Tag: US stocks

Market Update for 4 May 2020: Stocks, Gold, and Bitcoin

This article provides an overview of news that may be relevant to three different markets: equities (mainly U.S. stocks), commodities (mainly gold), and crypto (mainly Bitcoin).

The price information you’ll see in this article was taken around 08:00 UTC on 4 May 2020. The data providers used for pre-market trading data are as follows:

Two pieces of news seem to be on the minds of many investors today.

First, on Saturday (May 2), legendary American investor Warren Buffett, one of the world’s richest men, as well as the chairman and CEO of Berkshire Hathaway, made some worrisome comments at his company’s 2020 Annual Shareholders Meeting in Omaha, Nebraska, which was broadcast on Yahoo Finance.

According to a report by CNBC, during the meeting, Buffett explained why Berkshire Hathaway had not made any major investments recently despite the drop in U.S. stock prices as the result of the COVID-19 pandemic and despite the fact that his company is sitting on a mountain of cash (to be more precise, $137 billion in cash and equivalent instruments, according to Berkshire Hathaway’s latest 10-Q filing):

“We have not done anything, because we don’t see anything that attractive to do… Now that could change very quickly or it may not change…”

“We are willing to do something very big. I mean you could come to me on Monday morning with something that involved $30, or $40 billion or $50 billion. And if we really like what we are seeing, we would do it.”

As Anthony Pompliano (aka “Pomp”), Co-founder and Partner at Morgan Creek Digital, pointed out yesterday in a Q&A session (on the economy and financial markets) broadcast live on YouTube yesterday, Buffett’s hesitancy to pull the trigger could mean that he expects further falls in the prices of U.S. stocks.

Second, on Sunday (May 3), U.S. Secretary of State Mike Pompeo said during an interview with ABC’s “This Week” program that the Trump administration believed that the Chinese government “did all it could to make the sure the world didn’t learn in a timely fashion about what was taking place” in China in the early days of the COVID-19 outbreak. Furthermore, according to ABC, there are U.S. intelligence reports that say the coronavirus may have come from a lab in Wuhan and that China quietly stockpiled medical supplies (such as masks) in the early January.

Pompeo then went on to say that China’s mishandling of the COVID-19 crisis had resulted in the loss of hundreds of thousands of lives around the world and that President Trump intends to “hold those responsible accountable.”

CNN says that “multiple sources inside the administration say that there is an appetite to use various tools, including sanctions, canceling US debt obligations and drawing up new trade policies, to make clear to China, and to everyone else, where they feel the responsibility lies.”

Equities

Here is how various stock markets around the world are doing on Monday morning (London time):

  • Hong Kong’s Hang Seng: -4.18%
  • Japan’s Nikkei 225: -2.84%
  • France’s CAC 40: -3.70%
  • Germany’s DAX: -32.%
  • UK’s FTSE 100: -0.14%

Commodities

Spot gold is trading at $1,705.49, up $16.75 (or +1%).

In the year-to-date period, gold is up 17.50%.

Source: Market Update for 4 May 2020: Stocks, Gold, and Bitcoin | CryptoGlobe

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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.

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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.

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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.

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John Navin

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

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Datadog Stock Surges 39%: Its CEO Recounts When The Company Was An Underdog In New York

Shares of New York-based Datadog rose 39% to close at $37.55 after opening at $40.35 in the cloud company’s market debut Thursday. The successful IPO cements Datadog’s position as an East Coast counterweight to Silicon Valley’s dominance of the enterprise software realm.

“Initially when we started fundraising for Datadog, it was really not that easy,” CEO Olivier Pomel told Forbes after the market closed Thursday. “We were not based where most of the companies were based, so it was hard to get trust from investors on the West Coast. And the investors in New York were not really specialized in the type of company we were building.”

Pomel said this underdog tale worked to the advantage of Datadog. By relying on small checks and angel investors at first, the company was forced to build an efficient business, he said. That’s become a huge asset to the nine-year-old company as it ballooned to a $10.9 billion valuation at the end of Thursday. It reported a net loss of $10.8 million, after posting a $2.6 million loss the year prior—good numbers for a fast-growing company of its stature.

Higher net losses usually accompany recent enterprise tech IPOs with comparable revenue figures, such as with Medallia ($82 million), Dynatrace ($116 million) and Crowdstrike ($140 million). “One thing investors reacted to was the fact that we run a healthy business from a profitability perspective,” Pomel said.

