Advertisements

Dave & Buster’s Stock Soars As KKR Boosts Stake Over 10%

DAVE & BUSTER'S EARNS

Topline: Private equity giant Kohlberg Kravis Roberts & Co. (KKR) disclosed in a filing Friday that it now owns a 10.7% stake in U.S. restaurant chain Dave & Busters, and plans to continue discussions with management as it pushes for changes to the business.

  • Dave & Buster’s (PLAY) stock surged up to 16% on the news Friday, reaching almost $49, its highest level since June 2019. Shares are currently up 12% for the day while KKR stock increased 2.5%.
  • KKR, which has invested in businesses such as Lyft, Sonos and FanDuel, is one of the largest private equity firms in the world with over $200 billion in assets under management.
  • The firm took a rare activist step in disclosing its stake, saying that it has held discussions with Dave & Buster’s management and board as it pushes for changes, though its filing did not include any specific plans or proposals for the company.
  • KKR, which previously reported a 2.65% stake in Dave & Buster’s last September, also disclosed that it may discuss “any extraordinary corporate transaction” with management and shareholders, including a merger or a change in the board.
  • KKR reportedly has a “good relationship” with Dave & Buster’s management and the two sides have had a “constructive dialogue,” a source told Axios, while also confirming that KKR isn’t internally talking about attempting a hostile takeover.

Image result for amazon gif advertisements for businessCrucial statistics: Wall Street analysts are largely bullish on Dave & Buster’s: It has nine “buy” ratings, four “hold” ratings and zero “sell” ratings, according to Bloomberg data.

Key background: The Dallas-based company, which first opened in 1982, has over 110 locations. Shares of Dave & Buster’s fell 7.5% overall in 2019, while the S&P 500 rose 30%. The company suffered a one-day drop of 20% in June when it reported a surprising decline in quarterly sales that severely rattled investor confidence in the retailer. Facing headwinds like higher wage costs and restaurant oversupply in what is an increasingly competitive industry, Dave & Busters said earlier this week that its comparable store sales would decline between 2.5% to 3% for fiscal year 2019.

Crucial quote: “Based on our review of past engagements, we believe the KKR Fund may undertake a traditional activist campaign and seek to gain board representation if the firm is unable to make progress working directly with management to improve performance,” Stifel analyst Christopher O’Cull said in a note on Friday. He previously predicted that a leveraged buyout of Dave & Buster’s would be possible for around $50 per share, but that the company will be taken private at a significant premium.

Tangent: Raymond James analyst Brian Vaccaro also forecasts a possible leveraged buyout scenario, where KKR, which has steadily increased its stake in Dave & Buster’s since the third quarter of 2019, would pay a price of $55-per share for the company.

Further reading: Gentlemen At The Gate: With Trillions Pouring In, KKR And Its Peers Must Build Up Rather Than Break Up (Antoine Gara)

Follow me on Twitter or LinkedIn. Send me a secure tip.

I am a New York—based reporter for Forbes, covering breaking news—with a focus on financial topics. Previously, I’ve reported at Money Magazine, The Villager NYC, and The East Hampton Star. I graduated from the University of St Andrews in 2018, majoring in International Relations and Modern History. Follow me on Twitter @skleb1234 or email me at sklebnikov@forbes.com

Source: Dave & Buster’s Stock Soars As KKR Boosts Stake Over 10%

https://i1.wp.com/onlinemarketingscoops.com/wp-content/uploads/2020/01/video-slate._CB472361159_.png?resize=740%2C417&ssl=1

https://i2.wp.com/onlinemarketingscoops.com/wp-content/uploads/2020/01/L1W_P1_Hero.jpg?resize=740%2C217&ssl=1

Advertisements

These 4 Low P/E Stocks Trade Below Book And Pay Dividends

US dollar rolled up in macro shot

Despite the highest stock market prices in history and Presidential tweets proclaiming the wonder of the economy, it’s still possible to identify equities coming in at under book value and with price/earnings ratios actually somewhat close to earth.

Right now, the p/e of the S&P 500 stands at 24.13 and the Schiller p/e sits at 30.88. The price of the index is 3.6 times book value.

The price/earnings ratio of the NASDAQ Composite index is 34.16. The NASDAQ is trading at 3.3 times its book value.

What if — under these conditions of over valuation — you could find stocks trading with price/earnings ratios of below 15 and at less than their book value? You know, like Warren Buffett used to do it.

1.png

Instead of falling in love with Tesla, now trading with a forward p/e of 75, at 12 times book and with more debt then equity, what if you could consider old-school valuation techniques and identify what they used to call “cheap.”

Are there still such things as actual value stocks?

Here are 4 possible candidates:

WestRock is a New York Stock Exchange-listed stock in the “packaging solutions” business with headquarters in Atlanta.

The stock trades with a price/earnings ratio of 12.65 and at a 7% discount to its book value. The record of earnings is quite good for this year and looks in the green over the past 5 years. Investors receive a fat 4.68% dividend. That long-term debt exceeds shareholder equity is a concern — however, the current ratio is positive.

Metlife is the brand name life insurance firm that’s been around for 145 years. Based in New York, the stock trades on the NYSE.

The price/earnings ratio of Metlife is an amazingly low 6.85. You can buy shares at the current price for 70% of the company’s book value. Shareholder equity is greater than long-term debt. The dividend payment comes to 3.43%. With an average daily volume of 5.3 million shares, no need to worry much about liquidity.

AXA Equitable Holdings is an NYSE-listed insurance brokerage founded in 1859 and headquartered in New York.

The p/e is 14.73 and it trades at an 18% discount to its book value. Long-term debt is less than total shareholder equity. Investors receive a dividend of 2.41%. Earnings this year are excellent and the 5-year track record of earnings is very good.

Amplify Energy is an independent oil and gas company that trades on the New York Stock Exchange.

This one requires closer inspection than those listed above. With a price/earnings ratio of 6.46 and trading at just half its book value, the stock is definitely “cheap.” One concern is that long-term debt exceeds shareholder equity. Also, it’s odd that the dividend yield is 11% — how likely can that high of a payout be sustained? Meantime, Amplify’s earnings this year are excellent and the 5-year record is good. Average daily volume is relatively low at just 248,000 shares.

2.png

Stats courtesy of FinViz.com.

I do not hold positions in these investments. No recommendations are made one way or the other.  If you’re an investor, you’d want to look much deeper into each of these situations. You can lose money trading or investing in stocks and other instruments. Always do your own independent research, due diligence and seek professional advice from a licensed investment advisor.

Follow me on Twitter or LinkedIn.

My Marketocracy work is profiled in The Warren Buffetts Next Door: The World’s Greatest Investors You’ve Never Heard Of by Forbes Investments Editor Matt Schifrin. I’m a 1972 graduate of the University of North Carolina

Source: These 4 Low P/E Stocks Trade Below Book And Pay Dividends

Our unique software has the Strike Trader Elite Strategy built in so all you need to do is look for a signal and you are ready to take the trade! At a 70%+ win rate, the signals are ALL valid on any time frame. Our goal is to get you to learn this system as fast as you can. Our training course in the members area will cover a variety of topics so that after you take the training, you will be a certified Strike Elite Trader! Here are a few of the topics the trainings will cover:

  • Best FX Pairs to trade and best times of day to trade 
  •  How to trade “News Release” events with precision 
  •  Advanced “in-trade” management for maximum profits 
  •  Support & Resistance levels and tracking 
  •  Developing key habits through “process based psychology” for successful trading
  • Win to Loss ratios and Reward to Risk ratios for successful trading 
  • Efficient money management methods 
  • Position sizing and proper leverage for FX 
  •  Scalping & Swing Trading differences – the benefits of both styles
  •  Smart trade entry methods for Scalping and Swing trading

1.png

Stocks Rise On Solid Economic Data, Despite Looming China Tariff Deadline

Topline: Wall Street is rallying on the back of solid economic data, with Friday’s blockbuster jobs report showing that the labor market is still a bright spot for the U.S. economy, which could help the stock market finish off the year strong despite ongoing uncertainty over the looming China tariff deadline on December 15.

  • The S&P 500 is up more than 1% while the Dow Jones Industrial Average has risen 1.24% so far on Friday, a rally which helped both indexes recover losses from earlier this week, when markets struggled with mixed signals on U.S.-China trade.
  • The Labor Department’s November jobs report showed that the U.S. labor market grew at its best rate since January, adding 266,000 jobs, easily beating the 187,000 expected by Wall Street and suggesting that the economy’s momentum can continue into next year.
  • Stocks also surged on news that the unemployment rate ticked down to 3.5% from 3.6%, which matches the lowest level since 1969.
  • As the Federal Reserve prepares to meet again next week, strategists see November’s strong jobs report making another interest rate cut less likely (the Fed has cut rates three times so far this year), according to CNBC.
  • Despite solid job growth and steady consumer spending dampening recession fears, the big remaining variable is the looming tariff deadline, with the Trump administration  poised to tax another $156 billion of Chinese goods on December 15.
  • If Trump imposes tariffs, which China has asked to be canceled as part of a phase one trade deal, that could cause tensions to escalate and threaten the stock market’s year-end run.

