Fortune executive editor Adam Lashinsky weighs in on the pending TikTok-Oracle deal.
Fortune executive editor Adam Lashinsky weighs in on the pending TikTok-Oracle deal.
After the summer bulls, markets corrected themselves – but more than that, the selling was highly concentrated in the tech sector. The tech-heavy NASDAQ is now leading the on the fall, having lost 11.5% since September 2.JPMorgan strategist Marko Kolanovic points out that much of the market is now well-positioned for a rebound. Kolanovic believes that stocks will head back up in the last quarter of the year.“Now we think the selloff is probably over. Positioning is low. We got a little bit of a purge, so we think actually market can move higher from here,” Kolanovic noted.Acting on Kolanovic’s outlook, JPMorgan's stock analysts are starting to point out their picks for another bull run. These are stocks that JPM believes they may double or better over the coming year. Running the tickers through TipRanks’ database, we wanted to find out what makes them so compelling.NexTier Oilfield Solutions (NEX)The first JPM pick is NexTier, a provider of oilfield support services. The oil industry is more than just production companies. There are a slew of companies that provide drilling expertise, fluid technology for fracking, geological expertise, pumping systems – all the ancillary services that allow the drillers to extract the oil and gas. That is the sector where NexTier lives.Unfortunately, it’s a sector that has proven vulnerable to falling oil prices and the economic disruption brought on by the coronavirus pandemic crisis. Revenues fell from Q1’s $627 million to $196 million in Q2; EPS was negative in both quarters.But NexTier has a few advantages that put it in a good place to take advantage of a market upturn. These advantages, among others, are on the mind of JPM analyst Sean Meakim. “Admittedly we’re concerned about the sector disappointing the generalist 'COVID-19 recovery' crowd given the asymmetry of earnings beta to oil, but with 1) a solid balance sheet (net debt $17mm), 2) our outlook for positive (if modest) cash generation in 2021 (JPMe +$20mm), 3) a pathway to delivering comparably attractive utilization levels and margins, and 4) the cheapest valuation in the group (~20% of replacement), we think NexTier stands out as one of the best positioned pressure pumpers in our coverage,” Meakim opined.In line with his optimism, Meakim rates NEX an Overweight (i.e. Buy) along with a $5 price target. His target suggests an eye-opening upside potential of 203% for the coming year. (To watch Meakim’s track record, click here)Similarly, the rest of the Street is getting onboard. 6 Buy ratings and 2 Hold assigned in the last three months add up to a Strong Buy analyst consensus. In addition, the $3.70 average price target puts the potential twelve-month gain at 124%. (See NEX stock analysis on TipRanks)Fly Leasing (FLY)The next stock on our list of JPMorgan picks is Fly Leasing, a company with an interesting niche in the airline industry. It’s not commonly known, but most airlines don’t actually own their aircraft; for a variety of reasons, they lease them. Fly Leasing, which owns a fleet of 86 commercial airliners valued at $2.7 billion, is one of the leasing companies. Its aircraft, mostly Boeing 737 and Airbus A320 models, are leased out to 41 airlines in 25 countries. Fly Leasing derives income from the rentals, the maintenance fees, and the security payments.As can be imagined, the corona crisis – and specifically, the lockdowns and travel restrictions which are not yet fully lifted – hurt Fly Leasing, along with the airline industry generally. With flights grounded and ticket sales badly depressed, income fell – and airlines were forced to cut back or defer their aircraft lease payments. This is a situation that is only now beginning to improve.The numbers show it, as far as they can. FLY’s revenue has fallen from $135 million in 4Q19 to $87 million 1Q20 to $79 million the most recent quarter. EPS, similarly, has dropped, with Q2 showing just 37 cents, well below the 43-cent forecast. But there are some bright spots, and JPM’s Jamie Baker points out the most important.