3.10k followers • 13 symbols Watchlist by Yahoo Finance
Follow this list to discover and track stocks that have been overbought as indicated by the RSI momentum indicator within the last week. A stock is overbought when the RSI is above 70. This list is generated daily, ranked based on market cap and limited to the top 30 stocks that meet the criteria.
Slack Technologies, Inc.
EQM Midstream Partners, LP
Zillow Group, Inc.
Micro Focus International plc
Compañía Cervecerías Unidas S.A.
CyberArk Software Ltd.
Strategic Education, Inc.
Nuveen California Quality Municipal Income Fund
The global economy is starting to look a little shaky. Between the US-China trade tensions and now the Iranian-sponsored attacks on Saudi Arabian oil output, the pressures on the world system of trade and commerce are increasing. As CLSA’s Eric Fishwick said, “Trade both ways has slowed… the trade wars are definitely having an impact.” And in an effort to calm markets after the drone attack on his company’s largest facility, Saudi Aramco CEO Amin Nasser said, “We have enough oil products to supply the local market.”After posting losses on Monday, both the S&P 500 and the Dow Jones were up slightly on Tuesday. The S&P gained 0.26%, while the Dow added 0.13%. A look at the charts, however, shows that the sharp gains the markets have posted since August 23 have slowed and levelled off. Investors are watching the news and getting nervous.A wise investor will move to protect his portfolio, and we’ve found three Strong Buy stocks in the TipRanks database to do just that. These are large-cap health insurers, offering a product that remains in high demand no matter what the economic conditions, and generating high returns through share appreciation over the long-run. They are not cheap stocks, but they are classic defensive plays for an uncertain market environment. Anthem, Inc.With 40 million members, Anthem (ANTM – Get Report) is the largest managed care company in the Blue Cross Blue Shield network. It is the largest health insurer in California, the country’s largest state-wide market. ANTM shares are up 123% over the past five years, and the company’s dividend, while yielding a modest 1.24%, pays out an appreciable $3.20 per share annually.Anthem’s earnings reflect the company’s strong position in the health care market. In the second quarter, Anthem reported a net profit of $1.14 billion on quarterly revenues of $25.47 billion. EPS, at $4.64, was in line with the expected $4.62. Both profits and EPS were up year-over-year; net profits by 8.5% and EPS by 9%.Robust earnings and a solid position in its industry prompted Deutsche Bank analyst George Hill to start coverage of this stock with a Buy rating. He set a $323 price target, and noted, “The company's execution has been strong recently, even though we see some implementation risk [from] relatively lower exposure to the faster-growing segments of the market.” Hill’s price target suggests an upside potential of 25%.ANTM stock has a unanimous Buy consensus from the Street; 7 analysts have given this company a Buy in the past three months. Shares sell for $257, and the average price target of $345 implies a potential upside of 34%. Cigna Holding CompanyWith 5-year growth of 75%, and a Q2 earnings positive surprise of 13%, Cigna (CI – Get Report) is another solid performer in the health insurance industry. The company offers medical and dental, as well as accident, disability, and life insurance products around the world.Oppenheimer analyst Michael Wiederhorn, who has a 65% success rate with his stock recommendations, sees CI as a compelling buy. His price target of $254 suggests an impressive upside of 57%. In his comments, Wiederhorn states, “The [business] environment has certainly changed, with regulatory pressure affecting all ends of the pharmaceutical supply chain, but he believes the depressed multiples are well overdone.”Analyst George Hill, quoted above, also likes CI, enough to initiate coverage with a Buy rating. He writes, “The company's PBM segment does not contain the significant short-term earnings risk implied by the steep discount of the stock price. We believe its core commercial MCO and the perceived cross sales benefit could drive its multiple expansion.” Hill’s $207 price target implies an upside of 28%.Like Anthem, Cigna has a unanimous consensus rating of Strong Buy – in the last three months, the stock has been given 8 buy ratings. Cigna shares sell for $161, making it significantly less expensive than Anthem or UnitedHealth (see below), and its average price target of $214 gives the stock a 32% upside potential. UnitedHealth Group, Inc.UnitedHealth (UNH – Get Report) benefits from scale – it is the world’s largest health insurer and boasts over 115 million customers. Its 2018 revenue totaled over $225 billion, with over $17 billion realized in profits. More recently, UNH posted a 3.9% positive earnings surprise on Q2 EPS of $3.60. While the company’s growth has slowed in the past year, sheer scale ensures that it will remain profitable. The strong dividend, paying out $4.32 per share annually, makes this stable stock a favorite for return-minded investors.Continued profitability lies behind 4-star analyst A. J. Rice’s optimism on the stock. The Credit Suisse analyst gives UNH a buy rating with a $293 price target. Rice says of UNH, “The company gave the impression that the moderation in enrollment growth it’s seeing this year was largely expected... However, it also stressed that its goal of 13-16% EPS growth is a long-term target implying that 2020 is an unlikely timeframe to see such substantial improvements."Our current 2020 estimates anticipate 10% Y/Y growth. If UNH posts modest upside relative to our Q3 and Q4 2019 estimates, our 2020 $16.30 EPS est could then represent roughly 8-10% growth. This type of growth seems a reasonable initial target.” Rice’s price target suggests a potential upside of 26% for UNH shares. He has a 63% success rate with his recommendations on this stock.Overall, UNH holds a Strong Buy from the analyst consensus, with 10 buys and 2 holds given in the past three months. Shares in UNH sell for $232, making it the most expensive of the stocks in this list. The $298 price target suggests an upside of 28%.Visit TipRanks’ Trending Stocks page and find out what else the Street’s top analysts are looking at.
