|Bid||137.69 x 1100|
|Ask||137.30 x 800|
|Day's Range||136.97 - 143.36|
|52 Week Range||26.30 - 143.36|
|Beta (3Y Monthly)||N/A|
|PE Ratio (TTM)||N/A|
|Earnings Date||Nov 5, 2019 - Nov 11, 2019|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||117.53|
Aug.12 -- Mark Mahaney, RBC Capital Markets analysts, discusses the outlook for Roku Inc. with Bloomberg's Taylor Riggs on "Bloomberg Technology."
This weekend's Barron's offers ways to prepare portfolios to ride out the next decade. "How to Prepare Your Portfolio for the Worst When the Worst Is a Real Possibility" by Reshma Kapadia shows how financial advisors are beginning to prepare for some bad, but not unthinkable, "doomsday" scenarios. Should Microsoft Corporation (NASDAQ: MSFT) be in your doomsday portfolio?
Wall Street is still nervous and for good reason. The economic global wars are escalating especially between the US and China. Just Friday and ahead of the G7 meetings, China announced resuming its tariffs on US autos. So the politicians continue to pick on headline scabs and cause upside breakout setups to fail at inopportune moments. Simply put, homework is hostage to headlines during this period.Nevertheless, here are the top stocks trades for today: Roku (NASDAQ:ROKU), Aurora Cannabis (NYSE:ACB), VMware (NYSE:VMW), Boeing (NYSE:BA), and Salesforce.com (NYSE:CRM). Top Stock Trades for Monday No. 1: ROKUInvestorPlace - Stock Market News, Stock Advice & Trading TipsThere is too much love for the ROKU stock. So I shorted it almost exactly at the top. My thesis was simple but I think it's time to change my mind on that.Short term, there could be more downside perhaps to close to the open gap at $110. But eventually my take on it is to stop selling the rips and buying the dips in ROKU stock. So I would chase it back to new highs if it closes above $143 per share.Meanwhile, ROKU stock fell on Friday but there should be support down to 133 and $127 per share. Below that it could trigger the gap fill move. So I wait patiently for the level breaks and chase them in that direction. * 7 Retail Stocks to Buy on the Dip Fundamentally, I've been a critic of Roku because they've been in business for 16 years and they still haven't figured out how to be sustainability profitable. But maybe that was because the environment wasn't conducive for their business model.Now that Netflix (NASDAQ:NFLX) established fact that the world wants to cut the cord and stream content, Roku has a better setup because it aggregates content so there will be strong demand for its services. based on this, it's better to trade the ROKU stock than try to judge it on its lack of success in the past. The future prospects are not going to be like what has happened most of those 16 years. Top Stock Trades for Monday No. 2: Aurora Cannabis (ACB)Cannabis stocks are falling off a cliff after incredible hulk blah last year. But one stock stood out among all the high-profile names of late. ACB stock has held up better than most. This is not to say it's doing well except in relation to the rest. Even Canopy Growth (NYSE:CGC) which was once considered the cream of the crop cannot find the bottom. They are all in a technical breakdown patterns setting lower lows for weeks.Meanwhile ACB stock has been managed to hold just above a bearish pattern trigger. It even manage to set a few higher-lows recently. But since its chart is still in a negative channel, then I expect at some point that trend line will break up words.But the immediate goal for bulls is to hold ACB from triggering a bearish pattern that would target $4.70 per share. They can do that by holding above $5.50 now. Else there might be more pain ahead.Eventually and if pot stocks have any future, I expect that the sectors rebounds and ACB stock should lead the charge. It's closest to that since it's showing relative strength now. So this stock is on the watch list and the upside triggers could start as early as $6.20 per share. If that happens it would invite more momentum buyers and cause shorts to cover and book their profits.Since the bulls of ACB stock have so far been able to maintain the line in such negative sector-wide action, the upside scenario looks a little more likely than the breakdown. If I am long ACB stock and have not bailed on it, now is not the time to do it for the same reasons stated here. Top Stock Trades for Monday No. 3: VMware (VMW)VMW stock has had a terrible year so far. It's lagging behind since it's only up half as much the S&P 500. Moreover, VMW is down 30% from the March highs. But the opportunity to buy VMW stock is fast approaching. On Friday the stock fell 8% on a decent earnings headline.It has fallen so far that it is reaching a long term pivot zone. These are usually support because bulls and bears have a history of tough fights there. This creates congestion and should give the VMW stock bulls the chance to stabilize the stock and mount their bounce rally.Specifically, VMW stock is just above the last two bottoms around the Christmas corrections. So unless there is something new developing these should hold. VMW $130 per share was pivotal in early 2018 and it should again play an important part soon.Since they don't ring bells at bottoms, I can start a long position with an appropriate stop. It's best to see VMW stock rise above $145 to trigger some buying to accelerate. Conservatively, I can wait it out until a clear trough develops but the downside risk from the charts seems reasonably low. Top Stock Trades for Monday No. 4: Boeing (BA)BA stock was almost impossible to short. Every dip was a buying opportunity. But the sad events of the Boeing 737 Max crashes changed that fact. Now the headlines are more negatively impactful than positively.The headlines are fast and furious and the BA stock bulls are in pain.I would buy BA stock here but this is for the long term. This is after all still a duopoly where both suppliers are overbooked for a decade in advance. So these operational and political problems here are transitory. So this is a classic scenario of this too shall pass.BA stock sells at a 41 price to earnings ratio and pays a respectable dividend. So owning it at these levels is not paying for a lot of bloat. Most of the perceived froth has already been sold out of it.BA stock was up on Friday even though the stock markets were down almost 2%. So this is encouraging but there is a band of resistance through 380 per share. But if the BA bulls can push through it then they target a $50 rally from there. Top Stock Trades for Monday No. 5: CRMThis is the company that invented the cloud. It started years ago when no others were pursuing using the internet for business operations. They battled the behemoth Microsoft (NASDAQ:MSFT) and won. This should have been a sign that CRM stock had much higher levels to go.Indeed, it's is up 162% in five years. On Friday, CRM stock spiked another 5% on a reaction to an excellent earnings report (and then fell with the broader market). They beat all expectations and raised their forward guidance. This silenced a lot of criticism of their acquisitions efforts. Clearly this is a team that is executing on plans perfectly and the only way for the Salesforce.com stock is up. * Stock Market Today: Trump's Tweets Rattle Investors, Foot Locker Trips So If I am long the stock for the long term then I am lucky and stay in it. I personally had longs as a binary bet on the earnings and it paid quickly. But I would buy CRM stock when it closes above $161 per share. From their the upside potential is for another $15 rally in the next few months. There is some short term concern from the open earnings gap.Nicolas Chahine is the managing director of SellSpreads.com. As of this writing, he did not hold a position in any of the aforementioned securities. Join his live chat room for free here. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Retail Stocks to Buy on the Dip * 7 Marijuana Stocks With Critical Levels to Watch * 7 Internet of Things Stocks to Buy Now The post 5 Top Stock Trades for Monday: ROKU, ACB, VMW, CRM, BA appeared first on InvestorPlace.
