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InvestorPlace
5 Cheap Stocks to Buy With High Yield and Good Earnings Power
In this technology-centric market, I wanted to find some cheap stocks to buy with high-yields, and whose earnings power would be sufficient for the dividends. In turn, this will allow investors to receive present income while they also wait for the underlying stock to recover to their previous highs.Additionally, another advantage is that investors can use these stocks in a “barbell,” so to speak, investing strategy approach. This is where you put higher-valuation technology stocks in one portion of your portfolio. Typically, though, these stocks do not pay dividends. So, on the other end of the “barbell”, you invest an equal or nearly equal weight in cheap high-yield dividend stocks.In turn, this allows you to benefit from both worlds: growth and value investing. It helps your portfolio to have present income, and the possibility of offset gains from each type of investing. Thus, when your growth stocks start to falter, the cheap high yield stocks will tend to move up — and vice versa.InvestorPlace – Stock Market News, Stock Advice & Trading TipsWith all of that in mind, I’ve honed in on a few that have expected earnings and/or free cash flow for the next year. However, they still sell for less than eleven to twelve times earnings for next year. In addition, the average dividend yield of this group is two to three times the average dividend yield of the S&P 500. 9 Gold Stocks to Buy That Still Have Room to Run So, here are the five cheap stocks to buy: NetApp (NASDAQ:NTAP) Investors Bancorp (NASDAQ:ISBC) Keycorp (NYSE:KEY) Phillips 66 (NYSE:PSX) AT&T (NYSE:T)Let’s dive in, and look at these stocks. Cheap Stocks to Buy: NetApp (NTAP) Click to EnlargeSource: Mark R. Hake, CFA Market Capitalization: $10.05 billionDividend Yield: 4.5%NetApp is a physical flash array and cloud-based data storage company. For the current fiscal year, earnings are expected to take a dip to $3.27 per share from $4.05 last year. However, in 2021, analysts polled by Yahoo! Finance expect its earnings power to rebound back to $4.02.Meanwhile, this company’s earnings more than cover its annual $1.92 dividend. It is also one of the few technology stocks that also buys back its shares. In fact, one of its chief advantages of buybacks is that it allows a company to continue to grow its dividend per share without any further outlay of cash.That said, my analysis of the stock is that it is worth significantly more than its present price. For example, the average dividend yield for NTAP stock over the past four years, according to Seeking Alpha, is 2.37%. Today, its yield is 4.5%.That implies that if the stock were to rise to the point where it enjoyed its average yield, the stock would be worth $81.01 — or 91% above today’s price.Moreover, another way to value NTAP stock is to look at its average price-to-earnings (P/E) ratio. That said, Morningstar has a page showing that the average P/E ratio over the past five years was 27.3 times. Applying that ratio to NetApp would give it a target price of $89.68.So, the average of these two methods provides a potential upside target price of $85.35. That represents a gain of 102%. Additionally, if that took three years to achieve, the average compounded return annually would be 26.4% each year. And if you add in the annual 4.5% yield, the total return would be over 30% annually.That is a pretty good ROI, and NTAP is a pretty good cheap stock to buy. Investors Bancorp (ISBC) Click to EnlargeSource: Mark R. Hake, CFA Market Cap: $1.95 BillionDividend Yield: 6.2%Investors Bancorp is a New Jersey headquartered bank with 154 branches in New Jersey and New York. ISBC stock is very cheap, priced at $7.77 for just 73.5% of its $10.57 tangible book value.Moreover, the dividend yield for ISBC stock is attractive at 6.2%. And over the last 12 months, the company made 73 cents per share — which more than covers its 48 cents dividend per share. Additionally, the stock trades for just 10 times expected earnings for next year. And if you put all of these things together, you have a very cheap stock to buy.Obviously, the bank has been hit by the real estate troubles. And even with loan provisions it still made 18 cents per share in Q2. This more than covered the 12 cents per share quarterly dividend.My estimate of the company’s value is $14.95 per share, or 88 percent above the price today. This may take two or three years to recover, but that implies an annualized compound return of 23.4% in each of three years. 7 Strong Stocks to Buy to Avoid Portfolio Overvaluation And, with the 6.2% dividend yield, the stock has an estimated annual total return of over 29% annually. Again, that is a great ROI. Cheap Stocks to Buy: KeyCorp (KEY) Click to EnlargeSource: Mark R. Hake, CFA Market Capitalization: $12.46 BillionDividend Yield: 10.4%KeyCorp is a Cleveland based bank with almost 1100 branches in 15 states. Currently, the bank has $171 billion in assets and $15.6 billion in shareholders’ equity. More importantly, though, KEY stock trades for just 94% of its $13.07 tangible book value per share.Overall, KEY stock has an attractive 10% dividend yield and trades for 10 times forward earnings. And in the last 12 months, the company made $1.12 per share — which more than covers its 78 cents dividend per share. And this was after taking a $482 million credit loss provision. Nevertheless, its revenue for Q2 was up 17% in quarterly succession — mainly from fees, consumer banking and its capital market division.Based on its 3.15% average annual yield over the past four years, KEY stock is worth over $40 per share. That represents a price rise of over 200% more than today’s price.In addition, based on its average P/E ratio over the past 5 years the stock is worth 48% more. In fact, on average, it is worth $29.30 — or 130% over today’s price of $12.77.So, assuming it takes three years to reach this price, the average annual gain on a compounded basis is 33.7% annually. And with the dividend yield, the company expected return is over 43% annually for the next three years. Phillips 66 (PSX) Click to EnlargeSource: Mark R. Hake, CFA Market Capitalization: $27 BillionDividend Yield: 6%Phillips 66 is a downstream and midstream company that owns or has stakes in 13 refineries. It was spun off from ConocoPhillips to its shareholders in April 2012. And right now, the company pays a 90 cents per share quarterly dividend, or $3.60 per share annually. Overall, at the current price of $61.79 per share, PSX stock has an ample 6% dividend yield.That said, this high yield is more than covered by the company’s expected earnings by next year. For example, analysts expect Phillips 66 to make $1.08 this year and $5.42 per share in 2021.Nonetheless, the high numbers for 2021 obviously depend on the price of oil rising next year. This is based on the economy returning to normal with a Covid-19 vaccine that is effective and abundantly available.So, based on the company’s average historical yield and average historical P/E ratio, PSX stock is worth $120.87 per share. That represents a gain of 101% in the stock price. 