114.75 +1.49 (1.32%)
Pre-Market: 7:28AM EDT
|Bid||114.20 x 800|
|Ask||114.95 x 1000|
|Day's Range||112.41 - 115.90|
|52 Week Range||106.80 - 274.00|
|Beta (3Y Monthly)||1.57|
|PE Ratio (TTM)||8.82|
|Earnings Date||Jul 29, 2019 - Aug 2, 2019|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||173.04|
U.S. Senator Chris Van Hollen joins Yahoo Finance to discuss the impact of Trump's trade war saying it's "certainly hurting the U.S. economy." He also weighs in on its impact of Chinese stocks and rising tensions with Iran, saying we "need all the facts" on the tanker attacks.
U.S. regulators are finally paying attention to the risky issues associated with Chinese companies publicly listed in the U.S., but the proposed solution could actually be more harmful to U.S. investors.
The six-day winning streak of the benchmark Shanghai Composite Index was broken today as the index fell 0.87% to close at 2,982.07. This was the longest winning streak in over a year for the index, which has gained 19.6% so far in 2019.
Velodyne LiDAR seems to be preparing for its IPO. The company “has hired bankers for an initial public offering,” Reuters said. According to the report, Velodyne LiDAR has chosen Bank of America Merrill Lynch, Citigroup, Royal Bank of Canada, and William Blair to work on its potential exchange listing.
The cup with handle chart pattern is to serious investors what the single is to a baseball fan. It's the starting point for scoring runs.
While Asian markets were mixed, China’s Shanghai Composite Index gained 0.21% to end on a positive note for five days in a row. However, the tech-heavy Shenzhen Component ended in the red today.
The tech giant’s multiclass voting structure makes it nearly impossible to challenge its plans for the People’s Republic.
Latin America's leading online marketplace and China's top dog in streaming video both grew revenue at roughly 45% in their latest quarters, but that's about the only thing that these two passing ships have in common these days.
NVIDIA's (NVDA) partnership with Volvo will help it to expand presence, and improve competitive prowess against Intel, Qualcomm and DXC in the autonomous vehicle market.
A few months after nabbing a handsome $500 million funding round, China'sshared housing startup Danke Apartment got a talent boost
To avoid tariffs in the US-China trade war, some Chinese companies have moved production facilities and other operations to the U.S., not just Southeast Asia.
Baidu (BIDU) has witnessed a significant price decline in the past four weeks, and is seeing negative earnings estimate revisions as well.
I must say that I haven't been too kind with iQiyi (NASDAQ:IQ), which most folks know as China's Netflix (NASDAQ:NFLX). You would think that a company that is levered toward the world's biggest market in anything would do well. A cursory look at the charts for IQ stock tells a different tale.Source: Shutterstock And while I'm not trying to pat myself on the back, I will say that recommending against buying iQiyi stock was a gamble. How many times have we seen embattled securities bounce back for absolutely ridiculous reasons? Despite my reservations about the company, IQ still has that China market in its pocket. That's not something to take lightly.That said, I also want to know what other people are thinking, especially those that have a different perspective. You don't really understand your own argument until you understand your opponent's thesis. Although I hardly consider our own Dana Blankenhorn an opponent, he did put forward a differing narrative on IQ stock.InvestorPlace - Stock Market News, Stock Advice & Trading TipsEssentially, people have the completely wrong perspective regarding iQiyi stock. As I so cavalierly mentioned up top, IQ is the Netflix of China. But Blankenhorn takes issue with that comparison because it's only accurate from a superficial angle. In reality, they're two different animals. * 7 Stocks to Buy for the Coming Recession Increasingly in American and presumably other western households, people sit down in front of the TV to stream their favorite programs. This behavior facilitates the binge-watching phenomenon that we've grown so accustomed to.But in China, things are different. They don't have time to sit on their easy chair like us lazy Americans. Instead, their consumption is mobile-centric, which specifically benefits iQiyi's platform, and IQ stock.It's also a damn good argument. Unique Chinese Consumerism Also Hurts IQ StockWorking in the financial media space, I more or less have seen it all. Again, I'm not trying to toot my own horn, but I'm rarely intellectually stimulated with investment-related editorials.Blankenhorn's point, though, hit me right in the solar plexus. It made me rethink my own thoughts about iQiyi stock. I also looked at the charts again. While I was right to be bearish on shares, right now, the discount is mighty attractive.So, have I changed my mind? I'm sorry to disappoint any ardent bulls of IQ stock, but I'm still cautious on the company longer-term.Fundamental to Blankenhorn's thesis is that iQiyi is uniquely positioned to serve the unique needs of Chinese consumers. The company's target demographic is the young, upwardly mobile Chinese professional who grew up in an era of unprecedented prosperity. To quote Blankenhorn, they're "working hard and must play hard as well."But this unique Chinese consumerism is a double-edged sword. China's consumers have expectations to stream high-quality content. That arguably benefits IQ stock. But they also expect to do so for free. Obviously, that doesn't help matters.You know what? I'm not surprised one bit. Why should anyone be? For