I was only temporarily right about over-the-top streaming device manufacturer Roku (NASDAQ:ROKU). Back near mid-July, I had reservations about the ROKU stock price. It had more than tripled in market value since January's opening volley. Naturally, I felt that a healthy correction was in order.Source: Michael Vi / Shutterstock.com Shortly after I wrote my cautionary tale, the ROKU stock price cooled like clockwork. At one point earlier this month, shares closed below the psychologically important $100 level. Although I was right on paper, I must admit I was wrong on the reason why.Last month, I had stressed that ROKU was fundamentally stretched. Clearly, extreme enthusiasm had taken over Roku stock. In my view, the company deserved a premium valuation, but not that rich.InvestorPlace - Stock Market News, Stock Advice & Trading TipsBut when shares of the OTT streaming device maker finally corrected, it was more likely due to broader market weakness from the U.S.-China trade war. In other words, Roku stock declined in sympathy with everyone else. Later, the underlying company released its earnings report for the second quarter, and shares were back onto the races. * 10 Marijuana Stocks That Could See 100% Gains, If Not More By most accounts, the OTT provider delivered stunning results. For one thing, the company brought home 30.5 million subscribers overall, representing nearly 39% growth from the year-ago quarter. That was also the first time the company breached the 30 million barrier, a nice excuse to pump up the ROKU stock price.Further, the device and smart-TV maker rang up $250.1 million in revenue, obliterating estimates calling for $224.2 million.Now, I could probably nitpick something, like year-over-year subscription growth being in a downtrend since Q3 2017. But why bother when we're headed toward a recession? ROKU Offers a Compelling Recession-Proof ArgumentLet me back up for a second. I'm not suggesting that a recession is guaranteed. Perhaps, President Donald Trump's administration has a secret formula that could substantively improve the economy.However, I base my pensiveness on the yield curve inversion. For multiple times this month, the yield on shorter-dated U.S. Department of Treasury bonds have jumped past yields of longer-dated Treasuries. Stated differently, investors are receiving less reward for taking on more time-based risks.Truly, this is a nonsensical dynamic, and it worries me on many levels. Logically, the equity markets may absorb some volatility. If anything, they will do so out of sheer uncertainty.But as a contrarian, I think Roku stock suddenly looks very interesting. Don't get me wrong, it was probably always interesting. But ROKU is one of the few growth stocks that might offer some safe haven in a downturn.Why? I'm banking on the consistency of human psychology. A decade ago during the Great Recession, the box office performed surprisingly well. Hollywood offered escapism at a cheap price.It was the same story back about 90 years ago. One of the most enduring images of the Great Depression is bankers jumping from tall buildings. But those who decided to tough it out had some help from the then-burgeoning movie industry. It brought a smile to a desperately hurting nation.While we may not suffer such a severe trauma, a downturn will certainly necessitate some downtime. As a low-cost distraction, nothing beats Roku's OTT streaming products and services.As you know, the company's flagship products are their streaming devices. Offering a wide range of performance specs, you pay only $25 for the cheapest. And unless you decide to fork over for premium content like Netflix (NASDAQ:NFLX), that's all you'll pay. How to Play Roku StockStill, despite Roku's potential resilience during a recession, I wouldn't go too crazy. The reason is that we should all respect the tape. Again, with the yield curve inversion, the major indices risk significant volatility in the future. In that context all names, irrespective of their individual strengths, face some threat.Therefore, I'm bullish on Roku stock, but not necessarily at this price. I'd like to see at least one healthy correction before considering shares. But when that time comes, the present environment is supportive of the OTT device maker. It provides a relevant service at a price that you just can't beat.As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Marijuana Stocks That Could See 100% Gains, If Not More * 11 Stocks Under $10 to Buy Now * 6 China Stocks to Buy on the Dip The post Roku Stock Needs a Recession appeared first on InvestorPlace.
For a stock that gets as much attention as Netflix (NASDAQ:NFLX), one "minor" detail seems to be going overlooked these days. Down more than 23% from its 52-week high, Netflix stock, believe it or not, is currently mired in a bear market.Source: Riccosta / Shutterstock.com So what's ailing once-beloved Netflix stock? Fortunately, the question is easy to answer, but where things get murky is how well the company is going to answer the query.Much of the recent lethargy in Netflix stock is attributable to rising competition in the streaming space. While it felt like Netflix had the streaming universe mostly to itself for awhile (it did), this landscape isn't one conducive to quasi-monopolies as Amazon (NASDAQ:AMZN) has in online retail or as Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) has in Internet search.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 10 Marijuana Stocks That Could See 100% Gains, If Not More Every day, companies in all industries contend with rivals. Often, the results of the tussles boil down to quality of the competitors and how deep their pockets are. That's some of the bear thesis with Netflix stock. Streaming rivals include Amazon, Apple (NASDAQ:AAPL) and Walt Disney (NYSE:DIS). All three are or will soon make significant streaming strides and they have the resources to pinch Netflix.Competition could beget more lost subscribers, long the bane of Netflix stock. Explaining why Netflix stock has struggled since its second-quarter earnings report just over a month boils down to the 126,000 lost domestic subscribers when Wall Street was expecting the addition of 352,000. The 2.8 million international additions were overshadowed due to that number missing estimates by two million. There's Hope for NFLX Stock … Sort OfYes, there's a bull case for Netflix stock, but investors willing to exercise some restraint may be able to get pricing than they see today for a couple of reasons. First, some of the aforementioned competition, such as Disney+, is coming soon, and as companies update on that front, Netflix stock could be dinged. Second, the chart on Netflix is not attractive from the long side.While investors may be lacking enthusiasm for NFLX stock at the moment, some data points indicate subscribers may be renewing affinity for the streaming provider's wares."It's still early in the quarter, but data through July looks solid (rebound from 2Q)," said SunTrust Robinson Humphrey analyst Matthew Thornton in a recent note. "Google searches (on keyword "Netflix") and mobile app downloads for the month also show nice upticks vs 2Q19 and back toward or above the 1Q19 high-water-mark."New content could be a catalyst for Netflix stock, but there are costs associated with that and NFLX has a history of losing money. Plus, the company's cancellation track record confirms it's more likely to make a new dud than another "Orange Is the New Black." Bottom Line on Netflix: Fierce CompetitionIn its early days, Netflix had pricing power, which enabled it to raise subscription fees without much churn. But with an onslaught of new competitors in the streaming world, pricing power is diminishing."Larger firms like Disney and WarnerMedia are launching their own SVOD platforms to compete against Netflix," said Morningstar in a recent note. "We think this usage pattern and increased competition will constrain Netflix's ability to raise prices without inducing greater churn."The research firm notes that while admirable, international expansion efforts by Netflix carry no competitive advantage, because its global and local rivals can adjust their own content budgets to go head-to-head with Netflix.Thanks to companies like Roku (NASDAQ:ROKU) that are driving pay TV prices lower through over-the-top delivery, Netflix may not be able to apply much more upside pressure to its $13 a month base subscription fee. In lieu of significant subscriber growth, lost pricing power is a headwind for NFLX stock that must be acknowledged.Todd Shriber does not own any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Marijuana Stocks That Could See 100% Gains, If Not More * 11 Stocks Under $10 to Buy Now * 6 China Stocks to Buy on the Dip The post Netflix Can't Chill: Too Many Worthy Competitors Are Looming appeared first on InvestorPlace.
While Netflix remains the most popular subscription service, rivals like Hulu and Amazon Prime Video are stealing share, according to eMarketer's latest OTT forecast.