4 Perfect Stocks to Buy for Beginners And, assuming it takes two years for the stock to hit this target it represents a compound annual gain of 41.7% each year. With the 6% annual yield, the expected total return is 47.7% annually over two years. Cheap Stocks to Buy: AT&T (T) Click to EnlargeSource: Mark R. Hake, CFA Market Capitalization: $214.03 BillionDividend Yield: 6.9%AT&T is a diversified telecom, media, and technology (TMT) services company with more than $175 billion in revenue in the last 12 months ending June. Right now, the stock is attractive with a 6.94% dividend yield and 9.3 times forward P/E ratio.Moreover, analysts polled by Yahoo! Finance estimate that AT&T will make $3.19 per share this year and $3.24 per share next year. That said, this is enough earnings power to cover its $2.04 annual dividend per share.I estimate the stock is worth $34.43 based on its average 6% dividend yield over the past four years. In addition, its historical P/E ratio of 13.8 times implies a stock price of $44.83 per share.In turn, the average of these two is $39.58 — or 32% above the current price of $30 per share.So, assuming it takes two years to reach this target price, the average annual compounded return is 14.9% annually. And, combined with the 6.9% dividend yield, the total expected return is 21.8% annually over two years. Summary of Cheap High Yield Stocks Click to EnlargeSource: Mark R. Hake, CFA The table here shows that these five cheap stocks to buy that have an average dividend yield of 6.8% and an average P/E ratio of just 10.7 times. That is very cheap.Moreover, the average upside of each of these stocks is 83.4%. Even it takes on average 2.4 years, i.e. to the end of 2022 to reach these targets, the average compounded return is 28.6% annually.So, if you include the 6.8% dividend yield each year, the total expected return will be 35.4% each year. And these are excellent expected returns for most investors.On the date of publication, Mark R. Hake held a long position in ISBC.Mark Hake runs the Total Yield Value Guide, which you can review here. More From InvestorPlace Why Everyone Is Investing in 5G All WRONG America’s 1 Stock Picker Reveals His Next 1,000% Winner Revolutionary Tech Behind 5G Rollout Is Being Pioneered By This 1 Company Radical New Battery Could Dismantle Oil Markets The post 5 Cheap Stocks to Buy With High Yield and Good Earnings Power appeared first on InvestorPlace.
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TipRanks
Goldman Sachs: Bet on These 2 Stocks for Over 30% Returns
September is known for being a seasonally volatile month, but long-term, some are looking at the glass half full. Goldman Sachs has become more optimistic about U.S. economic growth, as it expects that by Q2 2021, an effective COVID-19 vaccine will be “widely distributed.” Based on this assumption, the firm’s chief economist Jan Hatzius bumped up his 2021 U.S. GDP forecast from 5.6% to 6.2%. On top of this, 2021 unemployment levels also might not be as dismal as previously expected, with the economist calling for the figure to land at 6.5%, versus his previous 7% estimate. This modest revision is driven by the conclusion that “consumer services spending accelerates in the first half of 2021 as consumers resume activities that would previously have exposed them to COVID-19 risk.” That said, the firm does issue a warning. “We still expect a package worth at least $1.5 trillion to become law… but the risk of no further legislative action has increased and could pose a threat to the budding recovery,” Hatzius wrote. As the analysts from Goldman Sachs have pointed to two stocks in particular that could gain over 30% in the next year, we wanted to dig a little deeper. By using TipRanks’ database, we found out that both have received Buy ratings from the rest of the Street as well. Vasta Platform (VSTA) First up we have Vasta Platform, which is an education company in Brazil that provides end-to-end educational and digital solutions to cater to the needs of private schools operating in the K-12 educational segment. Based on the strength of its product offering, Goldman Sachs is pounding the table on this name. Representing the firm, analyst Diego Aragao argues “VSTA’s learning platform is helping to fundamentally change the nature and process of the overall learning experience within private K-12 schools in Brazil.” The analyst added, “In addition, as its digitally native technological platform evolves, we see a solid opportunity for all stakeholders in the K-12 ecosystem to benefit from the ongoing digitalization trend that creates solid growth prospects and improved returns for the company over the coming years.” Part of what makes the company stand out, in Aragao’s opinion, is that it boasts “a distinctive asset-light business model, that combines recurrence, predictability and scalability by providing a strong portfolio of solutions that fully integrates the K-12 ecosystem in Brazil.” Additionally, the market for core K-12 content is very fragmented, with the after-school market still very much underpenetrated. To this end, the analyst believes there is a substantial top-line opportunity for VSTA. Not to mention the company has made a significant investment in enhancing its technological offering with digital management solutions focused on schools. According to Aragao, this reflects a greenfield opportunity that VSTA’s different go-to-market could address. “Lastly, we see M&A as an optionality in the next 12 months (that could add up to U.S. $4.0/share), while the potential for scaling-up Plurall — the company’s super app — is an opportunity in the mid-to-long run,” Aragao also mentioned. It should come as no surprise, then, that Aragao joined the bulls. Kicking off his VSTA coverage, he put a Buy rating and $26 price target on the stock. Should this target be met, a twelve-month gain of 70% could be in the cards. (To watch Aragao’s track record, click here) All in all, other analysts echo Argao’s sentiment. 4 Buys and no Holds or Sells add up to a Strong Buy consensus rating. With an average price target of $22.13, the upside potential comes in at 44%. (See Vasta Platform stock analysis on TipRanks) Halliburton Company (HAL) With operations in more than 70 countries, Halliburton counts itself as one of the largest oil field services companies in the world. Following a conversation with management, Goldman Sachs is even more confident about its long-term growth prospects. Firm analyst Angie Sedita tells clients that she has several takeaways from the meeting with HAL’s leadership team. First of all, it is estimated that the industry would need to drill 6,000 oil wells, implying 500 drilling rigs and roughly 200 frac fleets are required to keep U.S. production flat. Many E&Ps are placing a significant focus on keeping production flat, meaning that the frac count could more than double next year. The analyst added, “HAL expected a ‘fast start’ to U.S. activity in 2021, vs a ‘slow build’.” On top of this, Sedita stated, “The company believes the U.S. market comes back at two-thirds of the level of prior activity, but the overarching goal is to generate higher EBITDA, and more importantly higher FCF in a structurally smaller market. Given the right-sizing