After a sharp run-up for U.S. stocks, rising tensions between Washington and Beijing could spark a round of near-term consolidation that could prove to be an entry point for investors, a prominent Wall Street bull said Friday.
The S&P 500 has broken above 3,000, marking a milestone in the current bull rally. There’s a deepening feeling that equities by be a leading indicator, showing that the economy will turn around in 2H20.That’s the blue-sky scenario, and it may happen. We live in an uncertain world, however, and even the most upbeat investors will look for ways to defend their portfolio in times like these. It’s natural to look at value stocks, equities trading at low cost but offering high upside potential, and high-yield dividend stocks, with their steady income stream providing a cushion against share depreciation. We’ve used TipRanks database to find three stocks to fit that profile. Ares Commercial Real Estate (ACRE)We’ll start with a real estate investment trust. These companies typically pay out high yield dividends, as tax codes require them to return a high percentage of income directly to shareholders. Ares, which originates, invests in, and manages commercial real estate loans in the mid-market, is typical of its niche.The economic and market slides of the past few months hit the company hard. With commercial activity slowing, there were fewer opportunities for real estate loans, and repayment income was hit. Ares saw a sequential decline in earnings from Q4 to Q1, although at 11% it was not as deep as many similar companies. The company’s stock price is still down, however; with a net share price loss of 50%, Ares has badly underperformed in the current cycle.Even though the stock is down and income is lower, Ares has maintained its solid dividend. The company paid out 33 cents per share in Q1, slightly more than its EPS. The yield, however, is the true attraction here – at 16.5%, it is sky-high, far higher than the 2.2% average found among peer companies in the financial sector.JMP’s 5-star analyst Steven DeLaney sees ACRE’s current condition as an opportunity to buy in at lower prices. He writes of the stock, “…our outlook for a recovery in the value of ACRE shares remains positive after an expected few months of temporary economic turbulence as the company has minimal exposure to higher-risk commercial property types and has generally demonstrated solid loan underwriting since its inception in 2012.”DeLaney’s Buy rating is backed by a $10 price target, suggesting room for a robust upside of 32%. (To watch DeLaney’s track record, click here)Ares has a unanimous Strong Buy analyst consensus rating, based on 3 recent Buy reviews. Shares are selling for $7.61 and the average price target matches DeLaney’s at $10. The 31% upside and ultra-high dividend yield should bring investors in. (See ACRE stock analysis on TipRanks)Barings BDC, Inc. (BBDC)Next up is a business development corporation, Barings BDC. This company, provides asset management and direct origination for its customers to raise capital. Barings invests in middle market debts, equities, and fixed income assets, with customers around the world. Barings boasts over $327 billion in world-wide assets under management.In Q1, Barings managed to avoid sharp sequential declines, but the 15-cent EPS still missed the forecast by a penny. Top line revenue, at $18.7 million missed the forecast by almost 2%; however, it did show modest year-over-year growth.BBDC pays out 16 cents per share quarterly, making the yield on the 64-cent annualized payment an impressive 9%. While not as stellar as Ares above, it is still more than 4x higher than the average 2% yield found among S&P listed companies.Finian O’Shea covers this stock for Wells Fargo and writes, “With a stable portfolio, leverage and liquidity profile, we believe BBDC is one of the names that will sail through the recession with comparatively little harm – and therefore likely to provide a very attractive return over the medium to long term.” (To watch O’Shea’s track record, click here)The Strong Buy analyst consensus rating here is another unanimous vote, also based on 3 reviews. BBDC is selling for $7.40 per share, and the average price target of $8.50 indicates room for a 10% upside potential. (See Barings BDC stock analysis on TipRanks)Ready Capital Corporation (RC)Last up is another REIT, this one focusing on commercial mortgages. Ready Capital buys, originates, finances, and manages loans for commercial mortgages and related real estate securities including multi-family properties. The company’s customer base is in the US, where it boasts that it has provided over $3 billion in capital through its services.Ready suffered the worst share price loss of the stocks in this list, as it is down 59% since February. Shares have been flat since their initial decline, and the first quarter saw earnings collapse from over 40 cents to just one penny.However – the prospect for Q2 is better, with forecasts predicting up to 52 cents EPS inQ2. Most investors appear to see Ready’s pain as already baked in – repayments were down, but as the economy improves that situation is likely to reverse itself. In the meantime, Ready has kept up its dividend at 40 cents quarterly. The annualized payment is $1.60 per share. These are decent numbers, but the yield is where it’s at here. RC’s dividend yields an eye-popping 25% after the share declines – more than enough to make the potential risks worthwhile.Piper Sandler analyst Crispin Love writes, “We believe RC can weather the volatility given its diversified platform, low LTVs, PPP benefits, and potential to buy distressed assets in 2020/2021… The company's $4.2B portfolio of 4,500 loans have LTVs of about 60% and 90% of loans are current through April 30. In the CRE portfolio, 10% of loans are in forbearance while 7% of loans in the resi portfolio are in forbearance. Given RC's focus on small balance, we believe there were worries that forbearance rates would be significantly higher.”All of this is a recipe for a stock ready to bounce back, and Love rates RC a Buy. The analyst’s $17.50 price target shows how strong his confidence is – it implies an upside potential of 195% for the coming year. (To watch Love’s track record, click here)While RC shares get another Strong Buy from the analyst consensus, also based on 3 Buy reviews, there is some caution here, shown by one Hold tossed into the mix. Ready’s shares are selling for $5.92, and the average price target of $13.50 suggests a strong upside of 128%. (See Ready stock analysis on TipRanks)To find good ideas for dividend stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Commentators lately are engaged in an intense debate over whether Warren Buffett has lost his touch. On that score, it pays to look beyond Buffett to the rest of Berkshire Hathaway (BRK)(BRK) especially its shareholder base — a factor in the company’s future prosperity, as it has been from the beginning. In 1979, Buffett drew on the 1958 book “Common Stocks and Uncommon Profits,” by the legendary investor Phil Fisher.
