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Tag: Finance

  • How to Choose the Right Debt Provider for Your Business

    How to Choose the Right Debt Provider for Your Business

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    Opinions expressed by Entrepreneur contributors are their own.

    When founders think of raising debt, they often imagine going to a bank. In my three years advising companies on debt financing options, I frequently remind founders that banks are certainly an option — but not the only one. Founders exploring debt should familiarize themselves with all of the options in the market, from traditional asset-based loans to more innovative venture debt and revenue-based financing solutions.

    These various lenders don’t just have distinctive structures and terms for their capital, they also each have a particular set of criteria to qualify for a loan. By acquainting yourself with the entire market upfront, you can focus on the lenders that suit your business the best, maximize the number of term sheets you receive and spend less time chasing dead ends.

    Related: Why Founders Should Embrace Debt Alongside Equity

    Banks

    Banks themselves come in various shapes and sizes. When it comes to business loans, you have your regional community banks, large multinational banks and specialized venture debt banks. Sometimes one large bank may roll up all of these divisions under one roof, providing a range of options from revolving lines of credit, term loans, warehouse lines and more.

    Oftentimes these banks have access to the cheapest available capital and therefore can offer you the lowest interest rate. But bear in mind that while this is usually the cheapest option, banks also have a high bar to qualify for their capital. They may include covenants or other performance requirements to ensure the business continues to meet their benchmarks throughout the duration of the loan.

    For many small businesses, taking a loan from a local community bank can be a simple low-cost option. But be aware that they may have minimum asset or cash flow requirements to qualify or even ask for a personal guarantee.

    Venture debt banks, on the other hand, specialize in VC-backed cash-burning businesses that show huge growth potential. Oftentimes, getting a loan from one of these banks requires several rounds of equity from brand-name venture capital funds, providing up to 25-35% of your most recent equity raise amount.

    Eventually, once your business is generating several millions of dollars in cash flow, an even wider spectrum of bank options opens up including some of the largest multinational banks.

    Venture debt funds

    More traditional venture debt offerings are very similar to those one would find at a bank. A three- to four-term loan structure is standard, though generally, rates are more expensive than banks with the flipside of a greater quantum of capital.

    Similarly, venture debt funds look for VC-backed companies or at least some form of institutional backing, rapid growth and high LTV/CAC. More bespoke options do exist as well, oftentimes branded as growth debt rather than venture debt, since they can provide capital to angel-backed or even fully bootstrapped businesses.

    Both of these options typically come at a cost of capital in the teens with interest-only periods and can be quite creative in structure. Founders should be aware that for both venture debt banks and funds, loan packages often come with warrants — effectively an option to purchase shares of the company in the future at a fixed price. Meaning, a small amount of dilution should be expected, though some lenders in this space pride themselves on being fully non-dilutive.

    Related: When is the Best Time to Raise Venture Debt – Here’s the Key

    Revenue-based financing (RBF)

    An increasingly popular non-dilutive financing solution for early-stage companies is technically not debt. Revenue-based financing functions more akin to a cash advance. Capital injections are repaid as a percentage of monthly revenues, as opposed to a fixed principal repayment schedule.

    If you’re looking for the fastest path to receiving capital, revenue-based financing is the solution. Many firms that use API integrations to your accounting and commerce data are able to aggregate that data through their underwriting systems and offer terms in 24-48 hours.

    While this capital tends to be on the more expensive side, speed and flexibility make up for it. Unlike other lenders, RBF facilities usually don’t require collateral or impose restrictive covenants that may limit your ability to grow.

    In terms of qualifying for an RBF, monthly revenue minimums can be as low as $10K with at least six months of operating history. The crucial requirement is to show evidence of recurring revenue. This usually means SaaS revenue with low churn, but can also be applied to most subscription-style businesses or even transactional ecommerce businesses that show a strong history of sticky customers.

    Non-bank cash flow lending

    Traditional private credit funds lend to established companies that have several years of traction under their belts. They generally are EBITDA or cash flow positive, some starting at as low as $3M annual EBITDA while others require $10M+. Businesses can be founder or sponsor-owned, and range from fast-growing later-stage tech companies to more traditional businesses and even turnaround financing for distressed situations.

    Use of capital covers a huge spectrum from funding leveraged buyouts or asset purchases to growth capital. Funding structures run the gamut, from senior secured to mezzanine debt (below senior lenders but above equity-holders) or even preferred equity in the capital stack. Rates are typically higher than banks from single digits to mid-teens, with three- to five-year terms. Closing fees and exit fees are common, as are covenants, and loan sizes are derived either holistically on the business fundamentals or as a function of cash flow.

    Non-bank asset-based lending (ABL)

    An ABL facility allows borrowers to use an asset as collateral for a line of credit or term loan. The asset can be as liquid as accounts receivable and inventory or as illiquid as real estate or a specific piece of equipment. Some of these loans can be secured with just one asset. For instance, a company needs a new warehouse and gets ABL financing for that, or it could be a combination like A/R and inventory.

    Asset-based lenders will often focus on a specific industry and require a minimum amount of whichever asset(s) they specialize in (accounts receivable, inventory, capital equipment, real estate or even intellectual property). Those assets can be held on the books as collateral or in some cases purchased outright at a discount (receivables factoring, for example).

    Unlike the other debt facilities covered, ABLs normally carve out a specific asset rather than taking a security interest on the entire company. This lowers the risk for borrowers and provides some flexibility to stack on additional debt, provided they can cover it. The advance rate (the amount of cash you get up-front) is usually between 50% and 90% of the value of the pledged assets.

    Related: The Old-School Solution to Cash Flow Problems Hiding in Your Receivables

    Questions to ask yourself

    As you consider which debt provider to approach, you need to think about the characteristics of the funding vehicle that will unlock the long-term potential of your business — while covering your short-term cash flow needs. Don’t forget that each lender has its own unique criteria. Fundraising without a clear plan of action can become a huge time suck for founders, pulling them away from operating the business. By strategizing upfront and learning the market, you can ensure that you only spend valuable time with lenders that can provide a real offer.

    Once the term sheets are in hand, you can now leverage them and pick the terms that are best for you. I’ll discuss that in my next article.

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    Tim Makhauri

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  • First-Time Investor? Here Are 9 Mistakes You Want To Avoid

    First-Time Investor? Here Are 9 Mistakes You Want To Avoid

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    Investing is one of the best ways to build wealth and secure your financial freedom as you get older, especially post-retirement. But if you’re looking to get into the investment game now, you need to beware of certain investing mistakes that are easy for first-time investors to make.

    Read on for 9 beginner investing mistakes to avoid.

    Investing Without a Plan

    First and foremost, investing without a plan is never a good idea, even if you receive a 100% guaranteed profitable stock investing tip from a friend or financial expert. When you put money into the market, you need to know:

    • What is the purpose of that money
    • When you’ll take the money out (“take profit”)

    For example, if you are investing for retirement, you should have retirement investment goals and immediately take money out of the market when you hit those goals. The sooner you have an investment plan, the sooner you can make wise decisions for your portfolio.

    Buying Without Research

    Similarly, you should never purchase a stock, ETF (exchange-traded fund), or another market instrument without extensive research beforehand. If you don’t know what to look for, rely on the advice of a financial advisor who has already done the research for stocks and the market at large and who can make good decisions based on your financial goals and existing savings.

    Misunderstanding Investing Fees

    It’s also a mistake to misunderstand investment fees. When you invest your money in the stock market, you’ll use an investing platform like Fidelity, Due, or something else. Many of these platforms charge minor fees, but that’s not necessarily a bad thing!

    In fact, as a first-time investor, it’s often beneficial to spend $10 or more to get the help and advice of financial advisors so you don’t move your money around unwisely. Don’t think of investing fees as always bad news. Sometimes, they’re necessary to make the most of the stock market.

    Chasing Trends

    Never chase temporary, hot-button trends when it comes to investing. Those trends might appear attractive and potentially profitable, but they are impossible to predict by nature. If you’re unlucky, you could put a lot of money into a trending stock, only for that stock’s value to decrease the next day, causing you to lose a lot of money.

    Watching the Market 24/7

    You’ll drive yourself crazy if you watch the stock market and its endless arrays of charts, lines, and bar graphs 24/7. It’s much better to invest your money and then move on to something else. Check the market every day or week, depending on your goals and the kinds of investments you’ve made. But don’t spend all your time and attention on the market, or you’ll become impatient and potentially make other first-time investing mistakes.

    Following Dubious Advice

    There’s a lot of bad investing advice on the internet, particularly on social media sites, posted by “gurus” who claim to know the secrets to making tons of money. In truth, the best advice isn’t free or readily shared on Facebook. Try to avoid following dubious advice from people you don’t know or trust, especially those advisors with no real-world credentials to back up their claims.

    Investing Money You Don’t Have

    When you invest in the market, only put the money you can afford to lose in stocks, bonds, or other assets. For example, if you’ve been saving up to buy a home, resist the urge to invest that money anywhere until you’re ready to buy your property. Even in the best cases, no one can predict how the market will turn with 100% certainty. Investing money you may need elsewhere soon could jeopardize your financial future or harm your ability to make mortgage payments and cover other essential living expenses.

    Developing Company Loyalty

    From time to time, you might become emotionally attached to a specific company and may want to purchase its stocks for reasons other than making money. This is a beginner’s mistake.

    It’s much wiser to avoid developing any loyalty for companies you invest in. At the end of the day, they’re businesses looking to make money – they have the same goal as you do. The company doesn’t have any loyalty to you, so you should feel no qualms about selling your stocks or other assets in those companies in favor of different investments if the price is right.

    Delaying Investing

    One of the biggest mistakes you can make as a first-time investor is delaying investing. The earlier you put money in the market, even if it’s in a slow-growth, low-risk mutual fund, the more money you’ll have when you retire. Putting money into the market earlier is also better if you’re young since any hypothetical market downturns or bear markets will likely turn back up by the time you need to withdraw your investment cash for retirement or other purposes.

    The sooner you start investing, the better, so get started now, even if it’s just kicking in $50 a month into a safe mutual fund.

    Bonus Mistake: Being Impatient

    Here’s one last mistake you should avoid as a first-time investor: being impatient. When you invest money into a company or any other asset, remember that it will take time to grow in value. “Meme” stocks that catapult in value over a few days or weeks are rare, so don’t let those fool you into thinking they are the norm.

    Instead, it’s more common for your investments to take years or decades to pay off. That’s okay! The last thing you need to do is be impatient and constantly withdraw your money in pursuit of short-term riches. If you’ve made wise investments or are following the advice of a knowledgeable financial advisor, you can let your money sit and grow without any attention on your part.

    Final Words

    Investing for the first time can be exciting, but it can also be risky. Stay smart and cautious, and consider signing up for a financial advisor or retirement advisory service like Due so you can learn the ropes of smart, profitable investing.

    The post First-Time Investor? Here Are 9 Mistakes You Want To Avoid appeared first on Due.

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    Kiara Taylor

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  • What You Should Know About BFSI in 2023 and Beyond

    What You Should Know About BFSI in 2023 and Beyond

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    Opinions expressed by Entrepreneur contributors are their own.

    Very little is clear as we look at the economy in the coming year. Inflation is high, interest rates are heading north, and many fear a recession is coming in 2023. Amidst this uncertainty, there has also been a wave of innovation throughout the banking, financial services and insurance industry (BFSI) — a wave that has only been accelerated by the pandemic and expedited shift to digital and immersive customer solutions.

    Where does the world of BFSI stand in 2023 after years of both tumult and change? We must first take stock of the BFSI landscape in order to decide the strategies and tactics we need to apply in 2023. I won’t pretend to have a crystal ball to tell the future, but after spending my entire career in the industry, I feel safe to make a few predictions about what the year might hold. These are the four trends all BFSI professionals need to be prepared to tackle in 2023:

    Related: This Software can Play an Incremental Role In BFSI Sector

    1. Collections are back

    As the government-mandated moratoriums instated during the pandemic come to an end and we enter a recession, collections will be a huge element of our work in the BFSI sector in 2023. What can we do to prepare ourselves and our customers for this reality?

    We do not want to come barging down doors, demanding collections. We must be mindful and acknowledge there is a journey to the process to avoid burning bridges with our customers. We should prepare for remediation and plan to create unique payment plans that are personalized to the customer. In doing so, we avoid breakage and keep our customers in our house. It’s like asking for couples therapy rather than an outright divorce — if we can figure out a plan together, we are much more likely to maintain our relationship and create loyalty through that remediation.

    Acquisition is far more expensive than retention; if we lose customers left and right in collection, then we are setting ourselves up for much more work (and lost revenue) down the line. Fifty-two percent of consumers switched providers in the last year, largely due to poor customer service, and we do not want to add to that statistic in the collections process. If we can be creative in our remediation tactics, we can likely save the customer, which will not only save money but also create long-term loyalty.

    2. Open banking is an essential tool

    Open banking has been one of the most important changes to hit the world of BFSI since it came into play. It creates one home for all of our assets, offering greater mobility to the consumer and the opportunity for companies to innovate new and exciting financial services.