Crucial quotes: “Markets are fairly confident we will see President Trump pass on the December 15 tariff threat,” says Edward Moya, senior market analyst at Oanda.

“If China tariffs go into place on December 15, we’ll see some real volatility and it won’t be as cheerful holiday season,” predicts Mark Freeman, chief investment officer at Socorro Asset Management. “If Trump holds off on tariffs, we’ll see the stock market’s positive momentum carry into year-end.”

Key background: November’s blockbuster jobs report comes amid a challenging year for the U.S. economy, with a slowdown in global economic growth and the ongoing U.S.-China trade war weighing on Wall Street investors. But recession fears have been on the back-burner recently, as the stock market reached several new highs, and other economic indicators, like consumer spending, remain solid.

Earlier this week, however, trade tensions appeared to escalate—especially after Trump signed into law a bill supporting pro-democracy protests in Hong Kong, which caused China to retaliate by sanctioning several U.S.-based NGOs. Trump’s approval of the Hong Kong legislation notably “stalled” trade negotiations, according to Axios, which reported that Trump is expected to hold off on his planned December tariffs to keep a phase one deal alive.

Chinese officials have indicated that for a deal to be signed, the U.S. must also remove existing tariffs—and not just halt those planned to take effect on December 15, according to the Global Times. Trump later said on Thursday that the two countries were making progress with a phase one deal, and on Friday, China extended an olive branch by announcing that it would waive tariffs on some U.S. soybeans and pork imports.

What to watch for: Whether or not the president imposes additional tariffs on Chinese goods, starting on December 15, could make or break the stock market’s year-end rally.

Follow me on Twitter or LinkedIn. Send me a secure tip.

I am a New York—based reporter for Forbes, covering breaking news—with a focus on financial topics. Previously, I’ve reported at Money Magazine, The Villager NYC, and The East Hampton Star. I graduated from the University of St Andrews in 2018, majoring in International Relations and Modern History. Follow me on Twitter @skleb1234 or email me at sklebnikov@forbes.com

Source: Stocks Rise On Solid Economic Data, Despite Looming China Tariff Deadline

312K subscribers
CNBC’s Bob Pisani looks ahead at the day’s market action.

 

20 Stocks That Could Double Your Money in 2020

It might be hard to believe, but in just seven weeks we’ll be saying our goodbyes to 2019. Although investors have endured a couple of short-lived rough patches, it’s been an exceptionally strong year for the stock market. The broad-based S&P 500 is up 23%, the iconic Dow Jones Industrial Average has gained 18%, and the tech-heavy Nasdaq Composite has returned almost 27%.

How good are these returns? Well, let’s just say that the S&P 500, inclusive of dividends and when adjusted for inflation, has historically returned 7% annually, with the Dow closer to 5.7% a year, on average, over its 123-year history.

And it’s not just these indexes that stand out. Of companies with a market cap of $300 million or larger, 124 have gained at least 100% year to date, through Nov. 5. Just because the calendar is about to change over to a new year doesn’t mean this optimism can’t carry over.

If you’re looking for a number of intriguing investment ideas for next year, consider these 20 stocks as possible candidates to double your money in 2020.

1. Innovative Industrial Properties

Yes, cannabis real estate investment trusts (REIT) are a real thing, and they can be quite lucrative! Innovative Industrial Properties (NYSE:IIPR), the best-known marijuana REIT on Wall Street, is already profitable and growing at a lightning-quick pace. After beginning 2019 with 11 medical marijuana-growing and processing properties in its portfolio, it now owns 38 properties in 13 states that span 2.8 million square feet of rentable space.

The beauty of Innovative industrial Properties’ business model is that it creates highly predictable cash flow. The company’s weighted-average remaining lease term is 15.6 years, and its average current yield on its $403.3 million in invested capital is a cool 13.8%. At this rate, it’ll net a complete payback on its invested capital in just over five years.

As long as marijuana remains illicit at the federal level in the U.S., access to capital will be dicey for cannabis cultivators. That makes Innovative Industrial’s acquisition-and-lease model a veritable green rush gold mine for 2020.

A user pinning interests to a virtual board while using a tablet.

Image source: Pinterest.

2. Pinterest

If you missed out on the Facebook IPO and have been kicking yourself for the past seven years, don’t fret. Social media photo-sharing site Pinterest (NYSE:PINS), which allows users to create their own virtual boards based on their interests, could be your second chance to profit.

Like most brand-name social media sites, Pinterest has seen exceptionally strong user growth. Monthly active user (MAU) count rose to 322 million by the end of September, up 71 million from the prior-year period. What’s most notable about this growth is that it’s mostly coming from international markets (38% MAU growth vs. 8% in the U.S.). Even though ad-based revenue is minimal in foreign markets, it nevertheless demonstrates that Pinterest has global appeal.

The company is also making serious strides to monetize these users by boosting average revenue per user (ARPU) globally. In recent quarters, Pinterest has simplified its ad system for smaller businesses, focused its efforts on boosting ARPU in overseas markets, and pushed for video, which has a much higher repost rate than static images. These efforts appear to be paying early dividends, with international ARPU more the doubling to $0.13 from $0.06 over the past year.

With Pinterest forecast to push into recurring profitability next year, a doubling of its stock is certainly not out of the question.

A biotech lab researcher using multiple pipettes to fill test tubes.

Image source: Getty Images.

3. Intercept Pharmaceuticals

Never overlook a first-mover advantage — especially when it pertains to a $35 billion indication!

Nonalcoholic steatohepatitis (NASH) is a liver disease that affects between 2% and 5% of all U.S. adults, has no cure or Food and Drug Administration (FDA)-approved treatments, and is expected to be the leading cause of liver transplants by the midpoint of the next decade. And according to Wall Street, it’s a $35 billion untapped disease.

In late September, Intercept Pharmaceuticals (NASDAQ:ICPT) submitted a new drug application for Ocaliva, a treatment for NASH. While the high dose of Ocaliva did lead to an unsettling number of pruritus (itching)-based dropouts in late-stage studies, it also produced a statistically significant reduction in liver fibrosis levels, relative to baseline and the placebo, without a worsening in NASH at the 18-month mark. Even if Intercept’s Ocaliva only secures a small subset of the NASH market, it has the potential, if approved by the FDA, to quickly earn blockbuster status of $1 billion or more in annual sales. Suffice it to say that 2020 could be a banner year for this midcap biotech stock.

A Redfin for sale sign on the front lawn of a home, with a black sold sign attached.

Image source: Redfin.

4. Redfin

With interest rates and mortgage rates on the rise throughout much of 2018, it looked as if the fun had come to an end for a hot housing market. But following a trio of Federal Reserve rate cuts and a big drop in Treasury yields, the housing industry is hotter than it’s been in more than a year. That, along with low mortgage rates, could be the perfect recipe for online real estate brokerage company Redfin (NASDAQ:RDFN) to double in 2020.

Unlike some of the companies you’ll see on this list, profitability isn’t a near-term priority for Redfin. Rather, scaling its tech-driven platform and taking real estate service market share are its primary goals. One way Redfin is doing this is by undercutting traditional real estate agents with its salaried agents. With a listing fee of just 1%, Redfin cuts out costs that generally irritate buyers and sellers.

More so, Redfin is looking to infiltrate the high-margin servicing business to make the buying and selling experience less of a hassle. It’s expanding nationally and consolidating tasks, such as title, appraisal, and home inspection, into a single package that consumers can designate the company to handle, thereby removing a key buying or selling objection. Perhaps it’s no surprise that this real estate disruptor grew sales by 39% in the second quarter and saw its market share rise 11 basis points to 0.94% of U.S. existing home sales from Q1 2019.

Two smiling young women texting on their smartphones.

Image source: Getty Images.

5. Meet Group

The online dating industry is worth, by some accounts, $3 billion in annual revenue, and Meet Group (NASDAQ:MEET), which specializes in livestreaming and social media interaction (including online dating), is a company that growth and value investors should be swiping right on.

Whereas most of the tech world focuses on bigger names with broader brand recognition, Meet Group’s mobile portfolio of apps, which includes MeetMe, Lovoo, Skout, Tagged, and Growl, has done an admirable job of growing the business. More specifically, the company’s laser focus on bolstering its video business is really paying dividends. During the second quarter, daily active video users increased to 892,000, representing 21% of total users where Live is available on their app. This is important given that video revenue per daily active user grew to $0.26 in Q2 2019 from $0.15 in the prior-year quarter.