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The U.S. stock market is firing on all cylinders, and that’s bullish for its near-term prospects. The five largest U.S. stocks by market capitalization are grabbing attention, but their performance doesn’t tell the whole story. Concentration of market cap in five stocks is not a recent phenomenon, as is clear from the accompanying chart.
Jim Cramer discusses the stock market today including Trump's press conference discussing China, Marvell's excellent quarter and the future of cannabis stocks.
(Bloomberg) -- Occidental Petroleum Corp. cut its quarterly dividend by 91% to the lowest since at least the 1970s amid the pandemic-driven collapse in energy demand that has strained the oil explorer’s ability to shoulder its debt.Occidental shareholders will receive a penny per share on July 15, the Houston-based company said in a statement Friday. The move extends a cut announced in March when it trimmed the payout to 11 cents from 79 cents.The surprise cut came the same day under-fire Chief Executive Vicki Hollub and the rest of the board of directors won re-election at Occidental’s annual shareholders’ meeting. The company will announce the final vote tallies in a regulatory filing later.Hollub has weathered extreme pressure from shareholders ever since outbidding Chevron Corp. to win the purchase of Anadarko Petroleum Corp. last year. The deal saddled Occidental with some $40 billion of debt that was looking hard to pay off even before Covid-19 wiped out global oil demand, sending crude prices plunging to an unprecedented minus $40 a barrel at one point last month.The benchmark U.S. oil price rebounded 88% in May to close the month above $35 a barrel, but it’s still 44% down from its high point in January and below a level that would ensure healthy cash flow for most producers.The dividend reduction will save Occidental about $360 million a year, but it’s a drop in the ocean compared to the wall of debt due over the coming years. The company probably kept a token payout to avoid mandatory selling of the stock by dividend funds and to signal that it aims to restock the stipend at some point in the future, according to Leo Mariani, an analyst at KeyBanc Capital Markets.“They need that extra money at $35 a barrel oil, so it’s the right move,” Mariani said by phone. “They’ve got to do whatever they can to survive.”What Bloomberg Intelligence SaysAlready reeling from elevated debt, a weak fundamental backdrop and investors disgruntled by the Anadarko deal, Occidental doesn’t have many near-term positives we can speak to.\-- Vincent G. Piazza and Evan Lee, analystsRead the full report here.The company’s primary focus is on “maximizing liquidity and reducing debt,” Hollub said at the annual meeting, held virtually on Friday. The company has gone from being a steady, diversified oil producer to a debt-laden, shale-focused driller that now has a market value of just $11.7 billion, less than a third of the price it paid for Anadarko. Its credit rating was downgraded to junk in March.The stock dropped 5.1% to $12.95 in New York on a day when West Texas Intermediate oil futures jumped more than 5%.Hollub fended off a shareholder revolt by making peace with the company’s second-largest shareholder, billionaire Carl Icahn, ending a nine-month public battle that included personal barbs against the CEO. However, it came at a cost. Hollub and her fellow directors agreed to cede some control by putting nominees of the activist investor on the board.(Updates with analyst’s comment from sixth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Saudi Arabia transferred 150 billion riyals ($40 billion) from its central bank to its sovereign wealth fund as it went on an investment spree seeking to take advantage of recent market turmoil.The transfers from the kingdom’s foreign-currency reserves to its Public Investment Fund were made in March and April on an “exceptional” basis, and will “strengthen the investment capacity of the fund,” Finance Minister Mohammed Al-Jadaan said in a statement published by the official Saudi Press Agency on Friday.The move comes as the world’s largest crude exporter faces exceptional fiscal pressure from a crash in global oil markets. Al-Jadaan said the central bank transfer contributed to a historic drop in Saudi Arabia’s net foreign assets, which fell at the fastest rate in two decades in March, and will also have an impact on April’s central bank data, expected to be released on Sunday.