(Bloomberg) -- WeWork pushed back its much-awaited initial public offering as the company seeks more time to allay investor doubts over its governance, slashed valuation and business prospects.The offering is likely to be postponed until at least October, people familiar with the matter said Monday. The office-rental unicorn had planned to begin making its pitch to investors in a roadshow as soon as this week.“The We Co. is looking forward to our upcoming IPO, which we expect to be completed by the end of the year,” the company said in a statement on Monday evening in New York. On Tuesday morning, co-founders Adam Neumann and Miguel McKelvey, as well as Chief Financial Officer Artie Minson, addressed employees in a roughly half-hour webcast. Minson said the company delayed the offering to make sure it was done “1,000% right,” and Neumann reiterated the plan to go public in 2019, according to a person who heard the remarks.The IPO was expected to be the next step in WeWork’s rapid growth and mark a victory for Japanese telecom giant SoftBank Group Corp.’s plan to pour billions into startups around the world. Instead, it turned into a dramatic struggle between the company’s chief executive officer, bankers and SoftBank over whether to plow ahead in spite of a plunging valuation or pull the deal.The delay will give advisers more time to drum up interest and may allow the company to show investors another quarter’s worth of results. Still, the value of WeWork’s bonds sunk the most on record Tuesday on concerns that the cash-burning company will miss out not only on the more than $3 billion it planned to raise in the offering, but also a $6 billion credit facility tied to a successful IPO. WeWork must carry out the offering by Dec. 31 to get the loan, Bloomberg previously reported.SoftBank had pressed WeWork to put off the stock offering amid doubts about the business, people familiar with the matter said previously. In January, SoftBank made its last investment in WeWork, renamed We Co., at a valuation of $47 billion. The company was more recently expected to be valued at only about $15 billion in a listing and perhaps even less, people familiar with the matter have said.The company’s $669 million of bonds due in 2025 dropped as much as 7.3 cents on the dollar to 95.5 cents Tuesday in New York, according to the Trace bond-price reporting system. That’s the biggest decline since the notes were issued in April 2018.The biggest investors in SoftBank’s $100 billion Vision Fund are now reconsidering how much to commit to its next investment vehicle after the oversized bet on WeWork soured. Saudi Arabia’s Public Investment Fund, which contributed $45 billion to the gargantuan fund, is now only planning to reinvest profits from that vehicle into its successor, according to people familiar with the talks.Abu Dhabi’s Mubadala Investment Co., which invested $15 billion in the Vision Fund, is considering paring its future commitment to below $10 billion, the people said, asking not to be identified disclosing internal deliberations.The delay also adds another sour note to a medley of high-profile but frequently disappointing IPOs this year. The offering was expected to have been the biggest after Uber Technologies Inc.’s $8.1 billion listing, and ahead of the $2.3 billion offering by Uber’s ride-hailing rival Lyft Inc. Both of those stocks are down more than 20%, and software company Slack Technologies Inc. has fallen more than 30% from where it closed its first day of trading in June.WeWork has become an extreme example of the excesses afforded to technology entrepreneurs in the era of unicorns -- startups valued at $1 billion or more. Neumann was able to raise billions of dollars at astronomical valuations and spend freely, while retaining effective control over operations through special classes of stock.In an effort to keep its IPO on track, WeWork last week took steps to limit Neumann’s control of the company after an IPO, as well as other measures to improve its corporate governance.(Updates with details of staff webcast in third paragraph.)\--With assistance from Scott Deveau, Ellen Huet, Sridhar Natarajan and Claire Boston.To contact the reporters on this story: Gillian Tan in New York at email@example.com;Liana Baker in New York at firstname.lastname@example.org;Michelle F. Davis in New York at email@example.comTo contact the editors responsible for this story: Alan Goldstein at firstname.lastname@example.org, Michael J. Moore, Steve DicksonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
These stocks with high proportions of domestic sales and low exposure to China are well-positioned to thrive in the current macro environment.
(Bloomberg Opinion) -- SoftBank Group Corp. and its Vision Fund need another win. And they need it fast.With news that U.S. rental office company WeWork – formally known as The We Company – looks set to delay its IPO, we can see just how dependent SoftBank supremo Masayoshi Son’s empire was on this one exit to keep the Japanese company’s hit machine ticking along. SoftBank Vision Fund has been a major investor in some of this year’s most significant listings. Uber Technologies Inc. and Slack Technologies Inc. were among them. Both have fallen this quarter, dragging down the value of the Fund.There is a pattern to how the Vision Fund keeps returns climbing. Buy in at a later round of a startup’s funding, list the company a year or two later, and book the mark-to-market gains.Sounds simple, except for the one-two punch that follows: SoftBank, like most pre-IPO investors, is generally locked in and can’t cash out that profit for at least a year. Additionally, IPO shares have a tendency to perform badly in their first year. For SoftBank and the Vision Fund, that means quick gains turn to slow public-market losses that need to be booked every period, hurting returns in subsequent quarters.To paper over these losses, the Fund can book gains by bringing its next hot offering to market. That means that as long as there’s a healthy IPO each quarter, the pain from public-market declines can be squelched. So the model becomes: IPO gain, public-market losses, IPO gain. And around again.With WeWork, however, the merry-go-round risks turning into musical chairs. The game needs IPOs on the floor or the music stops. Had WeWork gone public before Sept. 30, and at a healthy premium to the various prices SoftBank paid through its funding rounds, then such paper profits likely would have covered over losses caused by the 26% decline in Uber’s shares so far this quarter and the 30% drop in those for Slack.As Bloomberg’ s Gillian Tan wrote earlier this month, SoftBank and its affiliates own around 29% of WeWork. Should the $47 billion valuation at which SoftBank most-recently bought in turn into the current whisper number of $15 billion, then SoftBank and the Fund could be set to lose as much as $9.28 billion right out of the gate.