Ford looks like it could be a good long-term buying opportunity for dividend investors. Management is cutting out unprofitable areas of the business and making operational changes to reduce costs and increase manufacturing flexibility.

This company is headed in the right direction, and the board is committed to maintaining the dividend. This is the kind of stock you buy and hold for a long time, but you may want to wait until 2020 to jump in. China is scheduled to impose 25% tariffs on American auto imports starting in December. However, a last-minute truce could be a positive catalyst for share prices. 

Lloyds Banking Group PLC (NYSE: LYG)

(United Kingdom) Financial, Yield: 4.64%

If you follow stock market news, you’ve probably heard about the incredible value numbers in European bank stocks. A looming global slowdown and a glut of negative-yielding European sovereign debt are turning the Street bearish on old-world financial stocks, but the value ratios are eye-catching, to say the least.

As a British bank, Lloyds is facing a lot of uncertainty with Brexit, but the firm restructured its operations in preparation for a potential crash-out and is now well situated for a no-deal Brexit. In terms of regulatory cost risk, it looks like the worst is over for Lloyds. If you can ride out the Brexit volatility, the long-term outlook for this bank stock is bullish.

Royal Dutch Shell PLC (ADR: RDS/A)

(United Kingdom) Oil/Gas Energy, Yield: 6.80%

Oil and gas is a tough sector to turn a buck these days, but you can find some great long-term values amongst the losers. Shell boasts one of the worlds’ largest LNG portfolios, plus lucrative refining & chemical businesses. The LNG market is incredibly over-supplied at the moment, but the demand for LNG is projected to rise in the coming years, which could help fuel price growth. The refining segment gives the company a steady revenue source to fall back on in case oil prices continue to fall. 

Shell adjusted its business model to reduce costs in order to compete under lower oil prices. If oil recovers to $65 a barrel, a conservative projection, the company should generate as much as $25 billion in free cash flow. Those three factors make a strong case for Shell recapturing its 52-week high of $70 per share in the future. That’s over 27% of upside from its current price levels. 

AT&T Corp. (NYSE: T)

Telecommunications & Media, Yield: 5.77%

After floundering around $29 per share for most of the year, AT&T is finally starting to make its move. Telecom stocks usually make good defensive allocations, and AT&T’s 5.7% dividend sweeten the deal.

The company has more media outlets that any of its competitors can match, with direct access to over 170 million pairs of eyeballs across its entire content portfolio. WarnerMedia has a vast portfolio of intellectual property and the HBO Max streaming service is set to launch soon. When the HBO Max launches, it will likely be a positive catalyst for the stock.

Don’t forget about AT&T’s consumer cellular business. It provides lots of steady revenues and is pretty much recession-proof. With a dividend of over 5.5%, AT&T looks like a long-term winner.

High Yield Dividend Stocks

You can find high paying dividend stocks by using a stock screener, but if it looks too good to be true it probably is. Beware of ‘yield traps’, high paying dividend stocks that are headed for disaster. For whatever reason, these companies have long-term issues so they try to suck in investors with attractive yields. Instead, search for quality companies with sustainable dividend payouts that are higher than the market average. 

To determine a good benchmark, the S&P 500 dividend yield is a good place to start. iShares Core SP500 ETF (IVV) currently has a 1.99% yield ratio, but most companies yield much more than that. For more perspective on dividend yields, compare them to their industry peers. The average sector dividend yield gives you another data point that you can use to evaluate a dividend stock.

Dividend Payout Ratio: Explained

Dividend payout measures the what percentage of overall earnings a company distributes through dividends. Ratios over 100% indicate that a company is paying out more than it’s earning, so it will either have to earn more money or cut its dividend moving forward.

dividend stocks payout ratio info

However, a low ratio isn’t good either. It implies that a company isn’t very committed to returning money to shareholders. That isn’t necessarily a bad thing. Some companies are focused more on growing revenues than returning earnings to shareholders. Do your due diligence and judge for yourself if the company’s dividend policy aligns with your own.

Generally, experts view dividend payouts between 35% and 75% as the ‘sweet spot’.

Monthly Dividend Stocks

Most dividend stocks payout every quarter or every six months, but some dividend stocks payout monthly. Income investors love monthly dividend stocks because monthly payments provide more flexible cash flow. Most stocks that pay monthly are ETFs. In particular, many bond fund ETFs make monthly payments, like the iShares High-Yield Corporate Bond Fund (HYG). If you like more regular cash flow from your portfolio, you may want to look into monthly dividend stocks.

Dividend Stocks: How to Buy

After seeing this lineup of the top dividend stocks, you might be looking to buy. But, finding the highest-yielding dividend stocks is only the first step. Once you find a trade, you have to find a broker. You buy and trade dividend stocks like any other stocks and, when dividend payment is made, it will usually post directly to your brokerage account automatically. 

If you’re shopping for a broker, check out these Robinhood and WeBull reviews. Both of these firms charge zero commissions and no account fees, so they’re great options for traders with smaller budgets.

How Do Dividend Stocks Work?

In most cases, dividend payments have three phases. First, the company announces a dividend. Usually, management announces the dividend during quarterly earnings reports, but sometimes special press releases detail the specifics. As part of this announcement, the company announces an ‘ex-dividend’ date. If you’re owning the company’s stock when the session opens on the ex-dividend date, you’re entitled to the dividend. It doesn’t matter if you sell the stock as soon as the session opens, you’ll still receive the dividend on the payment date. 

If you want to clock in for the dividend payment, you need to buy the stock before the close on the day before the ex-dividend date. After hearing this, you may think, “why not just buy stocks for the ex-dividend date and then sell them?” 

It makes sense in theory but not in practice, unfortunately. Stocks tend to slide on their ex-dividend date and, usually, the underlying exposure to short-term price movements generally negates the benefit of the dividend. Trust me when I tell you because I learned this lesson the hard way in the early days of my trading career. I ended up losing 3% of my principle chasing a 2% dividend. Dividends aren’t for short-term chasing, they’re for long-term investing and steady income. 

Best Long-Term Dividend Stocks

Dividend stocks are most effective when held for long periods of time. They generally best serve the interests of investors who are buying for the long haul. If you want to search for own dividend stocks, start with these screener settings.

  • Mid-cap or higher
  • Positive earnings growth
  • Profitable
  • Low-debt

Also, pay attention to the payout ratio. It measures the sustainability of dividend payments. Anything higher than 75% is a red flag but can be maintained so long as a company continues to grow its earnings, but it doesn’t leave a lot of margin for error if the business encounters cash flow problems. The sweet spot for dividend payouts is between 35% and 75% of earnings.

Dividend Stocks: Closing Thoughts

In an uncertain economic environment, dividends can be a great way to get returns from your investments. Bond yields are falling rapidly in the U.S. and they are already negative overseas, so there aren’t a lot of options for yield-seeking investors. As interest rates drop and yields head lower, expect dividend stocks to be an increasingly important part of the average portfolio in the coming years.

post-image

5 Drone Stocks You Shouldn’t Sleep On

Chris Dios - August 29, 2019

Drone technology is on the cutting edge of the tech sector. In fact, there are more drone stocks than you may think. Every big-tech player worth its salt is developing some type of UAV. Google, Facebook, and Amazon are all developing drones for commercial and government applications.  Lots of companies are taking a stab at remote-control drones, but the aerospace/defense industry is leading the field. Here are my Top 5 picks in this week’s watchlist: The Best Drone Stocks.

Best Drone Stocks: Top-5 Picks

Explore more of our cheap stocks watchlists:

Boeing Co. (NYSE: BA)

drone-stocks-boeing-BA

Boeing RQ-21A Blackjack

Boeing is one of the biggest companies in the Dow Jones Index, but the firm is having big problems with the 747 MAX. Regardless, it’s one of the leading developers of drone technology. The company produces a wide variety of drones, including models that can refuel planes, land on aircraft, and even carry up to 500 lbs of cargo. The company’s undeniably strong relationship with the U.S. government gives it a huge advantage. Government clients will surely be interested in Boeings high-tech UAVs.

Textron (NYSE: TXT)

invest-in-drones-Textron-TXT

Textron Shadow V2 UAV

This high-tech industrial conglomerate produces a variety of systems for the U.S. Military. The company has been working on drone technology since the 1980s and produces several models, including both aerial and surface drones. Textron also owns Bell Helicopter, a leading producer of rotary aircraft, and Cessna, famous for its small single-engine planes. This company has a variety of expertise and the government connections to make it happen in the drone space.

AeroVironment (NASDAQ: AVAV)

Out of all of the companies on this week’s list, AeroVironment is the only one that makes the majority of its revenues from drones. Although this company is small compared to the other massive-cap conglomerates on this week’s list, it’s the best pure-play drone stock in the lineup. In addition to drones, the firm also produces flight systems for military and civilian clients. Earnings are growing at a 94% clip from the previous TTM, and the stock is starting to look cheap after a long consolidation. 

military-drone-stocks-AeroVironment-AVAV

AeroVironment RQ-20 Puma AES

Raytheon (NYSE: RTN)

high-tech-drones-raytheon-RTN

Raytheon Coyote

An aerospace/military-industrial company, Raytheon makes high-tech gear for military and civilian clients, including the U.S. military. Be aware that Raytheon plans to merge with industrial conglomerate United Technologies (UTI). The deal is awaiting regulatory approval, and headlines could affect share prices as the merger develops. Regardless, the firm is a leading producer of drone technology. Raytheon is even developing small swarm drones that use advanced AI to work in unison. Regardless The company is working with DARPA, the U.S. governments advanced military research arm, to develop its swarm AI.

Airbus SE (ADR: EADSY)

Europe’s answer to Boeing, Netherlands-base Airbus is also a big player in the drone game. The Wall Street Journal recently featured the firm in an article on stratospheric drones because of its advances in the field. In addition, the firm has several other promising models in the pipeline. The stratospheric drone runs around-the-clock on solar-powered batteries, doing lazy loops in the upper stratosphere for days on end. Proponents of the technology believe stratospheric drones are cheaper and more flexible than spy satellites.

stratosphere-drones-airbus-eadsy

Airbus Zephyr Stratosphere Drone

More Trending Stock Picks

Thanks for reading! If you enjoyed our picks, be sure to give us a shoutout in the comments. Don’t forget to signup for FREE Dork Alerts for exclusive hot stock watchlists and in-depth market analysis. For even more bonuses, sign up for mobile alerts to get early access to Stock Dork Pro Reports and much more.

post-image

Defensive Stocks to Buy in a Recession

Chris Dios - August 15, 2019

Defensive Stocks

It doesn’t look good for markets. Valuations are historically high, earnings are decelerating, and we’re in the midst of a heavyweight fight with the second-largest economy in the world. The resultant uncertainty is creating an appetite for defensive stocks

The one beacon of light is the strength of the U.S. consumer, which is riding a strong labor market and an uptick in wage growth for the first time in several years.

Unemployment is historically low and consumer confidence is high, but many experts fear that the next round of proposed tariffs will finally impact consumers.

Inverted Yield Curve

The bond market raised a big red flag yesterday when the yield curve inverted between the 2-year and 10-year Treasury note.

An inverted yield curve signals a recession is on the horizon. On average, the signal occurs roughly 17 months before the official start of a recession.

It’s still unclear whether the U.S. economy is headed for a recession, but there are definitely warranted concerns regarding both the domestic and global economy.

Recessions are tough times for traders, but some stocks tend to perform better than others during a downturn.

Finding The Best Defensive Stocks

Today, we’ll look at stocks from three sectors that are traditionally considered to be ‘recession-resistant’: Discount Retail, Healthcare, and Entertainment.

Consumers are strong but spending would undoubtedly be affected by a recessionary environment.

These sectors are most likely to generate consistent, stable earnings during a recession because consumers generally keep their spending on groceries, healthcare, and entertainment relatively consistent.

These defensive stocks are a good place to start if you’re looking for a little insurance against a slowdown. 

Top-5 Defensive Stocks

Dollar Tree (DLTR)

Discount Retail

Dollar Tree is a discount retailer that sells off-brand and discounted merchandise. The stock was on fire for most of 2019 but suffered a 17% pull-back this month. A note from Deutsche Bank predicted the tariffs would squeeze the business, but not everyone agrees. CNBC’s Jim Cramer says Dollar Tree has “far less China exposure than one would believe and therefore is not subject to the margin squeeze everyone keeps fretting about come September 1.” 

I think this chain has a lot of value, especially in a recession. From a psychological standpoint, people flock to stocks like this during an economic slowdown. Valuations are reasonable, DLTR is currently trading for less than one times sales and its P/B is a scant 3.85. The recent pullback could be a buying opportunity for investors with a longer outlook.

Costco Wholesale (COST)

Consumer Staples Retail

Costco is not a traditional discount retailer, it’s a warehouse store with a membership-based business model. However, with over 44.6 million paid members with a renewal rate over 90%, they have a myriad of loyal shoppers.

Goods are cheap at Costco, the company’s business model relies on high volume and low margins to generate earnings, and the membership fees are the icing on the cake. Plus, over 30% of Costco’s warehouses are in international markets so it had diversified geographic exposure. Despite the trade war, the Chinese consumer is strong, so Costco’s presence in China could prove to be a big asset if the U.S. economy takes a downturn.

I’m a Costco member and I love this store. Their goods are dirt cheap and buying bulk is a great way for shoppers to save a few bucks. Since I got my membership, I find myself buying more and more of my groceries from Costco, and I don’t think my experience is unique. Costco stores are clean, the staff is friendly, and it’s like a 5-star resort compared to our local Wal-Mart. I think Costco will perform well during a slowdown. 

United Health (UNH)

Healthcare

No matter how bad the economy is, people still need health insurance. United Health is the largest health insurance payers in the United States. The firm has a market cap of over $229 billion and generated $12.99 billion in income last year. With that much cash flow, United is well equipped to ride out a recession. Healthcare has performed poorly in 2019, weighed down by escalating rhetoric from Democrats pushing for healthcare reform, but the downturn could be a buying opportunity.

United is one of the leading companies in healthcare, and it’s trading for cheap after performing poorly for most of the first half of 2019. Unfortunately, the political climate is generating a lot of uncertainty for United and the stock is subject to significant headline risk moving forward. If a Democrat candidate pushing hard for healthcare reform begins to take the lead in the polls, it could have a dramatic effect on the stock. 

CVS Corp. (CVS)

Retail / Healthcare

This stock combines the retail and healthcare sectors in one great company. CVS has the largest retail pharmacy network in the U.S., and the company officially entered the insurance business with the completion of its Aetna Health acquisition in late 2018.

The stock got hit earlier this year when CVS reported difficulties with its Aetna acquisition, but many experts believe that the Aetna deal will start paying dividends for CVS soon. Morningstar says, “The firm’s combination with Aetna should put the company in a much more attractive competitive position as the industry moves toward preferring a more integrated service offering.”

The market is in wait-and-see mode on CVS. Investors want to see results from the Aetna acquisition before they start buying. However, things could already be turning around. Shares of CVS are up over 10% from its bottom in May. 

This is a quality company with a track record for execution. Valuations are excellent, the stock is trading for only 8.15 times forward earnings. If you think the Aetna acquisition is about to turn a corner, getting in now could amount to significant additional gains. 

Disney (DIS)

Entertainment

Disney has been in the news a lot lately in relation to their new streaming service. Disney+ launches this November and it’s cheap. Subscribers can get Hulu (with commercials), ESPN+, and Disney+ for only $12.99; and Disney+ by itself is only $6.99 per month. Netflix starts at $8.99 but its standard package is $10.99.

The streaming business will allow Disney to monetize its MASSIVE content portfolio, which includes the Marvel Universe, Star Wars, and flagship Disney franchises. In addition to streaming, Disney is dominating the box office this year. According to the Observer, Disney films account for 36.9% of domestic box office market share.

Disney performed strongly in 2019, but shareholders got hammered in early August when the company released disappointing quarterly earnings. Disney missed consensus earnings estimates by over $1 billion. That’s not a small miss, but most of the poor performance can be attributed to costs associated with its Fox acquisition and a weak opening in its new Star Wars-themed amusement park.

The pullback improved valuations significantly. Shares are currently trading for only 17 times earnings. I anticipate Disney+ will succeed and, eventually, have a positive effect on share prices.

post-image

Recession Resistant Food Stocks For Value and Growth

Chris Dios - August 9, 2019

Food Stocks: Value and Growth

Every person on the face of this Earth has at least one thing in common, they need to eat food! Americans spend roughly 10% of their disposable income on food, with 5.2% of that total going towards eating at home. That figure has remained relatively static for the past two decades, and the consistent demand for food products has helped make food stocks an excellent choice for defensive portfolio allocations.

food-stocks-demand

Food stocks are listed under the consumer staples sector. Consumer staples usually do well during recessions and times of extended uncertainty. Food stocks and the consumer staples sector as a whole are widely considered to be recession resistant. Basically, recession resistance means that a business or industry will not be significantly affected by a slowdown in the economy.

Some food stocks are highly coveted for their recessionary resistance. Many of these companies have long histories of stable operations and revenues. The stability of these businesses appeals to investors during times of uncertainty.

Interested in more defensive stocks? Check out our article on gold stocks.

Food Stocks and The Business Cycle

Regardless of the economic environment, consumers spend money on food. While some studies show that recessions affect food spending, the impact is usually significantly less so than other types of consumer spending. Don’t let ‘recession resistance’ lull you into a false sense of security. Food stocks are resistant to recession, they are not recession-proof. 

food stocks performance

Courtesy of Fidelity Investments

That being said, the best-performing sector during a recession is consumer staples by a wide margin. Food stocks are widely viewed as a defensive asset, so capital tends to flow towards the sector when the economy starts contracting.

The U.S. economy appears to be strong so a recession doesn’t appear to be imminent. However, there are a few red flags that are concerning some investors, like falling bond yields and slowing GDP growth.

food stocks-business cycle

Courtesy of Fidelity Investments

No one knows when the next recession will begin, but it’s widely agreed that we’re currently in the later phase of the current economic expansion; the final phase before recession. but there are no hard rules for how long the economy can stay in this phase, and there’s also the possibility it could swing back towards expansion. We could be years from the next recession but being prepared in advance is a prudent move.

Now that you know the landscape, let’s get into the players. These companies represent some of the most notable food stocks on the market. This is a great place to start if you’re seeking a place to position the defensive portion of your portfolio.

Best Food Stocks to Buy- Packaged Food Stocks

The packaged food space is rich with legacy brands with deep customer loyalties. These companies have huge portfolios of brands that provide relatively stable revenues.

General Mills, INC (NYSE: GIS)

It’s a household name for many Americans, but General Mills is everywhere. The firm sells more than 100 brands in over 100  countries and its dividend payments have an unparalleled track record. General Mills has been paying shareholders dividends for over 118 years!

General Mills flagship brands include favorites like Betty Crocker, Green Giant, Haagen-Dazs, Cheerios, Yoplait, Pillsbury, and Progresso.

It’s not easy for a food company this large to find avenues for growth, but management is getting creative. Last year, General Mills acquired all-natural pet food produce Blue Buffalo for $8 billion in an all-cash deal. This new direction could have significant long-term implications. General Mills expansion into pet products could help it fuel long-term revenue growth by capturing market share in a new category.

Kellogg Company (NYSE: K)

kellogs food stocks

Source: Kellog Company

Kellogg’s is a classic American brand that dates back to 1905, and it’s no exaggeration to say they invented the modern breakfast cereal. Dr. John Harvey Kellogg founded the company just a few years after developing a process for producing the first corn flake cereals.

Today, Kellogg’s is a $21 billion empire with operations in approximately 180 countries. Brands like Kashi, Keebler, Famous Amos, Morning Star Farms,  Pop-Tarts, and Eggo comprise just a small portion of this company’s massive portfolio.

Kellogg’s currently pays a $2.28 cent annual dividend. At current prices, it’s yielding about 3.65%. The company has a history of committing a large portion of its retained earnings to dividends. Kellogg’s payout ratio is over 90.84% and the company has increased dividend payments at a 5.56% rate in the past year.

Best Food Stocks to Buy- Alternative Meat Stocks

Meat alternatives catapulted to super-stardom this year after Beyond Meat completed its IPO in May. The stock’s meteoric rise is a sign that the market is ready to sink its teeth into plant-based meat stocks.

Beyond Meat (NASDAQ: BYND)

This is the one that started it all. When the company hit the market in early May, most people on Main Street had even heard of this upstart brand. After a rally that took share prices to over eight times their IPO value, Beyond Meat is a household name. Wall Street is in love with this company, it’s a  dominant player in a space that is expected to explode over the next few years.

Beyond’s downright absurd valuation shows just how much investors are willing to pay for a piece of the pie. The company has a $9.79 billion market cap on annual sales of only $87.9 million (with an ‘M’) in 2018. Granted, Beyond already surpassed that total for 2019, but shares are still trading for 36 times the most recent quarterly sales figures and over 246 times the company’s book value.

The hype is driving share prices to levels that, logic states, are not sustainable. It seems unlikely that Beyond can support these valuations long enough for the company to grow into them. Competition is heating up in the space and the company is having issues keeping up with demand. However, Beyond had plenty of expansion firepower. The company just completed a second public offering to float more shares and capitalize on the opportunity presented by the runup in share prices.

As long as Beyond continues to grow revenues at high rates, the market will be satisfied and share prices can continue to rise. However, if you’re not already in this one, you’re a little late to the party. If you believe in the long-term potential of meat-alternatives, this stock is definitely worth watching. However, it would be best to wait for a substantial pullback before wading in the waters.

Tyson Foods (NYSE: TSN)

Beginning this summer, Tyson Foods will begin selling plant-based chicken nuggets under the brand name Raised and Rooted. Interestingly enough, Tyson, the largest meatpacker in the U.S., owned a large stake in Beyond Meat prior to its IPO, but it divested its shares before the offering because it wanted to develop its own plant-based product line.

Tyson CEO Noel White thinks alternative meat could turn into a billion-dollar business for the company. Euromonitor predicts that the meat alternative market will hit $22.9 billion globally by 2023, and Tyson is in a great position to capture market share.

