Tag: STOCKS

Vita Coco (NASDAQ: COCO) has emerged as a prominent contender within the highly competitive health and wellness beverage industry, a sub-sector of the consumer staples sector. Vita Coco is primarily recognized for its coconut water, coconut milk and coconut oil products. The journey of Vita Coco, established in 2004, exemplifies strategic dexterity and market adaptability. Recognizing a significant gap in the United States market, founders Michael Kirban and Ira Liran capitalized on the popularity of packaged coconut water in Brazil, positioning Vita Coco as a dominant brand within the industry.

The Vita Coco chronicle

The company’s notable strategic moves characterize Vita Coco’s climb in the market. These include its expansion beyond coconut water into products such as coconut oil and canned cocktails. This latter move was in collaboration with Diageo (NYSE: DEO), a renowned entity involved in the production, marketing, and sale of alcoholic beverages. Diageo is known for its vast portfolio, featuring prominent brands such as Johnnie Walker, Guinness, and Smirnoff.

Vita Coco’s strategic insight was further demonstrated by successfully executing its initial public offering (IPO) in 2021. This positioned the company as a top-performing consumer IPO despite experiencing a subsequent decrease in earnings in 2022. Nonetheless, Vita Coco has managed to maintain a substantial market share, commanding over half of the coconut water market.

Market challenges and adaptations

The brand’s journey has not been without challenges. Vita Coco faced early logistical issues and competition from beverage giants like Coca-Cola (NASDAQ: COKE) and PepsiCo (NASDAQ: PEP). Market trends, such as the surge in hard seltzer popularity and evolving retail sector strategies, tested the company’s adaptability. Despite these challenges, Vita Coco’s resilience and strategic agility have enabled it to maintain its growth trajectory.

Insider transactions and rating downgrades

Recently, significant developments have been affecting Vita Coco’s stock market dynamics. William Blair downgraded the company from an “outperform” rating to a “market perform” rating. This downgrade often indicates a change in the firm’s outlook on a stock’s future performance relative to the market and can reflect concerns about the company’s near-term financial prospects or market challenges. However, Vita Coco’s analyst ratings show that the number of analysts who rate the stock a “buy” has increased over the past quarter. 

The company reported earnings per share (EPS) of $0.26 for the quarter ending October 31, surpassing analysts’ expectations by $0.02. Their revenue for the quarter was $138 million, slightly below analyst estimates of $139.05 million. Despite this, the company’s revenue showed an 11.3% increase compared to the same quarter in the previous year, and Vita Coco had a return on equity of 23.93% and a net margin of 7.73%.

High-profile insider stock sales at Vita Coco have increased interest in the company’s market activities. Jane Prior, the Chief Marketing Officer, sold 1,205 shares at an average price of $28.84, while Jonathan Burth, the Chief Operating Officer, sold 23,671 shares at an average price of $30.04. Even more recently, chairmen and directors have sold off a collective 73,998 shares valued at a combined $1.95M. These sales are often a part of the normal course of business for corporate executives, but they draw attention as they might reflect the insiders’ perspective on the company’s future prospects. 

The involvement of institutional investors in Vita Coco has also been noteworthy. Recent changes in their positions indicate varying levels of confidence and investment strategies related to the company. Some investors have increased their stakes, while others have initiated new positions, showcasing a dynamic and changing investor landscape for Vita Coco.

Vita Coco’s revenue and growth trajectory

Vita Coco’s financials have shown a consistent increase in revenue. In 2022, the company reported an annual revenue of $427.79 million, a 12.72% increase from the previous year. This upward trajectory continued into 2023, with the company achieving $479.46 million in revenue for the twelve months ending September 30, 2023, a further 13.51% growth year-over-year. These figures indicate Vita Coco’s solid market presence and successful business expansion efforts.

Investor perspectives: Sentiment and valuation

The developments surrounding the company, including its financial performance, the stock rating downgrade, and other negative headlines about Vita Coco, have significantly influenced investor sentiment. The downgrade suggests a neutral outlook on the stock, indicating that it is expected to perform in line with the market average. This stance reflects a more cautious view of the company’s near-term growth prospects.

Nevertheless, Vita Coco’s revenue growth serves as a favorable indicator for investors. However, market analysts’ forecast of a flat EBIT margin for 2024 implies limited potential for substantial short-term growth in profitability. The current market valuation of Vita Coco is generally considered to be an accurate reflection of its anticipated financial performance.

Strategic aspirations: Vita Coco’s future outlook

Vita Coco’s strategy for future growth includes considering mergers and acquisitions, mainly targeting smaller brands with solid margins and positive consumer acceptance. This approach aims to accelerate growth and expand Vita Coco’s product range. The company’s partnership with Diageo, leading to the launch of Vita Coco spiked with Captain Morgan, is an example of its intent to broaden market reach and diversify consumer engagement points. Moreover, Vita Coco’s marketing strategies have evolved to cater to a diverse consumer base by leveraging digital channels like TikTok and YouTube.

Investment implications: Assessing Vita Coco

For those considering investing in Vita Coco, it’s a blend of opportunity and caution. The company’s strong track record and foothold in the ever-growing non-alcoholic drink market add to its appeal. However, the craze for coconut-based products could potentially cool down, which might affect Vita Coco’s business. The stock’s current price seems to reflect its achievements and future goals, offering a fair deal for potential investors. It is worth noting that Vita Coco’s short interest is considered to be high for its sector. High short interest may indicate that many investors are betting against the stock, which means any good news could lead to a quick rise in stock price. 

Vita Coco has carved out a strong position in the health and wellness beverage sector, demonstrating adaptability and strategic foresight. Its collaboration with Diageo reflects a diversification strategy while evolving marketing tactics aim to reach a broader consumer base. Despite a downgrade by William Blair and notable insider stock sales, the company’s consistent revenue growth and strategic plans, including potential mergers and acquisitions, signal a proactive approach to market challenges and opportunities.

Once again stocks flirted with the all time highs for the S&P 500 (SPY). This has happened 2 times recent both leading to failure and this 3rd time doesn’t seem to be the charm either. What is holding stocks back from making new highs? And what should an investor do to find better performance? 43 year investment veteran Steve Reitmeister shares his view including a preview of his 11 favorite stock picks now. Read on below for the answers.

In my recent commentaries I have speculated that we were due for a trading range to digest some of the rampant gains at the end of 2023. However, so far it has been more of a consolidation under the all time highs at 4,796 for the S&P 500 (SPY).

Consolidations are simply much tighter trading ranges. That investors refuse to have a serious sell off while also not being ready to climb higher. Kind of feels like cars revving up at the starting line of a race…lots of noise, but going nowhere.

We will discuss more of the reasons behind this consolidation and when stocks should be ready to race ahead.

Market Commentary

Stocks have tried twice over to make new all time highs above 4,800 for the S&P 500. And twice thwarted at that level followed by share pullbacks.

Yes it looks like Thursday’s action signals a 3^rd such attempt. Yet that was a very hollow rally with the usual suspects in the S&P 500 doing well with small caps and other riskier stocks lagging. That is not the sign of a healthy bull. And give very low odds of breaking to new highs.

Some are pointing to economic data being too weak as the problem. Such as the horrific -43 showing for the Empire State Manufacturing Index on Tuesday.

While others are pointing to economic data being too strong like Retail Sales being above expectations on Thursday. This had 10 Year Treasury rates breaking further above 4% and also lowered the odds of the first rate cut coming at the March Fed meeting.

Sorry folks…you can’t have it both ways. And perhaps the answer is that neither of these theses are correct.

Meaning I don’t believe that investors are truly worried about a looming recession. Nor are they fearful of rates spiking again as they did in the Fall of 2023.

Simply, the market has come a long way from bear market bottom in October 2022. A total gain of 37% from that valley to now is a lot of profit in a short time when the long term average annual gain for the S&P 500 is only 8%.

So now is a healthy time for an extended pause. The same way you would take a long break after running a marathon.

Rest is what is needed. And then gaining the strength for the next run higher.

In the stock market world that typically comes hand in hand with a pullback in price leading to a trading range. Along with that you will see these investment terms show up more often:

• Profit taking
• Sector rotation
• Change of leadership
• Buy the Dip
• The Pause that Refreshes
• And so on…

Yet right now the most apt term is consolidation. As shared up top, that is simply a very tight trading range right under a point of resistance. Currently that resistance corresponds with the all time closing highs at 4,796…but for simplicity easier to think of it as 4,800.

The point is at this stage it is healthy and normal for stocks to relax after such a long run higher. Don’t be surprised if the consolidation does turn into a wider trading range with a subsequent test of the 50 day moving average at 4,628 being a likely downside target.

Moving Averages: 50 Day (yellow), 100 Day (orange), 200 Day (red)

A break below 4,600 is unlikely without some greater fundamental concerns arising. But let’s do appreciate the 2 next levels of price support rest at 4,488 for 100 day moving average and about 4,400 for the 200 day moving average.

Your trading plan should be to stay bullish. Use any subsequent pullback as a buy the dip opportunity. NOT for the stocks that led the charge in 2023. That game plan is played out.

Instead valuation and quality will be held in higher regard this year as the overall PE of the market is not cheap. GAARP is fine (Growth At A Reasonable Price)…but not growth at ANY price like last year.

If you want my favorite stock ideas for 2024, then read on below…

What To Do Next?

Discover my current portfolio of 11 stocks packed to the brim with the outperforming benefits found in our exclusive POWR Ratings model.