decades, China represented ground zero for content piracy. The number of copyright violations that have occurred is simply staggering.In recent times, the Chinese government has cracked down on these content pirates and they've done a great job. However, because they did a great job, it patently shows you how deeply entrenched piracy is in China. This is a consumer culture that now expects certain things like media entertainment to be free of charge. * 7 Dark Horse Stocks Winning the Race in 2019 It's going to take a while to overturn this mindset, which is why I'm still avoiding iQiyi stock. Short-term Swing for iQiyi Stock PossibleNow, it's not all bad news for IQ stock. What I'm proposing is a longer-term narrative. In the interim, it's very possible that shares at least get a dead-cat bounce.Clearly, the magnitude of volatility has subsided. The risk is currently more to those gambling that shares decline even further. It appears that strong support exists at the $18 level, where shares are roughly trading today.If you have a short-term timeframe and don't mind the choppiness, go for it. The front-face narrative for iQiyi stock that everyone focuses on -- the Chinese Netflix -- remains popular, albeit inaccurate to Blankenhorn's point.But if you're thinking about holding this for the long-term, I'd back off and take a breather. There's a reason why the streaming units of Alibaba (NYSE:BABA), Tencent (OTCMKTS:TCEHY), and Baidu (NASDAQ:BIDU) haven't justified the hype. China has the numbers, but the numbers don't want to pay.As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 High-Quality Cheap Stocks to Buy With $10 * 7 U.S. Stocks to Buy With Limited Trade War Exposure * 6 Growth Stocks That Could Be the Next Big Thing Compare Brokers The post China's Mass of Mobile-Centric Consumers Both Help and Hurt IQ Stock appeared first on InvestorPlace.
Admittedly, Wall Street analysts aren't perfect, or even close. They can be too optimistic, as witnessed by just how rare it is that an analyst will assign a sell rating to a stock. Like the rest of us, they can succumb to a herd mentality. Stepping out of line is discouraged (and offers little incentive). As a result, the Street sometimes seems to move its targets as much due to price action as due to fundamental changes.But although Wall Street sentiment isn't gospel, it still has value. Analysts can still move stocks with an upgrade … or a downgrade. Few market participants understand the stocks better, and the industries, they cover. And in extreme cases, analyst expectations can signal value the rest of the market might be missing.For these 10 stocks, the divergence between the market price and the trading price is extreme: at least 25%. And for all 10 stocks, there's some logic behind the analyst arguments. These aren't the 10 stocks with the biggest divergences (many small-cap stocks have average target prices that suggest a double, albeit with limited coverage) and they're not guaranteed to rise. But, in all ten cases, there's at least good reason to think that Wall Street might be right.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 10 Stocks That Every 30-Year-Old Should Buy and Hold Forever (Author's note: average target price data comes from finviz.com. Upside based on closing prices on Monday, June 10, 2019.) Facebook (FB)Source: Shutterstock Average Target Price: +27%Wall Street still likes Facebook (NASDAQ:FB). Among the 35 largest stocks by market capitalization, only Alibaba (NYSE:BABA) has larger upside based on the average Wall Street target price.That said, analysts generally like the so-called FAANG stocks as a group. The Street sees 26% gains ahead for Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), and 20% upside for Amazon (NASDAQ:AMZN). Average target prices imply that Apple (NASDAQ:AAPL) will rise 14%, and Netflix (NASDAQ:NFLX) 7%.Still, Facebook is the Street's best pick in the group, at least at the moment -- and that makes sense. For all the noise about the company's myriad scandals, its users haven't gone anywhere. Larry Ramer raised caution about the pending Federal Trade Commission investigation, but I respectfully disagree, given Facebook has zero liability under existing antitrust laws. As I wrote last month, there's still a case for Facebook to reclaim all-time highs, and the average analyst agrees. The target price of $221 is just above July 2018 highs near $219.To be sure, FB stock likely needs some help from the broader market and the economy to keep driving ad sales. But there is plenty of room from a valuation standpoint for FB to rally, and it likely wouldn't take much of a catalyst for Wall Street to start pounding the table for the stock again. Baidu (BIDU)Source: Shutterstock Average Target Price: +87%At the moment, the Street sees Baidu (NASDAQ:BIDU) nearly doubling, but that may not be the case for long. BIDU shares tumbled after a disappointing Q1 earnings report last month, dropping over 25% before a recent, modest, rally. It's likely that some analysts haven't yet updated their price targets, and that some of those targets may come down with BIDU closer to $100 than the current $209 average target price.It's also worth noting that analysts are generally much more bullish on Chinese stocks than the market. As noted, analysts see 28% upside in Alibaba stock, over 50% in oil plays PetroChina (NYSE:PTR) and China Petroleum & Chemical (NYSE:SNP), and 60%+ gains for Weibo (NASDAQ:WB). China-focused analysts might be less connected to U.S. investor sentiment and maybe more likely to keep targets elevated to curry favor with company executives less open to dissent than their American