111.82 -0.12 (-0.11%)
Pre-Market: 9:12AM EDT
|Bid||112.50 x 2200|
|Ask||112.65 x 3000|
|Day's Range||104.00 - 113.44|
|52 Week Range||26.30 - 113.44|
|Beta (3Y Monthly)||N/A|
|PE Ratio (TTM)||N/A|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||N/A|
You don't have to look just at the technical charts to understand the appeal of Roku (NASDAQ:ROKU). Thanks to the momentum of rapidly increasing digitalization, smaller companies are able to disrupt much larger establishments. With ROKU, the company specializes in over-the-top streaming devices that essentially bypass broadcast-television platforms (and their associated restrictions); hence, the dramatic rise in the Roku stock price.Source: Shutterstock And it's not just the disruption that has many investors eyeballing this upstart firm. Instead, ROKU has already levered an outsized impact on the broader media landscape. Shortly after its introduction, the company's streaming-TV equipment dominated market share, beating out behemoths like Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), and Apple (NASDAQ:AAPL).Even more impressive, ROKU has held onto its overwhelming superiority. For instance, the company leads the connected-TV devices market, accounting for 30% of U.S. sales in the first quarter. Notably, the number-two provider is Sony's (NYSE:SNE) ultra-popular PlayStation network. Obviously, this provides an even greater impetus to buy up Roku stock.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 10 Best Dividend Stocks to Buy for the Rest of 2019 and Beyond And if that wasn't enough, research firm Strategy Analytics forecasts that Roku's connected-TV devices market share could hit 70%. From that perspective, investors can justify the astounding leap in the Roku stock price.From everything that we see, as well as the company's track record, very few analysts will contest the point that ROKU is a worthy tech name. But the question now isn't whether the streaming-equipment provider has a viable business. Rather, it's whether prospective buyers should consider taking a stab at Roku stock.Although I respect the disruption, I can't recommend going all-in here. Let me explain why: Roku Stock Trading Well Above Its FundamentalsAmong the many bullish factors driving the Roku stock price is the underlying company's monthly active user (MAU) base. In the most recent Q1 earnings report, ROKU registered 29.1 million MAUs on $206.7 million in revenue. Thus, the company generates $7.10 of sales per user.It's an impressive feat because between Q3 2016 and Q3 2018, the revenue generated per MAU appeared to be declining. But come Q4 2018 with its record-busting sales haul of nearly $276 million on 27 million MAUs, the narrative quickly turned incredibly bullish. Click to EnlargeMoreover, Q1 2019's sales-per-user metric of $7.10 exceeded the year-ago quarter's tally of $6.57. In Q1 2017, sales per user measured $7.05. Thus, we're seeing a noticeable shift in individual consumer demand.So why shouldn't investors consider piling into ROKU? Because at some point, the fundamentals matter. Yes, the company dominates the streaming-TV and equipment market ahead of established players. But the established players are all profitable. On the other hand, ROKU is not, which detracts from its overall argument.Let's give credit where it's due. Management has done an incredible job whittling down earnings losses last year. For example, back in 2017, net income measured a whopping loss of $63.5 million. Last year, losses were slightly less than $9 million.But in Q1 2019, the streaming-equipment provider recorded a loss of $9.7 million, noticeably more pronounced than the $6.6 million loss in Q1 2018. Stated differently, the company is in a race to have its revenue potential convert to real earnings.Working against management, though, is the fact that MAU year-over-year growth has steadily slipped from Q3 2017's 48% to Q1 2019's 40%. Plus, current per-user revenue is still down from Q4 2016's haul of $10.99. Just Look at the Charts…At the top, I commented that you don't need to look at the technical charts to gauge Roku's massive outperformance and popularity. But on the flip side, the technicals also provide ammunition for the bears. * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip Consider that on a YOY basis, shares have skyrocketed over 112%. But in terms of revenue, the company gained only 51%. Further, per-user revenue increased by only 8%. Don't get me wrong: these are strong numbers. But I don't they're strong enough to pile in at this price point.Also, please don't confuse this write-up as a perpetually bearish angle on Roku stock. As I mentioned, this company has a firm hold on the OTT market. Therefore, depending on the magnitude of a possible correction, I may be interested in picking some shares up myself.Invariably, though, you must stay agnostic with the markets. Right now, I'm afraid this consumer-tech firm has taken on an almost cult-like furor. Let it cool and at that point reconsider the narrative.As of this writing, Josh Enomoto is long SNE. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Buy for Less Than Book * 7 Marijuana Stocks With Critical Levels to Watch * The 10 Best Dividend Stocks to Buy for the Rest of 2019 and Beyond The post Here's Why Patience is the Best Call for Roku Stock appeared first on InvestorPlace.
The PowerShares QQQ ETF (NASDAQ:QQQ) came within a dime, but couldn't grind out new highs on Tuesday as we saw a decline in the Nasdaq today. However, that didn't stop everything from rallying, as Roku (NASDAQ:ROKU) stock burst as much as 8%, hitting new all-time highs in the process.Source: Shutterstock The stock clocked in over $113 at one point and it wouldn't be surprising to see the stock continue higher into earnings. After two huge post-earnings rallies, the stock is clearly on investors' radar. The stock was a clear leader on Tuesday and investors will look to see if they can keep squeezing shares higher amid this breakout.Not everyone was so lucky, though. Micron (NASDAQ:MU) continues to meet sellers, as it ran right into resistance. Shares fell about 3% on Tuesday, while Western Digital (NASDAQ:WDC) also dove on the day, down roughly 6%.InvestorPlace - Stock Market News, Stock Advice & Trading TipsBitcoin had a rough day too, plunging more than 11% to $9,600 at the time of this writing. Some New PartnershipsBlue Apron (NYSE:APRN) stock surge more than 60% at one point on Tuesday. The move came on news that it will partner with Beyond Meat (NASDAQ:BYND). The two are starting out with a pair of burger offerings and will look to add other options moving forward. Both should be available by Aug. 26. APRN has had a horrendous journey thus far as a public company and has already resorted to a 1-for-15 reverse stock split. But the partnership could be a win-win for both companies, and at least for one day, has given APRN stock a much-needed shot in the arm. * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip While we await the likely IPO of DoorDash this year, it was announced that McDonald's (NYSE:MCD) will partner with the delivery company. The plan is to start with 200 locations in Houston later this month. If successful, it will roll out nationwide.DoorDash reportedly has contract drivers within driving distance of 80% of U.S. households, prompting MCD to add it to Uber (NYSE:UBER) Eats and choose it over GrubHub (NYSE:GRUB) and Waitr (NASDAQ:WTRH). WTRH hit a new 52-week low in the session, by the way.It has been a busy month for Big Blue. International Business Machines (NYSE:IBM) will report earnings on Wednesday, and just recently closed on its acquisition of Red Hat. That's not all though. The tech giant reached a multi-year alliance with AT&T (NYSE:T), to "support each other in networking and the cloud." Part of that support will come from IBM's recently acquired Red Hat. Splits and Analyst TakesAlibaba (NYSE:BABA) announced plans for an 8-to-1 stock split earlier this year, pending shareholder approval. Well, the company received the green light and BABA stock will split sometime before July 15th, 2020.There weren't too many big analyst actions to take note of, but Slack (NYSE:WORK) did receive some initiations. Morgan Stanley analysts slapped an equal-weight rating on Slack, while Goldman Sachs went with a neutral rating an $34 price target, implying about 2% downside. Click to Enlarge Don't fret though, bulls. William Blair analysts initiated WORK at an outperform rating, while Canaccord Genuity analysts started it at a buying rating with a $40 price target. Barclays and Keybanc also gave an overweight rating, using price targets of $45 and $44, respectively. Heard on the Nasdaq TodayLike IBM, Netflix (NASDAQ:NFLX) will also report earnings on Wednesday. However, after tying HBO -- now an AT&T property -- in Emmy nominations last year, HBO topped NFLX this year 137 to 117. Obviously, Game of Thrones helped tip the scales, pulling in 32 nominations on its own.Netflix may face a dilemma losing its top two shows in 2020, Friends and The Office, as well as other top content later on. It's no wonder CEO Reed Hastings has been spending so much on content over the last few years.Tech companies testifying on Capitol Hill seems to be about one of the most pointless events. It's clear Congress can't keep up with technology and they can't keep up with these companies. Nothing ever seems to come of it -- other than headlines.On Tuesday, Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), Facebook (NASDAQ:FB) and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) were there, with hearings scheduled for tomorrow as well. It could be an important development though, as the government looks to build an antitrust case against several of these companies. Notice who's not there though? Microsoft (NASDAQ:MSFT).Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell was long ROKU, AAPL, AMZN and GOOGL. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip * 7 Services Stocks to Buy for the Rest of 2019 * 6 Stocks to Buy and 1 to Sell Based on Insider Trading The post Nasdaq Today: Rokuas New Highs; Beyond Meatas Partnership appeared first on InvestorPlace.