Yes, that same POWR Ratings model generating nearly 4X better than the S&P 500 going back to 1999.

Plus I have selected 2 special ETFs that are all in sectors well positioned to outpace the market in the weeks and months ahead.

These 13 top trades are based on my 43 years of investing experience seeing bull markets…bear markets…and everything between.

If you are curious to learn more, and want to see these lucky 13 hand selected trades, then please click the link below to get started now.

Steve Reitmeister’s Trading Plan & Top Picks >

Wishing you a world of investment success!

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

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SPY shares were trading at $477.39 per share on Friday morning, up $0.90 (+0.19%). Year-to-date, SPY has gained 0.44%, versus a % rise in the benchmark S&P 500 index during the same period.

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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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Williams-Sonoma (NYSE: WSM) has emerged as a standout performer in the fast-paced and volatile retail sector. The company has skillfully blended traditional business acumen with cutting-edge technology to create near-perfect customer synergy. How has this home goods brand not only survived but thrived in the face of sector-specific challenges? 

Strategic ingenuity: Pricing and AI integration

Williams-Sonoma’s innovative approach to pricing and Artificial Intelligence (AI) has been a cornerstone of its recent successes. The company’s strategic decision to move away from aggressive discounting during the pandemic has been a notable differentiator, contributing to its resilience in a challenging retail sector. This shift in pricing strategy has mirrored positively in Williams-Sonoma’s financial outcomes, including maintaining solid operating margins.

Williams-Sonoma has taken significant steps towards digital transformation and artificial intelligence integration. The company has adeptly utilized AI to personalize marketing efforts, making its communications with the company’s customers more relevant and targeted. This is coupled with AI’s role in streamlining the supply chain and enhancing the efficiency of operations. Additionally, AI has been employed to elevate the level of customer service, ensuring a more responsive and tailored customer experience. These AI-driven initiatives represent a forward-thinking approach, distinguishing Williams-Sonoma in a highly competitive industry.

Financial front: Earnings and revenue insights

In its latest fiscal report for Q4 2023, Williams-Sonoma has showcased a commendable proficiency in sustaining profitability during challenging market conditions. The company’s financial strength is particularly evident in its earnings per share (EPS) performance. Williams-Sonoma analysts had adjusted their FY2024 EPS forecasts for Williams-Sonoma to $14.42, a slight decrease from the prior estimate of $14.54. Despite this adjustment, Williams-Sonoma outperformed expectations in a recent quarter, recording an EPS of $3.66, which exceeded the consensus estimate of $3.34.

This achievement in surpassing EPS forecasts highlights Williams-Sonoma’s strategic and effective cost management and its ability to remain profitable in a competitive retail environment. However, it’s notable that the company’s revenue has not consistently aligned with analysts’ projections. Specifically, Williams-Sonoma’s reported revenue stood at $1.85 billion for the quarter, slightly below the expected $1.95 billion. Despite this shortfall in revenue, the company has demonstrated a robust financial standing, evidenced by a substantial return on equity of 59.65% and a net margin of 11.99%.

Williams-Sonoma’s strategy of balancing operational efficiency with current market trends has been vital in its navigation through the uncertainties of the retail sector. While facing potential economic downturns and heightened competition from online retail giants like Amazon (NASDAQ: AMZN), Williams-Sonoma’s strategic approach and historical performance indicate a resilient and adaptable business model.

Stock market saga: Investor confidence and market response

The stock performance of Williams-Sonoma has been an indicator of market confidence, particularly highlighted by the actions of significant investment entities. A notable event in this regard was the increase in Williams-Sonoma’s ownership stake by a major investment firm, which was interpreted as a strong signal of confidence in the company’s potential for growth and expansion. This investment resulted in a considerable boost to Williams-Sonoma’s stock price, marking a new high for the company within a 52-week period.

This rise in stock value wasn’t an isolated incident but rather part of a more significant trend indicating investor confidence in Williams-Sonoma. Such strategic moves by investment firms often reflect optimistic market projections for a company, signifying the potential for future growth. Despite facing the challenges of a turbulent consumer economy and high inflation, Williams-Sonoma’s stock has attracted attention, particularly from institutional investors.

While the company’s stock has gained attention and performed well, analysts’ opinions on its future performance have been more varied. The average analyst rating indicates a cautious approach, with some predicting potential downside in the stock’s value.

Investor sentiment: A mixed outlook

Investor sentiment toward Williams-Sonoma is currently a mix of caution and optimism. Economic uncertainties, including potential recession risks, contribute to the cautious outlook. However, the company’s recent Price-to-Earnings (P/E) ratio, approximately 14.1 as of January 2024, has risen from 6.84 at the end of 2022, indicating a change in market valuation. This suggests a more optimistic view of the company’s future earnings growth.

The company’s commitment to shareholder returns remains a positive aspect, marked by William’s-Sonoma’s consistent dividend payments since 2006 and increasing dividends annually since 2007. Despite challenges in meeting sales targets and the sensitivity of high-end home furnishings to economic trends, Williams-Sonoma has shown resilience, with a focus on inventory management and cash flow.

Williams-Sonoma’s market standing

Williams-Sonoma’s journey in the retail sector has been marked by strategic agility, operational efficiency, and robust financial health. The company’s ability to adapt to changing market dynamics and commitment to innovation and shareholder value positions it firmly for continued growth and success.

Williams-Sonoma represents a compelling case study in the retail sector. The company’s strategies, financial performance, stock movements, and investor sentiment collectively provide a comprehensive view of its market position and future prospects. For investors and market analysts, Williams-Sonoma’s trajectory offers valuable insights into the complexities of the retail industry and the company’s potential role in shaping its future.

The healthcare industry harbors a robust stance capable of withstanding various market challenges, thanks to the ceaseless requisite for its services. This is entwined with an escalating demand for healthcare facilities, pharmaceutical solutions, and pioneering medical breakthroughs, laying a robust foundation for the industry’s continued prosperity. Given this backdrop, fundamentally strong medical stocks UnitedHealth Group (UNH), CVS Health (CVS), Select Medical Holdings (SEM), and Zynex (ZYXI) could be solid buys for 2024 gains. Read on….

Over the years, the healthcare sector has consistently played a vital role in society, driven by the consistent demand for healthcare services and advancements. As we see increasing numbers of aging populations and the continuous rise of chronic diseases, the call for advanced pharmaceuticals, medical technologies, and progressive treatments is anticipated to escalate.

Considering the promising prospects of the medical industry, it could be wise to add quality medical stocks UnitedHealth Group Incorporated (UNH), CVS Health Corporation (CVS), Select Medical Holdings Corporation (SEM), and Zynex, Inc. (ZYXI) to one’s portfolio.

The soaring elderly population, a higher incidence of chronic Non-Communicable Diseases (NCDs), and growing health awareness offer significant growth opportunities for the healthcare sector as it strives to keep up with the mounting demand for medical services.

The onset of winter in the U.S., along with a probable rise in flu, COVID-19, and Respiratory Syncytial Virus (RSV) cases, underscores the urgency for amplified medical responses. For instance, as of the week ending January 6, weekly COVID hospitalizations escalated to 35,801 – marking the ninth consecutive week of rises. The U.S. hospital market is projected to hit a revenue of $1.48 trillion by 2024.

Simultaneously, the ongoing global digital revolution is setting the stage for numerous opportunities within the digital health realm. Technological breakthroughs in telemedicine, automated surgery, wearable health tech devices, and health informatics are poised to dramatically reshape the industry.

The digital health market is projected to expand at a CAGR of 23.3% to reach $1.97 trillion by 2030.

Staying at the forefront of technological innovation continues to be a priority for the healthcare industry. With projections showing the global medical devices market reaching $996.93 billion by 2032 at a CAGR of 5.8%, it’s clear that the industry is leveraging these technological leaps for its expansion.

Furthermore, amid the annual uptick in medical expenses, health insurance continues to be a critical buffer against fiscal distress. The global health insurance market, expected to reach $4.37 trillion by 2030, growing at a 7.3% CAGR, is primed for steady expansion due to heightened cognizance about the benefits of health coverage and an anticipated rise in the senior populace.

Given the industry tailwinds, it’s time to examine the fundamentals of the stocks to buy in the medical industry.

UnitedHealth Group Incorporated (UNH)

UNH is a diversified healthcare company in the U.S., operating through four segments: UnitedHealthcare; OptumHealth; OptumInsight; and OptumRx.

From January 1, 2024, UNH has placed eight preferred insulin products on tier one of standard commercial formularies, limiting out-of-pocket spending to $35 or less.

On December 12, UNH paid a quarterly cash dividend of $1.88 per share of UNH common stock. UNH has paid dividends for 21 consecutive years, indicating its shareholder payback abilities.

Its annualized dividend rate of $7.52 per share translates to a dividend yield of 1.43% on the current share price. Its four-year average yield is 1.33%. UNH’s dividend payments have grown at CAGRs of 14.7% and 16.1% over the past three and five years, respectively.

During 2023, the company returned $14.8 billion to shareholders through dividends and share repurchases.

UNH’s trailing-12-month asset turnover ratio of 1.43x is 262.5% higher than the industry average of 0.98x, while its trailing-12-month EBITDA margin of 9.78% is 108% higher than the industry average of 4.70%.