If I told you at the beginning of 2019 that two of your stocks would deliver 11% and 25% total returns through the first seven-and-a-half months of the year, you'd have gladly taken that performance. Well, that's precisely where Netflix (NASDAQ:NFLX) and Disney (NYSE:DIS) today, a little more than halfway through August. Unfortunately, for owners of Netflix stock and Disney stock, Roku (NASDAQ:ROKU) stock is up 338% year to date through August 12, leaving both entertainment stocks in the dust. Source: jejim / Shutterstock.com Clearly, Roku is the best entertainment stock in 2019. What happens to Netflix stock in 2020? Disney has a formidable video-streaming bundle out in November that could take market share from Reed Hastings & Co. Meanwhile, Roku doesn't care what you watch as long as you do so through the Roku platform or on one its player devices.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 10 Undervalued Stocks With Breakout Potential Seems like the answer to the question which of Netflix, Disney and Roku stock are good, better, and best, has already been answered by investors.Here are my two cents on the subject. Netflix StockNFLX didn't have a great July, down 12.1% while the S&P 500 eked out a 1.3% return on the month. By comparison, Disney was up 3.0% and Roku gained a whopping 14.1%, significantly better than either of the entertainment veterans. Netflix had some good news and bad news to deliver in July. On the plus side, its revenues and operating income grew by 26% and 53% respectively during the second quarter, precisely what management was expecting. The bad news was that Netflix planned to add 5 million new subscribers during the quarter ended June 30. Instead, it added just 2.70 million, well below its guidance and half the 5.45 million net subscribers it added in Q2 2018. Despite Netflix being known for missing badly on one quarter a year, investors took that as a big sign the days of significant growth were grinding to a halt -- and down went Netflix stock.There were two big reasons for Netflix's weak quarter.The first had to do with price increases in several countries where it operates. Once it upped the monthly fee, some price-conscious customers bolted. Secondly, it added so many new customers in Q1 2019 and Q4 2018 -- 9.6 million in Q1 2019, 700,000 more than forecast, combined with adding 8.8 million new customers in the fourth quarter, 1.2 million more than it forecasted for that quarter -- that is was entirely likely that Q2 2019 was going to be a dud. By no means does it suggest that the Netflix business model is broken. Disney StockFor the better part of three years, Disney stock traded in a range between $100-120. In 2019, due to the completion of its 21st Century Fox acquisition and the soon-to-be-released Disney+ video streaming, DIS came alive. At least until it announced Q3 2019 results that showed the highly anticipated launch of Star Wars: Galaxy's Edge, the most significant addition to Anaheim Disney in its history, was anything but a success. Disney stock dropped more than 6% on the news, the most it's fallen since August 2015. Also, to get Disney+ up and running, the company's direct-to-consumer business lost $553 million in the quarter as a result of spending for movies and TV shows for the new video streaming service.As a result of these problems, Disney's adjusted profit in the third quarter was $1.35 a share, 40 cents below the average analyst estimate. "The market will be disappointed with the top- and bottom-line misses," said Richard "Trip" Miller, founder of Gullane Capital Partners, on August 7. "This is a transition quarter for Disney, as they onboard Fox assets and spend capital to invest in the three direct-to-consumer products."I couldn't agree more. Disney's new video-streaming bundle is going to be a real thorn in the side of Netflix. At $12.99, it could be a Netflix killer. Roku StockA few days ago, I wrote about the great strides Roku has made in its business model, so I'm not going to say much about its stock. However, what I can say is that I love its business model. The company continues to generate significant growth in its active accounts and those active accounts are watching a lot more content translating into much higher average revenues per user. By introducing premium subscriptions, Roku will be able to continue to monetize its video streaming platform in the future.The one thing that's been holding Roku back is a GAAP profit for an entire fiscal year. It's got a shot at being profitable in 2019, but 2020 is more likely. As I've said several times in the past year, when Roku delivers an annual GAAP profit, Roku stock will skyrocket to $200 and beyond. Good, Better, Best In August, Needham analysts Laura Martin and Dan Medina stated that they felt Roku was a better stock to back than Netflix because while it struggles to get paid subscribers, Roku's 80 million users account for a significant chunk of the $70 billion U.S. television ad market. "Roku is the dominant internet aggregator for streamed TV & movie content, like YouTube is for user generated content, at about 1/20th the valuation," Martin and Medina wrote in a note to clients. * The 10 Best Marijuana Stocks to Buy Now I like Netflix stock, I do. However, when it comes to good, better, and best, Roku stock is best, Netflix is better, and Disney is good. Own all three if you can.At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Marijuana Stocks to Ride High on the Farm Bill * 8 Biotech Stocks to Watch After the Q2 Earnings Season * 7 Unusual, Growth-Oriented REITs to Buy for Your Portfolio The post Who Will Win the Streaming Wars? Netflix, Disney or Roku Stock appeared first on InvestorPlace.
Roku (NASDAQ:ROKU) unquestionably has had an incredible 2019. Earnings continue to beat expectations. Growth has impressed. The ROKU stock price has soared, climbing 348% to this point. Among stocks with a market capitalization over $4 billion, not one has come close. Snap (NYSE:SNAP) is in second place, with a paltry-by-comparison 184% gain.Source: jejim / Shutterstock.com Even after those gains, ROKU stock looks reasonably cheap -- at least by the standards of this tech market. The midpoint of revenue guidance for 2019 suggests a roughly 14x enterprise value/revenue multiple. In a market where Shopify (NYSE:SHOP) is getting 25x+ and double-digit EV/sales multiples aren't uncommon, that figure isn't necessarily out of line.With Roku's pole position among cord-cutting and international possibilities, that type of multiple seems merited. But I'm no longer sure that's the case. The issue isn't necessarily the headline multiple. Investors mostly have done well by paying up for growth in this market. It's that, looking closer, Roku's current valuation for several reasons looks highly questionable -- even if, admittedly, I've made that argument before.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Player Revenue Shouldn't Count for the ROKU Stock PriceAgain, 14x revenue isn't that crazy in this market, even if that statement alone makes some investors wonder if the entire market has gone crazy at this point. But it's important to remember, as I've noted before, that not all of Roku's revenue is worth paying up for.The company's guidance, updated after this month's second-quarter earnings report, is for revenue of $1.1 billion at the midpoint. But roughly one-third of those sales are coming from Roku players -- which are actually unprofitable. * 10 Undervalued Stocks With Breakout Potential Player gross margin in the second quarter was just 5.5%. Gross profit dollars for players over the past four quarters total just $23 million -- suggesting 6.5% gross margins. Given that research and development spending alone has been over $200 million during that stretch, the player business obviously is a loss leader for the company's platform business.And that's fine. Platform revenue is growing at an exponential rate: 79% year-over-year in Q1 and 86% in Q2. But investors shouldn't be paying 14x revenue -- or really, anything, for the player revenue.Back out those hardware sales, and the ROKU stock price now sits above 20x this year's revenue. That is a multiple that, on its face, looks questionable. It's a multiple assigned to companies that have the potential for dominance of their market. Roku isn't necessarily one of those companies, at least not yet. The Market Share QuestionWhat's interesting about Roku is that it's driving growth while facing competition from absolute giants. This is a company going directly against Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) -- three of the four most valuable companies in the world. It has leading market share in terms of streaming devices in use.But it's still a relatively fragmented market. And in smart TVs, which is where Roku management itself believes streaming is going to go, its share in the first half of this year was "more than one in three," according to the shareholder letter.To be sure, Roku may be able to take share over time. More users means more data, which combined with the company's machine learning capabilities improves the experience. The Roku Channel increasingly looks like a gateway to streaming. It also looks like a business in which Roku can take dollars from streaming services, take dollars from advertisers and potentially take eyeballs (and maybe at some point dollars) through its own content.Still, Roku seems potentially unlikely to ever truly dominate the space. Competition is always going to be a factor -- and those larger rivals can find a way to undercut on pricing for streaming services and for advertisers. At 20x+ platform revenue, an investor should at least think she's buying the clear winner in an industry. That's not yet guaranteed to be the case. Where Does Streaming Go?The broader question is that this remains an industry still in the early stages -- which means Roku's long-term role in the ecosystem may change over time. Right now, there are dozens of streaming services of all sizes -- with more on the way. Disney (NYSE:DIS), Comcast (NASDAQ:CMCSA), and AT&T's (NYSE:T) unit WarnerMedia all are launching major efforts within the next 12 months.But many of the existing services -- and possibly one or two of the larger offerings out there -- are going to go by the wayside at some point. The glut of so-called virtual multi-channel video programming distributors like YouTube TV, Sling, DIRECTV NOW and others will ease.Roku's potential base of advertising customers, in particular, is likely to peak in the next 12-18 months. A less-fragmented streaming universe would give more power back to the winners -- and lower overall demand and pricing power for Roku.From a broad standpoint, there are simply a lot of questions here. Roku certainly is going to grow going forward. This is not the next TiVo (NASDAQ:TIVO). But, again, this is a stock selling at 20x its key revenue stream -- and something like 400x 2019 adjusted EBITDA.It's a valuation that leaves little room for questions. And it's a valuation that is likely to recede if, at some point, those questions are raised.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Marijuana Stocks to Ride High on the Farm Bill * 8 Biotech Stocks to Watch After the Q2 Earnings Season * 7 Unusual, Growth-Oriented REITs to Buy for Your Portfolio The post Why the Roku Stock Price Needs to Pull Back appeared first on InvestorPlace.