counterparts. * 7 U.S. Stocks to Buy With Limited Trade War Exposure Still, even with those caveats, Wall Street clearly sees the fall in BIDU shares as overdone. There are risks here, as I wrote after the Q1 report. But as Barron's reported, analysts see better days coming in the second half of this year. At less than 15x earnings, BIDU looks cheap, meaning few improvements are actually priced in. If Wall Street is right about performance, Baidu stock has a big move ahead, even if it falls short of current price targets. Bausch Health (BHC)Source: Wikimedia (Modified)Average Target Price: +44%Investors would be forgiven for having some skepticism toward analyst opinions on Bausch Health (NYSE:BHC). Wall Street was caught notably flat-footed when Bausch, then known as Valeant Pharmaceuticals, saw its share price collapse back in 2015. And it's worth remembering that Bausch still has nearly $25 billion in debt and a market cap under $8 billion. It doesn't take much of a tweak to models to notably change the value of BHC stock.That said, Wall Street no doubt is a bit chastened by its prior analyses of BHC. ("Fool me once, shame on you; fool me twice, shame on me.") Meanwhile, Bausch posted its best organic growth in three years in the first quarter, and raised full-year guidance in the process.There are still risks here, and I've been cautious toward BHC since the Valeant days. But Bausch has made significant improvement in recent years … yet BHC stock has traded sideways for a good eighteen months. If Wall Street is right this time, the stock should be due for a rally. Qualcomm (QCOM)Source: Shutterstock Average Target Price: +37%Shares of Qualcomm (NASDAQ:QCOM) soared after its April settlement with Apple, and analysts jumped on board quickly as well. Morgan Stanley (NYSE:MS), for instance, raised QCOM stock to a Buy rating and hiked its target all the way from $55 to $95. Three other analysts immediately upgraded the stock.Morgan Stanley, in fact, very nearly got it exactly right. QCOM went from $57 before the announcement to $90 by early May. Since then, however, the stock has come in. As Dana Blankenhorn noted, fiscal Q2 results in early May seemed underwhelming given the optimism toward the stock. Generally negative sentiment toward chip stocks hasn't helped, either. QCOM went back to $65 before climbing in recent sessions to $70.But so far at least, analysts haven't budged off their optimism. They still see QCOM rising to $96. As James Brumley detailed recently, there's a strong case that Qualcomm stock can get there. 5G optimism (and potentially U.S. government support) and the company's significant intellectual property holdings underpin that bull case. * 7 High-Quality Cheap Stocks to Buy With $10 Of late, it looks like investors see the sell-off as overdone, but that won't be enough. The market will need to agree with analysts that the Apple deal was as transformative long-term as Wall Street seemed, and still seems, to believe. If that comes to pass, QCOM should return to those April highs. International Game Technology (IGT)Source: Charrua NYC via YouTube (Modified)Average Target Price: +64%I've long thought gaming analysts were one of the better groups on the Street, and one of their top picks is integrated gaming supplier International Game Technology (NYSE:IGT). Given that I personally own IGT shares, I'm inclined to agree.There are some risks here that have hit IGT shares lately. Notably, the company still has extensive exposure to Italy, where it runs both lottery and gaming options, and there are increasing fears that country could leave the E.U. or find further ways to squeeze out more money to fund its ongoing deficits. Debt is still significant. Q1 results were somewhat mixed, keeping intact IGT's reputation for inconsistent performance. And outside of Italy, IGT still is dependent on economically sensitive casinos at a time when global macro worries clearly are mounting.Meanwhile, sector analysts look relatively optimistic across the board. Fellow integrated supplier Scientific Games (NASDAQ:SGMS) would need to rise roughly 50% to hit Wall Street's average target. Analysts see big upside in U.S. names like Boyd Gaming (NYSE:BYD) and Penn National Gaming (NASDAQ:PENN). Even Macau-focused names like Wynn Resorts (NASDAQ:WYNN) and Las Vegas Sands (NYSE:LVS), whose bulls have sometimes criticized the Street for being overly cautious toward that volatile market, generally see outperform and buy ratings.All that said, IGT still looks intriguing here. It's cheaper than other suppliers. Its long-struggling slot business in the U.S. is showing signs of life. The Italian business is locked in through the middle of the next decade. Upfront payments required to secure the contract are done, meaning the company should drive impressive free cash flow in the coming years. A 6%+ dividend yield helps the case as well.Given the amount of debt used in the industry, and just how quickly fortunes can turn in a recession, gaming analysts usually are well aware of risk. In the case of IGT, they know the risks but still see upside, something investors should keep in mind. Splunk (SPLK)Source: Web Summit Via FlickrAverage Target Price: +28%The upside that Wall Street sees in software data play Splunk (NASDAQ:SPLK) isn't that impressive on its face; 28% returns are nothing to sneeze at, of course. But many SaaS (software-as-a-service) stocks have done better in recent years, and there is no shortage of stocks that analysts seem to like better than SPLK.But what's interesting about SPLK is that its trading relative to the Street has been much different than that of many other dearly valued, high-growth