Tag: STOCKS

Contract semiconductor manufacturer GlobalFoundries (NYSE: GFS) is the fourth largest producer of computer chips producing 7% of the world’s supply. This pales compared to the 53% market share controlled by  Taiwan Semiconductor Manufacturing Company (NYSE: TSM). It’s ironic that GlobalFoundries was a divestiture of one of Taiwan Semi’s largest contract manufacturing clients, Advanced Micro Devices (NYSE: AMD).
AMD had decided in 2008 to go fabless and outsource its capital-intensive chip production rather than continue losing money producing them in-house. This asset-light model worked out great for AMD and Taiwan Semi. GlobalFoundries was left on its own to turn around a money-bleeding operation into a profitable business firing on all cylinders with top and bottom line metrics.

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It Pays to Be Made in the U.S.A.

Being a domestic chip maker has its perks these days as the U.S. makes an aggressive attempt to bolster its production of semiconductors to reduce its reliance on foreign producers. The CHIPS Act of 2021 provides nearly $280 billion in funding which includes $52 billion in manufacturing and research grants and a 25% investment tax credit (ITC) to make chips in the U.S.
GlobalFoundries is based in Malta, New York, and has operations in the U.S., Singapore, and the European Union. It has received $30 million in funding in Vermont and received approval to become its own utility enabling it to buy electricity on the cheap. Rival domestic chip maker Intel (NASDAQ: INTC) is also a key benefactor of the CHIPS Act.

The World’s Fourth Largest Chipmaker    

GlobalFoundries supplies chips used in smart mobile devices, computing, automotive, communications, infrastructure, datacenter, aerospace and defense, and the internet of things (IoT). It’s long-term agreements (LTAs) have grown to 38 customers totaling nearly $27 billion in revenues. Committed prepays rose 6% to $3.8 billion.
It shares many customers with Taiwan Semi. It extended its production contract with Qualcomm (NASDAQ: QCOM). AMD is still a customer of GlobalFoundries but transferred production of 7 nanometer (nm) core dies to Taiwan Semiconductor. This was due to GlobalFoundries terminating its outfitting for 7 nm production to the prohibitive costs involved in 2018. GlobalFoundries was added to the Philadelphia Stock Exchange Semiconductor index (SOX) on Sept. 19, 2022.

Record Top and Bottom Line Growth

On Nov. 8, 2022, GlobalFoundries released its fiscal third-quarter 2022 results for the quarter ending September 2022. The Company reported an earnings-per-share (EPS) profit of $0.67 excluding non-recurring items versus consensus analyst estimates for a profit of $0.62, a $0.06 beat.
Revenues rose 22% year-over-year (YoY) to $2.07 billion beating analyst estimates for $2.05 billion. The Company achieved record gross margins of 29.4% and adjusted gross margins of 29.9%.
The Company recorded record net income of $336 million and an adjusted EBITDA of $793 million. GlobalFoundries ended the quarter with cash and cash equivalents of $3.5 billion.
CEO Thomas Caufield commented, “300mm-equivalent wafer shipments of 637 thousand was a record for GF, an increase of 5% year-over-year. Our revenue grew 22% year-over-year, and we delivered record gross, operating, and net profits, making significant progress toward our long-term financial model. We remain on track to deliver a strong year of growth and profitability.”

Raising Guidance

GlobalFoundries upped their Q4 2022 guidance for EPS to come in between $1.14 to $1.44 versus $1.00 consensus analyst estimates. Revenues are expected between $2.05 billion to $2.10 billion versus $2.08 billion consensus analyst estimates.

Geopolitical Risk-Free

Unlike Taiwan Semi, GlobalFoundries faces no geopolitical risk. Taiwan Semi is in a territorial dispute with China which always carries the risk of a potential invasion. South Korea’s Samsung (OTCMKTS: SSNLF) faces the constant threat of an invasion by North Korea. Furthermore, GlobalFoundries is expected to be a pure play benefactor of the CHIPS Act and also the European Chips Act, which seeks to bolster the production of semiconductors in Europe from 10% to 20% by 2030 investing up to 43 billion euros in funding.

Weekly Ascending Triangle Attempt

The weekly candlestick chart on GFS shows the swing low being made at $36.81 on July 5, 2022. Shares proceeded to surge in the following five consecutive weeks to peak at $65.96 before falling to a recent swing low of $46.52 on Oct. 10, 2022.
Shares triggered the weekly MSL buy signal on the breakout through $55.46 causing the weekly 20-period exponential moving average (EMA) to cross up through the weekly 50-period MA forming a breakout and uptrend with $57.92 and $56.03 as supports, respectively.
The surge on heavy volume was able to break out through the $66 upper trendline resistance on the ascending triangle pattern but peaked out at $68.47 before falling sharply back under the triangle breakout line in the sand at $66. The selling volume doubled the previous buying volume bar as shares dipped back to the $60.99 support level.
Pullback supports sit at the $58.28 weekly 20-period EMA, $55.46 weekly MSL trigger, $52.77, $48.77, and the $46.52 recent swing low level.

CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is a prime example of what can happen when the herd mentality turns bearish. The cybersecurity stock fell to a 52-week low last week as the market slammed a third quarter earnings report that would’ve been applauded in a stronger economy.

MarketBeat.com – MarketBeat

Contrary to the popular expression, it can be beneficial to strike when the iron is cold.

The nearsighted selloff showed just how impatient traders have been with technology companies in 2022. It also confirmed that even spending on must-have cloud software can slow during an economic downturn. As the dust settled, CrowdStrike slumped more than 60% below its all-time high from a year ago. 

Global demand for the protection of enterprise endpoints and cloud-based workloads isn’t slumping — the pause button has merely been hit. This has presented a great opportunity to invest in a cybersecurity leader. 

Why Did CrowdStrike Stock Go Down?

On November 29th, CrowdStrike announced third-quarter revenue growth of 53% including 54% growth in the annual recurring revenue (ARR) that stems from the company’s cloud subscription model. Both top and bottom line handily topped consensus estimates.

What the market honed in on, however, was the fact that new ARR fell short of internal expectations. New subscribers came in at 1,460 and new ARR accounted for only 8% of total ARR. This was the result of customers opting for “multi-phase subscription start dates” rather than committing to a full slate of CrowdStrike modules at once.

The market translated this to mean enterprises are becoming less interested in buying CrowdStrike products. In reality, the interest is there, but rising interest rates and economic uncertainty are putting purchases on hold — especially those by small businesses.

This is what CEO George Kurtz was referring to when he cited “elongated sales cycles.” Existing and prospective customers aren’t squashing plans to protect their IT infrastructure with CrowdStrike’s flagship Falcon platform, they’re just waiting for a more certain environment.

How is CrowdStrike Expected to Do in 2023?

What also contributed to CrowdStrike’s gap down was a fourth-quarter revenue forecast that fell well short of Wall Street’s expectations. Management guided to $623.7 million in Q4 revenue compared to the $634.8 million consensus. 

Yet with the stock market notoriously a ‘what have you done for me lately’ animal, a positive longer term outlook was all but ignored. Despite the economic headwinds, the company reiterated its full-year revenue guidance and raised its full-year adjusted EPS forecast. This suggests it anticipates the near-term challenges to be transitory and ultimately lend way to healthy secular cybersecurity software trends.

For 2023, the company’s fiscal 2024, CrowdStrike is forecast to produce 33% EPS growth to around $2.00. This means the stock now trades at 62x next year’s earnings — a lofty multiple on the surface, but nowhere near where it used to trade and reasonable given the growth history.

Is it a Good Time to Invest in CrowdStrike Stock?