of their structural costs ($1.3 billion in structural cost-cutting in 2019-2022), the company believes normalized margins in the mid-teens are achievable.” Additionally, as demand for oil and gas bounces back, activity increases and there are fewer players in the market, margins could experience a meaningful recovery in 2022. Speaking to the reduction of competitors, the cost of capital is growing for smaller names, and the sector is seeing large quantities of equipment leave the market as more companies face headwinds. Sedita explained, “The market could see consolidation merely to increase access to capital, vs gain scale.” When it comes to international markets, 2021 is expected to start off at a slower pace, but Sedita believes it will pick up. “HAL noted that the ‘most economic’ barrels are in the International markets, and not in the U.S. and expected the International markets to be long-term drivers of growth. Artificial lift (ESPs in particular) and chemicals should continue to see growth, as well as completion technology,” she commented. For pricing, there isn’t “a lot to give back,” so there should be limited pricing pressure, in Sedita’s opinion. HAL also thinks margins will trend higher over time in the international markets. Variable costs are slated to return at lower levels, with debt reduction and returning capital to shareholders remaining key priorities, so the deal is sealed for Sedita. To this end, she reiterated her Buy rating. The price target was also lifted from $20 to $22.50, implying shares could gain 38% in the next twelve months. (To watch Sedita’s track record, click here) Looking at the consensus breakdown, 6 Buys and 10 Holds have been published in the last three months. Therefore, HAL gets a Moderate Buy consensus rating. Based on the $15.70 average price target, shares could drop 4% in the next year. (See Halliburton stock analysis on TipRanks) Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
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TheStreet.com
Bearish Bets: 2 Nasdaq Stocks You Should Consider Shorting This Week
Using recent actions and grades from TheStreet’s Quant Ratings and layering on technical analysis of the charts of those stocks, Trifecta Stocks identifies five names each week that look bearish. While we will not be weighing in with fundamental analysis we hope this piece will give investors interested in stocks on the way down a good starting point to do further homework on the names. 51job, Inc. recently was downgraded to Hold with a C rating by TheStreet’s Quant Ratings.
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TipRanks
3 Monster Growth Stocks That Still Have Room to Run
For the stock market, is it onwards and upwards? As the dog days of summer come to a close, stocks have ripped higher in a remarkable fashion, with the market sitting at record highs. That said, when we make our way into September, a historically rough month for equities, should investors put their hunts for compelling plays on hold? Not necessarily. The pros on Wall Street have set their sights on a select few names with growth prospects that can only be described as monstruous. We aren’t exaggerating here. These stocks have already posted some serious gains in 2020, with analysts arguing there’s more than enough fuel in the tank to keep the rally alive. Bearing this in mind, we used TipRanks’ database to pinpoint three stocks deemed as exciting growth plays by the analyst community. According to the platform, each ticker has received Buy ratings and boasts substantial upside potential. ACM Research Inc. (ACMR) Operating as a wafer fab equipment (WFE) supplier, ACM Research specializes in wet processes including wet clean and electroplating. With shares notching a 398% year-to-date gain, it’s no wonder Wall Street focus has locked in on this name. Writing for Needham, five-star analyst Quinn Bolton believes ACMR does in fact have more “room to run.” He notes this name has had “a monstrous run this year,” and was able to deliver solid Q2 2020 results. Digging deeper into the details of the print, revenue, non-GAAP gross margin and non-GAAP EPS all exceeded Bolton’s expectations. ACMR also reported shipments of $45 million in the quarter, which sets “the stage for sequential revenue growth in Q3 2020,” in the analyst’s opinion. “The company provided several product and business highlights, but the most noteworthy in our view are the announcement of ~ $36 million orders from two China-based analog and power devices companies and the announcement of a repeat order for its Tahoe platform. According to management, most of the $36 million tools will ship in 2H20 and 2021,” Bolton added. Going forward, management raised its outlook for 2020 from $130-$150 million, which had a potential C2H20 DRAM recovery built in as the swing factor, to $140-$155 million, factoring in only modest DRAM investment. “The stronger revenue outlook is driven by an improving China WFE outlook that has risen from $8-9 billion to $10-plus billion, which may still have upside as SMIC just raised CapEx again. ACMR management expects domestic China WFE will grow in 2021 setting the stage for further revenue growth next year,” Bolton explained. To this end, he sees the business fundamentals as being robust. That said, Bolton points out that the share price is “less fundamental driven but more trading driven today as ACMR’s China subsidiary is expected to list on China’s STAR Market that typically values semiconductor and semicap stocks at 31-35x EV/sales (vs. less than 10x in international markets),” with it hard for him to value the stock. However, this doesn’t change Bolton’s bullish thesis. “By comparing SMIC’s relative valuations on the STAR Market and Hong Kong Exchange, we believe ACMR on NASDAQ could be valued at ~40% of the expected multiple on the STAR Market. This translates to a potential valuation of ~14x EV/CY21 sales leading up to the China IPO expected near year end,” the analyst said. Everything ACMR has going for it keeps Bolton with the bulls. Along with a Buy rating, the analyst leaves a $125 price target on the stock. This target suggests shares could surge 36% in the next year. (To watch Bolton’s track record, click here) Looking at the consensus breakdown, 5 Buys and 2 Holds have been published in the last three months. Therefore, ACMR gets a Moderate Buy consensus rating. Based on the $120.83 average price target, shares could rise 31% in the next twelve months. (See ACM Research stock analysis on TipRanks) TG Therapeutics (TGTX) Primarily focused on the development of cutting-edge treatments, TG Therapeutics wants to improve the lives of patients with B-cell malignancies and autoimmune diseases. Even though this healthcare name has already soared 121% in 2020, several members of the Street believe shares can climb even higher. Ladenburg Thalmann analyst Matthew Kaplan sees big things in store following the FDA’s acceptance of umbralisib’s NDA filing with a Priority Review for relapsed/refractory (r/r) Marginal Zone Lymphoma (MZL) (February 15, 2021 PDUFA) and a Standard Review for Follicular Lymphoma (FL) (June 15, 2021 PDUFA). The Priority Review was based on the Breakthrough Therapy