UNH’s total revenues for the fiscal fourth quarter that ended December 31, 2023, increased 14.1% year-over-year to $94.42 billion. Its earnings from operations rose 11.6% year-over-year to $7.69 billion.

For the same quarter, adjusted net earnings attributable to UNH common shareholders and adjusted earnings per share stood at $5.76 billion and $6.16, up 13.8% and 15.4% from the prior-year quarter, respectively. As of December 31, 2023, its total current assets stood at $78.44 billion, compared to $69.07 billion as of December 31, 2022.

As of December 31, 2023, UNH business served 52.75 million people, a 2% year-over-year growth. This encouraging trend was primarily propelled by membership growth of the company’s domestic commercial and Medicare Advantage businesses.

Street expects UNH’s revenue and EPS in the fiscal first quarter ending March 2024 to increase 8.3% and 8.6% year-over-year to $99.57 billion and $6.80, respectively. The company surpassed consensus revenue and EPS estimates in each of the trailing four quarters, which is impressive.

The stock has gained 6.4% over the past year to close the last trading session at $516.34. Over the past six months, it gained 6.7%.

UNH’s POWR Ratings reflect its robust prospects. The stock has an overall B rating, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

It has a B grade for Stability and Quality. It is ranked #6 out of 12 stocks in the B-rated Medical – Health Insurance industry.

For UNH’s additional ratings (Growth, Value, Momentum, and Sentiment), click here.

CVS Health Corporation (CVS)

CVS provides diverse health services and offers health insurance, pharmacy benefits, and retail products, including prescription drugs and walk-in medical clinics through MinuteClinic. The company operates across three segments: Health Care Benefits; Pharmacy Services; and Retail/LTC.

On December 15, CVS announced a quarterly dividend of $0.665 per share on the common stock of the corporation, payable to the holders on February 1, 2024. Moreover, it boasts a 26-year record for consecutive years of dividend payments.

The company pays $2.66 annually as dividends, which translates to a yield of 3.45% on the prevailing price level. Its four-year average dividend yield is 2.74%. The company has raised its dividend payouts at a CAGR of 6.6% and 3.9% over the past three and five years.

On December 6, CVS awarded $2 million in Hometown Fund grants to organizations in Connecticut, Massachusetts, and Rhode Island, focusing on improving access to equitable health care and addressing social determinants of health.

CVS’ trailing-12-month EBIT margin of 4.05% is 747.1% higher than the industry average of 0.48%. Its trailing-12-month levered FCF margin of 3.46% is 981.3% higher than the 0.32% industry average.

In the fiscal third quarter that ended September 30, 2023, CVS reported total revenues of $89.76 billion, up 10.6% from the prior-year quarter. The company’s adjusted operating income and income per common share attributable to CVS grew 2.5% and 1.8% year-over-year to $4.46 billion and $2.21, respectively.

As of September 30, 2023, CVS’ total current assets amounted to $70.14 billion, compared to $65.63 billion as of December 31, 2022.

For the full year of 2023, the company projects its adjusted EPS between $8.50 and $8.70. Additionally, the cash flow from operations is expected to be between $12.50 billion and $13.50 billion.

Street expects CVS’ revenue to grow 3.6% year-over-year to $88.34 billion for the fiscal first quarter ending March 2024. Its EPS for the same quarter is expected to be $2.02. The company surpassed the revenue and EPS estimates in each of the trailing four quarters.

CVS’ shares have gained 2.9% over the past six months and 1.7% over the past three months to close the last trading session at $73.88.

CVS’ POWR Ratings reflect its sound outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.

CVS has a B grade for Value, Stability, and Sentiment. Within the B-rated Medical – Drug Stores industry, it is ranked first among three stocks.

In addition to the POWR Ratings stated above, one can access CVS’ additional Growth, Momentum, and Quality ratings here.

Select Medical Holdings Corporation (SEM)

SEM operates critical illness recovery hospitals, rehabilitation hospitals, outpatient rehabilitation clinics, and occupational health centers in the United States. It operates through four segments: The Critical Illness Recovery Hospital, The Rehabilitation Hospital, The Outpatient Rehabilitation, and The Concentra.

As of September 30, 2023, SEM had operations in 46 states and the District of Columbia. It operated 107 critical illness recovery hospitals in 28 states, 33 rehabilitation hospitals in 13 states, 1,946 outpatient rehabilitation clinics in 39 states and the District of Columbia, 539 occupational health centers in 41 states, and 145 onsite clinics at employer worksites.

On November 28, SEM paid its shareholders a quarterly dividend of $0.125 per share. The company pays $0.50 annually as dividends, which translates to a yield of 1.93% on the prevailing price level. Its four-year average dividend yield is 1.09%.

SEM’s trailing-12-month EBIT margin of 7.92% is significantly higher than the industry average of 0.48%. Its trailing-12-month levered FCF margin of 2.09% is 553% higher than the 0.32% industry average.

SEM’s net revenue increased 6.2% year-over-year to $1.67 billion for the fiscal third quarter that ended September 30, 2023. Its income from operations grew 42.1% from the prior year’s quarter to $129.96 million.

Its adjusted net income attributable to common shares and adjusted net income per share stood at $56.48 million and $0.46, up 115.8% and 119% year-over-year, respectively. In addition, the company’s adjusted EBITDA grew 26.6% from the year-ago quarter to $193.84 million.

For the fiscal year of 2023, the company expects its revenue to be between $6.55 billion and $6.7 billion, Adjusted EBITDA between $795 million and $825.0 million, and fully diluted earnings per share between $1.77 and $1.94.

Analysts expect SEM’s revenue and EPS for the fiscal first quarter (ending March 2024) to increase 4.4% and 7.5% year-over-year to $1.74 billion and $0.60, respectively. Moreover, the company surpassed the consensus revenue and EPS estimates in three of the trailing four quarters.

The stock has gained 11.2% over the past month and 9.5% over the past three months to close the last trading session at $26.32.

SEM’s positive prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.

The stock has a B grade for Growth, Value, and Stability. SEM is ranked #6 of 11 stocks within the Medical – Hospitals industry.

To access additional POWR Ratings of SEM for Momentum, Sentiment, and Quality, click here.

Zynex, Inc. (ZYXI)

ZYXI designs, manufactures, and markets medical devices to treat chronic and acute pain; and activate and exercise muscles for rehabilitative purposes with electrical stimulation. It provides NexWave, NeuroMove, InWave, and E-Wave. The company also supplies privately labeled products, including electrodes and batteries for use in electrotherapy products.

On November 13, ZYXI submitted a 510(k) application to the U.S. Food and Drug Administration (FDA) for the M-Wave Neuromuscular Electrical Stimulation (NMES) device. The M-Wave is expected to replace the E-Wave, which has been fundamental in Neuromuscular Electrical Stimulation (NMES) treatments.

“We are excited to introduce the M-Wave, a device that showcases our ongoing commitment to improving the lives of patients dealing with neuromuscular conditions,” said Thomas Sandgaard, CEO at Zynex Medical.

On November 1, ZYXI’s board of directors approved a program to repurchase up to $20 million. The program commenced on November 1, 2023, and is scheduled to terminate before November 1, 2024, or when the $20 million limit is reached.

ZYXI’s trailing-12-month EBIT and levered FCF margins of 10% and 8.13% are significantly higher than the industry averages of 0.48% and 0.32%, respectively. Its trailing-12-month asset turnover ratio of 1.39x is 252.9% higher than the 0.39x industry average.

ZYXI’s net revenue increased 20.2% year-over-year to $49.92 million for the fiscal third quarter that ended September 30, 2023. Its revenue from Devices and Supplies grew 48.5% and 9.6% year-over-year to $16.86 million and $33.06 million, respectively. Its gross profit grew 22.1% from the prior-year quarter to $40.40 million.

In addition, the company’s cash and cash equivalents amounted to $42.52 million as of September 30, 2023, compared to $20.14 million as of December 31, 2022. Moreover, as of September 2023, its total current assets came at $102.92 million, compared to $69.56 million as of December 31, 2023.

Analysts expect ZYXI’s revenue and EPS for the second quarter (ending June 2024) to increase 21.5% and 14.8% year-over-year to $54.62 million and $0.10, respectively. Moreover, the company surpassed the consensus EPS estimates in all four trailing quarters and the consensus revenue estimates in three of the trailing four quarters.

The stock has gained 10.9% over the past six months and 23.5% over the past three months to close the last trading session at $10.34.

It’s no surprise that ZYXI has an overall rating of B, which translates to a Buy in our proprietary POWR rating system.

The stock has an A grade for Quality and a B for Value. ZYXI is ranked #4 of 8 stocks within the A-rated Medical – Consumer Goods industry.

Click here for ZYXI’s additional POWR Ratings for Growth, Momentum, Stability, and Sentiment.

What To Do Next?

43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.

2024 Stock Market Outlook >

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UNH shares . Year-to-date, UNH has declined -1.92%, versus a 0.25% rise in the benchmark S&P 500 index during the same period.

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About the Author: Sristi Suman Jayaswal

The stock market dynamics sparked Sristi’s interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy.Having earned a master’s degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors.

More…

The post 4 Medical Stocks on the Rise for 2024 Gains appeared first on StockNews.com

Apple Inc. (NASDAQ: AAPL) has recently announced a rare discount on its flagship iPhone products in China. The discount was specifically on the iPhone 15 lineup as part of a rare Lunar New Year promotion in China. This promotion included an additional discounted savings of up to 500 RMB (about $70) on the iPhone 15 lineup.