In a year in which growth has been tough to come by even for tech businesses in high-growth markets, CrowdStrike has delivered stellar financials that would normally be the envy of the sector. Abnormally high growth is just part of the story:

• CrowdStrike has beaten Street EPS estimates every quarter since it went public in June 2019 — that’s 14 for 14 including several pandemic-challenged periods.
• Profitability is on the rise. The gross margin has expanded from 55% in fiscal 2018 to 75% currently.  
• Net retention rates are trending near record highs, a reflection of customers’ willingness to not only stick around but to add new software modules to their subscriptions.
• Cash flow from operations and free cash flow hit record highs in the recent quarter.
• CrowdStrike has almost $2.5 billion in cash equivalents, plenty of money to weather even a prolonged recession.

It’s not often that a tech company gets overwhelming support from sell-side analysts in the wake of a selloff. Often the dead horse gets kicked while it’s down. Not the case with CrowdStrike. More than 20 firms reiterated their bullish sentiment after the report; only one downgraded to a neutral stance.

Unlike the selloff, the Street’s vote of confidence makes sense. 

The frequency and impact of cyberattacks are trending higher. In response, enterprises of all sizes and across various industries are scrambling to adopt modern protection strategies. This will ultimately lead to more and more spending on reputable solutions such as those offered by CrowdStrike. 

CrowdStrike’s AI-powered platform detects threats and stops breaches against workloads that run on PCs, servers, virtual machines and Internet-of-Things (IoT) devices. Over half of the Fortune 500 and 15 of the top 20 U.S. banks use CrowdStrike. Despite the traction, the company is still in the early stages of a huge global growth opportunity as more enterprises realize the critical nature of cybersecurity and as new products are launched. 

At this stage, the stock’s downside is likely a fraction of the long-term upside. This may not be the bottom, but it’s sure looking like a good time for growth investors to build a position.

Most investors have had a rough time in the turbulent 2022 stock market (SPY). Now more than ever they need a reliable way to identify winning stocks regardless of the current market conditions. The key to success is to take the guess work out of investing by having the computers do the heavy lifting for you. First, by narrowing down to the healthiest fundamental stocks using the POWR Ratings system. Next, applying leading edge technical analysis to find the timeliest of those stocks ready to break higher now. That’s what I discuss in more detail in the article below. Read on for more….

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So many traders and investors are always looking to get rich quick without any effort. Most never find it. They simply shuttle from one guaranteed get rich quick scheme to the next in the eternal quest for gold.

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The Fundamentals – StockNews POWR Ratings

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The Technicals – Market Club’s Trade Triangles

Know exactly when to get in and out of the market!

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These signals are not intended to catch tops and bottoms. Instead, the signals help members find the majority of a swing trend.

Green Triangles suggest positive trends
Red Triangles suggest negative trends

Monthly Triangles determine trend and possible entry points.
Weekly Triangles determine timing exits, entries, and re-entries.

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Tim Biggam
Editor, POWR Breakouts Newsletter

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SPY shares fell $0.84 (-0.21%) in after-hours trading Friday. Year-to-date, SPY has declined -13.34%, versus a % rise in the benchmark S&P 500 index during the same period.

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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.

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The post How to Stack the Odds in Your Favor… appeared first on StockNews.com

Approaching the final week of November CSL Ltd ADR (OTCMKTS: CSLLY) received some good news as the United States Food and Drug Administration approved CSL Behring’s new gene therapy drug, HEMEGENIX (etranacogene dezaparvovec-drib) for treating hemophilia B. The news helped continue the stock’s upward momentum, a trajectory that has been mostly consistent for at least the last four years.

MarketBeat.com – MarketBeat

Based in Australia, CSL Behring (AXS: CSL) is a segment of CSL Ltd, which trades under the ticker symbol OTCMKTS: CSLLY in the US market. Their other segments include CSL Plasma, CSL Seqirus, and CSL Vifor; all of which address various aspects of biotechnology and health services.

CSLLY stock’s current value is sitting in a good place: breaking the $100-theshold and resting just below the all-time high ($117.74 USD). Combined with a decent forward dividend yield of 1.11% and projected earnings growth of more than 21%, there could easily be more to come from this company (and its interconnected segments).

November 2022 Was Good to CSL Behring

This late November development is just the latest advance in what has been a busy month for CSL Behring. For example, earlier in the month the company announced its collaboration (and licensing agreement) with Arcturus Therapeutics Holdings, Inc (NASDAQ: ARCT). This partnership would develop and improve capabilities for large-scale clinical supply delivery; in particular enabling CSL to deliver mRNA vaccines to market more efficiently and effectively. These mRNA vacccines would eventually help treat common diseases like the flu and Covid-19.

The positive coverage of both the Arcturus collaboration and the HEMGENIX approval helped raise the price of CSL stock during November. Then, on November 23, CSL Limited share price broke through $300 (AUD) for the third time in all of 2022, closing out the month at $300.11 AUD. That is up 6.92% from the month prior. It has since settled back down a little, just south of that threshold.

Similarly, CSLLY is up +14.62% over the last 30 days; and up +1.21% over the last 90 days.

A High Price With High Potential

The FDA approval comes amidst successful results in the ongoing HOPE-B trial, which happens to be the largest hemophilia-B gene therapy trial to date. So far, results show marked improvement over various study criteria that definitely qualify HEMGENIX as a more attractive treatment option. Effectively, the study found that roughly 94% of patients treated with HEMGENIX discontinued use of their traditional prophylactics.

The price for this new drug is $3.5 million USD per dose, making it the most expensive drug in history. Of course, HEMGENIX is not alone in the upper ranges of drug cost. Take Novartis (NYSE: NVS), for example; their infant spinal muscular atrophy drug Zolgensma sold for $2.1 million USD a dose, upon its approval in 2019. And Bluebird Bio, Inc’s (NASDAQ: BLUE) beta thalassemia (blood disorder) treatment Zynteglo was listed at $2.8 million USD only a few months ago.

Of course, this news about HEMGENIX is typically the sort of thing that motivates investors. First of all, an independent nonprofit research organization, the Institute for Clinical and Economic Review (ICER), has determined that a fair price for HEMGENIX should be around $2.95 million USD. They determine this cost-effectiveness analysis by weighing the drug’s health benefits against offset costs. This gives the drug quite a premium, and that means more profit.

In addition, a treatment upgrade means the product will be more attractive to patients, even at a higher price point. Reducing much of the obstacles presented by other treatments can also make it more accessible to patients with particular sensitivities.

Stable Growth Could Make CSLLY Investment Worthy

All this in mind, CSLLY could be a moderate BUY, at least for now. While it is still stabilizing from the recent news, analysts expect at least 10% business growth in the future. And with a 52-week high of $312.92 AUD, CSL could be on its way to a record high in no time. CSLLY currently pays an annual dividend of $1.08 per share and has a dividend yield of around 1.1%, which greatly exceeds the 0.1% industry average. This industry category includes biotechnology, pharmaceuticals, and life sciences.

On the other hand, CSL has a Price-to-Earnings ratio (P/E) of 42.98, which is nearly double that of the industry average. This implies that the stock may not grow as quickly as analysts hope. Also, its 10.2 Price-to-Sale ratio (P/S) exceeds the industry average of 4.4. This could mean CSL is probably spending more than it would like to be.

Put simply, dividends are the primary method by which a publicly traded company returns profits to shareholders. 

MarketBeat.com – MarketBeat

Are you ready to understand “What is a good dividend yield?” in simple terms? You may also want to simplify your knowledge of what a dividend is and why you might want to buy one. 

In this article, we go into deep detail on what makes a good dividend yield, how to calculate dividend yield, what “high” and “low” dividend yield is and what it means. Let’s dive in.

What is Dividend Yield?

The dividend yield refers to the amount of money a stock pays when you own it. Dividends are money a company pays to investors, usually from earnings (but not always). They are a foundational reason to own stocks and one of the reasons why the stock market exists. Investments pay you to own them, either through capital gains or profits. Dividends show how a company in today’s stock market pays profits to shareholders. 