    For example, customers can now apply for a mortgage without compiling a novel’s worth of paperwork; they can simply give their lender permission to access their accounts and look at their finances. Companies, on the other hand, can now assemble a clear financial picture of a customer’s assets and liabilities by tapping into data from multiple banks.

    Open banking has created greater ease and portability for customers and bankers alike. But as new products, services and capabilities are created in response to this development, we will see an increasingly competitive marketplace. Customers can switch from bank to bank at any time with ease, and, as we know, they are not afraid to do so. This flexibility and access available to consumers both today and increasingly so tomorrow will challenge their existing institutions to provide best-in-class terms and experiences across a vast landscape of services and capabilities. Institutions that acquired and built their customer relationships with a wedge of limited but valuable products will be challenged as providers of a full suite of solutions vie for access to these customers whose asset portability has never been simpler.

    To keep up, banks must prioritize satisfying customer demand to pay any way they want and transform how they engage with their customers to become more personalized. Furthermore, banks should work to align their strategies with the innovation, policies and regulatory changes coming our way. Open banking will be an essential tool for banks and customers alike, attracting customers seeking greater mobility and personalization in their financial services.

    Related: Cyber Security and Its Importance For the BFSI sector

    3. Insurance will be digitized

    Insurance has long been behind other industries when it comes to digitization, and though they began the process in 2020, it was quickly put on pause during the pandemic. Insurance companies need to have a radical leapfrog effect and paradigm shift in strategy, transforming their companies to become digital-first.

    As it stands now, insurance companies have no streamlined customer view. I’ve had my home, auto and flood insurance, among others, with the same company for over ten years, and yet they do not have one unified customer view of my account, nor do they have the digital assets to engage with me. So much so, that when I tried to log onto my car insurance app, it said I was not a customer.

    As we enter the new year, it will be essential for insurance companies to digitize their work and create more personalized engagement with their consumers. Consumers are more loyal when they have personalized services. If you don’t offer personalization, it will be very challenging to have any stickiness in the insurance vertical. Customers will be quick to try new companies because they have no relationship with their current provider, and thus it is no skin off their back to jump ship. This dynamic was played out in the mobile carrier market as it became easier to move providers and take your number with you.

    4. Emerging payments must be reassessed

    Many have said we’re in an emerging payments freeze with crypto, BNPL and P2P, but in reality, we’re merely in a consolidation. The leaves are starting to turn yellow and fall, but the trees are not barren. The world of emerging payments and crypto is on pause, which is not necessarily a bad thing. Now is our opportunity to look at emerging payments and ask, “What do we want to happen in this space? And how can we use the next year or two to build the right tools for emerging payments that the rest of the BFSI industry can leverage?”

    It is an opportunity, just as the start of fall beckons a new school year with fresh notebooks and sharpened pencils, to hone our products, build the right capabilities and then get back out there. Real-world and practical solutions to consumers and institutions will emerge or wilt on the vine, based on applicability. Institutions that build frictionless, embedded and native solutions for their customers to interact with will see share gains coming out of this.

    Related: These #4 Trends Hold The Key For Disruption of the BFSI Sector

    We are financial partners

    Now more than ever, the power is in the hands of the consumer. Banks can no longer coast by merely providing an account and a credit card. Consumers will be out the door before the end of the business day without personalized engagement to support their lifestyle and financial aspirations. A modern bank is a life and planning partner, and as we enter 2023 and all of the uncertainty it holds, our customers will expect to be supported via a wide array of financial services that take advantage of the data at our fingertips and the innovation banging down our doors.

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    Mamta Rodrigues

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  • Facebook’s VR Division Lost $13.72 Billion In 2022

    Facebook’s VR Division Lost $13.72 Billion In 2022

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    Image: Kotaku / Shutterstock / Kevin Dietsch (Getty Images)

    Facebook’s parent company, Meta, is having a decent day today after beating revenue and user activity forecasts for its final fiscal quarter of 2022. But its VR division isn’t helping the company make money. In fact, it’s costing the company billions in losses.

    While it’s true that Meta’s stock is rising in after-hours trading today after sharing fairly positive fourth-quarter financial results, its VR division, Reality Labs, didn’t have such positive news to share, as it’s continuing to blow through money at a shocking rate. Today, the company confirmed it lost over $4 billion to VR and metaverse development in its final quarter of 2022. And in total, it lost well over $13 billion in 2022 trying (and failing) to build a metaverse people would flock to.

    In comparison, Meta brought in $32.1 billion in revenue across all departments and apps.

    As reported by Decrypt.co, Meta’s Reality Labs only brought in $727 million in revenue in the closing months of 2022. That’s not great when compared to the billions spent on the division in the same year, but it’s also worse than you might think. That figure is down 17% from the division’s revenue in the same period of 2021. Ouch.

    Remember too that Facebook’s flagship metaverse software, Horizon Worlds, has basically been a giant flop, with reports that most worlds inside of it are empty and barely played. Not only that, but the company’s own employees barely use it, with a leaked internal memo showing that staff at Meta don’t enjoy using Horizons Worlds because it’s riddled with bugs and other quality issues.

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    Really the only big success story from Reality Labs is the Oculus Quest 2 headset, which was seen by many as an affordable alternative to pricey PC and console VR headsets and was also completely standalone. But in July Meta raised the price of that affordable headset by $100, with the 128GB model now costing $400 and the 256GB version now going for $500.

    In November 2022, Meta laid off 11,000 employees, blaming covid, “macroeconomic downturn, increased competition, and ads signal loss.” Zuckerberg blamed himself for the layoffs, but conveniently didn’t mention in his announcement of layoffs how much money the company is continuing to spent on VR and metaverse development. Over the past few years the company has spent tens of billions of dollars trying to make a VR-powered metaverse a thing.

    And now, in February 2023, following massive layoffs and continued losses, it only has an unappealing and empty PlayStation Home clone to show for all its troubles.

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    Zack Zwiezen

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  • KlimaDAO and SCB Group Carbon Project Financing Partnership: Improved Cookstoves for Rohingya Refugees in Bangladesh

    KlimaDAO and SCB Group Carbon Project Financing Partnership: Improved Cookstoves for Rohingya Refugees in Bangladesh

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    Press Release
    –

    Feb 1, 2023 13:00 EST


    SAN FRANCISCO, February 1, 2023 (Newswire.com)
    –
    KlimaDAO has ratified 250,000 USDC in funding to support the development of the Improved Cookstoves project in Bangladesh in collaboration with SCB Group. The funding will enable the issuance of 31,250 Gold Standard certified carbon credits between 2023 and 2025, with the goal of providing liquidity for consumers within the Digital Carbon Market (DCM) on the Polygon blockchain.

    By rolling out energy-efficient, improved smokeless cook stoves known locally as ‘Chula’ to the community, the project helps address environmental and health issues that stem from the use of inefficient cookstoves and polluting open flames within homes.

    The partnership demonstrates how decentralized mechanisms can be used to transparently allocate resources towards high-impact carbon projects globally, and how community-wide governance can enable greater stakeholder engagement and scrutiny around the type and quality of carbon credits that are bridged into the DCM.

    The partnership announcement comes after three months of discussion on KlimaDAO’s Community Forum and a token vote via the Snapshot platform.

    Drew Bonneau of KlimaDAO said, “This collaboration represents a significant milestone for KlimaDAO and the wider DCM, as the community’s first DAO-wide token vote to allocate funding towards a project financing initiative. The carbon markets are becoming an increasingly important mechanism for directing capital to projects across the globe, and increased community involvement can help raise the scrutiny, scale and profile of project financing. The Improved Cookstoves for Rohingya Refugees in Bangladesh project, with its strong environmental and social co-benefits, now serves as a blueprint for future decentralized carbon project initiatives.”

    Kevin McGeeney, CEO of SCB Group, said, “The on-chain community, always at the forefront of shaping emerging best practice in voluntary carbon markets, has once again demonstrated how forward-thinking and agile it is by agreeing to support this project. I congratulate KlimaDAO for their collaborative approach and am especially pleased I’ve had the honor to visit this project firsthand. The people we’re supporting left everything behind in their homeland of Myanmar, and although they are now safe in Bangladesh, their situation is beyond what most of us can imagine. Your support allows these people to cook their rations and boil their water, saving time that can be more productive and sparing the scarce resources of the surrounding environment in the world’s most densely populated country.”

    About KlimaDAO

    KlimaDAO’s mission is to accelerate the delivery of climate finance globally by building the transparent, neutral, and public infrastructure needed to scale the Digital Carbon Market. Contact KlimaDAO.

    About SCB Group

    SCB has more than 17 years’ experience in the global renewables and commodity markets. With an industry-leading team and more than 100 employees across offices in Chicago, London, Singapore and Geneva, SCB is a world-leading low-carbon commodity company. It provides market-based carbon trading solutions to assist clients in achieving their sustainability goals and supports the financing of high-integrity and quality emission reduction and removal projects. Contact SCB Group.

    Source: KlimaDAO

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  • Investor Alert: Why the Bear Market Might End on 2/1?

    Investor Alert: Why the Bear Market Might End on 2/1?

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    The stock market (SPY) is at a fork in the road coming into the 2/1 Fed announcement at 2pm ET. However, in this case there are 4 different directions stocks could head from here and thus 4 trading plans you should be aware of now. 40 year investment pro Steve Reitmeister spells it all out in his timely commentary below.

    January has been quite bullish. Not just the solid overall gains for stocks, but the very Risk On nature of the groups that outperformed.

    At this stage investors are holding their breath waiting for the next Fed announcement on Wednesday 2/1 @ 2pm ET. Anything is possible including a softening of their hawkish stance that would give bulls a green light to keep running ahead.

    Just as likely is the Fed doubling down on their previous statements that would have stocks tumbling lower once again.

    Indeed, a lot hangs on Wednesday’s announcement. So, let’s discuss how each possible outcome would alter our trading plans.

    Market Commentary

    I see 4 possible scenarios after this very crucial Fed announcement on February 1. Let’s review each and how it would affect our trading plans to carve out profits from the stock market.

    Scenario 1: Raging Bull (the Bear is Dead!)

    In this scenario the Fed makes a clear and evident pivot in their rate hike regime. Meaning that they see inflation coming down faster than expected and will not have to keep rates high through the end of the year as previously stated.

    This unexpected dovish tilt will delight investors as it greatly increases the odds of a soft landing for the economy with stocks raging higher. This should compel investors to abandon their bear market outlook quickly and switch to more Risk On selections that would outperform in a new bull market.

    Or simply, sell everything that did well in 2022 and buy the investments that did poorly last year with emphasis on growth over value.

    Note that I think the odds of the Fed pivoting so obviously at this stage is incredibly low. The next section is the more probable bullish possibility.

    Scenario 2: Cautious Bull

    Here we get more subtle hints from the Fed of a potential future pivot in policy. Like they are encouraged by moderating inflation…and will keep rates higher for longer to make sure that rating inflation is good and dead…but just maybe they won’t have to do it for as long as previously stated.

    This would increase the current bullish bias in the market. However, the total upside would be more limited as investors would still be too worried about the next Fed statement. And will also be very cautious as they view economic data which is tilting more and more towards recession.

    In this case, I would recommend being moderately bullish. Whereas Scenario 1 would compel investors getting back to 100% long…this would be more like 50% long the stock market. And yes, that should be with the same kind of Risk On selections noted above. Just a smaller allocation with ample cash on hand.

    Note that this scenario still leaves open the chance that the Fed stays hawkish too long and we still tip over into recession with bear market coming back on the scene. That explains why only 50% long as downside risks still exist.

    Scenario 3: Bear Returns with a Vengeance

    The Fed has proactively talked down bulls at 2 previous junctures putting an end to premature rallies. I am referring to the famed Jackson Hole speech in August where Powell scared everyone senseless ending the 18% summer rally with new lows in the offing.

    A more subtle version of this happened at the beginning of December where he reiterated the “higher rates for longer” mantra more times than I can count. Plus it was clear that they would rather risk recession than leaving any flames of inflation in the economy as that is the greater long term evil.

    So if Powell gets back on the “bully pulpit“, or in any way implies that bulls are WAY ahead of themselves, then the bear market comes back with a vengeance. That’s because the longer the Fed stays hawkish…the higher the odds a hard landing (recession) for the economy.

    In this case, stay bearish and stick with the 2022 bear market playbook with inverse ETFs and conservative stocks to squeeze out profits as the market heads lower.

    Scenario 4: Dazed & Confused

    This is where the Fed gives mixed signals. Still hawkish for a long time to save face given previous statements. And yet do tip their hat a little to moderating inflation.

    This gray area leads to a trading range until investors have more facts in hand. I suspect that 4,000 is the low end with 4,200 at the high end. This comes hand in hand with a ton of volatility as each new headline has investors recalibrate the bull/bear odds.

    This trading range evolves into 1 of the 3 other scenarios in the future depending on future Fed statements and health of the economy. The more you think it will become like scenario 1 or 2 means you tilt more bullish on your trading strategy. And if you still believe that the bearish scenario 3 is where we end up…then you play the trading range with the same degree of caution.

    Conclusion

    Yes, there is a lot riding on the Fed statement. I am prepared for any of these scenarios to play out with 2 and 3 being the most likely followed by 4.