Parents and children will have an easier time consuming family-friendly content on their Roku devices with the addition of “Kids & Family” aggregation on The Roku Channel.
[CORRECTION: This version corrects that Roku's 52-week high is $142.10 and not $198.23.]In general, equity markets represent investor confidence. Since late July, most tech stocks have been declining amidst the bearish sentiment in the global and United States markets. It is no secret that the Chinese economy is beginning to feel the effects of the ongoing trade war. Other global powers, such as Japan, the United Kingdom and the European Union, led by Germany and France, are also showing signs of a slowdown. And earlier in the week, Argentina spooked the Latin American markets when its currency and equity markets lost a third of their value overnight.In other words, unless we have a swift resolution on the trade war front, spending by the U.S. consumer may not be enough to improve economic prospects globally.InvestorPlace - Stock Market News, Stock Advice & Trading TipsTherefore, investors are wondering what may be next for many of the tech stocks in their portfolios. Today, I'd like to discuss three tech stocks to avoid in the second half of August and possibly in September, too. These stocks are Baidu (NASDAQ:BIDU), Roku (NASDAQ:ROKU) and Tesla (NASDAQ:TSLA). * 10 Cyclical Stocks to Buy (or Sell) Now Investors may consider waiting on the sidelines if they do not currently have any positions open in these tech stocks. If they already own shares, they may either consider taking some money off the table during this market bounce or hedging their positions. As for hedging strategies, covered calls or put spreads with Sep 20 expiry could be appropriate as straight put purchases are likely to be expensive due to heightened volatility.With all of that in mind, let's dive a little deeper into each of these stocks. Stocks to Sell: Baidu (BIDU)Source: testing / Shutterstock.com Notable Risks: Valuation, questions about growth, trade wars and broader tech market weaknessPossible Price Range: $85-$105During the past year, the BIDU stock price is down 55%. On Sep. 21, 2018, the shares saw a 52-week high of $234.88. Now, Baidu stock is hovering around $95. Clearly, the bears have taken control of the tape.What is the main reason for the deterioration of Baidu's market cap? Investors fear that the company's growth narrative does not hold any more.BIDU has two sources of revenue: * Internet advertising business (which is at the core); and * Income from majority ownership in iQiyi (NASDAQ:IQ)The tech market in China has grown exponentially in the last decade. And Baidu stock has been able to ride that wave. Baidu has over 70% of the Chinese online search market share. Until about a year ago, this leadership has meant growing advertising revenues and solid margins.However, that is not the case anymore. Competitors like Alibaba (NYSE:BABA) and Tencent (OTCMKTS:TCEHY) have been pressuring its business model and ad revenues. Many Chinese consumers are using apps that bypass browsers and thus Baidu's search engine. In other words, BIDU stock's desktop search business is being disrupted or even displaced.Wall Street is not sure if management knows how to go after the challenge to Baidu's core business. The company has increased spending to attract more advertisers, which in turn has affected margins. In other words, the company spends a lot of cash to make some money.Furthermore, as the Chinese economy slows down, all these companies chase the same advertisers, who have been scaling down ad budgets.The second factor adversely affecting Baidu's top-line growth comes from its ownership of iQiyi, the so-called Netflix (NASDAQ:NFLX) of China. Baidu still owns roughly two-thirds of iQiyi, so IQ's results and its growth are reflected in Baidu's consolidated numbers. And iQiyi stock is not making any money at this point either.Management at iQiyi has underlined that as the company further invests in technology and builds content, the cost of revenue would be high -- therefore the company will not be profitable any time soon.And when you add the uncertainty around trade wars, it may just not be fashionable to buy BIDU shares in 2019. Overall, the bull thesis supporting BIDU stock is falling apart. It would be important to analyze the next earnings report expected in November to see if Baidu stock has a better investment proposition for long-term investors.From a time and price analysis perspective, I'd expect BIDU stock to reach a 52-week low around Sept. 21. Until then, I'd not get too bullish on Baidu shares. Roku (ROKU)Source: JHVEPhoto / Shutterstock.com Notable Risks: Profit-taking, rich valuation and broader tech market weaknessPossible Price Range: $135-$155ROKU stock has been on a tear this year. Year-to-date, Roku shares are up 135%. However, it might now be time for investors to become cautious.With a market cap of $11.7 billion, Roku stock is the largest over-the-top streaming content provider in the U.S. On Aug. 13, 2019, ROKU stock hit a 52-week high at $142.10.U.S. consumers are fast moving from traditional pay-TV services to streaming delivery services. 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, there is likely to be some further profit-taking in ROKU stock in the next few weeks.Roku 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.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 advertising. OTT ads are shown on a TV screen through a smart TV or streaming device.Roku 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. 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? * 8 Dividend Aristocrat Stocks to Buy Now No Matter What Therefore, I'd encourage retail investors to exercise caution with Roku stock until the next earnings report, expected in October. Tesla (TSLA)Source: Sheila Fitzgerald / Shutterstock.com Notable Risks: Fundamentals, profit-taking, trade wars and broader tech market weaknessPossible Price Range: $180-$230When Tesla released worse-than-expected second-quarter 2019 earnings on July 24, many investors possibly ended up with more questions than answers on what to expect from Tesla stock for the rest of the year.Before reporting earnings, TSLA stock closed at $264.88. The next morning it opened at $234.50. Now Tesla stock price is hovering around the $220-$225 range.Investors usually can get a sense of any current and future problems by looking at operational and market performance as well as at basic financial metrics and cash flow. In Tesla's case, we may have a combination of signs of difficulty.The past year has seen the demand for electric vehicles decline in the U.S. And Tesla's Model 3 sales have not been at the levels expected.Tesla's Q2 results showed that the gross margin of its automotive segment is declining. Last quarter, it was 20.2%. In Q4 and Q3 of 2018, the metric was 24.3% and 25.8%, respectively.The main reason behind the decline of the company's gross margin is that Tesla's sales mix is increasingly shifting from higher-priced S and X models to the Model 3. Model 3, which is priced at $35,000 is an entry-level car that carries lower margins.As we discuss Tesla's problems, we have to mention that the auto sector is susceptible to the trade-war risk. As the demand in the U.S. declines, Tesla needs to achieve increased sales numbers from overseas, namely China, the largest electric vehicle market in the world.In late 2017, Tesla and the Chinese government agreed that the company would manufacture cars in China, and build and own a factory in Shanghai.TSLA is continuing to build its manufacturing plant in Shanghai. However, the details as to when actual production will begin at the plant is sketchy. Tesla is yet to release definite dates and production goals for the plant.At this point, TSLA stock has had several months of poor performance, both in terms of metrics and the stock price. Therefore, before committing any capital into the shares, I'd like to see the next earnings statement, expected in late October. By then, we might even have an earnings warning statement, which would send the stock even further south.At this point, Tesla bears have the upper hand and I'd consider investing in TSLA stock as a speculative bet.As of this writing, Tezcan Gecgil did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Cheap Dividend Stocks to Load Up On * The 10 Biggest Losers from Q2 Earnings * 5 Dependable Dividend Stocks to Buy The post 3 Tech Stocks to Avoid (or Sell) for Now appeared first on InvestorPlace.
Roku, Inc. (ROKU) today announced the addition of “Kids & Family” on The Roku Channel, the home for free and premium entertainment on the Roku platform. The new Kids & Family experience makes it easy for children and parents to find a great selection of tailored content available for free and through Premium Subscriptions available in one, easy-to-access destination. In addition, Roku is rolling out Parental Control features for The Roku Channel giving parents an additional layer of control over what their kids can playback within the channel.