What is a good dividend yield for a portfolio? Naturally, it’s a tougher question to answer. 

What is a Good Dividend Yield?

What is a good dividend yield? It’s a loaded question. 

What is good for one company may not be good for another and neither may be good for your portfolio. A good yield is one that a company can sustain as they pay it. A regularly paid dividend is the foundation of a buy-and-hold mentality and something most companies hope for and strive to achieve. 

For easy reference, a good yield should be high relative to the broad market S&P 500 and the company’s peers. Ironically, you don’t even have to own stock for more than a day to get the dividend. To find out how, you need to know about the ex-date versus the day of record. 

How is Dividend Yield Calculated?

The dividend yield is an easy calculation. You determine yield by dividing the dividend payout amount by the stock price. There are two ways to calculate yield: You can use the dividend payments over the trailing twelve-month (TTM) period and you can also use the expected dividend payments over the coming twelve-month period. 

Why is Dividend Yield Useful?

The dividend yield is useful because it is one of only two reasons to own a stock — growth and dividends: 

1. Growth: The company is growing and the stock will be worth more in the future. 
2. Dividends: The company shares its profits in the form of dividends. Dividends are also useful as a means of generating income, leveraging your portfolio by dividend reinvestment and they can help offset inflation decay. 

What is a good annual dividend yield? One that makes you smile when you think about it. One way to find those is to use the best dividend stocks tool. 

When is a Dividend Yield too Low?

When is a dividend yield too low? You have to answer that question for yourself. 

Some of the reasons why it might be too low may be due to your portfolio strategy, the yield relative to peers, the yield relative to the S&P 500 and the risk relative to owning bonds. If the goal of the portfolio is low risk and you want to achieve income with no need for capital gains, your threshold may be lower than if the portfolio was more risk tolerant and if you were looking for growth. 

In all cases, consider owning a number of dividend stocks for diversification and safety. 

When is a Dividend Yield too High?

At face value, no dividend yield is too high because higher is better as long as it is sustainable. In reality, dividends have to be sustainable in order to be attractive to investors. Unfortunately, high yields are not always sustainable. 

A dividend is too high when the company cannot sustain the payment. If there is risk of a dividend cut or suspension, that could weigh on the share price and worse, it could cause the loss of capital if the cut or suspension comes to pass. 

What is good dividend yield? In this case, it’s a dividend you can rely on. 

What Causes a High Dividend Yield?

There are many reasons that could affect the yield dividend stocks, including the payout amount and the price action. Let’s take a look at a few reasons more in depth:

1. A stock’s dividend yield is a function of its payment. Assuming the stock’s price remains static, the higher the payment, the higher the yield. The problem (or opportunity) for investors and traders, depending on how you look at it, is that a stock’s price is rarely static. 
2. A stock’s dividend yield is also a function of its price action. Assuming the dividend distribution amount remains static, which so often is the case, an upward movement in the stock price will reduce yield. The inverse of this is true if the stock’s price moves lower. In that case, the yield would move higher and open up a potentially high-yield opportunity for investors. 
3. A stock’s dividend yield is also a function of data. Sometimes the data used to determine the yield that is displayed is based on past results and not relevant to the future. One example is an MLP, REIT or shipping stock that pays its monthly payment based on income. In some cases, traditional corporations are governed by managed distribution plans that dictate how much, how often and when a dividend payment can get paid out. For example, the company Cal-Maine Foods (NASDAQ: CALM) cannot make a distribution for any quarter with negative earnings and the company cannot make a distribution until those lost earnings are made up. 
4. News can have a big impact on the yield. For example, news displayed on websites and in stock searches may send a stock price into the trash bin and spark a massive spike in yield. The trouble with this type of “high yield” is that the news may have already included a dividend cut or suspension or may lead to one in the future. 

Evaluating High Dividends for Risk

High dividends are attractive to investors because more is better, right? In the case of dividends, high payouts can be a red flag or, in some cases, an indication of trouble that has already happened. Check out a list of things to review to know whether a stock’s high yield is worth buying or not. 

Compare the Yield with Peers

Dividend-paying stocks in the same sector tend to pay out similar yields relative to their values. The first thing to check when evaluating a high yield is to see if it is abnormally high for the group. A higher-than-average yield is one thing — it could signal an opportunity. However, a significantly higher yield is reason enough to dig deeper into the details. 

You get what you pay for. What you don’t want to pay for is a distribution cut or suspension that will leave share prices in the dust. 

Check Out Dividend Statistics 

Most stock websites will publish a list of commonly followed dividend statistics that you can use to weed out risky high-yield stocks. Among these metrics is the payout ratio, the compound annual growth rate (CAGR) and the years of consecutive increase. 

The payout ratio tells you how much of a company’s earnings are paid out in dividends. In this case, lower is better and higher is worse. The higher the payout ratio, the less room in the cash flow for dividend increases or paying for other things like growth. 

The next statistic is the CAGR, which tells you the pace of distribution increase which can be more important than yield. The higher the CAGR, the better, because it means the yield on investment continues to grow and should grow at a similar pace in the future. 

The final statistic is the number of years of increases. This figure can tell you a lot because a history of sustained dividend increases can be a powerful reason to buy and hold a stock. The top dividend stocks have a decades-long track record of dividend increases. 

Check the Balance Sheet

It doesn’t take an accountant to see red flags on a balance sheet. The easy numbers to look for include cash and equivalents (known as liquidity) and the company’s debts, both short and long term. If the company has a healthy cash balance and little to no debt, the cash flow is unimpeded by debt payments and free for use. 

If not, the company may have a hard time paying out dividends or sustaining its record of consecutive annual increases. You can check the leverage ratio, a measure of how much debt the company carries relative to its assets. In this case, low is good. A leverage ratio under three is very good; under 10 is okay depending on the reason why the debt exists. 

Learn What Others Say About the Stock 

Finally, what do others say about the stock? Check the analyst’s ratings and the trend in analyst sentiment. If the analysts are getting warmer and this matches the fundamental outlook, the high yield dividend stock is likely a good buy. If the analyst’s sentiment cools, you may want to avoid it. After that, check the headlines and find out whether the company struggles in any way or faces hurdles that may impact its results. 

A Good Dividend Yield is Where You Find it 

So, what’s a good dividend yield? Put simply, it’s one the company can sustain and which fits the needs of the portfolio. 

You’ll treasure a good dividend yield, but good is relative. A good yield for a tech stock may be a horrible yield for a consumer staple stock — not all types of companies can sustain a “high yield.” To find a good yield, make sure the company can pay it and compare it to others in the sector. If it looks attractive relative to its peers, then it is a good yield. 

FAQs

Still have some questions about what makes a good dividend yield? There’s no one single answer to rule them all. However, we’ll dive into some frequently asked questions to help you understand which dividend yields are good and which ones to avoid. 

Is a 6% dividend yield good?

A 6% dividend yield is good. That is more than three times what the average S&P 500 company pays and well above the threshold to be considered a “high yield.” 

What is a too-high dividend yield?

A too-high dividend yield refers to one that isn’t sustainable. A 10% yield coming from a highly leveraged growth stock isn’t the same as if it were paid by a REIT. To get an understanding of a too-high dividend yield, compare yields within sectors and check out the earnings, free cash flow and balance sheet to see if the company has the money. 

What is a good average dividend yield?

A good average dividend yield depends on the sector and stock. Each sector tends to trade at a different valuation and those vary over time. To find “average” dividend yields, compare yields within a sector and with the broad market S&P 500. 