While competition from local tech giants like Xiaomi and Huawei is intense, Apple’s decision to offer discounts seems more related to a broader strategy to boost sales amid analyst rumors of weak Chinese demand for the latest iPhone models rather than a direct response to competition alone. This marks a significant departure from Apple’s traditional premium pricing strategy, highlighting the company’s adaptability to the unique dynamics of the Chinese smartphone market.

The intense rivalry in the Chinese smartphone market

China’s technology sector and smartphone market is known for its intense competition. For international brands like Apple, the challenges are many, including local consumer preferences and aggressive pricing by domestic players. Recent market share statistics show that while Apple maintains a significant presence, it is under constant pressure from local brands. These brands offer technologically advanced products and are also aggressively priced, making the market highly competitive.

Tracing Apple’s journey in China

Apple’s marketing strategies in China have changed over time. Discounts on the iPhone 15 lineup indicate that Apple is shifting towards more aggressive pricing in response to market conditions and declining sales rather than solely due to competition.

Initially, Apple adhered to its global premium pricing model, which helped to establish its products as luxury items. However, Apple has since shifted its approach in an effort to align with changing market dynamics and growing competition. This strategic discount in China is a testament to Apple’s willingness to adapt to market demands and consumer expectations.

Chinese consumers are known for valuing both brand perception and value for money. Apple’s pivot to offering discounts can be seen as an effort to align better with these preferences. Technological innovation remains a key factor, but the perceived value in pricing is increasingly significant in purchase decisions made by the Chinese consumer.

Apple vs. Competitors: A technological showdown

Despite its ongoing competitiveness, Apple’s market position in China has been eroded by local brands. The company has seen a significant drop in iPhone sales, indicating increased competition from high-end products offered by companies like Xiaomi and Huawei.

Apple’s competitive advantage has traditionally been its sustained innovation and strong brand reputation for quality. However, the competition is quickly closing the gap by offering cheaper products with comparable high-tech features. Apple’s recent discount strategy can be interpreted as an acknowledgment of these competitive pressures and an effort to maintain its market share.

Broader global economic trends also influence Apple’s strategy. Issues like international trade dynamics and supply chain disruptions have significantly impacted the company over the past year. The post-pandemic market is still stabilizing, and Apple’s pricing adjustment can be seen as a proactive measure to maintain its market position in these evolving conditions.

Assessing the financial impact of Apple’s strategy shift

Apple’s decision to offer discounts on its flagship iPhones in China represents a significant shift in strategy that holds substantial implications for investors. This move must be carefully examined to understand its potential impact on Apple’s financial performance. The company’s financial performance, particularly Apple’s earnings, market share, and profit margins, must be considered when analyzing this new strategy shift.

Impact on revenue and market share

Introducing discounts is expected to stimulate demand, potentially leading to an increase in sales volume. China, one of the world’s largest smartphone markets, offers a vast customer base. Reducing prices could make Apple’s products more accessible to a broader market segment, potentially driving up sales figures. This increase in volume could compensate for the lower profit margins per unit sold, thereby maintaining or even boosting overall revenue.

Concerns about reduced profit margins

The primary concern for investors is the impact of reduced prices on Apple’s profit margins. Historically, Apple has enjoyed high margins thanks to its premium pricing strategy. A move towards discounting disrupts this model. However, it’s important to note that Apple’s robust supply chain and economies of scale might mitigate the impact on margins. Furthermore, increased sales volume can offset lower margins, especially if the discounts help Apple capture a larger customer base.

Strategic importance of the Chinese market

Maintaining a solid market presence in China is crucial for Apple’s long-term financial health. China is not just a large market in terms of customer base, but it’s also a rapidly growing one, with increasing demand for high-end smartphones. Apple’s presence in China is strategically important for its global revenue and market influence. The Chinese market also serves as an indicator of technological and consumer trends, making it a key market for Apple to maintain a strong presence in.

Long-term financial health

Investors typically prioritize long-term growth, and Apple’s discount strategy in China could be advantageous in this regard. Apple is creating a foundation for continued revenue growth by establishing a stronger foothold in the Chinese market. The strategy also exhibits Apple’s pliability and responsiveness to shifting market conditions, characteristics that are vital for long-term success in the rapidly changing tech industry.

Apple’s strategic discount in China underscores its adaptability and willingness to recalibrate its approach in response to changing market forces. This move reflects a broader trend in the global tech industry, where companies must continually navigate new territories and adapt to remain competitive. For investors, market observers, and competitors alike, Apple’s strategy in China offers valuable lessons in flexibility, responsiveness, and the importance of understanding and adapting to local market dynamics.

The pharmaceutical industry is thriving, fueled by steady demand for drugs, cost-efficient alternative discoveries, and rapid technological innovations. Hence, fundamentally strong pharma stocks Novo Nordisk (NVO), Eton Pharmaceuticals (ETON), and Pacira BioSciences (PCRX) might be profitable buys now. Read on….

The pharmaceutical industry is considered recession-proof, given the consistent demand for medicines and new treatment options. Moreover, the industry is experiencing a drastic transformation with the growing adoption of advanced and innovative digital technologies.

Given the industry’s promising prospects, it could be wise to invest in quality pharma stocks Novo Nordisk A/S (NVO), Eton Pharmaceuticals (ETON), and Pacira BioSciences, Inc. (PCRX) for substantial gains.

Medical needs are surging around the globe due to the rapidly aging population and growing prevalence of chronic diseases, such as arthritis, asthma, cancer, diabetes, ulcerative colitis, cystic fibrosis, and more. The pharmaceutical industry is expected to witness robust long-term growth, driven by an increase in drug demand amid expanding healthcare needs.

Revenue in the pharmaceuticals market is expected to reach a staggering $636.90 billion in 2024. The market’s largest segment, Oncology Drugs, is projected to total $114.60 billion this year. In global comparison, the United States is expected to generate the most revenue of nearly $636.90 billion.

During the forecast period (2024-2028), the pharmaceuticals market is anticipated to exhibit a CAGR of 6%, resulting in a market volume of $802.80 billion by 2028.

Increasing healthcare costs and the need for enhanced accessibility to medication drive high demand for generic drugs. The global generic pharmaceutical market is estimated to be worth around $740.50 billion by 2032, growing at a CAGR of 8.1% during the forecast period from 2024 to 2032.

The growing pressure in the pharma industry to reduce production costs and improve efficiency is propelling corporations to take substantial strides toward automation. That has resulted in increased adoption of digital technologies across the pharma value chain, from drug discovery to packaging.

Advanced technologies, including AI, IoT, blockchain, robotics, and big data analytics, are being adopted by pharma companies to automate repetitive and hazardous tasks, improve quality and yields and meet compliance standards.

For instance, AI techniques can analyze large-scale biomedical data to identify existing drugs that can potentially have therapeutic advantages for different diseases. By repurposing approved drugs for new indications, AI is accelerating the drug discovery process and reducing costs.

According to Coherent Market Insights, the global pharma 4.0 market is projected to hit $54.43 billion by 2031, expanding at a CAGR of 18.3% from 2024 to 2032.

Investors’ interest in pharmaceutical stocks is evident from the iShares U.S. Pharmaceuticals ETF’s (IHE) 10.4% returns over the past six months.

Given these favorable trends, let’s look at the fundamentals of the three Medical – Pharmaceuticals stocks, beginning with the third choice.

Stock #3: Pacira BioSciences, Inc. (PCRX)

PCRX offers non-opioid pain management and regenerative health solutions for healthcare practitioners and their patients. The company provides EXPAREL, ZILRETTA, and iovera system. The company also develops proprietary multivesicular liposome, a drug delivery technology that encapsulates drugs without altering their molecular structure.

On November 10, 2023, PCRX announced the U.S. Food and Drug Administration (FDA) approval for its supplemental new drug application (sNDA) to expand the EXPAREL® (bupivacaine liposome injectable suspension) label to include administration in adults as an adductor canal block and a sciatic nerve block in the popliteal fossa.

“We are thrilled that today’s approval offers clinicians and patients another option for achieving long-lasting non-opioid pain control with EXPAREL and an increased ability to transition procedures to the ambulatory environment,” said Dave Stack, chief executive officer and chairman of Pacira BioSciences.

PCRX reported preliminary total revenue of $675 million for the year ended December 31, 2023, compared with $666.80 million for the year ended December 31, 2022. The company’s full-year EXPAREL net product sales of $538.1 million, compared to $536.9 million in 2022.

Also, PCRX’s ZILRETTA and iovera° net product sales of $111.10 million and $19.70 million in 2023, compared to $105.50 million and $15.30 million in 2022, respectively.

For the third quarter that ended September 30, 2023, PCRX reported total revenues of $163.93 million, and the company’s income from operations was $17.72 million. Its non-GAAP net income and non-GAAP EPS came in at $36.63 million and $0.72, up 22.7% and 22% from the prior year’s quarter, respectively.

Street expects PCRX’s revenue for the first quarter (ending March 2024) to increase 7.3% year-over-year to $172.07 million. Further, the consensus EPS estimate for the ongoing quarter of $0.78 indicates 47.2% growth year-over-year.

Shares of PCRX have gained 17.3% over the past month to close the last trading session at $32.23.

PCRX’s robust outlook is reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.

The stock has a B grade for Growth, Value, and Quality. It is ranked #27 out of 161 stocks in the Medical – Pharmaceuticals industry.