    No doubt you are thinking to yourself “isn’t there an easier way to invest in the stock market?”

    Unfortunately not.

    The future outlook for the economy, and thus stock prices, is never 100% certain. And thus it is MOST confusing at the 180 degree turns from bearish to bullish or vice versa.

    Once we make that big turn, then we get on to the straightaway. Once there the outlook becomes clearer allowing us to enact plans with a greater degree of certainty.

    I will of course dissect every word of the Fed announcement to determine which scenario we are in with appropriate change in trading strategy to quickly follow.

    Hold onto the steering wheel tight and be ready for anything!

    What To Do Next?

    Watch my brand new presentation: “Stock Trading Plan for 2023” covering:

    • Why 2023 is a “Jekyll & Hyde” year for stocks
    • Why the Bear Market Could Come Back
    • 9 Trades to Profit Now
    • 2 Trades with 100%+ Upside Potential as New Bull Emerges
    • And Much More!

    Watch “Stock Trading Plan for 2023” Now >

    Wishing you a world of investment success!

    Steve Reitmeister…but everyone calls me Reity (pronounced “Righty”)
    CEO, StockNews.com and Editor, Reitmeister Total Return

    SPY shares fell $0.47 (-0.12%) in after-hours trading Tuesday. Year-to-date, SPY has gained 6.29%, versus a % rise in the benchmark S&P 500 index during the same period.

    About the Author: Steve Reitmeister

    Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks.

    More…

    The post Investor Alert: Why the Bear Market Might End on 2/1? appeared first on StockNews.com

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    Steve Reitmeister

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  • 5 No-Brainer Medical Stocks to Buy in 2023

    5 No-Brainer Medical Stocks to Buy in 2023

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    With expanding medical needs and technological advancements, the healthcare industry’s prospects look impressive. Moreover, healthcare stocks tend to perform relatively well, irrespective of economic conditions, thanks to the inelastic demand for their products and services. Therefore, we think Nature’s Sunshine Products (NATR), Abbott Laboratories (ABT), Humana (HUM), Molina Healthcare (MOH), and McKesson (MCK) are no-brainer stocks to buy in 2023. Read on.

    The healthcare industry, which thrived during the COVID-19 pandemic, is likely to remain in the limelight amid growing health awareness, an aging population, and advanced technological breakthroughs.

    Moreover, the increasing use of data analytics in healthcare and companies focusing on preventive care are boosting the industry. Also, amid the increasing penetration of smartphones, improved internet connectivity and advancement in healthcare IT infrastructure are helping to expand the digital healthcare market.

    The global digital healthcare market is anticipated to grow at a CAGR of 23.7% until 2030.

    Furthermore, the demand for healthcare companies’ products and services is inelastic, which makes them ideal holdings amid market turmoil. According to CNBC’s Jim Cramer, healthcare stocks have been reasonably stable in 2022 because they are recession-resistant or perform well regardless of broader economic situations.

    Given the backdrop, investors could consider buying no-brainer medical stocks Nature’s Sunshine Products, Inc. (NATR), Abbott Laboratories (ABT), Humana Inc. (HUM), Molina Healthcare, Inc. (MOH), and McKesson Corporation (MCK), in 2023.

    Nature’s Sunshine Products, Inc. (NATR)

    Natural health and wellness company NATR primarily manufactures and sells nutritional and personal care products in Asia, Europe, North America, Latin America, and internationally.

    On November 3, 2022, CEO Terrence Moorehead said, “We remain confident that we will navigate this unique period of volatility and uncertainty, bolstered by our strong balance sheet and team of experts on the ground.”

    NATR’s forward EV/Sales of 0.38x is 78.4% lower than the industry average of 1.76x. Its forward Price/Sales of 0.46x is 59.4% lower than the industry average of 1.13x.

    NATR’s trailing-12-month gross profit margin of 71.59% is 128.2% higher than the industry average of 31.37%. Its trailing-12-month ROTA of 4.96% is 48% higher than the industry average of 3.60%.

    NATR’s selling, general, and administrative expenses came in at $36.79 million for its third quarter ended September 30, 2022, down 6.9% year-over-year. Its total current liabilities came in at $63.89 million for the period ended September 30, 2022, compared to $76.67 million for the period ended December 31, 2021.

    NATR’s revenue is expected to rise marginally year-over-year to $420.61 million in the current fiscal year 2023. Its EPS is estimated to grow 280% year-over-year to $0.18 in 2023. Over the past month, the stock has gained 26.9% to close the last trading session at $10.56.

    NATR’s strong fundamentals are reflected in its POWR Ratings. The stock’s overall A rating indicates a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

    NATR has an A grade for Value and Quality and a B for Stability and Sentiment. In the B-rated Medical – Consumer Goods industry, it is ranked first among nine stocks. Click here for the additional POWR Ratings for Growth and Momentum for NATR.

    Abbott Laboratories (ABT)

    ABT discovers, develops, and sells healthcare products focused on cardiovascular, diabetes care, diagnostics, neuromodulation, nutrition, and medicine worldwide. Its products are sold directly to wholesalers, distributors, government agencies, healthcare facilities, pharmacies, and independent retailers.

    On January 26, 2023, ABT announced that the FDA approved its ProclaimTM XR spinal cord stimulation (SCS) device for treating painful diabetic peripheral neuropathy (DPN), a devastating consequence of diabetes. The sale of this device is expected to expand ABT’s revenue margin.

    ABT’s trailing-12-month gross profit margin of 56.53% is 1.9% higher than the industry average of 55.48%. Its trailing-12-month EBITDA margin of 27.58% is 640.2% higher than the industry average of 3.73%.

    ABT’s net sales increased marginally year-over-year to $43.65 billion for its fiscal year that ended December 31, 2022. Its diagnostics sales came in at $16.58 billion, up 6% year-over-year.

    Street expects ABT’s revenue to increase 5.2% year-over-year to $42.12 billion in 2024. Its EPS is estimated to grow 9.9% year-over-year to $4.87 in 2024. It surpassed EPS estimates in all four trailing quarters. Over the past three months, the stock has gained 11.7% to close the last trading session at $110.55.

    ABT has an overall rating of B, which equates to a Buy in our POWR Ratings system.

    It has a B grade for Value, Stability, Sentiment, and Quality. ABT is ranked #9 out of 148 stocks in the Medical – Devices & Equipment industry. Click here to see the additional POWR Ratings for ABT (Growth and Momentum).

    Humana Inc. (HUM)

    HUM and its subsidiaries operate as a health and well-being company in the United States. It operates through three segments: Retail; Group and Specialty; and Healthcare Services.

    HUM’s forward EV/Sales of 0.63x is 84.6% lower than the industry average of 4.11x. Its forward Price/Sales of 0.66x is 86% lower than the industry average of 4.71x.

    Its trailing-12-month EBITDA margin of 4.81% is 29.1% higher than the industry average of 3.73%, while its trailing-12-month asset turnover ratio of 1.90% is 458.9% higher than the industry average of 0.34%.

    HUM’s total revenues came in at $22.80 billion for the third quarter that ended September 30, 2022, up 10.2% year-over-year. Its premium revenue came in at $21.47 billion, up 8% year-over-year. Moreover, its income from operations increased 86.6% year-over-year to $1.17 billion.

    HUM’s revenue is expected to increase 9.7% year-over-year to $102.05 billion in the fiscal year 2023. Its EPS is estimated to grow 11.8% year-over-year to $28.01 in 2023. It surpassed EPS estimates in all four trailing quarters. The stock has gained 30.4% over the past year to close the last trading session at $511.70.

    It’s no surprise that HUM has an overall A rating equating to a Strong Buy in our POWR Ratings system.

    It has a B grade for Growth, Value, and Quality. It is ranked #3 in the A-rated Medical – Health Insurance industry. Click here for the additional POWR Ratings for Stability, Momentum, and Sentiment for HUM.

    Molina Healthcare, Inc. (MOH)

    MOH offers managed healthcare services under Medicaid and Medicare programs and through state insurance marketplaces. The company operates through four segments: Medicaid; Medicare; Marketplace; and Other.

    In terms of forward EV/Sales, MOH is trading at 0.50x, 87.8% lower than the industry average of 4.11x. The stock’s forward Price/Sales multiple of 0.56 is 88.1% lower than the industry average of 4.71.

    Its trailing-12-month EBITDA margin of 4.76% is 27.6% higher than the industry average of 3.73%. Furthermore, the stock’s 2.54% trailing-12-month asset turnover ratio is 643.9% higher than the industry average of 0.34%.

    MOH’s total revenues came in at $7.93 billion for the third quarter that ended September 30, 2022, up 12.6% year-over-year. Its net income increased 60.8% year-over-year to $230 million, while its EPS came in at $3.95, representing a 60.6% year-over-year rise.

    The consensus revenue estimate of $33.07 million for the fiscal year 2023 indicates a 4.5% increase year-over-year. Its EPS is expected to grow 10% year-over-year to $19.59 in 2023. It surpassed EPS estimates in all four trailing quarters. Over the past year, the stock has gained 7.4% to close the last trading session at $311.83.

    MOH’s overall A rating equates to a Strong Buy in our POWR Ratings system.

    It has a B for Growth, Value, and Quality. It is ranked #4 in the same industry. Beyond what is stated above, we’ve also rated MOH for Momentum, Stability, and Quality. Get all MOH ratings here.

    McKesson Corporation (MCK)

    MCK is a diversified healthcare service provider focusing on advancing patients’ health outcomes globally. The company operates through four segments: U.S. Pharmaceutical; Prescription Technology Solutions (RxTS); Medical-Surgical Solutions; and International.

    In terms of forward EV/Sales, MCK is currently trading at 0.21x, 94.8% lower than the industry average of 4.11x. The stock’s forward Price/Sales multiple of 0.19 is 95.9% lower than the industry average of 4.71.

    MCK’s EBIT margin of 1.20% is higher than the negative 1.76% industry average. Its asset turnover ratio of 4.29% is substantially higher than the 0.34% industry average.

    MCK’s total revenues increased 5.4% year-over-year to $70.16 billion for the second quarter that ended September 30, 2022. Moreover, its income from continuing operations came in at $932 million, up 249.1% year-over-year. Also, its EPS came in at $6.46, up 277.8% year-over-year.

    Analysts expect MCK revenue to increase 4.6% year-over-year to $276.15 billion in the current fiscal year 2023. Its EPS is expected to grow 4.6% year-over-year to $24.79 in 2023. The stock has gained 47.5% over the past year to close the last trading session at $378.68.

    MCK’s POWR Ratings reflect its promising prospects. MCK’s overall A rating translates to a Strong Buy rating in our POWR Ratings system.

    It has an A grade for Growth and a B for Value, Stability, and Quality. It is ranked first out of 79 stocks in the Medical – Services industry. To see additional POWR Ratings for Growth, Sentiment, and Momentum for MCK, click here.

    Consider This Before Placing Your Next Trade…

    We are still in the midst of a bear market.

    Yes, some special stocks may go up. But most will tumble as the bear market claws ever lower.

    That is why you need to discover the brand new “Stock Trading Plan for 2023” created by 40-year investment veteran Steve Reitmeister. There he explains:

    • Why it’s still a bear market
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    You owe it to yourself to watch this timely presentation before placing your next trade.

    Stock Trading Plan for 2023 >

    NATR shares were unchanged in premarket trading Wednesday. Year-to-date, NATR has gained 26.92%, versus a 6.29% rise in the benchmark S&P 500 index during the same period.

    About the Author: RashmiKumari

    Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master’s degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.

    More…

    The post 5 No-Brainer Medical Stocks to Buy in 2023 appeared first on StockNews.com

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  • Money-Saving Tips Entrepreneurs Often Miss in Tax Filing Season

    Money-Saving Tips Entrepreneurs Often Miss in Tax Filing Season

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    Opinions expressed by Entrepreneur contributors are their own.

    There is one time a year that requires a detailed level of attention for a business owner, no matter the size of your business.

    When tax season comes around, entrepreneurs initiate survival mode sometime between January and April 15 and look for every way to get a few more deductions.

    Bookkeeping, tax filing, audits and deductions will assist in keeping a good relationship with the IRS, as well as supporting good habits for your business; however, because getting everything just right can be overwhelming, it is easy to miss important things and leave money on the table that would be better suited in your pocket.

    Tax season reaches beyond the immediate tax return and can have a lasting impact five or even 10 years down the road. While you can make certain deductions one year that will benefit you, as your business grows, having a different strategy is in your best interest.

    This requires experience, a little patience and a willingness to learn from the mistakes you made.

    There are three very important things every business owner should be paying attention to when you file your yearly taxes to ensure you are getting the most out of your return. These examples can also create strong business habits that will help you create a long-term operation.

    Related: 75 Items You May Be Able to Deduct from Your Taxes

    The home office deduction

    While it may be more convenient to work from home, as well as being fiscally cheaper, it may make you a target for audits.

    Since you can deduct items like the square footage of your home office or short trips to the office supply store, it is crucial that you have the documentation to verify everything you list as a deduction.