software plays. Workday (NYSE:WDAY), Shopify (NYSE:SHOP), Zoom Video Communications (NASDAQ:ZM) and Paycom Software (NYSE:PAYC) all trade above Wall Street targets. This has been a category where analysts usually have been playing catch-up, trying to match targets to steadily increasing valuations.Yet SPLK largely has been left out of late: the stock is up just 3.4% over the past year. And that might set up an interesting opportunity, either as a trade or an investment. Splunk stock isn't cheap, but its growth remains impressive. It's coming off a nice first-quarter beat that still wasn't quite enough to impress investors. * 7 A-Rated Stocks to Buy Under $10 Investors have looked to SaaS stocks as a way to buy growth at almost any price. But with valuation concerns now rising for stocks like SHOP and ZM, SPLK may be seen as a way to get exposure to big growth at a relative discount. Certainly, more than a few analysts see it that way. If other plays in the sector keep rising, and that sentiment finds its way back to Splunk stock, analysts might again have to play catch-up with SPLK. Diamondback Energy (FANG)Source: Shutterstock Average Target Price: +58%To be sure, investors in oil and gas stocks like Diamondback Energy (NASDAQ:FANG) need to take analyst targets with a grain of salt. There are literally dozens of O&G plays where analysts see huge upside.Here, too, analysts may be a bit late in updating models, particularly after the recent pullback in crude oil prices. But this is a space where, for small- and mid-cap stocks in particular, analyst targets can suggest 100%+ upside. (At the moment, that's true for Encana (NYSE:ECA), Bonanza Creek (NYSE:BCEI), and Callon Petroleum (NYSE:CPE), to name just three.)Still, as far as larger producers go, Diamondback and Concho Resources (NYSE:CXO) look to be the top picks. And that sentiment improved just a few weeks ago amid the bidding war for Anadarko Petroleum (NYSE:APC) between Chevron (NYSE:CVX) and Occidental Petroleum (NYSE:OXY).Falling crude prices have dimmed enthusiasm somewhat, but as I wrote last week, there's still a strong case that Diamondback could be a takeover target for one of the major oil players. Results have been strong lately, with a cheap valuation (8x forward earnings) supporting the case for FANG on its own. Oil analysts might look a little too optimistic toward the industry as a whole, but I think they've got it right when it comes to FANG. Tesla (TSLA)Source: Tesla Average Target Price: +33%More than a few analysts have turned bearish on Tesla (NASDAQ:TSLA) of late. Most notably, in May, two different firms released bear-case fair value estimates of $10 and $36, respectively.While I'm not quite that pessimistic toward Tesla, I continue to agree more broadly with those analysts. I still think, as I wrote last week, that Tesla stock is sharply overvalued. Execution and strategy have been subpar under CEO Elon Musk, who clearly has lost the trust of more than a few investors.But for both bulls and bears, it's important to remember that Wall Street on the whole still has a bullish take on TSLA stock. The average target price sits at $283, even with a few headline-grabbing reductions in recent weeks. Only seven of 23 analysts rate TSLA a sell or an underperform.Whether Street support is good news for TSLA stock is up for debate. The fact that many analysts see upside in the stock raises the risk of another earnings miss with the second-quarter report, likely coming in late July. More downgrades and target price cuts could restart the pressure on the TSLA stock price. * 7 U.S. Stocks to Buy With Limited Trade War Exposure But the fact that analysts -- nearly all of whom have extensive experience in the auto industry -- still back the stock might be proof that the story isn't as simple as bears make it out to be. There's still a bull case for Tesla stock, which means, as we've seen in recent sessions, that there are still potential buyers out there. Palo Alto Networks (PANW)Source: Shutterstock Average Target Price: +41%Cybersecurity leader Palo Alto Networks (NYSE:PANW) reported second-quarter earnings in late February, and handily beat analyst estimates. PANW stock climbed to an all-time high the next day.But I wrote at the time that the headline numbers hid potential risks and those risks have come to pass. Q4 guidance along with earnings at the end of last month disappointed. Valuation had become stretched, and has come in. PANW stock has dropped some 24% from those highs.And with the pullback, PANW does look more intriguing. It's still one of the more attractive plays on what should be a growing cybersecurity space. It trades below 30x FY20 earnings-per-share consensus backing out its net cash. Luke Lango called PANW a "steal" below $200, and analysts appear to agree. The average price target suggests strong upside, even if some analysts may be looking to update their models following third-quarter numbers.To be sure, there are still some modest concerns about the space on the whole. But PANW looks like it's putting in a bottom, and a modest change in sentiment could lead to a nice rebound from current levels. Allergan (AGN)Source: Everjean via FlickrAverage Target Price: +41%At the end of May, shares of Allergan (NYSE:AGN) touched their lowest levels in almost six years. And there are worries here, and risks of further decline. Cash cow Botox faces potential competition from Revance Therapeutics (NASDAQ:RVNC). The 2017 acquisition of Zeltiq Aesthetics has turned out to be a significant miss, as revenue from that company's CoolSculpting has stalled out. Meanwhile, broader questions about the company's pipeline persist.But