Designation (BTD) umbralisib had previously been granted for MZL. “We expect a commercial launch for the MZL indication could come in Q1 2021. Additionally, the FDA awarded the FL indication a Standard Review (10-month) with a PDUFA date of June 15, 2021. We expect the commercial launch for the FL indication could come in Q3 2021,” Kaplan commented. It should be noted that the FDA doesn’t plan to hold an advisory committee meeting for either indication. To this end, Kaplan stated, “We are encouraged by the acceptance of the umbralisib NDA for review by the FDA and look forward to the potential approval for both the MZL and FL indications in 1H21.” On top of this, additional upside could be driven by regulatory milestones and results from late-stage clinical trials slated for 2H20 and early 2021, in Kaplan’s opinion. In Q4 2020, topline data from the Phase 3 ULTIMATE I and II studies with ublituximab in Multiple Sclerosis (MS) will be read out, with an approval potentially coming in late 2021. The analyst added, “Detailed data from the positive UNITY-CLL trial and detailed data from the UNITY-NHL MZL and FL cohorts, including full efficacy and safety data is expected to be presented at a medical conference in 2020 and we expect the UNITY-CLL NDA/BLA submission in late 2020/early 2021.” Data already released from this trial indicates the therapy showed superior efficacy as it successfully hit the primary progression-free survival (PFS) endpoint. Summing it all up, Kaplan said, “We continue to be impressed with the progress TGTX has made and recommend investors purchase the stock ahead of the significant potential catalysts expected during 2H20.” Therefore, Kaplan kept his bullish call and $44 price target as is. Should this target be met, a twelve-month gain of 80% could be in store. (To watch Kaplan’s track record, click here) What does the rest of the Street think? Only Buy ratings, 5 to be exact, have been received in the last three months, so the consensus rating is a Strong Buy. The $41.80 average price target suggests 71% upside potential. (See TG Therapeutics stock analysis on TipRanks) Vivint Smart Home (VVNT) Making homes smarter, Vivint Smart Home offers products that allow its clients to secure, automate and control their homes. So far in 2020, shares have jumped 67%, but this is only the beginning, according to one analyst. J.P. Morgan’s Paul Coster tells clients he is even more optimistic about VVNT’s long-term growth prospects after speaking with its CEO, noting a “positive re-rating of this somewhat undiscovered growth-stock” could be in the cards. Choosing the company as a top pick in Applied Tech and a Focus List Pick, the analyst is “looking for a homerun here.” Expounding on this, Coster stated, “We believe growth momentum, revenue visibility, expanding margins, improved cash flow, and optionality warrant a close look at this leader in smart home solutions by tech investors, by GARP investors, and a re-rating could be spurred on by branding events and improved stock liquidity.” To back this up, Coster cites VVNT’s Q2 earnings release, which he believes was “pivotal.” During the quarter, the company reported 9% year-over-year growth despite COVID-19’s impact on door-to-door sales and the planned temporary withdrawal from the Canadian market. Additionally, all operational metrics got a major boost, with churn, customer acquisition cost and subscriber service cost dropping. If that wasn’t enough, adjusted EBITDA margins reached approximately 50% and cash flow from operations turned positive, one year earlier than expected, and almost all upfront equipment sales are now either paid-in-full or third-party financed through FlexPay. Coster added, “The company raised guidance for the year. Various thresholds were crossed, and we think the bearish concerns that accompanied that SPAC are largely put to rest.” Reflecting additional positives, 90% of 2020 revenue was contracted in previous years, and 95% of revenue is recurring. With its subscriber base, which currently lands at 1.6 million, expanding at about a 15% CAGR, Coster thinks “VVNT has a meaningful leadership position in the professionally-installed, smart home/home security space at a time when homeowners are making significant investments in their homes.” The analyst also mentioned, “Though the solution is largely focused on security today, the firm has a path to grow into near adjacencies, the most exciting of which is likely to be home insurance (they have an enormous amount of data regarding the home, its occupants and their behaviors), but could include home automation, age-in-place services, telehealth and so on. We think Google’s investment in ADT is a validation of the space and its potential.” With VVNT placing a significant focus on increasing brand awareness, which could benefit sales, and launching an insurance product, the deal is sealed for Coster. As a result, he reiterated his Overweight rating. Given the $30 price target, shares could gain 74% in the next twelve months. (To watch Coster’s track record, click here) Turning now to the rest of the Street, opinions are split evenly down the middle. 2 Buys and 2 Holds assigned in the last three months add up to a Moderate Buy analyst consensus. In addition, the $21.75 average price target implies upside potential of 26%. (See Vivint Smart Home stock analysis on TipRanks) Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
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Benzinga
AT&T Eyeing Sale Of Half Its DirecTV Stake: Report
AT&T (NYSE: T), has hired Goldman Sachs Group Inc. (NYSE: GS) to see through the process of offloading its stake in DirecTV, according to a Wall Street Journal report.What Happened: AT&T acquired DirecTV in 2015, and the total purchase price including assumed debt was about $67.1 billion.With the rise of various digital and OTT platforms like Netflix Inc. (NASDAQ: NFLX) there has been a steady decline in the subscriber base of DirecTV, and this is said to be the reason AT&T is exploring a sale. Advisors from Goldman Sachs and officials from AT&T have been in talks with private equity companies, WSJ said in a late Friday story, citing unnamed people familiar with the matter.Apollo Global Management Inc. (NYSE: APO) and Platinum Equity are seen as potential suitors, the report said. Why It’s Important: AT&T is planning to hold on to 50% of the assets, which would allow the telecom giant to enjoy the benefits of DirecTV’s distribution network.If AT&T can sell half of DirecTV’s stake at $34 billion, it would be a no-profit, no-loss scenario for the company, and it could still generate revenue from the remaining half of DirecTV’s assets, according to WSJ. What’s Next: AT&T CEO John Stankey made his intentions about the deal clear when he said that the company should focus more on core competencies like connectivity services.Cell phone and broadband services have been the main revenue-generating segments for AT&T, accounting for more than half of the company’s annual revenue.The company could still retain the pay-TV customers even if they decide to drop the satellite infrastructure, according to the report.Photo by HurricaneGeek2002 via Wikimedia. See more from Benzinga BlackRock Forays Into Mutual-Fund Business In China: WSJ FDA Issues Emergency Use Of Convalescent Plasma For COVID–19 Treatment Tesla The 13th Most Valuable Stock On US Exchanges, Leading Auto Competitors(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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InvestorPlace