Even with Beyond’s rocket-ship runup, Tyson is still worth roughly three times the young startup. Tyson’s divestment of its Beyond Meat shares shows that the company is confident in its ability to operate in the space.

Trading at only 14 P/E, Tyson is a great value and share prices are following a strong uptrend. If Tyson can capture ground in the plant-based meat business, it could push the stock even higher.

It’s not the hot new thing, but Tyson has much better investable fundamentals than Beyond Meat.

Bottom Line

Food stocks are a great way to position your portfolio defensively. You can even find good prospects for growth if you look in the right places. We’re in the midst of a late-phase economic cycle, so now might be the time to allocate a portion of your portfolio to food stocks like these.

By the time a pending recession is clear, the market will undoubtedly drive up the cost of these stocks and substantially reduce returns for incoming investors. A preemptive defensive position could pay off big time if the economy takes a turn. In the meantime,  these stocks will provide good diversification and value for your portfolio.

Stock Dork Alerts

Sign up for Stock Dork Alerts to get the latest news on Alternative Meat stocks and much more! Start your day off with the latest stock market news, hot stock alerts, weekly watchlists, and much more. Join thousands of investors who trust the Dork for their stock market news and register for Stock Dork Alerts today!!

post-image

Gaming Stocks Primed for Strong Second Half

Chris Dios - August 9, 2019

Outlook for Gaming Stocks

The market is staring down a lot of uncertainty right now. Stalling global growth, coupled with a trade war between the world’s two largest economies, is a serious concern for investors. Could gaming stocks provide the safe haven many investors are searching for?

Most figures show that the economy is very strong. Stocks are still the best place to be, but investors should take extra caution during these uncertain times. It’s imperative to understand the companies you’re buying and the underlying factors that could affect your trade.

So what’s the best course of action for times like these? The textbook answer would be to shift assets into “safe haven” sectors, like utilities and consumer staples. The only problem with that strategy is everyone else has the same idea! Added demand for these assets is elevating valuations and eroding returns for investors who go this route.

Utilities aren’t having a great year. Valuations are actually 25% lower than they were last year, but utilities are underperforming the S&P 500 this year by about 1.5%. Most utility stocks offer stability and reliable dividends, but the sense of security comes at the cost of growth.

Last year, the consumer staples sector averaged 26.08 Profit-to-Earnings. This year, FUD has pushed valuations up to 42.07 P/E; a 61% increase! That’s an insanely high number for such a mundane asset class. It’s hard to imagine that the consumer staples sector can maintain these valuations for a prolonged period.

Strong Outlook for The U.S. Consumer

Recent economic data shows that the U.S. consumer is very strong. Unemployment is at record lows, wage growth is starting to pick up, and consumer confidence is at multi-year highs; creating a great environment for consumer discretionary stocks.

gaming stocks watchlist

Consumer Confidence Index at Multi-Year Highs

There are great opportunities in consumer discretionary stocks, but many of them also have inflated valuations. In addition, tariffs are hurting many retailers, so any bad trade headlines tend to weigh down the whole sector. The risks associated with trade are making retail a tough place to play, but where else can investors benefit from strong consumer spending?

One segment of the consumer discretionary sector looks like it could be a good answer: gaming stocks.

Video game stocks could be a great way to invest in a strengthening consumer. Gaming stocks had a slow start to 2019, so many of these companies are undervalued and offer great upside potential. Plus, video game developers have practically no exposure to Chinese tariffs. These gaming stocks could be a great way to bet on a strong consumer without exposing yourself to the major issues facing the overall market.

Watchlist: Best Video Game Stocks

Take-Two Interactive (NASDAQ: TTWO)

video game stocks

Red Dead Redemption 2

Momentum Mover

Take-Two is one of the hottest video game stocks on the market. Its games include hits like Grand Theft Auto and Red Dead Redemption. The company crushed its earnings estimates last week; surpassing consensus estimates by about 700%. Digitally delivered merchandise accounted for 77% of total revenue, and spending on downloadable add-ons and in-game purchases made up 54% of that total.

The unexpected beat set off a big rally the stock, but there’s still room for upside.  Share prices are trending upward and are now approaching a key milestone. If TTWO can break through its 52-week high at $140 it’s a clear sign that this bull still has gas left in the tank.

Zynga (NASDAQ: ZNGA)

Best Performer

Mobile gaming accounts for an increasingly large portion of the overall gaming market, and Zynga is one of the leaders in the space. The company’s hits include games like Words With Friends and Farmville. Zynga missed on its most recent earnings report, earning 4 cents per share against consensus estimates of 5 cents, and sent shares sliding over 7%.

However, even with the recent setback, Zynga is still one of the best performing video game stocks of 2019. it’s up over 94% since the beginning of the year. Valuations are elevated but this recent slide could create an excellent entry position for dip buyers. If you like the mobile gaming industry, take a strong look at Zynga.

Activision-Blizzard (NASDAQ: ATVI)

best video game stocks

COD: Modern Warfare; Fall 2019

Good Value

Activision is the largest video game company by market capitalization, and its assets include hit franchises like Call of Duty, Candy Crush, and Warcraft. The stock has struggled this year. Shares got slammed, along with the rest of the market, towards the end of 2018. Most of the market recovered from that sell-off, but ATVI hasn’t been able to recapture the ground it lost.

ATVI traded in a tight range between $42 and $50 for most of the year, but that’s significantly lower than its 52-week high of $82. It could be an excellent buy for long-term investors seeking value. Activision will get its feet back under it eventually but the question is, when? Its currently trading for only 21.1 P/E, significantly less than the sector at large.

Electronic Arts (NASDAQ: EA)

Best Value

EA is another huge video game company with a great library of intellectual property, including the Battlefield series and Madden Pro Football. One of the company’s most promising new titles is a free-to-play game called Apex Legends. It’s the company’s answer to Fortnight and the game’s rapidly-rising popularity is an encouraging signal for investors.

EA can’t be beaten from a value perspective. It’s trading for only 12.94 P/E; that’s about 67% less than the industry average. Remember, this is one of the top video game developers in the world! At a multiple like that, it’s hard to pass up. The stock has been somewhat volatile over the last week but, at these valuations, it’s hard to imagine that EA won’t be a winner in the long-term.

best video game stocks

Resident Evil 2

CAPCOM (OTC: CCOEF / TYO: 9697 )

International Exposure

CAPCOM is a Japanese video game developer and publisher with a long history hit titles and a portfolio of popular franchises. It’s a foreign company, but U.S. investors can buy shares via OTC markets. Also, be aware that Share prices can be affected by currency exchange rates between the USD and Japanese Yen.

CAPCOM is a great company to own if you’re looking for some foreign exposure in your portfolio. The firm is an early pioneer of the video game industry and its properties include new hits, like Monster Hunter, and classics like Resident Evil, Mega Man, and Street Fighter. The company is delivering impressive revenue growth and it has a policy of returning roughly 30% of its trailing earnings to shareholders by way of a dividend. If you’re looking for some international variety in your gaming stocks, check out CAPCOM.

The Best Gaming Stocks and Much More

Sign up for Stock Dork Alerts to get the latest hot stock watchlists delivered right to your email. Don’t miss out on another trading opportunity! Register for Dork Alerts and join the thousands of investors who trust The Stock Dork to deliver their stock market news. It’s totally free and you can cancel at any time, so join today!

 

post-image

Best Uranium Stocks & The Outlook for U.S. Uranium

Chris Dios - August 2, 2019

Uranium Stocks: Buy or Sell?

Uranium has a nasty reputation, but the truth is nuclear power produces less carbon than most traditional forms of energy production. Climate change regulations have made clean energy a priority, and many countries are turning to uranium-powered reactors to meet emission standard deadlines. Our picks for the best uranium stocks will introduce you to the major players in North America and explain the basics behind the market.

The uranium sector is unique for several reasons. Unlike silver, gold – as described here, and other precious metals; uranium doesn’t trade on an open exchange. The industry relies on two companies that specialize in pricing uranium:   TradeTech and UxC. These firms periodically release price reports based on long-term contracts and average selling prices. As a result, the market moves more erratically than traditional commodities.

The uranium industry is multi-faceted and complex, so trying to understand the market can be intimidating at times. This brief, simplified breakdown of the uranium industry should shed some light on this misunderstood sector.

Best Uranium Stocks: Our Top Picks

For the best uranium stocks, we focused on North American uranium producers. These companies are some of the biggest players domestically, and each has a market cap greater than $100 million. If the U-232 review comes back with recommendations that are favorable to the domestic uranium industry, these uranium stocks could go up in value significantly. Please note that these figures are based on the most recent production statistics available from the U.S. Energy Information Administration 

Energy Fuels Inc. (UUUU)

Energy Fuels Inc. operates in the U.S. with a headquarters in Lakewood, Colorado. The company owns several subsidiaries that are developing uranium mines across the U.S., including facilities in Wyoming, Texas, and Utah. If the U-232 review comes back with findings that benefit American miners, this uranium stock could be a big winner. The company owns one of only four uranium mills operating in the U.S. so it’s an important link in the domestic supply chain. The firm is also increasing vanadium production. Vanadium is a rare metal that is used to produce special industrial alloys, and UUUU is seeking to “re-establish the Company as the only primary producer of vanadium in North America.” (Energy Fuels Inc.)

Ur-Energy (URG)

Another American uranium producer, Ur-Energy operates 13 projects across the U.S. Its flagship asset is the Lost Creek project, sprawling over 37,500 acres in the Great Divide Basin, Wyoming. Ur-Energy is another key American producer that could be a huge beneficiary of government intervention in the uranium industry. In fact, URG was one of two companies that submitted the petition to the White House that led to the U-232 review (the other was Energy Fuels). The company’s Lost Creek property is one of only a handful of fully-operational uranium mines in the U.S., and the property has an output capacity of approximately 2 million pounds of U308 annually. To offer some perspective, U.S. U308 production totaled approximately 1.45 million in 2018, according to the U.S.E.I.A.

Cameco Corp. (CCJ)

Cameco is perhaps the most influential uranium stock in the North American uranium market. Its fully-owned subsidiary, Cameco Resources, is one of the world’s largest uranium producers and owns the largest production facility in the U.S. based on licensed ISR production capacity. The mine, located near Glenrock WY, has an annual production capacity of 5.5 million pounds, and Cameco has additional operations in Nebraska at its Crow Butte project. The only company on our list with a market cap over $1 billion, Cameco is more likely to survive a prolonged bear market. It’s one of only a few companies that is ACTIVELY producing domestic uranium and shares currently trade for less than one times its book value. Cameco could be the best value on our best uranium stock lineup. 

Uranium Mining: How It Works

Uranium is abundant in the Earth, but extracting is an expensive and resource-intensive task. There are two ways to extract uranium: open-pit mining and In-Situ Recovery (ISR). Pit mining is exactly what it sounds like, dig a hole and mine the uranium out of the ground.

When it’s extracted from the ground, natural uranium is comprised mostly of uranium oxide concentrate (U₃0₈). Miners extract, store, and trade uranium in this raw form. U₃0₈ only has a 0.7% energy content and needs to be enriched for commercial use.

Open Pit / Underground Excavations

Miners extract uranium from U-bearing minerals like uraninite. Once it’s out of the ground, the rock is crushed and treated in a specialized mill that extracts the uranium from the minerals. According to the U.S. Energy Information Administration’s 2018 Domestic Uranium Production report, there are no open-pit uranium mines currently operating in the United States.

The ISR Method of Mining Uranium

On the other hand, the ISR method drills down to reach the uranium and then injects a solution that separates the uranium from the rocks. Then, large pumps bring the uranium back up to the service where processing begins.

The ISR method costs less to deploy but is more expensive to maintain over time. The output from a mine or other natural resource slows over time as the resources are extracted. Decline rate measures just how fast that output slows over time, effectively measuring how fast a resource gets used up. ISR decline rates are fairly high in comparison with other methods.

The Uranium Fuel Cycle

uranium stocks

Once the uranium is brought to the surface,  it gets processed and dried into drums. The finished product has a yellow color, so it’s commonly referred to as yellowcake within the industry. Once processed, the yellowcake needs to be processed into a gas called UF6.

The UF6 is then enriched to between 3% and 5% energy content and becomes DUP, which is fabricated to pellets. Then, the pellets go to power plants to be used in nuclear reactors. From the time it gets mined to the time it’s used in a reactor, aka the fuel cycle, takes about 18 to 24 months.

Enriching Uranium

Nuclear reactors can’t use natural uranium because it doesn’t have enough energy content. Nuclear reactors require energy levels ranging from 3% to 5%. Enriching uranium to these levels creates low-enriched uranium; also known as reactor-grade uranium

uranium stocks

Uranium Supply and Demand Basics

Most of the demand for uranium comes from civilian power plants. According to uranium fund manager Mike Alkin, there are 450 “operating” nuclear reactors in the world. Ironically enough, not all of those are actually operation, so we’re closer to 420 active reactors. There are approximately 55 reactors currently under construction and hundreds more in the planning phase.

The Kazakh government owns the world’s largest uranium producer. Just 20 years ago, KazAtomProm was a small player in the uranium industry. Today, the company is helping Kazahkistan dominate the uranium market. Today, Kazakhistan produces roughly 44% of the global uranium supply and KazAtomProm constitutes half of that production.

According to Cameco Corp (CCJ), one of the largest uranium producers in North America, there are security concerns relating to the global uranium supply. “Almost 90% of uranium production comes from countries that consume little-to-no uranium,” the company says on its website. “the issues highlight the fact that nearly 70% of primary production is in the hands of state-owned enterprises.” 

uranium stocks

Courtesy of EIA.gov

United States Uranium

The United States has 104 nuclear reactors that use about 55 million pounds of uranium every year; representing 25% of the global supply. On the other hand, U.S. uranium production only comprises 5% of the global supply. The U.S. imports over 90% of the uranium it uses from abroad. As this imbalance continues to grow, some experts say our reliance on foreign uranium is a national security concern. Recently, the White House undertook an effort to review and possible address the issue. 

Uranium-232 Explained 

The White House recently reviewed the domestic uranium market. The probe began after major U.S. producers submitted a petition to impose import quotas under Section 232 of the Trade Expansion Act. The investigation, commonly referred to as U-232, gets its moniker from the section of trade law it’s based upon. The Administration initially declined to place restrictions on foreign uranium, but the matter is still up for review. Uranium investors should keep an eye on this developing story.

Many uranium manufacturers can’t survive with spot prices at current levels. U-232 proposed pushing up uranium prices in order to protect the domestic supply chain. Although the administration declined to take immediate action, it acknowledged the national security threat and designated the matter for a more detailed review.

Uranium Stocks: Closing Thoughts

If you’re a long-term believer in nuclear energy or you think U-232 could have a favorable outcome for these companies, U.S. uranium stocks could be a tremendous value at their current price levels. However, there are some concerns facing this industry. Regardless of whether it’s justified, negative sentiments plague the nuclear energy industry. 

That being said, there are only a handful of U.S. uranium producers operating and it seems unlikely that this White House will allow its domestic uranium supply chain to crumble under its watch. Officials have already acknowledged that the current state of U.S. uranium is a threat to national security so one can logically assume that there will be some kind of government intervention to support the industry. The U-232 verdict hit these uranium stocks hard, but the downside could be overdone. If the government comes back after the 90-day review concludes and decides to take action, there could be a parabolic reaction in these uranium stocks. 

post-image

Are Cobalt Stocks Ready to Run? Our Top Picks

Chris Dios - July 29, 2019

Cobalt Stocks: Overview

These days, it seems everything has a rechargeable battery.  Now, batteries even power full-scale vehicles and trucks. Cobalt is a key component in the lithium-ion batteries (LIBs) used in electric vehicles(EVs) and certain mobile devices. Buying cobalt stocks could be a great way to invest in the growing popularity of electric vehicles.

Cobalt is a rare mineral that comes from the Earth, so it needs to be mined out of the ground. It’s been a key resource for the metals industry for decades because it’s used to produce superalloys and steel products. However, cobalt use in EV LIBs is the growth story driving the market. Cobalt futures began trading on the London Metal Exchange in 2010; officially making cobalt an investable metal, but futures aren’t for everybody. Instead, buying cobalt stocks is a simpler way to play the trend. Speaking about investable metal, you should read about Gold stocks: https://www.thestockdork.com/best-gold-stocks/.

Check out current spot prices for cobalt here.

In this post, we’ll explore the industry and list our picks for the best cobalt stocks.

Cobalt Production & Use

Cobalt is an integral ingredient in the world as we know it. It’s used to make incredibly strong, temperature-resistant superalloys for jet engines, but it’s also vital to producing everyday items. Cobalt is used to make stainless steel, medical prostheses, diamond tools, and more. However, increased demand for EV LIBs growth is powering the industry.

Lithium isn’t the only element used in producing LIBs. In fact, the batteries are comprised of several elements. According to the U.S. International Trade Commission, cobalt is one of the key components of the most widely used battery chemistries.

cobalt stocks

Courtesy USITC.gov

There are three key components to LIBs: the anode (negative electrode),
the cathode (positive electrode), and the electrolyte (that promotes the movement of ions from the cathode to the anode). The anode typically consists of carbonaceous material (i.e., graphite), while the cathode is made of various formulations of oxidized metals which can include cobalt.”
(Courtesy of USITC.gov)

Cobalt Mining

Producing industrial-grade cobalt starts with getting it out of the ground. Cobalt isn’t particularly rare. According to the Cobalt Institute, it ranks 32nd in global abundance. Cobalt deposits are scattered across the Earth’s crust, but it’s usually not alone. Most cobalt comes as a byproduct of mining copper and nickel. Roughly 55% of the world’s cobalt production comes from processing nickel ores. However, a handful of mines in Morroco and Canada extract cobalt alone from arsenide ores.

Supply & Demand

According to the U.S. Geological Survey, the Democratic Republic of Congo (DRC) supplies over 60% of the world’s cobalt. The DRC produced over 90,000 tons of cobalt in 2018, more than any other country by a significant margin. Russia took the second-place spot by producing a mere 5,900 tons. In addition, DRC has another 3.4 million tons still in its reserves.

The U.S. produces only a small portion of the world’s cobalt supply. However, there are about one million tons of identifies cobalt resources in the U.S; mostly in Minnesota. Most cobalt produced from U.S. reserves will come as a byproduct of producing other metals, like nickel and copper.

China was the world’s largest cobalt consumer in 2018, and the rechargeable battery industry comprised 80% of consumption.  The U.S. gets most of its refined cobalt from China. Chinese refiners import massive amounts of cobalt from the DRC. Then, they refine the imported cobalt and sells it to U.S. companies for commercial use. Most of the refined cobalt consumed in the U.S. comes from China.

Reuters Graphic

The DRC Cobalt Controversy

The demand for cobalt increased significantly in recent years due to meet the growing demand for LIBs. As a result, DRC cobalt production has exploded to meet global demand. The DRC’s cobalt/copper deposits constitute a huge portion of the country’s sovereign wealth. However, corporate America is beginning to question DRC cobalt and its ESG impact.

There are a host of concerns surround the DRC cobalt industry. Amnesty International says child labor and human rights violations are rampant in DRC cobalt mines. Approximately 20% of cobalt mined in the DRC is extracted by hand-powered manual labor; commonly referred to as artisanal mining.

The concerns have led some consumers to look for alternative cobalt sources. Many companies enacted policies that forbid the purchase of ‘unethical cobalt’. If this trend continues, it could be a tailwind for producers in the U.S., Canada, and Australia.

Best Cobalt Stocks: Producers

These cobalt stocks are actively pulling cobalt or other minerals out of the ground. Mining costs money, so the leading companies have huge market caps and access to capital. These cobalt stocks are more stable and, thus, more suitable for longer-term investments.

Glencore Plc (OTC: GLNCY)

A Switzerland-based company, Glencore is a globally diversified natural resources firm. The firm’s asset portfolio includes approximately 150 mining operations, oil production assets, and agricultural facilities. Glencore operates internationally, with locations in the Americas, Europe, Asia, Africa, and ‘Oceania’.

Not limited to cobalt, this huge industrial conglomerate is very active in the commodity market. Glencore deals in oil, grain, and a variety of other commercial commodities. Its current market cap is about $46 billion, so the cobalt trade only comprises a small portion of the firm’s total revenue. However, large market cap producers are less volatile than cobalt stocks with smaller market caps.

Glencore’s size enables it to better withstand short-term fluctuations in the price of cobalt. However, its size also dampens the potential effects of a cobalt rally. Glencore offers investors more stability but sacrifices the upside potential for gains as a result.

Glencore currently pays an annual dividend that yields 5.97%, so that partially compensates for limited upside.

Update: August 8, 2019

Glencore Shutters One of Its Mines in Congo – Glencore PLC announced that it is closing one of its largest copper/cobalt mines. The firm cited concerns over a slowing global economy and weak commodity prices in China as the reason for the move.

This mine generates approximately 20% of the world’s cobalt supply. Declining copper and cobalt prices have created significant headwinds from Glencore’s Africa operations. Cobalt prices decline 58% in the first half of 2019, and copper decline by approximately 11%. Lower returns and higher costs pushed Glencore’s first-half net profits down 92% from the previous period.

Closing the mine should be a net positive for the cobalt market, which has been plagued by oversupply and lagging demand in 2019.

China Molybdenum Corp. (OTC: CMCLF)

Trade disputes hurt Chinese stocks this year, but lower prices result in better valuations. As a result, China Molybdenum Corp. is an interesting opportunity for value investors.

China Molybdenum is the world’s largest tungsten producer, and it’s the second-largest producer of cobalt and niobium. The company is also the world’s number one copper producer.

This company is a massive enterprise. It has a market cap of over $10.8 billion USD. The Chinese government owns a 25% stake in the company so it has plenty of governmental support. Current dividends have an annual yield of approximately 5.33%.