Furthermore, Meet Group’s big spending on security enhancements is now in the rearview mirror, according to a third-quarter preliminary update. This mobile livestreaming site is growing at a double-digit rate, has a focus on high-margin video, and sports a forward price-to-earnings ratio of eight (yes, eight!). This multiple, and stock, could both easily double and still have room to run.

A prescription drug capsule with a boxing glove coming out of it that's knocking out a cancer cell.

Image source: Getty Images.

6. Exelixis

In all fairness, Exelixis (NASDAQ:EXEL) has had an incredible run on the coattails of lead drug Cabometyx. Following its approval to treat second-line renal cell carcinoma (RCC), and first-line RCC, the company’s share price rose from $4 to $32 between Jan. 2016 and Jan. 2018. Now, back at $16, Wall Street is wondering, what’s next?

In the early months of 2020, Exelixis and partner Bristol-Myers Squibb may have that answer. The duo are expected to reveal results from the CheckMate 9ER late-stage trial that combines Cabometyx with Bristol-Myers’ blockbuster immunotherapy Opdivo, which also happens to be an RCC rival. If this combination therapy dazzles, the duo could snag an even greater share of the RCC market, further boosting Cabometyx’s case as a blockbuster drug.

Investors should also know that Exelixis offers a rare value proposition in the highly competitive and often money-losing biotech space. This is a company offering double-digit sales growth, a forward P/E of 16, and a PEG ratio of a minuscule 0.36. With patent cliffs remaining challenging for Big Pharma, Exelixis, in addition to potentially notching a win with CheckMate 9ER, might find itself as a buyout candidate in 2020.

A person inserting a credit card into a reader in a retail store.

Image source: Getty Images.

7. StoneCo

Although Warren Buffett is best known for buying value stocks, the fastest-growing stock in Buffett’s portfolio (at least from a revenue perspective), StoneCo (NASDAQ:STNE), could be primed to double in 2020.

StoneCo isn’t exactly a household name, but this $10 billion payment solutions and business management software developer is finding plenty of interest for its fintech offerings in Brazil. During the second quarter, which StoneCo reported in mid-August, the company saw total payment volume for its merchants rise 61% year over year, while active clients increased 80% to 360,200 from the prior-year period. Since Brazil remains largely underbanked, there’s a long-tail opportunity for StoneCo to make its mark with small-and-medium-sized businesses in the country.

StoneCo is also investing heavily into its software subscription model. On a sequential quarterly basis, subscribed clients more than doubled to approximately 70,000 in Q2 from 32,000 in Q1 2019. While StoneCo won’t appear cheap in 2020 due to its aggressive reinvestment strategy, its Wall Street-estimated top-line growth rate of 38% may have enough firepower to double this stock.

The facade of the Planet 13 SuperStore in Las Vegas, Nevada.

Image source: Planet 13.

8. Planet 13 Holdings

Although legalizing marijuana across the U.S. would make life easier for vertically integrated multistate operators (MSO), it’s not exactly a problem for Planet 13 Holdings (OTC:PLNHF), which approaches its seed-to-sale model a bit differently than other MSOs.

Planet 13 is all about creating the most unique experience imaginable for cannabis consumers. The company’s SuperStore in Las Vegas, Nevada, just west of the Strip, spans 112,000 square feet and will feature a pizzeria, coffee shop, events center, and consumer-facing processing site. At 112,000 square feet, it’s the largest dispensary in the U.S., and is actually 7,000 square feet bigger than the average Walmart. The company is also developing a second location that’ll open next year in Santa Ana, Calif., just minutes from Disneyland.

Aside from its sheer size and selection, Planet 13’s transparency and technology stand out. The company is utilizing self-pay kiosks in its stores to facilitate the payment process, and provides monthly updates on foot traffic and average paying ticket size for investors. Maybe most striking, Planet 13 has about 10% of Nevada’s entire cannabis market share. It could have its investors seeing green in 2020.

An up-close view of a shiny one ounce silver ingot.

Image source: Getty Images.

9. First Majestic Silver

Precious-metal mining isn’t exactly known as a high-growth industry. However, following years of conservative spending, and after witnessing gold and silver spot prices soar in 2019, miners like First Majestic Silver (NYSE:AG) are suddenly sitting pretty.

Even before gold and silver moved higher by a double-digit percentage in response to falling U.S. Treasury yields, First Majestic was making waves. In May 2018, it closed a deal to acquire Primero Mining and its flagship San Dimas mine. Between incorporating the low-cost San Dimas into its portfolio, and looking at ways to bolster its existing assets (e.g., modifying the roasting circuit at its La Encantada mine to add up to 1.5 million ounces of silver production per year), First Majestic has seen its silver equivalent ounce (SEO) production grow from 16.2 million ounces in 2017 to perhaps north of 26 million SEO in 2019.

First Majestic should also benefit from a return to historic norms in the gold-to-silver ratio (i.e., the amount of silver it takes to buy one ounce of gold). Historically, the gold-to-silver ratio has hovered around 65, but is currently at closer to 84. This would suggest silver has the potential to outperform gold in the intermediate-term; and no mining company has greater exposure to silver as a percentage of total revenue than First Majestic Silver.

A veterinarian with a stethoscope around her neck examining a small white dog.

Image source: Getty Images.

10. Trupanion

According to the American Pet Products Association, an estimated $75.4 billion will be spent on our pets in 2019, with $19 billion alone on veterinary care. Given that 63.4 million U.S. households have a dog, and 42.7 million have a cat, the opportunity for the pet insurance market is huge. That’s where Trupanion (NASDAQ:TRUP) comes in.

Trupanion is a provider of lifelong insurance policies for cats and dogs. Like any insurance company, Trupanion is built for long-term profitability. Most insurers offer predictable cash flow and have exceptional pricing power, which is a necessity if they’re to cover claims. But Trupanion is going where few insurers have gone before. U.S. and Canadian pet insurance market penetration is just 1% and 2%, respectively, which is providing some learning curve bumps along the way, but also giving Trupanion an incredibly long runway to growth.

Trupanion is currently unprofitable, but it appears close to turning the corner to profitability. Sales grew by 26% in the second quarter, and are expected to romp higher by 20% in 2020, according to Wall Street. If the company continues to find success with referrals, it’s very possible it could surprise in the earnings column next year.

A hacker wearing black gloves who's typing on a keyboard.

Image source: Getty Images.

11. Ping Identity

What do you get when you combine some of the hottest tech trends into one company? None other than identity solutions provider Ping Identity (NYSE:PING), which recently IPO’d in September.

While there are plenty of cybersecurity providers, Ping’s uniqueness derives from its use of artificial intelligence and machine learning to attempt to identify users and computers as trusted. Being able to operate within the confines of traditional enterprise networks, or being tasked with securing cloud networks, Ping offers an assortment of products that should be able to meet the needs of small, medium, and large-scale businesses. Not surprisingly, it should be capable of double-digit sales growth in the near-term, like its peers.

What also can’t be overlooked in the fast-growing security space is that Ping’s valuation is a modest $1.3 billion. After being acquired by private equity firm Vista Equity for $600 million in 2016, Ping delivered a doubling of that value in three years, following its IPO. This demonstrates the potential of focused individual security, and makes it all the more likely that Ping Identity could be quickly scooped up by a larger rival.

A woman checking her blood glucose readings on a connected device.

Image source: Livongo Health.

12. Livongo Health

As you’ve probably caught on by now, this list of stocks that could double in 2020 is full of disruptors, and Livongo Health (NASDAQ:LVGO) certainly fits the bill.

Livongo is a developer of solutions that helps people change their health habits. By supplying testing kits that connect to smartphones, and utilizing data science, Livongo works to change the behavior of diabetics, and can also be used to assist patients with hypertension. Given that over 30 million people have diabetes (most being type 2 diabetics), and a number of these folks could use some serious help managing their symptoms, Livongo Health’s products are exactly the disruptor needed in this space.

According to the company’s second-quarter results, the number of clients in Livongo’s ecosystem nearly doubled on a year-over-year basis to 720, while the number of enrolled diabetes members did more than double to 192,934. More importantly, Livongo’s triple-digit sales growth rate cannot be overlooked. While profits are highly unlikely in 2020, a year of market-topping revenue growth is very possible.

An assortment of couch sectionals pushed together in a living room.

Image source: Lovesac.

13. Lovesac

When the calendar changes to 2020, relax, put your feet up, and let small-cap Lovesac (NASDAQ:LOVE) do the heavy lifting for your portfolio.

Lovesac, the home furnishings company that sells beanbag chairs, sectional couches, and a host of other in-home decorations, has struggled in 2019 amid trade-war concerns. It’s been hit hard by higher tariff costs, and that’s clearly brought investor worry to the forefront.