U.S. stocks were slightly lower Tuesday as investors begin to digest corporate earnings results. Over the coming weeks, we'll be hit with hundreds of reports, with banks mostly leading the charge on Tuesday. Let's get a look at a few top stock trades going into mid-week. Top Stock Trades for Tomorrow 1: J&J Click to EnlargeShares of Johnson & Johnson (NYSE:JNJ) are down just over 1% despite beating on earnings estimates. The price action over the last few days has been telling and leaves a roadmap for investors.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 8 Penny Stocks That Have Fallen From Grace On Friday, shares took a dive, falling below the 200-day moving average. On Monday, the stock tried to rally but was stymied by the 200-day moving average. On Tuesday, JNJ stock broke below Friday's lows, but reclaimed them later in the session.That's a perfect little map for short-term investors. Above Tuesday's high and we can get a retest of the 200-day. Over the 200-day and perhaps J&J can work its way up to the 50-day. On a drop below Tuesday's post-earnings low, we could see a decline down to the key support area between $129 and $130. Top Stock Trades for Tomorrow 2: Wells Fargo Click to EnlargeWe're seeing some decent reaction to bank earnings, with JPMorgan (NYSE:JPM) and Goldman Sachs (NYSE:GS) advancing on the day. However, Wells Fargo (NYSE:WFC) isn't one of them, falling more than 2.5%.The stock has been in a downtrend (blue line) for about a year now, while $48 is acting as resistance. $45 has buoyed the name over the last few months, but should it fail, the May/June lows at $44 are on deck. Below that and WFC is in trouble.North of $45.63 and perhaps WFC can gain some bullish momentum. Top Stock Trades for Tomorrow 3: Roku Click to EnlargeRoku (NASDAQ:ROKU) surged more than 8% at one point, as the stock went on to make new highs above $113.Earlier this month, we flagged this one for InvestorPlace readers and boy is it paying off. Shares bounced cleanly off the 50-day and quickly reclaimed the 20-day. As long as it holds $105 now, it looks good on the long side.It sounds crazy, but I wouldn't be surprised to see $120 to $125 on this one ahead of earnings -- assuming the market continues to trade well too. Top Stock Trades for Tomorrow 4: Uber Click to EnlargeUber (NYSE:UBER) looked like it was ready to go earlier today, rallying right up to $45 before falling back down.This stock continues to put in higher low after higher low and is maintaining above its 8-day and 21-day moving averages.It's either going to create an epic breakdown or breakout at this point. The key point to watch is the $45 IPO price. Either shares break over this point, running to $47 and potentially to $50+ if it can gain momentum, or it's going to stumble hard. Watch $45 like a hawk (but remember, everyone else is too). Top Stock Trades for Tomorrow 5: Blue Apron Click to EnlargeBlue Apron (NYSE:APRN) has had one of the worst post-IPO runs I've ever seen. Did you know, APRN hasn't ever closed above its IPO price?Ironically, Beyond Meat (NYSE:BYND) has had one of the best IPOs in recent memory, so it only makes sense that the two partner. The move is sending shares of APRN higher by more than 50% and shares eclipsed $13.50 at one point. It was a very strong move and it makes sense why.Blue Apron's IPO price was actually $10, but on the chart it will show up at $150 because the company already had to do a reverse stock split. In any regard, the stock's move above $10 is notable. In doing so, it reclaimed the 50-day moving average and, at least for now, is breaking out of its downtrend. * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip Bulls will now want to see $10 hold as support, while resistance may come into play near $14 to $15.60.Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell was long ROKU. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip * 7 Services Stocks to Buy for the Rest of 2019 * 6 Stocks to Buy and 1 to Sell Based on Insider Trading The post 5 Top Stock Trades for Wednesday: JNJ, WFC, UBER, APRN, ROKU appeared first on InvestorPlace.
What goes up must come down, or so we're told. But if that discussion is about pricey-looking Roku (NASDAQ:ROKU) stock, investors would be wise to tune into today's momentum opportunity and buy before shares grow even richer. Let me explain.Source: Shutterstock Its earnings season for many on Wall Street. And if you like watching paint dry, Citigroup (NYSE:C) which kicked off the festivities this week with its results, is just waiting for bulls to wake up to its better-than-forecast report.Then there's ROKU.InvestorPlace - Stock Market News, Stock Advice & Trading TipsWith earnings still a full month away Roku stock is breaking out with nary a peep from today's headlines. Unofficially, ROKU could be anticipating a stronger-than-forecast confessional from streaming video on demand or SVOD giant Netflix (NASDAQ:NFLX) which releases results Wednesday night.While Netflix may be the crown jewel, the SVOD market is a crowded field. There's Disney's (NYSE:DIS) Hulu, the forthcoming Disney+, Prime Video from Amazon (NASDAQ:AMZN), HBO Go, Alphabet's (NASDAQ:GOOG, NASDAQ:GOOGL) YouTube and the list goes on and on. But as the platform of choice for watching all that entertainment, Roku stands to benefit no matter who can outspend who on content to control our eyeballs. * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip So sure, you could maintain that Roku stock is expensive. It is and many of my colleagues at InvestorPlace have argued that point. But during growth phases of a secular trend like the one fueling ROKU, shares aren't going to offer traditional value investors many, if any, opportunities.The good news is ROKU stock is offering momentum traders a terrific chance to profit right here, right now. Roku Stock Weekly Chart Buying pullbacks and larger corrections are of course the most commonly accepted way to "find value" in a name such as Roku stock. And while those types of entries rightfully find favor among investors, they also have their limitations.The most obvious challenge is when that pullback entry in ROKU turns into a much-more-punishing spiral in the share price. Many investors will pull the plug on their prior optimism and dump shares at a loss in fear of even larger losses. And it's easy to second guess ourselves too.More often than we like to believe, those "value" opportunities don't look nearly as attractive when the punishing price action occurs. Remember 2018's market correction? And compared to the stodgy old Dow Jones Industrials or a mature tech company like Apple (NASDAQ:AAPL), those declines paled next to Roku stock's crash of 65%.Today's breakout entry doesn't have those potential shortfalls. With the market at its back and a breakout from a month-long base in hand, a momentum purchase in ROKU stock, plain and simple, makes sense. It has its own special kind of value in this type of environment which shouldn't be dismissed.My only recommendation in Roku is this -- remember to take profits when they're offered. And please don't make the mistake of allowing a breakout to become a pullback and, potentially, something much more sinister.Investment accounts under Christopher Tyler's management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler's observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional options-based strategies, related musings or to ask a question, you can find and follow Chris on Twitter @Options_CAT and StockTwits. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip * 7 Services Stocks to Buy for the Rest of 2019 * 6 Stocks to Buy and 1 to Sell Based on Insider Trading The post Value Is Here, Right Now in Roku Stock appeared first on InvestorPlace.
(Bloomberg) -- Roku Inc. shares rose to a record on Tuesday amid indications of strong sales of the company’s products during Amazon.com’s Prime Day.Televisions with Roku technology and Roku streaming devices were among best-selling electronics during the annual two-day sale, according to Amazon. The stock rose as much as 7.1%, pushing year-to-date gains above 260%.“The market thinks they’re a beneficiary of Prime Day,” said Wedbush Securities analyst Michael Pachter. The more televisions sold with Roku operating systems, the greater their opportunity to sell ads or subscriptions to content providers like Netflix, he said.The third best-selling TV during Prime Day was a 32-inch Roku-enabled TCL for $99, according to Amazon.To contact the reporter on this story: Jeran Wittenstein in San Francisco at email@example.comTo contact the editors responsible for this story: Catherine Larkin at firstname.lastname@example.org, Steven FrommFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Roku Inc. shares hit an new all-time high in intraday trading Tuesday, extending a massive year-to-date rally for the stock. Shares climbed as much as 5.9% in the session, reaching a price of $110.46 before giving back some of their gains. They were recently up 5.1%, to $109.65. The company is projected to report second-quarter results on or about Aug. 7, according to FactSet, with the streaming platform for TV expected to report a loss of 22 cents a share after a breakeven quarter a year ago, while revenue is forecast to grow 43% to $223.9 million. Roku's stock has rocketed 259% so far this year, while the S&P 500 has gained 20%.