“[We] conservatively expect no deferral repayments in 2H20 vs. management’s expected $37m. Overall, our deferral and repayment assumptions are in line with the other lessors in our coverage. We are assuming no capex for the remainder of the year, consistent with management’s commentary for no capital commitments in 2020 [...] Despite recent volatility seen in the space, we believe lessors’ earnings profiles are more robust relative to airlines,” Baker noted.In short, Baker believes that Fly Leasing has gotten its income, spending, and cash situation under control – putting the stock in the starting blocks should markets turn for the better. Baker rates FLY an Overweight (i.e. Buy), and his $15 price target implies a powerful upside of 155% for the next 12 months. (To watch Baker’s track record, click here)Over the past 3 months, two other analysts have thrown the hat in with a view on the aircraft leasing company. The two additional Buy ratings provide FLY with a Strong Buy consensus rating. With an average price target of $11.83, investors stand to take home an 101% gain, should the target be met over the next 12 months. (See FLY stock analysis on TipRanks)Lincoln National Corporation (LNC)Last up, Lincoln National, is a Pennsylvania-based insurance holding company. Lincoln’s subsidiaries and operations are split into four segments: annuities, group protection, life insurance, and retirement plans. The company is listed on the S&P 500, boasts a market cap of $5.8 billion, and over $290 billion in total assets.The generally depressed business climate of 1H20 put a damper on LCN, pushing revenues down to $3.5 billion from $4.3 billion six months ago. Earnings are down, too. Q2 EPS came in at 97 cents, missing forecasts by 36%. There is a bright spot: through all of this, LNC has kept up its dividend payment, without cuts and without suspensions. The current quarterly dividend is 40 cents per common share, or $1.60 annually, and yields 4.7%. That is a yield almost 2.5x higher than found among peer companies on the S&P 500.Jimmy Bhullar covers this stock for JPM, and while he acknowledges the weak Q2 results, he also points out that the company should benefit as business conditions slowly return to normal.“LNC’s 2Q results were weak, marked by a shortfall in EPS and weak business trends. A majority of the shortfall was due to elevated COVID-19 claims and weak alternative investment income, factors that should improve in future periods [...] The market recovery should help alternative investment income and reported spreads as well…”These comments support Bhullar’s Overweight rating. His $73 price target indicates room for a robust 143% upside from current levels (To watch Bhullar’s track record, click here)Overall, the Moderate Buy rating on LNC is based on 3 recent Buy reviews, against 5 Holds. The stock is selling for $30 and the average price target is $45.13, suggesting a possible 50% upside for the coming year. (See LNC stock analysis on TipRanks)To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
Nikola Corporation's founder Trevor Milton purchased the original design for the company's flagship truck from a Croatia-based designer, the Financial Times reported https://on.ft.com/3mWv2s7 on Saturday, citing people with knowledge of the matter. Nikola One, the company's flagship hydrogen-powered truck truck, is at the centre of a design patent infringements lawsuit that Nikola filed against Tesla Inc in 2018. Nikola claimed, Tesla's Semi, its first electric heavy duty truck, is "substantially" similar to Nikola's design.
The rule of 70 is used to determine about how long it will take an investment to double in size while growing at a consistent rate of return. The rule is far from exact, but it can nonetheless help you … Continue reading ->The post What Is the Rule of 70, and How Do You Use It? appeared first on SmartAsset Blog.