If you’re looking for value and stability, this could be one of the best cobalt stocks. It’s currently trading for only 1.09 times book value, incredibly cheap, but headwinds abound. The ongoing U.S.-China trade dispute is a risky uncertainty for this Chinese cobalt stock, and slowing global growth could reduce demand for CMC’s products. However, CMCLF could be a long-term winner if a trade agreement is reached and the global economy picks back up.

Best Cobalt Stocks: Exploration & Development

If you have a healthy appetite for risk, massive state-owned mining enterprises probably don’t get you very excited. In contrast, exploratory-phase miners are more speculative assets and offer greater potential rewards for investors willing to take a chance. This section of the best cobalt stocks are companies that could be winners down the road.

eCobalt Solutions Inc. (OTC: ECSIF)

If you want more exposure to the domestic cobalt market, eCobalt Solutions might be the best option for you. The Vancouver-based junior mining firm explores and develops mineral properties in the U.S., Canada, and Mexico. In addition to cobalt, the company explores for precious metals, uranium, zinc, and more.

The company owns a 100% stake in its primary asset, the Idaho Cobalt Project. Located in Lemhi County, Idaho; the project has a mine and a mill to process the minerals. The site will produce battery-grade cobalt salts for rechargeable batteries and other renewable energy applications.

eCobalt’s Idaho mine is still being developed, but it’s a promising venture. The concerns surrounding the Congolese cobalt industry could create more demand for domestically sourced cobalt. If eCobalt can get the Idaho project up and running,  the firm could be a big beneficiary of such a trend.

Shareholders recently approved a merger with Australian-based Jervois Mining Ltd. (ASX: JRV). eCobalt shares jumped in response to the news.

This is a highly speculative cobalt stock so be sure to be cautious and do your own due diligence.

First Cobalt Corp. (OTC: FTSSF)

Toronto-based First Cobalt Corp. is another smaller North American miner that is developing a continental cobalt supply chain for domestic industry. Its principal asset is the Iron Creek cobalt project in Idaho. In addition, the firm holds about 100 square kilometers of land in the Canadian Cobalt Camp.

Recently, Glencore agreed to assist the firm in recommissioning the First Cobalt Refinery in Ontario Canada. First Cobalt accepted a $5 million load to support the operation. Reopening the refinery would be a big step towards establishing a self-contained North American cobalt supply chain.

If First Cobalt can successfully develop a North American cobalt supply chain it could create tremendous value in the stock. American companies want cobalt from ethical producers, so First Cobalt could capture some of the Congo’s market share if it can get its operation running at full capacity.

Outlook for The Best Cobalt Stocks

Massive increases in cobalt production oversupplied the market. Furthermore, the DRC continues to expand production. However, experts predict demand for cobalt will grow as LIB and EV production expands. Some industry insiders are predicting that global demand for cobalt will quadruple by 2025. Even the best cobalt stocks underperformed this year, but contrarian investors who get in near the bottom could be in prime position when the market swings. Cobalt stocks could be a great opportunity for both value investors and swing traders.

Stock Dork Alerts

Don’t forget to sign up for Stock Dork Alerts to get all the latest market news delivered directly to your inbox. You’ll receive tons of valuable content, like hot stock watchlists; market-moving news; and much more. The best part: it’s totally free! Sign up today and start receiving expert insights from The Dork today!

 

post-image

Value Stocks: What Are They & How To Find Them

Chris Dios - June 13, 2019

Value Stocks: Should You Own Them?

Value investing is a trading strategy that dates back nearly a century. First taught at Columbia Business School in 1928, the concept became a household name thanks to Warren Buffet. Stocks that fit this method of investing are called value stocks.

Buffet became one of the richest men in the world by making investments in companies with able management and steady revenues. He never bought companies with inflated valuations or trendy business models, so he made his entire fortune without the likes of high-growth stocks like Amazon (AMZN) and Google (GOOGL).

The good news is that you can use value investing to help you find profitable trades too. Ideally, you want to find stocks that are trading below their intrinsic value. The trick is judging the intrinsic value of the stock, something Buffett has mastered. Basically, the idea is to buy stocks at a lower price than they are worth in the long-term.

Finding Value Stocks With Finviz

Most value stock analysis is centered around a few key ratios. You can easily search for stocks that have good value ratios using a free stock screener. All you have to do is set the screener to filter down to the companies that meet your criteria.

If you’ve never used a stock screener, finviz has an excellent free screener that is good enough for most retail investors. In the screenshot below, you can see the layout of the finviz stock screener. Here is one example of one way to set your screen to return good value stocks.

As you can see in the image, the P/E ratio – which measures share price over earnings – is set to less than 15. Find companies with healthy balance sheets by setting debt/equity to less than 0.1. Finally, the price per free cash flow is also set to low because companies with more cash have more ammo to make investments and fuel growth.

value stock

Source: finviz.com

Also, consider setting P/B (price to book) ratio to less than 3. This ratio measures how much a company is worth on paper in relation to its share price. A number of less than 1 tells us that a stock is trading for less than the company is actually worth, according to its accounting books.

EPS growth is another figure that you should look at. If earnings are expected to grow in the future, it is likely that share prices will grow along with them. EPS growth of 20% or more is a good place to start, but you can reduce it to 15% to get more results.

News, Outlook, and Their Impact On Value

Fundamental analysis is only one way to find a stock. Even if you find a dozen value stocks that look great on paper, it does not help you unless you know what is going with the business. You may find a company that looks great on paper but that is facing serious issues that will have a long-term impact on business.

Fundamentals are only half the story. To get the complete picture, you need to find out what story the company is telling, where it’s driving share prices, and how the market feels about the company going forward.

Public companies use press releases, earnings calls, and various other means to tell their stories. When they put out their figures, investors expect to hear a story behind what they’re reading. A narrative is a story behind a company’s stock.

Narrative and Value

A negative narrative can often weigh down share prices beyond reason if the market is antsy. Sometimes, a bad vibe can affect a stock long after the perceived threat has passed and, other times, the narrative is flat wrong.

Judgment calls play a much larger part in successful stock trading than most pros care to admit. Your judgment can be the difference between winning and losing in the stock market. If you think the market has the narrative wrong, you might be right! When the rest of the market has given up, it could be a chance for a keen value investment. If you’re right, you will be the one laughing last.

The best way to discover opportunities like this is to stay in the loop. Follow stock market news and keep up on all the latest stories, but don’t take opinions at face value. If you see an interesting value stock, get a clear picture of the company you are considering buying by reading the recent news.

If you don’t, the ‘value stock’ you’re looking at could be a sinking ship.

Discovering The Best Value Stocks

The best value stocks have good fundamentals and narratives that are going the wrong way. Find value stocks of interest by following the latest stock market news. Then, do your research to determine whether it’s a good investment.

Keep up on the latest financial news with The Stock Dork Pro email alerts. Get all the latest news delivered to your inbox every week, plus the best value stock picks, weekly watchlists, economy news, and much more. Sign up by entering your email in the field below.

post-image

Best Telecom Stocks to Keep an Eye On in 2019

Leslie Spicer - March 6, 2019

For most investors, there are certain stocks are more exciting than others. Big dreamers often hitch their wagons to up & coming technologies, like blockchain and AI industries. However, telecom stocks may be a more reliable investment, but determining which are the best telecom stocks to buy is not an easy task. We wanted to help, so we’re bringing you our picks for the best telecom stocks to watch in 2019.

Telecom stocks involve companies that provide the global communication network we rely upon. Telecom stocks have exciting prospects for scalability and growth. The landline telephone was cutting-edge technology 100 years ago. These days, companies are developing 5G wireless broadband service that provides fiber-optic speeds on any mobile device.

The industry has come a long way since the invention of the telephone. The telecoms industry plays a vital role in maintaining vast communication networks across the globe. People everywhere rely on this industry to do business, stay in touch with loved ones, shop from home, and more.  

Hope for Telecommunications in 2019

Despite the sell-off that plagued the equity market during the last quarter of 2018,  the outlook 2019 remain hopeful for markets. B2B telecommunication CAGR (compound annual growth rate) is expected to stay at  13.6% through 2026, and 5G wireless access is set to become available to the masses within the next ten years. There is plenty of room for the telecommunication industry to grow. 

Without further ado, here are our picks for the best telecom stocks

The Best Telecom Stocks

telecom-stocks

Large-cap mobile service providers are the most recognizable companies in the industry. If you’re looking to build a big position in this sector, you can count on these big names to trade with relatively little volatility. With the 5G boom waiting to rock the telecommunication sector, getting in ahead of the herd is the key to profiting off the potential big gains associated with 5G. Our top picks for 2019 include:

Sprint

( NYSE: S ) – While Sprint is often criticized for its poor mobile service, the stock has some interesting potential. After undergoing a long downtrend, the stock seems to have bottomed last April. Since then, Sprint has quietly shifted gears and began a subtle, timid uptrend. Many investors are hoping the stock price sees a pop when if the merger with T-Mobile ( NASDAQ: TMUS ) goes through. Sprint’s stock seems to be on the precipice of a big move, one way or the other. However, this stock has a ridiculous PE ratio of over 80! The industry average is about 16. Plus, the stock pays no dividend so, if you can’t cash in on a move in the stock price, there’s no reason to hold this stock.

AT&T

( NYSE: T) AT&T has been plagued by bad acquisitions over the past few years. DIRECTV and AOL-Time Warner have been big headaches for the company. Many of the companies businesses, like landline phone and satellite TV, are basically doomed. However, AT&T has the scale to last over the long-term. It’s trading at only 10 times earnings, so it’s hard to imagine this stock being beaten up much more. If you can hold it for the dividend, you’ll investment will yield over 6 percent annually on the dividend payment alone. AT&T has been beaten down but it’s far from dead. The company isn’t going anywhere and it can only go up from here.

Verizon

( NYSE: VZ ) – Verizon is one of the leading providers of mobile service. In addition to its wireless division, the company provides fiber-optic services under their FIOS product line. The company has been steadily investing in 5G infrastructure in preparation for the implementation of 5G wireless technology. The stock is extremely steady, and it pays a decent dividend that yields about 4.3 percent. This is an investment-quality stock that you can feel confident buying for the long-term.

Telecom Infrastructure Providers

Mobile service providers are just one aspect of the telecommunication business. Other companies provide the infrastructure and resources that are necessary for broadband communication. Many of these businesses also have some direct-to-consumer services, but they all have significant resources invested in infrastructure. The demand for companies like these is anticipated to grow as society becomes more data-dependent.

Telephone & Data Systems, Inc.

telecom-stocks

( NYSE: TDS ) – TDS provides wireless communication, devices, and access to customers across the United States. The company provides various communication services. Many investors are looking for TDS to get some big contracts as the big boys look to build 5G infrastructure in coming years. The bulls were stampeding on this stock until the company reported an earnings miss in Q4 2018. The stock promptly crashed, but now may be a good time to jump in, with PE at less than 9 the company is a bargain buy with good growth prospects.

American Tower Corp


( NYSE: AMT ) – American Tower Corp. has an entirely different business model than any of the other companies on this list. They operate as a real-estate investment trust (REIT).  The company’s revenues come from multi-tenant leasing. AMT owns a massive portfolio of over 170,000 different communications sites that they lease to various telecom service providers. REITs are usually relatively stable and pay high dividends. AMT has performed amazingly since the market sell-off in October 2018. Market sentiment is high as AMT’s stock price has continued to rise, despite reporting an earnings miss for Q4 2018.  The stock price is at an all-time high, but the chart is showing no signs of a slowdown.

Century-Link

( NYSE: CTL ) – Century Link offers a range of services, but broadband is the company’s bread and butter. This stock has been absolutely slaughtered as of late, and it is resting pretty close to its 52-week low. The company delivered a strong beat on its Q4 2018 earnings report. However, the stock fell when it announced that it was cutting the dividend by 50 percent. This stock has been absolutely demolished as of late, but there’s nothing inherently wrong with this company. They have excellent fiber assets that give them a bit of a moat, in terms of infrastructure. They also offer TV and phone service over their fiber lines. When this company bottoms, you could see some big gains if you’re in for the run back up to its previous highs.

COMCAST

( NASDAQ: CMCSA ) – COMCAST is a large-cap juggernaut that has stakes in a variety of businesses. This company has a lot going on. In addition to its Xfinity broadband service, the company operates several different business divisions. COMCAST is the parent company of NBC and Telemundo. They also produce films under the names Universal Pictures and DreamWorks Animation. The company will be a big player in the showdown of the streaming services. The company will launch a streaming service in 2019, and Time-Warner and Disney are both launching streaming services of their own. The bears say, this company is over-exposed to outdated television models. They also point to $110 billion in debt as a big red flag for this company. A successful launch of their new streaming service will help address some of that exposure to traditional TV revenues.  However, they have to deleverage or they’ll face balance sheet issues down the road.

Why Invest in The Best Telecom Stocks Now?

While many other technology forms are in new and shaky territory, telecom are a vital part of the modern economy. Telecom will continue to become more important as more and more of the world becomes connected. M&A amongst telecommunications companies has created companies with incredible exposures to the consumer. AT&T has over 370 million direct-to-consumer relationships across their wireless, streaming video, broadband businesses, and WarnerMedia.

Telecom stocks are not flashy buys. However, every investor with a portfolio worth its salt should have some stake in the industry. As the world evolves, it will rely even more heavily on telecom infrastructure and connectivity. As demand continues to rise, our best telecom stock picks are in prime position to capture market share.

post-image

Best Shipping Stocks: 7 Ways to Buy the Industry

Chris Dios - February 28, 2019

Shipping Stocks: The Backbone of Commerce

The shipping industry is the backbone of the global economy. Over 90% of world trade is transported via shipping, and shipping stocks generally do well when economies are expanding. Both retailers and wholesalers rely on supply chains to keep their businesses running. With so many businesses using them to transport their goods, shipping companies are often big beneficiaries of a good economy. Many shipping companies are stable businesses whose stocks have little volatility. Many pay dividends, so your money will grow even if the stock price stays flat. Investing in shipping stocks can provide you with a defensive position that will collect dividends and, ideally, see relatively little volatility. However, there are big gains to be made on shipping stocks of small-cap companies with solid growth outlooks.

best shipping stocks

  • New Watchlist: Best Stocks Under a Buck, click here to read it now.

Best Shipping Stocks: Value or Growth?

Shipping stocks represent a variety of businesses operating in different market sectors. Marine freight, trucking, and courier services are all considered shipping businesses. Each of these sectors has unique influences and is affected by different economic circumstances. For example, a domestic trucking company may not be affected by a global economic slowdown the same way an international shipping business would be. Before building a position in one of these stocks, it’s important to realize what segments of the shipping industry the business operates in. Some shipping stocks are more suited to growth while others are considered to be value stocks. Companies like FedEx trade at low multiples and pay steady dividends, so they would be considered to be value investing plays. The small-cap shipping stocks on our list have more opportunity for growth but have greater risks, as well.

Best Shipping Stocks 

FedEx ( NYSE: FDX )

FedEx is a full-service shipping company. They will ship anything to anywhere for the right price. Though best known for its courier and delivery services, FedEx has many profitable businesses. FedEx has an enormous air fleet, 50,000 dropbox locations, and over 27,000 vehicles in their freight fleet alone. This is a stable company with a huge global presence, and they’re not going away anytime soon. FedEx is a defensive stock with large institutional holdings. The company has been around for decades and has seen its share of economic crises, and they always weathered the storm. FedEx is a proven winner and its stock is reasonably valued. The stock pays a dividend that yields about 1.4% and currently trades for less than 10 times earnings.

United Parcel Service ( NYSE: UPS)

One of the largest shipping companies on the planet, UPS handles more packages than almost anyone. UPS shipped roughly 17 million average parcels per day in 2017. FedEx moved only 10.5 million. Margins are low in the shipping business, so volume is very important to earnings growth. UPS can reach the most recipients on the planet, and they have a huge network of assets. All of that volume means more revenues for UPS. The company looks to boost profits by driving low-margin services, like express and ground shipping. This is a healthy company with a great infrastructure of assets. FedEx pays a steady dividend with a yield of over 3 percent. It’s a good defensive stock with a large institutional ownership interest.

XPO Logistics ( NYSE: XPO )

warehouse-bay-doors

Founded in 2011, XPO Logistics operates expedited freight shipping and transportation businesses in the U.S. and abroad. Since its founding, the company made several acquisitions to improve its transport network. XPO curtly ceased M&A activity a few years ago, when management shifted gears and began integrating existing operations to improve profitability. The Street applauded the change in direction because XPO had difficulties with margins and leverage as a result of their M&A shopping spree. The company recently announced that they lost a major client due to insourcing. The loss will cost the company approximately $600 million in lost revenue. Share prices fell after the announcement, but many analysts believe XPO still has a good outlook for growth in 2019.

Matson ( NASDAQ: MATX )

This is the first company on our list that works primarily in the maritime shipping sector. Matson operates primarily in the Pacific Ocean. They ship dry commodities, cars, livestock, retail merchandise, and other various cargo to domestic and international ports. Matson is a small-cap company with a market cap of less than $1.6 billion. It’s a tiny company in comparison to the shipping giants. However, there is potential for growth and the company is financially healthy. Though small, Matson offers a potentially profitable means of investing in the shipping sector.

Union-Pacific Corp. ( NYSE: UNP )

best shipping stocksUnion Pacific Corporation operates a large network of railroads in the United States. Railroads are still a huge part of the shipping industry. About 42 percent of intercity freight is transported via rail, and rail traffic tends to increase as the economy grows. Union-Pacific runs over 32,000 miles of track that connect ports on the Pacific Ocean & Gulf of Mexico with other U.S. regional rail networks. In January 2019, the company named a new Chief Operating Officer with a reputation for cost-cutting and the stock jumped over 8 percent. If the long-awaited China-U.S. trade deal ever goes through, Union-Pacific stock will likely see some gains on the news. Plus, Union-Pacific pays a yearly dividend with a yield of over 2 percent.

  • Click Here to see our top 5 penny stocks watchlist for this month.

Landstar Systems Inc. ( NASDAQ: LSTR )

One of the nation’s largest provider of 3rd party logistics, Landstar offers logistics for both international and domestic shipping and transport. They also have an insurance business that underwrites some of the risks associated with the company’s network of independent contractors. Landstar doesn’t own their own fleets, they are a shipping broker who use a network of contractors to coordinate and fill customer orders. The truck brokerage business may grow even faster than the overall transport market in the coming years. Landstar should expand their revenues from their brokered trucking business as demand for this service rises. However, a nationwide shortage of drivers looks to serve as a headwind for this company. Experts predict that recruiting qualified operators will become more difficult in the next few years. The company pays a very small dividend that yields less than one percent.

docks-containers

Best Shipping Stocks: Final Thoughts

We’ve shown you a few different ways to make plays in shipping stocks. These are just a few of the many companies that operate in the shipping industry. As you can see, there are many types of specialized businesses that are classified under shipping stocks. If you believe in the shipping industry, determine the specific aspects of the industry that you think will prosper. In our ranking for the best shipping stocks, there are large-cap companies like FedEx and UPS that make for great defensive positions. They will net you decent dividends just by holding onto them. However, smaller niche businesses have better growth outlooks. Always be sure to research companies thoroughly before you buy. With some strategy and foresight, these shipping stocks could end up as the best-performing stocks in your portfolio.

post-image

The 7 Best Sports Stocks to Watch in 2019

Chris Dios - February 20, 2019

The popularity of sports in America has seen a resurgence recently as a result of several social and economic factors. A recent report estimates the market cap of pro sports in North America to reach $73.4 billion by 2019. When you combine that with over $47 billion in sporting goods store sales in the US, you begin to get an idea of just how massive the total market for sports is in the U.S. Pro sports are more popular than ever, and some of the best sports stocks are in companies that look to take a bigger bite out of that market in 2019. The sports industry accounts for a huge amount of market capitalization and revenues by itself. However, gambling legalization could push the pro sports industry in the U.S. to new heights.

The wide-spread legislation and legalization of sports betting across the country is disrupting a black market industry and slowly dragging an estimated 80 billion dollar market into the light. Eight states have already legalized sports betting, and legislation is pending in 29 other states and the District of Columbia. As a result, sports betting stocks are getting more and more attention from investors as legalization sets the stage for a bonanza of growth in public companies operating in the space.

With the widespread popularity of pro sports and more active Americans in the market for sporting goods than ever before, there are plenty of opportunities to see nice gains in sports stocks. The sector has a variety of segments and specialized companies that provide plenty of investment angles to explore. Here are some of the best sports stocks to explore going into 2019:

The Best Sports Stocks

Disney ( NYSE: DIS )  Disney is the parent company of ESPN, so they have a huge presence in the sports media and advertising industry. They have broadcasting agreements with pro leagues and the NCAA, so they have great exposure across the sector. Additionally, the company is introducing a streaming media service that’s set to launch in 2019, Disney+. This will bolster Disney’s already sizeable commitment to streaming media and compliment the company’s ownership in Hulu, which reached 60% with Disney’s acquisition of 21st Century Fox’s entertainment and media assets. ESPN is will likely be a big part of Disney’s streaming strategy. 

World Wrestling Entertainment ( NYSE: WWE ) Pro wrestling has continued to increase in popularity, assumably due in part to its popularity amongst millennials. The stock has exploded as of late, quadrupling after years of being stuck in a low double-digit trading range. WWE has been steadily growing its international profile over the past few years, and they recently came to an agreement to broadcast their mainstay programs, Raw and Smackdown, in Greece. Look for a rating boost in late 2019, as the company will begin airing Smackdown on Fox primetime in September of this year.

Sports Apparel Stocks

Lululemon ( NASDAQ: LULU ) Lululemon has been a pioneer in performance sports apparel products since the company was first founded in 1998. Lulu started out making high-quality ‘athleisure’ apparel for women. However, the company recently expanded its offerings to include a men’s line. They operate 404 corporate stores across 12 countries, and they also maintain direct-to-consumer sales channels. The future looks bright for the company, as performance athletic apparel continues to be in vogue.