Snap Inc. (NYSE:SNAP) stock has done very well in 2019. SNAP stock price has rallied 178%. Among stocks with a market capitalization over $10 billion, Snap Inc stock has been the fourth-best performer in 2019. Only Array BioPharma (NASDAQ:ARRY), Sea Limited (NYSE:SE), and Roku (NASDAQ:ROKU) have been better.Source: Shutterstock To be honest, I've misread SNAP stock. I thought in April that the gains had gone too far, and doubled down on that theory last month. That said, I've understood why optimism toward SNAP has risen. Its user growth is starting to show signs of life after flat-lining in 2018. Its disastrous Android app redesign has been fixed. And Snap, as I've argued for some time, has a path to significantly improve the monetization of its users, particularly overseas. * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip Of late, Wall Street analysts have picked up on that bull case. At least four firms have upgraded SNAP stock , and one of those upgrades sparked a big jump in SNAP stock price. But it's hard not to wonder if the Street is late to the party and if its sudden interest in Snapchat stock might signal a top. If long-bearish analysts have turned bullish, too, who can still turn bullish on Snap stock?InvestorPlace - Stock Market News, Stock Advice & Trading Tips Snap Gets UpgradedAt least three analysts have changed their tune on SNAP stock in just the last month. In mid-June, Aegis Capital raised its target price on SNAP stock to $17 and upgraded SNAP to a "buy." The firm increased its revenue estimates, citing higher ad sales and increased use of the Android app. The firm had argued only a few months earlier that CEO Evan Spiegel should sell the company, but said in its recent note that it had decided to "walk back" that argument.The same day, well-respected tech analyst Rich Greenfield of BTIG Research upgraded SNAP stock as well, setting a price target of $20. That target became the highest among analysts covering the stock, though it's "only" about 39% above the current levels of SNAP stock. Greenfield, like Aegis, increased his top-line outlook for the company, also citing the improved monetization of its users and the growth of the Android app, in an interview with Yahoo! Finance.The two upgrades sparked a nearly 10% jump in SNAP stock price, propelling it to a 14-month high. Two weeks later, a third firm, MoffettNathanson, highlighted what it called the potential "Cinderella story" of Snap Inc, and projected a blowout Q2 earnings report in early August, driven by faster-than-expected user growth.Moffett analyst Michael Nathanson didn't upgrade SNAP stock, citing valuation. But as recently as October, the same firm had a $6.50 price target on Snapchat stock and was questioning if it would need to raise capital. The firm's change in sentiment is significant, even if kept a 'neutral' rating on the shares.Finally, Goldman Sachs jumped on the bandwagon last week, moving SNAP stock to a 'buy' with a price target of $18. That firm cited the same improving user numbers as many of its peers. Has SNAP Stock Price Reached a Top?MoffettNathanson's reversal highlights the risk to SNAP stock now. Analysts turned bearish on SNAP near its bottom: indeed, the stock hit an all-time low less than three months after MoffettNathanson's October note.Are the same analysts turning bullish at the top of SNAP stock price? It wouldn't be surprising, and there's evidence that it might be the case. SNAP stock actually has weakened modestly since Aegis and BTIG upgraded it in mid-June.The story analysts are telling isn't really surprising the bull case for SNAP even at the time of its IPO was based on user growth combined with gains in its revenue per user. The fact that Snap Inc is making progress isn't a secret, either: the company posted strong Q1 earnings.Meanwhile, Snap's better outlook is priced into Snapchat stock, at least to some extent. Again, the SNAP stock price has risen 180%+ in about six months. It's added over $13 billion in market value over that period. Snapchat's performance may have improved, but its valuation now is a question mark.Indeed, that's the case I made at $10 and then at $12. With SNAP stock above $15, the reasons for concern seem stronger. SNAP trades at more than eight times analysts' average 2020 revenue estimate, and it's not expected to report profits for at least another two years. Competition for advertising will remain fierce: Facebook (NASDAQ:FB), Twitter (NYSE:TWTR), and Alphabet (NASDAQ:GOOG,NASDAQ:GOOGL) aren't going anywhere.The story analysts are telling may be right, as Snap Inc is improving. But SNAP stock price has tripled from its December lows, so a lot of improvement already is priced into Snapchat stock.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip * 7 Services Stocks to Buy for the Rest of 2019 * 6 Stocks to Buy and 1 to Sell Based on Insider Trading The post Analysts Are Turning Bullish on Snap Stock at Its Top appeared first on InvestorPlace.
About a year ago, I coined the high-growth STARS acronym on InvestorPlace, saying that these five growth stocks -- Shopify (NYSE:SHOP), The Trade Desk (NASDAQ:TTD), Adobe (NASDAQ:ADBE), Roku (NASDAQ:ROKU), and Square (NYSE:SQ) -- are the high quality, big return potential stocks that investors want to buy now and hold for the next several years.The idea behind the STARS acronym was simple. The market's favorite high-growth acronym -- FANG, which comprises Facebook (NASDAQ:FB), Amazon (NASDAQ:AMZN), Netflix (NASDAQ:NFLX), and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) -- was becoming increasingly obsolete for investors. That's not to say that FANG companies have peaked. They haven't. They are still doing very well. But, they are such large companies and long FANG is such a crowded trade, that the long-term return potential in these names isn't what it used to be. It almost certainly isn't the best return potential investors can find in the overlap of growth and technology.STARS is exactly that. Each one of the STARS stocks is supported by huge secular growth trends, is small relative to their addressable markets, is unknown relative to the FANG stocks, and has huge upside potential in a multi-year window. That's why I told investors to forget FANG and buy the STARS stocks a year ago.InvestorPlace - Stock Market News, Stock Advice & Trading TipsThe results speak for themselves. Over the past year, the S&P 500 is up about 7.5%. Had you bought one share in each of the FANG stocks, you would be up just 5% over the past year. But, had you bought one share in each of the STARS stocks, you would be up more than 70% over the past year. Click to EnlargeIn other words, STARS stocks have generated more than 60 points of alpha over both the S&P 500 and FANG stocks over the past twelve months. * 7 Dependable Dividend Stocks to Buy This out-performance from the STARS group will continue. Without further ado, let's take a deep look at why you should buy each one of these high-quality growth stocks. STARS Stocks to Buy for the Long Run: Shopify (SHOP)Source: Shutterstock Trailing 12-Month (TTM) Gain: 90%The Bull Thesis Tag Line: "The Next Big Thing in Commerce"Core Bull Thesis: The secular bull thesis on e-commerce solutions provider Shopify is simple. Thanks to the widespread proliferation of the internet, the commerce world is two doing things: One, it's pivoting into direct retail, wherein brands and merchants are selling to and communicating with customers. Two, it's also pivoting into a decentralized model, wherein anyone can sell anything to anyone else.Shopify is at the heart of both these pivots, providing the tools which allow any seller to sell any item through any direct channel, and is thus levered to benefit from the expansion of these two huge secular tailwinds.These tailwinds are still in their early innings. Shopify's gross merchandise value represents less than 1.5% of global e-retail sales, and is growing at a steady 50%-plus pace. Further, Shopify just started to jump into the physical retail world, dramatically expanding this company's addressable market.As such, SHOP has the necessary room and firepower to keep growing at a robust rate for a lot longer.Key Growth Projections: * Shopify goes from 1.5% e-retail market penetration today, to 7.5% penetration by 2030, as direct decentralized retail trends gain mainstream traction. * Shopify goes from about 0% physical retail market penetration today, to about 0.5% penetration by 2030, as Shopify finds some success in the physical retail world. * Total gross merchandise volume (GMV) and Merchant Solutions revenue grow at about 30% annualized pace into 2030. * Subscription Solutions revenue grows at a high teens annualized pace, as Shopify continues to grow its merchant base. * Total revenue grows at a 25%-plus pace over the next decade. * Operating margins scale from 1% today, to 25% by 2030, as robust revenue growth drives significant operating leverage on already huge gross margins. * 2030 EPS settles around $25, versus projected EPS in 2019 of $0.60.Long-term Price Target: About $750, based on a commerce platform average 30-forward multiple on projected fiscal 2030 EPS of $25.Present Value: About $300, based on a 10% discount rate and a 2029 price target of $750. The Trade Desk (TTD)TTM Gain: 160%The Bull Thesis Tag Line: "The Future of Advertising"Core Bull Thesis: The secular bull thesis on The Trade Desk centers around something called programmatic advertising. Programmatic advertising is essentially automation in the ad industry. Before, ad spend allocation was largely a guess-and-check effort, while ad transactions were conducted between two human parties. Programmatic advertising automates both of those processes, leveraging AI and big data to optimize ad spend