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While it’s a good idea to go through your portfolio at least once a quarter and evaluate how your stocks are doing, special circumstances dictate that you do it more scrupulously, and our present pandemic certainly counts. The markets are caught in limbo, awaiting another stimulus package after a massive run from late March through September. The biggest winners have been tech stocks, especially biotechs and pharmaceutical companies. Much of that hype initially centered on the race for a COVID-19 vaccine. But it then filtered through the entire industry, since many companies that were once small-time outsiders were launched into headliners with a cure.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Diagnostic companies, testing and healthcare equipment companies all started rising as well. But we’re in a different place now. 7 Airline Stocks to Buy on Pelosi Stimulus Hopes Here are 7 unhealthy biotech stocks to sell before they sicken your portfolio: Galapagos NV (NASDAQ:GLPG) Heron Therapeutics (NASDAQ:HRTX) Ionis Pharmaceuticals (NASDAQ:IONS) REGENXBIO (NASDAQ:RGNX) Illumina (NASDAQ:ILMN) China Biologic Products (NASDAQ:CBPO) Ligand Pharmaceuticals (NASDAQ:LGND) For these biotech stocks, the ardor has cooled. While these aren’t terrible stocks, they’re stocks best exited before a correction hits or their momentum slows further. Unhealthy Biotech Stocks to Sell: Galapagos NV (GLPG) Source: Jarretera / Shutterstock.com Based in Belgium, this biotech focuses on small molecule and antibody therapies, aiming to discover novel drug targets. Last summer, Gilead Sciences (NASDAQ:GILD) announced it was investing around $5 billion in the company, which sent the stock flying. But the pandemic crushed the stock and just as it began climbing back, it was hit by news that its osteoarthritis drug in development with GILD failed FDA trials. Even with the cash infusion, this is a costly setback, as the company has to spend more on trials that may or may not get it approval. And it pushes back the possible launch date and increases its burn rate. Down 40% year to date, there’s still more downside risk. Heron Therapeutics (HRTX) Source: Shutterstock While only sporting a $1.4 billion market cap, this biotech has two drugs recently approved by the FDA (one of which is coming this week). Both drugs are antiemetics (drugs that reduce nausea and vomiting) to be used in conjunction with chemotherapy for cancer patients. But its biggest ace, still in trials in the U.S. and the E.U., is a non-addictive, non-opioid painkiller. Unfortunately, the opioid epidemic has been supplanted by the pandemic. So this boutique biotech has been pushed to the back burner. 7 Airline Stocks to Buy on Pelosi Stimulus Hopes Down 34% year to date, if the market sells off, HRTX is going with it. Ionis Therapeutics (IONS) Source: Shutterstock There’s a novel approach in biotech called antisense therapeutics. It basically alters pieces of messenger RNA so when the body builds new DNA strands from that RNA, it can help mitigate certain diseases. IONS has been involved in antisense therapeutics since 1989. And it has two drugs available in the U.S. and one in the E.U. All work to help people with rare diseases better manage their symptoms. The massive chemical conglomerate Bayer (OTCMKTS:BAYRY) is a partner and just recently took over development and production of an IONS clotting drug. IONS is down 23% year to date and there’s nothing, good or bad, that is going to move the stock anytime soon. REGENXBIO (RGNX) Source: Shutterstock Boasting a $1 billion market cap, RGNX has a number of partnerships with leading drug makers to use its gene therapy solutions for a variety of different pathologies. One of the drugs it worked on with Novartis (NYSE:NVS) was lucrative enough that RGNX didn’t have to look for cash for other projects by issuing more stock. Unfortunately, a big impending payment from NVS looks like it has been pushed further into the future due to an FDA ruling. 7 Airline Stocks to Buy on Pelosi Stimulus Hopes The stock is down 33% year to date, and absent any other big news from its partners, is likely to hang fire at best. Illumina (ILMN) Source: Shutterstock This major gene sequencing company should be going gangbusters here. And it was doing pretty well after the March market dive. But in late September it announced it was re-buying cancer-screening start-up, Grail for $8 billion. Grail had been a division of ILMN a few years ago and it was spun off with big-name investors Bill Gates and Jeff Bezos buying in. ILMN stock got hammered on the announcement because many of the industry analysts couldn’t understand why it buy Grail back, since its leading product puts ILMN in direct competition with some of its other customers that are working on similar technologies. The