However, a quick look at Lovesac’s second-quarter operating results should relieve most worries. By passing along modest price hikes to consumers, as well as reducing its reliance on China from 75% to 44% of its manufacturing, the company has, in a very short time frame, reduced the impact of the trade war going forward.

What’s more, these price hikes don’t appear to be adversely impacting the company’s fast-growing and niche furnishings business. Lovesac reiterated full-year sales growth of 40% to 45%, with comparable store sales growth coming in at 40.7% in the second quarter, and noted that new customers and repeat clients are driving growth. Although profitability is still probably two years away, sales growth of at least 40%, with a price-to-sales ratio of right around 1, could be more than enough to send this stock rocketing higher.

A lab researcher in a white coat holding a vial of blood in his left hand while reading from a blue clipboard in his right hand.

Image source: Getty Images.

14. Amarin

The biotech industry is always a good bet for a volatility, and Ireland-based Amarin (NASDAQ:AMRN) might have a real shot to grow from a midcap to a large-cap valuation in 2020 thanks to its lead drug, Vasecpa.

Vascepa, a purified fish oil derivative, was approved by the FDA all the way back in 2012 to treat patients with severe hypertriglyceridemia (SHTG). But it’s not Vascepa’s potential in treating SHTG patients that’s got Wall Street excited. Rather, it’s a supplemental new drug application stemming from a five-year Harvard study in 8,179 people with milder (but still high) triglyceride levels. The results showed that Vascepa lowered the aggregate risk of heart attack, stroke, and death in these patients by 25%. In other words, if Vascepa were to be approved for an expanded label indication to reduce the risk of major adverse cardiovascular events, its potential pool of patients could grow tenfold, as would its sales potential.

Later this month, on Nov. 14, an AdCom meeting will take place to discuss Amarin’s marketing application for Vascepa, as well as to vote on whether or not the members of the committee favor approval. By January 2020, at the latest, Amarin should have the FDA’s official decision on Vascepa (the FDA isn’t required to follow the AdCom’s vote, but it often does). If I were a betting man, I’d count on positive reviews all around.

A large city canvased by blue dots, representative of a wirelessly connected society.

Image source: Getty Images.

15. CalAmp

In Aug. 2018, Bain & Co. predicted that the Internet of Things global market would more than double from $235 billion in spending to $520 billion in just four years’ time (between 2017 and 2021). That global opportunity is too lucrative to overlook for small-cap CalAmp (NASDAQ:CAMP).

CalAmp, which provides software and subscription-based services, as well as cloud platforms that support a connected economy, has been hurt in recent quarters by the trade war with China, as well as sales weakness in its Telematics segment that’s been tied to a few core customers. However, CalAmp has reduced its Telematics product sourcing from China to around 50% from 70% to 80% earlier in the year, thereby minimizing the pain it feels from the trade war. Also, a number of customers blamed for its sales slowdown in Telematics (e.g., Caterpillar) are on the cusp of ramping up production as upgrades are made from 3G to 4G.

As Telematics growth picks back up, the company has seen record sales from its software subscription segment. Sales rose 65% year over year in the latest quarter, and now account for a third of total quarterly revenue. In short, the CalAmp growth story is just getting started, and 2020 could feature some very favorable year-on-year comparisons.

A female physician high-fiving a young child sitting on her mother's lap.

Image source: Getty Images.

16. Aimmune Therapeutics

Another biotech stock with a potential first-mover advantage in 2020 is Aimmune Therapeutics (NASDAQ:AIMT).

Aimmune’s lead drug is Palforzia, an oral drug that’s designed to lessen the symptoms associated with peanut allergy in children and teens. There is no FDA drug currently approved to treat peanut allergy in adolescents, and an estimated 4% to 6% of all children in the U.S. have some form of allergy to peanuts.

Now, here’s the great news: Palforzia looked like a star in late-stage clinical trials. Patients aged 4 to 17 were administered increasingly larger doses of peanut protein during the study, and 67.2% taking Palforzia completed the study without needing to discontinue the trial. This compared to a mere 4% on the placebo who completed the trial.

More good news: Palforzia has already been given the thumbs up by the FDA’s Allergenic Products Advisory Committee. Even though the FDA isn’t required to follow the vote of its panel of experts, it does so more often than not. It appears likely that Palforzia will get a green light in January, and it could be on track for more than $470 million in annual sales (by Wall Street’s consensus) by 2022. With other treatments in development for egg and walnut allergies, Aimmune looks well on its way to carving its own niche in the biotech space, and potentially doubling its stock in 2020.

Oil and gas pipeline leading to storage tanks.

Image source: Getty Images.

17. Antero Midstream

Midstream is the unsung hero of the energy infrastructure space. While drillers retrieve fossil fuels and refiners process them, it’s midstream providers that are the essential middlemen providing transmission, storage, and a host of other services that ensure these products make it to refineries for processing. Antero Midstream (NYSE:AM) may be just one of many midstream operators in the U.S., but it also might hold the distinction of being the cheapest and most likely to rebound in 2020.

Antero Midstream acts as the middleman for Antero Resources, a producer of natural gas and natural gas liquids (NGL) operating out of the Marcellus Shale and Utica Shale region in the Appalachia. This region is known for its natural gas and NGL production, which is worth noting given that LNG demand in North America could quadruple between 2018 and 2030, according to estimates from the McKinsey Energy/Insights Global Energy perspective model. This should provide a solid foundation of fee-based revenue for Antero Midstream.

Antero Midstream also recently announced a $300 million share repurchase program, suggesting that its board feels its stock is too cheap. If fully executed, this share buyback would remove about 8% of the company’s outstanding shares, and it shouldn’t impact the company’s jaw-dropping, yet seemingly sustainable, 17% dividend yield. Including this payout, Antero Midstream could very well double next year.

A gloved individual holding a full vial and dropper of cannabinoid-rich liquid in front of a hemp plant.

Image source: Getty Images.

18. MediPharm Labs

Marijuana stocks throughout Canada have suffered through supply issues since day one of adult-use legalization more than one year ago. But one ancillary niche that should be immune to these struggles is extraction services. The company you’ll want to know in this space is MediPharm Labs (OTC:MEDIF).

Extraction-service providers like MediPharm take cannabis and hemp biomass and produce resins, distillates, concentrates, and targeted cannabinoids for their clients. These are all used in the creation of high-margin derivatives, such as edibles and infused beverages, which were just legalized in Canada on Oct. 17, and will hit dispensary shelves in a little over a month. Since derivatives offer much juicier margins than dried cannabis flower, demand for cannabis and hemp extraction services should remain strong.

What’s more, extraction providers like MediPharm often secure contracts ranging from 18-to-36 months, leading to highly predictable cash flow. With MediPharm’s Barrie, Ontario, processing facility eventually on its way to 500,000 kilos of annual processing potential, and the company already profitable, it would not be the least bit surprising if MediPharm doubled in 2020.

A woman opening up a personalized box of clothing.

Image source: Stitch Fix.

19. Stitch Fix

Even high growth stocks can hit a rough patch; just ask the shareholders of online apparel company Stitch Fix (NASDAQ:SFIX). Following poorly received fourth-quarter results and weaker-than-expected sales guidance for the first quarter, Stitch Fix is a lot closer to its 52-week low than 52-week high at this point. However, things could change in a big way in 2020.

For starters, Stitch Fix is a potential retail disruptor that can capitalize on consumers in two ways. First, there’s the subscription side of the business that includes a stylist who picks outfits and accessories out for customers, who then to decide to keep (buy) or return these items. Secondly, but more recently, Stitch Fix has also been finding success with its direct buy program, which allows its members to skip the stylist and purchase highly curated and personalized product directly off its website. The company believes this dual-growth approach will play a key role in revenue growth reacceleration. It’s worth noting that despite its fourth-quarter report being poorly received by Wall Street, active clients grew 18% to 3.2 million from the prior-year period.

Stitch Fix is also planning to expand its offerings to men and children, and would be expected to bolster advertising as these new lines roll out. The company pointed out in its most recent quarter that fiscal first-quarter sales guidance is weaker because it lifted its foot off the gas pedal with regard to advertising. That’s an easy fix that should have Stitch Fix mending its weakness pretty quickly in 2020.

A white prescription generic drug tablet with a dollar sign stamped on it.

Image source: Getty Images.

20. Teva Pharmaceutical Industries

Not every stock that doubles has to be growing at 20%, 30%, or more, per year. Sometimes, it just requires Wall Street and investors to readjust their outlook.

Brand-name and generic drug giant Teva Pharmaceutical Industries (NYSE:TEVA) has had a miserable go of things for nearly four years. A combination of generic-drug pricing weakness, opioid lawsuits, bribery allegations, high debt levels, and the shelving of its once-hefty dividend, have sunk Teva’s stock by almost 90%. But a renaissance of sorts may be on the horizon.