    With less obvious options like the Augusta Rule — in which you can rent your home out to business events and summit meetings — you have more options for write-offs and every purchase adds up. Nearly every purchase that you make for your business is considered tax-deductible as it relates to your business.

    Although not every person who works from home will be audited, if you were to go through a formal audit and you do not have proper documentation for your deduction claims, you can have those deductions revoked.

    If your business is growing quickly and producing high capital, you may want to consider moving your business into an office lease to keep your home and business separate.

    This will be to your advantage when you are looking for clear defining factors in listing deductions, but if that’s not your cup of tea as an entrepreneur and you like the home office as a center for operations, make sure you keep proper documentation of your home office to ensure your write-off isn’t arguable in the case of an audit.

    Related: These 6 Tax Tips Will Help Make Tax Season Easy for Your Business

    Utilize deductions in the ways that benefit you the most

    Being honest with your deductions is a good practice to have, making sure that you are not putting forth false information to save a few bucks.

    One thing that many people do not consider is overusing deductions that are available. It can be quite easy to get into a rhythm of using the same tactics every year, but this can cost you in the long run.

    Let’s say you were to buy a new vehicle every year or two for your business. It could be a worthwhile plan for the first couple of filings that will help ease some of the financial pressure on a young business.

    However, this can turn into abuse — not from a legal standpoint, but in the metric that vehicles depreciating over time will cost you more than the deduction would save.

    Working with a professional accountant to have a good roadmap to how your deductions will affect you not only this year, but in future filings, is a good thing to consider. This will help with the guidance of what you should be used as a deduction and what would be better to leave behind.

    Map your deductions out accordingly because they can save you a lot of headaches and money 10 years from now.

    Related: The IRS Hates Telling Entrepreneurs Anything About Taxes. Here’s How You Can Find Out What They’re Thinking.

    Categorize your business properly

    It is a necessary task to “list” your business regardless of where you operate. That being said, there are four options upfront as to how you list your business by definition and how your business is classified can save you or cost you money.

    The four business classifications are:

    • LLC: A limited liability company.

    • S corp: S corporations are corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes.

    • C corp: A C corporation is a legal structure for a corporation in which the owners, or shareholders, are taxed separately from the entity.

    • Sole proprietor: A person who is the exclusive owner of a business, entitled to keep all profits after tax has been paid but liable for all losses.

    With all of these options, it is imperative to either know what you are doing or work with someone who does to register your business accordingly in the state you own a business.

    Related: 14 Tax Deductions Your Small Business Might Be Overlooking

    It can be misleading as to which definition will be the best to suit your needs; however, if you do it correctly, it can create a good foundation that will benefit you.

    There can be many options to choose from when you are looking for deductions within your business, whether you are working from home or in an office space, under an LLC, sole proprietor or S corp. If you are unfamiliar with how to navigate this information, it is best to hire an accountant/bookkeeper to help guide you through.

    While there are many “deductions” you can apply to your business, being aware of the things that will benefit you now and in the long run can relieve stress when you need it most.

    Utilize every deduction you can to bring the cost of running your business down like materials, office supplies, office space, vehicles, advertising, etc., then consider what you will still be able to use in the big picture by measuring your growth against what you are saving this year.

    Documentation is one of the most important things you can do, so if you don’t have the time to be on top of it, hire a competent bookkeeper.

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  • 7 Safe Investments with Relatively High Returns for 2023

    7 Safe Investments with Relatively High Returns for 2023

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    Right now is a tricky time to manage investments. Stocks, real estate, gold, and crypto are all in bear market territory with a huge chance that the recession will worsen this year.


    Due – Due

    If you’re looking to make a risky bet, you could consider shorting the market in various capacities. 

    However, if you’re looking to allocate capital as safely as possible, here are some options with (relatively) high returns. 

    1. I-Bonds

    US government-backed bonds are about as safe as it gets. The Series I Savings Bonds accrued at a whopping 9.62% in 2022, and now are offering 6.89%.

    i bonds interest rate

    Source: TreasuryDirect.com

    Interest on the bonds is tax deductible on your federal income taxes. (Though the investment of principle isn’t.)

    These interest rates are pegged to inflation, and they change every six months. So if inflation goes up or down, the rates will go up or down, too.

    The downsides to this investment involve time and investment caps. 

    You have to keep the bond for at least one year to gain any interest. If you redeem the bond before holding it for five years, your last three months will not be paid interest as a penalty.

    The investment cap is $10,000 per person per year. This is more flexible than it seems.

    You’re allowed to invest $10,000 for every person in your household, including minors. So if you have a family of four, you can invest $40,000 per year. 

    Businesses can also invest up to $10,000. So if you have one or more businesses, that gives you additional investment opportunities as well.

    The calendar year limitation is quite flexible too because you don’t have to wait 12 months before making your next investment. 

    If you already maxed out your I-Bond allocations even as recently as December 2022, you can make your next investment in January 2023. 

    The traditional inflation hedges, gold and silver, actually declined in price in 2022. So the I-Bond may be your best bet to stay ahead of high inflation.

    2. Pay Off Your Mortgage

    house with a mortgage

    Source: Photo by Scott Webb from Pexels

    This may not be the sexiest investment of the year, but it’s guaranteed to pay off. 

    If the stock market and other investment markets have a down year, paying off your mortgage may be one of the best returns you can get.

    Paying off your mortgage early can save you tens of thousands of dollars in interest. It also decreases your overall financial risk and eliminates what is most likely your biggest monthly bill. 

    Say you’ve been in your house for three years and have a balance of $300,000 on your home loan at a 3.5% interest rate. The loan term is 30 years.

    If you pay an extra $1,000 per month, the loan will be paid off 12 years and 2 months earlier than it would have been. 

    More importantly, you’ll save $91,824 in interest. (Based on these Calculator.net calculations.)

    If you analyze your return on investment, you’ll net 4% per year in annualized returns. (Based on this ROI calculator.) 

    That may not be record-breaking, but it’s a guaranteed return on an asset that you own 100% of and have insured. Anyone can do it.

    Even high net-worth individuals often have huge mortgages, so this advice applies to people across the economic spectrum. 

    Don’t have a mortgage? The same advice applies to student loans and car loans. 

    Of course, credit cards are the best debt to pay off because of their high-interest rates. In my opinion, credit card debt should be the first investment priority of anyone who has it.

    3. Annuities

    Fixed-income annuities are like setting up your own private pension plans. You can invest in them while you’re healthy and working, with the expectation that they provide money for you as long as you live.

    The biggest financial risk that any of us face is that we’ll outlive both our working years and retirement savings. 

    Annuities fix this by guaranteeing income for retirement. This is one reason why many economists recommend annuities. 

    There are many different types of annuities, and like any investment, they can vary quite a bit. Some contain more risk than others.

    Still, if you’re looking for an investment alternative to the huge movements in the stock market, annuities offer an opportunity to diversify your portfolio and shield you from market fluctuations. 

    As with all investment opportunities, you should make sure that you understand what you’re investing in and speak with your financial advisors before proceeding. 

    Annuities are particularly tricky in this regard because they are usually offered by life insurance salespeople who get huge commissions for selling them. But if an annuity strategy is smartly employed as part of a balanced portfolio, it can offer a consistent retirement income source that few other products can match.

    4. Invest in Art

    This is an unusual one that is normally reserved for the wealthy.

    However, as alternative investment platforms like Masterworks and Yieldstreet will tell you, the entire asset class of art has outperformed the S&P 500 by a healthy margin since 2000.

    art chart

    The Artprice100® Index vs. the S&P 500. Source: Yieldstreet

    It also has a low correlation to the price movements of stocks and bonds. 

    Normally the cost and expertise needed to buy a $5,000,000 painting make art inaccessible to the average investor. 

    However, alternative investment platforms, like those mentioned above, make it affordable for the average investor to buy a share of a valuable piece of art. 

    One of the main downsides to investing in art is the asset itself. Most asset classes are necessarily boring and unoffensive. 

    Conversely, many people consider contemporary art to seem silly at best. Or downright repulsive at worst.

    ugly art

    Source: Artist JEAN MICHEL BASQUIAT via Masterworks.com

    If you can hold your nose regarding the appearance of the asset itself and learn to understand how the art market works, it can be a valuable investment. 

    Also, keep in mind that this is not a liquid investment. You’ll want to hold onto your ownership shares until the underlying asset gets sold, which could take 1-10 years. 

    5. Buy Farmland

    Like art, this one is off the beaten path for the average investor. And historically, it requires large capital investment and considerable expertise to get involved.

    Also like art, farmland is now accessible to a wider group of investors through multiple investment platforms. A few platform examples include Acretrader, Farmfolio, FarmTogether, and many more.

    Many of these platforms require that you be an accredited investor to invest, but some don’t. 

    Acretrader claims that farmland has an average 11% historical yield, without the volatility of stocks and real estate.

    farmland comparison graph

    Source: Acretrader

    I was particularly surprised to learn that farmland prices don’t mirror commercial real estate, but it makes sense. Farmland supply and demand differs greatly from commercial buildings and land, which are mostly urban. 

    It’s important to note that farmland investments do not involve the farm operations themselves. 

    Many farmers lease their land, and the buildings, livestock, and farming businesses themselves are not part of the investment.

    The main downside to farmland is that it’s not liquid. You won’t get your money back until the land is sold years later. 

    If your investment horizon is at least 5-10 years, then it could be a good option for diversification and safety.

    6. Invest in Your Own Business

    Venture-backed companies typically invest all of their profits back into the company for rapid growth. However, most small businesses don’t operate this way. 

    If you’re a business owner, now might be the perfect time to think more like a startup and plan your expansion. If your business is in good shape financially, spending on growth could be your smartest investment.

    Real business expenses like advertising and inventory are tax deductible, so any new business cost that you take on will lighten your tax burden.

    As mentioned earlier, many small business owners don’t allocate capital into their business at the same level they would their own 401(k). Why not?

    A smart growth strategy can be your best weapon in protecting your business as the recession gets worse in 2023.

    Of course, you don’t want to spend frivolously or on expenses that won’t promote growth. 

    But if your business has a good track record and you believe in your operation, it could be a solid investment path.

    7. Your Savings Account

    High inflation in 2022 turned off many investors from saving money in a bank account. 

    On the contrary, I would argue that bolstering your cash reserves may be the smartest move you can make right now.

    For starters, interest rates are high. Saving account interest rates are higher than they’ve been in over a decade. Getting 3% interest on savings is entirely doable.

    Second, it never hurts to have a lot of cash on hand during a recession. As they say, “cash is king.” 

    If you lose your job or any of your income sources get jeopardized over the next year, a healthy cash reserve will be your best friend.

    Third, and most importantly, there is a very high probability that deflation will set in. There are loads of indicators that the economy will get worse and that markets will continue to tumble. 

    Why not build your cash reserves to buy back in at the bottom?

    Over the past 100 years, the average stock bear market lasts 1.3 years and has a typical loss of 38%.

    bull and bear markets graph

    Source: First Trust via UIdaho.edu

    In more recent years, bear markets have been even longer and lower:

    • The 2007-2009 bear market was 1.3 years and went down 50%
    • The 2000-2002 bear market lasted 2.1 years and went down 45%

    Warren Buffet famously cites the GDP to stock market valuation ratio to measure the state of the overall market. Some people call this the “Buffett Indicator.” 

    At the time this article was written, markets are “Significantly Overvalued.”

    Source: CurrentMarketValuation.com

    In 2022, the Federal Reserve demonstrated a high commitment to quashing inflation. They did this by raising interest rates. 

    If inflation remains the #1 enemy to US economic policymakers in 2023, then the markets will continue to tumble.

    What better way to wait out the crash than with a healthy savings account?

    Final Thoughts

    None of us have a crystal ball. But the markets and the government policies that affect them typically follow patterns. 

    One of the most difficult parts of investing is controlling your emotions. 

    Keep your head. Follow a sound strategy. That’s how you’ll make 2023 a great year for your portfolio.

    The post 7 Safe Investments with Relatively High Returns for 2023 appeared first on Due.

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  • What Small Businesses Can Do If the IRS Comes Knocking

    What Small Businesses Can Do If the IRS Comes Knocking

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    Opinions expressed by Entrepreneur contributors are their own.

    Disclaimer: This article is for informational purposes only. It should not be considered legal or financial advice. You should consult with an attorney or other financial professional to determine what may be best for your individual needs.

    Although most small business returns filed every year don’t get audited, the IRS is certainly becoming more active. For instance, in November 2020, the IRS announced it would ramp up audits of small businesses by 50% in 2021. Then, in August 2022, Congress passed the Inflation Reduction Act, including $80 billion in IRS funding, with approximately $45 billion going toward enforcement — conducted by at least some of those 87,000 new agents the IRS is reportedly hiring.

    So how can you stay out of the IRS’s crosshairs? To an extent, there’s nothing you can do, as some audits are totally random. However, in most cases, audits result from actions or omissions by the taxpayer — certain of which are more likely to trigger some unwelcome mail from the IRS announcing an audit.

    Here are five of the most common small business tax audit triggers.

