|Bid||0.00 x 800|
|Ask||0.00 x 1400|
|Day's Range||106.57 - 110.57|
|52 Week Range||26.30 - 113.44|
|Beta (3Y Monthly)||N/A|
|PE Ratio (TTM)||N/A|
|Earnings Date||Aug 7, 2019|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||83.63|
(Bloomberg) -- Netflix Inc. shocked investors by reporting a drop in U.S. customers and much slower growth overseas, raising fears that the streaming giant is losing momentum just as competitors prepare to pounce.The shares plunged 10% to $325.21 at the close in New York, the worst one-day drop in three years, after the company reported a loss of 130,000 customers in the U.S. Netflix blamed higher prices and a weak slate of TV shows. It signed up 2.8 million subscribers internationally in the period, roughly half what the company predicted.“Netflix has a difficult road ahead, with looming competition and the removal of popular content,” said EMarketer Inc. analyst Eric Haggstrom. But a stronger lineup of new shows in the current quarter could help attract former subscribers, he said.The quarter represents the biggest black eye for Netflix since 2011, when the company split its DVD-by-mail business from its streaming business. That move raised prices for its customers, and resulted in the loss of more than 800,000 subscribers in the U.S. The company had planned to call the DVD service Qwikster, but it backpedaled on the plan after investors and customers scoffed at the idea.Netflix said the miss is a one-time blip rather than a long-term problem. The second quarter has typically been its weakest time of year: The company missed its forecast during the period in three of the past four years.Netflix looks to add 7 million subscribers in the current quarter, thanks in part to the return of top shows “Stranger Things” and “Orange Is the New Black.”“Our position is excellent,” Chief Executive Officer Reed Hastings said during a videoconference call Wednesday. “We’re building amazing capacity for content. Our product has never been in better shape.”Several analysts agreed that the second-quarter disappointment should be only a temporary hiccup for Netflix. Investors should “aggressively buy the stock” on weakness, especially below $325 a share, Loop Capital said.Heavy SpendingFor now, the second-quarter shortfall is renewing investor concern about the company’s heavy program spending and low profitability. Netflix shelled out more than $3 billion on programming in the quarter and another $600 million to market its shows. The company spent $594 million more than it took in and will need to raise money to fund programming.Investors had been forgiving about the spending and the debt -- so long as customers grew at record rates. But the loss of subscribers in the U.S. was the first since the Qwikster debacle, and it suggests Netflix may be running into price resistance or the limits of the addressable domestic market. The company has forecast it can reach as much as 90 million customers in the U.S., compared with 60.1 million currently.Overseas SlowdownInternational results flagged too, with the company missing its own forecast of 4.7 million new subscribers. Europe, Latin America and Asia have been the primary drivers of Netflix’s customer acquisition in recent years, and growth must be sustained if the company is to justify its high valuation.Netflix is introducing a cheaper, mobile-only package in India to attract customers in a big market with price-sensitive customers.Analysts expect the company to have a blockbuster second half because of a heavy release schedule that includes a new season of “The Crown” and movies by directors Martin Scorsese and Michael Bay. Even after the slowdown last quarter, Netflix still thinks it can have its best year of customer growth in 2019.But competition is coming. Walt Disney Co. and Apple Inc. plan to introduce streaming services this year, while offerings from Comcast Corp. and AT&T Inc. arrive in 2020. Those services may not steal users from Netflix, but they will make future growth harder, according to Michael Pachter, an analyst with Wedbush Securities.Just a Preview?“We saw a preview of next year with this quarter,” Pachter said in an interview with Bloomberg Television. “Next year, they’ll have a couple quarters where they’ll lose subscribers.”Another challenge: Competitors are taking back rights to programs that have been popular on Netflix, including “Friends” and “The Office,” to use for their own services. That will force Netflix to rely even more on its original productions.Those efforts have largely been successful. Its shows just earned 117 nominations for the 2019 Emmy awards. But reruns of old shows still constitute the majority of viewing.The slowdown in users overshadowed the company’s quarterly financial results. Earnings for the second quarter fell to 60 cents a share, but beat analysts’ estimates of 56 cents. Sales grew 26% to $4.92 billion, compared with projections of $4.93 billion.The stock had been up 35% for the year at the close of regular trading, nearly double the gain of the S&P 500. The decline spread to related stocks such as Roku Inc., which makes set-top boxes that deliver the streaming service. Its shares fell as much as 2.5%, but closed little changed.(Updates with closing prices)To contact the reporter on this story: Lucas Shaw in Los Angeles at firstname.lastname@example.orgTo contact the editors responsible for this story: Nick Turner at email@example.com, Rob GolumFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