stock has regained some of that value, but it’s still not clear how it’s going to move forward with this major purpose. Down 4% year to date, there’s as much risk as promise here, and it’s expensive. China Biologic Products (CBPO) Source: Shutterstock As the race for a vaccine or cure for COVID-19 continues around the globe, there are other diseases that still need attention as well. That’s where CBPO comes in. It has a portfolio of plasma-based drugs for the treatment of everything from tetanus and rabies to hepatitis B. The problem is, the pandemic has changed the priorities of both patients and healthcare professionals. And that has meant some conditions don’t rise to the level of attention they did before the pandemic. This can be seen in CBPO’s second-quarter earnings. Sales were off, while income and profits also lagged. And earnings missed consensus. 7 Airline Stocks to Buy on Pelosi Stimulus Hopes While the stock is only off 2% year to date, it may be stuck here for a while. Ligand Pharmaceuticals (LGND) Source: Casimiro PT / Shutterstock.com LGND is a R&D contracting firm for biotech and pharmaceutical companies. It develops drug candidates and then it partners with a firm that will take it through trials and market it. This means LGND doesn’t bear the costs and risks associated with bringing a drug to market and the drug company doesn’t have to invest on an in-house R&D staff and facilities. LGND makes its money off negotiated royalty payments from its partners. Currently, LGND is receiving royalties from 9 different drugs on the market now. But the pandemic has shifted resources for its customer base, putting LGND in a tough spot. That’s best illustrated by the fact that 63% of its stock is now in short positions. The stock is already down 20% year to date. On the date of publication, Louis Navellier has no long positions in any of the stocks in this article. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article. The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article. 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Hardware is becoming software, so investors are dumping hardware. At the same time, software is moving to the world of the cloud. These trends undeniably shape what tech stocks you should be buying. Most computer chip companies today are “fab-less,” based not on manufacturing, but designs written in software. That is why Nvidia (NASDAQ:NVDA) today is worth more than Intel (NASDAQ:INTC). At the same time, open-source software is replacing proprietary software, especially in the clouds, where the money is made. That is why Facebook (NASDAQ:FB) is worth more than Oracle (NYSE:ORCL).InvestorPlace - Stock Market News, Stock Advice & Trading Tips What does this mean for companies in the business of making computer hardware? It means they need to find new paths to profit. And that also means software names are the best tech stocks to buy. The biggest hardware makers are aware of this. The hope investors have for them is they can execute and return to prominence. Until they do, however, their growth and valuations will lag the market. 7 Airline Stocks to Buy on Pelosi Stimulus Hopes For now, keep an eye on these six tech stocks as they pivot to the software world: International Business Machines (NYSE:IBM) Dell Technologies (NYSE:DELL) Cisco Systems (NASDAQ:CSCO) Nokia (NYSE:NOK) Ericsson (NASDAQ:ERIC) Workhorse (NASDAQ:WKHS) Tech Stocks: International Business Machines (IBM) Source: JHVEPhoto / Shutterstock.com Former IBM CEO Virginia Rometty missed the cloud. Under her watch, IBM went from being the world’s unquestioned technology leader to a laggard. Facebook is now worth over six times more. IBM has recognized its mistake. Rometty gave up the CEO chair in April to Arvind Krishna, who was running its cloud operations. He named Jim Whitehurst from Red Hat, the leading open source company in the world, as president. Since Krishna took over, however IBM stock has barely budged. Despite the cloud experience of its new leaders, IBM remains a hardware company. Its primary profit center remains its Z Series mainframes, and the proprietary software that runs on them. After delivering new versions in the second quarter, systems sales jumped 69%, year over year, to $1.9 billion, and profits rose 4.3%. But that profit center has been milked dry. Getting rid of older workers just drained its talent pool, and put the government’s eyes on it. It will take tricky financial engineering for IBM to find the cash flow needed to compete. It could sell the hardware units to private equity, spin out Red Hat, or spin its cloud operations into a REIT, as companies like Equinix (NASDAQ:EQIX) have done. For now, IBM says it’s focusing on “hybrid cloud.” Here, enterprises retain their own data centers built to cloud standards, then arbitrage larger public clouds