    Related: These Are the Top Tax Filing Mistakes Made by Small Business Owners (and How to Avoid Them)

    1. Failing to report income

    Whether it’s intentional or simply due to an oversight, failing to report income is a common trigger for an IRS audit.

    The IRS receives copies of 1099 forms sent to your business, so in many cases, it’s easy to spot a discrepancy between reported income on a tax return and the information included in tax reporting forms. If there is a discrepancy, the IRS will flag it on your return and, most likely, initiate an audit.

    In addition, as more individuals turn to side hustles and gig work to make money, the IRS is taking steps to ensure that it’s keeping tabs on what people are earning. While it has delayed implementation for tax year 2022, the IRS will soon be requiring third-party settlement organizations such as PayPal and Venmo to issue 1099-K forms to individuals being paid $600 or more via these platforms.

    Fail to report income? There’s a good chance the IRS will notice.

    2. Large deductions and excessive expenses

    Small businesses should claim all justifiable business deductions. That’s their right under our tax laws.

    However, there are no bright-line rules that define what’s “justifiable” — only a somewhat fuzzy standard that a business expense must be both ordinary and necessary.

    Because there’s ambiguity in these terms, some taxpayers take it too far and claim unreasonably large deductions and excessive expenses, leading to audits. The odds that a deduction will trigger an audit increase if such deductions or expenses are either out of line with IRS standards for similarly situated businesses and/or significantly larger than the prior year.

    It’s also important to note that certain deductions tend to draw more scrutiny than others, including the home office deduction, travel costs and vehicle use, to name a few.

    Related: Top Tax Write-Offs That Could Get You in Trouble With the IRS

    3. Large amounts of cash transactions

    If you run a “cash business,” such as a restaurant or barber shop, that fact alone makes it more likely that you’ll be audited. When a business relies mostly on cash transactions, they face an increased audit risk because the IRS may be concerned that the business is underreporting income.

    If your small business has a large number of cash transactions, there may not be much you can do to prevent an audit — but if you keep good records and disclose your income, the risks stemming from an audit will be greatly reduced.

    4. Claiming business losses year after year

    Are you running a business or trying to write off expenses for a hobby? IRS guidelines say that if you have earned a profit in at least three of five consecutive years, the presumption is that the business is being run to generate a profit. If not, it could trigger an audit, because having multiple years of losses can lead to the IRS questioning if you have a legitimate business.

    If your business is not, in fact, a hobby but continues to generate losses, make sure to keep accurate and extensive records to help prevent the reclassification of your business as a hobby.

    5. S Corp shareholder-employees earning low or no salaries

    It’s common for small business owners to establish an S Corp instead of an LLC to avoid paying self-employment tax on distributions. However, to take advantage of these tax benefits, the S Corp shareholder-employee must be paid what the IRS deems a “reasonable salary” — a paycheck comparable to what other employers would pay for similar services.

    If there’s additional profit in the business beyond the salary, those can be paid as distributions.

    The IRS is on the lookout for S Corps paying shareholder-employees unreasonably low salaries — or in some cases, no salaries at all. When compensation is misaligned relative to a similar position in a similar industry, it may trigger an audit.

    Related: What I Learned From a Two-Year IRS Audit

    What to do if you get audited by the IRS

    The idea of an audit strikes fear in most people because they immediately conjure up a vision of IRS agents forcefully knocking on the front door of their home or business, ready to rifle through their records.

    That’s not how things work, at least for most people who are subject to audits. Remember, audits are rare. And when they do happen, most are done by mail. While it’s not common, some audits take place at an IRS office (a “desk audit”) or at a home or business (a “field audit”). Regardless, if you find out you’re getting audited, don’t panic and contact an experienced tax audit lawyer, especially if there’s significant money at stake. Do this right away, because the IRS requires a timely response.

    In many instances, resolving an audit will involve providing documentation to the IRS to substantiate the figures on your return. That may end the matter, or there may be some adjustment to the amount you owe, as well as penalties and interest, that you may agree to pay.

    However, you may disagree with the conclusion reached by the IRS, in which case you’ll have 30 days to appeal the IRS’ findings. Disputes proceed with an appeal with the IRS Office of Appeals, followed by a petition to the U.S. Tax Court in the event your appeal is unsuccessful.

    While it’s important to know what to do in the event of an audit, the best way to avoid negative repercussions from an audit is to avoid one in the first place. Be aware of the most common audit triggers. Avoid them if possible. Keep good records. And if the IRS comes calling anyway, contact an experienced audit defense attorney to help you through the process.

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    Jason Carr

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  • There’s So Much More to NFTs and Web3 Than the FTX Crash

    There’s So Much More to NFTs and Web3 Than the FTX Crash

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    Opinions expressed by Entrepreneur contributors are their own.

    When was the last time you looked at a work of art online and thought, even for a second, about what file type it was? Whether the image you see is a JPEG or GIF rarely matters to anyone except for professionals in the media industry, where file types have different properties, qualities and sizes. For the average content consumer, it doesn’t matter at all.

    Now ask yourself: Why are NFTs any different?

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    Matt Cimaglia

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  • Inflation Tips for Startups – Top 11

    Inflation Tips for Startups – Top 11

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    In October of 2022, the Consumer Price Index was up 7.7% from the same time the previous year. Shelter, food, and gasoline prices are leading the way, which we’re all bearing the brunt of. Inflation has all kinds of side effects for individuals and for businesses, particularly businesses that are just getting started.


    Due – Due

    Prices for most things you need to run your business are up, which can really eat into your profit margin. However, customers are buying less as well, so the total impact comes from both costs that are up and sales that are down.

    On top of inflation, a recession may also be on the horizon, making consumers cut back on spending even more. The good news is that it’s possible for a business to grow during a recession. Here we’ll run down the top 11 inflation tips for startups.

    When you have to pay more for the goods you sell and the other business costs, you may have to pass on those costs to your customers. Therefore, you need to analyze your profit margins to determine if you need to raise your prices.

    If your costs start exceeding your revenue at your current prices, you may need to bump your prices so that you’re not running at a loss month after month. Even if you’re still making slim profits, you may still need to raise your prices to have enough cash flow to keep the doors open.

    It’s a fine line that you have to walk. You need to protect your profits, but you don’t want your prices to be so high that customers stop buying.

    One strategy that you can use is to raise your regular prices but then offer sales and promotions that will still give you a profit while giving customers the impression that they’re getting a deal.

    How you manage your prices in times of recession really depends on the nature of your business. As a startup, you’re still trying to penetrate the market, so it may be worth it, in the long run, to take some losses temporarily until inflation is under control. That way, you can continue to bring in new customers that will still be with you in better times.

    Manage Your Cash Flow

    Having cash in hand during tough economic times is critical so that you can meet your obligations. Remember that cash flow and sales are two different things. You can be bringing in revenue but still not have enough cash to pay expenses.

    Managing your cash flow effectively involves several things.

    • Speed up cash coming in. If you’re a business-to-business seller, you’ve probably negotiated payment terms with your customers. For example, they may pay you 30 to 60 days after the date of purchase. If so, it’s time to take another look at those terms to shorten the time that it takes for cash to come in. Invoice quickly and make the time to pay as short as you can while staying within industry standards.
    • Slow down cash going out. On the other hand, you probably have a similar deal with your vendors, paying them within a certain amount of time after purchase. Now is the time to renegotiate those terms so that you can delay payment for as long as possible without incurring a penalty.
    • Manage your inventory. Inventory that you hold is cash not in your hand. You need to find the optimal level of inventory that allows you to fulfill orders quickly and keep customers happy while not holding extra inventory that’s just sitting on the shelves. You might want to consider implementing a pull strategy instead of a push strategy.

     

    In a push strategy, you purchase inventory and then try to sell it. In a pull strategy, you wait for orders to come in before you purchase the inventory to fulfill the order. If you can use a pull strategy and still deliver your orders in a reasonable amount of time, you’ll avoid having inventory sitting on your shelves and have more cash in hand.

    Analyze Your Costs

    When times are tough, you need to look for ways to cut expenses, so you need to analyze your costs across all your operations. You’re looking for items that you can reduce or eliminate. Here are a few costs you can look at.

    • Processes. Analyze all the processes within your company to find steps that you can eliminate or tasks you can automate. This can reduce your labor costs or the use of other resources.
    • Credit card processing fees. You can try to negotiate lower fees with your credit card processing company or shop around for a lower rate. Credit card processing fees can be significant, so lower rates can make a big difference.
    • Labor costs. No one wants to lay off employees, but you can’t pay for labor that you don’t need. Take a look at how much you’re paying people and for what and see if you can reduce or eliminate any of those costs.
    • Office costs. Many companies these days are downsizing their offices and letting many employees work remotely. Consider whether this could work for your business, and if not, you can try to negotiate a lower rent. If you pay for utilities, you can also look for ways to reduce those costs.
    • Vendor and service prices. It might be time to shop around for less expensive vendors or service providers. You can try to negotiate prices down first, but if you can’t, see if you can find better deals. You may be able to find significant savings.

    Make sure you take a look at all your costs line by line. Small cost savings across the board can add up to a significant amount.

    Focus on Customer Retention

    In times of inflation or recession, it’s just as important to keep customers as it is to bring in new ones. Here are a few ways to do so.

    • Engage with loyalty program members. The customers who belong to your loyalty program are probably your best customers, so you can do things like provide them with exclusive offers. You have their email addresses, so send promotions or even just “keeping in touch” messages. You just need ways to remind them of your brand and your products.
    • If you don’t have a loyalty program, start one. You can easily find software to create a loyalty program customized to your business. Many companies use loyalty programs for good reason – they work by increasing the loyalty life cycle, meaning that customers will be loyal to your brand for longer.
    • Ask for feedback. Customers want to know that you care about their experience with your brand. Ask for customer feedback using surveys by text or email, and then use that information to improve your product or service and your customer support. You need to give your customers the best buying experience possible.
    • Make purchases easy. If you sell online, use customer accounts to make the buying process simple. Have saved payment and shipping information in their accounts so that they have to enter very little information.
    • Personalize the customer experience. Again, if you sell online, make the customer’s experience personal by using data and automation to make product recommendations based on past purchases.
    Bundle Products

    Consider bundling related products into a package deal if you sell more than one product. For example, if you sell clothing, put together three items as an outfit with a slight discount from the price of paying for each item separately. This will increase the average amount of your sales and bring in more revenue. Depending on the nature of your business, you can get creative with this, but the key is to make the package of products look like a great deal.

    Promote Profitable Products

    You probably have items that have a higher profit margin than others. When that’s the case, even if you offer a discount on that high-margin item, you’ll still make a profit. Run aggressive promotions for your profitable items with signs in your store, emails, and other marketing strategies. You can offer customers a great deal while increasing your revenue and profit, all at the same time.

    Diversify Your Products

    If you currently only offer a few products but have the resources to produce other products, consider adding new product lines unrelated to what you now provide. This can open up new markets of customers and diversify your sales potential. For example, if you sell a product that people might consider unnecessary during an economic downturn, offer a product that’s more recession and inflation-proof.

    If the nature of your business allows, you can try to find something to offer as a subscription service to add a new, recurring revenue stream. For example, if you have an auto repair shop, offer a subscription that customers pay monthly that allows them to get free oil changes every three to six months. You’re bringing in revenue even if customers skip their oil change.

    Adjust Your Marketing

    You can take advantage of economic problems to increase your brand’s goodwill factor. You can adjust your marketing to send a message of empathy for your customers by saying, “we want to help” or “we care”. Combine this marketing with your promotions on profitable products, and you’ll leverage two strategies simultaneously.

    You should also adjust your marketing strategy to use free and low-cost marketing techniques. Spend time, not money, on social media marketing and email marketing. Put together a budget and an overall strategy to keep your brand image in front of customers without breaking the bank.

    Get a Line of Credit

    If raising prices is going to have a significant negative impact on your sales, you may want to consider keeping your prices where they are and utilizing a line of credit to keep the doors open until the economy takes an upward turn and prices normalize. That way, you’ll retain your customers but still be able to meet your obligations.

    You can use the line of credit when your cash flow is low to pay vendors, rent, or other expenses.

    Just be careful. Lines of credit are intended as a short-term cash flow solution, so use it sparingly and pay it off as soon as possible.

    Roll Out the Red Carpet for New Customers

    Hopefully, you’ll still have new customers coming in the door, and you’ll want to make them glad they did. Whether you’re selling online or in person, new customers should have an outstanding and memorable experience with your company. One excellent option is to offer a discount on their next purchase from your business.

    You also want to maximize your value from each new customer. Get them to sign up for your loyalty program and make product recommendations such as your product bundles or your high profit items.

    You also want to get information from them so that you can improve your marketing as well as keep in touch with them. So try to find out how they found you and their email address, at the very least.

    Build Partnerships

    Often, companies partner with other companies that offer complementary products to share marketing and sales resources. For example, if you sell clothing, you could partner with a jewelry company to create a marketing campaign. This allows you to market your product at half the cost.

    Customers also may see more value in what you’re offering when they think of it in conjunction with another product. For example, “that dress looked amazing with that necklace.” It becomes a win-win-win situation. You and the other company make a sale, and the customer gets a great outfit!