I get the case for Roku (NASDAQ:ROKU) as a business. The concern -- or one of the big concerns, anyway -- is the ROKU stock price.Source: Shutterstock ROKU stock has risen 260% in 2019 alone. It's added some $9 billion in market value over that period. To be sure, ROKU had crashed at the end of 2018, and likely was too cheap at those lows. Still, the gains are close to staggering: none of the 720 stocks with a market cap over $10 billion have outperformed ROKU stock so far this year.Again, there is a bull case here. In fact, I've made that bull case. I also argued last month, with the ROKU stock price over $100, that the rally had gone too far. For a moment, that call looked prescient, as the stock promptly fell over 10%. But a more confident market has bid ROKU back up to an all-time high.InvestorPlace - Stock Market News, Stock Advice & Trading TipsAhead of earnings, coming on August 7, those highs look too high. There's value here. But to even stay at these levels, Roku will have to answer some key questions. * 7 Stocks Top Investors Are Buying Now So much success is priced in at this point that it seems difficult to get too excited. Of course, I -- and other skeptics -- have said that before. Can the ROKU Stock Price Hold the Valuation?On its face, ROKU looks expensive. The company is guiding for over $1 billion in revenue this year -- which suggests something around a 11x+ EV/revenue multiple, backing out some $285 million in cash.Of course, in this market, 11x sales -- even for an unprofitable company -- isn't all that extreme. Whether it's Shopify (NYSE:SHOP) or MongoDB (NASDAQ:MDB), growth stock investors have become accustomed to paying those types of multiples. Even streaming giant Netflix (NASDAQ:NFLX), accounting for its post-earnings decline on Wednesday, trades at 9.4x EV/revenue, based on 2019 analyst estimates, with slower growth.But, as I've written before, it's important to remember a key aspect of Roku's business. The company's player business -- the actual sales of Roku hardware -- is unprofitable. Players generated gross profit of just $7 million in the first quarter, for example. It's the platform revenue from advertising, the Roku Channel, etc., for which investors are paying.That revenue is guided to two-thirds of this year's total. That in turn means investors are paying roughly 17x platform revenue -- one of the highest multiples in the entire market. It's difficult to see that moving any higher -- and there are reasons to think it might move lower. Will Netflix and YouTube Play Ball?That multiple might seem acceptable given Roku's key position in the growth of streaming. But the problem is that Roku isn't monetizing that position all that well.Notably, per the Roku 10-K, Netflix and Alphabet's (NASDAQ:GOOG,NASDAQ:GOOGL) YouTube account "for a majority" of hours streamed on Roku devices. Roku does not get "material revenue" from YouTube, however, and still appears to receive few dollars from Netflix.That might not be a terrible thing in terms of growth. The lack of dollars from those streaming giants means that new streaming services from Disney (NYSE:DIS), AT&T's (NYSE:T) WarnerMedia, and Comcast (NASDAQ:CMCSA) subsidiary NBCUniversal all can provide catalysts to revenue and profits.But from a long-term perspective, it's hard to see how ROKU stock is a clear and easy play on streaming when it's not making money from the industry's two biggest players (at least for now). And it's difficult to see why Disney or WarnerMedia would pay Roku when they're competing against Netflix and YouTube. Who Buys Roku?These questions are largely moot if Roku gets acquired. Rumors have swirled since even before the company's IPO. At this point, Roku clearly has out-competed Alphabet and Amazon (NASDAQ:AMZN) in terms of streaming devices. As such, it would make sense that some company might want to acquire it as an entry into the streaming ecosystem -- or a way to profit from it.The problem at this point is: who? If anyone involved in streaming acquires Roku, it then owns a gateway for cord-cutters. But so many other companies are involved in streaming, that the new Roku owner instantly would own the distribution mechanism for its competitors.That's a sticky situation. It makes streaming providers more hesitant to deal with Roku; they might instead turn to Amazon, who is having some success licensing its Fire technology to television manufacturers. It puts Roku, at this point a subsidiary of a larger player, in an awkward position.Meanwhile, Alphabet, Amazon, and Apple (NASDAQ:AAPL) all have their own hardware (Apple's platform is on the way). Disney and NBCUniversal won't be looking to provide streaming services for their competitors. Smaller media companies, at this point, might be too small given Roku's about $12 billion enterprise value.It's easy to assume that Roku will be bought out. But the same assumptions were made about TiVo (NASDAQ:TIVO). These aren't the same situations, of course, but the names of potential Roku buyers being floated around don't make all that much sense -- at least not yet. Be Careful Ahead of EarningsParticularly with Netflix's post-earnings flameout, ROKU stock simply looks dangerous here. Valuation is a question mark. Competition remains intense. An acquisition is far from guaranteed.And, as we've seen with Netflix, streaming growth isn't quite as linear as some would like to believe. For ROKU, so much success is priced in that anything short of a blowout quarter next month is going to be a problem. There's a wonderful business here, to be sure. It just might not be quite as wonderful as the ROKU stock price suggests at the moment.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Stocks Top Investors Are Buying Now * The 10 Best Cryptocurrencies to Keep on Your Radar * 7 Marijuana Penny Stocks That Could Triple (But You Won't Make Money) The post Three Key Questions for Roku Stock Ahead of Earnings appeared first on InvestorPlace.