Why Nvidia Stock Still Has More Upside Left
The run in Nvidia (NASDAQ:NVDA) has been stunning, and deservedly so. With NVDA stock up 183% from the March lows, many investors are beginning to wonder just how high this name can go.Source: JHVEPhoto / Shutterstock.com That’s a fair question at this point, even from those that have been long. However, investors also need to realize the underlying mechanics of the market. Understanding DemandHindsight is obviously 20/20 right? It’s easy to sit here now at the end of August and pound our chest about being long stocks. Well in April — when the action looked like a bear-market rally — it wasn’t easy staying long. In May, when the market was flirting with another breakdown, it wasn’t easy to champion a bullish stance. InvestorPlace – Stock Market News, Stock Advice & Trading TipsNow that everything has resolved to the upside, it’s easy to be the bull. But understanding the underlying mechanics is necessary to learn for the future. NVDA stock was a steal below $200 per share. At that time, it was a value play. In the months since though, it was a momentum play. That’s as large cap tech was clearly in demand. That’s shown by how much faster the Nasdaq hit new highs before the S&P 500. Simply put, there was more demand for tech than other sectors. That was a plus for Nvidia.But the other big positive? Nvidia has growth — and not only growth, but accelerating growth. It’s the kind of thing I like to see with the stocks I pick for my 5G Highway Super Portfolio. Put simply, the pandemic has been good for business. That has made Nvidia among a smaller cohort of stocks that are now growing even faster, while a larger group of stocks have little or negative year-over-year growth. That creates even more demand for a stock like Nvidia. I have been talking about this concept — that growth stocks accelerating their growth deserve a higher premium — for months now. 30 Dividend Stocks to Buy Now for 20 Years of Income Growth So next time, analyze what part of the market is in demand, then what stocks in that group are in even higher demand. Breaking Down NVDA StockWhen the company reported earnings in May, upside guidance really blew Wall Street away. However, despite elevated expectations coming into the most recent earnings result, Nvidia again delivered. Earnings and revenue topped expectations, with the latter growing 50% year-over-year. Gross margins also came in ahead of estimates. But on top of all that, management said it expects fiscal third-quarter revenue of $4.4 billion, well ahead of consensus estimates at the time for $3.97 billion in sales. Friends, there’s no other way to say this: Nvidia’s products are in robust demand. Its data center business just had its best quarter. Gaming — as we know from our prior coverage — has been robust as well. Demand for A.I. and cloud applications is through the roof. Those two catalysts are also what makes it a promising 5G stock to consider. Nvidia isn’t just a 5G “road builder” like some companies investors like to hype up. It’s going to be a driver on what I call the “5G Highway.” It’s going to lead some of the greatest innovations as we step into a future that brings our biggest sci-fi dreams into reality. While the Mellanox deal took longer than expected to close, it has immediately added to Nvidia’s business. This is no surprise, as management told us it would be accretive to cash flow, margins and earnings from day one. Admittedly, some areas of its business are struggling as the sectors that it caters too — for instance, automotive — are in a tough spot due to the novel coronavirus. But as a whole, Nvidia’s businesses are booming and thus, NVDA stock has been on fire. This rally is deserved, even if the stock is getting stretched. Bottom Line on Nvidia Click to EnlargeSource: Chart courtesy of StockCharts.comSome investors are becoming concerned about the move, asking “just how far can Nvidia go?”While the valuation is becoming stretched — now at 46 times next year’s earnings estimates — realize that price-to-earnings ratios are not the all-encompassing deciding factor in the stock market. Otherwise, this latest rally in the market would have never occurred. Valuation isn’t irrelevant, but there are more factors in play than just that. There was clear hesitation by investors after earnings. Despite a strong quarter, the stock stalled, ending flat on the day after it reported. That said, it only took a day for buyers to come back to NVDA stock. Shares soon cleared $500 and continue to hold above that mark now.On the upside, look for a rotation over the current high at $516.50. Above that puts the 261.8% extension in play up near $535. Above that mark and shares can again start to push higher. While the run seems extreme, investors have to realize that Nvidia is a backbone in the tech sector. It’s not just a component that can be swapped with others; in many cases it’s a critical pillar that makes it possible. For this reason, not only does Nvidia stock deserve a premium, but it will also continue to fuel growth. Regardless of what the share price does, NVDA stock has great fundamentals and that will continue to drive this stock higher for the long term.But if you’re looking for the most profitable stocks to buy on 5G prospects, Nvidia is just the tip of the tip of the iceberg. Investors can discover new companies developing revolutionary technologies to make the most of our hyper-connected future.As the chief technology analyst at InvestorPlace, I’ve curated The 5G Highway Super Portfolio … a tactical approach to investing in 5G that maximizes short-term and long-term gains. In this special report, I uncover the 5G equivalents of the hottest tech behemoths and more.With a proven track record in making calls on tech titans far before they dominated the field, my research team and I have demonstrated the know-how needed to sift through the 5G duds to find the real gems. I’ve found companies at the forefront of key 5G revolutions: movements in driver-less cars, virtual reality and remote surgery … just to name a few.On the date of publication, Matt McCall did not have (either directly or indirectly) any positions in the securities mentioned in this article. The InvestorPlace Research Staff member primarily responsible for this article had a long position in NVDA. The InvestorPlace Research Staff member did not have (either directly or indirectly) any other positions in the securities mentioned in this article.Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. Click here to see what Matt has up his sleeve now. More From InvestorPlace Why Everyone Is Investing in 5G All WRONG America’s 1 Stock Picker Reveals His Next 1,000% Winner Revolutionary Tech Behind 5G Rollout Is Being Pioneered By This 1 Company Radical New Battery Could Dismantle Oil Markets The post Why Nvidia Stock Still Has More Upside Left appeared first on InvestorPlace.