Wall Street, at least, sees the selloff as overdone. The lowest of 19 price targets for AGN still suggest double-digit total returns, including the company's 2.3% dividend yield. And analysts might be right here. AGN stock is awfully cheap, at less than 8x 2019 EPS estimates. Debt is worth noting, but still manageable. The company's Vraylar just won Food and Drug Administration approval to treat bipolar depression. * 7 High-Quality Cheap Stocks to Buy With $10 The concerns here are real, to be sure. But AGN still has a diversified portfolio, it still has potential in aesthetics and now it looks awfully cheap. Wall Street knows the problems facing the company as well as anyone, yet they're still on Allergan's side. Perhaps investors should be as well, particularly near the lows.As of this writing, Vince Martin is long shares of International Game Technology, and has a bearish hedged options position in Tesla. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 High-Quality Cheap Stocks to Buy With $10 * 7 U.S. Stocks to Buy With Limited Trade War Exposure * 6 Growth Stocks That Could Be the Next Big Thing Compare Brokers The post 10 Stocks to Buy That Wall Street Expects to Soar for the Rest of 2019 appeared first on InvestorPlace.
Despite the ongoing trade war with the U.S., investors shouldn't be ignoring companies in China. To the contrary, here are three that could be worth buying.
IQiyi (NASDAQ:IQ) is not "the Chinese Netflix (NASDAQ:NFLX)." IQ stock is not Netflix at all. But that's not necessarily a bad thing. Netflix, as presently constituted, might not be a good fit for China.Source: Shutterstock That's because Chinese people are highly mobile when it comes to the internet. Their screen of choice is a phone. Not a tablet, not a PC, and certainly not a TV, a phone. With a tiny screen, and wireless connections.IQ is premised on serving that market. IQiyi's service is ad supported. It's an impatient market so IQiyi content is short, punchy, more like YouTube. It's also highly interactive.InvestorPlace - Stock Market News, Stock Advice & Trading TipsIt's just not Netflix. What IQiyi IsIQiyi delivered its latest quarterly report May 16, a net loss of $270 million, 35 cents per share, on revenue of $1 billion. * 7 Dark Horse Stocks Winning the Race in 2019 That's not terrible because growth was 45% from a year earlier, and subscription revenue (which it calls membership fees) was up about 65%, and now represents half the total. Revenue from advertising was basically flat.The market's reaction was to sell IQ stock, and it's now down 9% from where it was when the earnings came out. Speculators mistook the company's moves toward interactivity, games and original content for confusion.But IQiyi management is not confused. During the quarter they overtook Tencent Holdings (OTCMKTS:TCEHY) for the lead in the Chinese streaming market, pushing a unit of Alibaba Group Holding (NASDAQ:BABA) to third. It's a very tight race, and the fact that a $13 billion company is beating two giants worth over $400 billion each shows they know what they're doing.Put most simply, IQiyi is an entertainment company catering to young Chinese who grew up in a time of rising prosperity but are working hard and must play hard as well. Nearly every Chinese city has the rush of Manhattan Island. People are in a hurry. They're in a state of constant interruption and stimulation. This is not "Netflix and chill." What IQiyi DoesChief content officer Wang Xiaohui describes IQiyi as a "one stop entertainment platform," and entertainment can mean long-form movies that are relevant to the Chinese experience, immersive video games, even e-books like those found on the Amazon's (NASDAQ:AMZN) Kindle. The idea is that a book or game with traction can become a video, and vice versa, with IQiyi squeezing every ad dollar and view it can get out of this original content.IQiyi had 98 million subscribers at the end of the last quarter. Compare that to Netflix' 150 million, then note we're talking about a single market. IQiyi memberships don't cost much, the 98 million bringing in about $500 million, but the idea is to build a host of other online subscription revenue, advertising revenue, and licensing opportunities as well. (Netflix relies entirely on subscription revenue.) The Bottom Line for IQ stockIf you're buying IQ stock today you're betting that its managers know that their big new "original content" budget can create not just shows for tiny screens, but enduring franchises that can be monetized in several ways.IQiyi wants to break out its best content into movies for a market worth $9 billion, into streaming subscriptions for a Chinese market as big as its pay TV market, into games and even virtual reality experiences. Titles like Beijing Love Story, Wolf Warrior and Detective Chinatown don't have to travel to be profitable. They just need to be constantly renewed, like the Star Wars franchise. * 7 Stocks to Buy for the Coming Recession That's the strategy, anyway. If you like it, buy IQ stock. Just don't call it Netflix.Dana Blankenhorn is a financial and technology journalist. He is the author of a new environmental story, Bridget O'Flynn and the Bear, available now at the Amazon Kindle store. Write him at firstname.lastname@example.org or follow him on Twitter at @danablankenhorn. As of this writing he owned shares in AMZN. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Stocks to Buy for the Coming Recession * 10 Smart Dividend Stocks for the Rest of the Year * 5 Tech Stocks That Are Far Too Risky Right Now Compare Brokers The post IQiyi Stock is the Not Netflix of China -- And That's Okay appeared first on InvestorPlace.