When it comes to Nikola (NASDAQ:NKLA), I think many investors and most of the Street have lost sight of a few important points. Most critically, they don't realize that Nikola stock can soar even if the company does not, on its own, revolutionize fuel-cell and battery technology. Nevertheless, I believe that investors should wait for a better entry point before buying Nikola.Source: Stephanie L Sanchez / Shutterstock.com As I've pointed out previously, there will be meaningful demand for fuel-cell trucks from many companies that want to show that they care about the environment in general and climate change in particular. Additionally, in certain places, like California and Europe, governments are likely to mandate the use of zero-emission trucks.And it makes sense for battery-electric trucks to be used for relatively short-distance tasks in areas where many people live and/or work. In those situations, the trucks' short range will not be an issue, while their lack of pollution will be an important asset.InvestorPlace - Stock Market News, Stock Advice & Trading TipsThere aren't many companies making "green," full-size trucks now. After performing extensive research on the sector, I've only heard of several such companies, including Toyota (NYSE:TM), Hyundai, Workhorse (NASDAQ:WKHS), and Lightning Systems which is partnering with Plug Power (NASDAQ:PLUG). * 7 Hot Stocks to Buy on Robinhood Now Given the relative lack of competition in the "green truck" space, Nikola can succeed -- and Nikola stock can surge above its current levels -- if its vehicles are well-designed, work well without giving their owners major difficulties, and use top-notch existing technologies.The company's plan to launch hundreds of hydrogen-fuel stations could, meanwhile, give it an important first-mover advantage over its competitors, since there are currently very few such stations in the U.S.There are multiple indications that Nikola's trucks will be well-designed, function properly, and incorporate leading technology. A Closer Look at Nikola StockFirst of all, Nikola has received large orders from two huge companies: Anheuser-Busch (NYSE:BUD) and trash hauler Republic Services (NYSE:RSG). In 2018, the beer maker ordered "up to" 800 fuel-cell trucks from Nikola, while Republic Services in August ordered 2,500 battery-electric trucks from Nikola.In November 2019, Anheuser-Busch announced that it had used one of Nikola's tucks to make a delivery for the first time. I think it's likely that the beer maker has utilized many of Nikola's trucks since then and that we would've heard if the vehicles weren't functioning well by now.Further, I'd be willing to bet that both Anheuser-Busch and Republic Services used experts to evaluate Nikola's technology, engineering concepts, and personnel and found that it was poised to develop reliable vehicles with strong functionality. Nikola Is Likely to Have Leading TechnologyOn the technology front, Nikola has worked closely with Bosch, a top developer of truck components and technologies. Specifically, the two companies partnered to create a "fuel cell powertrain" for Nikola's Nikola Two truck.Moreover, the companies reported that "Nikola trucks feature Bosch innovations such as Mirror Cam systems, Perfectly Keyless and Servotwin steering system."Further, as is well-known, General Motors (NYSE:GM) recently announced a large-scale deal with Nikola. Under the agreement, GM will engineer and build Nikola's Badger pickup truck. Two versions of the truck will be sold: one will use only a battery and the other will be powered by a fuel cell and batteries. And outside of Europe, GM will supply all of Nikola's fuel cells.GM's electric car, the Bolt, has generally been the best-selling electric vehicle in the U.S. that's made by a company whose name is not Tesla (NASDAQ:TSLA). I've been very pleased with my pre-owned Chevy Volt which I bought in October 2019. Given these points, I'm confident that GM will, using Nikola's design, build an excellent pickup truck for the start-up and sell it high-functioning fuel cells. Trouble With the CEOUnder its former chairman and CEO, Trevor Milton, Nikola specialized in half-truths/deception, exaggerations, and somewhat overambitious aspirations, but Milton is no longer with the company. Its CFO, Tom Brady, recently provided a measured evaluation of Nikola's capabilities, indicating that Nikola intends to be more levelheaded and transparent going forward.Additionally, one could easily argue that if Milton's statements should disqualify Nikola, then Elon Musk's statements should have doomed Tesla stock many years ago.Remember Musk's claims about Tesla's autonomous vehicles and accusations of test fudging by the EPA. Of course, The Who could forget that the SEC famously accused Musk of lying.Most recently, Musk failed to deliver on his million-mile battery tease and, much more egregiously, let the rumor that Tesla was about to unveil such a battery circulate for many weeks without denying it. The Bottom Line on Nikola StockGiven the high likelihood of strong demand for zero-emission, full-sized trucks, the lack of strong competition in the space, and Nikola's impressive partnerships, Nikola could become quite successful.If Elon Musk's history is any indication, Milton's misrepresentations and exaggerations should not be disqualifying for Nikola over the longer term.But with the coronavirus pandemic poised to potentially worsen as the weather gets colder and restrictions on the sale of over 250 million shares of Nikola stock set to expire on Dec. 3, I would urge investors to wait until at least after a week or two after that date before pulling the trigger on the shares. I think investors who wait until at least the middle of December will probably get a better entry point.On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. Larry has conducted research and written articles on U.S. stocks for 13 years. He has been employed by The Fly and Israel's largest business newspaper, Globes. Among his highly successful contrarian picks have been solar stocks, Roku, and Snap. You can reach him on StockTwits at @larryramer. Larry began writing columns for InvestorPlace in 2015. More From InvestorPlace * Why Everyone Is Investing in 5G All WRONG * America's 1 Stock Picker Reveals His Next 1,000% Winner * Revolutionary Tech Behind 5G Rollout Is Being Pioneered By This 1 Company * Radical New Battery Could Dismantle Oil Markets The post Have a Little Patience Before Jumping in on Nikola Stock appeared first on InvestorPlace.