You see, Teva lost more than half of its value in 2019 after 44 U.S. states sued the company, and many of its related peers, over the manufacture and sale of opioids. However, Teva appears to be making progress on these lawsuits by offering free medicine to select states, and, more importantly, not having to outlay much of its precious cash. If these opioid suits are resolved, it’s not crazy to think Teva regains pretty much all of the ground it lost when they were announced.

At the same time, Teva’s turnaround specialist, CEO Kare Schulze, has reduced annual operating expenses by $3 billion and lowered net debt by $8 billion in a couple of years. Teva has the potential to really change some opinions in 2020, and that could lead to a doubling in its share price.

A man in a tie who's holding a stopwatch behind an ascending stack of coins.

Image source: Getty Images.

Don’t forget the most important “secret” to wealth creation

While it’s possible that many, or only a small number, of these 20 companies doubles next year, the important thing for investors to remember is that great ideas often take time to develop. The grandiose secret to wealth creation isn’t going to be found by day-trading or trying to time the market. Rather, it’s discovered by investing in high-quality businesses that you believe in, and allowing your investments to grow for five, 10, or even 20 years, if not longer.

It can be fun to predict next year’s top performers and potentially find yourself a proverbial gold mine, but don’t take your eyes off the horizon, which is where the big money is being made.

10 stocks we like better than Stitch Fix

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now… and Stitch Fix wasn’t one of them! That’s right — they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of June 1, 2019

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Sean Williams owns shares of Exelixis, First Majestic Silver, Intercept Pharmaceuticals, and Teva Pharmaceutical Industries. The Motley Fool owns shares of and recommends Facebook, Livongo Health Inc, Pinterest, Stitch Fix, and Trupanion. The Motley Fool owns shares of Stoneco LTD. The Motley Fool recommends CalAmp, Exelixis, Innovative Industrial Properties, Intercept Pharmaceuticals, and Redfin. The Motley Fool has a disclosure policy.

This Marijuana Stock Could be Like Buying Amazon for $3.19
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.

And make no mistake – it is coming.

Cannabis legalization is sweeping over North America – 10 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.

And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.

Because a game-changing deal just went down between the Ontario government and this powerhouse company…and you need to hear this story today if you have even considered investing in pot stocks.

Simply click here to get the full story now.

Sean Williams

Sean Williams

(TMFUltraLong)

Learn more

Source: https://www.fool.com/investing/2019/11/11/20-stocks-that-could-double-your-money-in-2020.aspx

11.7K subscribers
GROWTH STOCKS THAT WILL DOUBLE YOUR MONEY! Stocks that will double your money. Top Stocks To Buy for 2020. Analysts forecast that over the long term Disney could potentially reach 160 Million Subscribers. Even with all those potential customers $7 per subscriber will translate into huge income for Disney. If Disney hit 50 million subscribers, that would generate revenue of between $3 billion and $5 billion in the first full year alone. At 160 million subscribers, we’re talking between $9 billion and $13 billion annually. To put that into perspective, Disney produced $59 billion in fiscal 2018. If Disney were to achieve these estimates, it could increase its revenue by between 5% and 7% in the first year and could eventually boost its top line by between 16% and 22%. Hulu Is Growing Faster Than Netflix The streaming service released some end-of-year numbers. Hulu ended 2018 with over 25 million subscribers. That’s more than 8 million more than last year and a 48% year-over-year increase. That’s better growth than Netflix (NASDAQ:NFLX) on both a relative and absolute basis in the United States. For reference, Netflix added 5.7 million U.S. subscribers in the 12 months ended in September.Is Disney Stock A Buy? DISNEY STOCK 2019| DISNEY STOCK ANALYSIS (Top Growth Stocks 2019). Costco Stock|Disney Stock| Growth Stock Investing 2019. Costco Net sales totaled $138 billion, an increase of 9.7 percent, with a comparable sales increase of 9 percent. Net income for the 52-week fiscal year was $3.134 billion, or $7.09 per share, an increase of 17 percent. Revenue from membership fees increased 10.1 percent to $3.142 billion.In 2018, Costco reached a milestone with 750􏰀􏰁 warehouse locations. Fiscal 2018 expansion included the opening of 21 new warehouses around the globe, the 100th location in Canada. Costco continues adding gas stations and other ancillary services to locations in different countries. In 2019, Costco expects to open 23 new warehouses and relocate up to 4 warehouses to more ideal locations. Growth Stock Investing. Dividend Stock Investing. Undervalued Stocks 2019. Best Stocks 2019. Top Stocks 2019. Stock Market. Stocks. Best Growth Stocks 2019. Best Growth Stocks 2019. Best Growth Stocks to buy 2019. Top Growth stock picks 2019. Best technology stocks to buy 2019. Top investments 2019. Best investments 2019. Best stocks to buy and hold forever. Top stocks to buy 2019. #stocks #stockmarket #investing

Last Week Confirms It. Goodbye, Recession – Hello, Bull Market

 

It is time to get excited, optimistic and bullish. Last week put the final nails in the “Oh, woe is me” recession coffin. RIP.

Last week’s good news supported and confirmed recent anti-negative and pro-positive improvements. Here is the wonderful list:

Earnings reports are driving a shift to the positive

Compare these two headlines from The Wall Street Journal:

  • October 9: “U.S. Earnings Flash a Worrying Signal”
  • November 2: “Earnings Tide Lifts Most Stocks – Investors are getting a more positive picture of American corporations’ health than that painted by analysts in buildup to earnings season”
Today In: Money

The cause? Earnings reports continue to be positive on balance, with most of the September quarter-end earnings reports now in. The 336 S&P 500 companies reporting September results so far (from October 15 through November 1) represent 67% of the 500 companies and 75% of the $27T market capitalization. (Many of the remaining 164 companies will report October or November quarter-end results later.)

While reports of companies beating expectations are widespread, a good way to view investors’ complete evaluation is by examining stock performance. Below is a graph of the one-month returns (including dividend income) for all of the 336 reporting companies. I have broken out the so-called “safe” stocks (REITs and utilities) because they have been beneficiaries of both reduced interest rates and bearish thinking – therefore, expect them to underperform.

Clearly, Wall Street views this earnings report season as favorable. Additionally, the need and desire for “safe” stocks has given way to the pursuit of growth.

The Federal Reserve cuts and quits

Finally! While rates remain abnormally low (meaning there is music to be faced in the future), at least the game of will-they-or-won’t-they looks over for now. That is helpful because businesses, consumers and investors now can make decisions based on a stable rate environment.

GDP growth is just fine

A good example of how negativity can take time to turn positive is the last week’s third quarter GDP growth report. Expectations had been for a seasonally adjusted, real (adjusted for inflation), annualized rate of 1.6%, down from 2% last quarter. Instead, it came in at 1.9%. That is good news, but most reports focused on the “continued slowing” instead of the desirable surprise.

Think of that report this way. For a quarter that had its problems, growth was still around 2%, in line with the average post-recession growth rate. Looking at a longer time period provides a good perspective for that 1.9% growth rate.

Employment and consumer spending are good

The recession pundits keep expecting these shoes to drop, but they do not. The problem is the factors leading up to reduced employment are absent. Following, so long as consumers are employed, they will spend. Therefore, in spite of that previous sharp drop in consumer confidence, consumer spending has remained strong and consumer confidence has improved.

The Wall Street Journal’s November 2 lead story (print edition) says it best: “Jobs, Consumers Buoy Economy, Defying Slowdown Across Globe.”

The bottom line

Last week offered an outstanding combination of good news that removes recession pessimism and reintroduces growth optimism for 2020. Stock ownership (excluding “safe” stocks) continues to look desirable.

Follow me on Twitter or LinkedIn.

During my 30-year career, I managed and consulted to multi-billion dollar funds. Using the “multi-manager” approach, I worked with leading investment managers. I now manage personal accounts and write about my analysis and decisions. … From my 50-year personal/professional investment experience, I developed the skills I use to find opportunities and avoid risks. Because markets are ever changing, I choose the strategies (safety, income, value and growth) that conditions warrant. … My one regular activity is to seek developments and trends being ignored or misinterpreted by investors. These are the situations that consistently produce higher return opportunities (or higher risk levels). … I am a CFA charterholder with an MBA from Stanford Graduate School of Business and a BS in Finance from San Diego State University. I am a former Washington DC CFA board member and currently serve on the AAUW Investment Advisers Committee and the City of Vista Investment Advisory Committee. … For more, please see my LinkedIn bio at http://www.linkedin.com/in/johntobeycfa

Source: Last Week Confirms It. Goodbye, Recession – Hello, Bull Market

292K subscribers
Traders Jon and Pete Najarian are joined by Sarat Sethi, managing partner at Douglas C. Lane & Associates, and Anastasia Amoroso, global investment strategist at J.P. Morgan Private Bank, to discuss calls on Netflix, Apple and Juniper Networks.