allocation and dynamically transact ads based on those optimal allocations. In this sense, programmatic advertising is the future of advertising.The Trade Desk is one of the most important players in the programmatic advertising world, and one of the fastest growing, too. But, ad spend through the TTD platform measures less than 1% of the near $300 billion global digital ad market. That market is rapidly marching towards $500 billion-plus levels. Eventually, most of that $500 billion-plus worth of spend will be transacted programmatically, and the lion's share of that programmatic spend will happen through TTD.As such, The Trade Desk has huge growth potential over the next several years through automation in the ad world, and if all that growth potential materializes as expected, TTD stock will fly higher from here.Key Growth Projections: * The global advertising market measures around $1 trillion by 2025, up from $650 billion-plus this year. * The digital ad market grows to around $650 billion by 2025, representing 65% share versus 45% share in 2018, as engagement and ad dollars continue to flow into the digital channel. * TTD grows its share in the digital ad market from less than 1% in 2018, to 2-2.5% by 2025, as programmatic advertising becomes more widely used across various ad formats and channels. * Gross spend on TTD and revenues grow at a 25%-plus pace into 2025. * Profit margins gradually move higher as robust revenue growth drives positive operating leverage on healthy gross margins. * 2025 EPS comes in around $15, versus 2019 estimates of $2.90. * 10 Stocks to Sell for an Economic Slowdown Long Term Price Target: About $375, based on a digital ad average 25-forward multiple on projected 2025 EPS of $15.Present Value: About $230, based on a 10% discount rate and a 2024 price target of 375. Adobe (ADBE)TTM Gain: 20%The Bull Thesis Tag Line: "The Cloud Giant in a Visually Dominated World"Core Bull Thesis: The secular bull thesis on cloud giant Adobe is predicated on two very simple ideas: First, the world is becoming increasingly obsessed with visuals. Consumers are increasingly engaged in visual-first social media apps, like Instagram and Snapchat. They are also spending more time on visual-content-heavy streaming platforms like Netflix. At the same time, businesses are increasingly using visuals to communicate with their customers, since these forms of communication are what resonates most deeply with today's consumer. Thus, both consumers and enterprises are shifting to a more visually-focused world.Second, Adobe is the unrivaled king in delivering visual solutions. Sure, there are a ton of Adobe competitors out there, but none really rival Adobe. They are all just knock-offs. Long story short, Adobe dominates the visual-focused industry, and when it comes to creating visuals on both the consumer side (e.g. editing a photo for Instagram) and the enterprise side (e.g. creating a visually aesthetic ad campaign), everyone turns to Adobe solutions.Put those two ideas together, and it becomes increasingly obvious that Adobe has plenty of room to grow over the next several years as both consumers and enterprises increasingly adopt visual-focused cloud solutions.Key Growth Projections: * Adobe's Document Cloud, Creative Cloud, and Experience Cloud businesses continue to grow at a robust pace over the next several years given digital and visual related tailwinds, and ultimately power about 15% annualized revenue growth into 2025. * Gross margins expand gradually towards 90% as Adobe benefits from steady but small price hikes given lack of competition. * Operating margins expand towards 50% as 15% revenue growth drives healthy operating leverage on huge gross margins. * EPS settles around $23 by fiscal 2025.Long Term Price Target: About $460, based on a growth average 20 forward multiple on projected fiscal 2025 EPS of $23.Present Value: About $290, based on a 10% discount rate and a fiscal 204 price target of $460. Roku (ROKU)Source: Shutterstock TTM Gain: 111%The Bull Thesis Tag Line: "The Cable Box of the Streaming World"Core Bull Thesis: When I first created the STARS acronym, the most controversial stock on the list was Roku, given what many perceived as huge competition risks. But, ROKU stock is up 111% over the past year as the company's secular bull thesis has drowned out competition risks.The core bull thesis here is that Roku is becoming the central access point (or "cable box") of the streaming world -- a platform which consumers everywhere rely on to access their favorite streaming services like Netflix, HBO, Amazon Video, and the like.A year ago, there were concerns that Roku couldn't maintain this "cable box of the streaming world" positioning because bigger competitors would come in and gobble up its customer base. But, those concerns missed three big things: 1) Roku is content-neutral, it's competitors aren't, and this content neutrality ultimately makes for a more friction-less viewing experience; 2) Roku is already the runaway leader in this space, and consumers like the intuitive Roku UI; and 3) the streaming space will big enough to accommodate more than one service platform aggregator.As such, Roku has done nothing but rattle off big-growth quarter after big-growth quarter over the past year, and ROKU stock has more than doubled in the process. The streaming market globally is still relatively nascent, and ad dollars are just now starting to follow consumers into the streaming channel, so Roku's long-term growth narrative is in its first few innings. Over the next several years, the company will continue to rattle off big-growth quarters and ROKU stock will trend higher.Key Growth Projections: * The global streaming-video-on-demand (SVOD) market grows from roughly 300 million households today (25% TV household penetration), to around 600 million households by 2025 (35% TV household penetration, assuming mild global TV household growth). * Roku's platform goes from about 30 million accounts in 2018 (about 10% market share) to about 100 million by 2025 (about 17.5% share). * Average revenue per user rises at roughly 15% per year into 2025, as unit SVOD revenue moves higher due to higher streaming service prices and more streaming service subscriptions per account, and AVOD revenue moves higher from a higher inflow of ad dollar volume. * Total revenues rise at a 25%-plus pace into 2025. * Platform gross margins scale towards 70%, while player gross margins stay around 5%. * The opex rate drops to 40% as robust revenue growth drives significant operating leverage. * EPS settles around $5.50 by 2025. * 10 Best Dividend Stocks to Buy for the Rest of 2019 and Beyond Long Term Price Target: About $165, based on a big growth 30-forward multiple on projected fiscal 2025 EPS of $5.50.Present Value: About $100, based on a 10% discount rate and a projected 2024 price target of $165. Square (SQ)Source: Shutterstock TTM Gain: 22%The Bull Thesis Tag Line: "The Backbone of Modern Commerce"Core Bull Thesis: The secular bull thesis on Square is based on the idea that Square is transforming into the backbone of the the modern commerce world by creating a payments ecosystem tailored to 21st century consumption and retail habits.Consumers globally are pivoting away from cash transactions towards non-cash transactions, because non-cash transactions are significantly more convenient and more levered to digital shopping. As such, global non-cash transaction volume has risen at a steady 10%-plus clip for the past several years.Over the next several years, non-cash payments volume is expected to run at a 10%-plus pace, driven by heavier card usage in developed economies and broader urbanization and digitization in developing economies.Square has built a payments platform which helps merchants of all shapes and sizes process these non-cash transactions. On top of that, the company has developed a myriad of tangential solutions - such as a digital peer-to-peer payments app, an enterprise payroll app, and lending services - all of which are tailored to the consumption and retailing habits of the 21st century.Square is developing a payments ecosystem which is built for modern commerce. Yet, the platform still only accounts for 0.35% of all global retail sales. As such, the trends and addressable market here imply that Square has a lot of room and firepower to grow over the next several years.Key Growth Projections: * Global retail sales grow at a 5% compounded annual growth rate into 2025 to nearly $34 billion, due to inflation and global urbanization trends. * Square's market share of the global retail sales pool rises from 0.35% in 2018, to 1% by 2025, as the company expands its reach in the physical retail world from micro-merchants to bigger merchants, and as the company takes a deeper dive into the e-commerce world. * Square GPV grows at a 20%-plus annualized pace into 2025, while revenues grow at at 25%-plus annualized pace, driven by incremental revenue from hardware and ancillary solutions. * Profit margins move steadily higher over the next several years as increased scale drives positive operating leverage. * EPS settles around $4.50 by fiscal 2025.Long Term Price Target: About $135, based on a payments stock average 30-forward multiple on fiscal 2025 EPS of $4.50.Present Value: About $85, based on a 10% discount rate and a fiscal 2024 price target of $135.As of this writing, Luke Lango was long FB, AMZN, NFLX, GOOG, SHOP, TTD, ADBE, ROKU, and SQ. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Dependable Dividend Stocks to Buy * 10 Stocks Driving the Market to All-Time Highs (And Why) * 7 Short Squeeze Stocks With Big Upside Potential The post 5 STARS Stocks Smashing the Market (FANG Stocks, Too) appeared first on InvestorPlace.