UnderArmour ( NYSE: UAA ) Though the company has been dysfunctional in past years, an executive shakeup and few policy shifts have some traders on The Street betting that UnderArmour is ready to turn its act around. CEO Kevin Plank is in the process of restructuring the company’s operations to cut costs and address inventory mismanagement. While the plan has already begun gaining traction and investor sentiment is approving, the company’s domestic growth has stalled in recent years and they’re facing stiff competition from big-time players like Nike ( NYSE: NKE ). 

Sports Betting & More

The Stars Group ( NYSE: TSG ) The parent company of the digital poker platform PokerStars, TSG is in the process of expanding its operations in the wake of last year’s Supreme Court decision. With licenses or approvals to operate in 21 jurisdictions worldwide, it already has a strong foundation on which to build its sportsbook operations. The stock got beat up recently, but it could be bottoming. If it regains its prior highs, investors could see nice gains if they start building a position now.

Churchhill Downs ( NASDAQ: CHDN ) Americans have been “playing the ponies” for a long time, but the recent frenzy of gaming legislation has Churchill Downs looking for opportunities to take a bite out of the newly legitimized market. The company’s online wagering business, TwinSpires, is expected to increase revenues as wagering expands across the country. The stock has been volatile as of late, but it still has an attractive P/E ratio of around 18. The prospects for Churchill Downs look good, and TwinSpires figures to be an increasingly important part of the company’s operations moving forward.

Paddy Power Betfair [UK] ( USOTC: PDYPF ) Fanduel and Draftkings are two up-start gaming companies that have seen a ton of publicity in the past few years. After initially considering a public offering, Fanduel was eventually acquired in a deal with UK sports-betting titan Paddy Power in 2018. The two companies merged the U.S. based businesses and are now looking to make U.S. sportsbook a priority. The stock struggled lately, but growth could return if its U.S. businesses begin to recover.

The Bottom Line

Sports continue to be a passion for many Americans and the sports business continue to benefit as a result. If sports betting becomes anywhere near as popular as pro sports, sports betting companies stand to benefit greatly. Gaming companies are scrambling to position themselves for market share in the relatively new sports-betting market. However, the companies that have experience and infrastructure seem poised to take the lead. The wave of streaming services launching next year seems also to benefit pro sports and their continued popularity. If you believe in this industry’s potential for growth and you’re looking to make an investment, these sports stocks are a great place to start.

Are you investing in any sports stocks? Leave a comment below with a few of your favorite.

post-image

7 Important E-Commerce Stocks For 2019

Larry Davidson - January 23, 2019

The global retail market is growing exponentially, which could mean more money to investors who get in on the right e-commerce stocks. For over a decade, e-commerce has been transforming how consumers buy products. Technological advancements have made it easier, cheaper, and more efficient to shop online.

After all, do you know anyone right now who doesn’t shop at Amazon.com?

ecommerce stocksAccording to a report from the Observer, consumer spending accounted for more than three-quarters of GDP in Q3 2018, yet there are still opportunities for unlimited growth at different levels of the value chain. Market research company eMarketer estimates that the global business-to-consumer e-commerce spending will reach roughly $2.84 trillion this year, and it will rise to $4.88 trillion by 2021.

Now, there are several angles an investor can take on how to play e-commerce. Below, you’ll find seven stocks in the space that are worth watching.

E-Commerce Stocks: Marketplaces

Alibaba (NYSE: baba)Alibaba is the largest Chinese company that trades in the U.S., with a market cap larger than Wal Mart, Exxon, and JPMorgan Chase.

The company is China’s leader in online retail. However, this e-commerce stock does a lot of business overseas.  Alibaba.com has leveraged the power of the marketplace model and continues to experience rapid growth in the space.  In 2018, Alibaba delivered revenue growth of 58% to $39.9 billion. The firm projects even further growth in 2019.

eBay (NASDAQ:ebay) One of the first online retailers, eBay’s auction website is well known in e-commerce. Also, the company owns the ticket-reselling marketplace StubHub. Most recently, it acquired Corrigon, Flipkart, and Terapeak.

eBay’s profit margins have always been high. However, the auction-based company faces challenges from consumers who have more options. With a market cap of nearly $30B, eBay maintains a solid footing in the space.

E-Commerce Stocks: Software Providers

shopify e-commerce stocksShopify (NASDAQ: shop): The company provides a cloud-based multi-channel e-commerce platform. Originally, it started as a platform for Small and Medium-size Enterprises (SMEs) but has now grown large enough to handle any sized business.

It generates revenue by commissions on every item sold through its platform and payment processing services. The company’s valuation has skyrocketed by nearly 500% since its initial public offering in 2015. With approximately 160,000 online stores, at the time of its IPO, Shopify has soared to more than 600,000 online stores across 175 countries.

That said, there is still plenty of room for growth for this up-and-coming e-commerce stock.

Baozun (NASDAQ:bzunis known as “the Shopify of China.” That said, its platform is customizable making it appealing for its customers who wish to sell their products online.

In fact, Baozun has managed to carve a niche for itself in Asia. Its clients include Microsoft, Nike, Calvin Klein, and Starbucks.

China os the largest e-commerce market. That said, Baozun is uniquely positioned to capture a large chunk of market share. The company is now collaborating with Western partners, which could help sales volumes increase and overall growth on its platform.

E-Commerce Stocks- the elephant in the room

Amazon (NASDAQ: AMZN) is the king of online sales. According to eMarketer, it owns a dominant 50% of the U.S. e-commerce market. That said, its one of the largest companies in the world, alongside Microsoft, Apple, and Alphabet.

Amazon continues to show innovation, and enter new marketplaces. For example, it recently purchased grocer, Whole Foods. It will be interesting to see what the strategy is with that acquisition, but investors know one thing- Amazon is a threat to any business that it enters.

That said, the company is growing its cloud computing business, video streaming, and voice-activated search markets, through its Amazon Web Services.

Also, the firm has shown a keen interest in the pharmacy, logistics and advertising markets. More so, the company has been able to build a strong customer base through its Prime loyalty program where it has more than 100 million members globally.  It’s on track to hit $18 billion in Prime membership revenue by 2020.

E-Commerce Stocks- Direct Sellers

Wayfair (NASDAQ:W) With a market cap of under $10B, Wayfair is not the biggest company on this list. However, when it comes to online furniture sales, they are in a league of their own.

Wayfair was founded in 2002 and has been a publicly traded stock since 2014. The company’s stock has soared since its IPO. Also, it’s been growing its revenues. That said, its estimated to reach some $10 billion in sales by 2019.  Wayfair is strategically positioned for growth, especially as the real estate market continues to grow, homeowners will be shopping for furniture and home goods.

sfix e-commerce stocksStitch Fix (NASDAQ: SFIX) is a relatively new player in the e-commerce sector. The company positions itself as a styling service. Online customers are given a stylist who caters a look based on their preferences. It sends the customer a box of clothes, the customer is then allowed to keep what they like and return the rest.

Stitch Fix uses technology and algorithms to determine its buying and selecting process, and it focuses on using the customer’s past choices to guide and select future picks.

Switch Fix’ AI-powered business model projects a disruptive nature, and pundits have noted that it could become the Netflix of fashion. For example, Stitch Fix has started producing and branding its clothing line by using its large data to its advantage.

The company is planning to launch its first international expansion this year starting with the United Kingdom and has moved into manufacturing men’s, plus-sized, and kid clothes.

The Bottom Line

E-commerce is growing exponentially.  Technologies like artificial intelligence, machine learning, and cloud computing will play a significant role in the future of e-commerce.

That said, the internet has enabled people to communicate and exchange goods faster. For example, you don’t even have to leave your home to get your groceries in anymore; you can use an app on your phone to buy them.

At some point, e-commerce will be an ultra-competitive space. When that happens, expect to see mergers used as a tool for growth. However, we are not near that stage yet.

That said, brick-and-mortar retailers like Wal Mart, and Target, are pushing hard to catch up in the space. However, don’t count them out just yet.

post-image

Are You Watching These Virtual Reality Stocks In 2020?

Chris Dios - January 15, 2019

Best Virtual Reality Stocks

It’s a great time to buy virtual reality stocks. The potential utility of VR technology is practically limitless. Buying now, while the technology is still being refined, could be a shrewd move. Virtual reality stocks could become much more valuable if this technology takes off as expected.

More High-Tech Stocks

Check out our monthly penny stock list here, including the hottest tech stocks. For more cheap stocks, go to the best stocks under 1 dollar, best under $5 page, and best under 10 dollars.

Virtual Reality: Industry Overview

Video games are the most popular application of VR technology, but it can be used in a variety of application.  VR has the potential to revolutionize several massive industries, including healthcare, defense, education, real estate, manufacturing, retail, and more.

Researchers at Mordor Intelligence have reported that the global VR market was valued at $3.13 billion in 2017 and is expected to grow at a CAGR of 58.54% to reach $49.7 billion by 2023. In 2014, there were less than 1 million VR users, but the number of people using VR had already exceeded 150 million in 2018.

virtual reality stocks chart

Global virtual reality revenue was $7.2B in 2017, and Greenlight Insights forecasts that industry revenue is on track to hit $75 billion by 2021, so including some VR stocks in your portfolio could be a good idea.

If you want to invest in the VR industry, you need to learn the players. Big Tech names are developing VR to maintain their lead, while startups are disrupting markets with virtual reality innovations.

Let’s look at some of the best virtual reality stocks on the market. The VR industry is segmented by product type into hardware, software, gaming console, desktop, and smartphone.

Top Virtual Reality Stocks: Hardware

Facebook (NASDAQ: FB)virtual reality stocks

Facebook’s Oculus headset is leading the market. Users can immerse themselves in their favorite digital entertainment; including games, movies, and more. The company just released a new version, the Oculus Go, that is totally self-contained; no need to hook it up to a computer. The new Oculus Go is pretty affordable too. At only $199 retail, it’s significantly less expensive than previous models.

If anyone has the resources to win the VR rat race, it’s Facebook. The company has a strong consumer base, brand recognition, and plenty of cash. If Facebook can commercialize VR for facilitating social interactions it has a massive user base to market itself to.

virtual-reality-stocks

Vuzix Corp (NASDAQ: VUZI)

is another player in the hardware segment of the world of Virtual Reality stocks. Vuzix makes VR and AR products for both consumer and enterprise customers. Vuzix makes wearable display devices that allow users to interact with digital content in a VR environment.

The company has an impressive IP portfolio of 66 patents and 43 pending patents, so it’s a potential acquisition target.

best-virtual-reality-stocks-vize-focus

HTC Corp. [Taiwan, GDR: HTCKF)

Most people know HTC as one of the leading smartphone producers in China, but the company sells tons of products. HTC also sells a VR headset, the HTC Vive VR system. The company released a new, self-contained version of the Vive headset in early 2019. Vive Focus requires no external computer to use, but it has a hefty price tag compared to the Oculus Go.  HTC’s Vive Focus, with hand sensors, retails for $799. That’s a lot of dough for what is essentially a novelty, at this point.

VR Stocks: The Hardware Leader

So far, it looks like Facebook is leading the race to mainstream consumer adoption of Virtual Reality. The Oculus Go’s low price makes it much more accessible for the average shopper. If you’re slightly interested in VR, a $199 headset sounds like a good place to start ignoring the technology. The Oculus could be huge for Facebook down the road.

Best Virtual Reality Stocks: Software

Qualcomm Inc. (NASDAQ: QCOM)

is not a pureplay VR stock, but it’s exposed to the VR space. The company provides visual, sound, and intuitive interactions technology solutions for creating immersive VR experiences.

Qualcomm’s Snapdragon VR SDK offers access to advanced technical features on Snapdragon VR devices. Developers use VR SDK to create complex virtual environments on a user-friendly platform.

Best Virtual Reality Stocks: Gaming Console

Sony (Japan, ADR: SNE)vr-stocks-ps-vr

Playstation VR is one of the most accessible forms of virtual reality technology. As of March this year, Sony announced they sold over 4.2 million VR headsets in less than three years of selling the device. Many competing VR devices need to be connected to a powerful computer, but Sony’s unit connects to a PS4 console. That removes a significant barrier to entry for most casual gamers who already own PS4 consoles. Playstation VR starter bundles retail for $379, no console included.

The Best Virtual Reality Stocks: Desktop

Microsoft Corporation (NASDAQ: MSFT)vr-stock-msft-hololens

Microsoft has two key virtual reality products lines: HoloLens, a commercial-use headset, and mixed reality, a mixed reality platform introduced as part of Windows 10.

The mixed reality platform, also known as augmented reality(AR), helps to overlay digital content on the physical world. For example, Dynamics 365 users can interact with virtual holograms on physical surfaces.

HoloLens is a high-quality headset designed for commercial-use VR and AR applications. With prices starting at $3,000; it’s clearly not intended for retail users. However, the commercial market for VR is likely larger than the consumer sector. Microsoft’s enterprise-level VR solutions could have more long-term potential than any other segment of the VR market.

Top Stocks In Virtual Reality: Smartphone

Apple (NASDAQ: AAPL)

has made some forays into the augmented reality space, especially with the addition of the ARKit augmented reality platform to the iPhone in 2017. Apple recently released ARKit version 3 with enhanced features for virtual developers. The support for VR developers on its platform suggests that Apple is positioning for a future with more VR applications.

Rumor has it that Apple is working on a line of AR/VR headsets. However, the firm has yet to publicly announce its plans with VR. Nonetheless, Apple will be a leading virtual reality stock if it gets serious with VR. While there are already numerous iPhone compatible VR headsets, it would be a game-changer if Apple announced they were producing a branded VR headset.

Google (NASDAQ: GOOGL)

Google has a massive portion of the worldwide mobile OS market, so it’s no surprise it’s focusing on mobile VR technology. The company is developing its own immersive virtual experience and offers tools for developers to build out the VR experience.

Google’s Android OS comprises approximately 75% of worldwide smartphone OS market share,  and they also control 28% of the tablets market share. Google is perhaps in the best position to unlock the mass-market potential of Virtual Reality.

The company is working on tons of high-tech stuff, and the public is only aware of the tip of the iceberg. Google filed a patent last year for virtual reality ‘roller skates’ that allow users to walk more naturally in virtual worlds. As one of the world’s leading innovators, Google likely has more tricks up its sleeve that will grow the virtual reality markets.

The Bottom Line

Virtual reality stocks offer great opportunities for growth. The potential applications of this technology are basically limitless. These companies are in an excellent position to capture VR market share as the industry grows.

Keep an eye on these virtual reality stocks, and follow The Stock Dork for the latest market updates.

Sign up for the Stock Dork alerts and get the virtual reality investing alerts, market-moving news, stock watchlists, and much more. Join today by entering your email!

post-image

Buy These Semiconductor Stocks and Thank Me Later

Larry Davidson - October 31, 2018

Our thirst for bigger, faster, and better technology seems endless.  Semiconductor stocks have been among the best performers over the last five years. Demand for chips and semiconductor equipment is growing at a rapid pace thanks to emerging technology like artificial intelligence, the blockchain, medical devices, smartphones, wearables, virtual reality, cloud, IoT, augmented reality, gaming, autonomous driving, and much more.

More Businesses rely on powerful computing systems to process and analyze data than ever before.  The semiconductor space is a $412B global industry according to KPMG.  That said, estimates moving forward remain bullish on the sector. According to some analysts, the global semiconductor market is set to reach $831.5B in 2024, that’s a growth of upwards to 100%

During 2018 the most significant increase is expected across memory, analog ICs, and optoelectronics,  according to  World Semiconductor Trade Statistics.

The semiconductor space is enormous. It’s often broken down to sub-sectors like broad line, equipment and materials, integrated circuits, memory chips and specialized.

Let’s take a look at some of the best semiconductor stocks in the market today.

Best Semiconductor Stocks To Buy – Broad Line

Integrated Device Technology, Inc. (NASD: IDTI) develops system-level semiconductor solutions for the communications, computing, consumer, automotive, industrial, and industrial end-markets.

The company specializes in RF, high-performance timing, memory interface, real-time interconnect, optical interconnect, wireless power, and smart sensors. It’s a significant player in sensor and wireless technology, two areas that will see increased demand from the automotive industry.

Its been able to boost revenues every year from 2014 to 2018. No surprise that IDT is an M&A target.

amd semiconductor stocks

source: AMD

Advanced Micro Devices, Inc. (NASD: AMD) has been one of the top performing stocks in 2018. It operates in two segments- computing and graphics.

AMD makes some of the most popular processors and graphics cards for the gaming industry. In addition to gaming, its GPUs will play a significant role in emerging technologies like virtual reality, augmented reality, and cloud data centers.

Nvidia Corporation (NASD: NVDA) has been one of the best-performing stocks over the last decade. It has seen its revenues rise in the following areas: AI and cloud data centers, autonomous machines, and gaming to name a few.

The company invented the GPU, an important piece that leads the PC gaming revolution. Today, GEFORCE is the world’s largest gaming platform. Besides, its GPU computing will play an essential role in powering data centers, AI for driving and intelligent machines.

Semiconductor Stocks- Equipment & Materials

Brooks Automation, Inc. (NASD: BRKS) supplies automation solutions for semiconductor manufacturing, clean energy, life science drug discovery, biobanking, and related markets.

Its semiconductor and cryogenics services include repairs and exchanges for robots, CTI cryopumps, and compressors.

Cree, Inc. (NASD: CREE) is a market leader in lighting-class LEDs, LED lighting and semiconductor solutions for wireless and power applications.

The company made headlines in 2014 when it introduced the industry’s first 1700V SIC half-bridge module that delivers SIC switching speed and energy efficiency to solar, EV, and some industrial power supplies.

oled semiconductor stocks

source: Apple Inc.

Universal Display Corporation (NASD: OLED)  

A global leader in the OLED industry its technology is in some iPhones, Samsung’s Galaxy series and LG’s OLED TVs. The company believes that OLEDs have the potential to offer power efficiencies that are far superior to incandescent bulbs and fluorescent tubes.

The company has been able to grow revenues consistently over the last five years.

 

 

ASML Holding N.V. (NASD: ASML) provides chipmakers with hardware, software, and services. It mass produces patterns on silicon, helping to increase the value and lower the cost of the chip.

Its most coveted technology is the lithography system, it brings together high-tech hardware and advanced software to control the chip manufacturing process down to the nanometer.

Now, when it comes to size, its massive, the company has over 19k employees with more than 60 offices in 16 countries. It is one of the largest international companies in the world by market cap and headquartered in the Netherlands.

Semiconductor Stocks – Integrated Circuits

Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) is the world’s largest semiconductor foundry, manufacturing 9,920 different products using 258 different technologies for more than 465 customers in 2017.

TSMC-manufactured semiconductors are in applications covering the following segments: computer, communications, consumer, industrial and standard semiconductor markets.

It has seen its EPS and revenues rise year over year. TSMC is one of the largest companies in the world; it offers income investors an excellent dividend at $1.35 per share.

Applied Optoelectronics, Inc. (NASD: AAOI) is a provider of fiber-optic networking products. The company focus is on the following markets: internet data centers, cable television broadband, fiber-to-the-home, and telecommunications.

The company had a breakout year in 2017, increasing EPS by nearly double and sales rose by 46% from the previous year.

skyworks semiconductor stocksSkyworks Solutions, Inc. (NASD: SWKS) a key figure in wireless networking, its analog semiconductors connect people, places, and things. The company is involved in Philips’ CityTouch, a secure and connected lighting management platform for smart cities. Skyworks is providing connectivity solutions to the CityTouch project.

That said, the company has clients in aerospace, automotive, broadband, cellular, infrastructure, industrial, medical, military, smartphone, tablet and wearable markets.

Its clients include Netflix, Twitter, Amazon, Starbucks, eBay, YouTube, Alibaba, Google Maps, and much more.

Besides, the company is at the forefront of 5G data technology which will be essential for machine learning, virtual reality, augmented reality, autonomous vehicles, industrial IoT and much more.

Semiconductor Stocks- Memory

The undisputed champ in the memory space remains Micron  Technology (NASD: MU). Its products include memory, storage, advanced solutions, storage platforms. 3D XPoint Technology is garnering plenty of attention for the firm. It allows you to turn massive amounts of data into valuable insights in real time.

Micron’s customer base includes automotive, consumer, IoT, financial, government, industrial, mobile and networking. Micron offers solutions for client storage, cloud, data center, mobile, and networking.

The company has been able to see its revenues rise from 2016 to 2018 as well have its EPS more than double from 2017’s numbers.

Bottom Line

The semiconductor space is among the fastest growing in the economy. Our thirst for data and speedier computing should keep this sector interesting for the coming years. As an investor, you’ll want to follow semiconductor stocks closely because the competition is tight. A new player could emerge and take market share from someone else, as witnessed by the sudden rise in Nvidia over the last five years.

post-image

Is It Time To Invest In Steel Stocks?

Larry Davidson - October 30, 2018

Economics and politics influence the steel sector greatly. That said, steel stocks have gone through a roller coaster ride of ups and downs ever since Donald Trump was elected President of the United States.

One of the big campaign promises Trump made was rebuilding America’s infrastructure. Also, bring back manufacturing and recover jobs lost in the industry.

When Trump got elected, the stock market rallied, especially steel stocks. However, the industry was still facing many challenges including cheap imports.

steel stocks steel production

US steel production has been declining since the 1970s, but that hasn’t deterred the President from trying to revitalize the industry. In 2018, President Trump put a 25% tariff on steel imports.

The price of steel skyrocketed after the announcement.

steel pices steel stocks

The tariff’s give US-based steel companies a chance to be more competitive.

U.S. Steel  Corporation (NYSE: X) announced that it would be investing $750M to revitalize its flagship plant in Gary, Indiana.

Despite the shift in sentiment, some analysts believe that the tariffs will only create a short-term boost for the industry. Other factors to consider is the overall health of the economy, politics,  and rising interest rates.  Of course, supply/demand of steel will also play a role in how steel stocks trade.