(4)That would result in an unusual IPO loss, drag down the Fund, and ruin the quarterly model. So it makes sense that SoftBank wants to delay WeWork’s IPO, at least until after Sept. 30. WeWork responded to reports of this delay by saying it expects to complete the IPO by the end of this year.Assuming that there’s no other basis for revaluation, such as a new equity round, the Vision Fund can still contend that WeWork is worth $47 billion when it closes its books at the end of this month.But that doesn’t solve the possibility of the Vision Fund posting a loss this quarter thanks to slides in Uber and Slack. One listed portfolio company, Ping An Good Doctor (aka Ping An Healthcare and Technology Co.), was up 39% in Hong Kong as of Tuesday morning, netting a gain of around $110 million to the Vision Fund. Others have fallen, including Guardant Health Inc. (-13%) and ZhongAn Online P&C Insurance Co. (-8.6%). I believe that this leaves SoftBank Vision Fund with little choice but to enact a two-pronged strategy. First, take a “big bath(3)” for the September quarter and get the bad news behind it. Second, hurry along the IPOs of the other unicorns in its stable.ByteDance, the hugely popular Chinese video content platform, is currently the world’s most valuable startup at $75 billion, according to CB Insights. That’s followed by Chinese ride-hailing provider Didi Chuxing at $56 billion. I don’t think either is ready to IPO in the next month or two, but there’s always a chance ByteDance may decide to list before a slowdown in the Chinese economy starts to show up in its growth metrics.There are also some smaller fruit about to ripen. South Korean e-commerce company Coupang and U.S. food delivery provider DoorDash Inc. could find favor among IPO investors. Southeast Asian transport and services startup Grab Holdings Inc. would also be very popular, but I sense they want to spend a little more time building the non-transport offerings before pitching an IPO. Then there is Son’s plan to relist British semiconductor designer ARM Holding Plc, which would likely be a success because of its central role in the global technology sector.Despite the troubles with WeWork, SoftBank still has a strong team of highly valued startups on its roster. But they’re not much good to the Vision Fund if they’re sitting on the bench.(1) The exact scale of any loss would depend on how SVF has valued preferred shares acquired in earlier rounds. This figure assumes the Fund raised valuations in subsequent funding rounds.(2) Big Bath refers to the concept of collating lots of bad news in one quarter so that a company can put it all in the past and move on. Often seen as manipulation, I'd argue this can actually be a healthy strategy because it allows investors and management to return their focus to building the company.To contact the author of this story: Tim Culpan at email@example.comTo contact the editor responsible for this story: Patrick McDowell at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Artificial intelligence in housing won’t just eliminate Realtors. It could completely change the way we buy, sell and live.
MoviePass had all the workings of a genius tech start-up but was unable to execute its business model effectively. What does this mean for other unprofitable public companies?
(Bloomberg) -- The biggest backers of SoftBank Group Corp.’s gargantuan Vision Fund are reconsidering how much to commit to its next investment vehicle as an oversized bet on flexible workspace provider WeWork sours.Saudi Arabia’s Public Investment Fund, which contributed $45 billion to the $100 billion Vision Fund, is now only planning to reinvest profits from that vehicle into its successor, according to people familiar with the talks. Abu Dhabi’s Mubadala Investment Co., which invested $15 billion, is considering paring its future commitment to below $10 billion, the people said, asking not to be identified in disclosing internal deliberations.A partial retreat of the two anchor investors would complicate fundraising for SoftBank Chief Executive Officer Masayoshi Son, who upended venture capital by making huge bets on promising yet unproven companies and spurring others to follow suit. Perhaps more than any other startup, WeWork has come to symbolize that brash style, and the success or failure of its IPO is likely to impact Son’s ability to raise cash for future deals.PIF executives are still considering options and no final decision has been made, one of the people said. A spokesman for the Saudi Arabian wealth fund declined to comment. Mubadala said discussions are continuing on whether or not any investment will take place. A representative for SoftBank’s Vision Fund didn’t immediately have a comment.“The suggestion we have made any decisions on the size or timing of a potential investment is simply unfounded,” said Brian Lott, a spokesman for Abu Dhabi’s sovereign fund. “Our discussions continue at an appropriate and deliberate pace, given the importance of this effort.”Sagging ValuationThe Wall Street Journal previously reported that Saudi Arabia’s sovereign wealth fund wasn’t planning to be a significant investor in the new fund but may still make a more modest commitment. A decision to only reinvest proceeds from the first fund would mark a significant shift. Saudi Arabia’s Crown Prince Mohammed bin Salman said last October that he planned to invest another $45 billion into any new fund.“We would not put, as PIF, another $45 billion if we didn’t see huge income in the first year with the first $45 billion,” he said in an interview with Bloomberg.WeWork is one of SoftBank’s flagship investments, along with Uber Technologies Inc., messaging software provider Slack Technologies Inc. and U.K. chipmaker ARM Holdings Plc. SoftBank, which with its affiliates, owns a 29% stake, and in January invested at a valuation of $47 billion, more than triple the $15 billion that’s currently being discussed in an IPO.Tensions have erupted within SoftBank over how it has handled its investment in WeWork. The Vision Fund, along with PIF and Mubadala, scuttled a $16 billion investment early this year Son had championed. SoftBank ended up making only a $2 billion investment from its parent entity, rather than the Vision Fund.SoftBank said in July that other investors had expressed interest in pledging a combined $108 billion for the second Vision Fund, though that was before WeWork forged ahead with plans for an IPO. The new fund is expected to collect money from Apple Inc., Microsoft Corp., Foxconn Technology Group and various Japanese financial institutions, with seven having signed memorandums of understanding to participate.(Adds that talks are ongoing in fourth paragraph.)\--With assistance from Matthew Martin.To contact the reporters on this story: Gillian Tan in New York at email@example.com;Giles Turner in London at firstname.lastname@example.orgTo contact the editors responsible for this story: Tom Giles at email@example.com, Christian Baumgaertel, Sree Vidya BhaktavatsalamFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
There is a feeling in financial markets right now that the U.S. and global economic environments are actually improving. Look no further than Citi's Economic Surprise Index, which measures how economic data is coming in relative to expectations. For the first time since early 2019, this index has poked into positive territory.If the U.S. and global economic environments are actually improving, then the long end of the U.S. Treasury yield curve shouldn't be so low. Right now, the long end of the curve is basically screaming "recession." The data disagrees with this assessment. Almost always, the data wins out. Thus, there are murmurs out there that the long end of the yield curve should actually move higher over the next few months.While that is great news for the economy, it's bad news for growth stocks. Low rates inflated growth stocks, because as rates went lower, so did the discount rate for which investors used to discount future profits. Growth stocks get all of their value from future profits. Thus, as the discount rate on those future profits tumbled, the present value of those future profits soared, and so did growth stocks.InvestorPlace - Stock Market News, Stock Advice & Trading TipsThe opposite could happen, too. Rates could rise, and if and when they do, growth stocks could drop. * 