Qualcomm (NASDAQ:QCOM) stock has been volatile over the past few months. QCOM stock went from $57 in mid-April to almost $90 by the end of the month. By mid-May -- one month after Qualcomm stock rocketed higher -- the shares were back down to $65.Source: Shutterstock Holy moly, that's a lot of volatility for a name that many own for income. Some income investors can ignore that kind of noise and use it to their advantage. That is, they can reap the reward of the gains of QCOM stock, yet smile when it declines, knowing that their reinvested dividends are buying more shares of QCOM stock. * 7 Stocks Top Investors Are Buying Now But QCOM stock looks like a tough dividend stock to stomach. After all, Qualcomm stock is bouncing around more than high-octane growth names like Shopify (NASDAQ:SHOP) and Roku (NASDAQ:ROKU), with the latter name recently hitting new, all-time highs. The bottom line is that there are far less volatile names with yields similar to that of QCOM stock.InvestorPlace - Stock Market News, Stock Advice & Trading TipsBut the charts indicate that Qualcomm stock could be presenting investors with the perfect buying opportunity. Let's take a closer look. Trading QCOM Stock Click to EnlargeQCOM is sitting right above its uptrend support, depicted by the upward-sloping blue line. However, on Tuesday QCOM stock importantly closed over its short-term downtrend resistance (depicted by the downward sloping blue line with the number "2" above it. ). A similar pattern has played out for a longer period of time, with the purple lines highlighting the wedge.So what does all this mean?That data alone isn't necessarily enough to convince investors to go long QCOM stock, but have a closer look; Qualcomm stock is staying above its 20-day and 50-day moving averages.The most attractive part of the setup, though, is the fact that QCOM is so close to its uptrend support and those moving averages. That puts buyers in a low-risk trading situation. Since it's easy for them to pull the plug on the trade and sell their position on a slight breakdown, they can avoid the pain of a major reversal. The only caveat is that QCOM can't be too volatile.With their downside limited, traders can look to ride QCOM stock up to its monthly high near $80.76. Click to EnlargeFor longer term investors, this trade setup may not be applicable. However, for them, another trade may be worthwhile. Specifically, it's pretty clear what a vital level $65 is for QCOM stock. While it seems unlikely that the tech giant would pull back and test that area, remember that it did so just last month.An unfavorable development involving Apple (NASDAQ:AAPL), the DoJ or any number of catalysts can negatively impact Qualcomm stock. Keep the $65 level in mind on any deep pullbacks. Weighing Qualcomm StockRecently, I asked whether being long Qualcomm stock was worth the risk. In its settlement with Apple, Qualcomm was paid at least $4.5 billion and agreed to a six-year licensing deal. Further, all legal disputes between the two companies were dropped, clearing a huge headwind for QCOM stock and making one of the world's richest firms its customer.The bulls didn't get to enjoy their spoils for long, though.The FTC made a huge fuss about Qualcomm, arguing that its practices are anti-competitive. Judge Lucy Koh ruled that QCOM is a monopoly and must change the way it does business. The FTC also accused QCOM of charging excessive licensing fees for its technology and has forced the company to submit annual compliance reports for the next seven years to the agency.On Wednesday, QCOM stock rose slightly as the DoJ reportedly sought to delay the enforcement of the antitrust ruling. The Justice Department argued that the ruling would force the Department of Energy and the Department of Defense to suffer intolerable supply disruptions. The DoJ also says that QCOM will likely win its appeal.At the end of the day, the legal issues facing QCOM create both opportunity and risk.While analysts, on average, only expect QCOM's earnings to increase an anemic 2.7% this year, investors are banking on forecasts of 35% growth next year.I like the way QCOM stock has set up on the chart, but I am also aware of its legal risks.Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. Bret Kenwell was long AAPL, ROKU and SHOP. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Stocks Top Investors Are Buying Now * The 10 Best Cryptocurrencies to Keep on Your Radar * 7 Marijuana Penny Stocks That Could Triple (But You Won't Make Money) The post Is Qualcomm Stock Presenting Investors With the Perfect Opportunity? appeared first on InvestorPlace.