When it comes to growth stocks in general and the growth stocks of newer or smaller companies in particular, investors can be confounded by a variety of concerns, including high valuations, wondering if they're too late after a big move higher, and trying to determine when a growth name will become profitable.Source: Shutterstock The losses of one growth stock, Roku (NASDAQ:ROKU), are narrowing. Based on the company's ability to grow its revenue, pare those losses and approach profitability, Roku stock may not be as expensive as it appears at first glance. Importantly, even after more than quadrupling in 2019, it is possible that Roku stock's market capitalization of around $14.3 billion can increase over the near-term.As a streaming-entertainment provider, ROKU inevitably draws comparisons to Netflix (NASDAQ:NFLX). Netflix is a story stock in its own right, and those comparisons are apt to get some investors excited about Roku stock. That excitement is justified, but the owners of Roku stock should not become enamored with comparisons between the companies. Rather, the best course of action is to evaluate Roku's businesses and worry about whether it is becoming the best version of itself, not the second coming of Netflix.InvestorPlace - Stock Market News, Stock Advice & Trading TipsRoku's player and platform segments are the primary drivers of its revenue and of ROKU stock price. * 7 Great Small-Cap Stocks to Buy "It derives key revenue from the Player segment which consists of net sales of streaming media players and accessories through retailers and distributors, as well as directly to customers through the company's website," according to Morningstar. "Platform segment consists of fees received from advertisers and content publishers, and from licensing the company's technology and proprietary operating system with TV brands and service operators." Banking on BlowoutsRoku's second-quarter report was a blowout, as the company reported a loss of 8 cents per share, well below the 21 cent per share loss Wall Street was expecting. That report, delivered last week, sent the ROKU stock price higher by more than 20% in one trading day after the shares had surged 14% in July.That report had analysts waxing bullish on ROKU, taking the average price target on Roku stock to $111 from $88 in just a day. But Roku stock closed just over $131 on Friday, indicating that the average price target may need to increase further."While Amazon(NASDAQ:AMZN) will always be an imminent threat, Roku TV is a runaway train," said Rosenblatt Securities Mark Zgutowicz, who has a $134 price target on Roku stock. "ROKU's brand and audience reach is essentially 'out-scaling' the unowned content model."The price target increases are starting to trickle in. On Aug. 12, Needham analyst Laura Martin boosted her forecast on Roku stock to $150 from $120, implying a gain of about 15% from the current ROKU stock price."The vast majority of streaming services to date have chosen to either charge a subscription fee OR give consumers free programming, supported by advertising," said Martin. ""Roku's focus is on free content, supported by ad dollars. Netflix is competing for subscription dollars." The Bottom Line: Analysts May Be Too Conservative on Roku StockThe video-streaming industry has a lot of favorable tailwinds, many of which ROKU can seize as it widens its platform, particularly as new streaming-content providers partner with the company. Non-cyclical streaming trends coupled with robust top-line growth and compelling customer engagement data indicate the valuation of Roku stock may ultimately prove too conservative.Roku's business model as an aggregator, rather than a purveyor, of content could not only prove cost-efficient relative to Netflix, but vital, as the likes of Walt Disney (NYSE:DIS) and Apple (NASDAQ:AAPL) launch streaming offerings.Trading at nearly 16 times Roku's sales, Roku stock isn't a value play, but its multiple is likely to prove warranted, given the company's enviable market niche and its management's history of solid execution.As of this writing, Todd Shriber doesn't own any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Cheap Dividend Stocks to Load Up On * The 10 Biggest Losers from Q2 Earnings * 5 Dependable Dividend Stocks to Buy The post Stop Worrying About Roku Stock's Valuation appeared first on InvestorPlace.
Let me start by stating that I'm a big fan of Roku (NASDAQ:ROKU) - this is a winning business with a winning strategy in a secular growth market, positioned for big user, revenue, and profit growth over the next several years, the sum of which should power ROKU stock higher in the long run.These winning attributes were on display when Roku reported blowout second-quarter numbers last week.InvestorPlace - Stock Market News, Stock Advice & Trading TipsThe report comprised ~40% active account growth (which was above expectations), ~70% aggregate streaming hours growth (above expectations), 25%-plus average revenue per user growth (above expectations), ~60% revenue growth (above expectations), and 55%-plus adjusted EBITDA growth (also above expectations). Management also issued an above-consensus third quarter and full-year 2019 guide.Even further, Roku reported the strong numbers only a few weeks after Netflix (NASDAQ:NFLX) reported an awful quarter. In other words, the whole "Roku is winning only because Netflix is winning" thesis got thrown out the window.Instead, Roku is standing on its own two feet and is winning because this company is transforming into the cable box of the streaming TV world.All in all, it was a great report which underscored the stock's secular bull thesis. In response, the stock soared. As of this writing, ROKU trades hands at about $13o, up nearly 35% from the Q2 print and up 340% year-to-date. * 15 Growth Stocks to Buy for the Long Haul Despite all that great news, this long-time bull (I really started pounding on the table to buy ROKU stock back in late 2018 / early 2019) is starting to take profits. Here's why. The Valuation Is StretchedI've been doing some trimming in ROKU in August because at current levels, the stock's valuation is too stretched relative to the fundamentals.The bull thesis on ROKU stock is simple. Roku is turning into the cable box of the streaming world. That means two things. A bunch of subscription sharing dollars, and a bunch of streaming TV ad dollars. Roku is already racking up both of those.They will continue to do so over the next several years as: 1) more and more consumers migrate to the streaming channel, and 2) more and more ad dollars flow from linear to streaming TV.Further, both of those revenue streams are high margin (60%-plus gross margins), so the pathway to big profits at scale has tremendous visibility. The only problem is that the potential profits this company could produce at scale, do not justify much further near term upside in ROKU stock.Roku has a realistic runway to grow active accounts by ~25% per year to 130 million by 2025. ARPU has a realistic runway to grow 10% per year to $35 by 2025, given the secular pivot of ad dollars from linear to streaming TV. Revenues could consequently grow at a 30%-plus rate to over $5 billion by 2025. Margins should run significantly higher long term thanks to increased scale.Even under all those optimistic assumptions, my best case scenario for 2025 EPS is $7. Based on an equally aggressive 35-forward exit multiple (which is average for application software stocks) and a 10% discount rate, that equates to a 2019 price target for ROKU stock of $150.Thus, even in a best case scenario, ROKU has a runway to just $150 by the end of the year. The Momentum Is RealI haven't sold my entire ROKU holding, and still am holding a core position, because this stock has a lot of momentum right now and could keep this momentum for the foreseeable future.Zooming out, we have a market right now defined by still strong labor conditions and low rates. That sort of environment is perfect for growth stocks. Strong labor conditions support continued robust consumption, which supported sustained big profit growth. At the same time, low rates support bigger multiples on stocks and make growth stocks look relatively less richly valued.As such, in today's market, stocks with good growth narratives are marching higher. It's that simple. With rates so low, investors are seemingly turning a blind eye to valuation and focusing exclusively on long term growth potential.This is an advantageous dynamic for ROKU stock. Valuation is a problem here, yes. But, the growth story is as hot as ever, and the momentum behind the stock is as powerful as ever.So long as rates remain low, then, this stock should grind higher. With rate cuts on the horizon, rates project to stay lower for longer. As such, ROKU projects to move higher for the foreseeable future based on momentum alone. Bottom Line on ROKU StockROKU is a long term winner. But, with the stock up 340% year-to-date and closing in on a best-case scenario 2019 price target, now seems like a good time to some more profit-taking and become a little a more cautious on the name.To be sure, that doesn't mean it's time to sell everything. I rarely like to fully exit long term growth winners, especially with rates so low. As such, so long as interest rates remain depressed and the narrative here remains hot, I'll hold onto my core position, trim more on big rallies, and buy more on big dips.As of this writing, Luke Lango was long ROKU and NFLX. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 15 Growth Stocks to Buy for the Long Haul * 5 More Cloud Stocks With Plenty of Potential * 5 Clean Energy ETFs to Buy for 2019 The post I Love Roku Stock, but Here's Why I Sold Some After the Earnings Pop appeared first on InvestorPlace.