like those of Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT). It’s also pushing its quantum computing efforts, although they won’t contribute to profit for years. Dell Technologies (DELL) Source: Jonathan Weiss / Shutterstock.com Dell Technologies is even bigger than International Business Machines and even more undervalued. The story starts in 2016, when Dell bought EMC, which controlled VMware (NYSE:VMW), for $67 billion. Four years later, $45 billion of the debt remains on Dell’s books. That means the “enterprise value” of Dell, including its debt, is $95 billion. The same calculation, applied to IBM, leads to an enterprise value of $165 billion, on revenue of $77 billion. VMware and IBM’s Red Hat are valuable because they offer virtualization and other cloud infrastructure software. It’s the kind of franchise the market often values at 10 times revenue. VMware had sales of about $11 billion for its fiscal 2020. Here is the problem. Because of the funky corporate structure, it is hard to value Dell. What is it really worth without its massive stake in VMware? The answer is to break Dell up again. Analysts think both companies would be worth more separate. Dell had fiscal 2020 net income of $4.6 billion. VMware could be worth $15-$20 per share more, nearly $10 billion. VMware CEO Pat Gelsinger says VMware could tie up with more hardware vendors if it were independent. Selling VMware would also bring Dell enough cash to retire its debt and compete more closely against Hewlett Packard Enterprise (NYSE:HPE). HPE is currently killing it in “hyperconverged” hardware, a key data center market, and now matches it in server market share. A spinoff is planned, with Dell and hedge fund partner Silver Lake maintaining a majority stake. The big issue? The move will not raise cash to pay down debt. Moreover, the split wouldn’t happen until September 2021. Even so, analysts call this a big win that will unlock Dell’s value in hardware, where many of its products are considered leaders. Take it all together, and a patient investor should do well buying Dell here. But you’re buying financial engineering, not the real kind. Tech Stocks: Cisco (CSCO) Source: Sundry Photography / Shutterstock.com Cisco Systems has been adrift ever since Chuck Robbins became CEO in 2015 Robbins’ strategy has been to shift Cisco’s revenue from expensive networking gear to software subscriptions. It’s not working. The revenue today is the same as it was in 2016. Profits have been uneven. Still, the stock’s low price has analysts pounding the table for it, calling it cheap and undervalued. But that’s not how tech stocks work. When a company stops growing, it starts dying. A small cut tells the sharks to feed. Cisco has made a half-dozen security acquisitions since Robbins took over, and 11 acquisitions since the start of 2019. But it’s not solving the problem. The number of bugs hitting Cisco software is increasing. Some impact key products like its high-end switches. BabbleLabs is one of these recent deals, bought to improve its videoconferencing experience. But that only serves to underline Cisco’s weakness. Cisco practically invented videoconferencing. But when the pandemic hit, Zoom Video (NASDAQ:ZM) became a verb. Cisco is now worth only 15% more than Zoom, which came public in April 2019 and covers just one of Cisco’s product niches. Competitors can smell blood in the water. Hewlett Packard Enterprise finished its acquisition of Silver Peak, a software-defined networking company that will be part of its Aruba unit. The move accelerates the shift of networking from a product to a service. It increases the pressure on Cisco. Nokia (NOK) Source: RistoH / Shutterstock.com The move of hardware to software, and of software becoming open source, has also hit the telecom equipment market hard. Nokia lost its niche in cell phones, bought into the equipment market, and is now seeing its lead there threatened. Part of the threat comes from China’s Huawei, which can make equipment for less and has been making inroads into the carrier market as a result. Nokia’s response is to support OpenRAN, a common set of interfaces for Radio Access Networks. Nokia has been using OpenRAN support mainly to compete with Huawei and its Scandinavian rival, Ericsson. It says a complete set of OpenRAN interfaces will be available next year. The hope now is that small, OpenRAN companies can be bought out, or parts of the emerging standards held back. That would let Nokia limit competition while still claiming openness. A short price war, initiated by the larger vendors, could quickly finish off the OpenRAN folks, analysts believe. But there’s another threat. Microsoft has already bought Affirmed Networks and Metaswitch, making its bid for an OpenRAN company look likely. Facebook is backing the Telecom Infra Project, the consortium that