I've been a big bull on shares of streaming device maker Roku (NASDAQ:ROKU) since late 2018, a stretch during which ROKU stock has more than tripled. The company has reported monster quarter after monster quarter, reaffirming that this company is on a long-term winning trajectory in the streaming-video-on-demand (SVOD) space.Source: Shutterstock But over the past two months, I've warned that valuation may ultimately put a pause in this ROKU stock rally. Specifically, I've said that ROKU stock is fairly valued around $100, and that rallies towards $110 should be faded, while dips towards $90 should be bought.Today, ROKU stock trades at $110. It's up big over the past few weeks on the heels of a favorable market share update from Strategy Analytics and strong Prime Day sales. But, the long-term upside implications of those catalysts are arguably already priced into the stock at $110.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 3 Food Stocks to Buy for Fast and Big Profits As such, I'm reaffirming that ROKU stock is a long-term winner which, at $110 in mid-2019, needs to take a breather. Roku Stock Is a Long-Term WinnerRoku's long-term growth potential paves a viable pathway for ROKU stock to be a long term winner.According to Internet World Stats, there are about 4.4 billion internet users in the world (~57% of global population). Assuming a global average household size of 3.5, that means there are about 1.3 billion internet households in the world. Of those 1.3 billion internet households, 300 million of them are SVOD households (about 23-24%). Of those 300 million SVOD households, 27 million of them have a Roku device (~9% market share).All of those metrics will go up over time.Global population will go up. The global internet penetration rate will rise as emerging markets continue to urbanize, leading to a rise in the number of global internet people and households. The SVOD penetration rate will similarly rise as internet households continue to shift from linear to internet TV given convenience and price advantages. Further, Roku's market share in the SVOD market will similarly go up because the platform is content neutral, has an easy-to-use UI, and is the smart TV leader.Broadly, then, I think the following are very reasonable assumptions by 2025: * Global internet penetration rises to 70%. The number of global internet households hits roughly 1.6 billion. * SVOD penetration rises to 40%. The number of global SVOD households hits roughly 650 million. * Roku's market share rises to 15-20%. The number of worldwide active Roku accounts hit ~115 million.ARPU will continue to rise, too, thanks to the growing number of subscriptions per account and a secular rise in OTT video ad spend. Gross margins will remain high thanks to the shift to Player revenues. Opex rates will fall with scale, and operating margins will rise dramatically.These assumptions pave a viable pathway towards $5.50 EPS for Roku by 2025. Based on a 30-forward multiple, that yields a 2024 price target for ROKU stock of $165. Stretched Valuation Will Limit Near-Term UpsideThe above narrative and math strongly support the notion that Roku stock is a long-term winner. But there's one problem with buying into this long term winner at current prices: valuation.With the stock trading at $110, ROKU stock is trading in fairly valued to slightly overvalued territory. If you take the fundamentally supported fiscal 2024 price target of $165 and discount it back by 10% per year, you arrive at a fiscal 2019 price target of $100. Thus, long-term growth fundamentals imply that ROKU stock is trading 10% above its fiscal 2019 price target, and we are only halfway through 2019.To be sure, momentum can often outweigh fundamentals in the near term. ROKU stock has a ton of upward momentum right now, boosted by strong Prime Day sales and positive market share reports.But this momentum is fickle, and it can change on a dime. Just see how volatile ROKU stock has been since inception.As such, with ROKU stock, the best thing to do is stick with the fundamentals, and the fundamentals say wait to buy more until you get another dip in the stock. Bottom Line on ROKU StockROKU stock is a long-term winner that you want hold onto for the long haul. With these types of stocks, what you want to do is accumulate a core position at a reasonable price, add on big dips, and sell on big rallies. * 7 Stocks Top Investors Are Buying Now Right now, ROKU stock is in the the middle of a big rally into fundamentally unsupported territory. As such, I think this recent rally is an opportunity to do some trimming. The stock should come back in over the next few weeks, and when it does, that'll be the time to buy more.As of this writing, Luke Lango was long ROKU. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Stocks Top Investors Are Buying Now * The 10 Best Cryptocurrencies to Keep on Your Radar * 7 Marijuana Penny Stocks That Could Triple (But You Won't Make Money) The post It's Time for ROKU Stock to Hit Pause on Its 2019 Rally appeared first on InvestorPlace.
