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A uniform saga with many dramatic twists and turns at the world's largest airline looks to have an end date in sight.
American Airlines (AAL) stock is going through turbulent times. AAL has lost 17.4% of its market value YTD, underperforming the broader market.
Nvidia Corp (NASDAQ:NVDA) the giant $91 billion market cap gaming chip maker, reported second-quarter earnings that signal the importance of artificial intelligence (AI) for its future. Its latest results show AI is leading its turnaround.Source: michelmond / Shutterstock.com NVDA's new gaming RTX chips use AI to simulate light (called "ray tracing"). Its hyperscale data center clients are increasingly buying Nvidia chips to enable their AI conversation and training bots. Nvidia is also leading in the autonomous vehicle market which need AI chips.The Q2 earnings which Nvidia reported on Aug. 15 showed a marked turnaround. On the follow-up call, NVDA's CEO highlighted the how AI is powering Nvidia's growth in these markets.InvestorPlace - Stock Market News, Stock Advice & Trading TipsNVDA reported Q2 sales of $2,579 million, down 17.4% from the prior year, but up 16.1% from $2.22 billion reported in Q1 2019. NVDA's Q3 sales guidance was $2.9 billion, plus or minus 2%. * 10 Stocks to Own Through a Global Recession NVDA is now back on a growth path. Three months ago Nvidia stock was trading for $169 per share when it reported Q1 earnings. Today the Nvidia stock price is trading for $156.83 after hours. The market is starting to believe in the turnaround.Downturn EndedNvidia sources most of its manufacturing in Taiwan. So it is not directly affected by Chinese chip suppliers, the China yuan devaluation, and the U.S. China trade war. However, it is facing competition from Chinese data centers which buy chips elsewhere.In May Nvidia's CEO, Jensen Huang, told CNBC that "there was no question in my mind that the spending pause has ended" in their portion of the chip market. NVDA's figures today clearly showed this improvement.Gross MarginsAnalysts focus on Nvidia's gross margins as a bellwether of its financial health. In Q1 NVDA reported lows of 59.0%, and this quarter it hit 60.5%, both on a non-GAAP basis. NVDA's outlook for Q3 is for 62 to 62.5%, plus or minus 0.50%. Take a look at this chart taken from the Nvidia CFO's Commentary on Aug. 15, 2019:The reason this is important can be seen using the guidance for Q3. With sales at $2.9 billion next quarter, $765 million in operating expenses and $25 million in other income, with a tax rate of 10%, the estimated earnings per share next quarter will be $1.59, up 28.5% on the quarter: Bargain at This PriceOn an annualized run rate basis for the next 12 months full year earnings will be $6.37 per share. The earnings are also likely to incrementally increase 10 to 15% for each quarter as the turnaround grows each quarter. That implies a 12 month forward EPS of $7.40 to $7.96. At this price the implied price-to-earnings ratio is between 20 and 21x.Analysts covered by Yahoo! Finance have the stock trading at a forward P/E ratio of 20x, so this is in line with those analysts. At this price, the stock looks like a reasonable bargain. Nvidia Is Full of CashNVDA has $8.475 billion in cash, no debt and is free cash flow positive. Its latest Q2 filings showed that free cash flow was $823 million for the quarter, and this represented 89% of its net income of $923 million. I estimated that NVDA will have accumulated $10.7 billion in cash by the end of the year. NVDA has suspended its share buybacks until then.NVDA agreed to buy Mellanox Technologies (NASDAQ:MLNX) for $6.9 billion in cash, including debt. This should close by year end 2019. I estimate that NVDA will still have over $3.8 billion left over after the deal closes. NVDA plans to then restart buybacks. Bottom Line on Nvidia StockNvidia's business is now showing clear signs of a turnaround. Demand for its AI chips in gaming and data centers is rising. It is generating free cash flow each quarter, and will be accumulating cash up to year-end when it buys Mellanox. At this price, Nividia stock has a low P/E ratio. It is probably a good time to jump back in on Nvidia stock.As of this writing, Mark Hake, CFA does not hold a position in any of the aforementioned securities. 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 Artificial Intelligence Is Key to Nvidia Stock's Turnaround appeared first on InvestorPlace.
Powell's lecture gets huge importance in view of the recent global trend of rate cut to combat the economic slowdown by several major central banks.
In March 2019, China Life Insurance Company Limited (HKG:2628) released its earnings update. Generally, it seems that...
A biofuels producer said on Thursday it is proposing to acquire the fire-damaged Philadelphia Energy Solutions refinery and convert it to make renewable diesel and jet fuels. PES's owners halted production at the 335,000 barrel-per-day refinery and put the 1,300-acre (526-hectare) facility up for sale after a June fire damaged one of its gasoline-producing units. The biofuels company would convert at least a portion of the plant to make renewable diesel, marine diesel and jet fuel.
The Zacks Analyst Blog Highlights: China Life Insurance, JD.com, Qudian, China Southern and Sinopec Shanghai
Golar LNG (GLNG) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.
"That was really the missing piece," an Israeli tourism official said about American Airlines' new DFW-Tel Aviv route.
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
Despite a year-over-year decline in revenues, Zayo (ZAYO) surpasses fiscal fourth-quarter earnings estimates on the back of higher income tax benefit.
China Telecom said on Thursday it is ready to build a 5G mobile network with its rivals in order to reduce costs, a proposal that is likely to cut multi-billion dollar equipment orders for vendors such as Huawei Technologies. China's big three state telcos are racing to roll out 5G services in more than 50 cities this year, following countries like South Korea and the United States which have already started the service that promises to support new technologies such as autonomous driving. While the gradual rollout of 5G services globally is a boon to telecoms gear makers, tie-ups by mobile operators in China, the world's biggest smartphone market, to build the network together threaten to cut the size of the overall 5G infrastructure spending.
Cabot Corporation (NYSE:CBT) is a company with exceptional fundamental characteristics. Upon building up an investment...
Seemantini Godbole will lead employees at the $153 million Lowe’s Charlotte Tech Hub in South End, which will be home to up to 2,000 technologists.
Zayo Group (ZAYO) delivered earnings and revenue surprises of 73.33% and 0.52%, respectively, for the quarter ended June 2019. Do the numbers hold clues to what lies ahead for the stock?