The Fear Fund: Nancy Davis’ ETF Aims To Protect Investors From Scary Stuff, Like Recession And Inflation

Stocks have recovered from last fall’s crash, low interest rates stretch out to the horizon and the VIX volatility index is half what it was at Christmas. Sit back and coast to a comfortable retirement.

No, don’t, says Nancy Davis. This veteran derivatives trader runs Quadratic Capital Management, where her somewhat contrarian view is that investors, all too complacent, are in particular need of insurance against financial trouble.

The Quadratic Interest Rate Volatility & Inflation Hedge ETF, ticker IVOL, is designed to provide shelter from both inflation and recession. Its actively managed portfolio mixes inflation-protected Treasury bonds with bets, in the form of call options, on the steepness of the yield curve.

Those options are cheap, for two reasons. One is that, at the moment, there is no steepness: Yields on ten-year bonds are scarcely higher than yields on two-year bonds. The other is that the bond market is strangely quiet. Low volatility makes for low option prices.

                                   

“Volatility has been squashed by central bank money printing,” Davis says, before delving deep into the thicket of option mathematics. If volatility in interest rates rebounds to a normal level, her calls will become more valuable. Alternatively, she would get a payoff if the yield curve tilts upward, which it has a habit of doing when inflation surges, stocks crash or real estate is weak.

If IVOL is all about peace of mind for the investor, it’s all about risk for its inventor. Davis, 43, has poured her heart, soul and net worth into Quadratic, of which she is the founder and 60% owner. If the three-month-old exchange-traded fund takes off, she could become wealthy. If it doesn’t, Quadratic will struggle.

The fund showed its worth in the first week of August, climbing 2% as the stock market sank 3%. But it needs a much bigger shock to stock or bond prices in order to get big. It has gathered only $58 million so far. A crash had better arrive soon; IVOL’s call options expire next summer. Quadratic, moreover, needs to somehow scale up without inspiring knockoff products from ETF giants like BlackRock.

Davis was a precocious trader. As an undergraduate at George Washington University, she took grad courses in financial markets while earning money doing economic research for a consulting firm. She put some of her paychecks into a brokerage account. “Some women love to buy shoes,” she says. “I love to buy options.”

This was in the 1990s, a good time to indulge a taste for calls. Davis made out-of-the-money bets on technology stocks, which paid off well enough to cover the down payment, in 1999, on a New York City apartment. Nice timing.

There may be a sour grape, but there’s also truth in her current philosophy that hedge funds are not such a great deal for investors. ETFs, she says, are more liquid, more transparent and cheaper.

Davis spent a decade at Goldman Sachs, most of it on the firm’s proprietary trading desk, then did a stint at a hedge fund. At 31 she quit to actively manage two kids. Returning to Wall Street after a three-year hiatus, she worked for AllianceBernstein and then did what few women do, especially women with children: She started a hedge fund.

Quadratic, whose assets once topped $400 million, used a hedge fund platform at Cowen & Co. When Cowen ended the partnership last year, Davis set about reinventing her firm. There may be a sour grape, but there’s also truth in her current philosophy that hedge funds are not such a great deal for investors. ETFs, she says, are more liquid, more transparent and cheaper.

IVOL’s 1% annual fee is stiff, but Davis says it’s justified for a fund that is not only actively managed but also invested in things that ordinary folk cannot buy. If you want to duplicate her position in the Constant Maturity Swap 2-10 call due July 17, you’d need to know what banker to ring for a quote, because this beast is not traded on any exchange. Each of these calls, recently worth $7.71, gives the holder the right to collect a dollar for every 0.01% beyond 0.37% in the spread between ten-year interest rates and two-year interest rates. The spread has to move a long way up before the option is even in the money. But at various times in the past the spread has hit 2%. Could it do that again? Maybe, at which point the option pays $163.

Starting a firm like Quadratic is like buying an out-of-the-money call: long odds, big payoff. Davis is doing what she was doing in college. You can’t stop a trader from trading.

Get Forbes’ daily top headlines straight to your inbox for news on the world’s most important entrepreneurs and superstars, expert career advice, and success secrets.

Source: The Fear Fund: Nancy Davis’ ETF Aims To Protect Investors From Scary Stuff, Like Recession And Inflation

196K subscribers

Nancy Davis, founder and CIO of Quadratic Capital Management, introduces her new ETF that takes advantage of interest volatility and inflation expectations: IVOL. In this interview with Real Vision’s co-founder & CEO Raoul Pal, Davis deconstructs the structure of the ETF, highlights the cost of carry associated with the strategy, and discusses her macro outlook and where she thinks the yield curve is headed next. Filmed on May 29, 2019. Watch more Real Vision™ videos: http://po.st/RealVisionVideos Subscribe to Real Vision™ on YouTube: http://po.st/RealVisionSubscribe Watch more by starting your 14-day free trial here: https://rvtv.io/2KHDkoc About Trade Ideas: Top traders unveil their specific plans for cashing in on the market’s next move. In these short videos, our traders cut straight to the point and lay out their thoughts on the best risk-reward trades of the moment. Each episode concludes with a visual recap of trade details including profit-loss potential and trade duration. About Real Vision™: Real Vision™ is the destination for the world’s most successful investors to share their thoughts about what’s happening in today’s markets. Think: TED Talks for Finance. On Real Vision™ you get exclusive access to watch the most successful investors, hedge fund managers and traders who share their frank and in-depth investment insights with no agenda, hype or bias. Make smart investment decisions and grow your portfolio with original content brought to you by the biggest names in finance, who get to say what they really think on Real Vision™. Connect with Real Vision™ Online: Twitter: https://rvtv.io/2p5PrhJ Instagram: https://rvtv.io/2J7Ddlw Facebook: https://rvtv.io/2NNOlmu Linkedin: https://rvtv.io/2xbskqx The ETF Play on Interest Rate Volatility (w/ Nancy Davis) https://www.youtube.com/c/RealVisionT… Transcript: For the full transcript visit: https://rvtv.io/2KHDkoc NANCY DAVIS: So we invest with options with a directional bias on everything. So our new product that we recently launched, IVOL, is the first inflation expectations and interest rate volatility fund out there. It’s a exchange traded product. RAOUL PAL: Does anybody even know what that means? NANCY DAVIS: So what we do is for an investor, if you’re an equity investor, you want to have tail protection, for instance. It’s hard to own equity volatility as an asset allocation trade because it decays so aggressively. So it’s a more benign way to carry volatility as an asset class from the long side using fixed income vol. It’s not as sensitive as equity vol, but it’s a lot lower level. Like, the vol we’re buying is 2, 2 basis points a day in normal space. So it’s very, very cheap, in my opinion, and it gives you a way to have an asset allocation to the factor risk of volatility without having as much decay as you would in the equity space. And then for a fixed income investor, the big risk there is obviously Central Bank policy, fiscal spending, trade wars, as well as inflation expectations. And we saw a need to really give a fixed income investor a way to capitalize on the deflation that’s been priced into the market for the next decade. I mean, so current US inflation is around 2%. The five-year break-even is 1.59%. So that’s an opportunity in an option space. And so it’s long options with TIPS. And so that gives investors exposure. It gives you inflation-protected income, but also options that are sensitive to inflation expectations. And we think it’s pretty– you know, you’re never going to time these macro calls perfectly. But given the Central Bank in the US is so focused right now on increasing inflation expectations, and there’s been so much talk about the yield curve inverting– and that’s kind of crazy. If you step back and you’re like, all right, we have a $3.9 trillion balance sheet. We have a fiscal budget deficit. We have unclear or radically changing monetary policy. If you look where we are now with so many cuts priced into the interest rate markets in the US versus where we were four months ago, it’s wildly different. And at the same time, interest rate volatility is literally at generational lows. Equity, while people talk about equity vol, I think VIX today is 17. It’s low, I guess, in the context. But when you look at a percentile, like one-year vol over the last decade in equities, it’s about the 70th percentile. So it might be low, but it doesn’t mean it’s cheap. Interest rate volatility is literally at, like, 2, 1, you know, 0.

What Can a Trader Do With Best Buy Stock?

Chutes Without Ladders

As toddlers, my sister and I used to play the famous board-game where depending on the spot where one lands, the individual either slides down a long chute, or climbs a ladder. I had intended to carry my long position in Best Buy (BBYGet Report) into the holiday season as far back as September. This was one of the first names that I got rid of in early October at an average price of $70 and change.