Zoom Video (NASDAQ: ZM) has gone from an obscure but easy-to-use video communications platform to becoming a verb synonymous with video conferencing and remote engagement driven by the COVID-19 pandemic. Zoom Video was one of the major benefactors of the pandemic that helped usher in the “new normal” of hybrid work in a post-pandemic world. While other video calling tools were available, Zoom’s incredibly easy interface brought video conferencing to the mainstream masses. The Company’s growth has since peaked as normalization continues to set in. The question is where the baseline is for Zoom and what catalysts can help it speed growth back up. The Company compete with many teleconferencing and business collaboration software companies like Adobe (NASDAQ: ADBE), Microsoft Teams (NASDAQ: MSFT), Salesforce (NASDAQ: CRM), Google Workspace (NASDAQ: GOOG), Cisco Webex Meetings (NASDAQ: CSCO) and even Verizon (NYSE: VZ) with its BlueJeans Meetings app.  The Company wants to become a unified communication platform with the addition of email and calendar functions. It has also partnered with AMC Entertainment (NYSE: AMC) to turn some locations into Zoom meeting rooms

MarketBeat.com – MarketBeat

Growth Continues to Slow

On Nov. 21, 2022, Zoom Video released its third-quarter fiscal 2023 results for the quarter ending October 2022. The Company reported earnings-per-share (EPS) profit of $1.07 beating consensus analyst estimates for a profit of $0.84 by $0.23. Revenues rose 4.9% year-over-year (YoY) to $1.1 billion, matching consensus analyst estimates for $1.1 billion. $100,000 annual run rate (ARR) customers rose 31% to 3,286. Enterprise customers rose 14% YoY to 209,300. Enterprise revenue rose 20% YoY to $614 million. Online average monthly churn was 3.1% down 60 basis points from same period last year. Zoom Video ended the quarter with $5.2 billion in cash and cash equivalents and marketable securities. Zoom Video CEO Eric Yuan commented, “Our customers are increasingly looking to Zoom to help them enable flexible work environments and empower authentic connections and collaboration. Proactively addressing these needs with Zoom’s expanding platform continues to be our focus in this dynamic environment.”

Lump of Coal Guidance

Zoom Video issued downside guidance for fiscal Q4 2023 with EPS between $0.75 to $0.78 versus $0.82 consensus analyst estimates. Fiscal Q4 2023 revenues are expected to come in between $1.095 billion and $1.105 billion versus $1.12 billion. Incidentally, constant currency revenues are expected between $1.12 billion to $1.13 billion. Total fiscal 2023 revenues are expected between $4.370 billion to $4.380 billion and $4.42 billion to $4.452 billion in constant currency. Non-GAAP EPS for full-year fiscal 2023 is expected between $3.91 to $3.94 with 304 million weight average shares outstanding.

Analysts Cut Price Targets

Piper Sandler lefts its Neutral rating unchanged but cut its target price to $77 from $84 per share. Analyst James Fish was underwhelmed by its Q4 lump of coal outlook and concerned for the declining total customer base as the rate of new business continues to decelerate. Baird kept its Outperform rating but slashed the price target for Zoom shares to $95 from $100 per share. Analyst William Power felt the Q3 2022 results were solid, but its outlook remained mixed due to currency headwinds are weaker deferred revenues. Zoom remains a top holding at 8.31% in the Ark Innovation ETF (NYSEARCA: ARKK) operated by famed fund manager Cathie Wood.

Weekly Descending Triangle Risk

The weekly candlestick chart illustrates the potential for a descending triangle breakdown as it makes lower highs against a flat low at $70.44. Shares continue to reject off the falling weekly 20-period exponential moving average (EMA) now at $87.97. The Q3 2022 earnings reaction further accelerated the selling towards the $70.44 low area before a coil attempt failed to trigger the weekly market structure low (MSL) buy trigger above $81.50. Distribution volume rose upon the earnings release but was moderate compared to nearly double the volume on its Q2 2022 earnings sell-off. The weekly stochastic bounce through the 20-band stalled on the selling pressure setting it up for a potential crossover back down as shares near the flat lower trendline of the weekly triangle. As the channel between the falling upper trendline and flat trendline gets tighter towards the apex, shares will either breakout by triggering the weekly MSL or finally breakdown through the swing lows. This should resolve by the end of the year. Pullback support levels to watch sit at the $70.44 swing low, $67.60, $64.75, $60.97, %57.59, $54.54, and the $50.55.

The U.S. apparel market is forecast to contract 2% this year. Not bad considering the myriad of challenges facing clothing manufacturers and retailers. Ongoing supply chain disruption, higher materials costs and inventory build-ups have weighed on the industry in 2022.

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Thankfully, apparel investors may not lose their shirts for much longer.

Fewer logistics issues and moderating inflation are part of a more comfortable outlook for clothing companies. According to Statista, apparel industry volume will increase 9.7% next year as product availability and demand improve. Over the next five years, apparel market sales are forecast to grow 3.6% annually. 

The bullish outlook and recent quarterly earnings releases have several apparel stocks trending higher in recent weeks. And since many were hemmed in half from their 2021 peaks, the road to recovery remains a long one. Here are a few of the names worth trying on for sizable gains.

Why is The Gap Stock Going Up? 

The Gap, Inc. (NYSE: GPS) has almost doubled from its September 2022 low and has finished higher in 10 of the last 11 trading days. The momentum kicked into high gear after the retailer posted better-than-expected Q3 sales and profits. The double beat was driven by demand for more formal attire as Americans returned to the office and in-person social engagements. Dresses, woven tops and pants are flying off the shelves again. 

Banana Republic is again a strength for the company after notching 8% sales growth last quarter. The relaunch of work clothing drew more people to the stores. Old Navy and fitness-apparel arm Athleta also delivered growth while the flagship Gap business had flat sales due to soft kids clothing demand. 

The biggest reason for investors to get excited about The Gap is e-commerce. Digital sales were up 55% from pre-pandemic levels and 5% over last year. At a time when online shopping is slowing, The Gap’s e-commerce growth shows that consumers are finding value in the products. Digital sales now account for almost 40% of overall revenue.

Despite management anticipating a ho-hum holiday shopping season, Gap shares gapped up on the report. This tepid outlook has undoubtedly contributed to Wall Street’s skepticism around the stock’s surge — but makes the retailer an intriguing contrarian play heading into 2023.

What is Abercrombie & Fitch’s Growth Strategy?

Abercrombie & Fitch Co. (NYSE: ANF) gapped up in heavy volume last week on the heels of an impressive top and bottom line beat. Although both sales and earnings declined year-over-year, encouraging demand trends and ample inventory for holiday shoppers have investors lining up for a comeback.

Six months removed from a major plunge, the casual clothing company is re-establishing credibility due to strength in its core Abercrombie brand and progress with its ‘2025 Always Forward’ initiative. While omnichannel growth is a popular buzz phrase, the real reasons to invest are prospects for improved profitability. 

By the end of fiscal 2025, management is targeting an 8% operating margin compared to the 2% to 3% expected this year. Longer term, it sees operating margin expansion beyond 10% as cost savings kick in and global recognition of Abercrombie and Hollister broadens.

Abercrombie & Fitch has been one of the best clothing retailers when it comes to building out its online presence. Higher margin digital sales account for roughly half of all sales and are poised to be an even bigger part of the business going forward. Digital marketing and social selling hold the key to attracting Millennial and Gen Z customers. 

Burlington Stores Had a Bad Q3…Why Did the Stock Go Up?

Burlington Stores, Inc. (NYSE: BURL) is on the move despite a disappointing Q3 performance that included a 17% decline in same-store sales. The off-price retailer has yet to capitalize on the macro environment but believes it will attract bargain shoppers in 2023. Burlington touts prices on coats and other apparel that are as much as 60% below the competition. 