Shares in Roku (NASDAQ: ROKU) have had a successful run year-to-date. Roku stock is up three-fold, from approximately $32 a pop in January to over $103 today. Despite competition from larger peers Amazon (NASDAQ: AMZN), Alphabet (NASDAQ: GOOG, NASDAQ:GOOGL), and Netflix (NASDAQ: NFLX), investors are confident in the company's long-term success.Source: Shutterstock But with the Roku stock price reaching frothy valuation levels, future upside is likely limited. Read on to see why now is not the time to dive in. The Roku Platform Continues to GrowBased on Q1 2019 results, Roku continues to grow as a leading streaming platform. The number of active accounts is up 40% year-over-year, with 29.1 million active accounts in the first quarter of 2019. That compares favorably to the 20.8 million accounts in Q1 2018. Streaming hours have jumped 74% year-over-year, and average revenue per user has climbed 27%.InvestorPlace - Stock Market News, Stock Advice & Trading TipsWith this subscriber growth, quarterly sales have climbed 51% YOY, from $61.5 million to $206.7 million. However, due to the increased expansion of its infrastructure, the company continues to post operating losses. * 10 Stocks to Sell for an Economic Slowdown Losses from operations were $10.7 million, compared to a $6.9 million operating loss in Q1 2018. The company's 2019 guidance projects net revenues between $1.03 billion and $1.05 billion. However, management estimates a $65 million to $75 million net loss in 2019, with adjusted EBITDA estimated around breakeven ($10 million to $20 million).With ROKU continuing to invest in growth, it will be years before it becomes a "cash cow." But today's performance is not the story. Besides the potential catalyst of formidable market share in the next five to ten years, investors believe the company to be an irresistible takeover candidate for deep-pocketed competitors. Is Roku Stock Still a Takeover Candidate?Due to its small size compared to peers, several analysts consistently consider Roku stock a takeover candidate.As InvestorPlace contributor Bret Kenwell discussed back in March, Alphabet is the most logical buyer. Kenwell pointed out that 70% of streaming users have a ROKU device. In contrast, only 16% of streamers own Chromecast, Alphabet's streaming media adapter.Acquiring the company would be a quick and easy way for Google to jolt ahead of Amazon and Apple (NASDAQ:AAPL). While the potential acquisition price is high, building out organically would cost money, and more importantly, time.Microsoft (NASDAQ: MSFT) is another logical buyer. Microsoft has an existing streaming platform (Microsoft Movies & TV), but only Xbox users largely advantage this service. Buying Roku would get Microsoft's streaming and VOD service into more homes. That would give the software giant an opportunity to catch up to Amazon and Apple.And a slew of other potential acquirers abounds. Last October, InvestorPlace contributor Will Ashworth gave a full list of potential buyers. These include telecom companies such as AT&T (NYSE: T) and Verizon (NYSE: VZ), as well as content behemoths such as Disney (NYSE: DIS). Even Facebook (NASDAQ: FB) is a potential buyer.But takeover rumors are just that: rumors. Buying shares on takeover talk rarely pans out to big returns.An important caveat is valuation. When the Roku stock price was a third of what it is today, the company was more digestible. But at the current valuation, even a large competitor must weigh the opportunity cost of developing their own platform versus bulking up via a costly acquisition. Valuation: Roku Stock Price Getting FrothyGiven that Roku's biggest peers are subsidiaries of tech giants, the company's main publicly traded peer is Netflix. Looking at the company's enterprise value-to-sales (EV/sales) metric, Roku stock is the more expensive of the two. Specifically, that's 14.2 versus 10.5 for NFLX.The company also trades at a massive EV/sales premium to larger peers AMZN (EV/sales of 4.2), AAPL (EV/sales of 3.74) and GOOG (EV/sales of 4.86).It is important to note this is not an apples-to-apples comparison. As the only "pure play" of its kind, the company could be worth the premium. But with high expectations baked into the share price, the stock may no longer be a strong opportunity. Despite a Strong Business, Roku Stock Is Not a BuyDespite having less prestige than its FAANG competitors, Roku continues to grow as a major streaming platform. With advertising revenue moving from television to streaming, the company could win big long-term.But despite strong forward-looking prospects, ROKU stock is not a buy at these levels. Investors buying shares today are paying a substantial premium to gain exposure to the streaming trend.On the other hand, a big tech or media company could buy ROKU as an efficient pathway to eyeballs. With Alphabet, Microsoft, and others lacking significant market share in the streaming space, buying them out would make them more formidable competitors to Amazon and Apple.At the current Roku stock price, the company is not a buy. Waiting until a material pullback is the smart move. In late 2018, shares tumbled from roughly $75 a share to below $30, before rallying back to over $100. In the event of another big decline, ROKU could be a solid opportunity.As of this writing, Thomas Niel did not own a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Buy for Less Than Book * 7 Marijuana Stocks With Critical Levels to Watch * The 10 Best Dividend Stocks to Buy for the Rest of 2019 and Beyond The post After Three-Fold Rally, Roku Stock Is Overvalued appeared first on InvestorPlace.
Shares of Roku (NASDAQ:ROKU) have been on fire, even though they've cooled off a bit since hitting $108.32 in June. The stock was unfairly punished in the fourth quarter, even as the company reported strong earnings. Patient investors (and those with a strong stomach) have been rewarded though, with ROKU stock running from $26.30 in December to more than $100 today.Can they expect even more upside going forward?It feels like investors viewed Roku's strong fiscal fourth-quarter results as a one-off success in February. In May though, they really bought into the strong results as the stock went from $65 to $95 in just a few weeks. That action came amid a bruising run in the stock market, by the way.InvestorPlace - Stock Market News, Stock Advice & Trading TipsWith two very strong earnings reactions in the books, I think Roku stock price can garner some bullish momentum to new highs before the next report. That will come sometime in mid-August. * 10 Stocks to Sell for an Economic Slowdown Let's take a deeper dive. Streaming WarsYet another streaming platform has been added to the growing list: AT&T's (NYSE:T) Warner unit recently unveiled HBO Max. Currently available or coming soon is HBO Go, HBO Now, HBO Max, Disney's (NYSE:DIS) Hulu and Hulu TV, Disney+, ESPN+, Amazon (NASDAQ:AMZN) Prime Video, Netflix (NASDAQ:NFLX), NBCUniversal's platform, YouTube TV and others.The field is getting crowded, and while that leaves questions about who will win, ROKU is in prime position.When Disney unveils its Disney+ platform, millions will want in. Roku is an easy solution for those customers. So while they duke it out for the best content and total subscribers, the only thing that matters to Roku is having the best platform to host all of these services. Luckily, they do. And it's why it's dominating streaming now and will in the future. Valuing Roku StockThe biggest critique for Roku stock is its valuation. Simply put, it isn't cheap. But when a company is positioned atop a secular growth industry, it rarely if ever comes cheap. If you wanted a stab at Roku at "cheap" levels -- although, anything below $50 feels cheap in hindsight -- investors could have nabbed this name below $30 in December.Back in March I made the case that Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG) should acquire Roku. The rationale was simple: Google's Chromecast is one of the least popular streaming devices on the market, while Google operates one of the most popular websites in the world with YouTube.What people fail to realize is that Roku is not just a "stick you put in the TV." It's the operating system for streaming video. Platform revenue and profit is surging (up 79% and 76%, respectively), while hardware revenue is down big. Streaming hours surged 74% to 8.9 billion.The sooner investors understand this, the better: Roku stock is not about the hardware. It's all about the platform. While richly valued at almost 12 times this year's sales and still not generating a net profit, Roku is a buy-on-dips stock for investors who want to ride this secular trend higher. Trading Roku Stock Price Click to EnlargeUltimately, that's the problem with Roku stock. It has gone up so far, so fast that investors who missed this might be out of luck. But keep in mind, market-wide selloffs have dethroned Roku stock price in the past. Shares went from $77.50 in October to sub-$27 less than three months later -- with a fantastic earnings result in between.That's a 66% haircut despite no change in the fundamentals. When markets decide to sell, they do so aggressively and indiscriminately.From a trading standpoint, we now have points of reference on the upside and the downside. On the upside, we have resistance near $105 with a high at $108.32. Over $105 and that high is on the table, with an even larger run on watch should Roku stock push through.On the downside, $90 is rough support, with $87.34 as the low. Below the latter and ROKU stock could be heading down a slippery slope. Watch for the 50-day moving average to act as support as well.Given that the momentum-measuring MACD reading (blue circle) is starting to turn in ROKU's favor, a larger rally could be brewing. Particularly if ROKU can clear its recent highs.Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long AMZN, GOOGL, DIS and ROKU. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Sell for an Economic Slowdown * 7 Marijuana Penny Stocks That I May Buy * 7 of The Best Schwab ETFs for Low Fees The post Can Roku Stock Hit New All-Time Highs Ahead of Earnings? appeared first on InvestorPlace.