U.S. stock futures are aiming for their third lower open in a row. Ahead of the bell, futures on the Dow Jones Industrial Average are down 0.19%, and S&P 500 futures are lower by 0.19%. Nasdaq-100 futures have lost 0.25%.Source: Shutterstock In the options pits, put volume took the lead during yesterday's stock drop. With overall volume settling near average levels, however, the session lacked signs of panic. By the closing bell, about 16.2 million calls and 16.9 million puts traded.We did see an uptick in fear at the CBOE though. The single-session equity put/call volume ratio ramped to 0.78, nearing its high water mark for 2019. Meanwhile, the 10-day moving average ticked higher to 0.75.InvestorPlace - Stock Market News, Stock Advice & Trading TipsOptions activity was buzzing in Uber (NYSE:UBER), Pfizer (NYSE:PFE) and Roku (NASDAQ:ROKU) on Monday.Let's take a closer look: Uber (UBER)The bottom fell out from under Uber Monday, driving the ride-hailing giant to its lowest closing price ever at $37. Since reporting earnings last Thursday, UBER stock has lost 13.9% amid heavy volume. Its intraday low of $36.08 from the day after its IPO beckons and will soon be tested.Uber's quarterly results showed a massive $5.2 billion loss that has shareholders rushing for the exits. Deteriorating fundamentals and bearish technicals always form a toxic brew. I suspect the big earning miss will keep a lid on UBER for the remainder of the quarter. Couple that with a now extremely bearish price trend and spectators have little reason to buy.The stock is dead money at best. Wait for an uptrend to emerge before even thinking about bullish plays. * 10 Real Estate Investments to Ride Out the Current Storm Monday's options trading reflected sellers' dominance. Puts outpaced calls with activity growing to 234% of the average daily volume. In total, 119,490 contracts traded with puts accounting for 58% of the sum.Implied volatility popped to 47%, halting Friday's strong volatility crush after earnings. Pfizer (PFE)Pfizer stock's descent accelerated Monday, pushing the pharmaceutical titan to a new 52-week low. The 2.6% whack saw heavy volume flashing again in a long line of distribution days. Last month's earnings and the announcement that the company was spinning off its generic drug business with Mylan (NYSE:MYL) have rattled its stock price and created confusion over what impact the move will have on Pfizer's dividend.Since last year's peak, PFE stock has lost 24% and is offering what could turn out to be a compelling long-term buying opportunity. Significant support looms at $34, and the stock is flashing some extreme oversold readings, suggesting the time for a rebound is nigh. Naked puts such as the Sep $34 strike offer a compelling high probability trade if you're looking to bank on the bounce.On the options trading front, traders favored puts on the day. Activity swelled to 189% of the average daily volume, with 122,018 total contracts traded. Puts accounted for 53% of the take.The increased demand drove implied volatility higher on the day to 26%, placing it at the 54th percentile of its one-year range. Premiums are juiced, which makes selling puts all the more attractive. Roku (ROKU)Roku's bid for world domination continued in earnest Monday with the video streaming service rocketing to a new record high of $136.55. By day's end, the gains were pared, but ROKU stock still notched a new closing high. Buyers' enthusiasm following last week's better-than-expected earnings has been off the charts and reflects just how in love the Street has become for the stock.In the short run, ROKU is flashing extreme overbought readings. The red-hot stock will likely cool over the coming days as profit-taking strikes to lock-in the recent good fortune. Given the powerful uptrend, however, you should view all weakness as a buying opportunity. * 7 AI Stocks to Watch With Strong Long-Term Narratives As far as options trading goes, calls led the way with activity rising to 159% of the average daily volume at 152,478 contracts. Calls added 54% to the session's sum.Increased demand halted the post-earnings volatility crush, pushing the metric back up to 62%. That lands it at the 28th percentile of its one-year range. Premiums are now pricing in daily moves of $5.27 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 * 10 Real Estate Investments to Ride Out the Current Storm * 7 Marijuana Penny Stocks to Consider for Those Who Can Handle Risk * 7 Safe Dividend Stocks for Investors to Buy Right Now The post Tuesday's Vital Data: Uber, Pfizer and Roku appeared first on InvestorPlace.
RBC Capital Market analyst Mark Mahaney downgraded Roku Inc (NASDAQ: ROKU )'s stock rating from Outperform to Sector Perform in early July. The stock has gained more than 30% since the rating revision, ...
Every investor looks for a winner, and while “past performance does not guarantee future returns,” it’s only natural to look at stocks which have been successful when choosing a portfolio. Here, we look at three stocks have more than doubled in value over the past twelve months and show every sign of keeping their gains and continuing to return performance for investors. The NASDAQ index is up 18% this year, but all three of these stocks have surpassed that by an order of magnitude. Cronos Group, Inc. (CRON) Canada’s third largest cannabis company is up 124% in the last year. The company has benefited from the general gains of the cannabis industry in the wake of Canada’s sweeping legalization of marijuana in the second half of 2018. Q2 results, released last week, underline the gains. Cronos beat Wall Street’s expectations by a country mile, posting a C$0.22 earning per share instead of the forecast C$0.02 loss. Gross revenues, at C$10.78 million, were almost double the expected C$5.6 million. A company statement said that a combination of increased production and increased demand in the adult-use recreational market supported the quarter-over-quarter revenue growth.Cronos’s gains are less surprising when put into the company’s particular context: it’s positioning itself as primarily a CBD supplier, dealing in the non-psychoactive cannabidiol derivatives prevalent in the medial markets. CBD and other derivatives lie on the high-margin end of the marijuana industry, so Cronos should see future gains accordingly. The CBD market is expected to show a steep growth curve over the next few years, expanding more than 100% compounded annually through 2023.Cronos ended 1H19 with one serious drawback and one big advantage in its ledger. As a potential pothole, the company lags its peers in cannabis production. Where Aurora (ACB), Canada’s largest producer, predicts reporting 25,000 to 30,000 kilos available for sale last quarter, Cronos only sold 1,584 kilos in Q2. Cronos will have to address this issue, and improve production going forward, if it wants to remain profitable.On the plus side, Cronos ended Q2 with an enormous cash reserve. The company has over C$2.3 billion– about 39% of its total market cap – available in a combination of cash-on-hand and short-term investments. This cash boon comes mainly from tobacco company Altria’s (MO) recent US$1.8 billion investment in Cronos.New markets are uncertain, and like many companies making a mark in the newly legalized cannabis industry, Cronos reflects that uncertainty with mixed reviews from the analysts. The strong earnings, report, however, has brought it two well-deserved buy ratings. Writing from CIBC, John Zamparo reiterated his Outperfom on the stock, and set a C$25 price target, implying an upside of 43%. Piper Jaffray analyst Michael Lavery was impressed enough after the Cronos earnings call, when the company gave clarification on future product and sourcing pricing matters, that he initiated coverage of CRON with a Buy rating and a price target of US$18. His target suggests an upside of 35% for CRON shares.Overall, Cronos Group has a Moderate Buy from the analyst consensus, based on 3 buys, 3 holds, and 1 sell given in the past three months. Shares are selling for US$13.25 in New York, so the US$22.50 average price target gives an upside potential of 69%. Roku, Inc. (ROKU)This Over-the-Top online video streaming company is up 130% since a year ago, reflecting the dynamism of the Video-on-Demand sector. A direct competitor of Netflix (NFLX), Roku is positioning itself for continued growth in the online streaming business, even as Apple (AAPL) and Disney (DIS) enter the field later this year. Roku will survive by supporting numerous streaming companies through its hardware, collecting royalties on subscriptions and providing customers what they really want: variety in programming.It’s a strong model, with plenty of potential in rapidly expanding niche, and this month’s Q2 earnings report bears that out. Roku clobbered Wall Street’s estimates, beating the EPS forecast by 14 cents per share. Revenue grew 59% quarter-over-quarter, coming in at $250 million against a forecast of $224 million.In the wake of the blockbuster earnings report, Rosenblatt’s Mark Zgutowicz (a 5-star analyst according to TipRanks) upgraded ROKU shares from Neutral to Buy, saying, “Roku's