Today In: Innovation

“What helped the most by being in New York was that we’re a little bit closer to customers—there’s more of them here. And, you’re out of the echo chamber in the Silicon Valley so here you can get ahead on what the customers think,” he said. One early investment came from Index Ventures, which has backed Datadog beginning with the Series A funding round. Shardul Shah, a partner at the firm who also sits on Datadog’s board, says he bought in because of Pomel’s “relentless focus on delivering customer value from the very beginning.”

The successes of MongoDB and now Datadog could spur the growth of an enterprise ecosystem in New York. Prior to its market debut, Datadog had raised $147.9 million on what Pitchbook estimates as a $640 million valuation. The IPO is New York’s largest venture capital-backed tech IPO in two decades, according to Renaissance Capital.

Now trading on Nasdaq under the “DDOG” ticker, the company priced 24 million shares at $27 on Wednesday. That’s higher than the $24-to-$26 estimated IPO price listed in its latest filing to the Securities and Exchange Commission, which was already a huge boost from the $19-to-$22 range the company originally set. At its IPO price, Datadog raised $648 million to bring its valuation to $7.8 billion. Pomel said the added cash on hand will offer the company the flexibility to continue making acquisitions. He said he’s happy with Datadog’s acquisitions so far, including application tester Madumbo.

At Datadog’s opening stock price, CEO Olivier Pomel was on the cusp of billionaire status. Forbes calculates that the stock would need to surpass about $43 per share for Pomel’s net worth to cross the $1 billion mark—at the stock’s high point of $41.44, Pomel was $35 million short. After the stock price declined slightly over the course of Thursday, Pomel’s net worth settled at $874 million at the time of market close, but that doesn’t seem to bother him: “The stock, it’s up a good amount, but not too much. I think that’s what we were looking for.”

Datadog offers a cloud analytics platform that also provides log management and monitors infrastructure and application performance. Its software is primarily used by IT and developer teams and cuts across industries—it boasts customers including Samsung, 21st Century Fox, the University of Pennsylvania and the Washington Post. In its S-1, the company identified IT operations management as its primary opportunity market. Research firm Gartner predicts the market will be worth $37 billion by 2023.

The IPO reflects continued investor demand for cloud analytics and monitoring. In August alone, application performance management company Dynatrace’s stock jumped 49% in its public debut, while cloud monitoring vendor SignalFx was acquired by Splunk for more than $1 billion. In its S-1 filing, Datadog lists both Dynatrace and Splunk as direct competitors. The company also counts IBM, Microsoft, Cisco, New Relic and Amazon as rivals across fields such as infrastructure monitoring, application performance management and cloud monitoring.

Datadog jumped to No. 5 on this year’s Forbes Cloud 100 list, which was released last week, up from the No. 19 spot in 2018. As of last Wednesday, half of last year’s top 20 sold or went public, with eight taking the latter route amid a busy couple of months for cloud IPOs. Although most of these stocks—such as Zoom, Slack and Crowdstrike—had strong public debuts, some including Slack and Eventbrite have failed to maintain this momentum. Stripe, the No. 1 company in 2018 and 2019, announced a new funding round Thursday that brings its valuation up to $35 billion.

Datadog filed with the SEC in anticipation of its IPO at the end of August. Revenue increased 97% to $198 million in 2018, according to its S-1 filing. The cloud company reportedly rejected an eleventh-hour acquisition offer from Cisco at a figure “significantly higher” than $7 billion, according to Bloomberg. The move would have paralleled Cisco’s 2017 acquisition of AppDynamics for $3.7 billion, just two nights prior to the application performance management company’s IPO.

This article was updated to include the closing stock price, additional context on finances and comments from Pomel and Shah.

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Kenrick Cai

I am a San Francisco-based assistant editor for technology and innovation. As my beat, I cover Juul Labs. I also write other general tech news. Previously, I made stops at The Ringer and the Raleigh News & Observer. I graduated in 2019 from Duke University, where I spent time as news editor for The Chronicle, the university’s independent news organization.

Source: Datadog Stock Surges 39%: Its CEO Recounts When The Company Was An Underdog In New York

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The Watch List: Jonathan Lehr came on The Watch List to discuss what the Datadog IPO means for NYC’s enterprise tech ecosystem.

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U.S. Stocks End a Dismal, Volatile Year on a Bright Note — TIME

Wall Street closed out a dismal, turbulent year for stocks on a bright note Monday, but still finished 2018 with the worst showing in a decade.After setting a series of records through the late summer and early fall, major U.S. indexes fell sharply after early October, leaving them all in the red for the year.…

via U.S. Stocks End a Dismal, Volatile Year on a Bright Note — TIME

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