Chinese stocks are showing signs of recovery after additional economic stimulus. Position for further gains using these trading tactics.
Another roller coaster week is upon us, as many analysts highlight that the U.S.-China trade war has caused the global economy to become unstable and has had a negative impact on investor sentiment. Wall Street is now discussing whether the trade wars may end up becoming tech wars. Recent worries about tariffs on Mexican goods have also added to the increased volatility in the markets. Finally, the month of June has witnessed various headlines that the U.S. Justice Department may be going after several big tech names for antitrust issues.Markets suffer during times of uncertainty and in the coming months, I expect the price of many tech stocks to be a battleground between investors and traders. Stocks tend to behave differently in a falling market than they do in a rising one. The down moves can be rather fast in a declining market, and a momentum stock may become a falling knife. I personally do not like catching falling knives.Therefore, today, I'd like to discuss five tech stocks to avoid in the second half of June and possibly until they report earnings later in the summer. These stocks are Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), Apple (NASDAQ:AAPL), Baidu (NASDAQ:BIDU), Nvidia (NASDAQ:NVDA) and Tesla (NASDAQ:TSLA).InvestorPlace - Stock Market News, Stock Advice & Trading TipsAlthough the broader markets and tech stocks have gone up in the past few trading sessions, I'd urge investors to not get too optimistic with these tech names just yet. In other words, most tech stocks had been way oversold, so a relief rally was inevitable. For retail investors, discipline would be rather crucial at this point.Investors may consider waiting on the sidelines if they do not currently have any positions open in these tech stocks. If they already own shares, they may either consider taking some money off the table during this market bounce or hedging their positions. As for hedging strategies, covered calls or put spreads with July 19 expiry could be appropriate as straight put purchases are likely to be expensive due to heightened volatility. * 7 Stocks to Buy for the Coming Recession With all of that in mind, let's dive a little deeper into each of these stocks. Alphabet (GOOG, GOOGL)Source: Shutterstock Notable Risks: Potential decline in ad revenues, antitrust issues, government regulation and broader tech market weaknessExpected Price Range: $940-$1,090Google parent Alphabet is one of the largest and most widely followed companies in the market. Many investors are wondering whether the recent decline of Alphabet stock has now created a good entry point.Google's dominant core business is "search," where it has 90% market share globally. In recent years, it has also been incubating other "moonshot" ventures, such as Weymo, the self-driving car business or CapitalG, the late-stage venture capital arm, that could eventually become the next Google.Income from digital advertising, which mostly consists of its search and YouTube ecosystem, contributes to over 80% of revenues. Investors are especially concerned that the group's core advertising business is likely to be at a plateau. They are now watching Amazon's (NASDAQ:AMZN) increased presence in the market closely.In 2018, Google's ad business grew 20% and was outpaced by both Facebook (NASDAQ:FB) at 30% and Amazon at 95%. In other words, GOOGL is likely to face more competition in the future from them. Therefore Google's advertising revenue may take a hit, especially if the U.S. economy cools down in the months ahead.Many analysts are also concerned about YouTube, once a crown jewel and currently a big headache. During the earnings call of April 29, Alphabet CFO Ruth Porat announced various changes to YouTube so that the company could better curb the spread of toxic content, such as fake news and conspiracy theories. The result of the problems and the efforts to tame the issues has been loss of advertising revenue on YouTube.Therefore, long-term investors are likely to wait for the next earnings report in late July to see how revenue has fared amid the competition from Facebook and Amazon. In other words, if Google investors do not like the earnings results then, there might be further price pressure and reaction to the downside.Especially, over the past two years, like several other big tech names in the social media space, Google stock has been trying to address conflicting demands for privacy and security as it faces calls by global governments to regulate its services. There seems to be bipartisan support for cracking down on big tech and many in the U.S. would like to see it it broken up.Then the month of June started with the headlines that the Justice Department is preparing an antitrust investigation of Google. Scholars and analysts have long debated the potential effects of antitrust policy on consumer welfare. Yet, for shareholders in a company, it simply means uncertainty.At this point, it is hard to know what the outcome of this investigation would be on the GOOGL stock price. However, when a company like Alphabet faces a probe by the U.S. government, it is fair to say that investors would sell the stock first and ask questions later.Today, I'm not entirely convinced that GOOGL shares have found a bottom yet. They will continue to be volatile on a daily and weekly basis. In the coming weeks, if we have more headlines that suggest a long