“This procedure was taken after comprehensive study and taking into consideration the sufficient level for foreign-currency reserves,” Al-Jadaan said. The PIF has an “important role in diversifying and strengthening economic growth,” he said, noting that the fund’s investment returns “will be available to support public finances if needed.”A regulatory filing earlier this month showed that the sovereign fund has spent billions of dollars this year buying equities, including stakes in cruise operator Carnival as well as BP Plc, Boeing Co., Citigroup Inc and Facebook Inc.READ MORE: Saudi Arabia Wealth Fund Buys Boeing, Citi, Disney StakesIn his statement on Friday, Al-Jadaan said the fund was capitalizing on “a range of investment opportunities that presented themselves in light of the current circumstances global financial markets are passing through.”The news of the fund’s buying spree abroad coincided with the government cutting back on spending at home. Al-Jadaan has said that the kingdom will need to trim expenses this year to redirect resources to health care and supporting businesses as the coronavirus pandemic hobbles economic growth.Earlier this month, the government cut back state worker allowances and announced it will triple a value-added tax, shocking citizens and business owners. Saudi Arabia’s non-oil economy is expected to contract this year for the first time in three decades.READ MORE: Saudi Arabia Triples VAT, Cuts State Allowances Amid Crisis (2)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Chicago-based United said it is increasing trans-Atlantic service from Washington, D.C. and San Francisco to cities across Europe in July thanks to a modest rise in demand, and re-starting service to Tokyo-Haneda, Hong Kong, Singapore and Seoul.
Experts say a recession has begun. Is now the time to go to cash in stock mutual funds in your retirement savings accounts?
While nothing is ever certain on Wall Street, and a host of pandemic-related challenges remain, the general mood among investors improved dramatically in May as signs of an economic recovery continued to emerge. It may seem dangerous to buy a brick-and-mortar retailer right now, but Foot Locker has surged about 50% from its lows at the beginning of April as the impact of the health crisis on its business outlook appears to have been exaggerated.
It's been another difficult year for General Electric Company (NYSE: GE) investors, with the stock down another 40.7% year to date to under $7.One Wall Street analyst said GE's 2020 sell-off is a buying opportunity for long-term investors, but they should keep their near-term free cash flow expectations in check.The GE AnalystBank of America analyst Andrew Obin reiterated his Buy rating and $11 price target for GE stock.The GE ThesisGE and its investors started off the year with relatively high hopes for FCF. At an investor conference this week, GE CEO Larry Culp suggested the economic downturn will likely make 2020 another negative FCF year for GE.GE is now projecting negative industrial FCF of between $3.5 billion and $4.5 billion in the second quarter alone.Looking ahead, Obin said he anticipates a slow pace of recovery for GE's aviation business. However, he projects a stronger rebound in GE's health care business given orders for products diagnosing and treating COVID-19 more than doubled in the second quarter. Meanwhile, supply chain issues impacting GE's power and renewables segment are improving, and the company is on track to ship at least 45 heavy-duty gas turbines in 2020.While the downturn has been a bump in the road for GE, Obin said he believes GE should be able to weather the storm."We see GE having the financial flexibility to weather near-term revenue declines and continue its turn-around progress," he wrote in a Friday note.Benzinga's TakeIt seems GE's financial situation is far better than it has been in recent years, and the company's balance sheet is stable and flexible enough to endure yet another difficult year. However, GE investors are likely growing tired of hearing about how a turnaround is just around the corner after years of underperformance and lackluster FCF and earnings numbers.Do you agree with this take? Email email@example.com with your thoughts.Related Links:How Trading In Ford, GE And Other Volatile Stocks Could Be Linked To Casino Closures Revisiting Harry Markopolos' Call That 'GE Is One Recession Away From Chapter 11'Photo credit: Momoneymoproblemz, via Wikimedia CommonsLatest Ratings for GE DateFirmActionFromTo May 2020UBSMaintainsBuy Apr 2020Credit SuisseMaintainsNeutral Apr 2020UBSMaintainsBuy View More Analyst Ratings for GE View the Latest Analyst Ratings See more from Benzinga * Revisiting Harry Markopolos' Call That 'GE Is One Recession Away From Chapter 11'(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
When Cisco bought AppDynamics in 2017 for $3.7 billion just before the IPO, the company sent a clear signal it wanted to move beyond its pure network hardware roots into the software monitoring side of the equation. Yesterday afternoon the company announced it intends to buy another monitoring company, this time snagging internet monitoring solution ThousandEyes. Cisco would not comment on the price when asked by TechCrunch, but published reports from CNBC and others pegged the deal at around $1 billion.
