When you log in to InvestorPlace, you come for perspective. It’s our mission to provide high-quality, opinionated analysis to guide you on your stock-picking journey. Please see our publishing guidelines here. Below you’ll find some of the best stock market analysis, commentary and insights from myriad InvestorPlace writers. Please check back often, as this post will be continuously updated with the day’s hottest takes on the top stocks to invest in and the stocks to avoid.
InvestorPlace’s Top Stocks Today
Canopy Growth (NYSE:CGC) added 11% Monday, a day where the S&P 500 Index gave back 53 basis points, on news that New York state has granted the pot company a license to establish a “Hemp Industrial Park.” InvestorPlace writer and IPO expert Tom Taulli outlined three reasons people are excited about CGC stock:
“For the most part, cannabis is likely to be a massive growth opportunity. Canada will certainly be a factor but the U.S. is also rapidly moving toward legalization (a recent positive was the passage of the farm bill, which took industrial hemp off the controlled substance list). So how big will the market get? Well, according to Cowen analyst Vivien Azer, it will reach a whopping $80 billion in the U.S. by 2030.”
“You might be asking yourself why Privateer doesn’t take advantage of the upcoming lock-up expiration and start dumping stock at around five times the IPO price … [Because] Privateer is probably making a fortune from short sellers. Short sellers have to pay a so-called rebate to borrow stock from its owners. Normally this is a nominal fee, a couple percent or less. Recently, however, this has surged to 500% or more annually for TLRY stock. Take a second to think about that … A short seller is paying 500% per year, 40% per month, otherwise stated as more than 1% per day, to stay short Tilray. The stock needs to collapse, and pretty much immediately, for short sellers to get paid.”
While Lululemon Athletica (NASDAQ:LULU) popped 5.73% today, it didn’t register a blip on the radar from InvestorPlace readers. That’s a shame, considering Lululemon is on track to becoming “a mini Nike,” according to Luke Lango, who ascertains his own buy case based on LULU’s positive earnings revision:
“One, the outstanding momentum that the Lululemon brand generated in early 2018 didn’t lose any steam … Through the first three quarters of the year, comparable sales were growing in the mid- to high-teens range. Management shocked the world in early December by saying that fourth-quarter comparable sales growth would slow dramatically to ~10%. Lululemon stock dropped. As it turns out, management just sandbagged that guide. Instead, [comparable sales growth] will be almost exactly what it has been all year (15%-plus), and that’s proof that this brand’s operational momentum is more than just a flash in the pan.
Two, Lululemon is generating high quality, high margin sales growth acceleration. Lululemon management hiked the revenue guide by 2%. The company hiked the earnings-per-share guide by 4%, and they also kept the expected tax rate and share count constant. The implication is that margins progressed much better than expected during the quarter. That means this sales momentum is not promotion driven. Instead, it’s demand driven, and that bodes well for continued success in 2019.”
In anticipation of its earnings report before the bell Tuesday, JPMorgan Chase (NYSE:JPM) gained 1%, and 47 bps after hours. And InvestorPlace Feature Writer James Brumley believes JPM has a chance to stand out Tuesday:
“While most banks became more profitable over the course of 2018 against a backdrop of rising interest rates that didn’t crimp the economy, most banks also hit a revenue headwind during the fourth quarter. Wells Fargo (NYSE:WFC), which will also report its fourth quarter results on Tuesday morning, is expected to post a 1.4% dip in revenue. Citigroup’s top line last quarter rolled in at $17.1 billion, down roughly 2% and falling well short of the $17.6 billion analysts had modeled. Citigroup topped earnings estimates, and Wells Fargo along with JPMorgan will likely do the same, In the current environment, however, investors may leave little room for anything less than reaching targets.”
Top Stocks in the Hot Seat
Welcome to the earnings season kickoff! Now it’s about to get rough. At least, that’s what Josh Enomoto thinks, as he explores ten companies that could disappoint on earnings, including Bank of America (NYSE:BAC), Apple (NASDAQ:AAPL) and Ford (NYSE:F):
“According to the latest report from The Wall Street Journal, a string of downgraded profitability expectations has worried analysts. Prior headwinds that began to impact sentiment last year, unfortunately, stuck around longer than corporate leaders anticipated. Further, few indicators suggest that the markets can rise above the doldrums anytime soon.
Primarily, the upcoming earnings reports mostly have a China problem. The ongoing trade war between the top two economies in the world have rattled both corporate executives and shareholders. An initial thawing in relations turned out to be a head-fake when controversies like the Huawei arrest returned an icy chill to the narrative.”
“It’s not all bad news in China, though. This is still a 6%-plus growth economy. And, while Apple recently issued a big warning about slowing growth in China, Nike (NYSE:NKE) announced two weeks prior that its China business was red hot. My fear, however, is that Starbucks is on the Apple path in China, not the Nike path. From this perspective, the present situation for Starbucks in China is most likely one defined by slowing growth. That’s a big problem. Growth everywhere else is all dried up due to rising competition and saturation. Comparable sales growth in the U.S. has dropped from 5% and up a few years back, to 2% last year, with transaction volume actually down year-over-year. Europe, Middle East, and Africa comps have followed a similar trajectory, also with negative transaction volume growth last year.”
Year-to-date, Amarin (NASDAQ:AMRN) stock is up 40% on its treatment Vascepa showing positive trial data and also due to Pfizer (NYSE:PFE) buyout chatter. Such a buyout, however, is unlikely, explains Ian Bezek:
“Biotech journalist and Twitter heavyweight Adam Feuerstein weighed in on the Pfizer rumors, tweeting:
‘Help me with the logic here: $AMRN CEO John Thero just spent 4 days in [San Francisco] meeting face to face with investors while ALSO negotiating a $PFE takeout? People, please …’
It’s not uncommon for biotech management teams to pull out of conferences when they are about to be acquired. Particularly if Amarin already knew that Pfizer or someone else would bid for the company, why bother with in-person investor relations? There’d be more important business to attend to.”
But concludes on a more positive note:
“That said, Amarin finds itself in a decent position nonetheless. It had $249 million in cash as of the latest report, suggesting that it has time to ramp up its sales operations as a separate company.
Amarin lost $98 million on $205 million in revenues last year, suggesting it isn’t especially close to profitability. Analysts forecast a much smaller, but still negative, net income figure for this year as well. Regardless, with that cash position, Amarin isn’t desperate to find a suitor and can wait for an attractive offer.
For now, I see AMRN as a solid trading stock. When there are short-term rips, such as the 22% pop on the Pfizer rumors, it is a good time to take profits. When the stock dips, say on weaker than expected earnings or prescription fills data, you can buy back in at a better price.”
That’s it for today’s stock market commentary roundup. Please feel free to drop us a note at email@example.com to let us know what we got right and what we got wrong. Happy investing!
John Kilhefner is the Deputy Managing Editor of InvestorPlace.com. As of this writing, he did not hold a position in any of the aforementioned securities.
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