Click here to access additional PCRX ratings for Sentiment, Stability, and Momentum.

Stock #2: Eton Pharmaceuticals, Inc. (ETON)

ETON is a specialty pharmaceutical company that focuses on developing, acquiring, and commercializing pharmaceutical products for rare diseases. The company’s product portfolio includes ALKINDI SPRINKLE, Carglumic Acid, Betaine Anhydrous, dehydrated alcohol injection, and Zeneo hydrocortisone autoinjector.

On October 4, ETON entered into an agreement to acquire an abbreviated new drug application for Nitisinone Capsules via Oakrum Pharma, LLC’s Chapter 11 bankruptcy proceeding. This acquired product is used to treat hereditary tyrosinemia type 1 (HT-1) in combination with dietary restriction of tyrosine and phenylalanine.

Nitisinone is ETON’s fourth FDA-approved product and advances the company toward its goal of having ten commercial rare disease products on the market by the end of 2025. Also, this product shares the same metabolic geneticist prescriber base as its Carglumic Acid and Betaine products, offering an opportunity to leverage its existing sales forces and prescribers’ base.

For the third quarter that ended September 30, 2023, ETON’s net revenue increased 118.3% year-over-year to $7.03 million. Its gross profit rose 118.2% from the prior year’s quarter to $4.40 million. The company generated 900 thousand in positive cash flow from operations.

Furthermore, the company’s cash and cash equivalents as of September 30, 2023, were $22.07 million, compared to $16.30 million as of December 31, 2022. The company’s total assets were $31.52 million, compared to $25.03 million as of December 31, 2022.

Analysts expect ETON’s revenue for the fiscal year (ended December 2023) to increase 50.5% year-over-year to $31.99 million. For the fiscal year 2024, the company’s revenue and EPS are expected to grow 29.5% and 600% from the prior year to $41.43 million and $0.07, respectively.

Moreover, the company topped the consensus revenue and EPS estimates in three of the trailing four quarters, which is impressive.

ETON’s stock has gained 37.9% over the past six months and 24.9% over the past year to close the last trading session at $4.37.

ETON’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.

ETON has an A grade for Quality and Sentiment and a B for Value. Within the Medical – Pharmaceuticals industry, ETON is ranked #23 of 161 stocks.

In addition to the POWR Ratings stated above, one can access ETON’s Growth, Momentum, and Stability ratings here.

Stock #1: Novo Nordisk A/S (NVO)

Headquartered in Bagsvaerd, Denmark, NVO is a healthcare company that engages in the research, development, manufacture, and marketing of pharmaceutical products internationally. The company operates in two segments: Diabetes and Obesity Care; and Rare Disease.

On January 15, NVO reported an update on the share repurchase program initiated on 6 November 2023. Under the program, NVO will repurchase B shares for an amount up to DKK 4.10 billion ($602.01 million) in the period from 7 November 2023 to 29 January 2024.

This program is a part of the overall share repurchase program of up to DKK 30 billion ($4.40 billion) to be undertaken during a 12-month period starting 1 February 2023.

On January 4, NVO entered research collaborations with Omega Therapeutics (OMGA) and Cellarity Inc. on novel treatment approaches for cardiometabolic diseases. The Omega collaboration will leverage the company’s proprietary platform technology to develop an epigenomic controller as a part of a new treatment approach for obesity management.

The Cellarity collaboration will build upon initial work and engage the company’s platform to develop a small molecule therapy in metabolic dysfunction-associated steatohepatitis (MASH). These are the first research programs signed under the existing partnership between Novo Nordisk and Flagship Pioneering.

Also, on November 23, NVO invested more than DKK 16 billion ($2.35 billion) beginning in 2023 to expand the existing production site in Chartres, France, for the current and future product portfolio within severe chronic diseases.

This investment will considerably increase the company’s capacity of the manufacturing site, adding aseptic production and finished production processes along with an extension of the current Quality Control Laboratory. The investment, which includes capacity for GLP-1 products, will boost Novo Nordisk’s ability to meet future demands for innovative medicines.

During the nine months that ended September 30, 2023, NVO’s net sales increased 29.1% year-over-year to DKK 166.40 billion ($24.45 billion). Its operating profit grew 31.3% from the year-ago value to DKK 75.81 billion ($11.13 billion). The company’s net profit rose 47.2% from the year-ago value to DKK 61.72 billion ($9.06 billion).

Also, the company’s earnings per share was DKK 13.71, up 48.9% from the prior year’s quarter.

The company raised its full-year 2023 outlook, expecting sales to grow 32-38%, and its operating profit is expected to grow 40-46% at constant exchange rates (CER).

Analysts expect NVO’s revenue and EPS for the fourth quarter (ended December 2023) to increase 24.3% and 47.9% year-over-year to $8.83 billion and $0.66, respectively. In addition, the company surpassed the consensus revenue estimates in three of the trailing four quarters, which is impressive.

Shares of NVO surged 38.5% over the past six months and 60.4% over the past year to close the last trading session at $107.16.

NVO’s POWR Ratings reflect its promising prospects. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.

The stock has an A grade for Quality and a B for Sentiment, Growth, and Stability. NVO is ranked #2 of 161 stocks within the Medical – Pharmaceutical industry.

To see additional POWR Ratings of NVO for Value and Momentum, click here.

What To Do Next?

43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.

2024 Stock Market Outlook >

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NVO shares fell $0.59 (-0.55%) in premarket trading Tuesday. Year-to-date, NVO has gained 3.59%, versus a 0.29% rise in the benchmark S&P 500 index during the same period.

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About the Author: Mangeet Kaur Bouns

Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.

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The software industry is positioned for sustained expansion due to technological advances, escalating demand for innovative software solutions, and the shift to cloud-based platforms, driving the demand for software solutions. Given this backdrop, let’s evaluate the prospects of software stocks Dynatrace, Inc. (DT), Datadog, Inc. (DDOG), and Confluent, Inc. (CFLT) to discern the best investment opportunity in the thriving industry. Read on….

The software industry worldwide is witnessing a remarkable expansion, fueled by escalating demands for digital transformation across diverse industry sectors. The incorporation of generative artificial intelligence within these applications edges toward catalyzing an even more robust escalation across the industry.

Given the industry’s promising outlook, we evaluate three software stocks in this piece to shed light on how they can aid investors in leveraging the ongoing industry trends to their advantage.

A solid buy candidate for 2024 appears to be Dynatrace, Inc. (DT), given its robust fundamentals. Conversely, Datadog, Inc. (DDOG) should be kept on one’s watchlist for better entry opportunities, while Confluent, Inc. (CFLT) should be best avoided, given its weak fundamentals.

Let’s first look at what’s shaping the software industry before delving deeper into the fundamentals of the three stocks.

The enduring influence and exponential impact of the software industry continue to shape individuals and institutions worldwide, evidencing its dynamic domino effect. Contributing an estimated $1.4 trillion annually to the U.S. economy, this sector stands as a vigorous pillar of economic advancement and is projected to remain a potent catalyst for growth in the upcoming years. The global software market is expected to reach $1.79 trillion, growing at a CAGR of 11.7% until 2032.

Digital transformation, encompassing artificial intelligence, process automation, and cloud data migration, gains momentum through strategic IT investment and deployment across various sectors. Anticipated growth in IT spending will catalyze digital transformation across a wide range of industries. Gartner’s forecast for worldwide IT spending in 2024 anticipates a substantial upswing of 8%, yielding a head-turning $5.1 trillion.

The 2024 Gartner CIO and Technology Executive Survey reveals that CIOs are concentrating their investment efforts on Business Intelligence/data analytics and cloud platforms. A resounding 78% of CIOs demonstrate an interest in increasing spending on BI/data analytics, while 73% express an inclination toward intensified investment in cloud technology.

The business software market is forecasted to grow at an 11.2% CAGR to reach $1.10 trillion by 2029.

Considering these conducive trends, let’s take a look at the fundamentals of the three software stocks.

Stock to Buy:

Dynatrace, Inc. (DT)

DT provides a security platform for multicloud environments. It operates Dynatrace, a security platform that provides application and microservices monitoring, runtime application security, infrastructure monitoring, log management and analytics, digital experience monitoring, digital business analytics, and cloud automation. The company also offers implementation, consulting, and training services.

In November, DT achieved the Amazon Web Services (AWS) Security Competency. By earning this competency, DT has demonstrated expertise in helping its customers proactively remediate vulnerabilities and defend against threats across their AWS environments.

This recognition reinforces DT’s position as a trusted AWS partner and is a testament to its AI-powered approach to identifying, blocking, and investigating vulnerabilities in hybrid and multi-cloud environments. It further motivates the company to continue helping customers accelerate cloud migration and transformation with confidence.

DT’s trailing-12-month ROTA of 6.09% is significantly higher than the industry average of 0.48%. Its trailing-12-month net income and levered FCF margins of 13.06% and 24.42% are 453.7% and 182.4% higher than the industry averages of 2.36% and 8.65%, respectively.

For the fiscal second quarter that ended September 30, 2023, DT’s total revenue and non-GAAP gross profit increased 25.9% and 28.3% year-over-year to $351.70 million and $298.74 million, respectively. Moreover, its free cash flow stood at $34.13 million, up 36.1% from the year-ago quarter.

For the same quarter, its non-GAAP net income and non-GAAP net income per share increased 45% and 40.9% from the prior-year quarter to $93.49 million and $0.31, respectively.