The upbeat outlook combined with positive peer earnings reports has pushed the stock back to the $200 level for the first time in six months. However, given the weak sales and margin pressures, the stock is now a ‘show me’ story with little room for error. 

To build off the fortunate momentum, Burlington Stores must demonstrate that its ‘2.0 Off-Price strategy’ is working. The key component here is communicating a better message to consumers about the value the stores offer. Keeping the merchandise assortment fresh and inventory management will also be important but at the end of the day, effective marketing campaigns and word of mouth must drive stronger customer traffic.

Unlike The Gap and Abercrombie & Fitch, Wall Street loves Burlington Stores. Twelve of thirteen analysts called the stock a buy after the Q3 update. Proof of execution is needed here but this discount clothing retailer could be a good fit for the current economy.

GAP is a part of the Entrepreneur Index, which tracks some of the largest publicly traded companies founded and run by entrepreneurs.

Long term investing is not an easy path to top the stock market (SPY). On the other hand most active trading approaches miss some key elements that lead to outperformance. So let’s talk about a best of both worlds approach called “Active Investing”. Read on below for more.

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The world is moving faster by the day.

Not just technological change…but the speed in which industry peers find ways to beat their competitors. This makes buy and hold investing more difficult than ever as stocks that once looked fundamentally promising can sour quickly and become a drain on your portfolio.

This calls out for each of us to consider the virtues of “Active Investing” which leads you to closely and continuously purge weak stocks at the earliest possible stage to avoid undue harm.

Note that I am drawing a clear distinction between “Active Investing” and “Active Trading”. Meaning this is not a call to becoming a day trader…or slave to the market guzzling Red Bull all day long while watching 8 computer monitors.

Rather it is about proactively making sure that you stay in the healthiest stocks to give yourself the best chance to outperform. That’s because at the end of the day fundamentals are what truly drives stock prices.

Why?

Because we are actually buying an ownership stake in a company (not just random stats or a chart pattern on a screen…but a real living/breathing entity with a clearly definable value).

My goal for this article is two-fold.

First, to convince you that it is in your financial best interest to become a more active investor.

Second, to give you free access to a set of tools that provides a fountain of profitable picks for active investors.

The Importance of Timeliness

Some investors are more focused on preserving capital. While most have their eyes set on outperforming the market.

The only way to accomplish the latter task is to have timely stocks. The ones ready to rise now.

The #1 ingredient of timely stocks is improving fundamentals. That’s because the attractiveness of that healthier growth profiles is what leads investors to bid up shares.

On the surface this sounds like an overwhelming task as there are literally thousands of fundamental factors to consider.

Gladly, members of StockNews already know that the POWR Ratings gives them a leg up in this journey. That’s because this proven stock rating model narrows down to 118 unique factors that have historically pointed to stocks likely to outpace the market.

These impressive gains come from the computers doing the heavy lifting crunching these numbers daily in order to make our lives easier. But there is still 1 more problem to solve…

1,300 Buy Rated Stocks is Too Many

The POWR Ratings does a phenomenal job scanning over 5,300 stocks to narrow down to the top 25% ready to outperform (A & B rated).

However, that is still a whopping 1,300 stocks to consider on any given day.

No matter how much you love picking stocks…reviewing 1,300 is still a daunting and unwelcome task.

It is for this reason that we created several unique portfolio recommendation services to narrow down to the very best stocks.

In fact, right now we only have 41 total active recommendations across our popular portfolio trading services:

• Reitmeister Total Return
• POWR Growth
• POWR Stocks Under $10
• POWR Trends
• POWR Value
• POWR Breakouts
• POWR Options

Even better, 34 of those 41 trades are winners…not easy to do with so much market volatility.

However, it does make clear the benefit of the POWR Ratings system in the hands of veteran investors who manage these newsletter portfolios for the benefit of our customers.

What to Do Next?

Remember what I said about the goal of this article up top:

“…give you free access to a set of tools that provides a fountain of profitable picks for active investors.”

And that is exactly what we will do now.

Look again at the above list of seven market topping newsletter portfolio services. The bundle of all those newsletters is what we call POWR Platinum.

Now you can enjoy a free 7 day test drive of POWR Platinum to see all of these services including the ability to see all 41 of our top trade ideas.

All you have to do is click the link below to get started:

7 Day Free Trial to POWR Platinum to See All 41 Trades >

p.s. Please note that this offer is only available until Sunday November 27th @ midnight.

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

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SPY shares were trading at $402.27 per share on Friday afternoon, down $0.15 (-0.04%). Year-to-date, SPY has declined -14.32%, 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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Following October’s favorable inflation data, the Fed is expected to slow down its rate hike aggression. While there’s a surge in investors’ optimism, uncertainty remains. Therefore, investors looking to strengthen their retirement portfolio could consider buying quality dividend-paying stock Kroger (KR). However, fundamentally weak Carvana (CVNA) might be avoided. Keep reading….

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The stock market has been volatile this year, as is evident from the CBOE Volatility Index’s 18.6% year-to-date gains, as high prices, and consequent rate hikes continue to concern the broader markets.

However, October’s favorable inflation data has garnered substantial optimism among investors. As the central bank is making progress, a slower pace of rate hikes is expected in the coming months.

Moreover, CNBC’s Jim Cramer believes that the S&P 500 will witness a December Rally. He said, “The charts, as interpreted by the legendary Larry Williams, suggest that the Santa Claus rally is coming to town next month and you’ve got to get ready for it, or else you may be left behind.”

While uncertainty remains, investors’ interest in dividend stocks is evident from the SPDR S&P Dividend ETF’s (SDY) 12% gains over the past month. Therefore, investors looking for investments for their retirement portfolio might consider The Kroger Co. (KR), which possesses a solid dividend-paying record. However, fundamentally weak Carvana Co. (CVNA) might be best avoided now.

Stock to Buy:

The Kroger Co. (KR)

KR operates as a retailer in the United States. The company operates combination food and drug stores, multi-department stores, marketplace stores, and price-impact warehouses.

On October 14, 2022, KR and Albertsons Companies, Inc. (ACI) entered a definitive agreement. This collaboration is expected to vastly expand customer reach while aiming to deliver fresh and affordable food to nearly 85 million households.

KR has paid dividends for 16 consecutive years. Its dividend payouts have increased at 16.1% CAGR for the past three years. Its current dividend yield is 2.17%, and its four-year average dividend yield is 1.97%.

For the second quarter that ended August 13, 2022, KR’s sales came in at $34.64 billion, up 9.3% year-over-year. Its net earnings came in at $731 million, up 56.5% year-over-year. Also, its adjusted EPS came in at $0.90, up 12.5% year-over-year.

Analysts expect KR’s revenue to increase 7.5% year-over-year to $148.20 billion in 2023. Its EPS is expected to increase 10.6% year-over-year to $4.07 in 2023. It surpassed EPS estimates in all four trailing quarters. Over the past month, the stock has gained 9.7% to close the last trading session at $47.84.

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

KR has a B grade for Value and Quality. It is ranked #6 out of 39 stocks in the A-rated Grocery/Big Box Retailers industry. Click here for the additional POWR Ratings for Growth, Momentum, Stability, and Sentiment for KR.

Stock to Avoid:

Carvana Co. (CVNA)

CVNA and its subsidiaries operate an e-commerce platform for buying and selling used cars in the United States.

On November 4, 2022, Former Attorney General of Louisiana, Charles C. Foti, Jr., Esq., a partner at the law firm of Kahn Swick & Foti, LLC, announced an investigation into CVNA. The investigation has been initiated to discover if CVNA’s officers and/or directors breached their fiduciary duties to its shareholders or violated state or federal laws.

CVNA’s net sales and operating revenues came in at $3.39 billion for the third quarter that ended September 30, 2022, down 2.7% year-over-year. Its net loss came in at $283 million, up 784.4% year-over-year, while its loss per share came in at $2.67, up 602.6% year-over-year.