The Best Domestic Steel Stocks

Nucor Corporation (NYSE: NUE) is the largest steel producer in the United States as well as North America’s largest recycler. The company has 25 scrap-based steel mills with an annual production capacity of 27M tons.

It operates in three segments: Steel Mills, Steel Products, and Raw Materials. The company has approximately 200 locations and employees over 25k people.

Nucor pays its investors an annual dividend of  $1.52 per share. Also, there are listed options on the stock, which offer a way for investors to hedge and traders to speculate.

Steel Dynamics Inc (NASD: STLD) is one of the most diversified, vertically connected steel companies in the industry.  It operates through three segments: Steel Operations, Metals Recycling Operations, and Steel Fabrication Operations.

The company generates the majority of its revenue from steel operations. That said, metals recycling and steel fabrication accounted for less than 25% of the firm’s revenues in 2017.

Steel Dynamics pays its investors a dividend of $0.75 per share. You can also trade options on STLD.

zeus steel stocksOlympic Steel, Inc. (NASD: ZEUS) processes and distributes metal products. It operates its business in three segments including carbon flat products, specialty metals flat products, and tubular and pipe products.

The company has 31 facilities with more than 3.7M Sq. Ft.  in the U.S. and Mexico. It has a rich history; its flat-rolled metal service center first opened in 1954.

Olympic Steel offers its investors a dividend. Also, there are options listed on the stock, allowing investors ways to hedge and generate additional income from writing calls against their equities.

The Best International Steel Stocks

Tenaris S.A. (NYSE: TS) produces and sells seamless and welded steel tubular products and related services. Its clients come from the energy industry and industrial applications.

Based out of Luxembourg, the company operates a worldwide network of steel pipe manufacturing, research, finishing and service facilities. Tenaris has operations in Europe, Asia, Africa, and the Americas.  At the end of 2017, Tenaris had more than 21K employees across the globe.

Its CEO, Paulo Rocca, has been listed among the top 100 best-performing CEOs by Harvard Business Review for six consecutive years.

The company pays a dividend of $0.82 per share. Also, listed options on the stock are available for investors and traders.

ArcelorMittal (NYSE: MT)  owns and operates steel manufacturing facilities in Europe, the Americas, Asia, and Africa. It is one of the largest steel and mining companies in the world, it employees more than 197K people globally.

The company was formed in 2006 after Mittal Steel and Arcelor merged, together creating the world’s largest steel company.   It’s since been racking up the accolades. For example, Honda R&D Americas awarded ArcelorMittal with its Excellence in Innovation Award. That said, it has received awards from General Motors, Ford, and Jaguar Land Rover.

Option traders will be excited to find out that you can trade them on ArcelorMittal. The company also pays out a small dividend to its investors.

POSCO (NYSE: PKX) is the first integrated steel mill in Korea; it produces 41M tons of crude steel a year.  It operates its business through four segments that include steel, construction, trading, and others.

POSCO offers a diversified product line that includes hot and cold rolled steel, steel plates, wire rods, galvanized and electrical galvanized steel, electrical and stainless steel, automotive materials, titanium, magnesium, and aluminum-plated products.

Steel Stocks – An ETF Approach

For some investors, buying a specific sector ETF is a more straightforward approach than selecting individual stocks. Not only is it cheaper but its also a diversified approach.

VanEck Vectors Steel ETF (NYSE: SLX) is designed to replicate the price and yield performance of the NYSE Arca Steel Index. In other words, the ETF’s goal is to track the performance of steel companies.

Its top holdings include Rio Tinto, Vale, Ternium, Vedanta, Tenaris, ArcelorMittal, United States Steel Corp, Gerdau, POSCO, and Nucor.  There are less than 30 names in the ETF. Its top ten holdings consist of approximately 70% of the portfolio.

The majority of the stocks in the portfolio are from the United States followed by Brazil, the Netherlands, and Australia. Most of the companies in the ETF come from the materials sector.

It charges a management fee of 0.50% and has a gross expense ratio of 0.62%.

SPDR S&P 500 Metals & Mining ETF (NYSE: XME) is not a pure play on the steel industry, but more than half the portfolio is in steel names. The fund tries to provide investment results that resemble the total performance of the S&P Metals and Mining Select Industry Index.

The stocks in the fund come from industries like aluminum, coal and consumable fuels, copper, diversified metals and mining, gold, precious metals and minerals, silver, and steel.

Some of its key holdings include Allegheny Technologies Incorporated, Nucor, Reliance Steel & Aluminum, United States Steel Corporation, Cleveland-Cliffs, and AK Steel Holding Corporation.

The ETF has been around since 2006, is optionable, and has a gross expense ratio of 0.35%

How To Trade Steel Stocks

You want to buy and sell stocks that are liquid. In other words, the more shares of the stock trade, the better the likelihood that the bid/ask spreads will be competitive.

aks steel companies

Source: Yahoo

For example, AK Steel Holding Corporation (NYSE: AKS) trades tens of millions of shares daily, making it one of the most actively traded steel companies in the market.

On the other hand, Olympic Steel’s stock on average trades less than 100,000 shares per day.

olympic steel stocks

Source: Yahoo

You could use liquidity events like an earnings release or news catalyst to scale in and out of a significant position. Also, for stocks like Zeus, traders can play them with options too.

However, if you’re a day trader, you’ll want to wait for a catalyst before jumping into a thinly traded steel stock.

Catalysts in the sector include politics, like the Trump tariffs. For example, if the infrastructure plan ever gets off the ground than it could be very positive news for the steel sector. On the other hand, if the tariffs go away or the infrastructure plan never gets signed, then steel stocks could perform poorly.

That said if you’re an investor than consider trading steel stocks that are optionable. You can trade options on ArcelorMittal, POSCO, Nucor, Steel Dynamics, US Steel Corp., AK Steel Holding, Tenaris, Olympic Steel,  and to name a few.

VanEck Vectors Steel ETF is also optionable.

Bottom Line

Demand for steel from the auto industry expects to be strong as several manufacturers are transitioning to electric and hybrid cars over the coming years.

That said, if interest rates rise, businesses might be reluctant to start new projects, potentially causing a slow down in the economy. An economic downturn will have a negative impact on steel stocks.

However, if economic conditions are favorable, steel stocks become attractive, especially when many of the best companies pay investors a dividend.

post-image

Are These Really The Best Video Game Stocks?

Larry Davidson - October 24, 2018

esports video game stocks

source: Twitter

ESPN is an internationally recognized sports channel, broadcasting in more than 200 countries. However, it came as a shock to many when the Disney (NYSE: DIS) owned company announced it was going to start broadcasting esports, a form of competitive video gaming. Video game stocks are generating massive revenues and investors want in.

In just a short period esports has become a billion dollar industry.

That said, the video game industry as a whole generated more than $100B in revenues in 2017, according to a report by SuperData. There are more than 150 million Americans that play video games. The revenues generated by video games is now 2-3x greater than movies.

The highest grossing video game has generated more revenue than movies Avatar and Titanic combined.

It’s no surprise that wall street analysts are rating these companies as strong buy stocks. The sector will continue to see growth in esports, cloud gaming, and virtual reality. Other bright spots include growth in digital add-on content, free to play games, and gaming subscriptions.

Top Video Game Stocks To Buy

Now, if you play sports video games, you might already know this company.  I’m talking about the makers of the blockbuster game FIFA, Electronic Arts (NASDAQ: EA).

ea sports video game stocks

source: EA

Electronic Arts also makes the following series: NBA Live, Madden, NHL,  and the Sims Mobile. It has more than 300 million registered players around the world. EA Sports has more than 20 million competitive players this season.

FIFA Mobile in China became the most downloaded game in iOS China right after it launched. The firm has consistently done more than $4.4B in sales since 2015.

Now, when it comes to console games, Call Of Duty is the cream of the crop. It was the top-grossing console video game franchise globally in 2017.  It’s maker, Activision Blizzard (NASD: ATVI)  is the world’s most successful standalone interactive entertainment company.

Some of its top video games include Skylanders, Destiny, World of Warcraft, Heroes of the Storm, StarCraft, Diablo, Hearthstone, Candy Crush Saga, Pet Rescue, Bubble Witch, and Overwatch.

ESPN’s TV coverage of Activision’s Overwatch Leauge is a positive catalyst for the company.  That said the company was able to grow revenues to more than $7B in 2017 and 2018.

Competition in the space is ultra competitive. Let’s not forget Rockstar Games the maker of the ever popular Grand Theft Auto series. Take-Two Interactive (NASD: TTWO) owns Rockstar Games.

The last Grand Theft Auto sold more than 95 million units and generated more than $6B in revenues.

Top Video Game Stocks – OTC

Now, when we’re talking about blockbuster games, it doesn’t get bigger than Fortnite.  It’s already generated more than $1B in revenue and is a large part of the global esports movement.

Epic Games the maker of the game doesn’t trade publicly. However, Tencent Holding has a 40% ownership stake in the Fortnite game maker.

Tencent Holding (OTC: TCEHY) trades on the OTC markets.

tencent video game stocks

source: ESPN

Tencent is a Chinese internet superpower. It’s best known for its messaging app WeChat. However, the company has more than 800m monthly users throughout its network.

Tencent Games has the largest online games community in China. The firm has majority ownership in Supercell, the makers of the game Clash of Clans.

Tencent is one of the largest companies in the world based on market cap. That said its diversified outside of gaming.

nintendo video gaming stocks

source: Nintendo

Now, before Fortnite was stealing all the gaming headlines, Pokemon Go was the hottest game on the market. It’s pushed shares of Nintendo (OTC: NTDOY) higher by triple digits since launching in 2016.

Despite the company having a small stake in Pokemon Go, it was able to draw positive attention to the company which later helped boost the sales for its Nintendo Switch console.

Of course, the console maker still generates significant revenue from its Super Mario franchise, which is set to release a movie based on the series.

Easiest Way To Buy The Best Video Game Stocks

There is an ETF that you can buy that gives you a diversified basket of video game stocks. The ETFMG Video Game Tech ETF (NYSE: GAMR) is the first and only ETF that focuses exclusively on the video game industry.

The ETF has over 70 video game stocks in its holdings.  Some of its most significant holdings include Take-Two Interactive, NCsoft, Advanced Micro Devices, Glu Mobile, GameStop, CapCom, Activision Blizzard, Nintendo, Zynga, and Ubisoft.

The ETF was founded in 2016 and charges investors an expense ratio of 0.75%.

The Best of the Best Video Game Stocks

The following companies are not pure gaming stocks, but they have a piece of this giant pie.

Microsoft (NASD: MSFT), the developer of Xbox, remains active in the gaming sector. The Initiative is a new internal game studio that has gotten a lot of buzz for Microsoft. In 2014, the company invested $2.5B to acquire Minecraft game maker Mojang.  Other favorite games include Halo, Age of Empires, and Gears of War.

Amazon (NASD: AMZN) is more than just an online retailer these days. Its cloud business is the best of the breed. Its acquisition of Twitch in 2014 makes it a player in video game streaming space.

Facebook (NASD: FB) is a leader in the social gaming industry. The company launched its Instant Games with much fanfare. Facebook also owns Oculus, a significant player in the virtual reality space.

sne video game stocks

source: Sony

Sony (SNE), the maker of PlayStation, is one of the largest gaming publishers in the world.  The company sold 19 million consoles in 2017 and is making significant progress in VR gaming.

Bottom Line

The video game sector has become of the fastest growing areas in entertainment. Viewership for esports is set to rival and surpass the NHL, NBA, and NFL.

Cloud gaming is also disrupting the way people play games.

That said, virtual reality is still in its infant stages. However, Variant Market Research believes that the VR gaming market will value $43.4B by 2024.

The success of Pokemon Go has investors bullish on augmented reality games. According to consultancy.uk, virtual and augmented reality market could reach $170B by 2022.

Make sure to do your homework as there are plenty of growth stocks worth researching in this sector.

post-image

Don’t Buy Hotel Stocks Before You Read This!

Larry Davidson - October 24, 2018

airbnb hotel stocks

source: forbes.com

Make no mistake about it, travel and tourism is big business. It accounts for 10% of global GDP.  Hotel stocks have enjoyed a nice run since the 2008 financial crisis. However, it faces a challenging environment as interest rates are set to rise it could derail or slow down the economy. Airbnb, an industry threat, is expected to IPO in 2019.

Airbnb’s website lets almost anyone make their home (or part of it) available for short-term lodging. At 5 million listings, it has more than the top five major hotel brands combined. But Airbnb is just one concern the hotel industry.

The prices of hotel stocks can fluctuate for many factors, they include:

 

The health of the economy: A strong economy should lead to greater tourism and have a positive impact on hotel revenues. Economic indicators worth monitoring include retail sales, consumer spending, consumer confidence,  and employment situation.

The price of oil is another factor that influences the travel industry. If oil prices rise, they could push airline prices higher which makes traveling more expensive for the consumer.

The hotel industry is centuries old; however, new technology may help hotel stocks profit more. You see, online travel agencies have become extremely popular over the last decade because of their convenience.  But when you book a hotel through an OTA, the hotel pays a commission to the online travel agency.

locktrip hotel stocks

source: locktrip.com

That said, blockchain technology could help eliminate third-party costs in the future, encouraging a direct relationship between the hotel and the consumer.

As you can see, there are several moving pieces to this mega-important sector. That said, here’s a list of the best hotel stocks in the market today.

Best Hotel Stocks To Buy

bel best hotel stocksWith more than 46 hotels, trains, and river cruises in 24 countries, Belmond (NYSE: BEL) offers an experience to its customers.

 

bel safari hotel stocks

source: Belmond

The company offers a collection of curated travel adventures located in the United Staes, Mexico, The Caribbean, Europe, South Africa, South America, and Southeast Asia. Its portfolio of hotels includes 3,203 individual guest rooms and multiple-room suites.

mar hotel stocks

source: Marriott

With more than 29 brands to its name, Marriott International (NASD: MAR) is one of the most significant players in the space. The company has over 6,700 properties across 130 countries. In 2017, the firm generated more than $22B in revenues.

From 2013 to 2017, Marriott has been able to increase its revenues. The company is a member of the S&P 500 and offers investors a dividend of $1.64 per share.

Now, one of the fast-growing hotel stocks has been China’s Huazhu Group Limited (NASD: HTHT).  Its brands include Hi Inn, Han Ting Hotel, Elan Hotel, Orange Hotel, HanTing Premium, Starway Hotel, Ji Hotel, Orange Hotel Select, Manxin Hotel, Crytal Orange Hotel, Joya Hotel, Grand Mercure, Novotel, Mercure, Ibis Styles, and Ibis brand names.

At the end of 2017, the company had 671 leased and owned hotels and 2,874 manachised hotels. The company has been able to grow sales from 2013 to 2017. However, it wasn’t till 2017 when investors started to pile into the name.

Insiders own a large percentage of this stock, more than 50%, sign management believes in the company.

Investing In Hotel Stocks — REITs

Another way to gain exposure to the hospitality industry is by investing in REITs. Summit Hotel Properties (NYSE: INN) owns over 77 hotels with a total of more than 11k guestrooms in 26 states.

Its brand partners include Marriott, Hilton, Hyatt, and IHG.

The REIT offers an attractive dividend to investors, at $0.72 per share.

Hospitality Properties Trust (NASD: HPT) owns a diverse portfolio of hotels and travel centers located in 45 states. The hotels it owns range from midscale to upscale service and extended stay hotels and upscale to luxury full-service hotels.

Its brand partners include Holiday Inn, Hyatt Place, Courtyard Marriott, Crowne Place, Residence Inn and much more.

The REIT offers a handsome dividend of $2.10 per share.

How To Trade Hotel Stocks

The most important consideration a trader should have is liquidity. Is the stock or ETF you’re trying to trade liquid?

How can you tell?

One way is by looking at the bid/ask spread. An actively traded stock will have a competitive spread. Try trading stocks that do a million shares or more of volume.  The most actively traded hotel stocks include Hilton Worldwide (NYSE: HLT), Marriott International (NASD: MAR), and Park Hotels & Resorts Inc. (NYSE: PK)

Hotel stocks have been historically more volatile than the S&P 500. However, they are not nearly as unpredictable as tech stocks like Facebook (NASD: FB), Twitter (NYSE: TWTR), and Square(NYSE: SQ).

You can gauge how volatile a stock is by reviewing its historical volatility as well as looking at the options implied volatility.  You can buy and sell options on stocks like Marriott International, Hilton Worldwide, InterContinentel Hotels Group, Hyatt Hotels Corporation, Huazhu Group Limited, Park Hotels & Resorts, Wyndham Hotels & Resorts, Choice Hotels International, Wyndham Destinations, Belmond, and Red Lion Hotels.

Trading options allow you to be more strategic. For example, when you buy a stock, you only make money if the stock price rises. However, with options, you can put on trades that don’t have a directional bias. Instead, they are volatility bets.

Bottom Line

Hotel stocks face many challenges moving forward. For example, Airbnb’s 2019 IPO could have a negative impact on hotel stocks. Besides, an ongoing tug of war between online travel agencies.

However, blockchain technology could help hotels reach directly to the customer, eliminating third-party services.

Maybe a visionary, Expedia’s former CEO, Dara Khosrowshahi left the company in 2017 to join Uber despite him being one of the highest paid CEO’s in the world.

Ironically, Uber was receiving bad press for its toxic work culture. Uber founder Travis Kalanick resigned as CEO because he couldn’t manage the publicity nightmare.

REITs offer an exciting way to play hotel stocks and pay a handsome dividend. If you want to invest in hotel stocks, make sure to pay attention to economic reports. Clearly, a strong economy should lead to greater tourism and more hotel revenues.

On the other hand, if it looks like the sector is slowing down because of poor economic numbers than you might consider using options to hedge.

post-image

Looking For Hot Stocks To Buy? Here’s How To Find Them

Larry Davidson - October 24, 2018

Finding hot stocks to buy is not as hard as it sounds. The hard part is figuring out which ones will remain. But this year is off to a good start, as the S&P 500 had already risen 3.3% on this year.

Companies like Amazon, Alphabet, Facebook, and Alibaba are among the largest services in the world.

They were all founded in the mid to late 1990s except for Facebook which started in 2004. Incredible when you consider that The New York Stock Exchange is over 200 years old.

Technology is now a key driver in the economy.

Chew on this…

source: dw.com

The Walt Disney Company has been in business since 1923; however, Netflix was able to surpass them in market cap in the past year, despite Disney having a more than 70-year head-start.

Just keep in mind, the stocks to buy now might not be the ones to buy a decade from now. Companies like General Electric, AIG, and Eastman Kodak were all part of the Dow Jones Averages at one point.

Finding Stocks To Buy – Day Trading

pre-market movers hot stocks to buy now-

source: nasdaq.com

Day traders need volatility to make quick money from the market. Figuring out what to trade often happens during the pre-market time. Traders will look at which ones are moving the most and see if there are any possible trades out there.

Example-

You can find this information on most trading platforms or services. Also, websites like finviz.com and nasdaq.com.

Generally, most stocks don’t trade before the market opens at 9:30 AM ET unless it has a catalyst.

hot stocks to buy catalyst plays

source: Globe Newswire

If you look above, you’ll see that Dave & Buster’s (NASD: PLAY) was trading 4.3% higher in the pre-market. The catalyst was a quarterly earnings release that it disclosed earlier that morning.

A catalyst can be an earnings release, analyst action (buy/sell recommendation), press release, rumors, news about the company or something that can materially affect its business.

Here are some recent catalysts and its impact on its stock price:

Tesla (NASD: TSLA)

hot stocks to buy now tsla

source: Geek Wire

Tesla’s stock has surged nearly 132% since this year only. But let’s take a quick glance to the past. On September 6, 2018, Tesla Ceo Elon Musk does a podcast interview with Joe Rogan. During the meeting, the two appear to pass along and puff on a cigar mixed with marijuana and tobacco.

The following morning Tesla shares fell sharply lower. As you can see, this is an example of a negative catalyst.

Canopy Growth Corporation (NYSE: CGC)

hot stocks to buy canopy growth

source: bamsec.com

On August 15, 2018, Constellation Brands, maker of Corona beer, announced it was investing $4B into pot stock Canopy Growth Corporation.

When a top corporation expresses so much interest in a relatively young and unproven company, it’s generally viewed as a positive catalyst.

That said, the day of the announcement, Canopy saw its stock rise by more than 30% from the previous day close.

Websites such as finviz, yahoo finance, and Twitter are excellent resources when searching for stock news.

The Story Matters When You’re Looking For Stocks To Buy

Since we’re talking about hot stocks, a juicy story will always trump fundamentals in the short-term.  Constellation’s investment into Canopy strengthed the narrative. Many traders were speculating on the cannabis stock well before Constellation’s investment announcement; however, what it did was legitimize the industry.

Marijuana is illegal in the United States on the federal level. That said, many investors have been reluctant to invest in the space because of the federal law.

Constellation’s move took some fear away from investors, and it caused others in the sector to rise also.

The most famous being Tilray (NASD: TLRY), a recent IPO that went from $17 to $300 in about two months.

Its catalysts included:

  • A strong earnings report
  • One of only a handful of pot stocks that trade on the Nasdaq or NYSE
  • Canada set to legalize recreational marijuana later in the year
  • A vast majority of the shares were borrowed and shorted, causing the stock to be placed on the REG SHO threshold security list.

Did it make sense that Tilray was trading by nearly 700 times its sales with a market cap of more than $20B?

Not really… but the stock market doesn’t care.

Psychology plays a significant role when trading. Emotions such as fear and greed take over, and financial fundamentals get thrown out the window.

Tilray eventually dropped by more than 50%, two days after it hit $300 per share.

Buying Hot Stocks – Have An Exit Plan

Tilray’s short-term move was based on a supply and demand factor. Too many traders were short the stock causing it to squeeze higher.

hot stocks to buy vw

Source: cnbc.com

Shifts in supply and demand can cause a stock to do crazy things. For example, in October of 2008, a massive short squeeze caused Volkswagen’s stock to rise by more than 150% in one day, making it one of the largest companies in the world.