The company announced in a statement that CEO, Edward Lampert, would step down, with day-to-day operations managed by three high-ranking executives. Where is Sears Today? A bankruptcy judge approved the sale of the company's assets for $5.2 billion to Lampert in a bankruptcy auction.
Having a good credit score is beneficial, and an excellent score is even better. But what if you could achieve the perfect credit score? To attain the highest credit score there is, you'll need to have outstanding credit practices, meet … Continue reading ->The post What Is the Highest Credit Score You Can Have? appeared first on SmartAsset Blog.
Baird analyst Peter Benedict, in a research note, said the chances of discount retailer Costco paying a special dividend “seem to be rising.”
Despite falling from $500 per share to less than $400 today, Tesla (NASDAQ:TSLA) remains a very expensive name to own. But unlike in recent years, where a fall had it compared with stocks like General Motors (NYSE:GM) or even Toyota Motor (NYSE:TM), Tesla stock now has analyst support.Source: Sheila Fitzgerald / Shutterstock.com People like Oppenheimer analyst Colin Rusch and even TV analyst Jim Cramer counsel patience.Tesla stock now has believers on Wall Street, who insist this is what CEO Elon Musk says it is - a tech stock, not a manufacturer.InvestorPlace - Stock Market News, Stock Advice & Trading Tips The Key for Tesla Stock Is BatteriesThe technology is batteries. I wrote years ago that Tesla's challenge was to scale its manufacturing, but I was wrong. Others argued over whether assembly or computer components would rule the new car market. They were wrong too. * 7 Hot Stocks to Buy on Robinhood NowIt turned out batteries were the technology that would rule the electric car market. While rivals like Volkswagen (OTCMKTS:VLKAY) are just starting to produce electric cars, Musk said at his Battery Day event that Tesla is ready to double battery efficiency.Musk's big announcement was a new battery called the 4680. Its electrodes will be dry-coated, its cells larger. Once the kinks are worked out, the 4680 will have five times the energy, 16% more range, and six times the power of older models. The new batteries will replace cobalt with nickel and their design will be integrated into the car's structure instead of being a separate component.A better battery means prices of electric cars can achieve parity with gas-powered vehicles across the board. With the new battery installed, Musk said his cars will start at just $25,000 in three years. But his firmest product announcement was a $140,000 model for 2021 that can go from zero to 60 mph in two seconds and run 520 miles on a single charge.Tesla's battery success has analysts dreaming even beyond where Musk is willing to go. A Tesla with a full battery pack can act as a home's back-up power. Masses of Teslas can stabilize the electric grid itself. Believe in Musk?Tesla's success in scaling has made it the hottest stock of 2020. Even with two sharp falls, which have taken the market with it, shares are up 363% on the year. Short interest that averaged 28% earlier in the year is down to 22%. This despite the fact that even assuming Tesla can hit its revenue forecast of $30 billion for 2020, it's still selling at more than 11x revenue.For the quarter ending this month, analysts are expecting revenue of $7.62 billion and (perhaps more important) a profit, 17 cents per share. For 2021 the estimate is for $42 billion in sales and net income of $3.18 per share.That will still be just one-third the size of GM. But Tesla is now worth almost 10 times more than GM's $41 billion, and could buy Ford (NYSE:F) 13 times over. Both GM and Ford are struggling for batteries in limited production. Tesla controls its supply chain.While Musk has found himself associated with the Trump administration, he now has political power of his own. Tesla is suing the administration over its China tariffs. Tax breaks are fine, but free trade is finer for Tesla stock. The Bottom LineTesla's success with batteries has made it not just a dominant car company, but a dominant factor in electric technology.What Tesla hasn't done yet is deliver solar cells in enough quantity, and at a low enough price, to power its cars and close the loop on electricity. That remains just a promise. But fewer people are now betting he can't do it.Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of the environmental thriller Bridget O'Flynn and the Bear, available at the Amazon Kindle store. Write him at firstname.lastname@example.org or follow him on Twitter at @danablankenhorn. As of this writing he owned no shares in companies mentioned in this story. More From InvestorPlace * Why Everyone Is Investing in 5G All WRONG * America's 1 Stock Picker Reveals His Next 1,000% Winner * Revolutionary Tech Behind 5G Rollout Is Being Pioneered By This 1 Company * Radical New Battery Could Dismantle Oil Markets The post Despite Its High Price, Analysts Say Buy Tesla appeared first on InvestorPlace.