    In Closing

    Times of inflation is tough for everyone, but savvy business owners can weather the storm and sometimes even thrive. It just takes a strategy that utilizes some or all of the tips discussed. What you can do depends on the nature of your startup business, so think about how these tips can work for you. Think outside the box and get creative.

    Also, always remember that the economy will inevitably cycle up and down. So just do your best to get through the bad times – they will pass, and you’ll be stronger for powering through the storm.

    The post Inflation Tips for Startups – Top 11 appeared first on Due.

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    Carolyn Young

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  • Rev Up Your Portfolio with Honda Motor (HMC) Shares

    Rev Up Your Portfolio with Honda Motor (HMC) Shares

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    PE of 9 along with 3.9% dividend yield is a pretty good start to any stock picking conversation. Yet there is a lot more to love about Honda Motor Company (HMC) making it one of our top value picks for 2023. Get the full story below….


    shutterstock.com – StockNews

    Honda Motor Company (HMC) is one of our 7 favorite value stocks for the year ahead. Having a Value rating of A is a good start, but only part of the story. Let’s start at the beginning to spell it all out.

    Honda was originally a motorcycle manufacturer. Now they make everything from motorcycles to automobiles, power products such as boat engines, generators, and lawnmowers. It they also makes robots and private jets and is currently Japan’s third-largest automaker by sales and has the highest exposure to North America out of Japan’s big three.

    Honda’s brand and its reputation for quality have certainly helped drive demand for its models. HMC has also been historically known for fuel-efficient cars, which has positioned it to take advantage of the massive consumer demand for more fuel-efficient vehicles.

    The popularity of its vehicles has also allowed it to use fewer incentives than other automakers, boosting its profits and improving its cars’ resale value. Like most automakers these days, the company is investing in electric vehicles with its Honda 2030 Vision. It should also benefit from a rebound in auto production as the chip shortage eases.

    Now let’s get down to why you are really reading this article. To appreciate the tremendous value story at play.

    HMC is one of the top stocks according to the POWR Rating with an A or Strong Buy. Stocks with that rating have beaten the S&P 500 by more than 4X since 1999.

    On top of that we have a Value rating of A thanks in large part by a rock-bottom P/E of 9. On top of that you have a very attractive 3.9% dividend yield. This makes for a winning combo, and a major reason that Wall Street analysts expect HMC to greatly outperform in the year ahead.

    Want to Discover More Value Stocks?

    HMC is just 1 of 7 attractive value stocks found in a new special report we just put together. Click the link below to claim your free copy now:

    7 SEVERELY Undervalued Stocks

    What To Do Next?

    Watch my brand new presentation: “Stock Trading Plan for 2023” covering:

    • Why 2023 is a “Jekyll & Hyde” year for stocks
    • 4 Warnings Signs the Bear Returns in Early 2023
    • 9 Trades to Profit on the Way Down
    • Plan to Bottom Fish @ Market Bottom
    • 2 Trades with 100%+ Upside Potential as New Bull Emerges
    • And Much More!

    Watch Now: “Stock Trading Plan for 2023” > 

    Wishing you a world of investment success!


    Steve Reitmeister…but everyone calls me Reity (pronounced “Righty”)
    CEO, Stock News Network and Editor, Reitmeister Total Return

    HMC shares were trading at $24.07 per share on Thursday morning, down $0.02 (-0.08%). Year-to-date, HMC has gained 5.29%, versus a 4.69% rise in the benchmark S&P 500 index during the same period.

    About the Author: Steve Reitmeister

    Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks.

    More…

    The post Rev Up Your Portfolio with Honda Motor (HMC) Shares appeared first on StockNews.com

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    Steve Reitmeister

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  • A Tale of Two Markets

    A Tale of Two Markets

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    It was the best of times (Visa earnings), it was the worst of times (Intel earnings)…Charles Dickens didn’t actually write those words about our current stock market (SPY) environment… but he might as well have. Read on to find out what this could mean for where the market heads next.


    shutterstock.com – StockNews

    (Please enjoy this updated version of my weekly commentary originally published January 26th, 2023 in the POWR Stocks Under $10 newsletter).

    Market Commentary

    For anyone who has been out of middle school for a few decades, here’s the entire opening to Dickens’ “A Tale of Two Cities.”

    “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair.”

    And dang, if that doesn’t just sum up our current situation, I don’t know what does.

    And depending on who’s talking, we could either be well into our next BULL market or cluelessly heading toward a 20% dropoff.

    And while I seem to know analysts that are bearish, neutral, or bullish in equal measure, there’s one thing I’ve noticed that many of them have in common…

    Almost no one is excited about a single sector. Nearly everyone is excited about a few particular stocks… but not an entire sector.

    And it’s because we’re living in this “tale of two markets.” We’ll get extremely pessimistic forward guidance from Intel or Goldman Sachs on the same day as largely optimistic guidance from Visa or United Airlines.

    And each time, the other side will say, “Oh, how foolish those bulls/bears are. They have no idea this is another trap for them to fall into.”

    And then we have analysts who are switching to the opposite side! In a recent alert for his Reitmeister’s Total Return service, Editor and StockNews CEO Steve Reitmeister wrote that he was becoming less bearish, which genuinely shocked me to see.

    If that’s not a sign of market positivity, I don’t know what is…

    And then today, one of my closest friends and a longtime mentor who has been fairly bullish all this time told me she now believes that we’ll have a recession between Q2 and Q3, and that it will feel more like a depression than a recession.

    You know what I think? I think I’m actually excited for next week’s Federal Reserve meeting.

    There has been a lot of new data and information — some of it bullish, some of it bearish — and now we need Fed Chair Jerome Powell to tell investors what we should think about it.

    Because here’s the thing…

    Even if the bullish data really is bullish… we’re not going to get any kind of sustained rally until the Fed indicates that they’re potentially considering some kind of policy pivot. There’s essentially a lid on how high stocks can go, thanks to the Fed’s terminal rate projections.

    And if the bearish data really is bearish, fresh hawkish comments from the Fed will be enough to tamp down any unwarranted optimism.

    Conclusion

    Fed Chair Jerome Powell is expected to give us the results of their upcoming meeting on February 1. That’s when we’ll find out which of us have been foolish… and which have been wise.

     What To Do Next?

    If you’d like to see more top stocks under $10, then you should check out our free special report:

    3 Stocks to DOUBLE This Year

    What gives these stocks the right stuff to become big winners, even in this brutal stock market?

    First, because they are all low priced companies with the most upside potential in today’s volatile markets.

    But even more important, is that they are all top Buy rated stocks according to our coveted POWR Ratings system and they excel in key areas of growth, sentiment and momentum.

    Click below now to see these 3 exciting stocks which could double or more in the year ahead.

    3 Stocks to DOUBLE This Year

    All the Best!

     

     

    Meredith Margrave
    Chief Growth Strategist, StockNews
    Editor, POWR Stocks Under $10 Newsletter

    SPY shares were trading at $407.00 per share on Friday afternoon, up $2.25 (+0.56%). Year-to-date, SPY has gained 6.42%, versus a % rise in the benchmark S&P 500 index during the same period.

    About the Author: Meredith Margrave

    Meredith Margrave has been a noted financial expert and market commentator for the past two decades. She is currently the Editor of the POWR Growth and POWR Stocks Under $10 newsletters. Learn more about Meredith’s background, along with links to her most recent articles.

    More…

    The post A Tale of Two Markets appeared first on StockNews.com

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    Meredith Margrave

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  • How to Ask for a Raise? 5 Scripts for the Most Common Situations

    How to Ask for a Raise? 5 Scripts for the Most Common Situations

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    Inflation’s brutal — don’t leave any money on the table.

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    Amanda Breen

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  • Is Buying an Aged Corporation a Good Idea?

    Is Buying an Aged Corporation a Good Idea?

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    Getting a business up and running is difficult. Especially when your business needs to meet age and business credit requirements to apply for business loans and government contracts.


    Due – Due

    Getting a shelf corporation has been touted as a way to skip those barriers to entry, but it may be more trouble than it’s worth. 

    What Is a Shelf Corporation?

    A shelf corporation is a company formed solely to sell it in the future. Much like aging a bottle of wine, the shelf corporation gets stored away until it reaches a ripe age to sell at. 

    Often this includes establishing related services such as:

    • Business bank account
    • Employer Identification Number (EIN)
    • Filed business tax returns
    • Established business credit 

    Shelf corporations go by many different names, but it’s not to be confused with a shell company. Shell companies are often used to conceal illegitimate dealings. Shelf companies might straddle the line of legality but they can also be used legally.

    Other names for shelf corporations include:

    • Aged corporations
    • Off-the-shelf companies
    • Credit ready corporations
    • Seasoned shelf corporations

    Typically, these types of corporations don’t engage in business activities and they usually don’t hold any assets or liabilities when they’re put on the market. The only exception is the state fees paid to maintain good standing. 

    Ideally, the shelf company buyer purchases a mature company with a clean slate which helps them:

    • Qualify for bidding on government contracts
    • Present the appearance of corporate longevity and stability
    • Skip the process of building corporate credit
    • Avoid the paperwork of establishing a business outright

    Shelf companies seem like a shortcut to establishing an aged corporation on your own. However, it can also be seen as fraudulent or deceptive when using this to acquire business loans or other opportunities where your business age is needed to qualify. 

    Are Shelf Corporations Legal?

    Shelf corporations land in a legal gray area. There are no official laws dedicated to taking them down, but it could still create very real legal issues for you. 

    In any situation where the age or established corporate credit of the shelf LLC qualifies your business for a loan or other opportunity that you don’t qualify for without it, you’re taking a big risk. 

    For example, let’s say you buy a 10-year-old shelf corporation with an established credit history so you can qualify for a government contract.

    You win the contract, but can’t fulfill the requirements because you’re still a new business underneath the facade of the shelf company. When they investigate why your services are not up to par, you may need a lawyer if the government decides to prosecute. 

    From there, a judge decides the outcome and you might be on the hook for fraud. 

    So while a shelf corporation might get you what you want, it could potentially land you in hot water for misrepresenting your business. 

    According to Reuters, Wyoming Corporate Services, which sells aged shelf corporations, has had multiple civil lawsuits against the companies registered there since 2007. These lawsuits include alleged unpaid taxes, securities fraud, and trademark infringement. 

    I don’t think that’s the type of crowd you want to get mixed up with. 

    How Much Do They Cost?

    There’s no getting around it, shelf companies are expensive. The older the existing business is, the more money it’ll cost you. Younger corporations are sometimes more affordable and typically start around $650. 

    The ones found on Wyoming Corporate Services assign lower price ranges to the shelf LLCs that are only a few months old. At a year old, these prices jump up to about $1,000. 

    With a 15 years or older company, you might see prices of up to $6,695. In one case, there was a recorded sale of a shelf company for $10,000. 

    Risks of Using a Shelf Corporation

    To be completely upfront, shelf corporations have been used for some shady stuff – money laundering, tax evasion, and running scams to name a few. Plus there’s the risk that it might not even work for what you’re planning. 

    They’re Expensive

    Compared to the cost of starting a new company the traditional way, buying a shelf corporation is a much more costly venture. If you’re choosing to buy a young shelf corporation just to skip the paperwork of starting a business, then it might not be the best use of your resources. 

    As we mentioned before, an aged shelf corporation can reach up to $10,000. At the very least, you’re handing over $650 for a shelf LLC that’s a few months old. 

    Unlike many years ago, starting a business has become relatively easy and cost-effective for some industries. You could save that money for another business expense instead. Plus, it’s a lot of money to spend when there’s no guarantee that it’ll work for the reason you need it. 

    They Could Have Negative History Attached To Them

    Many aged corporation vendors claim that the corporations they sell are clean slates with no assets, no liabilities, and no problems. That’s not always true. 

    If you’re buying an aged shelf corporation with established credit lines, then you usually won’t know what’s on that credit report until after you buy. That could mean any number of liabilities attached to the company and since it’s yours now, you’re responsible for the business activity.

    Many aged corporation vendors also offer “nominee” officers and directors to conceal the identities of the real business owner. The issue is, you have no idea who the nominee officer is. 

    That leaves the potential for stolen identities or even someone with criminal records acting as a corporate officer of your company. The worst part is, none of the information needed for due diligence is offered up by the aged corporation vendors. So you find out after you’ve made an expensive purchase. That’s some serious buyer’s remorse. 

    They Might Not Work

    Vendors selling an aged shelf corporation present you with a ton of potential benefits, but there are zero guarantees that buying an aged shelf corporation will work. 

    Using it to bypass credit and business age standards to get business financing? 

    Lenders might detect your scheme and deny your applications. And if you already have open tradelines with them, they may choose to close your accounts since you tried to circumvent their system for managing credit risk. 

    Aged corporations aren’t new. The government and most business lenders already know what to look for and will quickly cut ties with your ready made company. 

    How to Establish Business Credit the Right Way

    Today, starting a business is much easier than in previous years. Most times you can do everything online through your state website. It only takes a few days and a small fee to file the company registration. Making it significantly cheaper than buying an aged shelf company.