However, in the long-term, fundamentals matter. Volkswagen has never had a higher market cap as it did back in October of 2008.

High flying stocks typically mean-revert after having their explosive moves.

If you’re trading these, you have to be active and continuously track them. Day traders often will scalp them to try and turn in a quick profit. However, the most money is made by investors who are brave enough to hold on for more substantial gains. Of course, you’ll need to be able to deal with the volatile price swings.

Bottom Line

Positive economic readings are putting this year to a good start, as the S&P 500 has already risen 3.3%. The hottest stocks now are usually accompanied by a juicy story.  However, after a massive run-up expect the stock to cool off.

Compelling stories have spill-over effects. For example, Canopy Growth’s catalyst was able to get investors buying sympathy plays like Tilray and Cronos Group.

Now, you can use the price action as an indication of how powerful the catalyst is.  In addition to price strength, tracking the trading volume is extremely important. Ideally, you want to see a stock trading at least more than three times its average daily volume. It shows that there is a great deal of financial interest in the name.

Also, pay attention to supply and demand dynamics of a stock. Companies such as Tilray and Volkswagen saw massive runups because of a short-squeeze. Having top information like short-interest, floating shares, earnings growth, and other fundamental market data can prove to be very helpful in your financial strategy.

Lastly, if you’re going to trade a hot stock… make sure to have a plan.

post-image

Are these the best bitcoin stocks to trade?

Larry Davidson - September 16, 2018

Bitcoin stocks are relatively new to the market. Largely because bitcoin was ignored by the mainstream media for years up until 2016, where it started to pick up some momentum. At the beginning of 2017, you could have purchased one bitcoin for approximately $1,000.  The value of one bitcoin surpassed $19,000 during its peak that year.

Bitcoin is a digital currency that allows you to make and receive payments quickly and effortlessly. Bitcoin acts as an entry on a digital ledger; it has no central authority, no federal reserve bank or FDIC. Blockchain is the technology that maintains the bitcoin transaction ledger.

Some believe that blockchain technology will improve how we manage data, and bank. As well as, improve the fields of healthcare, transportation and logistics.

bitcoin stocks volatility

source: coindesk

Now, whether bitcoin takes off and becomes a widely used digital payment system is yet to be determined. However, that hasn’t stopped traders from speculating on the digital currency.

That said, many investors have avoided trading bitcoin because of its lack of regulatory oversight.  Instead, they’ve opted for trading bitcoin stocks.

The Best Bitcoin Stocks- Bitcoin Investment Trust (OTC: GBTC)

bitcoin stock grayscale

source: Grayscale

Founded by Grayscale, one of the largest digital currency asset managers on the globe. Its goal is to track the market price of bitcoin, minus fees and expenses. The Bitcoin Investment Trust is a private, open-ended trust that offers several features that bitcoin doesn’t.

gbtc bitcoin stocks

source: Grayscale

Advantages of picking the Trust over bitcoin are that it’s IRA-eligible,  a titled security while having built-in security and storage.  It trades on the OTC Markets and was the first publicly traded bitcoin stock.

Each share of stock represents 0.092 bitcoin, as of November 30, 2017.  With bitcoin’s price now fluctuating between 4 and 5 figures, the Bitcoin Investment Trust offers a low barrier to entry for those wanting exposure to the digital currency.

In addition, Grayscale has created other products that feature other cryptocurrencies like: bitcoin cash, ethereum, ethereum classic, litecoin, xrp, zcash, and zen.  However, only the Bitcoin Investment Trust and  Ethereum Classic Investment Trust (OTC: ETCG) are publicly traded.

Now, the Bitcoin Investment Trust came under attack in 2017 when well-known short-seller Andrew Left, founder of Citron Research, issued a short report on the stock.

The argument Citron made was that the Bitcoin Investment Trust was overvalued based on its NAV. In fact, at times, the premium has been as high as 60-100%  In other words, at certain times you might be paying the Bitcoin Investment Trust $2 to own $1 of bitcoin.

How is it possible?

It was and still is, the only pure bitcoin play in the stock market. When bitcoin prices started going crazy in 2017, stock traders started piling in and out of GBTC shares trying to capitalize on its volatility. Valuation in the short-term can get out of line and markets can stay irrational longer than you can stay solvent.

Bitcoin Stocks- The Best Of The Rest

Overstock.com (NASD: OSTK)- Publicly traded since 2002,  Overstock is best known for being an online retailer and a survivor of the dot-com bubble. The company founder, Patrick Byrne, is considered an advocate on cryptocurrencies and bitcoin.

In 2014, Overstock became the first publicly traded company to accept bitcoin payments on its website.  However, tZero, the company’s blockchain subsidiary (83% owned) is why traders are talking about Overstock a bitcoin stock.

tZero is a digital securities market platform. The firm’s goal is to build a token trading system to trade tokenized securities. It wants to be the first SEC approved venue for initial coin offerings and SEC approved trading venue for crypto-securities.

tzero bitcoin stocks

source: tzero.com

On August 9, 2018, tZero received a letter of intent by a group of investors to buy into as much as $270M of the company. At some point, Ovestock will spin-off tZero, till then expect the stock to move along with bitcoin.

Now, there are other stocks to look at if you want to play bitcoin. However, since it is not its main business than they won’t always move in the same direction as bitcoin.

Advanced Micro Devices (NASD: AMD)- not a pure bitcoin play but still worth putting on your watch list.  The chip-maker makes powerful graphics cards that are used in cryptocurrency mining. However, its a small portion of its business at the moment.

Bitcoin Stocks – Be Careful

Trading bitcoin requires an appetite for risk.

riot bltcoin stocks

source: cnbc

Longfin Corp. IPOed at the height of the bitcoin craze. The stocked closed its first-day trading at $5.17 on Dec 13, 2017, five days later it traded as high $142.80 per share. Months later the company delisted from the NASDAQ and now trades on the OTC Markets.

SEC bitcoin stocks

source: SEC

Other fly-by-nite companies emerged, changing their names to suggest its business is affiliated with blockchain and/or cryptocurrencies. Eventually, the SEC took a more aggressive stance on the matter.  They spent more time educating the public and disciplining bad actors.

With so many unknown variables surrounding bitcoin, how it will be regulated and used, owning bitcoin stocks as an investment is very risky.

There have been attempts to create a bitcoin ETF but the SEC has rejected all proposals to date.

Bottom Line

Bitcoin started to really take off in 2016 and 2017. Its price action remains volatile.  The majority of companies claiming to be blockchain companies are fly-by-nites.

Longfin’s stock price went from around $5 to over $140 in a matter of days, and later got delisted. Now, savvy traders were able to take advantage of these volatile moves. However, novice investors who got caught up in the hype surrounding bitcoin got burned.

We’ve seen this type of excitement before,  in sectors in like marijuana, 3-D printing, social media, the internet, solar energy, and many others. When the hype train leaves the station the only ones left are the bag holders.

It’s too early to tell what the best bitcoin stocks of the future will be. That said, it’s better to be a trader of these companies than an investor.

post-image

How To Read The Stock Market Like A Pro

Larry Davidson - September 16, 2018

If you know how to read the stock market then your chances of making money from it are greatly improved. People get interested in stocks because they hear about the potential money that can be made from the market.

Thousands of different stocks are traded daily, for someone new to investing, picking which stocks to buy and sell can be very overwhelming at first. However, that shouldn’t discourage you.

Investing in the stock market is one way that an individual can generate wealth, sometimes, wealth beyond their imagination. That said, U.S. stocks are experiencing the longest bull market in history, but nearly half of Americans don’t have a single dollar invested in them, according to a Gallup study.

If you want to be able to read the stock market you’ll have to pay attention to a number of other markets that make up the financial system. They include: the bond market, currency market, and commodities market.

The bond market consists of three types of debt instruments: treasuries, corporate bonds, and municipal bonds. The federal reserve bank sets the target for the fed funds rate. That’s the same interest rate that banks charge each other for overnight loans.

how to read the stock market currencies

Source: CNN Money

When interest rates are low, businesses are more inclined to borrow money to grow their firm. Now, when interest rates are low, investing in bonds becomes a less attractive alternative to investing in stocks.  Given these dynamics, institutions closely follow the actions of the federal reserve and the interest rate market.

The U.S. dollar has been a stable currency for decades. However, that can’t be said for other nations. A currency crisis has the potential for a contagion to occur. Paying attention to the currency markets is helpful.

How To Read The Stock Market – Economics & Politics

The largest shareholders of stock are financial institutions. For example, as of June 30, 2018, the Vanguard Group, a registered investment advisor with over $5.1T in assets, is the largest shareholder of Apple stock. Vanguard is the largest provider of mutual funds and owns over 300M shares of Apple.

The second largest Apple shareholder is Blackrock, the world’s biggest investment advisor with over $6.3T in assets.  When financial institutions take a stake in a position they are looking to hold on to that position for a year or longer. If you’ve got a longer term horizon than it makes sense to follow the economy and politics.

how to read the stock market poltics

Source: MarketWatch

The stock market remained strong after Donald Trump was elected President of the United States Of America. That said, he has the ability to move stocks by one single tweet. If you are an active day trader trying to read the market than you must follow the President’s twitter account.

His tweets have affected the following industries: steel, auto, healthcare, tech, aviation, entertainment, sports, defense, and retail to name a few.  The president has the potential to move the entire stock market when he talks about international trade and national defense.

Institutions also follow economic indicators like: ISM Manufacturing; International Trade; Jobless Claims; Employment Situation;  PPI; CPI; Retail Sales; Housing Starts; Existing Home Sales; FOMC Meeting; GDP; Durable Goods and Personal Income.

For the most part, economists do a lousy job of predicting the future. Regardless, keeping up with economic headlines is good if you’re an active trader. Sometimes a good or bad economic report can temporarily influence market sentiment for that trading day.

How To Read The Stock Market – Technical Analysis

Now, some traders will tell you that following the news is a waste of time. In their eyes, price action tells the story. Instead of bothering with analyst reports or sifting through financial statements, technical traders focus on price and volume to generate trade ideas.

Traders can develop trading strategies based on technical analysis.  For example, trend trading is a strategy in which you identify if a stock price is moving upwards or downwards and then taking a position in the direction of the trend.

how to read the stock market nvda

Source: finviz

In the month of October 2017, NVIDIA Corporation hit an all-time high of 39.67. Now, that high held up until May 13, 2016, where the stock eventually broke through all-time highs and closed at $40.98.  Buying a stock in a bullish uptrend is a common trend strategy.

Let’s say you decided to buy $10,000 of NVIDIA stock a couple weeks later, at an even higher price, $46.72.  As of Aug 31, 2018, that $10,000 investment is worth over $60,000.

how to read the stock market trending

Source: buyupside

There are several technical indicators that traders use to help them identify if it’s the start/end of a trend, direction and strength of trend.

There are even indicators that attempt to tell us if a stock is overbought or oversold, and if its likely mean-revert.Some traders take a contrarian view. If a stock is trending too strong, they’ll look to take the opposite side in hopes the trend reverses.

Technical analysis can be applied to day trading as well as swing trading. Most investment advisors make their decisions based on fundamentals. But if you’re trading short-term, using technical analysis can be helpful. Analyzing stock charts can help you pinpoint areas of support and resistance, as well as, help you decide which areas look like decent entry and exit levels.

The Bottom Line

No one can predict the markets all the time. The key to trying to reading the market is to be humble. It’s okay to develop a thesis or trade idea, but also develop a plan in case your idea is wrong.

The largest players in the market are buying and shorting stocks with the idea of holding on to positions for 12 months or longer. That said, stock prices fluctuate on a daily basis. Short-term traders should try to identify market sentiment before making any trades.

Remember, you’ll make your most money by figuring out what the crowd is doing, the earlier you discover that the better.

Some investors will tell you that buying a stock at its highs make them uncomfortable. However, you can never underestimate how high or low a stock can go. Become a student of the market, and try to read it the best you can. The market is bigger than all of us, be flexible and able to admit when you’re wrong.

post-image

Two Ways To Find Stocks Under $10 That Could Double

Larry Davidson - September 16, 2018

Some stock investors focus purely on stocks under $10. Imagine buying a little-known company by the name of Netflix back on Dec 1, 2011, when it was trading $9.59. Now, if you invested $10,000 in it and held until Aug 31, 2018, it would be worth more than $380K.

stocks under $10 nflx

Source: buyupside

Of course, returns like this are uncommon. But the potential to turn a small amount of capital to a larger sum is possible when you are trading stocks under $10.

That said, when you are looking at the prices of stocks, make sure to pay attention to the company’s market cap and shares outstanding.

For example, Lloyds Banking Group (NYSE: LYG), one of the world’s oldest financial institutions, trades under $5 per share. A novice might see that share price and think it’s a small company. However, Lloyds has a market cap of more than $50B.

On the hand, Union Bankshares, Inc. (NASD: UNB) stock’s price trades for more than 10 times that of Lloyds, but its market cap is more than 210 times smaller.

The price of a stock does not tell us anything about the size of the company. That said, when investors are on the hunt for stocks that trade under $10, they are primarily looking at small to mid-cap companies, often referred to as growth stocks.

Companies like Netflix, Nvidia, and Apple were once small to mid-cap growth stocks before they became household names.

Small cap stocks that trade under $10 are often overlooked by wall street analysts and mutual funds.

This creates an opportunity for savvy investors to do their own due diligence and potentially discover the next big market leader. An investor with a small trading account gravitates to lower-priced stocks because they appear affordable.

Despite the upside potential small cap stocks offer, it’s important to note they tend to experience greater volatility than large caps.

Finding The Best Stocks Under $10 – Fundamental Approach

Using a stock screener, like the one found on the finviz website is a great way to discover the best stocks under $10.

Here is one scan done with the following criteria: price of the stock under $10; market cap between $300M and $2B; a low long-term debt/equity ratio; positive eps growth over the last five years and for the next five; and a positive eps growth this year. 

The scan resulted in only 12 symbols, three of the most interesting included: Geron Corporation (NASD: GERN),  and Camtek (NASD: CAMT).

stocks under $10 gern

Source: geron

Geron is an oncology company which is best known for Imetelstat, a telomerase inhibitor. It is being developed for the potential treatment of hematologic myeloid malignancies. Geron has partnered with Janssen Oncology, a subsidiary Johnson & Johnson Company  (NYSE: JNJ).

Always impressive to land the world’s largest biotech company in the world as a partner, making Geron one of the hot stocks trading under $10 to watch.

stocks under $10 camt

Source: Camtek

Camtek Ltd. (NASD: CAMT) , offers inspection and metrology tools and services for the semiconductor industry. Its business spans across the Asia Pacific, North America, and Europe.

That said the company has been experiencing excellent growth. During the second quarter of 2018, the firm reported record revenues.

Finding The Best Stocks Under $10 – Technical Approach

Using a stock screener, like the one found on the finviz website is a great way to discover the best stocks under $10.

Here is one scan done with the following criteria: stock performance up 30% or more ytd, stock price above 20, 50, and 200 day simple moving averages, the stock is trading near its 52-week highs, is trading under $10 per share, and has a market cap of $50M or more. 

Two of the names that popped up on the scan were Calix, Inc. (NYSE: CALX) and The One Group Hospitality, Inc. (NASD: STKS).

Calix, Inc. is a global communications service provider. The Calix platform helps businesses manage their infrastructure among subscribers and the cloud.  The company  was founded in 1999, and has over 700 employees.

calx stocks under $10

Source: infosys

The ONE Group Hospitality, Inc.  (NASD: STKS) develops, owns, and operates restaurants and lounges throughout the globe.

stks stocks under $10

Source: instagram

Forbes has ranked them among the best steakhouses in America. The company owns the following brands: Radio Rooftop, STK, Asellina, Bagatelle, and Heliot Steak House.

The company was founded in 2004, and is headquartered in New York City.

The Bottom Line

Investing in small cap growth stocks requires a stomach for risk. Of course,  day trading stocks under $10 can also be lucrative but these stocks are also typically volatile.

Make sure to size your positions accordingly to adjust for the additional volatility.

You can use a stock screener to help find trade candidates. In the examples above, two scans were created, one using fundamentals and another using technicals.

Sometimes you might be bullish or bearish on  a sector but don’t know which publicly traded companies are available to invest in. Doing a scan by sector can also be a way to find quality stocks under $10 per share.

Focus on stocks that have growth potential. It makes sense to do your research on management. Often times when you invest in a new company you are investing in the personnel and their ability to execute.

Many of the best companies in the world are recognized by its leaders: Tim Cook at Apple, Jeff Bezos at Amazon, Elon Musk at Tesla, and Mark Zuckerberg.

Don’t underestimate how important leadership is when investing in growth stocks under $10.

post-image

Strong Buy Stocks And Other Thoughts On Analysts

Larry Davidson - August 30, 2018

Nothing beats doing your own homework when it comes to trading and investing. However, strong buy stocks are recommendations from wall street analysts that are among the most bullish. Wall street analysts can be wrong but often times their opinions are highly respected.

Banks and research firms hire analysts to speak with corporate executives, research specific companies,  give an opinion on if the stock is overvalued, undervalued, or fairly valued. That said, stock analysts will also make forecasts, give buy, sell or hold recommendations, and give a price target on where they think the stock should be trading at.

Now, different firms will issue various types of stocks ratings, they range from: buy, outperform, overweight, strong buy, neutral, hold, equal-weight market perform, sell, underweight and under perform.

The strong buy stock rating is among the most coveted.

For example, at Raymond James, a strong buy rating typically implies that the stock will produce a total return of double digits and outperform the S&P 500 over the next six months or so.

stock analysts strong buy stocks

At Needham & Co., a strong buy rating implies that the stock could produce total returns in the mid double digits over the next 12 to 18 months.

A team of analysts usually cover a sector together, for example, retail. They issue their reports along with a recommendation and price target. The report is usually distributed to clients of the bank. However, the rating information and price target, becomes readily available after it’s released.

A company like Apple has over 20 analysts covering its stock. It’s unlikely that the stock will overreact to an upgrade or downgrade because of its market cap.

Analysts will typically make changes to their outlooks after an investors day meeting, industry conference, and/or quarterly earnings statement release.

strong buy stocks appl

Source: Nasdaq.com

Strong Buy Stocks And Its Catalysts

Now, there are a number of reasons why an analyst will give a strong buy rating. Here are some of them:

  • Seasonal trend, for example retail stocks during Christmas time.
  • Increasing gross profits
  • Strong cash flow
  • Strong sales and EPS numbers
  • A Return on invested capital greater than 10%
  • A bullish outlook on the sector
  • The stock appears cheap based on a valuation model
  • Share buyback program
  • Faith in management and their ability to execute
  • Company guidance is higher than expectations
  • Favorable court or government ruling
  • Business coming out of a slump
  • Economic conditions are improving
  • Growth drivers

Now, those are just some of the reasons on why an analyst might give a stock a strong buy rating.

Of course, a strong buy rating does not always mean that the stock will rise the day the report is released or if it will ever reach its price target. The analysts are just offering their opinions. But its the institutions and other players in the market that dictate how high or low a stock will trade.

Websites like tipranks.com actually rank analysts on how well they perform.

Source: tipranks.com

Trading Strong Buy Stocks

Now, imagine an investment bank coming out with the most bullish sounding report on the stock. The stock is trading at $50 and they gave it a street high price target of $85.

The stock is set to gap up $2 on the open on low volume. Most novice traders will buy the stock on the open, but that might not always be the smartest move.

You see, just because a stock gets a strong buy recommendation there is still more research you need to do.

Questions you should be asking:

Who is the analyst? and What is their reputation covering this stock or the sector?

Is the analyst’s firm respected around the street or is it just some blogger trying to make a name for themselves?

Is the analyst’s research offering something new and original?

Sometimes a stock can get a strong buy rating but the price target might be at or even lower to where the stock is trading at. Despite the bullish rating, the low price target makes it less bullish and even slightly bearish. For example, lets say the stock is trading at $50 and it receives a strong buy rating with a price target of $45. You can see how that doesn’t come off across as that bullish.

What’s important is to listen to the narrative and see how that matches the markets sentiment. Analysts have access to much greater resources than we do as individual investors. It’s important to read and listen to their reports. But ultimately, you’ll need to come up with your own conclusions and make choices that best fit your interests as an investor.

post-image

How To Discover Undervalued Stocks

Larry Davidson - August 21, 2018

Many investors dream of finding undervalued stocks.  Imagine buying Netflix, before it became a household name. For a good part of 2002 and some of 2003, Netflix was trading under $1 per share. A penny stock!!

Fast forward to 2018, and it has a larger market cap than Disney. A $10,000 purchase of Netflix stock on Sep 29, 2002 was worth over $5.6M in July 2018.

A stock is said to be undervalued if it is trading below its intrinsic value. However, often times a stock will trade based on its future prospects. That said, projecting the future is speculative and it requires making assumptions and guesses. This can be especially challenging when making projections in new sectors, like social media and block chain.

Now, that doesn’t stop analysts and investors from trying to figure out what the value of a stock is. In fact, one of the greatest investors of all-time, Warren Buffett, is considered a value investor.

Value Investing – What Undervalued Stocks Look Like

Value investing was introduced to the public by Benjamin Graham and David Dodd. The two wrote the book Security Analysis, which laid the foundation work of value investing.

Value investing is the art of buying stocks that appear to be cheap according to some fundamental metric. Famous students of value investing include billionaire investors Warren Buffett, Charlie Munger, and Mario Gabelli.

How can the market be wrong?

From time to time, sentiment can change quickly from being overly positive to overly negative. Value can be discovered during periods of volatility.

buffett undervalued stocks

Source: theweek.com

When most investors were panicking and getting out of stocks during the financial crisis, savvy investors like Warren Buffett were making strategic investments in beaten up banks like Goldman Sachs and Bank of America.

You see, for an investor like Buffett, he knows that sentiment can shift in the near term. However, when he invests in a company, he has a long-term plan. He has been quoted in the past as saying: Buy it thinking you will hold it forever.