Renewed interest in emerging biotechnology companies lifted Sorento Therapeutics (NASDAQ:SRNE) recently. Excessive bearish volumes against the stock could squeeze them out further. If Sorrento continues to post positive news in its drug and testing developments on the novel coronavirus, then SRNE stock may keep rising.Source: Shutterstock At a 34.3% short float, the bearish bet on Sorrento is getting too crowded.The company posted a pair of news releases that caught investor attention. On Sept. 17, the company received U.S. Food and Drug Administration approved its Phase 1 clinical trial of STI-1499. COVI-GUARD is a neutralizing antibody for treating hospitalized Covid-19 patients.InvestorPlace - Stock Market News, Stock Advice & Trading TipsSorrento previously posted preclinical studies of STI-1499. It "demonstrated 100% in vitro neutralizing effect against SARS-CoV-2, preventing infection of healthy cells." The company then evaluated STI-1499 on multiple strains. Once again, it proved 100% effectively. So, when Sorrento presented the results of infected hamsters to the FDA, it translated to a 160mg dose for a human patient.On Sep. 14, Sorrento announced an exclusive licensing agreement with Mayo Clinic. It will supply "stable antibody-drug-nanoparticle albumin-bound (nab) immune complexes (ADNICs) targeting many types of human diseases." * 7 Hot Stocks to Buy on Robinhood Now This technology produces antibody drug conjugates that may play a role in chemotherapy. ADNIC technology is also more efficient because of its absorption in targeted cancer cells. Also, the non-covalent binding will facilitate "delivery of both a monoclonal antibody and chemotherapeutic payload" to the tumor. SRNE Stock in Cancer TreatmentHaving a connection with Mayo Clinic and Columbia University is a vote of confidence for Sorrento. Not only is it involved in developing rapid on-site detection tests for coronavirus, it is also licensing the next generation of cancer treatment. The more drugs the company has against a wide variety of diseases and infections, the more diverse its business gets. When it comes to biotechnology investing, investors should demand such a robust business model.Markets are focused on making a quick buck by trading the hottest Covid-19 vaccine developer. Yet Sorrento is under a short attack.Sorrento works in three markets. From its investor presentation (slide 5), it is involved in Covid-19, Immuno-Oncology and non-Opioid Pain Management. When generic drug giants like Endo International (NASDAQ:ENDP) and Teva Pharmaceutical (NYSE:TEVA) are out of favor because of opioid litigation, Sorrento's pain management looks appealing.In 2018, the FDA approved Sorrento's pain relieving patch ZTlido. And because the stock barely moved by much back then, investors are most interested in its Covid-19 developments. Covid-19 DevelopmentsCOVI-TRACE, a rapid on-site virus detection solution, is under EUA filing in the final stages. It will reach commercial scale in the fourth quarter of 2020. COVID-TRACK is a rapid antibody detection. Once it reaches manufacturing scale, its usage should boost the bottom line. The FDA granted the company emergency use of COVI-TRACK on June 10.Investors may only guess what Sorrento's future revenue will look like. An educated guess may include the following metrics in a five-year discounted cash flow revenue exit model.Metrics Range Conclusion Discount Rate 12.5% - 9.0% 11.00% Terminal Revenue Multiple 8.1x - 9.1x 8.6x Fair Value $10.60 - $13.20 $11.73 Model courtesy of finbox: click on this link to change metricsAssuming that revenue grows by at least 50% annually, Sorrento shares could be worth over $11. Risks and Your TakeawayThe Covid-19 vaccine and testing market is getting highly competitive. As other firms reach market sooner, Sorrento cannot fall behind its research and development efforts. If management scales production and supplies its treatments to those who need it, markets will take notice. This could hurt the bears further.On the date of publication, Chris Lau did not have (either directly or indirectly) any positions in the securities mentioned in this article. More From InvestorPlace * Why Everyone Is Investing in 5G All WRONG * America's 1 Stock Picker Reveals His Next 1,000% Winner * Revolutionary Tech Behind 5G Rollout Is Being Pioneered By This 1 Company * Radical New Battery Could Dismantle Oil Markets The post Why Investors Should Take a Serious, Bullish Look on Sorrento appeared first on InvestorPlace.