CVNA’s revenue is expected to decrease 14.5% year-over-year to $3.21 billion for the quarter ending December 2022. Its EPS is expected to decrease 102.9% year-over-year to negative $2.07 for the same period. It missed EPS estimates in all four trailing quarters. Over the past month, the stock has lost 43% to close the last trading session at $8.12.

CVNA’s POWR Ratings reflect its poor prospects. The stock has an overall F rating, equating to a Strong Sell. It has an F grade for Stability, Sentiment, and Quality and a D for Growth.

Click here to access the additional POWR Ratings for CVNA (Value and Momentum). CVNA is ranked last among 58 stocks in the F-rated Internet industry.

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KR shares were trading at $48.55 per share on Friday morning, up $0.71 (+1.48%). Year-to-date, KR has gained 9.38%, versus a -14.23% rise in the benchmark S&P 500 index during the same period.

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About the Author: Riddhima Chakraborty

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master’s degree in economics, she helps investors make informed investment decisions through her insightful commentaries.

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The post 1 Stock to Buy for Your Retirement Account and 1 to Keep Out appeared first on StockNews.com

While solid EV demand and favorable government incentives are significant tailwinds for the EV industry, EV manufacturer Mullen Automotive (MULN) is still far from starting its deliveries. The company is expected to struggle amid high inflation, supply chain issues, rising raw material costs, and stiff competition. Thus, is it worth buying the stock just because of its low price? Read more….

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As the world moves toward a cleaner and greener future, electric cars will play a pivotal role in reducing greenhouse emissions. The growth prospects of electric vehicles have drawn the interest of the existing automakers and several new-age automobile manufacturers. Electric cars have seen demand soaring over the past few years, with people increasingly dumping IC-engine vehicles.

Analysts at BCG estimate that worldwide battery-powered EVs will amount to 20% of global sales by 2025 and 59% by 2035. The U.S. President has set an ambitious target: Half of the car sales will be EVs by 2030. Electric vehicle (EV) manufacturers like Mullen Automotive, Inc. (MULN) are expected to benefit from the demand increase.

However, MULN has had a difficult 2022, with the stock declining 96.1% in price year-to-date and 97.6% over the past year to close the last trading session at $0.20.

The company operates in various verticals of businesses within the automotive industry. The company owns some synergistic businesses, including CarHub and Mullen Energy. It is developing Mullen FIVE, a fully electric SUV, and Mullen DragonFLY, an electric sports car.

During its “Strikingly Different” EV Crossover Tour, MULN received higher-than-expected pre-bookings for the Mullen FIVE. On September 8, 2022, the company announced the acquisition of a 60% controlling interest in EV truck innovator Bollinger Motors. The acquisition will help MULN enter the medium-duty truck classes 3-6 and B1 and B2 sport utility trucks.

On November 2, 2022, MULN announced eliminating $13 million in company debt. The company has reduced its debt from more than $30 million last year to a current estimate of less than $10 million. Also, on November 17, 2022, MULN announced that it had received $150 million, a part of which will be used to close ELMS assets and accelerate EV production and delivery.

On September 21, 2022, MULN CEO David Michery received 9.62 million shares as part of its performance stock award agreement. However, Michery sold 750,000 shares at an average price of 40 cents per share the very next day. Michery has sold shares on seven different occasions this year, bringing the total sold shares to 2.53 million.

Although the demand for automobiles recovered significantly after the pandemic restrictions were lifted, automobile demand has been affected this year by high inflation, supply chain disruptions, and lingering chip shortage.

However, the soaring gasoline prices this year led to many prospective car buyers shifting to EVs as the operating costs of gasoline-powered vehicles rose substantially.

The third quarter of 2022 saw EV sales of over 200,000 in the United States, setting a new record. Electric car sales grew faster than any other auto industry segment. According to the Electrified Light Vehicle Sales Report, Americans bought 67% more electric vehicles in the third quarter than in the year-ago period.

However, the high borrowing rates may deter prospective EV customers. Also, despite the investments, charging infrastructure still needs to be improved. Moreover, the proposed tax credits for EVs under the Inflation Reduction Act come with various restrictions, proving counterintuitive.

Here’s what could influence MULN’s performance in the upcoming months:

Weak Financials

MULN’s loss from operations widened 184.5% year-over-year to $18.22 million for the second quarter ended June 30, 2022. The company’s net loss widened 289.9% year-over-year to $59.47 million. Moreover, its net loss per share narrowed by 94.5% from the prior-year quarter to $0.16.

Weak Profitability

MULN’s trailing-12-month ROTC is negative compared to the 6.65% industry average. Likewise, its trailing-12-month ROA is negative compared to the 4.45% industry average.

POWR Ratings Reflect Bleak Prospects

MULN has an overall F rating, equating to a Strong Sell in our POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. MULN has a D grade for Quality, in sync with its weak profitability.

MULN is ranked #57 out of 64 stocks in the D-rated Auto & Vehicle Manufacturers industry. Click here to access MULN’s Growth, Value, Momentum, Stability, and Sentiment ratings.

Bottom Line

MULN is trading below its 50-day and 200-day moving averages of $0.34 and $1.05, indicating a downtrend. Although the company has reduced its debt, it is still far from profitability, as its Mullen FIVE vehicle is slated for delivery in 2024.

Despite the bright prospects of the EV industry, MULN is unlikely to capitalize on the industry’s tailwinds due to its poor financials and weak profitability. Moreover, given the uncertain macroeconomic environment, investors should avoid buying MULN.

How Does Mullen Automotive, Inc. (MULN) Stack up Against Its Peers?

MULN has an overall POWR Rating of F, equating to a Strong Sell rating. You might want to consider investing in the following Auto & Vehicle Manufacturers stocks with an A (Strong Buy) or B (Buy) rating: Subaru Corporation (FUJHY), Isuzu Motors Limited (ISUZY), and Volkswagen AG (VWAGY).

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MULN shares were trading at $0.19 per share on Friday morning, down $0.01 (-5.51%). Year-to-date, MULN has declined -96.37%, versus a -14.40% rise in the benchmark S&P 500 index during the same period.

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About the Author: Dipanjan Banchur

Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.

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Shares of ContextLogic (WISH) have had a free fall this year, with the stock declining more than 77% year-to-date. Although the stock is trading at a discount to its peers, the uncertain macroeconomic conditions add further gloom to the company’s growth prospects. So, will it be wise to invest in the stock now? Read on to learn our view….

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Mobile e-commerce company ContextLogic Inc. (WISH) has declined 77.6% in price year-to-date and 82.4% over the past year to close the last trading session at $0.70. The stock is trading 83% below the 52-week high of $3.99, which it hit on November 29, 2021.

WISH’s forward Price/Sales of 0.84x is 2.8% lower than the industry average of 0.87x. Its forward Price/Book of 0.92x is 64.8% lower than the industry average of 2.61x.

In the third quarter, the company’s monthly average users (MAUs) declined 60% year-over-year to 24 million. Its LTM (Last Twelve Months) active users also fell 65.2% year-over-year to 16 million. The company’s marketplace revenue decreased 77% year-over-year to $51 million, while its logistics revenue fell 50% year-over-year to $74 million.

WISH’s revenue decline for the third quarter can be attributed to lower marketing spending amid the high inflation and rising interest rate environment and the new pricing practice implemented by the company, which was fully effective during the last quarter. The company expects an adjusted EBITDA loss of between $90 million to $110 million in the fourth quarter.

With inflation remaining uncomfortably high and the Fed’s final interest rate expected to be higher, the economy is expected to enter a recession by the start of next year. This is expected to affect consumer spending significantly, further straining WISH’s financials.