Some metrics value investors use to try and uncover cheap stocks are: PE Ratio, PEG Ratio, book value, and free cash flows among others.

That said, a company’s stock can be undervalued relative to its industry as well as its own historical data.

When new information is released it takes time for market participants to interpret and decide what it means to the company’s stock price.

Undervalued Stocks – Metrics

Here are some of the most popular metrics analysts and investors use to help determine a stocks valuation:

PE Ratio:  The ratio of a stock’s current price to last year’s earnings per share. The price-earnings ratio tells us how much we can expect to invest in a company in order to get one dollar of that company’s earnings.

undervalued stocks semi conducters

Intel Corp is the largest semi-condcuter traded. Generally, companies that are mature have a lower P/E ratio and companies that are considered to be growing have a higher P/E ratio.

However, making decisions on this metric alone could –lead you to miss opportunities. For example, Amazon has historically had a high P/E ratio and has been among the top performing stocks over the last decade.  In addition, companies that post losses do not have a P/E ratio.

Enterprise Value: The market value of common stock + market value of preferred equity + market value of debt + minority interest – cash and investments.

Use this metric to compare companies in similar industries.

undervalued stocks

Source: CNBC

When Greenlight Capital took a stake in Twitter, it noted that the company had an enterprise value of just 2% of that of Facebook, the largest social media company in the space. Greenlight made the move because they thought that twitter was an undervalued stock.

Despite Twitter having a large user base and broad market reach, Greenlight believes that it is a value relative to its competitors.

Free Cash Flow- This metric tells us how much cash a company can put together after its required investment obligations.

The amount of free cash flow is important because it tells us if a company can pursue M&A, R&D, expand business, distribute dividends, or do stock buybacks.

That said, if a company has a negative free cash flow, don’t be fast to dismiss them.

How You Can Find Undervalued Stocks

For the most part, when a Wall Street bank gives out a buy or sell recommendation on a stock, they’ll base it on fundamentals.  To help build their thesis they will use financial models.

The Discounted Cash Flow is a valuation model that analyzes the future free cash flow estimates and discounts them,  through a required annual rate and arriving to present value estimates.

Generally, if the”DCF” is higher than the current cost of investment, it is potentially a favorable opportunity.

Another valuation technique that can help to find undervalued stocks is peer company analysis. It’s a side-by-side comparison of companies in the same sector. Some common valuation comparisons include: P/E, Fwd P/E, P/FCF, P/S, Enterprise value/EBITA, dividend yield, profit margins, and EPS to name a few.

Market pundits often tell you to invest in “best of breed” companies. These are typically the ones that have the largest market cap, leading in sales and growth or some of the other valuation metrics previously mentioned.

Using a stock screener like the one on finviz.com, makes it easy to do some valuation analysis.

finviz undervalued stocks

source: finviz 

In addition, it is important to read quarterly earnings statements and follow news on companies you are interested in.

Bottom Line

Valuation is an art form. No one can really predict the future and because of that investment opportunities arise. Value investors like Warren Buffett have a long term perspective.

Now, for today’s investors, thinking long term can be challenging. For example, Google, Amazon, and Facebook are among the largest companies in the world, and Amazon is the oldest of the three, and it is just in its 20s still.

Will new companies come along and dethrone the current best of breed?

Most likely, that is, if the past is an indicator. Companies like General Electric, American International Group, Eastman Kodak, Sears, Goodyear Tire, Bethlehem Steel, and Westinghouse were all once part of the Dow Jones Industrial Averages.

With technology changing rapidly, the concept of value of investing becomes difficult. However, using concepts like relative value and peer analysis can be helpful when making investment decisions.

post-image

How To Get Started Buying and Selling Stocks

Larry Davidson - August 3, 2018

Let’s face it, most people don’t know how to start a business or even have the time to try. However, they all have the opportunity to invest in the best companies in the world through the stock market. This is done by buying and selling stocks on publicly traded companies.

For example, Apple and Amazon are two of the largest companies in the world, both of them are traded on the NASDAQ stock exchange. The second largest US stock exchange behind the New York Stock Exchange.

aapl buy and sell stocks

Source: finviz

A company will issue shares of stock to raise funds for business. The issued shares represent the amount of capital invested by the shareholders of the company.

Apple has over 5B shares outstanding. If its stock is trading at $185 per share, than it has a market cap (shares x stock price) of about $930B. There are thousands of publicly traded stocks investors and traders can select from.

When you buy a stock you are hoping to sell it for a  higher price sometime in the future.  Someone might buy a stock and intend to hold it for years, this type of stock buyer is considered an investor. On the other hand, someone else might buy a stock and hold it for just a few minutes, in hopes of making a short-term profit.

If a stock is held for less than one year, and sold for a profit, the capital gain will be taxed at ordinary income tax rates. However, if it’s held for more than one year and later sold for a profit, the capital gain is taxed at a maximum rate of 20%

Buying and Selling Stocks- Getting Started

In order to be able to trade stocks in the US, you must have a stock brokerage account. Opening up a stock brokerage account is fairly simple, all you need to do is fill out some personal and financial information. They want to make sure that you are who you say you are, not going to launder money, and are financially capable to risk money in the stock market.

That said, you can open a stock brokerage account online. Some of the largest online brokers today are Fidelity, Charles Schwab, TD Ameritrade, and  E-Trade.

buying and selling stocks

Selecting the right broker depends on several factors, some include minimum balances, commissions, ease of the trading platform, types of margin accounts.

You should conduct your own due diligence before selecting a broker. Many of them offer demo accounts for you to try out their platform, a great way for you to find out which platform works best for your needs.

There are two types of brokerage accounts: cash and margin. A cash account is one where the investor must pay the full amount for stocks bought.

On the other hand, a margin account allows the investor to borrow money from their broker to buy stocks. Stocks in your existing portfolio act as collateral. There is no such thing as a free lunch, investors can incur interest costs when stocks are bought on margin.

You can also buy and sell stocks through an individual retirement account (IRA). This type of account allows investors to save for retirement with tax-free growth or on a tax-deferred basis. The three most common IRAs are: Traditional, Roth, and Roller IRA.

Buying and Selling Stocks- Trading Basics

When you’re buying and selling stocks you are looking at three prices: the current, bid, and offer price.

buying and selling stocks msft

Source: Fidelity

In the example above, Microsoft is last trading at $29.71, the current price. However, traders in the market are bidding $29.70. While other traders are offering to sell shares at $29.71.

Only when the  buyer and seller agree on a price is the trade executed. The minimum amount shares you can buy is one. Your broker will charge you a commission for the transaction.

That said, there are several different ways you can buy and sell stocks. Here are some of the more common:

Marker Order: This order executes at the current offer price if you are buying and the current bid price if you are selling.

Limit Order: This order is executed at a specific price that you set. For example, if XYZ stock is trading at $100 and you want to buy it at $99, you can put out a limit to buy at $99, your order should get executed if the stock trades down to $99.

Stop Limit: A buy or sell limit order that executes when a specific price is reached.

Buying and Selling Stocks- Short Selling

Now, when you sell a stock you don’t own, you are short selling. A short seller borrows shares of stock that they don’t own from their broker. Their goal is to profit from a decline in the stock they are short.

You’ll need a margin account in order to sell stocks short.

For example, if a trader sells 1,000 shares short of a stock at $20, $20,000 goes into their trading account. However, it’s not free money, in fact, short selling is riskier than buying stocks. When you buy a stock your risk is defined to your total investment. On the other hand, when you short sell a stock, your risk is undefined.

Let’s assume the trader had $30,000 in their account and the stock they were short suddenly halted for news pending. The company announces that it is going to be acquired for $60. When it re-opens it is trading at $55, the trader is short $55,000 in stock and now has lost their entire account and then some.

That said, short selling can be very lucrative. Imagine shorting Enron near its peak or the dot com stocks before the bubble popped. A buyer and seller is what creates a market. Short sellers are neither good nor bad, but play a vital role in the stock market ecosystem.

Buying and Selling Stocks- What Investors Look At

Investors and traders look at different things when it comes to buying and selling stocks. A short-term trader is primarily interested in stocks that have catalysts, they need volatility to turn a profit. Some catalysts traders play are earnings, economic, political, breaking news, analyst research and more.

On the other hand, a long-term investor is not necessarily concerned with the day-to-day fluctuations of their stocks, they are judging the company on a much longer time horizon.

Many investors focus on the fundamentals of a company.  They include:

  • Return on Assets
  • Return on Equity
  • Debt/Equity
  • Profit Margin
  • Gross Margin
  • Dividend Distribution
  • P/E Ratio
  • Fwd P/E Ratio
  • EPS

and much more.

The Bottom Line

Getting started with buying and selling stocks is as easy as opening up a brokerage account online. That said, there are different types of accounts to consider. The type of account you select should be reflective on your objectives. For example, most IRAs do not allow for short selling.

It’s important to take the time to review the different features each broker offers and to request a demo of their trading platform. Trading on demo is a great way to learn about the stock market and how stocks move. You can also practice different order types while practicing.

Before you know it, you’ll be using real money, buying and selling stocks.

post-image

Best Options Trading Strategies For Investors

Larry Davidson - August 3, 2018

Trading options can create an added dimension to your overall trading. Some options trading strategies will offer greater flexibility, and better risk/reward than trading the underlying stock.

You see, when you’re trading stocks you are betting that the stock price rises ( long) or falls (short). But with options, you can bet that the price of a stock will rise, drop, stay in a range, experience high or low volatility, and a whole lot more.

It’s this type of versatility that attracts investors into trading options.

Basic Options Trading Strategies – Calls

Before we dive into options trading strategies it’s important you know some key terms. There are two types of options, calls, and puts.

Call Option: A contract that provides the buyer the right to purchase a predetermined amount of stock at a specific price and date.

One option contract represents 100 shares of stock. For example, if you owned 10 call options of General Electric, you would have the right to convert those to 1000 shares of stock.

At the time of this writing, General Electric stock is trading around$15 per share. January 17, 2020, $15 calls are trading for $2.40 per contract.

What does this all mean?

Well, if you bought these calls you are saying that you’re willing to buy GE stock at $15 per share. You are paying $240 per contract ($2.40 x 100 shares), in order for you to break even at expiration (January 17, 2020) you’ll need GE to be trading above $17.40 per share ($15 + $2.40 premium).

Now, if the stock never gets to that price level by expiration, the options will be worthless. Whenever you buy an option, the risk is limited to the amount of premium you spend on the contract.  In other words, if General Electric would to hypothetically go bankrupt, the only risk the call buyer is exposed to is the cost of their options contracts.

Buying a call option is another way to get bullish on a stock without actually buying the underlying.

On the other hand, the seller of a call option has the same risk profile as a trader who is naked short a stock, undefined. Shorting calls naked is not suitable for most investors because it is risky, potentially leading to losses greater than the funds in your trading account.

Basic Options Trading Strategies – Puts

Calls are used to express a bullish view, and traders buy puts when they are bearish on the underlying stock.  They could also be used as a way to hedge and have downside protection if you are long the underlying stock.

Put Option: A contract that provides the buyer the right to sell a predetermined amount of stock at a specific price and date.

For example, if the SPDR S&P 500 ETF (SPY) is trading at 280. The $280 puts expiring in a week are trading for $1.00.  If the trader buys these puts it will cost them $100 per option contract. The way they make money is if the SPY drops below 279 before expiration.  The great thing about buying put options vs. selling a stock short, long puts are a defined risk strategy, whereas, selling a stock short has undefined risk.

options trading strategies

Buying puts can be used to speculate on the future decline of company stock or ETF. They could also be used to hedge a long portfolio against the market downside. For example, if you have a basket of stocks as part of your long-term retirement portfolio, consider buying index fund puts like SPY.

Of course, you could also buy puts to hedge an individual stock position. Let’s say a stock your long has upcoming earnings and are uncomfortable with anticipated volatility. By buying a put option you can limit your risk while maintaining your upside profit potential.

Buying puts as a way to hedge is like buying medical insurance. You pay a premium but hope that you’ll never need it. But if an emergency strikes you’re glad that you are covered.

Best Options Trading Strategies- For Investors

One of the craftiest ways to express a bullish bias on a stock before owning it is by selling naked puts. Now, if buying puts is considered a bearish strategy than selling puts is considered a bullish strategy.

The above image is an example of the type of put option an investor might sell. These options are more than $40 out-of-the-money and are expiring in a little less than a years time.

If a trader sells these $150 puts in Apple, they will receive a premium of $4.01. They’ll be able to keep that entire premium if the stock stays above $150 on the expiration date.

Why is this such a great long-term strategy?

Because you’re able to profit off the stock’s uptrend for cheap. However, the long-term investor ultimately wants to buy the underlying stock.

The investor is willing to buy Apple shares at $150 per share by expiration. They receive $401 per contract for taking on the risk. If Apple stays put or trends higher, the investor retains the premium received.  The investor can repeat the strategy for as long as it matches their thesis.

For the long-term investor, this is very much a win-win scenario for them.

Selling puts naked requires an investor to have a margin account. It’s important that investors respect the leverage of options and don’t put themselves in a position where they could receive a margin call.

Bottom Line

The best option strategy is the one that best matches your opinion. Since options don’t move up and down the same way stocks do, it’s important that you learn about how they are priced. Specifically, understanding the role that time, and volatility have on the price of an option.

In periods of low volatility, you want to be a buyer of options. In periods of high volatility, you want to be a seller of option premium. Looking at charts of historic volatility is just as important as price charts if you want to trade options.

Selling puts naked in a stock you might be one of the best options strategies for long-term investors. It’s not the most lucrative but it’s very solid way to generate revenue from your holdings

post-image

Day Trading for Dummies – Essential Tips & Tricks

Larry Davidson - August 2, 2018

Day trading is the art of buying or selling stocks in hopes of turning a short-term profit. A day trader enters each day in cash and ends the day the same way.  A typical day trade can last a couple of seconds to several hours but it does close out by or before the close of the trading day.

FINRA rules define a “pattern day trader” as an individual who executes four or more day trades within five business days, provided that the number of day trades adheres to more than 6% of that individual’s total trades in a margin account for those same five business days.

Individuals deemed as such must have at least $25,000 in their accounts and can only trade in margin accounts. 

On December 15, 2017, a little-known stock by the name of Longfin Corp. (LFIN) gapped up in the pre-market after it announced that it acquired blockchain provider, Ziddu.com.

Before the opening bell, the stock was up nearly 100%.  That said, it opened up at $9.76 and hit a high of $26.80 that day.

Imagine if you bought 1,000 shares at $10 that day and sold it at $21 later on, you would have doubled your money. But what’s even crazier is that the next day it went from $22.01 to as high as $142.81.

long fin day trading for dummies

Source: TradingView

Imagine holding 500 shares and making 100 points in less than an hour!

Although you can hire a broker to make trades at a good price, it’s very easy to get started with day trading. All you need to trade is risk capital, a computer, internet, and a stock brokerage account. Many individuals have trading times for a good hour or two. Successful day traders have financial freedom, create their hours and trading times, and have no boss.

However, day trading is one of the hardest ways to make money.

Day Trading – Why Most Day Traders Fail

There are several reasons why day traders fail, here are some of the most common reasons:

Lack of Capital: It takes time to learn how to day trade stocks. If a day trader opens a brokerage account with a small amount of money, there’s a good chance you’ll lose it all before you learn how to make money in the market. Pattern day traders must have at least $25,000 in their account.

Lack of a Proven Strategy: The day trading strategy is generally identifying market patterns that have a high probability of success. Once recognized, they must be willing to risk money before they have the chance to make.

However, it takes time to find a proven day trading strategy.  Trial and error can be a costly approach for a day trader. It’s best to risk small amounts of capital on trades when you’re first learning how to day trade.

You should also learn to cut losses in a day trade with market orders or limit orders. A market order is executed at the best price at the time, so no price guarantee. As for a limit order, it guarantees the price but not the execution. So set your price for buying and selling. This is one of the strategies you should have.

Poor Risk Management: If you are new to trading, how do you know which trade may be right and which one may be wrong. That said, new people may put too much confidence in their trade by betting a large portion of their account on the outcome of one trade. Not fully knowing what you’re doing while making large bets on a trade may be an easy way to blow out your trading account. Set the risk and position you’re willing to take.

Repeating Mistakes: If you are someone who is not okay with being wrong then trading is not for you. Some may get away with being right just one-third of the time and still be profitable in a trade. It’s possible if their winners are significantly more massive than the losers.

After a while, they can recognize what their best trades are and focus on them. New traders often make the same mistakes in a trade. The way they can limit repeating the same mistakes is by at least reviewing trades and then recording them in a journal. This can be part of developing a trading strategy.

Day Trading – How To Succeed At Day Trading

day trading for dummies

Study: To trade successfully, you need to set yourself on being curious seeking knowledge first. Of course, make sure to read good books as part of the day trade process. You’ll find that the best books are the ones that focus on trading psychology.  Most books on day trading are outdated, and you don’t want those because they won’t offer you timely help or valuable strategy.

However, learning from a mentor is one of the best ways to get trading knowledge fast. An experienced mentor can help you avoid day trade mistakes, introduce you to technical analysis, and teach you what is working in the markets now. They’ll teach you everything you need when it comes to trades. If you don’t have access to a mentor than get to work on developing strategies through sim trading. Take some time to trade here so you can start learning without risking actual money in the market. You’ll learn that no two trades are the same. So even if you’re only trading for an hour or two, knowledge is extremely important.

Invest In Tools: If you want to start day trading, then you’ll need to decide on which services and tools you’ll need to get. There are a number of tools out there like charting packages, trade-alerts, news services, chat rooms, investment newsletters, and research are some that day traders subscribe to. Many offer advanced functions as well. Day trading often boils down to speed, having information at your fingertips is essential when you’re making split-second decisions.

Learn the basics. At least having a firm grasp of different trading terminology is important if you want to day trade. Like for example, price. Price has two structures: per-trade and per-share. It’s also good to know stuff like this so you would not be lost. As for trading platforms, you don’t really need the best ones right from the start if you’ve just started learning the ropes in the stock market. Take your time, try out a number of platforms, and develop your strategy well. Learning the technical analysis can come after the basics.

Join A Community: Believe it or not, most of the best day traders work in teams. Communicating ideas and developing plans in a team setting could lead to bigger profits than if you tried to do it alone. If you want to succeed, you do need to know and have a plan. Especially if you’re having a rough start, the least you can do is reach out for help from people who know trading well. Spending time with other people in the same community does wonders.

Be Disciplined: You also need discipline especially since there are so many ways and times that trading stocks can be profitable. Also, $25,000 is pretty much a big investment you would not want to go to waste. However, that doesn’t mean your personality fits all these trading styles.

For example, some stocks are riskier to trade than others. If your risk tolerance is low, then you want a strategy to avoid many volatile stocks or trade options to limit trading risk.

The best day traders know what their strengths and weaknesses, and use them for a strategy. However, they primarily focus on capitalizing on their strengths. Being a consistently profitable day trader requires discipline and patience, something that newbies often lack because they want money fast. When you just start day trading, knowing when to buy and sell can also be tricky.

Day Trading – Day Trading Strategies

Developing a strategy is crucial. Now, these aren’t the only day trading strategies in the markets, but they are among the most common.

Reversals: This is a counter-trend strategy, the trader takes the opposite side of the trend in hopes that it reverses. A person typically put this position on when they believe a stock move is extended (overbought/oversold).

BABA day trading for dummies

On June 29, 2018, Alibaba (NYSE: BABA) declined sharply on the open by four points; reversal traders found that as a buying opportunity and bought the stock, it rallied back by more than four points in less than 15 minutes.

Sometimes this strategy gets a bad reputation because you are trying to pick tops and bottoms. However, stocks do overshoot, creating opportunities for both longs and shorts.

Trend: Trend traders want to go with the momentum — that’s their strategy. If a stock is going up, they are buying, and if it’s selling off, they are shorting. They live and die by the adage: The trend is your friend.

On June 26, 2018, Pacific Energy Development (NYSE: PED) announced the strategic investment’s close. The following day the stock rose sharply in the pre-market.

PED day trading for dummies

The stock price opened at $0.40 and got up as high as $2.37 that day. Trend traders who were able to spot the trade early were able to ride the wave higher for handsome profits.

News: Traders who trade the news or other types of catalysts have a couple of different approaches in a strategy.

First, is speed, the faster you can interpret a breaking story the better the chances you’ll be able to act, position, and make profitable decisions when trading.

Second, if speed isn’t your game, then you’d want to focus on the merit of the story, whether its true or not and what the magnitude of the story means to the stock. Typically, news trading is something professionals have an advantage. It’s unlikely the average trader from home will be to react as quickly as the professional, especially when they are competing against news reading algos.

Day Trading – Final Word

Day trading is not easy. You need to have firm knowledge, great discipline, and an open mind to succeed in the markets. That said, trading may be the path for financial freedom for some. You will need much patience, time, hard work, a mentor, and a community to support you when trading. But with the day trading tips above, you can start day trading and take one step at a time.

post-image

What Are Earnings Per Share And What You Need To Know

Larry Davidson - April 17, 2018

Many on and off Wall Street speak about Earnings Per Share (EPS), but few actually understand the metric. Every quarter, public companies release and earnings report, highlighting sales numbers and EPS. We will describe how these numbers originate, what they mean, and how to react to them .

Breaking Down EPS

Earnings per share is the amount of money earned for each share of stock outstanding. This is a profitability measure for companies. The calculation is as follows : EPS = (net income – dividends on preferred stock)/outstanding shares.

Furthermore, EPS requires both the income statement and the balance sheet for calculations. Net income comes from the income statement. Conversely, the balance sheet reveals total outstanding shares and dividends. Intelligent analysts use a weighted average of the outstanding shares as the number changes over time.

Evaluating EPS

Earnings per share

EPS is one of the most important variables in stock price

Additionally, many consider EPS to be the most important variable in valuing a company’s share price. Why is this?