Costco does the right thing during COVID-19 but Wall Street is having none of it.
The former editor-in-chief of Time Inc. explains why the stock market continues to thrive in spite of all the apocalyptic events unfolding in the U.S. on an hourly basis.
It took me a while to warm up to Nio (NYSE:NIO). My colleague Bret Kenwell shares my thoughts on investing in the electric vehicle (EV) carmaker. He said it takes a lot of money to build a new auto company into a profitable entity. But true as this may be, Nio has faced several headwinds this year. In fact, prior to receiving some timely funds from the Chinese government, Nio was charging headlong into bankruptcy.Source: Carrie Fereday / Shutterstock.com That's why, when I wrote about the company a month ago, I said that it was now going to be judged by a different standard. What I meant by that was that with bankruptcy off the table, Nio has to show investors that it will be a long-term player in the EV market.What I didn't mean was that investors need to start trading Nio based on news about Tesla (NASDAQ:TSLA). The specific issue I'm referring to is the news that Tesla is planning to debut a $25,000 EV in three years.InvestorPlace - Stock Market News, Stock Advice & Trading Tips The EV Market Is Getting Juiced UpIf you haven't heard, Tesla held a Battery Day event and the company pledged to revamp and upscale its battery cell production. For those that are so inclined, the manufacturer went into detail about the technology behind the improvements. The upshot for investors is that, if Tesla is successful they will be able to lower the cost and significantly extend the range of their electric vehicles.Tesla's Model 3 is the most popular EV in China. So this news is seen (by some) as a potential existential threat to Nio. * 7 Hot Stocks to Buy on Robinhood Now However, I can't get that excited about something that may or may not happen in three years. And I would advise you to not get that hung up on it either. Separating the Lock and the KeyNio takes a different approach to the battery issue. And how to handle the battery is central to making EVs a practical reality. The battery is the key that unlocks the power of an electric vehicle. The battery swap model separates the lock from the key.For China, this process of centralized and shared battery charging, storage and dissemination is being done out of necessity. The country lacks the fast-charging infrastructure to keep up with demand for EVs.Nio, along with multiple Chinese companies, has adopted this model. In August, Nio introduced its battery-as-a-service (BaaS) initiative. This allows Nio to sell the electric cars separate from the battery. From the company's press release:"BaaS users can subscribe to battery packs of various capacity according to their needs and pay on a monthly basis. BaaS users are also entitled to NIO's Power Swap and flexible battery upgrade services, as well as the national NEV subsidies and purchase tax exemption enjoyed by users who have purchased batteries." The Right Reason to Buy Nio StockAt this time, Nio is not a global car company. The company has intentions to start selling vehicles in Europe, perhaps as early as the second half of 2021. And the real prize for Nio would be the opportunity to sell its cars in the United States. But at this time, the company has no timetable under which that would happen.That means, for now, Nio is strictly a Chinese car company. That's not so bad. China has one of the largest EV markets in the world. And now that its liquidity issues are behind it, Nio is holding its own. In the first eight months of 2020, Nio has delivered 21,667 cars. And the company offered guidance of a record 5,000 vehicles being delivered in September.And that's about as simple as it gets. If Nio continues its upward delivery trend, then the stock will continue to be a strong buy and its prospects for international expansion look good. If it can't, then you may have to start reconsidering holding a long-term position.But no matter what you do, look at Nio for the news it's generating, not what its competitors may do three years from now.On the date of publication Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. Chris Markoch is a freelance financial copywriter who has been covering the market for over six years. He has been writing for Investor Place since 2019. More From InvestorPlace * Why Everyone Is Investing in 5G All WRONG * America's 1 Stock Picker Reveals His Next 1,000% Winner * Revolutionary Tech Behind 5G Rollout Is Being Pioneered By This 1 Company * Radical New Battery Could Dismantle Oil Markets The post Why You Shouldn't Trade Nio On Tesla News appeared first on InvestorPlace.