U.S. stock futures are heading for a sleepy open.Source: Shutterstock Ahead of the bell, futures on the Dow Jones Industrial Average are up 0.01%, and S&P 500 futures are higher by 0.02%. Nasdaq-100 futures have added 0.09%.In the options pits, call volume made a comeback despite stocks slipping for the first time in six sessions. Overall volume settled near average levels with about 17.6 million calls and 13.5 million puts changing hands.InvestorPlace - Stock Market News, Stock Advice & Trading TipsMeanwhile, over at the CBOE, the distance between puts and calls narrowed, driving the single-session equity put/call volume ratio up to 0.62 -- a one-week high. The 10-day moving average drifted sideways at 0.60.Options traders loved these three companies yesterday: United Airlines (NYSE:UAL), Roku (NASDAQ:ROKU) and United States Steel (NYSE:X). Let's take a closer look: United Airlines (UAL)United Airlines shares took flight yesterday ahead of last night's earnings release. The 2.85% ramp delivered a robust breakout just in time for the unveiling of their second-quarter profits. For the three months, UAL scored adjusted earnings of $4.21 per share on revenue of $11.4 billion. Analysts were calling for earnings of $4.09 on $11.36 billion in revenue. * 10 Monthly Dividend Stocks to Buy to Pay the Bills UAL stock is trading up just shy of 1% premarket following the release.With its price trend now cruising strongly above rising 20-day and 50-day moving averages, and with it having finally departed its 2019 trading range, the future looks bright for the company's shares. Consider $100 the next upside target.On the options trading front, calls and puts proved equally popular ahead of last night's report. Total activity rocketed to 724% of the average daily volume, with 100,995 contracts traded. Puts barely edged out calls to claim 51% of the day's take.Premiums were pricing in a move of $4.10 post-earnings, so the 50 cent pop this morning is well within expectations. Look for volatility sellers to score a big win at the open. Roku (ROKU)Roku's bid for the market's hottest stock continued in earnest Tuesday with its shares rocketing 7.3% higher to a new record. The culprit for the latest round of its ongoing buying binge was Amazon's (NASDAQ:AMZN) Prime Day, which saw strong sales of televisions equipped with Roku technology as well as Roku streaming devices.The meteoric rise in ROKU stock this year has been a sight to behold. It's now up 265% year-to-date and is followed by momentum traders across the land.On the options trading front, traders came after calls with a vengeance. Activity swelled to 296% of the average daily volume, with 214,010 total contracts traded; 63% of the trading came from call options alone.Implied volatility rallied to 84%, placing it at the 66th percentile of its one-year range. Premiums are baking in daily moves of $5.93 or 5.3%. United States Steel (X)Steel stocks were percolating yesterday, and United States Steel was one of the best performers. X stock rallied 3.6% and is up another 0.73% premarket. The news was light, so I'm chalking the rally up to rotation into the beaten-down sector. Time will tell if it's a one-off or the start of a more sustained recovery.The climb does put an exclamation point on the stock's recent higher swing low. With the follow-through, X shares now sit above the 50-day and 20-day moving averages and are signaling a bottom could be in for the trend. For now, at least. We've seen many such reversal attempts fail in the past.Nonetheless, as long as support at $13.15 holds, buyers hold the upper hand.On the options trading front, calls were the hot ticket all day long. Activity grew to 186% of the average daily volume, with 105,832 total contracts traded. Calls accounted for 73% of the session's sum.Implied volatility ticked up to 60% or the 65th percentile of its one-year range. Premiums are now baking in daily moves of 57 cents or 3.8%, so adjust your expectations accordingly.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 * 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 Wednesday's Vital Data: United Airlines, Roku and United States Steel appeared first on InvestorPlace.