governmental probe into anti-competitive practices by the company, Alphabet stock is likely to decline to the triple digits, possibly towards the low-$900 level. Apple (AAPL)Source: Shutterstock Notable Risks: Trade wars, currency fluctuations and broader tech market weaknessPossible Price Range: $165-$195With a market cap of $874 billion, AAPL stock has the second-highest weighting in the S&P 500, after Microsoft (NASDAQ:MSFT). And China is Apple's second-most important market.Apple stock initially went up at the start of May following a positive Q2 earnings report released on April 30. However, news about the trade war with China followed by complaints about Apple's App Store pricing pressured the AAPL stock price down.Then last week, the stock staged back an impressive rally along with the rest of the market. So is the worst for Apple behind it?It'd be fair to say that Apple stock has now become a proxy for the trade wars between the U.S. and China. Almost 20% of Apple's revenues come from China. In 2018 and the first quarter of 2019, sales of iPhones in China have declined. And there's a good possibility that China's economy will slow some more.Furthermore, AAPL relies on Chinese suppliers and its mobile devices are assembled in China. Thus, Apple would have to react to tariffs either by increasing prices in the U.S. or absorbing the cost of the tariffs. The latter action would definitely have a major negative impact on the price of Apple stock.It is no wonder that, since early 2018, but especially over the past few weeks, the trade dispute has negatively affected the price of Apple stock. The further the signing of the trade deal gets pushed out, the greater the adverse effect on Apple's future earnings and AAPL stock could be.If AAPL's sales, margins, and revenue all decline in China amid increased competition from local companies, including Huawei, and currency headwinds, then the multiple of Apple stock will drop. * 7 Top-Rated Vanguard ETFs to Buy in 2019 Year-to-date, AAPL shares are up 20%. Not all investors are comfortable with the increased volatility levels in the stock. If you are a shareholder who has been able to ride the impressive rally since early January, then you may want to take some of your profits in Apple stock. Baidu (BIDU)Source: Shutterstock Notable Risks: Valuation, questions about growth, trade wars and broader tech market weaknessPossible Price Range: $85-$125Could this be the month to become a contrarian investor and establish or build on existing positions in China's leading companies? Many investors would specifically be asking about the stock price of Baidu, the Chinese-based search engine. I'd say, no, it is not an opportunistic time to buy into BIDU shares … yet.During the past year, the BIDU stock price is down 58%. On July 13, 2018, the shares saw a high of $274. Now, Baidu stock is hovering around $110. Clearly, the bears have taken control of the tape.What is the main reason for the deterioration of Baidu's market cap? Investors fear that the group's growth narrative does not hold any more.BIDU has two sources of revenue: * Internet advertising business (which is at the core); and * Income from majority ownership in iQiyi (NASDAQ:IQ)The tech market in China has grown exponentially in the last decade. And Baidu stock has been able to ride that wave. Baidu has over 70% of the Chinese online search marketshare. Until about a year ago, this leadership has meant growing advertising revenues and solid margins.However, that is not the case anymore. Competitors like Alibaba (NYSE:BABA) and Tencent (OTCMKTS:TCEHY) have been pressuring its business model and ad revenues. Many Chinese consumers are using apps that bypass browsers and thus Baidu's search engine. In other words, BIDU stock's desktop search business is being disrupted or even displaced.Wall Street is not sure if management knows how to go after the challenge to Baidu's core business. The company has increased spending to attract more advertisers, which in turn has affected margins. In other words, the company spends a lot of cash to make some money.Furthermore, as the Chinese economy slows down, all these companies chase the same advertisers, who have been scaling down ad budgets.The second factor adversely affecting Baidu's top-line growth comes from its ownership of iQiyi, the so-called Netflix (NASDAQ:NFLX) of China. Baidu still owns roughly two-thirds of iQiyi, so IQ's results and its growth are reflected in Baidu's consolidated numbers. And iQiyi stock is not making any money at this point, either.Management at iQiyi has underlined that as the company further invests in technology and builds content, the cost of revenue would be high, i.e., the company will not be profitable any time soon.And when you add the uncertainty around trade wars, it may just not be fashionable to buy BIDU shares in 2019. Overall, the bull thesis supporting BIDU stock is falling apart. It would be important to analyze the next earnings report expected in August to see if Baidu stock has a better investment proposition for long-term investors. Nvidia (NVDA)Source: Shutterstock Notable Risks: Fundamentals, semiconductor weakness, trade wars and broader tech market weaknessPossible Price Range: $100-$160On May 16, Nvidia reported that its net income had fallen to $394 million in its fiscal first quarter from $1.24 billion during the same period a year earlier. Overall, NVDA stock did not perform well in the wake of the result, which also included mostly in-line guidance.The