Street expects DT’s revenue and EPS for the fiscal third quarter of 2024 (ended December 2023) to increase 20.3% and 11.8% year-over-year to $357.75 million and $0.28, respectively. The company surpassed consensus revenue and EPS estimates in each of the trailing four quarters, which is impressive.

The stock has gained 36.4% over the past nine months to close the last trading session at $56.25. Over the past year, it has gained 53.5%.

DT’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

DT has a B grade for Growth, Sentiment, and Quality. It is ranked #29 out of 134 stocks in the Software – Application industry.

To see the additional ratings for DT (Value, Momentum, and Stability), click here.

Stock to Hold:

Datadog, Inc. (DDOG)

DDOG operates an observability and security platform for cloud applications in North America and internationally. The company’s products include infrastructure and application performance monitoring, log management, digital experience monitoring, continuous profiler, database monitoring, network monitoring, incident management, observability pipelines, cloud cost management, and universal service monitoring.

On November 27, 2023, DDOG announced expanded security and observability support for AWS serverless applications built on AWS Lambda and Step Functions services. The functionality helps AWS Lambda and Step Functions users detect security threats, get a high-level overview of how their state machine is performing at a single point in time, and monitor services instrumented with OpenTelemetry.

On the same date, DDOG added identity, vulnerability, and app-level findings to the Security Inbox. This provides engineers with one actionable view to improve security posture without any additional overhead or friction.

With these new features, DDOG shifted cloud security earlier in the software development lifecycle and empowered developers and security teams to address issues proactively. DDOG’s Security Inbox delivers a unified view of the top issues DevOps and security teams need to address to reduce risk significantly.

DDOG’s trailing-12-month cash from operations of $554.17 million is 617.2% higher than the industry average of $77.27 million. Its trailing-12-month gross profit and levered FCF margins of 80.01% and 26.18% are 62.8% and 202.7% higher than the industry averages of 49.14% and 8.65%, respectively.

For the fiscal third quarter that ended September 30, 2023, DDOG’s revenue and non-GAAP gross profit increased 25.4% and 29.5% year-over-year to $547.54 million and $450.87 million, respectively. Moreover, its free cash flow stood at $138.19 million, up 105.9% from the year-ago quarter.

For the same quarter, its non-GAAP net income and non-GAAP net income per share increased 95.5% and 95.7% from the prior-year quarter to $158.46 million and $0.45, respectively. As of September 30, 2023, its total current assets stood at $2.82 billion, compared to $2.34 billion as of December 31, 2022.

Street expects DDOG’s revenue and EPS for the fiscal fourth quarter of 2023 (ended December 2023) to increase 21.1% and 67.9% year-over-year to $568.24 million and $0.44, respectively. The company surpassed consensus revenue and EPS estimates in each of the trailing four quarters.

The stock has gained 84% over the past nine months to close the last trading session at $123. Over the past year, it has gained 77.7%.

DDOG’s fundamentals are reflected in its POWR Ratings. The stock has an overall C rating, equating to Neutral in our proprietary rating system.

DDOG has an A grade for Growth and a B for Quality. Within the B-rated Software – Business industry, it is ranked #23 out of 42 stocks.

Click here to see the additional POWR Ratings for DDOG (Value, Momentum, Stability, and Sentiment).

Stock to Sell:

Confluent, Inc. (CFLT)

CFLT operates a data streaming platform in the United States and internationally. The company offers Confluent Cloud, Kafka Connect, ksqlDB, and stream governance. It serves automotive, communication, financial services, gaming, government, insurance, manufacturing, retail and e-commerce, and technology industries.

CFLT’s trailing-12-month asset turnover ratio of 0.31x is 49.3% lower than the industry average of 0.62x, while its trailing-12-month CAPEX/Sales of 0.37% is 84.3% lower than the industry average of 2.37%.

For the fiscal third quarter that ended September 30, 2023, CFLT’s total revenue and non-GAAP operating loss stood at $200.18 million and $10.92 million, respectively. Moreover, its free cash flow came to a negative $13.08 million.

For the same quarter, its non-GAAP net income and non-GAAP net income per share stood at $6.33 million and $0.02, respectively. As of September 30, 2023, CFLT’s total current assets stood at $2.17 billion, compared to $2.20 billion as of December 31, 2022.

Street expects CFLT’s revenue and EPS for the fiscal year of 2023 (ended December 2023) to be $769.09 million and negative $0.01, respectively.

The stock has declined 37.7% over the past six months to close the last trading session at $22.31. Over the past three months, it has declined 27.8%.

CFLT’s bleak fundamentals are reflected in its POWR Ratings. The stock has an overall D rating, equating to Sell in our proprietary rating system.

CFLT has a D grade for Value, Stability, and Quality. Within the Software – Application industry, it is ranked #127.

Beyond what we have highlighted above, to see CFLT’s additional ratings for Growth, Momentum, and Sentiment, click here.

What To Do Next?

Get your hands on this special report with 3 low priced companies with tremendous upside potential even in today’s volatile markets:

3 Stocks to DOUBLE This Year >

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DDOG shares fell $0.54 (-0.44%) in premarket trading Monday. Year-to-date, DDOG has gained 1.33%, versus a 0.29% rise in the benchmark S&P 500 index during the same period.

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About the Author: Sristi Suman Jayaswal

The stock market dynamics sparked Sristi’s interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy.

Having earned a master’s degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors.

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Stocks keep flirting with the all time highs for the S&P 500 (SPY) and keep falling short. Meaning this is proving to be a stubborn level of resistance at 4,800. Why is that happening? And when will stocks finally break above? 43 year investment veteran Steve Reitmeister shares his view including a preview of his favorite stock picks now. Read on below for the answers.

As suspected, the market is not ready to make new highs above 4,796 for the S&P 500 (SPY).

That was quite evident Thursday as stocks jumped out of bed in the morning to touch those previous highs only to find stubborn resistance with the broad market heading lower from there.

Why are stocks struggling at this level?

And what is an investor to do about it?

The answers to those vital questions will be at the heart of today’s commentary.

Market Commentary

Some investment writers will have a fairly short hand, and highly inaccurate, way to describe what happened on Thursday.

They will tell you that the CPI inflation reading was hotter than expected on Thursday morning. And that caused the stock market sell off that followed.

That is simply not true.

Here is what really happened. The CPI report came out an hour before the market open. And yet still the market leapt higher out of the gate. But once it touched the hem of the previous highs (4,796) a more than 1% intraday sell off that ensued.

That pain is not so evident in the late session bounce and modest loss for S&P 500. Yet is a lot more apparent in the -0.7% showing for the small caps in the Russell 2000 on the session.

Thus, the problem for lack of further stock advance is not about CPI report. Just a statement that investors are not prepared to breakthrough resistance to make new highs.

So, what is holding stocks back?

I discussed that in greater detail in my last commentary: When Will the Bull Market Run Again?

The essence of the story is that investors have less clarity on the next moves for the Fed than they had after the November and December meetings that sparked a tremendous end of year rally. Unfortunately, there has been a mixed bag of inflation and economic data that calls into question when rate cuts will begin.

At the earliest those cuts could come at the March 20^th meeting. But I sense that the more readings we get like Thursday’s CPI report, or last Fridays stronger than expected employment report…the more likely those first cuts get pushed off to either the May 1^st or June 12^th Fed meetings.

Digging into the CPI reading we find that inflation was expected to come in at 3.1% yet spiked to 3.4% on this reading. Core CPI was even worse at 3.9% year over year. Just still too far away from the Fed’s target of 2%.

For the “wonks” out there you should dig into the Sticky Price resources created by the Atlanta Fed. To put it plainly, sticky inflation remains too sticky. The main elements are housing and wages that are not coming down as quickly as expected.

When you appreciate the conservative nature of the Fed…and that they state over and over again that they are “data dependent”, then its hard to look at the recent data and assume they are ready to lower rates any time soon.

Long story short, I don’t think that investors are ready for the next bull run to make new highs until they are more certain WHEN the Fed will finally start cutting rates. That delays the next upside move to March 20^th at the earliest with May or June becoming all the more likely.

Hard to complain about settling into a trading range for a while given the tremendous pace of gains to end 2023. So this seems like a reasonable time for stocks to rest before making the next big move.

The upside of the current range connects with the aforementioned all time high of 4,796…but really easier to think of the lid as 4,800.

On the downside, that is a bit harder to infer. Typically trading ranges are 3-5% from top to bottom. So, for quick math let’s say around 4,600 on the bottom. This also represents the previous resistance point that took a long time to finally break above in early December.

The good news is that I expect quality stocks to prevail even in a range bound market. Meaning that last year pretty much any piece of beaten down junk was bid higher. That party is OVER!

Instead, when you have a pretty fully valued market as we have now, then there will be a greater eye towards quality of fundamentals and value proposition. I spelled that out pretty completely in last week’s article: Is 2024 Prime Time for Value Stocks?

The answer to the question posed in the headline is…YES. Meaning that 2024 is lining up nicely for value stocks.

Case in point being the early results this year with our Top 10 Value strategy up +3.70% through Wednesday’s close vs. breakeven for S&P 500 and -2.80% for the small caps in the Russell 2000.

I strongly believe that edge for value will continue as the year rolls on. And the best way to take advantage of that is spelled out in the next section…

What To Do Next?

Discover my current portfolio of value stocks packed to the brim with the outperforming benefits found in our exclusive POWR Ratings model.