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InvestorPlace
Novavax Is Conducting Clinical Trials: The Ride In NVAX Stock Will Continue To Be Wild
Gaithersburg, Maryland-based late-stage biotechnology company Novavax (NASDAQ:NVAX) has been working on a vaccine against the novel coronavirus. So far in 2020, NVAX stock is up over 2,500%. In other words, $1,000 invested in the company in early spring would now be worth over $26,000.Source: Ascannio/Shutterstock.com On Aug. 5, Novavax stock reached a 52-week high of $189.40. As I write, it is hovering at $110. Therefore, investors are wondering if now would be a good time to invest in the shares. As of Aug, 26, the number of globally reported Covid-19 infections has passed 24 million. The outbreak has already killed close to 850,000 people. Therefore individuals and governments are ready to welcome the news that a vaccine or drug is ready for global use. However, it is unlikely that a therapy will be ready shortly or all biopharma companies that are working on a cure against the virus will cross the finishing line. Thus investors in Novavax stock should be ready for more volatility in the shares. The Phase 2 Study Is UnderwayNovavax specializes in the development and commercialization of vaccines to prevent serious infectious diseases, such as seasonal influenza, Ebola, MERS, SARS, and most recently COVID-19.InvestorPlace – Stock Market News, Stock Advice & Trading Tips 9 Gold Stocks to Buy That Still Have Room to Run Since March, whenever management has put out a press release on the potential development of the COVID-19 vaccine, the stock price has reacted, mostly positively. For example, in early July the group secured $1.6 billion in funding from Operation Warp Speed. And investors were delighted. Later on Aug.4, it announced positive Phase 1 data for its COVID-19 vaccine candidate. the next day, the stock soared.On Aug. 24, Novavax said it initiated Phase 2 portion of Phase 1/2 Clinical Trial of COVID-19 vaccine. It will enroll up to 1,500 volunteers in US and Australia, with approximately 50% between the ages of 60 and 84. Novavax expects interim data from this trial in the fourth quarter of 2020.Shareholders are hoping that if all goes well with Phase 2 testing, management then could quickly move into the late-stage testing. Thus the results of the current pivotal study could change the fortunes of investors. But the company is still a long way away from delivering a final product. And the stock has been under pressure the past several trading sessions. What Could Derail NVAX Stock Further?Research led by John Billington of Belgium-based GSK Vaccines, a division of GlaxoSmithKline (NYSE:GSK), one of the most important vaccine manufacturers worldwide, concludes, “Vaccine development involves a substantial investment and a high risk of failure. Typical vaccine development programs from discovery to licensure can cost companies upwards of a billion dollars, can take over a decade to complete, and on average have a 94% chance of failure.”Not many investors knew of Novavax six months ago. In mid-March, NVAX stock was around $6. Now it is hovering at $110. And the biotech company is in the limelight in the race to develop a coronavirus vaccine.At present, in addition to Novavax, a wide range of companies are working on a therapy against the novel coronavirus. They include both big pharma names as well as smaller biotechnology companies such as Amgen (NASDAQ:AMGN), AstraZeneca (NYSE:AZN), BioNTech (NASDAQ:BNTX), Gilead (NASDAQ:GILD), GlaxoSmithKline, iBio (NYSEAMERICAN:IBIO), Inovio Pharmaceuticals (NASDAQ:INO), Moderna (NASDAQ:MRNA), Pfizer (NYSE:PFE), Sanofi (NASDAQ:SNY), and Sorrento Therapeutics (NASDAQ:SRNE).If Novavax cannot deliver on the initial excitement of the past several months, Novavax stock may easily fall as fast as it went up. In fact, the 52-week high of early August seems quite far away in the back mirror.It is also important to remember that Novavax is a loss-making firm. It doesn’t have any products on the market, yet. On Aug, 10, Novavax released its Q2 earnings and reported revenue of $35.5 million and net loss of $17.5 million. The market seems to have already bought the potential revenue from a possible COVID-10 vaccine. The Bottom LineIn the coming weeks, shareholders will pay close attention clinical updates from various vaccine developers like Novavax. Even if successful clinical trials finalize soon, that does not necessarily mean the U.S. Food and Drug Administration (FDA) will accept a vaccine application. Therefore, more stomach-churning volatility is possible in Novavax stock.If you are an investor who has participated in the mouth-watering gains in Novavax shares, you may want to take some money off the table.Alternatively, if you currently own the stock, you may also consider initiating a covered call position with approximately a six-week time horizon — so Oct. 16 expiry. Such a covered call position would enable to you to participate in a potential up move and also offer you some downside protection.If your portfolio can handle a high risk/high return investment, then you may want to consider investing in NVAX stock, especially if the price dips below $100.Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, including a Ph.D. degree, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation. She also publishes educational articles on long-term investing. As of this writing, Tezcan did not hold a position in any of the aforementioned securities. More From InvestorPlace Why Everyone Is Investing in 5G All WRONG America’s 1 Stock Picker Reveals His Next 1,000% Winner Revolutionary Tech Behind 5G Rollout Is Being Pioneered By This 1 Company Radical New Battery Could Dismantle Oil Markets The post Novavax Is Conducting Clinical Trials: The Ride In NVAX Stock Will Continue To Be Wild appeared first on InvestorPlace.