    From there, you can get a free EIN for your limited liability company through the IRS website within a few minutes. You can also register for a DUNS number for free as well. 

    While you won’t be applying for business loans right out the gate, you can start building legitimate business credit by opening other business credit accounts:

    These are the easiest accounts to start with before seeking other forms of business financing. In many cases, there are options for business owners who have good personal credit scores but no corporate credit yet. 

    Two to three business credit tradelines are suggested for the fastest credit growth. Just make sure you pay them on time, every time. Unlike personal credit, being even one day late on your business credit payments can negatively impact your score. 

    Finally, you’ll need to keep an eye on your corporate credit to ensure that everything is reported accurately. By following these steps, you’ll save money on buying an aged corporation by developing legitimate business credit instead. 

    Buying an aged shelf corporation might seem like a worthy shortcut to an established business until you look further into it. In reality, it opens you up to a significant amount of risk, requires a large investment, and could result in legal trouble.

    Building credit the right way might take longer, but it’s not nearly as risky.

    The post Is Buying an Aged Corporation a Good Idea? appeared first on Due.

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    Seychelle Thomas

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  • 6 Reasons to Become Bullish Now

    6 Reasons to Become Bullish Now

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    40 year investment veteran Steve Reitmeister has been beating the bearish drums since May 2022. However, he is seeing more and more reasons to consider that it might be time to get bullish on stocks (SPY). All 6 of those bullish reasons are shared in the new commentary below including top picks to consider now.


    shutterstock.com – StockNews

    I was not the first guy to get bearish in 2022, but by May I got the memo just in the nick of time. This led to a major shift in my portfolio that allowed me to profit on the way down. And I have been steadfastly bearish since.

    But just like the Fed, my outlook is “data dependent”. And recent data has me becoming less bearish. Note that is not the same thing as becoming bullish.

    Why the change of heart? And what does that mean for trading strategy going forward?

    Read on below for the full story…

    Market Commentary

    First, let’s start with some important terminology. Less bearish is quite different than being bullish.

    Imagine that I previously saw 80% odds of bear market and lower stock prices in 2023. Thus, only a 20% possibility of bull market.

    Given recent information my view has shifted down to about 65% bearish probability versus 35% bullish. That is nearly 2 to 1 in favor of bear market forming…just a notch less bearish than before. The next logical question is…

    Why still bearish?

    You have already me talk non-stop since last May about all the reasons to be bearish. That is overflowing in my article archive. Plus my most recent presentation puts that all into perspective in a nice concise way: Stock Trading Plan for 2023.

    Now we are going to flip over this coin and talk about the bullish view. It is hard for me to say it in a straight forward manner. Instead, I am going to flush out all the individual ideas that point in a bullish direction…the sum total of them is still less likely than the bearish thesis playing out.

    Employment is Too Strong: That was on full display Thursday when Jobless Claims went even lower to 186,000 claims. You can not have a recession without job loss. That is why the first half of 2022 was not labeled a recession even though we had 2 straight quarters of negative GDP.

    So yes, we all see the headlines about job cuts at some high profile tech firms. But overall there are far too many job openings which is why the unemployment has been going lower…not higher. The trends in jobless claims say that is not going to change anytime soon as you usually need claims over 300,000 to make the unemployment go up.

    To put it together, we may very well have an economic contraction coming soon, but it likely will barely effect employment…and thus increases odds of a soft landing for which stocks don’t need to fall further.

    Break Above 200 Day Moving Average: For as much as I rely upon the fundamentals, I have learned to pay close attention to the 200 day moving average for the S&P 500 (SPY). We broke above on 1/19 and have only rallied higher since then. 6 straight closes above and 100 points north of the mark seems to confirm the breakout for now.

    “As January Goes…So Goes the Rest of the Year”: This is another one of those classic investment sayings that does have a bit of truth behind it. Not just the 6% gain for the S&P 500 on the month, but the very Risk On nature of the groups leading the way. So if the saying holds true it means more of the same in 2023.

    Less Bad = Good: This notion comes from the idea that expectations are incredibly low for the economy and corporate earnings. Lower hurdles like these make it easier to impress investors where things being less bad than expected is all it takes to bid up stock prices.

    Too Many Bears: Have you ever noticed that investor sentiment is a contrary indicator? The more bullish people feel = optimism too high = greater odds of downside to follow.

    The same is true in reverse. When folks are too bearish…then too often the opposite happens. And indeed this is the most widely expected recession and bear market that I can remember. That increases the odds that the opposite will play out. This also fits in with the time honored notion that “the market climbs a wall of worry”.

    Fed Pivot on 2/1?: The Fed is a slow and deliberate group. And given statements in the past, and all throughout January, they will continue to raise rates into the future.

    However, any softening in their language to acknowledge that inflation is moderating and just maybe they do not need to stay hawkish for as long as previously stated could well be the final nail in the bearish coffin with more upside to come. That is because it increases odds of soft landing.

    Note that the absolute opposite could happen and that firmly hawkish statements would stop this rally in its tracks with significant downside to follow.

    I realize that after reading these 6 reasons to become bullish that it may sound like a convincing argument. Thus, I bring your attention back to the statement at the top where I still see 65% likelihood of continuation of the bear market with new lows later in 2023.

    That is because there is at least 6 more months of restrictive Fed policies ahead…plus the 3-6 months of lagged effect of these policies equals a lot more time for a full blow recession to take root. And thus plenty of opportunity for unemployment to finally worsen.

    This is the Pandoras Box of the economy. Once that PAIN starts to roll out then everyone becomes more fearful of their job security. This leads to more saving and less spending which further weakens the economy with more job layoffs as a consequence.

    If we can truly avoid this vicious cycle, and enjoy a soft landing, then yes, the bull market starts now. The odds of which will keep moving with each new economic fact in hand.

    Again, my reading of all of this is still 65% likelihood of recession and deepening bear market. However, am prepared to adjust more bullish if the preponderance of the evidence swings in that direction.

    The next key piece of evidence comes on Wednesday 2/1 when the Fed has their rate decision and announcement. That could be incredibly bullish…incredibly bearish…or incredibly uncertain.

    I will do my level best to decipher it all for you in next week’s commentary. Just make sure that your mind is open to all new facts as they roll in because the most dangerous thing with investing is to only listen to evidence that proves your point and ignoring the rest.

    We are investors. Not bulls or bears.

    Yes, there are times we are feeling more bullish or bearish. But that label should never be affixed to you as a point of identity as it could become too permanent stopping you from switching gears for the betterment of your portfolio.

    Right now we all need to be flexible to review the facts with as open a mind as possible.

    Stay tuned more updates and associated trades as these facts roll in.

    What To Do Next?

    Watch my brand new presentation: “Stock Trading Plan for 2023” covering:

    • Why 2023 is a “Jekyll & Hyde” year for stocks
    • 4 Warnings Signs the Bear Returns in Early 2023
    • 9 Trades to Profit on the Way Down
    • Plan to Bottom Fish @ Market Bottom
    • 2 Trades with 100%+ Upside Potential as New Bull Emerges
    • And Much More!

    Watch “Stock Trading Plan for 2023” Now >  

    Wishing you a world of investment success!


    Steve Reitmeister…but everyone calls me Reity (pronounced “Righty”)
    CEO, StockNews.com and Editor, Reitmeister Total Return

    SPY shares fell $0.09 (-0.02%) in after-hours trading Friday. Year-to-date, SPY has gained 6.08%, versus a % rise in the benchmark S&P 500 index during the same period.

    About the Author: Steve Reitmeister

    Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks.

    More…

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  • The Best Way to Play Stock Breakouts

    The Best Way to Play Stock Breakouts

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    No matter market direction there are always stocks ready to break higher. What is the best way to find these timely picks? And how do you maximize profits? 35 year trading veteran Tim Biggam spells it all out in this timely article below.


    shutterstock.com – StockNews

    The S&P 500 (SPY) has been on the verge of a breakout for several days. It finally overtook the 200-day moving average and the downtrend line that has been in place for nearly 10 months.

    The index has closed above the big round resistance level of $4000 each of the past three trading days, but has yet to do it with conviction.

    This brings up the question of how do you best play for breakouts, given the difficulty the market has in providing definitive clues.

    The answer is comprised of two separate components-fundamental and technical. This is the exact recipe we use at POWR Breakouts to find stocks with the best chance of having a bonafide breakout.

    What Exactly Is A Breakout?

    Simply put, a breakout is when a stock makes a meaningful move past a well-defined resistance level. The chart of the SPX shown above has a clearly well-defined resistance level which has held previously on several occasions.

    Although the SPX did manage to close above the downtrend line, 200-day moving average and round number resistance at $4000, it failed to do so in a meaningful way so far. Whether it ultimately succeeds or not is anyone’s best guess.

    But rather than just guessing, it would be wise to use other tools to put the probabilities in your favor. Here are the two best ways to accomplish that goal.

    POWR Ratings (Fundamentals)

    The POWR ratings are a combination of 118 different fundamental factors that uncover stocks that are ready to outperform. These stocks are then ranked according to all these multitude of factors into a clear and concise ranking system, that’s easy to use and understand.

    The very best stocks are A-rated (Strong Buy). The really good stocks receive a B-rating which signifies Buy.

    The chart below highlights just how big an advantage this provides. The Strong Buy A-rated stocks (triple the return) and B-rated Buy stocks (double the return) have absolutely crushed the market over the past 20 plus years.

    So, when looking for the best breakout candidates, it is always good to start with the best stocks from a fundamental perspective. POWR Ratings gets that done.

    Trade Triangles (Technicals)

    The Trade Triangles were developed by a renowned trader at the Chicago Merc and a computer engineer to identify meaningful trends in a straight-forward manner across multiple timeframes.

    They were looking to uncover stocks with increasing strength that have the potential for outsized moves to the upside.

    The illustration below shows how simply, but effectively, the trade triangles work. Note that having two of the triangles match means you can be comfortable taking a position to ride the trend.

    POWR Breakouts always makes sure that both the long term and intermediate term triangles are trending up and flashing green.

    Taking the top technical stocks to trade a breakout makes sense. It also makes the likelihood of a breakout much greater plus increases the size of a power-packed pop to the upside. Better chance with bigger return using the trade triangles.

    We will exit the trade when the original thesis changes. POWR Ratings drop to C or lower, trade triangles have intermediate or long term turn red, or the breakout fails to materialize. Also exit profitably when the stock breakouts too hard for too long and begins to stall out.

    Let’s take a walk through a recently closed out trade to see the power of the process-and also see when to exit the trade.

    Trade Example:  Adams Resources (AE)

    December 19, 2022 (Entry)

    Adams Resources was a Strong Buy-A Rated-stock in the Buy Rated Energy- Oil & Gas Industry. Ranked near the very top and number 3 out of 92 in the industry as well. Strong across the board from the fundamental viewpoint.

    The trade triangles were also pointing to strength. Long term and intermediate term both trending up and showing green. +85 trend formula score strong as well.

    Shares broke out with conviction above the $39 resistance area. Plus had a key reversal day. MACD is poised to generate a fresh buy signal.

    Went long AE in the POWR Breakouts portfolio on 12/19/22 at $41.02. Held the long position until the stock got to historically overbought readings and struggled.

    9-day RSI went past 80 but began to weaken. MACD reached an extreme above 1 then headed lower. Bollinger Percent B raced past 100 before softening.

    Shares were trading at a big premium to the 20-day moving average.  Previous times all these indicators aligned in a similar fashion marked significant short-term top in AE stock.

    Exited the long AE position on 1/13/23, for a +18.09% gain in under a month.

    Identifying potential breakout points is only the first step in creating a robust and profitable trading system. Making sure you pick the strongest stocks from both a fundamental (POWR Ratings) and technical (Trade Triangles) standpoint is absolutely vital to continued success.

    Knowing when to get out with a big profit or when to stop out with a small loss is the final, and sometimes most overlooked, element in the overall equation.

    That’s why using POWR Breakouts is key to learning the why, when and how of putting the odds in your favor when looking to bank big bucks with breakouts.

    What To Do Next?

    If you’d like to discover more top-rated stocks according to our exclusive POWR Ratings, then you should check out our free special report:

    3 Stocks to DOUBLE This Year

    What gives these stocks the right stuff to become big winners, even in this brutal stock market?

    First, because they are all low priced companies with the most upside potential in today’s volatile markets.

    But even more important, is that they are all top Buy rated stocks according to our coveted POWR Ratings system and they excel in key areas of growth, sentiment and momentum.

    Click below now to see these 3 exciting stocks which could double or more in the year ahead.

    3 Stocks to DOUBLE This Year

    Here’s to good trading!

     

     

     

    Tim Biggam
    Editor, POWR Breakouts Newsletter

    SPY shares were trading at $407.06 per share on Friday afternoon, up $2.31 (+0.57%). Year-to-date, SPY has gained 6.44%, versus a % rise in the benchmark S&P 500 index during the same period.

    About the Author: Tim Biggam

    Tim spent 13 years as Chief Options Strategist at Man Securities in Chicago, 4 years as Lead Options Strategist at ThinkorSwim and 3 years as a Market Maker for First Options in Chicago. He makes regular appearances on Bloomberg TV and is a weekly contributor to the TD Ameritrade Network “Morning Trade Live”. His overriding passion is to make the complex world of options more understandable and therefore more useful to the everyday trader.