The broad market selloff that stated there has now surpassed the threshold of what many consider to be the definition of a Correction (-10% from the highs) was just getting in gear at that time. The retailers were making a lot of noise regarding trade with China, and this name was one of the first deck chairs thrown overboard for me as my ship started taking on water. I could have made a better sale a day of two prior, but then again, these shares never looked back once I made that sale either.

Download Now: To be a profitable investor you first need to know the rules. Get Jim Cramer’s 25 Rules for Investing Special Report

The stock had been so badly beaten that recently I considered buying back what I had sold. As I usually do with the retailers, I visited my local Best Buy location before taking on some shares. I walked around the store, stopped over by the laptops pretending to need help. Nothing. Look around. Employees walk by. Maybe it’s just the department, so I walk over to household appliances. Same thing.

The employees did not seem interested in making a sale that day. I decided to walk out. I put my hands in my jacket pockets in a way that should have drawn interest from the security employee at the door. Again, nothing. Now it may just be my store, and it may have just been a bad day, but I decided not to buy any shares in the company that day. Lucky miss.

Will I Be Back?

To the store? Definitely. I have thought the employees energetic and helpful in the past. They’ll get another chance. The stock may have to prove itself, especially after Bank of America Merrill Lynch made their opinion known this morning. BAML cut it’s rating on BBY to “Underperform” from “Neutral”, so it’s not like they loved the chain to begin with. However, the firm dropped their price objective for BBY from $70 to $50.

Best Buy will report its Q4 results on February 19th. Industry consensus is for EPS of $2.57, which would be good for earnings growth of 6.2%. Revenue is expected to print somewhere around $14.7 billion, which will illustrate a contraction year over year for that line item.

The stock trades at just 9.8 times forward looking earnings, and given the general outlook for growth, is it possible that these earnings projections are just too high. If relations with China don’t come to an amicable resolution in the near future… perhaps. That’s the way BAML feels at least for the current quarter, but also makes a point of mentioning the full year.

The Catch

The analyst behind the BAML opinion is not highly rated by TipRanks, at least not yet. The last highly rated, high profile analyst that I see that still has a buy rating on BBY, and a much higher price target ($81) is Piper Jaffray’s Peter Keith. My belief would be that if Keith throws in the towel, that the marketplace will notice. Perhaps at that point I will initiate an entry level long but not without another visit to my local store.

Free Lunch?

So, what can a trader do, other than sit on their hands, and wait to see if another shoe drops? Right now, a trader might be able to sell one BBY $47.50 February 15th put at an implied value of $1.29, instead of taking down an equity stake. Hopefully, this trader pockets $129, and takes his or her significant other out for a nice meal.

The risk is that the shares trade below $47.50 by expiration, and the trader is forced to eat these shares at a net basis of $46.21. Note that expiration is four days ahead of this Q4 earnings release. At the time of publication, Stephen Guilfoyle had no position in the securities mentioned.

By:

Source: What Can a Trader Do With Best Buy Stock? – TheStreet

Earnings Economy Investing Options Stocks Trading Consumer Products

Warren Buffett has been and continues to be a role model for millions of investors across the globe. His rich investment history going back to as far as 11 years old when bought his first stock, his impressive story has been used in hundreds of speeches globally, with every investor, beginner or pro, being asked to emulate him. However, who is Warren Buffet? In this video, we are going to look into the life of the man known as the “Oracle of Omaha”, highlighting the investments and decisions he made to become one of the richest and most respected businessmen in the world. Audible 30 Day Free Trial: https://amzn.to/2mO6ow0 #WarrenBuffett #WarrenWisdom Light Sting by Kevin MacLeod is licensed under a Creative Commons Attribution license (https://creativecommons.org/licenses/…) Source: http://incompetech.com/music/royalty-… Artist: http://incompetech.com/ Practical Wisdom – Producing High Quality Content For Your Enjoyment. Please Consider Subscribing, and enable notifications. Thanks in Advance.

Stocks Making The Biggest Moves After Hours: Cisco NetApp and Vipshop

5.jpg

Cisco fell nearly 8% in after-hours trading after announcing better than expected fourth-quarter earnings and weaker-than-expected guidance. The enterprise technology company reported adjusted fourth-quarter earnings per share of 83 cents on revenue of $13.43 billion. Analysts had expected adjusted earnings per share of 82 cents on revenue of $13.38 billion, according to Refinitiv.

For the first quarter, Cisco said it anticipates adjusted earnings per share between 80 cents and 82 cents. The company said it expects flat to 2% revenue growth. Those figures are below analyst projections for earnings of 83 cents per share and revenue growth of 2.5%, according to Refinitiv consensus estimates.

Cisco CEO Chuck Robbins said the company’s business in China dropped 25% amid the U.S.-China trade war and early signs of macro shifts that didn’t occur in the previous quarter.

Shares of NetApp jumped nearly 4% after the data services and management company reported promising first-quarter earnings. The company reported adjusted earnings per share of 65 cents on revenue of $1.24 billion. Analysts had expected earnings per share of 58 cents on revenue of $1.23 billion, according to Refinitiv. NetApp CEO George Kurian said gross margin and cost structure improvements will help the company “navigate the ongoing macroeconomic headwinds”

Vipshop soared 8% after announcing higher-than-expected earnings for the second quarter. The Guangzhou, China-based company reported adjusted second-quarter earnings per share of $1.58 yuan on revenue of $22.74 billion yuan. Analysts had expected earnings per share of $1.01 yuan on revenue of $21.52 billion yuan, according to Refinitiv. Eric Shen, chairman and chief executive officer of Vipshop, cited the company’s growing numbers of active users and acquisition of Shanshan Outlets.

Pivotal Software shares skyrocketed nearly 70% in extended trading after VMware said it will acquire all outstanding Class A shares at $15 in cash. That price represents an 80% premium on  Pivotal’s closing price of $8.30 per share.

By : Elizabeth Myong

Source: https://www.cnbc.com/

 

Cisco, Tilray, Aurora Cannabis, Alibaba, Trade Talks – 5 Things You Must Know

Here are five things you must know for Wednesday, May 15:

1. — Stock Futures Lower Amid Subsiding Trade War Worries

U.S. stock futures were lower Wednesday though sentiment was lifted by a softening of the rhetoric from Donald Trump in the U.S.-China trade war and suggestions that talks could resume in the coming weeks.

Download Now: To be a profitable investor you first need to know the rules. Get Jim Cramer’s 25 Rules for Investing Special Report

Markets also were soothed by weaker-than-expected economic data from China that pointed to not only slowing growth in the world’s second-largest economy but also a weakening bargaining position in Beijing’s trade standoff with Washington.

With Trumps describing the dispute with China as “a little squabble” on Tuesday, as well as confirmation from the U.S. Treasury that Secretary Steven Mnuchin will soon travel to Beijing to resume trade talks, markets were happy to add risk following Tuesday’s gains on Wall Street.

Contracts tied to the Dow Jones Industrial Average fell 85 points, futures for the S&P 500 declined 8.70 points, and Nasdaq futures were down 23 points.

The economic calendar in the U.S. Wednesday includes Retail Sales for April at 8:30 a.m. ET, the Empire State Manufacturing Survey for May at 8:30 a.m., Industrial Production for April at 9:15 a.m., and Oil Inventories for the week ended May 10 at 10:30 a.m.

2. — Cisco, Alibaba and Macy’s Report Earnings Wednesday

Alibaba Group Holding (BABAGet Report)  posted stronger-than-expected fiscal fourth-quarter earnings as consumer growth on its online marketplace surged and its tie-up with Starbucks (SBUXGet Report) , the world’s biggest coffee chain, helped boost revenue and its cloud computing sales surged.

Macy’s (MGet Report)  earned 44 cents a share on an adjusted basis in the first quarter, higher than estimates of 33 cents. Same-store sales rose 0.7% in the quarter vs. estimates that called for a decline of 0.6%.

Earnings reports are also expected Wednesday from Cisco Systems (CSCOGet Report) and Jack in the Box (JACKGet Report) .

Cisco is a holding in Jim Cramer’s Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells CSCO? Learn more now.

3. — Tilray Rises After Revenue Beat, Aurora Cannabis Slumps

Tilray  (TLRY) shares were rising 4% to $50.71 in premarket trading Wednesday after the Canadian cannabis company posted stronger-than-expected first-quarter sales, while its domestic rival Aurora Cannabis (ACBGet Report) slumped after revenue missed analysts’ forecasts amid caps on retail store growth in the Canadian market.

Tilray said first-quarter revenue rose 195% from a year earlier to $23 million, as sales in Canada surged following the country’s decision to legalize cannabis for recreational use. The adjusted loss in the quarter was 27 cents a share, wider than analysts’ estimates, after a 5.7% drop in the average price per kilogram sold.