7 Tech Stocks You Should Avoid Now Of course, this blanket assessment doesn't apply to all growth stocks. For many of them, this unwinding of the growth trade that was inflated by low rates will just be a blip on the radar. Once rates stop moving higher, these stocks will stop moving lower, and they will continue on their secular up-trends.But, for some growth stocks, this unwinding could be more serious. Which growth stocks could get hit hardest in this unwinding period? Let's take a look at five growth stocks to sell as rates creep higher. Growth Stocks to Sell as Rates Move Higher: Chipotle Mexican Grill (CMG)Source: Northfoto / Shutterstock.com YTD Gain: 88%One growth stock which looks like it could get hit particularly hard if/when rates move higher as the U.S. economic outlook improves is Chipotle Mexican Grill (NYSE:CMG).Shares of the fast-casual Mexican eatery are up more than 88% year-to-date, mostly because the company has successfully and impressively executed on its turnaround initiatives, including building-out the digital delivery business, expanding the menu, and re-branding the chain as a "healthy ingredients" restaurant. Comparable sales have turned into sharply positive territory. Margins are have run higher. Profits have soared. So has CMG stock.But part of this rally has unequivocally found support in low rates. How else do you explain a restaurant sock trading at over 45-times forward earnings? The average forward earnings multiple in the restaurant sector is 28, less than half of Chipotle's forward multiple.As such, if/when rates creep higher over the next few months, CMG stock could get hit particularly hard -- not because the fundamentals here aren't good, but because the valuation looks almost entirely dependent on rates remaining low. Workday (WDAY)Source: Sundry Photography / Shutterstock.com YTD Gain: 9%One growth stock which has already been hit hard in the unwinding of the growth trade in anticipation of higher rates is Workday (NASDAQ:WDAY).Workday is a market-leading provider of cloud-hosted enterprise resource planning solutions. The cloud growth narrative has been on fire this year. So has Workday's growth narrative. In 2019, Workday's revenues, profits, and stock have all marched higher. But, as I've pointed out before, WDAY stock has marched into aggressively overvalued territory, and investors are finally starting to notice as the company's numbers have shown signs of weakness.Over the past two months, WDAY stock has shed more than 20%, mostly thanks to slowing growth trends in the company's most recent earnings report. During those two months, the 10-Year Treasury yield actually dropped from over 2% to about 1.6%. Thus, even with the long end of the curve dropping, WDAY stock has still dropped big over the past two months because the growth narrative here is losing momentum. * 10 Battered Tech Stocks to Buy Now If the long end of the yield curve reverses course here and starts to move higher, that will add more pressure to what is an already pressured WDAY stock. That added pressure should result in material weakness in Workday stock for the foreseeable future. Match Group (MTCH)Source: Shutterstock YTD Gain: 80%Another growth stock that seems aggressively overvalued and which could get hit hard in the event that rates do move higher is Match (NASDAQ:MTCH).MTCH stock is up 80% year-to-date -- and up 400% over the past three years -- as the company has emerged as the unchallenged leader in the secular growth online dating space. Specifically, two things have happened here. One, Match has acquired all of its competition (ex: Bumble) and now holds a portfolio of apps which cumulatively dominate the entire online dating landscape. Think Facebook (NASDAQ:FB) of online dating. Two, online dating has turned into a super valuable industry, as consumers have expressed ample willingness to pay up for premium and exclusive online dating services and perks.Consequently, Match's user base, revenues, and profits have all expanded dramatically over the past few years. This big growth has fueled big gains in MTCH stock. But, this is now a stock which trades at 37-times forward earnings, on revenue and profit growth that was under 20% last quarter. That's a really big multiple for not-that-big of growth. Excluding legal fees, Facebook is growing revenues at a faster rate and profits at a comparable rate. And FB stock trades at just 19.5-times forward earnings.From this perspective, it does appear that low rates are inflating the valuation underneath MTCH stock. If/when rates do move higher from today's all time low levels, then MTCH stock could suffer from material multiple compression. Roku (ROKU)Source: Michael Vi / Shutterstock.com YTD Gain: 388%It's tough for me to put streaming device maker Roku (NASDAQ:ROKU) on any "stocks to sell" list. The long-term growth narrative is just so good. But, ROKU stock has come so far, so fast, that I do think this stock could get hit hard if/when rates creep higher.Big picture, ROKU stock is a long-term winner. The company is transforming into the cable box of the streaming TV world, and in so doing, will one day have over 100 million active accounts, from which the company will be able to extract tons of high-margin dollars through TV ad sales and subscription sharing agreements. This company is in the first few innings of a very big long term growth narrative -- and that narrative will ultimately end with ROKU stock being way higher in the long run.In the near-term, ROKU stock is ahead of itself. See the math here. It's tough to justify a price tag above $150 today for this stock, even under aggressive long-term growth assumptions. The only justification for a price tag above $150? Low rates support it. But, if that low rate support disappears, you could see a big sell-off in ROKU stock. * 7 Discount Retail Stocks to Buy for a Recession As such, while I love the growth narrative underlying ROKU stock, I'm also worried that the stock could give back gains in a hurry if/when rates move higher. Starbucks (SBUX)Source: monticello / Shutterstock.com YTD Gain: 41%Joining Chipotle as the only other non-tech growth stock on this list, coffee retail giant Starbucks (NASDAQ:SBUX) seems susceptible to a sizable pullback in the event rates move higher.The logic here is simple. Starbucks is firing on all cylinders today -- positive comps, upward moving margins, double-digit profit growth, etc. That's why SBUX stock has rallied 41% year-to-date to fresh all-time highs.Starbucks is also growing at a slower pace than it has over the past several years. Sure, profits are expected to grow at a 10%-plus pace for the foreseeable future. But since 2014, EPS growth has been largely north of 15%, and often north of 20%.During that 15%-plus profit growth stretch, SBUX stock averaged a 25-times forward earnings multiple. Today, during a slower growth era, SBUX stock is trading at 29-times forward earnings. A bigger multiple for slower growth? That doesn't make sense … unless you consider that today's valuation is inflated by low rates.That's exactly what is happening. SBUX stock is trading at a bigger-than-normal multiple today for slower-than-normal growth because low rates support a bigger multiple. That low rate support could disappear over the next few months. If it does, SBUX stock could be due for some serious pain.As of this writing, Luke Lango was long FB. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Recession-Resistant Services Stocks to Buy * 7 Hot Penny Stocks to Consider Now * 7 Tech Stocks You Should Avoid Now The post 5 Growth Stocks to Sell as Rates Move Higher appeared first on InvestorPlace.