This includes direct access to our Top 10 Value Stocks strategy that is hot out of the gates in 2024 with plenty more room to run.

If you are curious to learn more, and want to lean into my 43 years of investment experience, then please click the link below to get started now.

Steve Reitmeister’s Trading Plan & Top Picks >

Wishing you a world of investment success!

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

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SPY shares were trading at $475.88 per share on Friday afternoon, down $0.47 (-0.10%). Year-to-date, SPY has gained 0.12%, versus a % rise in the benchmark S&P 500 index during the same period.

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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.

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Despite the intensified focus on eco-friendly energy alternatives, the rising demand for coal – facilitated by its affordability and easy transportation and storage capabilities – fortifies its anticipated growth trajectory. Given this scenario, let’s assess the prospects of coal stocks Peabody Energy Corporation (BTU), Hallador Energy (HNRG), and China Shenhua Energy Company (CSUAY) to determine the best investment opportunity in this space. Read on….

Amid escalating environmental concerns, the coal sector is set for robust growth, propelled by an amplifying coal demand.

In this piece, we evaluate three coal stocks to shed light on how they can help investors capitalize on the prevailing industry tailwinds.

Stocks Hallador Energy Company (HNRG) and China Shenhua Energy Company Limited (CSUAY) appear to be solid buy candidates for 2024, given their robust fundamentals. Conversely, I think Peabody Energy Corporation (BTU) should be kept on one’s watchlist for better entry opportunities.

Let’s first look at what’s shaping the coal industry before delving deeper into the fundamentals of the three stocks.

Many nations have instigated broad climate action plans for coal eradication in the coming years. However, ongoing gas shortages and sluggish renewables growth reinforce that coal continues its role as an essential power generation resource and industrial use across various regions.

Despite coal’s unwavering position as a reliable energy source, it remains the leading contributor to carbon dioxide emissions. Consequently, worldwide efforts to replace coal with renewable energy may trigger a gradual decrease in coal consumption over time. Yet this transition remains slow-paced.

Asia experienced a record surge in seaborne thermal coal imports in December. Driven by peak winter demand, China, the top importer, led the increase, with imports reaching 83.69 million metric tons. This figure marked a significant increase from November’s 78.87 million, representing the highest since records began in January 2017.

Chinese and Indian population sizes, the largest globally, suggest an imminent need to fulfill rapidly increasing energy demands, likely to stimulate industry growth in the future.

Furthermore, the U.S. Energy Information Administration predicts total coal consumption to be 391.3 million st in 2024, marking a 1.6% increase from December’s forecast. Consequently, the global coal market is expected to grow to $2.1 trillion in 2031 at a CAGR of 4.4%.

In light of these encouraging trends, let’s look at the fundamentals of the three Coal stocks, beginning with number 3.

Stock #3: Peabody Energy Corporation (BTU)

BTU is a producer of metallurgical and thermal coal. It markets and brokers coal from other coal producers trades coal and freight-related contracts, and partners in a joint venture to develop various sites. The company operates through Seaborne Thermal Mining; Seaborne Metallurgical Mining; Powder River Basin Mining; and Other U.S. Thermal Mining segments.

The company repurchased approximately 12.6 million shares of its common stock for $266.6 million and paid dividends of $20.7 million during the nine months ended September 30, 2023. From October 1, 2023, through October 27, 2023, the company repurchased an additional 1.1 million shares for $27.3 million. Moreover, the Board approved a new share repurchase program authorizing repurchases of up to $1 billion of the company’s common stock.

On November 9, the company paid a quarterly dividend on its common stock of $0.075 per share. BTU’s annual dividend of $0.30 per share translates to a 1.19% yield on current prices. Its four-year average yield is 3.19%.

Over the past three years, BTU’s revenue and EBITDA grew at CAGRs of 17.9% and 69.6%, respectively. Its levered free cash flow grew at 15.1% and 3.7% CAGRs over the past three and five years, respectively.

In terms of forward non-GAAP P/E, BTU is trading at 4.89x, 51.2% lower than the industry average of 10.01x. Its forward EV/Sales multiple of 0.57x is 71.7% lower than the industry average of 2x.

BTU’s revenue for the fiscal third quarter ended September 30, 2023, stood at $1.08 billion. The company’s operating profit and attributable net income amounted to $158.80 million and $119.90 million, respectively. Also, its income per share came in at $0.82.

BTU’s adjusted EBITDA came at $270 million. As of September 30, 2023, its total current liabilities came at $839.50 million, compared to $918.70 million as of December 31, 2022.

Street expects BTU’s revenue and EPS for the fiscal fourth quarter (ended December 2023) to be $1.19 billion and $1.44, respectively. The company surpassed the revenue estimates in three of the trailing four quarters, which is impressive.

Over the past six months, the stock has gained 14.4% to close the last trading session at $24.98. But it has declined 1.1% over the past nine months.

BTU’s POWR Ratings reflect its prospect. It has an overall rating of C, equating to Neutral in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

It has an A grade for Value and a B for Momentum and Quality. Within the A-rated Coal industry, it is ranked #8 within 11 stocks.

Click here to see the other ratings of BTU for Growth, Stability, and Sentiment.

Stock #2: Hallador Energy Company (HNRG)

HNRG engages in the production of steam coal for the electric power generation industry. The company owns the Oaktown Mine 1 and Oaktown Mine 2 underground mines in Oaktown; Freelandville Center Pit surface mine in Freelandville; and Prosperity Surface mine in Petersburg, Indiana.

On August 2, 2023, HNRG secured a new $140 million credit agreement with PNC Bank as the administrative agent. This agreement extends through 2026 and involves converting $65 million of existing debt into a new term loan with a maturity date of March 31, 2026, along with a $75 million revolver with a maturity of July 31, 2026.

The amendment also raises the maximum annual capital expenditure limit to $100 million. HNRG’s CEO, Brent Bilsland, appreciated the increased liquidity and flexibility the amendment provides, particularly following the Merom Power Plant acquisition in October 2022.

Over the past three years, HNRG’s revenue and EBITDA grew at CAGRs of 37.5% and 49.8%. Its levered free cash flow grew at 87.4% and 53.6% CAGRs over the past three and five years, respectively.

In terms of forward non-GAAP P/E, HNRG is trading at 4.94x, 50.6% lower than the industry average of 10.01x. Its forward EV/Sales multiple of 0.49x is 75.5% lower than the industry average of 2x.

HNRG’s total revenue for the fiscal third quarter that ended September 30, 2023, increased 94.8% year-over-year to $165.77 million. Its income from operations came in at $23.80 million, up 341.2% from the year-ago quarter. Its adjusted EBITDA increased 95.5% year-over-year to $35.92 million.

The company’s net income and net income per share increased 897.2% and 780% year-over-year to $16.08 million and $0.44, respectively. The company’s bank debt declined 45.7% year-over-year to $61.75 million. As of September 30, 2023, its total current liabilities came at $171.59 million, compared to $239.60 million as of December 31, 2022.

Analysts expect HNRG’s revenue and EPS for the fiscal year of 2023 (ended December 2023) to increase 107.8% and 215.8% year-over-year to $752.10 million and $1.80, respectively. Moreover, the company surpassed the revenue and EPS estimates in three of the trailing four quarters.

The stock has lost marginally over the past six months to close the last trading session at $8.80.

HNRG’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.

It has an A grade for Value and a B for Momentum. Within the same industry, it is ranked #4.

Beyond what we’ve stated above, we have also rated the stock for Growth, Stability, Sentiment, and Quality. Get all ratings of HNRG here.

Stock #1: China Shenhua Energy Company Limited (CSUAY)

CSUAY, headquartered in Beijing, China, is involved in manufacturing and selling coal and power, as well as railway, port, and sea transportation and coal-to-olefins enterprises. It operates through six segments: Coal; Power Generation; Railway; Port; Shipping; and Coal Chemical.

CSAUY pays an annual dividend of $1.49 per share, which translates to a dividend yield of 10.25% on the current share price. Its four-year average yield is 11.09%. CSUAY’s dividend payments have grown at CAGRs of 27.8% and 20.9% over the past three and five years, respectively.

Over the past three years, CSUAY’s revenue and EBITDA grew at CAGRs of 14.6% and 14%, respectively. Its EPS grew at 18.1% and 6.2% CAGRs over the past three and five years, respectively.

CSUAY’s forward EV/EBIT of 6.78x is 25.7% lower than the industry average of 9.14x. Its forward EV/Sales multiple of 1.78x is 11.2% lower than the industry average of 2x.

During the nine months ended September 30, 2023, CSUAY’s revenue from goods and services marginally increased year-over-year to RMB 252.47 billion ($35.48 billion). Its profit for the period stood at RMB 61.09 billion ($8.58 billion), while earnings per share registered at RMB 2.64.

As of September 30, 2023, the company’s total current liabilities amounted to RMB 94.43 billion ($13.27 billion), down from RMB 98.40 billion ($13.83 billion) as of December 31, 2022.

CSUAY’s revenue is expected to come at $11.96 billion for the fiscal first quarter ending March 2024. For the fiscal year ending December 2024, its revenue is expected to reach $48.23 billion.

CSUAY has gained 23.3% over the past year, closing the last trading session at $14.50. Over the past six months, it gained 20%.

CSUAY’s robust outlook is apparent in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.

CSUAY has an A grade for Stability and a B for Momentum and Quality. It has topped the same industry.