With a market cap of $11.7 billion, Roku (NASDAQ:ROKU) stock is the largest over-the-top streaming content provider in the U.S. On June 21, ROKU stock hit an all-time high at $108.32. Year-to-date, the stock is up 238%, as U.S. consumers move from traditional pay-TV services to streaming delivery services.Source: Shutterstock Advertisers are following those viewers. That's reason number one why, longer-term, I would not bet against Roku shares whose revenue increasingly comes from advertising. However, as the earnings season gets busy, there is likely to be some profit-taking in the stock in the next few weeks. Such a decline would potentially offer investors better entry points if they decide to hit the buy button later in the summer, especially around the time Roku stock releases earnings in mid-August. With all of that in mind, let's look at what may be next for Roku stock in the second half of the year. Evolving Business Model Fuels Roku Stock PriceRoku has been a pioneer in streaming video gadgets. The company's revenue can be divided into two segments: "Player" which represents sales of its digital media boxes; and, "Platform" which includes advertising sales, licensing and other non-hardware revenue sources.InvestorPlace - Stock Market News, Stock Advice & Trading TipsIn its earlier years, Roku's player segment accounted for about 75%, while its platform segment, which generates revenue mainly through advertising and content partnerships, provided the other 25%.However, these ratios have been changing rapidly. Now the platform segment accounts for the bulk of the company's sales. And Roku's device sales growth is decelerating. The expanding platform business, in return, means that the advertising business is growing.In other words, once Roku's hardware makes it to viewers' homes, then both subscription services and advertising revenue through the platform create the real growth for the stock. * 7 Retail Stocks to Buy That Are Down in 2019 At present, Roku and Hulu, the video streaming service that is majority-owned by Disney (NYSE:DIS), are the market leaders in over-the-top (OTT) advertising. OTT ads are shown on a TV screen through a smart (connected) TV, or streaming device.For example, Roku sells display ads that it shows on its home screen and on its screen saver. The company also offers ads within the videos it streams from particular channels available through the player. Advertising is now the biggest component of Roku's platform segment.It would be important to mention that Disney's new streaming service, Disney+, will launch on Nov. 12 and will include original movies and TV shows from the Magic Kingdom's brands. The entertainment giant has recently announced that Disney+ will be streamed on the PS4 and Roku, which is likely to give Roku stock price a significant boost. Roku's Operating Metrics and Impressive GrowthAccording to Roku's February results, Q4 2018 platform revenue -- which made up about 45% of total revenue -- grew 129% year-over-year (YoY).Then came the May 8 earnings release which showed a 79% YoY increase in platform revenue to $134.2 million. Now, platform revenue accounts for 65% of total revenue. Roku's accelerating growth has led to a 51% YoY growth in total revenue, which reached $207 million.In Q1, the company had almost 30 million active accounts, which on average clocked more than three hours a day watching video content. Netflix (NASDAQ:NFLX) has about 60 million U.S. subscribers and they watch about two hours of programming each day. Going forward, Roku investors are possibly expecting the company to reach a similar subscriber base that watches even more hours of content.In May, ROKU stock also reported strong Q1 sales for both Roku TVs and players. More than one in three smart TVs sold in the U.S. are Roku TVs, having taken the lead from Samsung to become the top-selling smart TV operating system (OS). Roku's OS, built specifically for televisions, is also available in Roku streaming boxes.The operating system enables Roku to have a direct relationship with its 30 million subscribers, who are increasingly spending more time on the platform.In its quarterly results, ROKU provides guidance on revenue, gross profit, net income, and adjusted EBITDA. In its Q1 2019 earnings, the group impressed investors with guidance on all four metrics that came above expectations for the rest of the year.Adoption of OTT video services will likely increase in double digits both in the U.S. and overseas. And Roku management is also looking at international expansion as the next strategic area of growth.The company aims to grow the number of countries it operates in and to add local content to attract international viewers. However, analysts believe that it will be several quarters before Roku firmly establishes relationships with international retailers and manufacturers and successfully markets its products globally. ROKU Stock's Constant Bull-Bear QuestionRoku is a growth stock, but it's also a speculative one. Long-term ROKU bulls happily highlight many of Roku's competitive advantages, starting with the platform's first-mover advantage in OTT advertising, share of smart TVs sold in the U.S. and projected annual growth of over 30% in the rapidly expanding over-the-top streaming market.On the other side of the coin are the nervous investors and short-sellers who are looking for any excuse to short ROKU stock. They believe that the market is setting itself up for disappointment. Can Roku's future quarters indeed be as bright as investors want to believe?Unlike Netflix or Disney stocks, Roku does not create content. This is another reason why some investors worry that Roku's revenue growth through subscriptions may simply be not enough to justify the rich valuation. And what if Roku cannot add enough new subscribers or cannot monetize the user base to cover the operating expenses?In other words, are ROKU shareholders looking at a pie to the sky? If Roku cannot repeat its blockbuster subscriber growth performance in the next quarterly results, investors may decide to punish the stock later in the year.The company still operates at a net loss and is burning cash rather fast. In the earnings report, management highlighted that operating expenses are projected to increase. Potential investors should remember that Roku's net loss is expected to continue at least for several quarters.Roku is also facing increasing competition on multiple fronts from several tech and media giants. Rivals include Alphabet's (NASDAQ:GOOG, NASDAQ:GOOGL) Chromecast and YouTube, Apple's (NASDAQ:AAPL) Apple TV, Amazon's Fire TV as well as Disney+. In other words, the cord-cutting revolution is here to stay and the space ROKU operates in is fiercely competitive and saturated.Will Roku be able to not only hold but also gain ground? As these competitors continue to make their mark in the streaming platform landscape, investors may decide to take some money off the table, pressuring the recent price gains. Should Investors Worry About ROKU Stock's High Valuation?ROKU stock trades at a high valuation, especially compared to its tech peers. For example, its current price-to-sales (P/S) ratio is over 14x. Companies generate revenue from the sale of goods and services. Analysts prefer a low P/S ratio, ideally below 1x. However, a P/S number between 1x and 2x is more common. To put the metric into perspective, S&P 500 index's average price-to-sales ratio is 2.1x.Another way to analyze the P/S ratio is to compare companies in similar industries or segments. Our readers may be interested to know that the P/S ratio for Amazon (NASDAQ:AMZN) is 4x. For Disney stock, the P/S ratio stands at 3.5x. And for Netflix, the P/S is about 10x.Earlier in the year, ROKU stock was hit with several downgrades by analysts who voiced concern at stretched valuation levels. In recent weeks, we have seen even more downgrades.If Roku cannot keep up with the aggressive growth assumptions, then shareholders may become more concerned with low profits as well as its margins and the stock price could easily suffer. In other words, could ROKU stock price be getting ahead of itself?Also, if the broader market does not go up as rapidly as it has done over the past few months, then the momentum in high-flying shares like ROKU would slow down, too. ROKU Stock's Massive Price RunROKU stock became a Wall Street soon after its 2017 IPO. The shares went from an opening price of $15.78 to a high of $77 in a little more than 12 months, benefiting from the disruptive internet entertainment revolution that has made viewing more personalized.Then came the market selloff in the last quarter of 2018 -- especially in the tech sector -- which was seen as an important signal that investors were no longer willing to be exuberant with technology stocks and their rich valuation numbers. On Christmas eve, with holiday gift-buying all but done, Roku saw a 52-week low of $26.30. * 10 Best Stocks for 2019: A Volatile First Half As Roku released two consecutive strong earnings reports first on Feb. 22 and later on May 8, bullish sentiment came back into the stock and the stock kept rewarding the shareholders. Especially after the Q1 earnings released in May, Roku stock soared the next morning as well as the following several trading days. And June as well as July so far have been good months for Roku shareholders. Currently, ROKU stock is around $103.As a result of the impressive 2019 price gains, short-term momentum indicators, which describe the speed at which prices move over a given period, have now become over-extended. Investors who pay attention to short-term oscillators should note that ROKU's technical message has also become "overbought."However, it is important to remember that shares can stay overbought for a long time. It is never easy to gauge when a given stock price is a peak. Only in hindsight, most investors have 20/20 vision.While long-term investors would now like to see Roku stay over the $100 level and even reach $110, traders may push the price down and keep the range between $80 and $100, possibly until the next earnings report on Aug. 14. Bottom Line on ROKU StockROKU stock is likely to experience volatility through the balance of July and into August. So investors should not rush to hit the buy button on Roku in the coming weeks. They may want to wait for the release of the next quarterly statement later in the summer to re-evaluate the balance sheet and the fundamentals.As long as the ROKU's metrics are moving in the right direction, long-term investors should not pay too much attention to the daily volatility in the stock price. That said, if you already own Roku shares, you may consider hedging your position with at-the-money (ATM) covered calls with Aug. 16 expiry.In recent months, ROKU stock has given investors a lot to be optimistic about and investors who buy the shares on the dips are likely to be rewarded handsomely within a few years.In the meantime, Roku may also find itself in the middle of a bidding war from the competitors to be acquired. After all it has experienced strong growth since its IPO and has an enviable advertising business that combines mobile with television.As of this writing, the author did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Buy on College Students' Radars * 7 Retail Stocks to Buy for the Second Half of 2019 * The S&P 500's 5 Best Highest-Yielding Dividend Stocks The post Will Roku Stock Rocket After This Month's Earnings Report? appeared first on InvestorPlace.