Rates spiked 0.4% last week, so is 2019 mortgage refi boom over? Let's take a look at where rates are, and where they might go as we move into Fall.
Ahead of the U.S. 2020 presidential election, some investors are concerned that discussions regarding healthcare reform could take a toll on both share prices and valuations. That being said, one analyst believes that compelling investment opportunities can still be found within the managed care space. Managed care refers to various healthcare plans that try to reduce costs by controlling the type and level of services provided.Deutsche Bank’s George Hill just initiated coverage on 3 healthcare stocks, giving each a Buy rating based on their “attractive” potential for growth on September 11. Using the TipRanks Stock Comparison tool, we compared how the stocks measure up against each other based on year-to-date gain, analyst consensus as well as average analyst price target. Each of these stocks has amassed significant support from other Wall Street analysts with a “Strong Buy” analyst consensus. This is based on the last three months’ worth of ratings from the rest of the Street. Let’s dive in. CVS Health CVS Health (CVS\- Get Report) provides health plans and services under three segments that include pharmacy services, retail and long-term care as well as health care benefits. Out of the three healthcare stocks on our list, Hill cites CVS as his top pick based on its level of diversification. While shares are down 2% year-to-date, CVS has slowly but surely been working its way back up gaining 18% in the last three months. With all that the drug store and pharmacy chain has going for it, Hill sees even more growth on the way. It has about 10,000 pharmacies across the U.S. and plans to open 1,500 HealthHub stores by the end of 2021. He also highlights its integrated care delivery, which can improve beneficiary care as well as cut costs.That being said, a significant portion of its revenue is generated from its non-managed care organization (MCO) segments. CVS’ non-MCO businesses include the largest PBM, the second-largest pharmacy chain, long-term care and other services. While some investors originally expressed concerns regarding its $70 billion acquisition of health insurer Aetna in 2018, management has tried to mitigate any fears. On June 4, the company conveyed that once the two companies are fully integrated, it could see low-double digit percent earnings growth by 2022. Hill argues that the company is poised to meet its guidance based on its business strategy. “We see the company as well positioned to deliver on a vertical integration care delivery strategy, allowing the company to take share and generate positive earnings surprise. We also see the valuation of CVS shares as highly compelling and capturing potential execution and integration risks,” he explained. As a result, the three-star analyst initiated coverage with a Buy and set a $91 price target, suggesting 42% upside. All in all, the rest of the Street takes a similar position. CVS boasts a ‘Strong Buy’ analyst consensus and a $72 average price target, indicating 13% upside potential, the lowest on the list. Anthem Inc. While shares of the health insurer have slid 3% year-to-date, Hill tells investors that the dip in Anthem (ANTM\- Get Report) presents a unique buying opportunity. Recently, Anthem has attracted attention for its new PBM strategy. The company announced in March that its PBM, IngenioRX, will be more transparent and customer-friendly, with the new PBM passing along rebates to pharmacy customers. Traditional PBMs get rebate payments from drug manufacturers in exchange for placing medications on PBMs’ lists of covered drugs, or formularies. According to management, this new strategy could reduce costs and simplify services.It should be noted that IngenioRx is the product of its partnership with CVS that involves a five-year agreement signed back in 2017. CVS has its own Caremark PBM, and only processes claims and handles tasks related to prescription fulfillment for IngenioRX. Anthem has full control over clinical strategy and decides which drugs are covered. In addition to revamping its PBM strategy, its 2018 acquisitions of Aspire Health and America’s 1st Choice as well as HealthSun in 2017 are expected to drive substantial Medicare Advantage growth. Medicare Advantage plans are an alternative to original medicare that let beneficiaries choose to get their coverage through private insurance companies that contract with Medicare.While all of the above supports a strong long-term growth narrative, Hill notes that there are some risks associated with Anthem. “While execution has been strong recently, we see some implementation risk on the company’s PBM strategy, risk to the company’s Medicare Advantage growth targets, less exposure to faster-growing segments of the market and a rich relative valuation,” he stated. Nonetheless, the potential reward outweighs this risk. With his coverage initiation, Hill set a $323 price target which implies 28% upside. With 7 Buy ratings vs no Holds or Sells received in the last three months, the word on the Street is that ANTM is a ‘Strong Buy’. Its $345 average price target demonstrates the potential for 36% upside, the highest on our list. Cigna CorporationAs Cigna (CI\- Get Report) shares have declined 15% year-to-date, the Deutsche Bank analyst argues that shares are now trading at a discount. Some investors have expressed concerns that the health insurance company is overexposed in both the PBM and commercial business space. In December 2018, CI finalized its $67 billion merger with PBM Express Scripts in order to expand its reach within the sector. The merger could be a problem for CI as regulations have been proposed that would impair the PBM business model. This poses a major threat to CI as its primary non-MCO revenue comes from large PBMs. While no legislation has been passed yet, there is always a possibility that this could change. A significant portion of CI’s revenue is also generated from its commercial products. The commercial MCO space includes risk-bearing insurance and administrative services only (ASO). Hill states that while this space can be more profitable, it is slower growing than the government-pay business as the commercial business is largely stagnant. While acknowledging that Cigna is behind the curve in terms of its reach within the government-pay space, he still believes the stock is poised to soar. “We view Cigna’s PBM segment earnings as not having significant short-term earnings risk and the company’s diversified earnings stream as undeserving of the steep discount applied to the shares in the wake of the Express Scripts merger,” he explained. As a result, the analyst initiated coverage with a Buy and set a $207 price target. The price target reflects his confidence in CI’s ability to surge 29% over the next twelve months.Wall Street seems to agree with Hill. CI has only been assigned Buy ratings in the last three months. Its average price target of $214 indicates 33% upside potential, falling just short of ANTM’s. Find Wall Street’s most loved stocks with the Top Analysts’ Stocks tool