Nvidia stock price has decreased from the mid-$160s to the mid-$130s. It is currently hovering around the $145 level.Previously a darling among investors, especially in 2017 and most of 2018, it has recently fallen out of grace. Nvidia stock gets a lot of attention, compared with other chip stocks. Many investors regard Nvidia as the premiere graphics-chip stock.Nvidia sells two main products: graphics processing units (GPU) and Tegra processors. Nvidia's graphic processing units are used in PCs and data centers. Tegra is a system-on-a-chip (SoC) suite developed by Nvidia for mobile devices. But its Tegra Processors segment only accounts for about 10% of its total revenues.Over the past year, the price of Nvidia stock is down 45%. Clearly, investors are taking another look at the company's fundamental growth outlook, which is mostly based on its GPUs for gaming and artificial-intelligence servers.Wall Street is also debating whether the semiconductor industry, which is highly competitive and cyclical, has entered a prolonged downturn.The chip sector is being hurt by rising inventories and trade-war concerns. In its quarterly report, Nvidia said that the sector's inventory levels stood at $1.43 billion, up from $797 million a year earlier. * 10 Smart Dividend Stocks for the Rest of the Year Despite the recent slide of NVDA stock, it might still be too early to get back into it, given its short-term risks, which make it a highly volatile investment. In other words, I recommend that investors wait for several weeks before buying NVDA stock. Tesla (TSLA)Source: Shutterstock Notable Risks: Fundamentals, profit-taking, trade wars and broader tech market weaknessPossible Price Range: $175-$225Tesla stock went up over 10% on May 2 and 3 as new regulatory filings showed that the company would be raising extra cash in U.S. markets through a combination of new shares and convertible debt.But since then, TSLA shares have been in a free fall. During May, many analysts have issued research notes and price target updates on Tesla stock. On June 3, the share price hit a 52-week low of $176.99.Last week, following the broad market rally, Tesla shares went back over $200. Now investors are wondering whether TSLA stock can stay above this psychologically important level. I am of the camp that the price is likely to go below $200 again in the near future.My basic fundamental view is that we do not know what exactly is going on at Tesla and that the company is facing a crisis. In general, a company's problems may come from different angles, such as: * Working capital/liquidity * Financial * Profitability * Operational * Industry Outlook * Corporate Governance * EmployeesInvestors usually can get a sense of any current and future problems by looking at operational and market performance as well as at basic financial metrics and cash flow.In Tesla's case, we may have a combination of signs of difficulty.The past year has seen the demand for electric-vehicles (EV) decline in the U.S. And Tesla's Model 3 sales have not been at the levels expected.As we discuss Tesla's problems, we have to mention that the auto sector is susceptible to the trade-war risk. As the demand in the U.S. declines, Tesla needs to achieve increased sales numbers from overseas, namely China, the largest electric-vehicle market in the world.All these problems are now contributing to the constant talks of liquidity issues at Tesla. Could this be the beginning of the end for TSLA stock?If the group is indeed in trouble, a successful turnaround would possibly require a focus on cash and cash returns. Not focusing clearly on cash may send a company into a spiral that may become rather difficult to recover from.Although many companies experience some financial difficulty at some point in their history, the first potential step to lead a company out of a crisis would be to acknowledge that there is a severe problem.There might be a plethora of reasons why management does not realize the situation may be worsening. They may be underestimating the severity of the problem, or they may be looking at poor data. Or the focus may be so short-term that they neglect the long-term health of the company.At this point, TSLA stock has had several months of poor performance, both in terms of metrics and the stock price. Stakeholders are hoping that the senior team at Tesla is currently asking the right questions and having honest discussions about the potential severity of issues.Investors would like Tesla management to offer their employees, shareholders and Wall Street a concise and compelling change story, without too many fancy metrics and big words. When TSLA clarifies the reasons to be positive about the company again, the decline in the stock price will likely come to a halt.Therefore, before committing any capital into the shares, I'd like to see the next earnings statement, expected in late July. By then, we might even have an earnings warning statement, which would send the stock even further south.At this point, Tesla bears have the upper hand and I'd consider investing in TSLA stock as a speculative bet.As of this writing, Tezcan Gecgil did not hold a position in any of the aforementioned securities. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Dark Horse Stocks Winning the Race in 2019 * 6 Chinese Stocks to Sell That Are Suffering From a Digital Ad Slowdown * 4 Technology Stocks Blasting Higher Compare Brokers The post 5 Tech Stocks That Are Far Too Risky Right Now appeared first on InvestorPlace.