Furthermore, the company also received a non-compliance letter from NASDAQ on October 28, 2022, as the NASDAQ Listing Rule requires listed securities to maintain a minimum bid price of $1 per share.

Here’s what could influence WISH’s performance in the upcoming months:

Weak Financials

For the fiscal third quarter ended September 30, 2022, WISH’s revenue declined 66% year-over-year to $125 million. Its adjusted EBITDA loss widened 216.7% year-over-year to $95 million. The company’s total assets declined 29% to $911 million, compared to $1.28 billion for the fiscal year ended December 31, 2021.

Its gross profit declined 79.6% year-over-year to $34 million. Also, its net loss widened 93.7% year-over-year to $124 million. In addition, its loss per share widened 80% year-over-year to $0.18.

Unfavorable Analyst Estimates

WISH’s EPS for fiscal 2022 and 2023 is expected to remain negative. Its revenue for fiscal 2022 is expected to decline 71.2% year-over-year to $600.02 million.

Low Profitability

WISH’s trailing-12-month levered FCF margin is negative, compared to the 1.35% industry average. Likewise, its trailing-12-month net income margin is negative compared to the 5.12% industry average. Also, its trailing-12-month EBITDA margin is negative compared to the 11.05% industry average.

POWR Ratings Reflect Bleak Prospects

WISH has an overall F rating, equating to Sell in our POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. WISH has a D grade for Quality, consistent with its poor profitability.

It has a D grade for Sentiment, in sync with the weak analyst estimates.

WISH is ranked #54 out of 58 stocks in the F-rated Internet industry. Click here to access WISH’s ratings for Growth, Value, Momentum, and Stability.

Bottom Line

WISH is trading below its 50-day and 200-day moving averages of $0.79 and $1.54, respectively, indicating a downtrend. Despite trading at a cheap valuation, consumer-facing businesses like WISH are expected to be hit badly by the expected recession next year.

Analysts look bearish on WISH’s prospects. Given the company’s weak financials and low profitability, the stock could be best avoided now.

How Does ContextLogic Inc. (WISH) Stack up Against Its Peers?

WISH has an overall POWR Rating of D, equating to a Sell rating. Therefore, one should consider investing in other Internet stocks with a B (Buy) rating, such as Yelp Inc. (YELP), trivago N.V. (TRVG), and Expedia Group, Inc. (EXPE).

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WISH shares were trading at $0.70 per share on Thursday morning, up $0.02 (+2.51%). Year-to-date, WISH has declined -77.49%, versus a -14.29% rise in the benchmark S&P 500 index during the same period.

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About the Author: Dipanjan Banchur

Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.

More…

The post Is This Internet Stock Too Cheap to Ignore Right Now? appeared first on StockNews.com

As the Fed’s aggressive monetary policy resulted in slightly cooled inflation last month, investors are hopeful of smaller rate hikes ahead. However, since a recession is expected to hit the economy next year, we think fundamentally sound stocks Pfizer (PFE), Flowers Foods (FLO), and Xperi (XPER), which are rated Strong Buy in our proprietary rating system, might be worth owning. Continue reading.

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The central bank’s benchmark overnight lending rate currently sits in a target range of 3.75%-4.00%. Investors overwhelmingly expect a rate increase of 50 basis points at the Fed’s next policy meeting as inflation showed signs of cooling.

The Fed’s most aggressive monetary tightening campaign since the 1980s has so far had a fairly limited effect on demand overall. However, recent data shows that business activity contracted for a fifth month in November, and applications for unemployment benefits rose last week to a three-month high. This indicates that some more resilient parts of the economy have started to soften.

In addition, as debate broadened over the implications of the U.S. central bank’s rapid tightening of monetary policy, a substantial majority of policymakers at the Federal Reserve’s meeting early this month agreed it would “likely soon be appropriate” to slow the pace of interest rate hikes.

Given this backdrop, we think fundamentally strong stocks Pfizer Inc. (PFE), Flowers Foods, Inc. (FLO), and Xperi Inc. (XPER) might be worth owning as we head into 2023. These stocks are rated Strong Buy in our proprietary rating system.

Pfizer Inc. (PFE)

PFE discovers, develops, manufactures, distributes, and sells biopharmaceutical products worldwide. It offers medicines and vaccines in various therapeutic areas. The company serves wholesalers, retailers, hospitals, clinics, government agencies, as well as disease control and prevention centers.   

On November 4, PFE and BioNTech SE (BNTX) announced updated data from a Phase 2/3 clinical trial demonstrating a robust neutralizing immune response one month after a 30-µg booster dose of the companies’ Omicron BA.4/BA.5-adapted bivalent COVID-19 vaccine.

These data highlight the potential benefit of the bivalent vaccine for all populations regardless of previous SARS-CoV-2 infection. This marks a significant achievement for the companies in developing the Covid-19 vaccines.

On November 3, 2022, PFE’s investigational cancer immunotherapy, elranatamab, received Breakthrough Therapy Designation from the U.S. Food and Drug Administration (FDA) for treating people with relapsed or refractory multiple myeloma.

Chris Boshoff, M.D., Ph.D., Chief Development Officer, Oncology and Rare Disease, Pfizer Global Product Development, said, “This marks Pfizer’s twelfth FDA Breakthrough Therapy Designation in Oncology, a testament to our relentless commitment to developing transformational cancer medicines in areas of high unmet need.”

On September 22, PFE declared a quarterly dividend of $0.40 per share on its common stock, which was payable to shareholders on December 5. Its annual dividend of $1.60 yields 3.26% on current prices. The company’s dividend payouts have increased at a 5.5% CAGR over the past three years and a 5.7% CAGR over the past five years. The company has a record of 12 years of consecutive dividend growth. 

In terms of forward EV/EBITDA, PFE is currently trading at 6.11x, which is 54.1% lower than the industry average of 13.31x. Its forward non-GAAP P/E multiple of 7.53 is 57.7% lower than the industry average of 17.79.

During the fiscal third quarter ended September 2022, PFE’s income from continuing operations improved 5.8% year-over-year to $8.65 billion. Its non-GAAP net income attributable to Pfizer Inc. common shareholders rose 39.7% year-over-year to $10.17 billion, while its non-GAAP EPS grew 40.2% year-over-year to $1.78.

Street expects PFE’s EPS for the current fiscal year ending December 2022 to be $6.46, indicating a 46.2% improvement year-over-year. The company’s revenue is likely to increase 23.2% year-over-year to $100.15 billion in the same year. Additionally, PFE has topped consensus EPS estimates in each of the trailing four quarters.

The stock has gained 8.7% over the past month to close its last trading session at $48.8. 

PFE’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

PFE is rated an A in Value and a B in Growth, Sentiment, and Quality. Within the Medical – Pharmaceuticals industry, it is ranked #2 out of 162 stocks. Click here to see additional POWR Ratings for Stability and Momentum for PFE. 

Flowers Foods, Inc. (FLO)

FLO is a producer and marketer of packaged bakery foods. The company offers fresh bread, buns, rolls, snack cakes, tortillas, frozen bread, and rolls. Its portfolio includes brands such as Nature’s Own, Dave’s Killer Bread (DKB), Wonder, Canyon Bakehouse, Tastykake, and Mrs. Freshley’s.

On November 18, FLO declared a quarterly dividend of $ 0.22 per share, an increase of 4.8% over the same quarter last year. This is the 81st consecutive quarterly dividend paid by the company and is payable on December 16, 2022.

Its annual dividend of $0.88 yields 2.98% on current prices. The company’s dividend payouts have increased at a 5.1% CAGR over the past three years and a 5.4% CAGR over the past five years. The company has a record of 8 years of consecutive dividend growth. 

FLO’s forward EV/Sales multiple of 1.49 is 11.7% lower than the industry average of 1.69.