Is the economy slowing down, or isn't it? Ask ten investors, and you'll get at least three different answers. One thing is for sure though -- the crowd won't come to a consensus on the matter until it's too late to do anything about it.Savvy investors know that planning ahead is a battle half-won. Decide now which names are exceedingly vulnerable to a market-wide pullback, and you're less likely to freeze up when the time comes to do so.Some of the following names move in the same direction as the overall market on any given day. The ones that are the most overextended, however, often end up being the ones that take the biggest bite out of a portfolio's value if and when things get hairy.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Retail Stocks to Buy for the Second Half of 2019 To that end, here's a look at ten stocks to sell should things take a decided turn for the worst. Advanced Micro Devices (AMD)Source: Shutterstock It's been one of the market's favorite stocks, if not the favorite, since its turnaround started to take hold in 2016, and was confirmed in 2018. But, graphics processing unit (GPU) and chip maker Advanced Micro Devices (NASDAQ:AMD) is highly vulnerable to a headwind, which in turns makes AMD stock highly vulnerable to profit-taking should investors start to sweat.Underscoring that vulnerability is a budding price war with rival Nvidia (NASDAQ:NVDA) at the end of a palpable refresh cycle. Just days before their launch earlier this month, Advanced Micro Devices cut the suggested price of its 5700 line of GPUs, countering Nvidia's recently-launched "Super" RTX graphics cards. Both product launches follow a string of new releases since early 2018, which may have already satisfied a market hungry for new GPUs.An economic slowdown could also easily curtail spending plans for big data centers, which have been big growth drivers for AMD as well as Nvidia. EXACT Sciences (EXAS)Source: Shutterstock EXACT Sciences (NASDAQ:EXAS) is a biopharma firm, and as such, isn't necessarily prone to economic weakness. Consumers don't skimp on healthcare when an insurer is paying the bills, even though they may skimp on other things.Nevertheless, after an almost 1500% rally from 2016's lows, EXACT Sciences stock is uncomfortably prone to a sizable pullback should the environment turn to malaise and doubt. * 10 Best Stocks for 2019: A Volatile First Half Though its top and bottom line are making tremendous forward progress thanks to solid demand for its Cologuard colon cancer screening test, the stock's got a valuation problem. As impressive as Cologuard is, trading at nearly 30 times revenue, the stock's current price is difficult to justify. Roku (ROKU)It's not a sweeping, decisive victory, and certainly not permanent, but Roku (NASDAQ:ROKU) so far has won the streaming set-top box wars. Now it's leading the SmartTV race with what should be 70% of that nascent market by year's end, according to Strategy Analytics.The refocus from hardware to selling ad space on its platform is also proceeding nicely.The triple-digit rally since the IPO in late 2017, however -- as well as the triple-digit rally since the end of last year -- is too much too fast. Driven more by hype than progress toward profits, even a small mood change could put the investors into profit-taking mode. Cyberark Software (CYBR)Cyberark Software (NASDAQ:CYBR) is in the cybersecurity business. Its 'Privileged' platform offers a unique solution that rivals like FireEye (NASDAQ:FEYE) or Palo Alto Networks (NYSE:PANW) can imitate, but not quite replicate. It's the company's Privileged suite, in fact, that was responsible for much of this year's heroic move.Last quarter's top line was up 34%, more than doubling the bottom line.Click to Enlarge * 7 A-Rated Stocks to Buy for the Rest of 2019 Investors are already having second thoughts about the move though, with a string of lower highs since the end of May alone. We have yet to see consistent lower lows, but if the support offered by the 100-day moving average line (gray) fails to keep shares propped up, a sizable setback could easily take shape. Zillow Group (ZG)Source: Shutterstock Though the economy has managed to continue growing despite stumbling blocks like steep tariffs and more migration of some jobs overseas, the housing market has already started to cool. In some regards it has even started to retreat.In March, prices of homes in the go-go real estate market of Southern California fell for the first time in seven years. They have since recovered, but even so, it's a microcosm of a bigger trend. Should the broad economy sour even more, an already-vulnerable housing market could entirely reverse course.That puts self-service real estate listing company Zillow Group (NASDAQ:ZG) in jeopardy. Shares are rallying right now, but it easily becomes one of the top stocks to sell once things merely start to get rocky. Verisign (VRSN)Source: Shutterstock Verisign (NASDAQ:VRSN) has been one of the most reliable advancers since the beginning of 2017, shrugging off the Q4-2018 market-wide weakness with relative ease, and renewing its march to higher highs. It has more than doubled in two years.What's amazing about the move is that it has taken shape on oddly anemic fiscal growth. Last year's top line was up just a little more than 4%, and this year's expectation is for barely more than 1%. Earnings growth is only marginally better. * 7 Retail Stocks to Buy That Are Down in 2019 Investors may be patient and lenient in a bullish environment like the one we've been in thus far. If those investors have to switch to a defensive mindset though, Verisign is exposed. Not only will the demand for website registration services wane, it will be tough to not notice there's no defensible moat in the business. Floor & Decor Holdings (FND)Source: Shutterstock Floor & Decor Holdings (NYSE:FND) isn't a household name, unless your house is near one of the 103 warehouse-format locales the company operates.That's the crux of the risk. While a strong economy inspires consumers to invest in their home's floors, flooring could easily be one of the planned expenses that gets put on hold when those consumers start to feel uneasy. The company also lacks the scale and diverse product lines that rivals Home Depot (NYSE:HD) and Lowe's (NYSE:LOW) enjoy, which shield them from economic headwinds. Snap (SNAP)Credit has to be given where it's due. Though it got off to a rocky start as a publicly-traded company, Snapchat parent Snap (NYSE:SNAP) eventually learned how to balance future growth with present results.It also learned the hard way that users of its social media platform are sensitive to sweeping changes. Rekindled user growth and revenue growth is a big part of the reason SNAP stock has managed to rally from under $5 late last year to its current price near $15. * 10 Stocks That Should Be Every Young Investor's First Choice With half the user base of Twitter (NYSE:TWTR) and less than one-tenth of the 2.4 billion regular users Facebook (NASDAQ:FB) boasts, should advertisers be forced to tighten their belts, a still-somewhat-unproven Snapchat would likely be the first advertising venue they'd drop. Vonage Holdings (VG)Source: Shutterstock Remember Vonage Holdings (NYSE:VG)? It was the first big name to capitalize on VOIP technologies, running a lengthy and aggressive ad campaign all throughout the early 2000's.The company never achieved the greatness that many anticipated. Rather than let a third-party utilize their internet service, ISPs simply added voice capabilities to their own menus. That, and mobile phones became the new norm.Vonage is still around though, finding its niche in the corporate world by facilitating all sorts if digital communications that can't be accomplished by mere phone connections. The stock's been a surprisingly strong performer, too.Still, with cheaper solutions constantly presenting themselves -- ranging from Skype to Twilio (NYSE:TWLO) to Dropbox (NASDAQ:DBX) -- Vonage's could be a relatively easy service to drop should cost-cutting become a priority. Wayfair (W)Finally, add Wayfair (NYSE:W) to your list of stocks to sell if and when the environment turns ugly.It's been an impressive performer to be sure. W stock is up more than 21% for the past year, and is higher to the tune of 99% for the past two years on expectations that it would be able to take at least a small bite out of the e-commerce dominance Amazon (NASDAQ:AMZN) enjoys. It's made headway to that end even.With actual profits still years down the road at the company's current trajectory, even the smallest of economic shakeups could force Wayfair to make a margin-pinching decision its bigger rival wouldn't be forced to make. More consumers can live without Wayfair than can live without Amazon.As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can learn more about him at his website jamesbrumley.com, or follow him on Twitter, at @jbrumley. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Buy on College Students' Radars * 7 Retail Stocks to Buy for the Second Half of 2019 * The S&P 500's 5 Best Highest-Yielding Dividend Stocks The post 10 Stocks to Sell for an Economic Slowdown appeared first on InvestorPlace.
U.S. stock futures are crawling lower this morning amid mild profit-taking after last week's jump to new record highs. Heading into the open, futures on the Dow Jones Industrial Average are down 0.32% and S&P 500 futures are lower by 0.26%. Nasdaq-100 futures have lost 0.39%. In the options pits, the post-holiday session saw below-average volume with only 15.7 million calls and 12.7 million puts changing hands. The action at the CBOE also reflected a lack of put demand with the single-session equity put/call volume ratio sliding to 0.61. With the reading now sitting in the dead center of its summer range, it's also right on top of the 10-day moving average. InvestorPlace - Stock Market News, Stock Advice & Trading TipsThe following were the three top stocks landing on the most-active options list: Roku (NASDAQ:ROKU), Electronic Arts (NASDAQ:EA) and Snap (NYSE:SNAP). Let's take a closer look: Roku (ROKU) A lackluster response to Friday's better-than-expected jobs report held the broader market under water, but Roku cared little for such shenanigans. The streaming media device company shot 5% higher on strong volume to kick-off its next upswing. The timing of ROKU stock's recent strength couldn't have come at a better time. The red-hot momentum stock had recently cooled amid valuation concerns and profit-taking following its meteoric 2019 rise. At last month's peak, ROKU had risen 253% for the year. By comparison, its 19% pullback is barely noticeable. The timing of the bounce coincided with a test of the rising 50-day moving average and reaffirmed the bulls' control of the intermediate-term trend. On the options trading front, traders favored calls on the session. Total activity grew to 178% of the average daily volume, with 130,407 contracts traded. Calls claimed 56% of the day's take. The ongoing ramp in implied volatility continued, rising to 73% or the 46th percentile of its one-year range. Premiums are pricing in daily moves of $4.50 or 4.6%. Electronic Arts (EA) Just when it looked like Electronic Arts shares had finally turned the corner, sellers staged a nasty rug-pull. The once high-flying video game company saw its breakout attempt fail miserably with a two-day 10% whack ahead of the weekend. The slide coincides with the release of season 2 of Apex Legends, the company's popular battle royale game, which appears to be tracking well behind the mass adoption of its first season. Ever since last year's 50% beatdown, EA stock has been floundering, unable to find any upside momentum. Last week's rejected breakout attempt underscores the ongoing challenge for traders trying to play EA to the long side. Critical support looms at $90. If it breaches that, watch out below. As far as options trading goes, EA topped the most-actives list with total activity rising to 346% of the average daily volume. By the closing bell, 75,626 contracts traded with calls accounting for 55% of the session's sum. Implied volatility drifted sideways to remain at 41%. That also lands it at the 40th percentile of its one-year range. The expected daily move is $2.41 or 2.6%. Snap (SNAP) Snap shares completed a textbook high base pattern Friday with a breakout to fresh 52-week highs. With the jump to $15.23, SNAP stock is officially up 176% on the year making it one of the Street's hottest stocks. It's certainly a favorite among traders shopping the few low-priced stocks that exist after a ten-year bull market. The combination of price and volume has been extremely bullish for the past six weeks. SNAP stock has remained on the north side of a rising 20-day moving average. Accumulation days litter the landscape with nary a whiff of distribution -- no need to overthink this one. The path of least resistance is higher. On the options trading front, traders came after calls like patriots to a fireworks show. Activity rose to 145% of the average daily volume, with 183,973 total contracts traded; 77% of the trading came from call options alone. Implied volatility popped to 62% and now sits at the 32nd percentile of its one-year range. Premiums are pointing toward daily moves of 59 cents or 3.9%. As of this writing, Tyler Craig didn't hold a position in any of the aforementioned securities. Check out his recently released Bear Market Survival Guide to learn how to defend your portfolio against market volatility. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 A-Rated Stocks to Buy for the Rest of 2019 * 7 Education Stocks to Buy for the Future of Academia * 5 Stocks to Buy as You Rebalance Your Portfolio The post Monday's Vital Data: Electronic Arts, Roku and Snap appeared first on InvestorPlace.