Editor's note: This story was previously published in July 2019. It has since been updated and republished.The concern about investing in growth stocks usually comes down to valuation. Stocks with significant growth potential usually have a multiple to match. One way around that problem is to invest in small-cap stocks, where the growth stories may not be quite as well known and the valuations may not be quite as stretched.In some cases, small-cap stocks come with more risk; but in most cases, small caps offer more potential rewards.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Tech Stocks You Should Avoid Now Here are eight small-cap stocks to buy due to significant growth opportunities. Each of these small-cap companies have valuations that lend themselves to significant upside if those opportunities are captured. AppFolio (APPF)Source: Pavel Kapysh / Shutterstock.com AppFolio Inc (NASDAQ:APPF) offers the best, and worst, of small-cap growth investing. On the positive side, revenue from AppFolio's software for property managers is growing nicely. The company's total revenue jumped about 40% last yearThe primary concern here is valuation. APPF trades at over 17 tines revenue on an enterprise basis. That's a big number in any market. It's also a notable premium to its closest peer, RealPage (NASDAQ:RP).Still, there's a reason to see more upside. AppFolio has turned profitable, and its margins should expand significantly going forward. The company's MyCase software for law offices offers another growth driver for AppFolio sales. Both software products drive exactly the kind of "sticky," recurring revenue investors are looking for in the software space.Again, valuation isn't perfect. But with earnings-per-share likely to clear 75 cents by the end of the decade, it's not quite as extreme as headline multiples would suggest. With AppFolio's growth prospects and potential as a takeout target, there's likely still some room left in the APPF rally. Chegg (CHGG)Source: Casimiro PT / Shutterstock.com Chegg Inc (NYSE:CHGG) has transformed itself over the past few years.What was formerly a company focused largely on a money-losing textbook rental business has become the go-to platform for college students in the U.S. Chegg offers a wide variety of services to students, ranging from tutoring and online study help to eTextbooks and its legacy print textbook rental business (which is now outsourced, providing a major boost to Chegg profits).Like most stocks on this list, CHGG isn't cheap, trading at over 14 times its revenue and a forward price-earnings ratio of about 52. But with the company's earnings per share expected to nearly double this year, there's enough to support a premium valuation.With Chegg increasingly looking dominant in what its CEO Dan Rosensweig has called "winner take most" markets, a takeover looks likely. Amazon.com, Inc. (NASDAQ:AMZN) has tried to attract college students by building out physical bookstores and offering free Prime memberships. Chegg, which reaches the majority of those students, would give the company both an entry into that market and a wealth of valuable data to boot. * 7 Stocks to Buy to Ride the Vegan Wave Even if Amazon doesn't come calling, Chegg's expanding service offerings and potential to target high school and graduate students suggest years of growth ahead. And even the current, somewhat pricey, valuation doesn't account for all of that potential. Varonis Systems (VRNS)Source: Shutterstock Varonis Systems (NASDAQ:VRNS) has an intriguing growth story. The company develops software for businesses that manages what it calls "unstructured data." That includes everything from emails to spreadsheets to memos.That data is growing exponentially and so is the risk it poses. As seen in leaks at Sony (NYSE:SNE) and elsewhere, there's a lot of valuable information contained in those files. Varonis protects them from unwanted entry and it organizes them for corporate managers.The importance of unstructured data continues to drive Varonis revenue higher, with the company's 2018 top-line growth expected to come in at about 20%. Sales cycles remain relatively long and intensive, as in many cases Varonis still has to prove the usefulness of the software. That's particularly true for companies who haven't had a data breach yet. As awareness increases and those cycles shorten, both revenue growth and operating margins will benefit.Meanwhile, VRNS is expected to report a profit for 2019. And yet it trades at a bit over 14 times its trailing-twelve-month revenue, plus cash. That sounds like a big multiple, but it's actually somewhat modest in the SaaS space, particularly given Varonis' growth profile.As sales grow, and that multiple expands, VRNS should continue to climb. Ollie's Bargain Outlet (OLLI)Source: Shutterstock There are very few retail growth stories in the U.S. of any size, particularly in brick-and-mortar retail. But Ollie's Bargain Outlet Holdings Inc (NASDAQ:OLLI) is one to keep an eye on.Ollie's benefits from being in the off-price channel, one of the few areas of retail that has held up well amid the pressure from online retailers like Amazon. And while Ollie's is much smaller than peers TJX Companies Inc (NYSE:TJX) and Ross Stores, Inc. (NASDAQ:ROST), in this case that's a good thing.The company's store expansion plan alone suggests years of growth ahead, with strong same-store sales contributing as well. OLLI isn't necessarily cheap, trading at 33 times analysts' consensus FY19 EPS estimate. * 7 Discount Retail Stocks to Buy for a Recession But the company is solidly profitable, has little debt, and has significant whitespace to build out its store count - and revenue. For investors who believe the off-price channel should continue to manage online competition, OLLI is an extremely intriguing choice. Shotspotter (SSTI)Source: Shutterstock Shotspotter (NASDAQ:SSTI) is a classic early-stage growth company. Shotspotter is expected to become profitable for the first time this year.The company's namesake product detects gunfire and notifies law enforcement in real time, making police response more efficient and neighborhoods safer. The product already has been deployed in major cities like Chicago and New York, with seven new cities adopting the software just last month.That growth should continue, as Shotspotter brings on additional municipalities and, eventually, expands internationally as well. Revenue is still relatively small -- just $34 million over the past year -- but a $491 million market cap leaves room for upside.Continued adoption would make SSTI a likely takeover target for defense companies like Lockheed Martin Corporation (NYSE:LMT) or Northrop Grumman Corporation (NYSE:NOC) or other larger, government-focused suppliers. And with the need for Shotspotter, unfortunately, rising every year, that increased adoption seems likely. LogMeIn (LOGM)Source: Shutterstock Video-conferencing leader LogMeIn Inc (NASDAQ:LOGM) offers a nice combination of growth and value.Trading at just 15 times analysts' consensus EPS estimate, LOGM certainly doesn't look like it's pricing in the huge EPS growth analysts are expecting this year.With video conferencing demand still increasing and top-line growth expected in 2019, LogMeIn should be able to drive double-digit EPS growth for years to come. That, in turn, suggests a fair amount of upside from current