U.S. pipeline operator Energy Transfer LP will begin cutting about 6% of its workforce next week, underscoring the spreading impact of weak oil and gas prices on the energy business. Marshall McCrea, chief commercial officer for the Dallas-based company, said in a recorded message to employees the cuts would begin Monday and affect about 6% of the company's staff, according to two people familiar with the recording. U.S. oil and gas producers have curtailed or shut in wells in response to crude prices down 45% since the start of the year, reducing deliveries to pipeline operators.
(Bloomberg) -- JDE Peet’s BV shares surged after holding Europe’s biggest initial public offering this year, drawing investors counting on the Peet’s Coffee owner to weather the pandemic lockdowns and take on giants like Starbucks Corp.The coffee giant, carved out of the Reimann family’s investment firm JAB Holding Co., raised 2.3 billion euros ($2.5 billion) in an IPO that took just 10 days, condensing what’s usually a four-week process and attracting investor orders that exceeded the number of shares offered by multiple times.Coffee consumption has remained resilient during the pandemic, moving from offices and cafes into people’s homes, according to JDE Peet’s, which bills itself as the world’s largest pure-play coffee group. Takeovers of coffee companies and cafe chains surged in the last few years, driven in large part by JAB, which has acquired well-known brands such as Caribou Coffee and Keurig Green Mountain, growing to become a rival to Starbucks and Nestle SA.JDE Peet’s climbed 13% to 35.50 euros at 10:51 a.m. on Friday in its first day of trading in Amsterdam after earlier gaining as much as 17%. The company priced its shares at 31.50 euros each, according to a statement Friday, in the upper half of the marketed range giving it a market value of 15.6 billion euros.The company, which had sales of 6.9 billion euros last year, also owns supermarket brands including Douwe Egberts, Jacobs and Kenco as well as U.S. retailers Peet’s and Intelligentsia, giving it access to home brewers.Read more: JDE Peet’s Rapid IPO Highlights Appeal of Home Coffee MarketJDE Peet’s is attractive in part because it should grow at a faster rate than the global economy and also pays a dividend, said Colin McLean, chief investment officer at SVM Asset Management, whose fund participated in the IPO and also bought shares once trading began.‘Stable Business’“It’s a stable business making a steady move to premium, higher value-added coffee markets,” he said, describing the trading debut as a “reasonable start.” The initial stock pop was to be expected given the high demand, he said, adding that his fund had received a lower-than-requested allocation.The pandemic has upended the traditional IPO process, with shorter subscription periods, more cornerstone investors and virtual meetings to pitch the offerings to investors. Cornerstone investors, including funds run by billionaire George Soros’s firm, are taking up a third of JDE Peet’s offering.The share sale saw strong demand from investors in the U.S., U.K., and continental Europe, a person familiar with the transaction said. Given the robust interest, keeping the order book open longer would have only exposed the transaction to downside risk, the person said.Mondelez SellsJDE Peet’s offering has raised hopes that the European IPO market, expected to be shut for the better part of the year amid the pandemic, could reopen earlier than initially expected. So far, listings in the region have been limited to a small group of companies either boosted by or experiencing little disruption from the lockdowns caused by the pandemic.The IPO is the largest listing on a European exchange since brake systems maker Knorr-Bremse AG’s 3.9 billion-euro offering in October 2018, according to data compiled by Bloomberg. JDE Peet’s sold 22.2 million new shares, raising 700 million euros in gross proceeds.Shareholders Mondelez International Inc. and Acorn Holdings, a company owned by JAB and other investors, sold existing shares for about 1.55 billion euros.Recent firms to have braved virus-related turmoil with an IPO have been rewarded by investors. Video-conferencing company Pexip Holdings ASA shot up in its Oslo debut this month, trading 37% up on the IPO price, while data mangement provider Exasol AG has risen 36% since listing in Frankfurt on Monday. German drug-maker PharmaSGP GmbH is also preparing to try its luck soon.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Marathon, whose shares trade around $35, is a play on rising gasoline demand. Marathon could be worth more than $50 a share in a breakup. Phillips 66 and Valero are favored by J.P. Morgan analyst Phil Gresh.
Pfizer Inc. shares fell 7% in after-hours trading Friday after the company reported that a study of a potential breast-cancer treatment was halted because it was unlikely to achieve its goal. Pfizer said that a phase 3 study of palbociclib, also known as Ibrance, which was ongoing in 400 centers spread across 21 countries, would not reach its intended change in survival rates. "This result is not what we hoped for, but we are steadfast in our commitment to advancing the science and care for people living with breast cancer," Chief Executive Albert Bourla said in the announcement. After closing a penny higher at $38.19, shares dove lower than $35.50 in extended trading following the announcement. Pfizer stock has fallen 2.5% so far this year, as the S&P 500 index has declined 6.2%.