earnings report marks the second consecutive quarter of strong growth across hours viewed, average revenue per user and users. The strong performance signals the company isn't facing hurdles in reselling inventory at a premium cost… Roku's momentum can sustain over the coming years and the company could penetrate around 50% of the total addressable market of 138 million households in 2027.” Zgutowicz backed up his optimism on the stock by nearly doubling his price target – from $77 to $134. His new target may not be high enough, however, as ROKU shares are on a tear, having gained 33% since the earnings release.Stephens’ Kyle Evans (a 4-star analyst) also upgraded ROKU shares after hearing the Q2 earnings. He wrote of the company, “We believe Roku's fundamentals remain sound and that its nexus business model will continue to power solid financial results.” Evans also increased his price target, from $84 to $120, but Evans’ target, too, has been outpaced by ROKU’s market performance.That Wall Street’s analysts will have to set new, higher, price targets for ROKU is borne out by the most recent rating, from Needham’s Laura Martin (a 5-star analyst). Martin was impressed by the earnings, but sees Roku’s biggest advantage in its business model: “The list of streaming video providers continues to expand and presents a complex or confusing sentiment for consumers with more than one subscription. Roku offers the convenience of aggregating both big and small providers on one easy-to-use platform.” She gives the stock a $150 price target, suggesting an upside of 11%. Justifying her position, Martin adds, “Online aggregators who get ahead, stay ahead.”ROKU shares are selling for $134, 14% higher than the average price target of $115. That average, however, is based on targets set the day after the earnings report; as noted above, ROKU shares have jumped 33% since then. Roku maintains a Moderate Buy rating from the analyst consensus, based on 7 buys, 4 holds, and 1 sell given in the past three months. Of the Buy ratings, 6 were set last week, indicating how quickly a market consensus can shift. Shopify, Inc. (SHOP)Headquartered in Ottawa, Canada, Shopify is best known for its eponymous e-commerce platform. Shopify offers online merchants a set of tools to facilitate customer engagement, marketing, payment processing, and product shipping. The success of the platform has supported the stock’s 145% gain over the past year. The company’s year-to-date gain, of 164%, is even more impressive. For comparison, the S&P 500 is up 15% year-to-date.Shopify’s earnings have reflected the stock’s gains. For Q2, the company reported a massive beat on earnings. The 14 cent EPS was seven times higher than the 2-cent expectation, and the quarterly revenue of $36 million easily passed the $350 million analysts had forecast.Investor confidence and high earnings have brought in plenty of love from those same analysts. Writing from Canaccord, David Hynes (a 5-star analyst) said, “Shopify's results included 48% revenue growth, operating profitability, and gross merchandise volume that surpassed $1B per week… Shopify has the underpinnings of what could be a $100B market cap company in the next 6-8 years. Look for pullbacks in the stock as opportunities to add to positions.” Hynes gives SHOP shares a $385 price target, suggesting an upside potential of 5% from current prices.Hynes is not the only analyst to bump up his price target on SHOP. KeyBanc’s Josh Beck (a 5-star analyst) also set a $385 target, noting, “The growth runway at Shopify is substantial… Shopify's cloud-based, mobile-centric platform is well positioned…” And writing from Wells Fargo, Timothy Willi (a 4-star analyst) set the most aggressive price target, of $400. He said of the company, “Shopify also noted a stronger than expected response to its fulfilment network… That will benefit new merchant acquisition while helping existing merchants reduce shipping costs and times and drive further gross merchandise volume growth.” Willi’s price target indicates a possible 9% upside for SHOP.Like Roku above, Shopify’s share price has posted strong gains in the immediate aftermath of an expectation-beating earnings report. The current share price of $366 is 6% higher than the price target of $343. The stock gets a Moderate Buy from the analyst consensus, based on 12 buy, 8 hold, and 2 sell ratings in the past three months. Of the buy ratings, 8 have been given since the August 1 earnings release.Find out what stocks are hot at TipRanks' Analysts' Top Stocks page.
While shares of Roku Inc. (ROKU) have surged a whopping 338% year-to-date, the bears point out that this doesn’t necessary imply smooth sailing for the streaming player company. Despite seeing its fair share of ups and downs, Roku may have just gotten the boost it needed to keep the bulls firmly in their camp. On August 12, Needham's Laura Martin raised its price target from $120 to $150, sending share prices soaring 7%. “Roku is the dominant internet aggregator for streamed TV & movie content, like YouTube is for user generated content, at about 1/20th the valuation," the five-star analyst according to TipRanks wrote in a note to clients. We take a closer look to see who has it right on Roku, the bulls or the bears. The Bull Case Some investors originally expressed concern that Roku’s growth would slow after Netflix’s (NFLX) July 17 Q2 earnings release showed a decline in subscriber acquisition. However, Roku’s business strategy is fundamentally different from Netflix’s. Unlike Netflix and Hulu, which spend more on content as well as charge for subscriptions, Roku’s business model is based on its hardware and platform, which includes advertising and other services. This strategy appears to be paying off based on its second quarter earnings release. On August 7, the company reported that quarterly revenue reached $250 million, up 59% year-over-year. Management attributed these gains to the doubling of its monetized video ad impressions year-over-year, with player growth also gaining 24% year-over-year. More good news came when the company raised its full year guidance, saying 2019 revenue will now exceed $1 billion. Investors now have another reason to be excited when Roku announced it had reached an agreement with Walmart (WMT) to offer new Roku devices under WMT’s Onn brand. The company has also made progress in expanding the content distribution segment of its business through its Roku play, with it expecting even more gains after Disney+, Disney’s (DIS) streaming service, is launched on November 12.Roku claims the Disney+ launch will give it the advantage it needs to leave its competitors in the dust. "We are excited, to say the least, about the coming services into [over the top], and believe that we are an essential platform for these new services,” said Scott Rosenberg, the head of the company's platform business. On August 8, Roku received a vote of confidence from Rosenblatt Securities. Mark Zgutowicz, a five-star analyst, upgraded the rating to a Buy and raised the price target from $77 to $134. “The company is essentially out-scaling the unowned content model,” he said. The analyst boasts a 73% success rate and gets an average return of 26% per rating. Four-star analyst, Kyle Evans, agrees that the streaming company’s strong Q2 performance warranted a ratings boost. On the same day as Zgutowicz, he upgraded the stock to a Buy and raised the price target from $84 to $120. “The quarter benefited from the revaluation of multi-element content distribution agreements (called out by management but not quantified), but we believe Roku's fundamentals remain sound and that its nexus business model will continue to power solid financial results,” the Stephens analyst said. The Bear Case Roku faces steep competition in the streaming player space. Amazon (AMZN), Google (GOOGL) and Apple (AAPL) all offer streaming players that go head to head with Roku’s. However, the real threat comes just from AMZN. The ecommerce giant made significant progress in its efforts to expand its Fire TV player customer base, with it boasting 34 million regular users compared to Roku’s 30.5 million active accounts. According to a Conviva report released on August 7, Roku still leads the race in terms of market share with it controlling 43% of the connected TV space vs Amazon’s 18%. There are also concerns regarding the streaming platform’s expensive valuation. Its market cap is over $15 billion, with revenue for full year 2019 expected to be only $1 billion. Four-star analyst, Alan Gould, said “The company remains well positioned in the TV ecosystem's shift to streaming. Roku will continue to exceed expectations, particularly as the launch of Disney+ (DIS) draws closer. However, it’s difficult to justify the $13B enterprise value on the stock, or over 10-times next year's platform revenue.” On August 8, the Loop Capital Markets analyst reiterated his Sell rating but raised his price target from $45 to $80, indicating 40% downside. Five-star analyst, Benjamin Swinburne, agrees that the competition from Amazon and high valuation suggests that now isn’t the time to buy. On August 9, he reiterated his Hold rating and raised the price target from $70 to $100, implying 26% downside. The Morgan Stanley analyst has a 60% success rate and gets an average return of 12% per rating. The Final Verdict The jury is still out on Roku. It has a ‘Moderate Buy’ analyst consensus and a $115 average price target, suggesting 14% downside. Discover the Analysts’ Top-Rated Stocks right now