FLO’s sales rose 12.7% year-over-year, $1.16 billion for the third quarter that ended October 8, 2022. Its net income improved 4.3% year-over-year to $40.53 million, while its EPS grew 5.6% year-over-year to $0.19.

Analysts expect FLO’s revenue for the fiscal fourth quarter ending December 2022 to increase 12.3% year-over-year to $1.10 billion, while its EPS for the ongoing year is expected to grow 18% year-over-year to $0.24.

FLO has gained 9.6% over the past month to close the last trading session at $29.59.

It’s no surprise that FLO has an overall rating of A, equating to a Strong Buy in our POWR Ratings system. The stock has a B grade for Growth and Quality. It is ranked #9 out of 82 stocks in the B-rated Food Makers industry.

To access the additional ratings for FLO for Value, Momentum, Stability, and Sentiment, click here.

Xperi Inc. (XPER)

XPER provides software and services in the United States. It offers consumers a seamless end-to-end entertainment experience, from choice to consumption, in the home, in the car, and on the go. The company has three business categories: Pay- TV, Consumer Electronics; Connected Car; and Media Platform.

On October 10, XPER celebrated its first day of trading as an independent company on the New York Stock Exchange.

Jon Kirchner, CEO of XPER, said, “Today we stand as an independent company with a strong balance sheet, an executive team with substantial tenure, and an exciting path to significant growth and profitability. The realization of this strategic milestone is the result of years of continuous effort.”

In terms of forward Price/Sales, XPER is currently trading at 0.88x, which is 64.9% lower than the industry average of 2.50x. Its forward EV/Sales multiple of 0.70 is 73.1% lower than the industry average of 2.59.

XPER’s revenue increased 3.3% year-over-year to $121.64 million for the third quarter that ended September 30, 2022. For the nine months ended September 30, its net cash from financing activities rose 115.3% from the same period last year, while its cash and cash equivalents at the end of the nine months grew 68.3% year-over-year.

XPER’s revenue is likely to increase 7.7% year-over-year to $535.32 million in the next fiscal year ending December 2023. Its EPS is estimated to grow 88% year-over-year in the next year.

Its shares dipped marginally intraday to close the last trading session at $10.32.

XPER’s strong fundamentals are reflected in its POWR Ratings. The stock’s overall A rating indicates a Strong Buy in our proprietary rating system. It has a B grade in Growth, Sentiment, and Quality. Within the B-rated Semiconductor & Wireless Chip industry, it is ranked #3 out of 92 stocks.

In addition to the POWR Ratings above, XPER is also rated for Value, Stability, and Momentum. Get all XPER ratings here.

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PFE shares were unchanged in premarket trading Thursday. Year-to-date, PFE has declined -14.59%, versus a -14.29% rise in the benchmark S&P 500 index during the same period.

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About the Author: Kritika Sarmah

Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor’s degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.

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Holiday sessions like this week have a naturally bullish bias for stocks (SPY). That’s because the joy of Thanksgiving typically leaks over to higher stock prices. The risk is giving this upward movement any significance when the long term trajectory is still decidedly bearish. Let’s do a roll call of recent events that continues to point the compass to more downside action ahead along with our game plan to profit as stocks make new lows in the weeks ahead.

shutterstock.com – StockNews

Yes, stocks closed above notable resistance at 4,000 for the S&P 500 (SPY) on Tuesday. But with more holiday sessions to go this week…then likely prices will continue to creep higher a little while long.

The key at this stage, as it comes to price action, is whether stocks really have what it takes to clear the hurdle of the 200 day moving average (now at 4,062).

Remember that this moving average (red on the S&P 500 chart below) is considered the long term trend line that really helps delineate bullish from bearish times.

 

As you can see that market got bearish in a hurry this year with many failed attempts to break back above. This time will be no different.

Why?

The storm clouds are forming for a recession to start in the first half of 2023 as the after effect of the Fed raising rates to tamp down the flames of inflation.

Remember the Fed has already told investors that their long term approach will come with a measure of economic pain. Whereas they “hope” to avoid a recession, they begrudgingly have to admit that it is not likely.

That message was served up loud and clear by Chairman Powell from his 11/2 press conference following the most recent 75 basis point hike. He was asked if the “window to create a soft landing for the economy had narrowed”.

The look on his face was even more powerful than the words where he admitted that with inflation barely budging at this point, that it would take a lot more Fed ammo to win the inflation battle. And thus indeed very unlikely to create a soft landing.

If no soft landing, then it means hard landing (recession).

Remember the famous words: Don’t fight the Fed!

So if they are telling you that they are far from done on their fight against inflation. And that the odds of a soft landing are closing in on zero. Then probably best to believe them and prepare for a recession which comes hand in hand with lower stock prices.

Economists surveyed by the Wall Street Journal see the odds of recession coming in the next year is up to 63% from the mid October reading. This view falsely offers a bit of hope with 37% chance of it not happening.

And now I will pull the rug out by informing you that economists have a terrible track record. That’s because the average recession has come on the scene when the average probability was only 40%. In that light you appreciate how daunting that 63% probability of recession is for our future outlook.

Wall Street analysts are also beating the recessionary drums as the most recent weak earnings season has led to a significant drop in estimates for the future. Q4 is nearing in on zero earnings growth. Whereas the first 2 quarters of 2023 are decidedly negative.

What’s worse is that earnings experts, like Nick Raich of EarningsScout.com, expect there to be even steeper cuts in the earnings outlook ahead. That’s because Wall Street is always too optimistic at the start of a recession.

The roll call of foreboding indicators continues with the Chicago Fed National Activity Index this week falling into negative territory once again. This is a fairly broad reading of the economy which is at the lowest level in 4 months. The change in trend back to negative usually points to even lower readings ahead.

Next we have the hit parade of 3 different regional Fed reports all pointing the wrong direction. That starts with the Richmond Fed reading on Tuesday going from a positive of 5 for manufacturing down to -9. Services also tipped over to negative at -3.

Thursday was no better with the Philly Fed Manufacturing index falling to -19.4. New Orders was also pointing south at -16.2 which points to more bad times ahead.

Lastly as we scan across the country to the Kansas City Fed we see the composite index (manufacturing & services) at -10.

All of this begs the question; Why have stock prices been going up for about 6 weeks in the face of such an obviously negative outlook?

Because a bear market is a long term process made with lower lows and lower highs on the bounces. Not just a smooth elevator ride to the bottom. That point comes through loud in clear with the S&P 500 price chart I shared above.

And also comes through loud and clear for past bear markets like 2008-2009 below:

And for the previous 2000 to 2003 bear market:

This recent rally will probably top out soon as foolish bulls get thwarted at the 200 day moving average.

Wise investors will appreciate the lessons from history and that you should not get bullish running INTO the recession. That is when it pays to bet on more market downside.

Once inside the recession, with stocks pressing lower, that is when it is wise start betting on bottom as the next bull market should be right around the corner. Not beforehand.

So please enjoy the holiday season. Just don’t get fooled by the optical illusion of this holiday rally.

What To Do Next?

Discover my special portfolio with 9 simple trades to help you generate gains as the market descends further into bear market territory.

This plan has been working wonders since it went into place mid August generating a robust gain for investors as the market tanked.

And now is great time to load back as we deal with yet another bear market rally before stocks hit even lower lows in the weeks and months ahead.

If you have been successful navigating the investment waters in 2022, then please feel free to ignore.

However, if the bearish argument shared above does make you curious as to what happens next…then do consider getting my updated “Bear Market Game Plan” that includes specifics on the 9 unique positions in my timely and profitable portfolio.

Click Here to Learn More >

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

 

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SPY shares rose $0.02 (+0.01%) in after-hours trading Tuesday. Year-to-date, SPY has declined -14.83%, 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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