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Bloomberg
Is Big Oil Still a Big Deal?
(Bloomberg Opinion) — From Monday there will be just one oil company in the Dow Jones Industrial Average — Chevron Corp. The removal of Exxon Mobil Corp. from the index after an uninterrupted presence since 1928 shouldn’t come as a surprise. It’s not the end of Big Oil, but it may signal the start of the beginning of the end.It may seem odd to remove one of only two oil companies in the index at a time when the shale boom has transformed America’s role in the global market. After all, the U.S. now produces more oil and more natural gas than any other country. Last year’s domestic oil production was up by 125% from levels in 2010, while gas output has increased by 60%.But those figures only tell part of the story, and not the most important part.It’s not the first time that there’s only been one oil and gas company in the Dow. The last time was between 2000 and 2008, when Exxon was the sole industry representative. Before that you have to go back to the 1920s. For a brief period of two weeks in 1924, there were none at all.Why remove Exxon rather than Chevron? That’s easy. The Dow is calculated using share prices, not market capitalization, so Chevron’s higher share price (it’s more than twice that of Exxon’s) gives it greater weight in the index. At the close of business on August 27, Chevron accounted for 2.04% of the Dow; Exxon just 0.96%.Removing Chevron would have reduced the weight of oil to an unreasonably low level. Its stock has also outperformed that of its larger rival over almost any recent period you care to choose.The replacement of Exxon with Salesforce.com, a cloud-software bellwether, reflects the evolution of the U.S. economy even as the current president champions the fossil fuel industries.The first shale boom, which saw natural gas output start to rise from 2005 and oil follow it five years later, helped spur a massive surge in jobs in the sector. The number of people employed in oil and gas extraction rose from about 125,000 in the first half of 2005 to a peak of more than 200,000 at the end of 2014, according to the Bureau of Labor Statistics. The second shale boom only created a quarter of the jobs that had been shed in the sector between 2015 and 2017 before it ran out of steam at the end of last year — and then the Covid-19 pandemic struck.Despite record production levels, oil and gas extraction contributed a mere 1% of U.S. GDP last year, according to the Bureau of Economic Analysis.Oil just isn’t what it was to the U.S. economy and, with much of the shale boom driven by small independent oil and gas companies, Big Oil is even less important.It is not just in the U.S. that Big Oil faces headwinds. Its opportunities and reputation are in decline worldwide.The oil majors, including Royal Dutch Shell Plc, BP Plc and Total SE, operate in a world where they are often denied access to prime prospects. They’re kept from investing in key areas of low-cost production, such as Saudi Arabia, Iran, Venezuela and Russia, by local laws or the risk of sanctions. In other areas, they face contract terms that make investment unattractive.It’s not just the lack of opportunities to discover and develop big, new oil fields. The companies are facing the need to reinvent themselves in a world where their core product is coming under increasing pressure from consumers for its impact on climate change and local pollution. And the long, hard slog of trying to turn themselves into producers of sustainable energy has only just begun.Exxon’s removal from the Dow may not signal the end of Big Oil, or even that its end is near, but it is reflective of the industry’s failure so far to adapt.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Julian Lee is an oil strategist for Bloomberg. Previously he worked as a senior analyst at the Centre for Global Energy Studies.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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Benzinga
Barron’s Picks And Pans: McDonald’s, Salesforce, Starbucks And More
This weekend’s Barron’s looks at homebuilder stocks that are poised to soar. Other featured articles focus on COVID-19 stocks, real estate investment trusts and disruptive global tech companies. Also, the prospects for a fast-food giant, an auto parts leader, a top software provider and more.The Housing Market Is on Fire. These Stocks Could Benefit.” by Shaina Mishkin makes a case that homebuilders like Toll Brothers Inc (NYSE: TOL) that have lagged could catch up as housing demand continues to swell.Avi Salzman’s “McDonald’s Battles Its Former CEO. Why It’s Still a Buy.” points out that fast-food giant Mcdonald’s Corp (NYSE: MCD) managed to prosper during the pandemic, but it also faces some ugly courtroom fights.In “Investors Are Betting Big on a Covid-19 Vaccine. Is That Safe?,” Josh Nathan-Kazis suggests how it could play out as vaccine candidates from Johnson & Johnson (NYSE: JNJ), Pfizer Inc. (NYSE: PFE) and others get ready for prime time.See why Barron’s believes auto-parts giant Magna International Inc. (NASDAQ: MGA) could play a major role as car sales recover in “Magna Builds Its Electric Future by Making Cars for Start-Ups That Can’t” by Al Root.In Andrew Bary’s “New York City’s Offices Are Empty. How to Gamble on a Recovery,” see why Barron’s thinks Vornado Realty Trust (NYSE: VNO) and other real estate investment trusts (REITs) could offer a cheap post-pandemic play.See also: 2 Reasons Millennials Are Pouring Into The Stock Market For The First Time”These Global Tech Companies Can Go the Distance” by Leslie P. Norton reveals what is to like about disruptive companies from outside the United States, such as Bilibili Inc (NASDAQ: BILI) and Wix.Com Ltd (NASDAQ: WIX).This past week, software company salesforce.com, inc. (NYSE: CRM) shares soared for a couple of reasons. So says Al Root’s “Salesforce Rises After It’s Included in the Dow. But Earnings Drive the Stock Even More.”In “Starbucks Stock Gets a Post-Covid Jolt,” Ben Levisohn discusses why every step closer to social normalcy after the COVID-19 crisis should