    Tim is the editor of the POWR Options newsletter. Learn more about Tim’s background, along with links to his most recent articles.

    More…

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  • Yousif Capital Management LLC Grows Holdings in Cullen/Frost Bankers, Inc. (NYSE:CFR)

    Yousif Capital Management LLC Grows Holdings in Cullen/Frost Bankers, Inc. (NYSE:CFR)

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    Yousif Capital Management LLC raised its position in Cullen/Frost Bankers, Inc. (NYSE:CFR – Get Rating) by 2.3% in the 3rd quarter, according to the company in its most recent 13F filing with the SEC. The fund owned 32,783 shares of the bank’s stock after buying an additional 736 shares during the period. Yousif Capital Management LLC owned 0.05% of Cullen/Frost Bankers worth $4,335,000 as of its most recent filing with the SEC.

    Several other institutional investors and hedge funds have also recently added to or reduced their stakes in the company. Meeder Asset Management Inc. grew its position in Cullen/Frost Bankers by 45.5% during the second quarter. Meeder Asset Management Inc. now owns 288 shares of the bank’s stock valued at $34,000 after buying an additional 90 shares during the period. Covestor Ltd grew its holdings in Cullen/Frost Bankers by 80.7% during the first quarter. Covestor Ltd now owns 309 shares of the bank’s stock valued at $43,000 after purchasing an additional 138 shares during the period. CWM LLC increased its holdings in Cullen/Frost Bankers by 638.5% in the 2nd quarter. CWM LLC now owns 384 shares of the bank’s stock worth $45,000 after acquiring an additional 332 shares during the last quarter. Atlas Capital Advisors LLC purchased a new stake in Cullen/Frost Bankers during the second quarter valued at about $51,000. Finally, Wipfli Financial Advisors LLC bought a new position in Cullen/Frost Bankers during the third quarter worth about $61,000. Hedge funds and other institutional investors own 81.93% of the company’s stock.

    Cullen/Frost Bankers Stock Performance

    NYSE:CFR opened at $132.16 on Friday. The company has a market capitalization of $8.50 billion, a price-to-earnings ratio of 17.74, a PEG ratio of 1.31 and a beta of 1.11. The business has a 50 day moving average of $135.80 and a 200 day moving average of $136.86. The company has a debt-to-equity ratio of 0.08, a current ratio of 0.63 and a quick ratio of 0.63. Cullen/Frost Bankers, Inc. has a 1-year low of $112.67 and a 1-year high of $160.60.

    Cullen/Frost Bankers (NYSE:CFR – Get Rating) last announced its quarterly earnings data on Thursday, October 27th. The bank reported $2.59 earnings per share for the quarter, topping analysts’ consensus estimates of $2.19 by $0.40. Cullen/Frost Bankers had a net margin of 30.07% and a return on equity of 14.18%. The firm had revenue of $479.34 million during the quarter, compared to analyst estimates of $445.68 million. On average, sell-side analysts predict that Cullen/Frost Bankers, Inc. will post 8.68 earnings per share for the current fiscal year.

    Analyst Upgrades and Downgrades

    CFR has been the topic of several research reports. Truist Financial lowered their price target on shares of Cullen/Frost Bankers from $160.00 to $148.00 in a research report on Friday, December 9th. Bank of America upgraded Cullen/Frost Bankers from a “neutral” rating to a “buy” rating and set a $155.00 price target for the company in a research report on Thursday, January 5th. Royal Bank of Canada increased their price objective on Cullen/Frost Bankers from $148.00 to $160.00 and gave the stock a “sector perform” rating in a report on Friday, October 28th. Raymond James lifted their target price on Cullen/Frost Bankers from $150.00 to $165.00 and gave the company an “outperform” rating in a report on Friday, October 28th. Finally, Morgan Stanley started coverage on shares of Cullen/Frost Bankers in a report on Monday, December 5th. They issued an “overweight” rating and a $178.00 price target on the stock. One equities research analyst has rated the stock with a sell rating, five have issued a hold rating and seven have issued a buy rating to the company’s stock. According to MarketBeat.com, the stock has an average rating of “Hold” and a consensus target price of $152.38.

    About Cullen/Frost Bankers

    (Get Rating)

    Cullen/Frost Bankers, Inc operates as a bank holding company of Frost Bank, which engages in the provision of commercial and consumer banking services. It operates through the following segments: Banking and Frost Wealth Advisors. The Banking operating segment includes both commercial and consumer banking services and Frost Insurance Agency.

    Featured Articles

    Want to see what other hedge funds are holding CFR? Visit HoldingsChannel.com to get the latest 13F filings and insider trades for Cullen/Frost Bankers, Inc. (NYSE:CFR – Get Rating).

    Institutional Ownership by Quarter for Cullen/Frost Bankers (NYSE:CFR)

    Receive News & Ratings for Cullen/Frost Bankers Daily – Enter your email address below to receive a concise daily summary of the latest news and analysts’ ratings for Cullen/Frost Bankers and related companies with MarketBeat.com’s FREE daily email newsletter.

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  • 4 Best Software Stocks to Buy in 2023 and Beyond

    4 Best Software Stocks to Buy in 2023 and Beyond

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    The software industry has faced several macroeconomic headwinds since last year. However, the industry’s prospects remain strong, driven by rapid digitalization and heightened spending. Therefore, it could be wise for investors to buy fundamentally strong software stocks Salesforce (CRM), Synopsys (SNPS), Autodesk (ADSK), and Progress Software (PRGS). Read more….


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    Last year, the Fed’s seven interest rate hikes had put the tech industry under immense pressure, with the tech-heavy Nasdaq Composite entering a bear market. Software stocks struggled as the demand outlook weakened amid high inflation and the rate hikes.

    However, the software industry is well-placed to benefit from the rising demand for cloud-based software solutions and rapid digitalization. Bank of America’s Rick Sherlund is bullish on the software industry’s performance this year.

    He said, “2022 was a terrible year for software stocks. We’ve seen tremendous compression in valuation. The good news is that downturns are ultimately followed by upturns. So, we’ve just got a lot of crosscurrents near-term.”

    The application development software market is estimated to reach $1.16 trillion by 2031, growing at a CAGR of 23.5%. According to Gartner, worldwide IT spending is expected to rise 2.4% year-over-year in 2023, with the software segment rising 9.3% from the prior-year period.

    To that end, it could be wise to buy fundamentally strong software stocks Salesforce, Inc. (CRM), Synopsys, Inc. (SNPS), Autodesk, Inc. (ADSK), and Progress Software Corporation (PRGS).

    Salesforce, Inc. (CRM)

    CRM provides customer relationship management technology that brings companies and customers together worldwide. Its Customer 360 platform empowers its customers to work together to deliver connected experiences for their customers. The company’s service offerings include Sales, Service, Marketing, and Commerce. 

    In terms of the trailing-12-month gross profit margin, CRM’s 72.69% is 47.2% higher than the 49.37% industry average. Likewise, its 30.62% trailing-12-month levered FCF Margin is 311.2% higher than the industry average of 7.45%.

    For the fiscal third quarter that ended October 31, 2022, CRM’s total revenues increased 14.2% year-over-year to $7.84 billion. The company’s gross profit increased 14.5% year-over-year to $5.75 billion. Moreover, its income from operations increased significantly year-over-year to $460 million. 

    Analysts expect CRM’s EPS and revenue for the quarter ending January 31, 2023, to increase 62.4% and 9.2% year-over-year to $1.36 and $8 billion, respectively. CRM has an impressive earnings surprise history, surpassing the consensus EPS estimates in each of the trailing four quarters. The stock has gained 27.5% over the past month to close the last trading session at $165.09. 

    CRM’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.  

    Within the Software – Application industry, it is ranked #27 out of 138 stocks. It has an A grade for Growth and a B for Sentiment.

    We have also given CRM grades for Value, Momentum, Stability, and Quality. Get all CRM ratings here. 

    Synopsys, Inc. (SNPS) 

    SNPS provides electronic design automation software products used to design and test integrated circuits. The company offers Digital and Custom IC Design solutions, Verification solutions, and FPGA design products that are programmed to perform specific functions.

    In terms of the trailing-12-month EBIT margin, SNPS’ 23.11% is 265.8% higher than the 6.32% industry average. Likewise, its 18.21% trailing-12-month ROCE is 266.4% higher than the industry average of 4.97%.

    SNPS’ total revenue increased 11.4% year-over-year to $1.28 billion for the fourth quarter (ended October 31, 2022). Its non-GAAP net income increased 4.2% year-over-year to $297.69 million. The company’s non-GAAP EPS increased 4.9% year-over-year to $1.91.

    SNPS’ EPS and revenue for the quarter ending January 31, 2023, are expected to increase 3.6% and 6.7% year-over-year to $2.49 and $1.36 billion, respectively. It has a commendable earnings surprise history, surpassing the consensus EPS estimates in each of the trailing four quarters. Over the past nine months, the stock has gained 26.1% to close the last trading session at $356.67.  

    SNPS’ POWR Ratings reflect its solid prospects. The stock has an overall rating of B, equating to Buy in our proprietary rating system. It is ranked #17 within the same industry. The company has an A grade for Quality and a B for Sentiment.

    Click here to see the additional POWR Ratings of SNPS for Growth, Value, Momentum, and Stability.

    Autodesk, Inc. (ADSK)

    ADSK provides 3D design, engineering, and entertainment software and services worldwide. The company offers AutoCAD Civil 3D, BIM 360, AutoCAD, and AutoCAD LT, among other software and tools.

    In terms of the trailing-12-month gross profit margin, ADSK’s 91.63% is 85.6% higher than the 49.37% industry average. Likewise, its 56.64% trailing-12-month ROCE is significantly higher than the industry average of 4.97%.

    ADSK’s total net revenue for the third quarter that ended October 31, 2022, increased 13.7% year-over-year to $1.28 billion. The company’s gross profit increased 13.9% year-over-year to $1.16 billion. Its non-GAAP income from operations increased 27.4% from the year-ago value to $465 million. Moreover, its non-GAAP EPS came in at $1.70, representing a 26.9% increase from the prior-year quarter.

    ADSK’s EPS and revenue for the quarter ending January 31, 2023, are expected to increase 20.8% and 8.4% year-over-year to $1.81 and $1.31 billion, respectively. It has an impressive earnings surprise history, surpassing the consensus EPS estimates in three of the trailing four quarters. The stock has gained 12.3% over the past nine months to close the last trading session at $208.46.

    ADSK’s POWR Ratings reflect this positive outlook. ADSK has an overall rating of B, which translates to Buy in our proprietary rating system. It is ranked #9 in the Software – Application industry. It has an A grade for Quality and a B for Growth and Sentiment.  

    We have also given ADSK grades for Value, Momentum, and Stability. Get all ADSK ratings here.

    Progress Software Corporation (PRGS)

    PRGS develops, deploys, and manages business applications. The company offers OpenEdge, Sitefinity, Corticon, and DataDirect Connect, among other applications and solutions. It sells its products to end users, independent software vendors, original equipment manufacturers, and system integrators.

    In terms of the trailing-12-month EBITDA margin, PRGS’ 33.93% is 199.8% higher than the 11.32% industry average. Likewise, its 35.42% trailing-12-month levered FCF margin is 375.7% higher than the industry average of 7.45%.

    On January 3, 2023, PRGS announced an agreement to acquire MarkLogic, a company managing complex data and metadata. PRGS’ CEO, Yogesh Gupta, said, “Progress’ digital experience and infrastructure software products along with MarkLogic products will create an unmatched platform, giving customers access to an increasingly more complete offering to drive business success.”

    PRGS’ non-GAAP revenue for the fourth quarter (ended November 30, 2022) increased 10.7% year-over-year to $159.17 million. The company’s non-GAAP net income increased 19.2% year-over-year to $49.24 million. Also, its non-GAAP EPS came in at $1.12, representing a 21.7% increase from the prior-year period. 

    Analysts expect PRGS’ EPS and revenue for the quarter ending February 28, 2023, to increase 7.8% and 7.4% year-over-year to $1.05 and $158.38 million, respectively. The company has a commendable earnings surprise history, surpassing the consensus EPS estimates in each of the trailing four quarters. The stock has gained 17.2% over the past six months to close the last trading session at $52.80.  

    It is no surprise that PRGS has an overall rating of A, which translates to a Strong Buy in our POWR Ratings system.

    It is ranked first in the Software – Application industry. It has an A grade for Quality and a B for Growth, Value, and Stability.  To get the additional PRGS ratings for Momentum and Sentiment, click here.

    CRM shares were trading at $166.52 per share on Friday afternoon, up $1.43 (+0.87%). Year-to-date, CRM has gained 25.59%, versus a 6.43% rise in the benchmark S&P 500 index during the same period.

    About the Author: Malaika Alphonsus

    Malaika’s passion for writing and interest in financial markets led her to pursue a career in investment research.

    With a degree in Economics and Psychology, she intends to assist investors in making informed investment decisions.

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