created OpenRAN. Open source, in other words, is coming. Will Nokia be able to main relevance among tech stocks? Tech Stocks: Ericsson (ERIC) Source: rafapress / Shutterstock.com While Nokia has been beating a drum for OpenRAN, rival Ericsson has been dismissing the threat. Ericsson is copying the strategy of Qualcomm (NASDAQ:QCOM), which has patents, copyrights and trademarks for all modem buyers to take its licenses. Importantly, these licenses come at a cost that makes rivals uncompetitive. But Qualcomm fought a bitter five-year legal war on three continents to achieve its dominance. Ericsson lacks that time, and it lacks that money. Ericsson insists that OpenRAN has security issues. It has already made its own equipment fully compliant with existing security and encryption standards. It has introduced an integrated packet core firewall to boost security further. This also increases its proprietary advantage. What might settle the dispute between open source and proprietary would be for Ericsson to buy Nokia. Rumors of such a deal were floated in February. President Donald Trump has been pushing for more control over the 5G equipment market, even suggesting Cisco Systems should buy one of the two Scandinavian companies. All this is leading to a new technology, Cloud RAN. This idea should dominate the new market for managed services, which is growing rapidly. What is this? The idea is to run radio networks according to what are called “cloud principles.” Ericsson is already pushing its own proprietary framework for this “journey.” Workhorse (WKHS) Source: rblfmr / Shutterstock.com Tesla (NASDAQ:TSLA) became the most valuable car company in the world by proving that cars represent technology, not manufacturing. This has spurred interest in other electric car companies like Workhorse. Since late June, WKHS stock has skyrocketed. Why? The reason is a U.S. Postal Service contract, which Workhorse has yet to win, for 140,000 electric mail trucks. Workhorse is one of three finalists. Its C1000 design features a light body with 1,000 cubic feet of storage, and a short range that recharges overnight. There is more than hype involved here. Workhorse’s first vans have traveled 8.5 million miles. It’s been in this niche for a decade. The trouble is its batteries are not yet competitive with gasoline engines. At the present price of $300 per kilowatt hour, a battery-powered van costs $30,000 to make. If Workhorse wins the postal contract, and if other last-mile companies follow suit, WKHS stock will be a big winner. But that’s a lot of ifs. This makes Workhorse less an investment than a speculation. Don’t bet any money on this stock you can’t afford to lose. There’s reason to speculate. It’s probable that, over the next decade, electric vehicles will take over the market. It’s likely that, in last-mile delivery, with a limited number of players, this can happen quickly. Contracts offered at scale are always valuable, and often profitable. But there is a lot of wishful thinking going on here. If the niche Workhorse is focused on proves out, why won’t Tesla just take it? At the time of publication, Dana Blankenhorn held long positions in AMZN, NVDA and MSFT. Dana Blankenhorn has been a financial and technology journalist since 1978. His latest book is Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, essays on technology available at the Amazon Kindle store. Follow him on Twitter at @danablankenhorn. More From InvestorPlace Why Everyone Is Investing in 5G All WRONG Top Stock Picker Reveals His Next 1,000% Winner Radical New Battery Could Dismantle Oil Markets Revolutionary Tech Behind 5G Rollout Is Being Pioneered By This 1 Company The post 6 Tech Stocks Every Investor Should Watch appeared first on InvestorPlace.
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In February 1993, five years after taking over from his father at South Korea's Samsung Group, 51-year-old Lee Kun-hee was frustrated that he wasn't making his mark. After a tense nine-hour follow-up meeting, Lee kick-started a strategic shift at Samsung - to gain market share through quality, not quantity. Lee, who died aged 78 on Sunday after being hospitalised for a heart attack in 2014, was driven by a constant sense of crisis, which he instilled in his leadership teams to drive change and fight complacency.