CEO Brendan Kennedy also said Tilray was looking to further its partnerships with U.S. and international companies as the potential $150 billion global market for cannabis undergoes a generational change in both regulation and consumer acceptance.

“We’ve been inundated with contacts from Fortune 500 companies who are interested in exploring partnerships with Tilray,” Kennedy told investors on a conference call late Tuesday. “And it’s a range of companies from a broad variety of industries.”

“We’re also starting to have conversations with U.S. retailers who are interested in carrying CBD product in the second half of this year,” he added.

Aurora Cannabis, meanwhile, was tumbling 4.7% to $7.99 in premarket trading after its fiscal third-quarter revenue of C$75.2 million missed Wall Street forecasts of C$77.2 million and consumer cannabis sales were just under C$30 million as provincial regulators limited the number of retail outlets.

The company reported a loss attributable to shareholders in the quarter of $C158 million said Aurora Cannabis said it was “well positioned to achieve positive EBITDA beginning in fiscal Q4.”

Aurora Cannabis is in TheStreet’s Stocks Under $10 portfolio. To find out more about how you can profit from this investing approach, please click here.

4. — Walmart Considering IPO for U.K. Unit Asda

Walmart (WMTGet Report) is considering an initial public offering for its U.K. grocery subsidiary Asda, a listing that that could value the company at as much as an estimated 8.5 billion pounds ($11 billion), Bloomberg reported.

The news comes just weeks after U.K. antitrust regulators blocked a planned merger between Asda, Britain’s fourth-largest supermarket, and rival J Sainsbury.

“While we are not rushing into anything, I want you to know that we are seriously considering a path to an IPO,” Judith McKenna, the company’s international chief, told employees at an event in Leeds, according to a summary of the event provided by Asda. Any preparations for going public would “take years,” she said, Bloomberg reported.

5. — Nelson Peltz’s Trian May Wage Activist Campaign at Legg Mason – Report

Nelson Peltz’s Trian Fund Management may wage an activist campaign at Legg Mason (LMGet Report) and push the mutual fund company to improve its flagging results, The Wall Street Journal reported, citing people familiar with the matter.

It would be the second time in 10 years that Trian has targeted the mutual fund company, according to Reuters.

Trian recently has held discussions with Legg Mason about the need to cut costs and improve profit margins, the people told the Journal. The two sides may still negotiate a settlement that sidesteps a proxy fight, the sources added.

On a conference call with analysts Monday, Legg Mason CEO Joseph Sullivan said the company was moving to slash expenses.

“While there is much work to be done, we now have increased visibility into and have gained even greater confidence in our ability to deliver $100 million or more of annual savings now within two years,” he said.

By:

 

Source: Cisco, Tilray, Aurora Cannabis, Alibaba, Trade Talks – 5 Things You Must Know

Yields Up To 9.9% That Rich Guys Don’t Want You To Know About

uncaptioned

Not yet as rich as you always wanted to be? Don’t worry, because today we’re going to dial you in for some “rich guy” dividend favorites that’ll pay you up to 9.9% every year.

Private equity is a lucrative and secretive world. It’s often limited to accredited investors, which means these funds require you to have $200,000 or more in annual income to qualify.

If you’re living on dividends alone, this might be challenging. Fortunately, there are some private equity plays that you can buy just like individual stocks. They trade for as cheap as $12 per share and they’ll pay you dividends from 8.8% to 9.9% along the way:

Contrarian Outlook

Contrarian Outlook

Private equity (PE)—funds that can invest in the equity and debt of privately held companies, which we typically can’t get our hands on—is generally touted as outperforming the stock market.

The American Investment Council, which advocates for private investment, points out that research from the 1990s and early 2000s showed that “private equity outperformed public markets by 3 to 4 percent each year,” and a 2019 paper investigating more recent “vintage years” finds that “that private equity continues to generate returns that are 2 to 3 percent above the returns of public markets.”

The downside? Privately held private equity firms aren’t exactly easy to tap, and you typically need to have seven digits to get in.

But here’s a back door that you and I can access. We can buy PE-esque investments just like regular stocks with a single-click! The trick is handful of little-known publicly traded companies called business development companies (BDCs).

Congress created BDCs in the 1980s to spur investment in America’s small and midsize businesses, the same way they created REITs in the ‘60s to help mom ‘n’ pop investors tap the real estate markets. And like REITs, BDCs get a generous tax break—if they dole out 90% or more of their profits as dividends to you and me.

Thus, business development companies not only let us access a big pool of investments you and I otherwise couldn’t otherwise dream of accessing, but also deliver sky-high yields that are among the highest you can find in the stock market. The caveat, of course, is that they do come with heightened risk, and not all BDCs are gems.

Today, I’ll show you three notable BDCs—yielding between 8.8% and 9.9%—that should be on your radar screen.

PennantPark Floating Rate Capital (PFLT)

Dividend Yield: 9.7%

Let’s start out with a yield juggernaut: PennantPark Floating Rate Capital (PFLT), which will get investors awfully close to a double-digit yield at current prices.

PennantPark provides access to middle market direct lending with, as the name implies, a heavy focus on floating-rate loans, though it’ll invest anywhere across the capital structure (senior secured debt, subordinated debt and others).

Its primary target is private equity sponsor-backed companies with $10 million to $50 million in EBITDA. It avoids capex-heavy businesses, as well as fickle industries such as fashion and restaurants, but it still has plenty of sectors to play with. Portfolio companies include the like of primary-clinic operator Cano Health, marketing services provider InfoGroup, and WalkerEdison, whose furniture can be found online via companies such as Amazon.com (AMZN), Target (TGT) and Home Depot (HD).

PennantPark typically leans toward the low-risk but low-reward end of the BDC spectrum, which historically has served it just fine. However, the BDC’s last earnings report raised some credit-quality concerns. The company reported that four of its portfolio companies were on “non-accrual,” which essentially happens when a payment is more than a month overdue, or there’s some other concern about a company’s ability to make a payment.

The BDC was subsequently nailed in May on the news. That has me wary. And the floating-rate nature of its loans, while attractive during periods of rising rates, isn’t a significant advantage right now.

New Mountain Finance

Dividend Yield: 9.9%

New Mountain Finance (NMFC) targets companies middle-market companies, too, investing between $10 million to $50 million across the debt spectrum in businesses that generate annual EBITDA between $10 million and $200 million.

NMFC likes to say that it invests in “defensive growth” industries. It’s a silly, contradictory term, sure. But the qualities it covets in its portfolio companies are, in fact, pretty attractive: high barriers to competitive entry, recurring revenue, strong free cash flow and niche market dominance.

To be fair, New Mountain, like PennantPark, is heavily weighted toward floating-rate loans, which make up 93% of the portfolio. But NMFC is a few steps in the right direction. Its credit quality is stellar – only eight portfolio companies have gone on non-accrual since inception in 2008, and there were no new non-accruals over this past quarter. Better still, the company is a bastion of consistency when it comes to covering its healthy dividend with net interest income (a core measure of profitability for BDCs).

New Mountain, which trades at only a sliver of a premium to its net asset value right now, still should be fine in the current environment. Keep this BDC in mind should the Fed’s hawks ever take over again.

Ares Capital (ARCC)

Dividend Yield: 8.8%

Ares Capital (ARCC) is a slightly more modest yielder compared to the previous two picks, and you likely won’t snag it for a significant discount. But that’s OK—ARCC is worth a small premium.

I’ve beat the drum on ARCC a few times, including in February 2019, but also going back more than two years, in January 2017. I said at the time that the company’s investment spread, as well as a $3.4 billion merger with American Capital, “should benefit ARCC in just about any market environment,” and that “in short, ARCC is going places.”

Ares Capital, Wall Street’s largest BDC, invests primarily in first and second lien loans and mezzanine debt of middle-market companies. A high priority is placed on “market-leading companies with identifiable growth prospects that can generate significant cash flow.” Its portfolio of roughly 345 companies touches numerous sectors, including business services, food and beverage, healthcare, IT and light manufacturing.

Ares’ core earnings and net realized gains have exceeded dividends every year since 2011, by increasingly wide margins. In fact, the company’s operational performance has been so robust that it has hiked its payout twice since this time last year.

Bottom line: ARCC is a standout in what typically is a difficult industry to invest in.

However, I’m not sure I’d commit capital to this stock right now. Given its recent run up, I’d like to see a pullback for a lower risk entry point.

Brett Owens is chief investment strategist for Contrarian Outlook. For more great income ideas, click here for his latest report How To Live Off $500,000 Forever: 9 Diversified Plays For 7%+ Income.

Disclosure: none

I graduated from Cornell University and soon thereafter left Corporate America permanently at age 26 to co-found two successful SaaS (Software as a Service) companies.

Source: Yields Up To 9.9% That Rich Guys Don’t Want You To Know About

%d bloggers like this:
Skip to toolbar