To access additional CSUAY ratings (Growth, Value, and Sentiment), click here.

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CSUAY shares were unchanged in premarket trading Wednesday. Year-to-date, CSUAY has gained 5.99%, versus a -0.30% rise in the benchmark S&P 500 index during the same period.

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About the Author: Sristi Suman Jayaswal

The stock market dynamics sparked Sristi’s interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy.

Having earned a master’s degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors.

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The tobacco industry’s outlook appears bright due to the consistent tobacco use given its addictive nature and the launch of new, emerging products like e-cigarettes. Thus, investing in quality tobacco stocks Japan Tobacco (JAPAY), Turning Point (TPB), and Imperial (IMBBY) could be wise for potential gains this month. Read more….

Despite stringent government regulations and the harmful health effects of tobacco use, the tobacco industry appears to be thriving with the introduction of tobacco-free and other innovative products such as e-cigarettes and nicotine pouches. Also, growing chain smokers and tobacco consumers contribute to the sustained adoption of tobacco products.

Given the industry tailwinds, it could be wise to invest in fundamentally sound tobacco stocks Japan Tobacco Inc. (JAPAY), Turning Point Brands, Inc. (TPB), and Imperial Brands PLC (IMBBY) this month for solid returns this month.

The tobacco industry has grown considerably despite the health risks associated with tobacco consumption from cancer and heart disease to lung disease and chronic obstructive pulmonary disease (COPD). The industry has even evidenced continued challenges such as surging taxes, strict rules and regulations, etc.

Tobacco companies highly benefit from the addictive nature of tobacco, compelling the consumer in the direction of consistent consumption. That leads to positive performance even through economic cycles. An estimated 28.3 million US adults are cigarette smokers, and nearly 2.80 million US middle and high school students use at least one tobacco product.

The global tobacco market is expected to exceed a valuation of $627 million in 2024, growing at a CAGR of 3.4% during the forecast period. The market is projected to reach $878 million by 2034.

In recent years, the slightly safer and less harmful tobacco products have taken over the industry significantly. Large corporations are shifting toward safer alternatives such as snus, e-cigarettes, heated tobacco products (HTPs), and nicotine pouches, boosting the industry’s growth and observing an expanding customer base.

Moreover, a surge in advertising and promotion of smokeless tobacco attracts consumers and increases the sales of cigars and electronic pipes. The global e-cigarette and vape market is expected to reach $182.84 billion by 2030, exhibiting a CAGR of 30.6%.

With these encouraging trends in mind, let’s delve into the fundamentals of the three Tobacco stock picks, beginning with the third choice.

Stock #3: Japan Tobacco Inc. (JAPAY)

Headquartered in Tokyo, Japan, JAPAY manufactures and sells tobacco products, pharmaceuticals, and processed foods internationally. The company operates through three segments: Tobacco Business; Pharmaceutical; and Processed Food.

On October 31, 2023, JAPAY announced the launch of Ploom X ADVANCED, its newest heated tobacco device in Japan, to be sold at convenience and tobacco stores nationally. This new device will deliver enhanced taste satisfaction as compared to the old Ploom X model. This new launch might extend the company’s market reach and drive its growth.

JAPAY’s trailing-12-month gross profit and EBITDA margins of 58.53% and 30.89% are significantly higher than the respective industry averages of 33.72% and 11.26%. Likewise, the stock’s trailing-12-month net income margin of 17.14% is 250% higher than the industry average of 4.90%.

During the third quarter that ended September 30, 2023, JAPAY’s revenue increased 3% year-over-year to ¥764.20 billion ($5.20 billion). Its operating profit came in at ¥218.30 billion ($1.51 billion), up 11.2% year-over-year. Also, its profit grew 11% from the year-ago value to ¥155 billion ($1.06 billion).

In addition, the company’s total assets stood at ¥7.10 trillion ($49.21 billion) as of September 30, 2023, compared to of ¥6.54 trillion ($45.37 billion) as of December 31, 2022.

Street expects JAPAY’s revenue and EPS for the fiscal year (ending December 2024) to increase 4.4% and 11.1% year-over-year to $20.16 billion and $0.01. Moreover, the company has surpassed the consensus revenue estimates in each of the trailing four quarters.

Over the past six months, JAPAY’s stock has surged 21.6% and 32.4% over the past year to close the last trading session at $13.08.

JAPAY’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

JAPAY has an A grade for Stability and a B for Momentum and Quality. It is ranked #3 out of 9 stocks in the Tobacco industry.

In addition to the POWR Ratings we’ve stated above, we also have JAPAY’s ratings for Sentiment, Growth, and Value. Get all JAPAY ratings here.

Stock #2: Turning Point Brands, Inc. (TPB)

TPB manufactures, markets, and sells adult consumer products. The company operates through Zig-Zag Products; Stoker’s Products; and NewGen Products segments. It markets and distributes rolling papers, tubes, finished cigars, make-your-own cigar wraps, moist snuff tobacco and loose-leaf chewing tobacco products.

On December 8, TPB declared a regular quarterly dividend of $0.065 per common share. The dividend was paid on January 5, 2024, to shareholders of record on the close of business on December 15, 2023. TPB’s annual dividend of $0.26 translates to a yield of 1.01% at the current share price. Its four-year average dividend yield is 0.79%.

Moreover, the company’s dividend payouts have grown at a CAGR of 9.5% over the past five years. TPB has raised its dividends for six consecutive years.

TPB’s trailing-12-month gross profit and EBIT margins of 49.14% and 19.26% are 45.7% and 128.5% higher than the industry averages of 33.72% and 8.43%, respectively. In addition, the stock’s trailing-12-month levered FCF margin of 10.82% is 122.7% higher than the industry average of 4.86%.

For the third quarter of 2023, which ended September 30, TPB reported net sales of $101.72 million. The company’s operating income came in at $20.24 million, an increase of 2.1% year-over-year. Its adjusted net income and adjusted EPS rose 1.6% and 5.6% year-over-year to $14.52 million and $0.76, respectively.

The company updated its full-year 2023 guidance. The company expects its adjusted EBITDA to be $92 to $95 million for the full year, which was earlier forecasted between $90 to $95 million.

Analysts expect TPB’s EPS for the fiscal year (ending December 2024) to increase marginally year-over-year to $2.79. Further, the company’s EPS is expected to grow 5.7% per annum over the next five years.

Shares of TPB have gained 11% over the past six months and 22.6% over the past year to close the last trading session at $26.33.

TPB’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.

The stock has a B grade for Momentum. Within the Tobacco industry, TPB is ranked #2 of 9 stocks.

Click here to access additional ratings of TPB for Growth, Value, Quality, Sentiment, and Stability.

Stock #1: Imperial Brands PLC (IMBBY)

Based in Bristol, the United Kingdom, IMBBY manufactures, imports, markets, and sells tobacco and tobacco-related products. It provides a wide range of cigarettes, tobacco accessories, heated tobacco, and oral nicotine. The company sells its products under JPS, Davidoff, West, Winston, Kool, Lambert & Butler, Golden Virginia, Rizla, Skruf, and Zone X brands.

In June 2023, IMBBY acquired a nicotine pouches range from TJP Labs, a Canada-based manufacturer, to facilitate its entry into the US modern oral market. The transaction will allow ITG Brands, Imperial’s US operation, to offer legal adult consumers in the US a diverse range of 14 product variants in a pouch that performs strongly in consumer testing.

After further consumer testing, ITG Brands will relaunch the range this year under a new brand, which will be supported by the company’s existing US sales force. This strategic acquisition provides IMBBY an opportunity to expand its next-gen product offerings in the US.

IMBBY pays an annual dividend of $1.80, which translates to a yield of 7.54% at the current share price. The company’s four-year average dividend yield is 9.34%.

IMBBY’s trailing-12-month gross profit and EBIT margins of 36.95% and 17.93% favorably compared to the respective industry averages of 33.72% and 8.43%.Also, the stock’s trailing-12-month net income margin of 12.88% is 163% higher than the industry average of 4.90%.

For the fiscal year that ended September 30, 2023, IMBBY reported a revenue of £32.48 billion ($41.09 billion). Its gross profit grew 10.6% year-over-year to £6.68 billion ($8.45 billion). Its operating profit was £3.40 billion ($4.33 billion), up 26.8% from the prior year’s period. The company’s adjusted EBITDA rose 5.6% year-over-year to £4.16 billion ($5.26 billion).

Furthermore, profit for the year and adjusted earnings per share came in at £2.33 billion ($2.95 billion) and 278.80 pence, up 48.3% and 5.1% from the year-ago values, respectively.

Analysts expect IMBBY’s revenue and EPS for the fiscal year (ending September 2024) to increase 3% and 10.06% year-over-year to $12.20 billion and $3.11, respectively.

IMBBY’s stock has surged 4.2% over the past month and 6.8% over the past six months to close the last trading session at $24.15.

IMBBY’s POWR Ratings reflect its bright prospects. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.

IMBBY has an A grade for Stability and a B for Value and Momentum. It is ranked first among nine stocks in the Tobacco industry.

To access IMMBY’s ratings (Sentiment, Growth, and Quality), click here.

What To Do Next?

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JAPAY shares were unchanged in premarket trading Tuesday. Year-to-date, JAPAY has gained 1.63%, versus a -0.15% rise in the benchmark S&P 500 index during the same period.

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About the Author: Mangeet Kaur Bouns

Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.

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