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China-based EV developer Nio (NYSE:NIO) has been in overdrive. The chart on Nio stock is, well, mostly upward sloping since April, with the return of 9X or so. Source: xiaorui / Shutterstock.com Granted, Nio has had to deal with some major challenges. In 2019, the company had to recall about 5,000 ES8 SUVs because the batteries caught fire. There also were some layoffs. But Nio CEO William Li has proven to be a very capable leader. Not only was he able to improve the company’s quality control but he also put together an important financing deal.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Note that he raised about $1 billion from Hefei City Construction and Investing Holding, CMD-SDIC Capital and Anhui Provincial Emerging Industry Investment. This was followed up with the issuance of 72 million shares to the public. 7 Airline Stocks to Buy on Pelosi Stimulus Hopes So then, what now? Will Nio stock continue to be a good investment? Well, to see, let’s consider some of the latest developments. Nio Stock Gets Its Groove Back The competitive environment in China for EVs is definitely intense, but Nio has done a good job in setting itself apart from its rivals. That is, the company has been focused creating sleek and innovative designs. When it comes to cars – especially those that command premium prices – this strategy can be a winner. But success has been more than fancy designs. “Nio has created a car that has a removable battery that cuts down the charging time,” said Victorio Stefanov, who is a Trader & Success Coach at TRADEPRO Academy. “You can drive up to a charging station and simply swap out your Nio battery. The company has also secured over 500 patented technologies into its battery swap solution.” Taken together, Nio has been able to grow at a rapid clip. In September, there was a 133.2% year-over-year surge to 4,708 vehicles. As for the quarter, there was a 154.3% spike to 12,206. Part of the acceleration is attributable to the launch of Nio’s newest vehicle, the EC6 (the company currently has three cars on the market). It’s a 5-seater premium smart electric coupe SUV that has a retail price that ranges from roughly $52,441 to $74,957 (this does not include government subsidies). The car includes comes with Mobileye chips for safety and has a system to allow for upgrades over the air. But of course, regarding the overall delivery growth, there have been other important factors. The Chinese government has continued to be a major proponent of EVs. The goal is to hit a 25% penetration rate within about five years. And given that more than 20 million vehicles are sold each year in China, the market potential for EVs is significant. In the meantime, the country has been able to effectively manage the Covid-19 pandemic. For the latest quarter, the GDP increased by nearly 5% and retail sales have been robust. There has also been an acceleration of digital adoption, which has boosted the share prices of companies like Alibaba (NYSE:BABA) and JD.com (NASDAQ:JD). In other words, the environment is quite positive for Nio. Bottom Line on Nio Nio is often referred to as the next Tesla (NASDAQ:TSLA), which has certainly been a nice catalyst for the stock! Yet there are still clear differences to keep in mind. Tesla’s strategy has been to develop its own manufacturing system, which has helped with profit margins. The company is also a leader in machine learning and Artificial Intelligence. This has been fueled by the huge dataset generated from Tesla’s large number of cars on the road. True, Nio is starting to invest more in AI and other cutting-edge technologies. But there is a long way to go. The fact is that Nio does not have the kind of deep engineering DNA that Tesla has. The irony is that Tesla may be the Tesla of China! Consider that the company is the leader in sales of EVs in the country. So all in all, investors should be wary with Nio stock. The valuation is getting to frothy levels, at least based on the small volumes. Moreover, Wall Street seems to be attributing Tesla-like qualities to the company that are fairly thin. For now, it’s probably best to be cautious on NIO stock – and perhaps wait for a better price. On the date of publication, Tom Taulli did not have (either directly or indirectly) any positions in any of the securities mentioned in this article. Tom Taulli (@ttaulli) is an advisor/board member for startups and author of various books and online courses about technology, including Artificial Intelligence Basics, The Robotic Process Automation Handbook and Learn Python Super Fast. He is also the founder of WebIPO, which was one of the first platforms for public offerings during the 1990s. 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Lee Kun-hee, who built Samsung Electronics into a global powerhouse in smartphones, semiconductors and televisions, died on Sunday after spending more than six years in hospital following a heart attack, the company said. The charismatic leader of Samsung Group and the country's richest person, grew it into South Korea’s biggest conglomerate. "Lee is such a symbolic figure in South Korea's spectacular rise and how South Korea embraced globalisation, that his death will be remembered by so many Koreans," said Chung Sun-sup, chief executive of corporate researcher firm Chaebul.com.