With all the hand-wringing over inverse yield curves, slowing housing prices, stalling economic growth, and lingering trade wars, the Dow and the S&P 500 keep posting new records.One of the most encouraging signs for the market at this point is the fact that the Federal Reserve said it will step in and lower rates if necessary. That is an about-face from its attitude about the economy just six months ago.Also, President Donald Trump picked two more potential appointments to the Federal Reserve. One of the nominees, Judy Shelton, wants to lower interest rates to 0% in one to two years if appointed.InvestorPlace - Stock Market News, Stock Advice & Trading TipsWhile low interest rates don't benefit all sectors -- banks have a harder time making money on loans in a lower-rate environment, for example -- there are some that rise as rates fall. * 7 Retail Stocks to Buy That Are Down in 2019 The following seven A-rated stocks to buy for the rest of 2019 have some of those winners as well as others that are riding strong, long-term trends. Roku (ROKU)Source: Shutterstock Roku (NASDAQ:ROKU) started trading in the fall of 2017 at around $23 a share. It's now at $95. While that's certainly a solid run, its recent run is what's more impressive -- Roku is up 219% year to date and 111% in the past year.For a company with a $10 billion market cap, those are some pretty big numbers.It also shows that Roku is still auditioning as a strong tech blue chip in coming years. The market has lifted it up and pushed it down on more than one occasion, unsure if this rising streaming platform can compete with the big players in the sector.For now, Roku is doing very well. It went from a niche product that the first wave of cord-cutters adopted, to a brand widely recognized by the average consumer.It still has room to grow in the U.S. and has the rest of the world waiting. At the end of 2018, Roku's operating system was on almost 25% of TVs in the U.S., which is impressive for a young company playing against major television and online companies.That means it will continue to grow or a big firm will buy it out at a premium. Either way, stockholders win. Waste Management (WM)Source: Shutterstock Waste Management (NYSE:WM) is a waste collection, disposal and management company. No, it's not the sexiest sector out there, but it is certainly a necessary one, especially in an e-commerce, consumer-driven economy like the U.S.WM is one of the biggest players in this sector in North America. Most operations are local and WM has been consolidating collection services around the nation for many years.The biggest mover in WM's favor is the fact that many nations that previously accepted U.S. trash and recycling are no longer doing so. This has set off a scramble on what to do with all the waste.The U.S. doesn't have the facilities to recycle this trash, nor do most local firms have the space to dispose of it. This new challenge has raised prices and cut margins for smaller providers. * 10 Stocks That Should Be Every Young Investor's First Choice But WM is in a much better position. It has the option to move trash from one facility to another and use landfills that few have access to. That's why the stock is up 32% year to date and has plenty of headroom moving forward. Equity Lifestyle Properties (ELS)Source: Shutterstock Equity Lifestyle Properties (NYSE:ELS) is one of a handful of companies on the leading edge of a growing trend: manufactured homes and communities.In the old days, these were called trailer parks. These aren't the trailer parks of old, tough: they're gated communities with upscale amenities and well-constructed prefab homes.With many retiring generations under heavy debt loads and longer lifespans, these homes are becoming an attractive option for stretching retirees' dollars.What's more, ELS operates as a real estate investment trust (REIT) that collects the rents, mortgages, and fees, and then passes the net profit onto shareholders in the form of dividends.This is a relatively new trend but one that will likely continue as boomers leave the job market with little-to-no nest egg in record numbers. Up 35% in the past year and delivering an almost 2% dividend, this is an ideal market for REITs, especially in this sector. Alliant Energy Corp (LNT)Source: Shutterstock Alliant Energy (NYSE:LNT) has electricity and natural gas distribution operations in Wisconsin, Minnesota, and Iowa.Utilities are good choices for low-interest rate environments because they're capital-intensive businesses. They need to keep their facilities and far-flung equipment operational all day, every day. That means spending money.Because utilities are regulated business, where they can save money is a bonus to the company, consumers and shareholders. But the big money comes from the unregulated side: facilities that sell power and other utilities on the wholesale market to big clients.LNT has a solid market and this current heat wave is always helpful for energy demand, especially on the unregulated side where demand spikes mean other utilities need to reach out for more capacity. * 7 F-Rated Stocks to Sell for Summer Year to date the stock is up 18% and has a respectable 2.9% dividend. You don't want flash from your utilities, just steady, consistent growth. LNT is delivering that and should continue to as rates move lower. Paycom Software (PAYC)Paycom Software (NYSE:PAYC) has been on quite a run. It's in one of the most popular sectors right now, Human Capital Management (HCM).HCM is one of those new terms that basically means managing all aspects of a company's workforce, from recruitment to retirement.PAYC is a cloud-based HCM that encompasses the whole shooting match. One of its biggest selling points is that it doesn't need any customization to operate its extensive platform. It comes from a core, proprietary HCM database that allows clients to access their platforms on the cloud, so there is also complete mobility.The stock is up 134% in the past 12 months, and it's still trading at a current PE ratio of 96, which means investors see some big room for growth, even after its current run.What's more, the company is expecting the same. PAYC recently upped its guidance for the remainder of the year. Tractor Supply (TSCO)Source: Bfraser8 via Wikimedia (Modified)Tractor Supply (NASDAQ:TSCO) is like a Home Depot (HD) for farmers and rural Americans.The company was founded in Brentwood, TN in 1938 and has 1,700 stores in 49 states. It's likely you haven't heard of it unless you live outside the suburbs or city.Tractor Supply specializes in the needs of farmers, ranchers, suburban and rural homeowners, as well as contractors and tradesmen.Larger home improvement chains aren't really focused on that niche market and can't saturate a rural area as efficiently as TSCO can. It's stores are smaller but busy because there's always something that needs fixing or upkeep on a farm. * The 7 Top Small-Cap Stocks Of 2019 Plus, as more workers take advantage of working offsite, it means people are moving to more rural communities and getting to know their local Tractor Supply store.The stock is up 32% year to date and still remains a solid value. Essex Property Trust (ESS)Source: FlickrEssex Property Trust (NYE:ESS) is a REIT that has been around since the early 1970s.Its primary focus is apartment complexes on the West Coast. ESS currently has more than 250 complexes in Southern California cities where there is always demand for housing.Most of its properties skew towards the upper end of the market, but there is so much demand in the markets ESS focuses on that it doesn't have issues keeping properties rented.Since the financial crisis, younger generations have leaned toward leasing apartments rather than buying real estate. And even when they do buy property, they're doing it later. That provides a growing market with a longer tail for quality REITs like ESS.Plus, if you're not paying for upkeep on a home, paying a premium on a rental means extra amenities and better locations. This trend will not slow anytime soon.ESS is hot right now. Though it has been getting pricey, there's still a lot of bullish sentiment and its earnings are strong. Up 21% year to date and delivering a 2.6% dividend in a low-interest rate market, all things are going its way.Louis Navellier is a renowned growth investor. He is the editor of four investing newsletters: Growth Investor, Breakthrough Stocks, Accelerated Profits and Platinum Growth. His most popular service, Growth Investor, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Retail Stocks to Buy That Are Down in 2019 * 7 of the Best SPDR ETFs -- Besides SPY and GLD * 5 Dividend Stocks to Buy From Across the Globe The post 7 A-Rated Stocks to Buy for the Rest of 2019 appeared first on InvestorPlace.