levels. * 10 Battered Tech Stocks to Buy Now There are some risks, specifically around competition. But from a long-term perspective, LogMeIn still seems to have years of growth in front of it and it's trading at a price worth paying. Shake Shack (SHAK)Source: JHENG YAO / Shutterstock.com Shake Shack Inc (NYSE:SHAK) is growing. Revenue is expected to jump 28% this year. And the company still has plenty of room to expand, and it recently opened its first restaurant in mainland China.SHAK is a bit of a turnaround play, but the Shake Shack story is still playing out. If the company can stabilize same-restaurant sales, location growth alone should drive profits -- and SHAK stock -- higher. iRobot (IRBT)Source: Grzegorz Czapski / Shutterstock.com iRobot Corporation (NASDAQ:IRBT) got a bit ahead of itself last year. In April, IRBT stock traded around $60; by late August, the stock had nearly doubled.IRBT then pulled back over 30%, subsequently rebounded back near its former highs, and then dropped again. But the category itself is growing double-digits, and Internet of Things catalysts could further drive product adoption. * 7 Stocks to Buy In a Flat Market IRBT shares aren't necessarily cheap. But at 24 times next year's earnings, IRBT isn't very expensive for a company in a rapidly growing category. With the company capable of driving 20%-plus EPS growth going forward, that multiple isn't very steep.As of this writing, Vince Martin did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks That Should Be Every Young Investor's First Choice * 5 IPO Stocks to Buy -- According to Wall Street Analysts * The Top 10 Best Sectors in the Market for 2019 The post 8 Small-Cap Stocks to Buy for Big-Time Growth Potential appeared first on InvestorPlace.
Okta (NASDAQ:OKTA) isn't exactly a household name. Enough people knew about it though (and liked it well enough) to Okta stock from its early-2017 IPO price of $17 to its July high of $141.85.Source: Sundry Photography / Shutterstock.com Then, everything changed. The stock has peeled back from that high to its current price near $103 and is seemingly testing even lower lows. The 27% meltdown Okta stock has suffered in fewer than two months is the biggest selloff it has seen since became publicly traded.The likely reasons include that Okta pushed the average maturation date on some of its debt down the road. On top of that uninspiring decision, several cloud-computing names like Twilio (NYSE:TWLO) and Slack Technologies (NYSE:WORK) have also stumbled into selloffs over the course of the past few days. Industry influence can be potent at times.InvestorPlace - Stock Market News, Stock Advice & Trading TipsThere's a more likely underlying reason OKTA has been hammered after being such an incredible performer though. That is, it's wildly, ridiculously overvalued, with little hope of ever justifying what was at one point in July a more than $16 billion market cap. A Closer Look at Okta StockOkta offers computer login-security services, remotely preventing unauthorized access to protected information. If you log into an app at work or even via your smartphone, it's possible you've passed through an Okta-managed digital gate. * 7 Tech Stocks You Should Avoid Now It's an important business given the countless number of data breaches and computer hacks we've seen of late, but it's not a business with a particularly high barrier to entry.The crowded field is evidence of that. Twilio is in the same arena, as is Nexmo. And Bandwidth. And Hearsay, Plivo and Voxbone just to name a few, along with dozens of other players.It's not just the small startups in the business though. Big rivals offer comparable services. Though Forrester gave Okta the highest praise in the second quarter of the year by calling it the leader of the IDaaS (identification as a service) industry, that industry's players also included Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG).No company wants to have to stand up to Google or Microsoft.It's not a message fans and followers of Okta want to hear about, and it's certainly not the new and modern way of thinking about evaluating equities. A good story is good enough. The idea is all the matters. The trajectory rather than the current situation is the key.Except, those premises are only true for a short while. Eventually, a company has to make some real money that at least comes close to making sense given its price.Even with its 27% selloff, Okta stock still isn't even close. The Real Problem for Okta StockThe sheer quantity and quality of its competition is only half the concern suddenly weighing Okta down, however. The other half is a valuation that makes little sense even if Okta can outpace its rivals.Forget the lack of earnings for the moment; lots of companies bleed cash in their infancy. Even just focusing on revenue, Okta is valued at a stunning 25.7 times its trailing sales of $486.8 million.The S&P 500's price/sales ratio right now is an above-average 2.2. By that measure, Okta is overvalued by a factor of more than ten.Okta would need to grow its top line all the way from $486 million now to $5.6 billion to fairly justify its current market cap of $12.3 billion. Even allowing a little more wiggle room that tech stocks often command, a top line of $5 billion would still be a necessity. That's more than a 1000% improvement in sales in a market that Microsoft and Google are also in.Earnings growth would have to be even more dramatic to justify the stock's current value, working its way out of the red. The Reality for Okta StockThe digital future will undoubtedly require even more secure login architecture. Okta provides it.Unfortunately, so do dozens of other companies. Investors went nuts in particular over this one, however, without ever really asking questions like, "How much revenue can this one company produce?" and "How much of that revenue can be turned into a viable, sustainable profit when the service is essentially a commodity?"Increasingly, investors are realizing that the company's insiders and early investors had more to gain by going public and touting the stock than they did by building the company's revenue base. The same goes for rivals. It's also arguable these insiders and major stakeholders of all these companies were ultimately gunning for an acquisition that's looking less and less likely.The timing of these realizations remains one of life's great trading mysteries.And that's not to say Okta stock won't bounce back from its recent setback. It probably will. Anything dropped from enough height will bounce. The question is, can any bounce be sustained?The scope and speed of the selloff, however, suggests the cloud-identification market's investors just had their aha moment. Okta's honeymoon period is officially over, and that ain't good for existing shareholders.As of this writing, James Brumley held a long position in Alphabet. You can learn more about him at his website jamesbrumley.com, or follow him on Twitter, at @jbrumley. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Recession-Resistant Services Stocks to Buy * 7 Hot Penny Stocks to Consider Now * 7 Tech Stocks You Should Avoid Now The post Okta Stock May Be Preparing to Take a Real, More Permanent Plunge appeared first on InvestorPlace.