First of all, EPS is integral in evaluating price-to-earnings (P/E) ratios.    P/E = stock price / EPS. P/E ratios are used by most every investor and analyst world wide.  It informs investors how much they pay for a single share of stock relative to its earnings.

Furthermore, EPS tells investors how the company did on a per share basis. This is paramount because it keeps company performance consistent. If a company earns much more income than the prior quarter, but diluted the outstanding shares in the process, they did not create value. The metric tells participants how efficiently the company earned its income.

Earnings Per Share Bottom Line

In conclusion, Earnings Per Share needs to be understood and utilized by all market players.  Each quarter companies report their EPS number. Also, Wall Street analysts estimate what they believe the company will report. The difference or similarity of these two numbers typically moves stock prices.

For this reason investors monitor EPS numbers extremely closely. EPS growth trends, in either direction, give investors a good idea of where the stock will be in the future.

post-image

Do You Own These Internet of Things Stocks?

Larry Davidson - March 30, 2018

According to IDC Research, by 2021 more than 55% of spending on Internet of Things (IoT) projects will be in software and services. It believes that  global IoT will reach more than $7B by 2020. Given the prospects for growth, investors have increased their interest in Internet of Things stocks.

The Internet of Things is a network of devices, that are matched with electronics, software, and sensors. They work together by exchanging and analyzing data. It’s use expands across several sectors including: industrial, security, agriculture, retail, automotive, healthcare, energy, infrastructure and much more.

An example that consumers might be familiar with is the partnership between Philips Lighting and Amazon.

Internet of Things Stocks Amazon

Source: Philips

Instead of going towards a switch to turn on the lights, the Philips Hue, a  smart light, enables you to control the tone of the lights by the sound of your voice. This can be achieved by pairing the Philips Hue with Amazon’s Alexa Voice Service.

 

Internet of Things Stocks GOOGL

Source: GLASS

Alphabet’s Glass is another example how Internet of Things technology can improve overall efficiency in the workplace.

In addition, sectors like manufacturing, logistics, and healthcare have increased efficiency by using the product.

From  smart watches to smart homes, the Internet of Things is growing rapidly.

Let’s take a look at some of the best Internet of Things stocks.

Internet of Things Stocks: Semiconductors

Let’s face it, without powerful chips the IoT space won’t take off. That said, some of the best Internet of Things Stocks are chip makers.

Intel Corporation (NASD: INTC)

IoT stocks INTC

Source: Intel

Founded in 1968, the company designs, manufactures, and sells computer, networking, data storage, and communication platforms across the globe.

Intel is working with companies in the automotive, retail, and industrial industry, implementing its IoT technology to help enhance productivity and boost business for its customers.

In addition, its working in energy, providing IoT solutions for oil and gas companies. Along with playing a role in creating smart buildings and smart cities.

It’s doing this by taking unconnected devices and adding sensors and technology that enables them to transfer data to the cloud.

Intel is a member of the S&P 500 and Dow Jones Industrial Averages (DJIA).  The company even distributes an annual dividend of $1.20 per share, something that is not very common among tech companies.

Nvidia Corporation (NASD: NVDA)

Founded in 1993, Nvidia operates as a visual computing company. It has two main segments: GPU and Tegra Processor.

It’s focus is on accelerating computing. Most importantly, accelerated computing for AI. You see, in order for  AI and deep learning to thrive it needs high performing GPU computing, and Nvidia is among the best in the world at building powerful graphics processing units.

In the beginning of 2014, shares of the stock were trading below $20; however, in the beginning of 2018 it started trading slightly below $200 per share.

Internet of Things Stocks: Cloud Platforms

Kroger Stock After Amazon Whole FoodsAmazon.com, Inc. (NASD: AMZN)

Founded in 1994, originally as an online book store, Amazon has grown to become one of the largest companies in the world. If they enter a new market their competitors shake in their boots.

Kroger shares fell 17% after Amazon announced it would be purchasing Whole Foods in the summer of 2017.

That said, Amazon operates under three segments: North America, International, and Amazon Web Services (AWS).

AWS IoT Core is a managed cloud platform that lets connected devices interact with cloud apps and other devices. It can support billions of devices and trillions of messages. The technology allows your apps to be able to track and communicate with all of your devices, whenever you want and even when they’re not connected.

AMZN IoT stocks

Source: Amazon

Also, Amazon produces consumer products in the IoT category.  For example, the Amazon Echo. It allows you to connect with the Philips Hue, SmartThings, Insteon, and Wink connected devices to control lights and switches with your voice.  You can use the device to listen to music,  weather, traffic, news, and audio books.

A member of the S&P 500, Amazon is actively traded, despite it’s stock price trading well north of a $1,000 per share.

Internet of Things Stocks: Communications

IoT networks connect personnel, processes, and applications at a rapid speed, so that businesses can make faster and better decisions, while maintaining high levels of security.

AT&T Inc (NYSE)

Founded in 1993, AT&T provides communications and digital entertainment services. Millions of Americans rely on them for internet, cable, and mobile phone service.

That said, the company offers several solutions and services in the IoT category. It includes solutions for: vehicles, asset management, smart cities and health care. Also, it offers services in the form of: networks, platforms, security, and other professional services.

There are over 2000 certified IoT devices on the AT&T network.

AT&T is a member of the S&P 500; the company distributes an annual dividend of $2 per share.

Internet of Things Stocks: Integrated

Alphabet (NASD: GOOGL)

Founded in 1998, this internet information provider has changed the way we live our lives. The company’s assets include: Android, Chrome, Google Cloud, Google Play,  and YouTube to name a few.

However, it also offers fiber Internet and Television services. In addition, it owns  Access, Calico, CapitalG, GV, Nest, Verily, Waymo, and X.

Source:   Google Cloud

The Google Cloud IoT is a set of fully managed and integrated services. It enables business to access data in real time, allowing them to act swiftly, securely, and be better informed.

If the company can vertically integrate its businesses it has the potential of emerging as the leader in IoT.

Bottom Line

The Internet of Things space is growing rapidly. There are billions of devices in the world that connect to the internet. The companies mentioned above are just some of the players. In fact, it’s worth mentioning firms like: Microsoft, Verizon, IBM,  Qualcomm, Texas Instruments, Skyworks Solutions, and Garmin Ltd.

That said, investors need to be careful. Recently, we’ve seen companies trying to take advantage of the buzz surrounding a hot sector.  They’ll do this by changing their name to reflect its association with the sector or create a press release on how it’s entering the space. We’ve seen this before with some OTC stocks,  in sectors like blockchain, rare earths, 3-D printing and medical marijuana.

As an investor, its your responsibility to do your own homework.

post-image

Are These The Top Oil Stocks To Buy?

Larry Davidson - March 29, 2018

Oil Stocks: Are They a Buy?

In November of 1998 the price of crude oil was trading below $20 per barrel. In less than a decade it would climb as high as $159 per barrel. That said, oil stocks tend to move in the same direction with crude oil, offering an alternative to investors who wish to gain exposure to the oil market.

oil stocks vs. crude oil futures

The chart depicts the price of crude oil futures overlaid with the price of the Energy Select SPDR ETF (NYSE: XLE). As you can see, there is a strong correlation between crude oil prices and the price of oil stocks. The Energy Select SPDR ETF is supposed to represent the performance of the energy sector of the S&P 500. It consists of companies in the oil, gas, consumable fuel, energy equipment and services industry.

When oil prices rise so do oil stocks, and the opposite happens when oil prices fall. The price of oil plays a large role in the global economy. For example, if oil prices rise its seen as a hidden tax to consumers. If it costs more to ship and deliver products that will end up costing the consumer more. If consumers are paying more to fill up their cars, they’ll have less disposable income to purchase other goods and services.

The oil sector is not small including several sub-sectors. It includes:  exploration and production; integrated oil and gas; oil equipment and services; and pipelines.

Let’s take a look at some of the best oil stocks in each sector.

Best Oil Stocks: Exploration & Production

Oil stocks in this category explore and produce oil, natural gas, and natural gas liquids. It’s often referred to as upstream, and is in the early stages of the oil and gas production process.

Anadarko Petroleum Corporation (NYSE: APC)

Founded in 1959 and headquartered in the state of Texas.  As of December 31, 2017, it had about 1.4B barrels of oil equivalent of proved reserves. Its oil and gas properties stretch out to: the U.S. onshore, Algeria, Ghana, Columbia, Gulf of Mexico, and other countries. In addition to is upstream business, it also has a segment that focuses on midstream and marketing.

As of December 31, 2016, the firm operated about 12,700 wells and owned interests in approximately 3,500 non-operated wells in the United States.

A member of the S&P 500, Anadarko is an actively traded oil stock that averages more than 5M shares of daily trading volume. The company rewards investors with a dividend and has plans on increasing it in the future.

Top Oil Stocks: Integrated Oil & Gas

Companies in this sector are involved in the exploration, production, refinement and distribution of oil and gas. Some of the largest companies in the oil and gas space operate as integrated oil and gas firms.

best oil stocksExxon Mobil Corporation (NYSE: XOM)

The largest publicly traded energy company in the world, Exxon is a member of the Dow Jones Industrial Averages and the S&P 500. The firm has been in business for more than a century and is headquartered in the state of Texas.

Its primary business involves exploring, producing, transporting and selling crude oil and natural gas. Furthermore, it manufactures, transports and sells petroleum products.

The company operates under the following segments: Upstream, Downstream, Chemical, and Corporate Financing. It does business across the globe, including: the United States; Europe; South America; Canada; Africa; Asia; and Australia.

As of December 31, 2017, it had about 25,827 net operated wells with proved reserves of 21.2B oil-equivalent barrels.

Exxon pays its investors an annual dividend of $3.08 per share. Exxon trades 15M shares on average, daily. That’s important if you’re looking for an oil stock to actively day trade, as liquidity is not an issue.

Oil Stocks To Buy: Equipment & Services

Corporations in this category tend to focus on such activities as offshore and deep offshore drilling, onshore drilling, refining, and equipment manufacturing.

Haliburton Company (NYSE: HAL)

Founded nearly a century ago, this Texas-based company is a member of the S&P 500. The company operates through two segments: Completion and Production, and the Drilling and Evaluation segment.

The Completion and Production segment delivers cementing stimulation, intervention, pressure control, specialty chemicals, artificial lift, and completion services.

The Drilling and Evaluation segment provides field and reservoir modeling, drilling, evaluation, and wellbore placement solutions.

From 2013 to 2017, the company averaged annual sales of $24.4B. It rewards investors with an annual dividend of $0.72 per share. Haliburton trades 9M shares on average, daily.

Oil Stocks: Pipelines

Part of the energy infrastructure segment. Pipeline companies simply serve as transporters of oil and gas. In other words, the majority of them don’t own the product they are transporting making them less vulnerable to shocks in oil prices. They move the product from the producers and shippers to the market.

Kinder Morgan, Inc. (NYSE: KMI)

Founded in 1936 and based out of the state of Texas, Kinder is a member of the S&P 500.

The company operates through five segments: Natural Gas Pipelines, CO2, Terminals, Products Pipelines and Kinder Morgan Canada.

As of Febrary 5, 2018, the company owned and operated about 85,000 miles of pipelines and 152 terminals. Its pipelines transport natural gas, gasoline, crude oil, and carbon dioxide to name a few.

The firm pays out an annual dividend of $0.50 per share. Its stock price is actively traded, as more than 16M shares trade on average daily.

Bottom Line

Oil and gas prices are determined by the forces of supply and demand. However, policy can also play a major factor. In fact, about 81% of the world’s proven crude oil reserves are located in OPEC Member Countries. That said, the group has the ability to heavily control the price of oil by altering how much oil they want to put out into the market.

Paying attention to economics and policy is important if you want to invest in the energy sector.  Oil and gas play an important role in the economy. Some of the best oil stocks in the market have been in business for more than 50 years.

As with any investment, make sure to conduct your own due diligence before making any investment decisions. You can do this by sifting through financial reports and other fundamentals. While, studying charts and reading what financial analysts are saying about the company.

post-image

ETF vs. Index Fund: What You Need To Know

Larry Davidson - March 29, 2018

ETF vs. Index Fund

Source: Vanguard

There is no better time to be a passive investor. Thanks largely in part to the explosive growth of exchange-traded funds over the years. The first U.S. ETF was created in 1993 and we haven’t looked back since. Before that, passive investors primary option was index funds. Today, they have both options.  But what is best for you, ETF vs. Index Fund is a discussion worth having.

Now, an index fund is a type of mutual fund that tracks the components of a market index. For example, there are index funds that track the S&P 500 index. That said, there are ETFs and ETNs that also track the S&P 500.

Let’s take a look at some of the similarities and differences between Index Funds and ETFs.

ETF vs. Index Fund: Similarities

Rules-Based Approach

Since an index fund tracks an index, fund managers are trying to replicate the performance of the index. They are not “stock picking” in hopes of beating the market, instead, they are following specific rules in order to replicate the tracking index. That said, the expense ratio of index mutual funds are generally far less than a mutual fund that has an active manager.

The same can be said about ETFs that track an index. These funds are not actively managed, instead, they are following specific guidelines in order to track the benchmark index.

They Both Offer Similar Products

For example, some index funds that track the S&P 500 include Schwab S&P 500 Index Fund (SWPPX); T. Rowe Price Equity Index 500 Fund (PREIX); and Fidelity Spartan 500 Index Investor Shares (FUSEX).

That said, ETFs that track the S&P 500 include:  SPDR S&P 500 ETF (NYSE: SPY); iShares Core S&P 500 ETF (NYSE: IVV); and Vanguard S&P 500 ETF (NYSE: VOO).

Furthermore, ETFs and index funds are both considered pool investment vehicles that are highly transparent.

ETF vs. Index Fund: Differences

ETFs Are More Accessible & Liquid

ETFs are traded on the stock market. All you need is an online brokerage account to get started. You can buy and sell them the same way you do a stock. On the other hand, index funds must be bought directly through a broker or the actual fund itself.

In addition, ETFs can be bought and sold throughout the day, including pre- and post-market hours.  Generally, index fund transactions are cleared after the market closes.

For example, if you’re long the T. Rowe Price Equity Index 500 Fund and want to bail out at 10 AM because you feel the market is going to sell off, the transaction won’t be cleared until the end of the day, potentially leading to bigger losses.

ETFs are better for more active traders than index funds.

Some Index Funds Require A Minimum Investment

Some fund managers require a minimum investment that is too high for small investors, making the barrier of entry harder for them. For example, the minimum investment for Vanguard 500 Index Fund Investor Shares (VFINX) is $3K.

On the other hand, you can buy one share of an ETF if you so desired. The barrier of entry is lower for ETFs compared to most index funds.

Fees & Expenses

ETFs generally have a lower expense ratio.

SPDR S&P 500 ETF (NYSE: SPY):

spy etf vs. index fund

Source: State Street Global Advisors

Vanguard 500 Index Fund Investor Shares (VFINX):

VFINX etf vs. index fund

Source: Vanguard

In addition, some index funds may require investors to pay a sales load. A sales load is an upfront fee that is typically paid to the broker who introduced the investor to the index fund.

ETF vs. Index Fund: Other Nuances

etf vs. index fund

Automatic Investing Flexibility

It’s true, ETFs are superior in terms of trading flexibility. However, index funds typically reinvest dividends, whereas an ETF won’t. An investor saves money because they don’t have to pay broker commissions to reinvest their dividends if they chose an index fund.

Tax Implications

Please note that nothing in this section should be considered tax advice. Always consult with a financial professional on the differences between investing in an ETF vs. an index fund.

That said, it’s possible that ETFs are more tax-efficient than index funds. The reason for that is in-kind redemptions.  Through this process, the ETF avoids selling securities to meet investor redemptions, which could, in turn, have favorable tax implications.

Again, speak with an accountant and other financial professionals for a deeper discussion on the tax implications of index funds and ETFs.

Bottom Line

Index funds and ETFs are very similar. However, if you’re an active trader in the market than investing in ETFs is the way to go. On the other hand, if you’re a long term investor than it might not make a huge difference. But, the auto investing feature of index funds might be enough of a selling point if you’re a buy and hold investor.

ETFs offer a lower barrier of entry for those looking to get involved in the markets and have a small trading account. In addition, expense ratio’s are typically lower for ETFs when compared to index funds.

As always, do your own due diligence to see what’s best for your specific situation and financial goals.

post-image

Are The Dogs of the Dow Broken?

Larry Davidson - March 29, 2018

Traders and investors are constantly on the hunt for edge in the markets. That said there are a number of different strategies and approaches to the market that work. One strategy that has garnered notoriety over the years has been the Dogs of the Dow.  It was popularized by Michael B. O’Higgins in his bookBeating The Dow.  In the book he shows that the Dogs of the Dow outperformed the market since 1973.

The strategy is simple and straight forward. It entails investors pick ten Dow Jones Industrial Average (DJIA) stocks who have the highest dividend yield.  These ten stocks are selected at the start of the calendar year.

Despite it’s success in the past, the Dogs of the Dow have been a mixed bag, from 1992 to 2011, the strategy matched the average annual return of the DJIA.

The DJIA is composed of large cap “blue chip” companies. That said, the strategy fits in line with value investing.  And since you’re selecting ten out of the 30 Dow stocks chances are good that portfolio will be diversified.

2018 Dogs of the Dow

dogs of the dow

Source: finviz.com

Included in the group are: Verizon Communications Inc (NYSE: VZ); Exxon Mobil Corporation (NYSE: XOM); Chevron Corporation (NYSE: CVX); International Business Machines Corporation (NYSE: IBM); Pfizer (NYSE: PFE); Merck & Co., Inc. (NYSE: MRK); The Procter & Gamble Company (NYSE: PG); General Electric Company (NYSE: GE); The Coca-Cola Company (NYSE: KO); and Cisco Systems, Inc. (NASD: CSCO).

A quick look at the names and you’ll notice that 40% of the portfolio is composed of energy and drug stocks. That said, you’re most likely investing in sectors that got beaten up in the previous year.

For example, lets say a company stock is priced at $100 and and the annual dividend is $3 per share, that’s a dividend yield of 3% Now, let’s say at the end of the year shares of the stock drop 10 points but it maintains the $3 per share annual dividend, the yield jumps to 3.3%

You see, every DJIA stock posts a dividend, and if the stock price goes up the yield drops and vice versa when the stock price declines.

2018 Small Dogs of the Dow

These consist of the 5 lowest-priced Dogs of the Dow.

small dogs of the dow

Source: finviz.com

The 5 lowest-priced stocks are General Electric (NYSE: GE); Pfizer (NYSE: PFE); Coca-Cola (NYSE: KO); Cisco Systems (NASD: CSCO); and Verizon Communications (NYSE: VZ).

So has investing in the strategy worked over the last 5 years?

The Small Dogs of the Dow have returned 18.2%; however, the S&P 500 returned 15.1% and the Dow Jones Industrial Averages returned 13.3% over the same time period.

It makes sense, as the bull market matures, investors try to find value in large cap “beaten up” stocks.  Outside of Coca-Cola, the Small Dogs of the Dow stocks have P/E ratios  of approximately 20 and below.

Should You Buy The Dogs of the Dow

Buying the Dogs of the Dow is similar to being long an index like the DJIA or the S&P 500. You’re buying into blue chip stocks that lagged the previous year.  In a bull market that makes a lot of sense, but during bear markets or when a corporation is under performing the threat of a dividend cut is very real.

For example, in November 2017, General Electric cut its dividend by 50%. Shares of the stock dropped by more than 42% that year.

In addition, if you’re an investor with limited funds you have to be selective on which investment strategy to go with. Some of the largest companies in the world don’t distribute a dividend. Firms like Amazon, Alphabet, Facebook , and Berkshire Hathaway pay no dividend to their investors.

Do you want to invest in growth stocks that better resemble the new economy or do you want invest in companies that have a rich history of stability. A question only you can answer.

The Dogs of the Dow Strategy Is Not Fool Proof

It’s true, the Dogs of the Dow strategy has outperformed the market in the past, but that is no guarantee it will continue to do so in the future. Some recent market dynamics may have altered the strategies effectiveness.

For example, companies are buying back stock.  According to Birinyi Associates, there was $170.8B in stock buybacks during the first month and a half of 2018, a record start.

What do stock buybacks have to do with the Dogs of the Dow?

Stock buybacks are a more flexible way to return money to shareholders. When a corporation buys its company stock, it reduces the number of shares that are publicly traded. So, if a company retains the same profits from the previous quarter, the earnings per share will increase because of the stock float reduction.

That said, if shares of the stock price rise investors can defer capital gains. On the other hand, dividends are taxed as ordinary income.

Of course, there is a downside to stock buybacks. A stock buyback can artificially boost earnings and the price of the company stock.  Now traders might love this, but investors might not benefit as much in the long-term.

Bottom Line

The Dogs of the Dow is a strategy consisting of buying the ten DJIA stocks with the highest dividend yield. The selection is made based on the close of the previous year. You won’t necessarily see the same stocks on the list every year, so you’ll have to make the adjustments if you want to follow it.

That said, buying into a company because it has a high yield is not a good stand alone reason to be long. You’ll have to do more due diligence than that. Consider looking into fundamentals; the prospects for the sector; analyst reports;  and guidance from the company.

Now, if you’re looking to trade for a year than you’ll also want to look at charts and do some technical analysis. Even if you’re not much of a chartist, it still helps when you’re trying to decide your entries and exits. As well as, where to set your stop levels and profit targets.

The Dogs of the Dow is not the holy grail of trading. However, its an interesting strategy for swing traders interested in value plays.

post-image

Should You Be Buying Marijuana ETF’s?

Larry Davidson - March 29, 2018

Marijuana ETFs:  The Best Way to Play Cannabis?

Marijuana stocks saw a great deal of interest in the beginning of 2018, the catalyst- legalization of recreational use of marijuana in the state of California. Also, the federal government of Canada has announced it will be legalizing recreational cannabis use in 2018. That said, traders can select from hundreds of marijuana stocks, trading throughout the OTC Markets, Nasdaq, and NYSE. However, good luck finding a marijuana ETF.