It was a very tough day in the stock market today. The S&P 500, Dow Jones Industrial Average, Nasdaq and Russell all fell more than 1% on the day as investors continue to worry about a plethora of issues. Global Concerns RemainAs cool as it would seem to have a mortgage with a negative interest rate, it's somewhat alarming with what's going on globally. Interest rates continue to hover near zero, and now even the United States is cutting rates.Everyone is afraid of another recession wreaking havoc on the global economy. Without being able to cut interest rates, investors are uncertain how global central banks plan to combat the eventual economic slowing. Of course, a trade war between the world's two largest economies and concern over an escalating currency battle doesn't do much to settle those fears.InvestorPlace - Stock Market News, Stock Advice & Trading TipsNor does it help when treasuries continue press higher -- with the iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) looking like a growth stock -- and as yield spreads continue to shrink. Of course, this has dealt a blow to financials, as a shrinking spread crimps profitability for certain banking segments.On Monday, there were even more dramatic headlines to sort through. The protests in Hong Kong continue to intensify, causing investor concern about what even more escalation could look like. Oh yeah, and Argentina's stock market cratered 35% and its currency fell 25% after a surprise election result.It also doesn't help that analysts keep increasing the odds of a coming recession. Just today, investors are reading about Goldman Sachs decreasing GDP growth estimates and Bank of America increasing their odds of a recession. * 8 Dividend Aristocrat Stocks to Buy Now No Matter What To say Monday was full of drama would be an understatement -- and there's no telling if the selling is ready to let up. Where Can We Go From Here?The saving grace? The U.S. economy. There have been a few yellow flags lately, but until the labor market and real estate prices start to show signs of distress, investor and consumer sentiment may remain elevated. Of course, either one (or both) of those readings may take a dive if the stock market does too.Investor sentiment took a real nasty turn at the start of the month once the markets started to decline in earnest. We've since seen a snap-back rally. Is it over so soon?Last week, the S&P 500 traded down to its 200-day moving average in the overnight session of the futures market. Unfortunately, the index -- as well as the SPDR S&P 500 ETF (NYSEARCA:SPY) or the PowerShares QQQ ETF (NASDAQ:QQQ) -- didn't trade down to the 200-day moving average during regular trading hours. If you recall, that made us suspicious of the stock market's recent rally.The index promptly rallied up to the 50-day moving average, retracing about 50% of the decline and paused there for two sessions. It was the perfect setup though, because it would either hurdle the 50-day or fail to hold the 100-day moving average.On Monday, the S&P 500 lost the 100-day moving average. Two scenarios are now possible, with the first being that the SPX reclaims the 100-day moving average. The other option? We retest the 2,825 to 2,850 area. While no one likes to see the market in decline, it would be healthy to see a tag of the 200-day moving average at 2,793.An overshoot to the 38.2% retracement at 2,767 is possible.As tough as it is, try to keep it simple. The index needs to reclaim the 100-day, otherwise lower prices are in store. Movers in the Stock Market TodayEven on the painful days, "Merger Monday" rings true. Well, sort of anyway. The only thing more dramatic than Monday's headlines has been the ongoing merger efforts between CBS (NYSE:CBS) and Viacom (NASDAQ:VIA, NASDAQ:VIAB).The talks have been going on for years -- literally -- with nothing but disappointment to show for it. Let's call it, the merger that cried wolf. Reports over the weekend suggested that a deal as soon as Monday morning may come. However, confirmation never came along.Apparently, it's down to just figuring out the conversion price of the all-stock deal. But is there even a winner? Both A-class and B-class shares of Viacom were down almost 5% on the day, while CBS stock fell nearly 2%.Roku (NASDAQ:ROKU) was a rare outperformer, with shares rallying over 7% on the day. The catalyst for Monday's rally came from the analysts at Nomura, who raised their price target from $120 to $150. Aside from owning the Street-high target on Roku, they maintained the stock as their top mid-cap pick for 2019.(Here's how to trade Roku, by the way).Finally, Nike (NYSE:NKE) fell 0.4% despite the company's plan to launch a subscription service for children's shoes. The hope is to collect a recurring revenue stream in exchange for parents being able to swap out shoes more quickly for their children. That has obvious benefits for Nike and its investors.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 * 7 Large-Cap Stocks to Sell Right Now * 7 Stocks Under $7 to Invest in Now * 7 Marijuana Stocks With Critical Levels to Watch The post Stock Market Today: The Merger That Cried Wolf appeared first on InvestorPlace.
It was a tough day on Wall Street, with investors hitting the exits on trade worries, concerns over Hong Kong, and as bond prices again rally. The markets are often volatile in August, and 2019 is proving to be no exception. Here are a few top stock trades to watch. Top Stock Trades for Tomorrow No. 1: RokuAt one point, Roku (NASDAQ:ROKU) stock was up 8% on Monday. The move adds to Roku's three-day gain, with shares up more than 30% since reporting earnings last week.InvestorPlace - Stock Market News, Stock Advice & Trading TipsMonday's move was inspired by the analysts at Nomura, who upped their price target to $150 per share. Despite the big move, shares are hardly overbought -- at least technically speaking via the RSI indicator (blue circle). * 7 Stocks Under $7 to Invest in Now A move into the upper $130s or lower $140s is still possible, with a Fibonacci extension near the latter. If the overall selling pressure in the market is too great, though, Roku may not be immune. In that case, see if prior short-term channel resistance (black line) can act as support on a pullback. Top Stock Trades for Tomorrow No. 2: PinterestPinterest (NYSE:PINS) outperformed the market on Monday, but did so in a very strange way.In midday trading, shares suddenly spiked higher, surging to $36 before retreating and giving up almost all of its 6% intraday gain. $34 remains a tough level for the stock, even after its strong earnings report last week.That said, it continues to hold $32 and its 8-day moving average. However, like other stocks, support may give way should overall market selling pressure pick up. Keep an eye on $32 support, and $31.50 just below that. Breakout traders may consider going long PINS on a close over $34. Top Stock Trades for Tomorrow No. 3: NetflixNetflix (NASDAQ:NFLX) stock held up okay on Monday, but its chart still looks concerning. Below, the $305 to $310 level is a concern. It will put the August lows near $297 on the table. A close below that opens up NFLX to a decline down the $270 to $275 area.On a rally, see if NFLX stock can reclaim its 20-day moving average. If it can, its 200-day is the next upside target. Top Stock Trades for Tomorrow No. 4: DeereDeere (NYSE:DE) stock is looking ugly. Shares rallied into former support at $155 as well as its 200-day moving average before tumbling more than 4% on Monday. The company reports earnings on Friday, adding more volatility into the stock.At this point, DE stock either needs to reclaim the $155/200-day moving average area or pull back to range support near $135. Top Stock Trades for Tomorrow No. 5: McDonald'sMcDonald's (NYSE:MCD) stock may be a flight-to-safety name, but shares are under pressure on a day where the stock market is in decline as well.The selling pressure comes as shares run into channel resistance. Now I'm looking for a test of channel support. That would put MCD in play somewhere near $213. As much as I'd hate to see MCD break channel support, a dip to $210 and the 50-day moving average would also be attractive.Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long ROKU and PINS. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Large-Cap Stocks to Sell Right Now * 7 Stocks Under $7 to Invest in Now * 7 Marijuana Stocks With Critical Levels to Watch The post 5 Top Stock Trades for Tuesday: ROKU, PINS, NFLX, MCD appeared first on InvestorPlace.
Is it fair for investors to compare Roku Inc (NASDAQ: ROKU) with Netflix, Inc. (NASDAQ: NFLX)? Roku's streaming platform will support the growing list of Netflix rivals, including Walt Disney Co (NYSE: DIS), Martin said.