(Bloomberg) -- The We Co. roadshow is set to begin this week, perhaps as soon as today. Such corporate processionals through the ranks of blue-blooded Wall Street institutions are usually a triumph for buoyant, young companies. WeWork’s roadshow, on the other hand, will likely more closely resemble Cersei Lannister’s humiliating march to the Red Keep in Game of Thrones.Shame! WeWork’s valuation, $47 billion in a private funding round last January, could be set as low as $12 billion.Shame! Shame! Investors will no doubt be distrustful of any evidence of apparent self-dealing by the chief executive officer, Adam Neumann, such as buying properties and leasing them to the company. (WeWork took additional steps on Friday to change some of the unorthodox aspects of its governance structure and seek an independent board member.)As the nine-year-old office-sharing startup continues its stumble to the public markets, some prognosticators see this moment as something more significant: that a WeWork belly-flop portends the end of the unicorn era in Silicon Valley.The argument goes like this: SoftBank, the Japanese conglomerate and its $100 billion Vision Fund, has become an engine pushing the technology market to its limit. If it’s forced to retreat on its $10 billion commitment to WeWork, SoftBank will reconsider the nearly blind sanguinity that has perverted incentives for founders and distorted valuations in the industry over the last few years.In this seductive vision of a calamitous—and cleansing—WeWork initial public offering, modesty will once again return to Silicon Valley; humbled venture capitalists will stop bidding the valuations of unprofitable startups into the stratosphere; and the unicorns—those magical startups worth a $1 billion or more—will be put out to pasture, their legendary horns clipped like the tusks of poached African elephants.But that’s probably wishful thinking.The current cycle in tech started more than a decade ago, fueled by excitement over the iPhone, Facebook Inc. and the infusions of cash from a new generation of VCs like Andreessen Horowitz and Y Combinator. Business cycles tend to last seven to 10 years in Silicon Valley, and the resulting boom should have ended by now. But that was before the longest bull market in American history and a seemingly never-ending supply of venture capital from an array of new sources, including wealthy Chinese investors and Saudi Arabian oil money.It doesn’t appear to be stopping anytime soon. The stocks of Dropbox Inc., Lyft Inc., Slack Technologies Inc. and Uber Technologies Inc. are all under their IPO prices. And yet, many investors still believe.Uber lost $5.2 billion last quarter, dismissed more than 800 employees in the last two months and lost a policy battle with California lawmakers last week that could rock its business model. Somehow, Uber is still worth a cool $57 billion. Meanwhile, SoftBank says it’s going to raise another Vision Fund, with contributions from Apple Inc., Microsoft Corp. and Foxconn—this one even larger than the last.The belief underlying the persistent tech boom is that savvy entrepreneurs in vast markets with access to enough capital can engineer their way through even the most challenging issues. Witness CloudFlare Inc., the unprofitable internet infrastructure company that raised $525 million last week at a higher-than expected market value of $4.4 billion. Investors were able to overlook recent controversies over unsavory former CloudFlare clients, like the forum where a mass shooter hung out, and the stock popped on the first day of trading.What will it take to really put an end to the unicorn era? Perhaps an economic recession and an accompanying withdrawal of overseas capital from the Valley. Perhaps it will take a total collapse of a once-promising unicorn to change the risk tolerance of conservative investors like endowments, pensions and sovereign wealth funds.If the WeWork IPO flops, technologists will try to dismiss it as an outlier, the bad fortune of a real estate startup that was never truly a tech company. It will be viewed not as an indictment of current excess in Silicon Valley but as an exception to it. That’s not realistic, but then again, neither are unicorns.This article also ran in Bloomberg Technology’s Fully Charged newsletter. Sign up here.And here’s what you need to know in global technology newsSpeaking of SoftBank, some of its other companies would be hit hard by California’s new labor bill that would force gig economy companies to hire their workers.Lawmakers are seeking information from customers of the Big Tech companies. A House panel investigating potential antitrust violations has contacted customers of Amazon, Apple, Google and Facebook, according to documents reviewed by Bloomberg. They also asked the companies to hand over documents.Disney CEO Bob Iger left the board of Apple. The long-allied companies are now streaming rivals.Stanford University took money from Jeffrey Epstein, too. The school, located in the heart of Silicon Valley, received a $50,000 donation from a foundation backed by the late sex offender in 2004. Other donations to Harvard and MIT are prompting scrutiny of the schools and their faculties.A former Golden State Warrior is the U.S. face of Jumia, the Amazon.com of Africa.To contact the author of this story: Brad Stone in San Francisco at firstname.lastname@example.orgTo contact the editor responsible for this story: Mark Milian at email@example.comFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Beekeeper, an operational communications platform for hourly workers, has raised another $45 million in funding. The Zurich-based startup has clients in 26 industries but hotel groups like Hyatt are its largest early adopters. Thayer, a travel-focused venture capital firm, and Swisscanto, an asset manager via its growth equity fund, co-led the Series B round. The […]
Home buying is expected to ‘move further out of reach’ as new home construction still hasn’t returned to pre-recession levels.
WeWork's rocky road to the public markets is indicative of what's going on in with problematic, overblown tech IPOs in general.
Slack Technologies Inc (NYSE: WORK ) boasts a best-in-class product, but the competitive environment will likely limit Slack's pricing power and expansion opportunities, according to Mizuho. The Analyst ...
It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that...