help restaurants generally, and Starbucks Corporation (NASDAQ: SBUX) specifically, thanks to its proven adaptability.Also in this week’s Barron’s:Why cities and states face a $1 trillion budget mess Whether stocks are rising into a treacherous fall How initial public offerings are catching a perfect wave How future prosperity depends on narrowing the income gap Funds that beat the market without the FAAMG stocks The price of the new Federal Reserve policy Whether activists will focus on energy and health care next year Whether Saudi Aramco can keep its dividend pledge A new auto design trend influenced by COVID-19At the time of this writing, the author had no position in the mentioned equities.Keep up with all the latest breaking news and trading ideas by following Benzinga on Twitter.See more from Benzinga Barron’s Picks And Pans: Apple, GM, Oracle, Softbank And More Barron’s Picks And Pans: Dollar General, IAC, Wells Fargo And More(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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InvestorPlace
5 Top Stock Trades for Monday: CHWY, TSLA, ZM, APPS, BIG
Monday will mark the last trading day of August, as investors turn their attention to September and begin to flip through the monthly charts looking for new setups. With that in mind, let’s look at a few top stock trades. Top Stock Trades for Monday No. 1: Chewy (CHWY) Click to EnlargeSource: Chart courtesy of StockCharts.comI love the way Chewy (NYSE:CHWY) has been trading. And given the momentum we’re seeing in technology and e-commerce, it only makes sense that that momentum starts to creep into Chewy stock.I have been vocal about this one breaking out. And with shares hitting new all-time highs, we’re getting the move we were looking for. Shares have done a good job riding the 10-day moving average, while uptrend support (blue line) seems to be giving Chewy the boost it needed.InvestorPlace – Stock Market News, Stock Advice & Trading TipsIf we measure from the March low to the June 2019 high, we get a two-times range extension near $62. Near there now, investors will be looking for a further run, potentially ahead of earnings scheduled for Sept 10. A longer term price target could be the 261.8% extension, up near $75. 9 Gold Stocks to Buy That Still Have Room to Run On the downside, though, a break of the 10-day and 20-day moving averages and uptrend support, could put the $52.50 level back in play. Top Stock Trades for Monday No. 2: Tesla (TSLA) Click to EnlargeSource: Chart courtesy of StockCharts.comTesla’s (NASDAQ:TSLA) 5-for-1 stock split will go into effect on Monday. AND After rallying 60% in 13 trading sessions and amassing a market capitalization of more than $400 billion, is Tesla finally running out of energy?If not, look for a run to the 361.8% extension at $2,588. If it gets there, it will put shares past $500 on a split-adjusted basis.On the downside, however, a move below the three-times range extension at $2,205 could put the 10-day moving average back in play — as well as the 161.8% extension at $1,969.I don’t want to call Tesla a bubble, and I don’t bet against exponential risers like this. But ultimately, this type of move is not sustainable, in my experience. That said, bravo to the bulls in this one. Top Stock Trades for Monday No. 3: Zoom Video (ZM) Click to EnlargeSource: Chart courtesy of StockCharts.comZoom Video (NASDAQ:ZM) continues to trade quite well, although it’s looking more and more indecisive near current levels.Shares finally broke out over $275 earlier this month, a level that has now been acting as support. So is the 10-day moving average. If Zoom loses a bit of momentum, though, these two areas will be the first spots bulls look for a bounce.Below them could put the 50-day moving average in play, which historically has been a great buying spot (with the exception of its test in August).So far, $300 has been a better sell than buy, although Zoom isn’t getting hammered from this spot. Let’s see if shares can rotate over this level and continue higher. A close above this week’s high at $303.58 would be a good start. 7 Strong Stocks to Buy to Avoid Portfolio Overvaluation Also, keep an eye on travel stocks and “anti-coronavirus” plays. If they gain momentum, the so-called “Covid-stocks” may start to dip — like Zoom. Top Stock Trades for Monday No. 4: Digital Turbine (APPS) Click to EnlargeSource: Chart courtesy of StockCharts.comDigital Turbine (NASDAQ:APPS) is gaining attention among traders. This name gapped up impressively earlier this month and ran to $28 before topping out.For now, the dip to the 20-day moving average is triggering a bounce. Let’s see if it’s enough to send APPS back to $28. Above $28, and $30-plus could be in play.If the stock takes out this week’s low at $22.30, it puts the gap-up low in play at $19.32, along with uptrend support (blue line). Below that and the 50-day moving average is on the table, followed by a full gap-fill toward $16.30. Top Trades for Monday No. 5: Big Lots (BIG) Click to EnlargeSource: Chart courtesy of StockCharts.comBig Lots (NYSE:BIG) is striking out on earnings, dipping 10% after reporting its quarterly results.On the plus side, though, shares are dipping down to the 20-day moving average and two-times range extension. If it holds, look for a rotation back up to the highs near $57.25. Above that puts the 261.8% extension in play at $61.08.Short of a gap-down or big flush, the current dip gives buyers a reasonable risk/reward.On the downside, a break of current support likely puts $43 to $45 in play. There, Big Lots finds a prior breakout level, the 50-day moving average and uptrend support (blue line).On the date of publication, Bret Kenwell held a LONG position in CHWY.Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. More From InvestorPlace Why Everyone Is Investing in 5G All WRONG America’s 1 Stock Picker Reveals His Next 1,000% Winner Revolutionary Tech Behind 5G Rollout Is Being Pioneered By This 1 Company Radical New Battery Could Dismantle Oil Markets The post 5 Top Stock Trades for Monday: CHWY, TSLA, ZM, APPS, BIG appeared first on InvestorPlace.