Roku Inc. (ROKU) today announced it will release second quarter 2019 results on Wednesday, August 7, following the close of market. Participants may access the live webcast in listen-only mode on the Roku investor relations website. An archived webcast of the conference call will also be available on the Roku website following the call.
The bulls tried, but it was never going to happen. The S&P 500 fell 0.34% on Tuesday, sliding lower on sizeable volume, calling into question just how much more stocks can climb.Source: Shutterstock Wells Fargo (NYSE:WFC) was a relatively big drag, falling more than 3% following an earnings beat that was dinged and dented by lackluster guidance.At the other end of the spectrum, Roku (NASDAQ:ROKU) soared more than 7% after being one of the big hits of this year's Prime Day, while Blue Apron Holdings (NYSE:APRN) was up more than 30%. Shares of the meal-kit company rallied on word that it was partnering up with Beyond Meat (NASDAQ:BYND) to offer meatless-hamburger meal options.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 10 Stocks Driving the Market to All-Time Highs (And Why) However, as for names that merit a closer trading look headed into Wednesday's session, it's the stock charts of Delta Air Lines (NYSE:DAL), Salesforce (NYSE:CRM) and American Airlines Group (NASDAQ:AAL) that are of the most interest. Here's what to look for. Delta Air Lines (DAL)With nothing more than a quick glance, Delta Air Lines look like a rocket. A large number of people saw last month's big move, wanted to plug into it, and fueled even more bullishness with that buying. Volume has been particularly strong of late.Caution is advised though. This is action we've seen from DAL stock multiple times since early 2017, and sooner or later, each of these run-ups end with a sizeable pullback. That pattern, in fact, has been alarmingly well established, and shares are within sight of a familiar technical ceiling. Click to Enlarge * The big boundary here is right around $64, where the upper boundary of a trading range that extends back to late-2016 currently rests. * The weekly chart is already stochastically overbought, which has proven problematic rather quickly over the course of the past couple of years. * Although its ripe for a wave of profit-taking, the precise tops within the confines of the trading range have never been clear. American Airlines Group (AAL)While Delta looks like it may be near a major peak, shares of rival American Airlines appear as if they're just getting started on a breakout move. That effort gelled in a huge way on Tuesday though, as the last vestige of resistance was rolled over. There's still a chance the advance could fall apart before it gets going in earnest, but the foundation is actually -- even if subtly -- rather firm. * 10 Monthly Dividend Stocks to Buy to Pay the Bills Click to Enlarge * The "trigger" here is Tuesday's move above the 200-day moving average line, plotted in white on both stock charts. * Fanning the bullish flames is the way this week's gain has pushed AAL stock above the upper boundary of a descending wedge. This convergence builds up pressure that, once unleashed, can fuel a prolonged rally. * Although Tuesday's action was catalytic, it could take several more days before the breakout thrust gels above the pivotal 200-day moving average line. Salesforce (CRM)When Saleforce was last examined in early May, it was well up since the end of last year, but putting pressure on the lower boundary of a short-term trading range. It was also acting overbought, struggling to continue making forward progress with or without the trading range. A month later, it had broken below its 200-day moving average line.The bulls pushed back, dragging CRM back above the 200-day moving average line (plotted in white on both stock charts) with a pretty impressive jolt. The bears are growling again though, and yesterday's action waves several red flags. Click to Enlarge * One of those red flags is the shape and placement of Tuesday's bar. The open above Monday's high and close below Monday's low constitutes an "outside day," which portends weakness. * It's imperceptible on both stock charts, but as of Tuesday, the 200-day moving average line is sloped downward. It's an indication of longer-term weakness. * Should the 200-day moving average line fail to act as a floor, if tested again, the next most likely landing spot is the Fibonacci retracement line near $129.As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can learn more about James at his site, jamesbrumley.com, or follow him on Twitter, at @jbrumley. 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 3 Big Stock Charts for Wednesday: Delta Air Lines, Salesforce and American Airlines appeared first on InvestorPlace.
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 firstname.lastname@example.orgTo contact the editors responsible for this story: Catherine Larkin at email@example.com, 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.