The stock market is a never-ending marvel. It has captured my interest since I was ten years of age when my late Uncle Sydney showed me how to read the Wall Street Journal. The U.S. stock market has been in a secular uptrend since the end of 2008/beginning of 2009.
Iconic U.S. motorcycle brand Harley-Davidson Inc (NYSE: HOG) has decided to exit India \- the world's largest motorcycle market, as a part of its "Rewire" strategy of having a leaner operating model.What Happened: Harley had been struggling to make in-roads in India's motorcycle market dominated by low-cost players. As a result, it decided to shut shop in India as a part of its restructuring strategy introduced by Jochen Zeitz, chairman, president, and CEO, who had joined in May this year.Harley expects to complete the revamp in the next 12 months, which will include a reduction of approximately 70 employees, and a restructuring cost of $75 million.The company has hired former Tyson Foods, Inc. (NYSE: TSN) executive Gina Goetter as the new Chief Financial Officer, effective Sept. 30."India is a high volume, low margin market. They weren't structured to play that game, being at the very pointy end of the pyramid. The lifestyle element that goes with owning a Harley bike is also not fully developed in India yet," Hormazd Sorabjee, Editor of Autocar India told BBC.The coronavirus pandemic has dealt a blow to the bike maker, which was struggling already with an average sale of 3,000 units a year.The company could not beat the affordability of Royal Enfield, which dominates the premium motorcycle market. Harley's bikes in India started at INR 450,000 ($6,100) compared to Royal Enfield's lighter vehicles selling for INR 200,000 ($2,717.67), reports the Financial Times.Why It's Important: Harley's exit comes after General Motors Company (NYSE: GM) and Ford Motor Company (NYSE: F) scaled back its India operations. The country's auto sector has been struggling for some time and Japanese carmaker Toyota Motor Corp (NYSE: TM) has decided to not expand in India owing to higher taxes, reports FT. Indian Prime Minister Narendra Modi's "Make-in-India" has had limited success in this regard.This will not bode well with the Trump administration, which has accused India of unfair treatment. It can be a sticking point with the U.S., with whom India is negotiating a free trade agreement, according to BBC.See more from Benzinga * Soaring COVID-19 Cases Dampen European Markets * Asian Markets Remain Mixed On Hopes Of Fresh US Stimulus * Delay TikTok Ban Or Defend By Friday, Judge Tells Trump Administration(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
(Bloomberg) -- Ray Dalio used the latest installment of his ongoing series on the changing world order to identify clear red lines that, if crossed, could result in a deadly war between China and the U.S., but the real enemy in the conflict may lie within.“Our greatest war is with ourselves because we have the most control over how strong or weak we are,” the billionaire founder of Bridgewater Associates wrote in the essay published on LinkedIn. “The internal wars and challenges in both China and the US are more important and bigger than external wars and challenges.”While Dalio doesn’t think the current trade war has been “taken very far,” any attempt by China to restrict American access to rare earth elements, or by the U.S. to restrict China’s access to semiconductors from Taiwan or crude oil, for example, could signal that the current conflict was about to get a lot worse.Culture, meanwhile, may be the one frontier where the two countries should try and make some inroads.“The main challenge the Chinese and Americans have with each other arises from some of them failing to understand and empathize with the other’s values and ways of doing things, and not allowing each other to do what they think is best,” Dalio wrote in the 17,000-word essay that also pondered the future of the U.S. dollar as a global reserve currency. “Some of these cultural differences are minor and some of them are so major that many people would fight to the death over them.”Key Quotes“Destiny and the way the global power cycle works have now put the United States in the unfortunate position of having to choose between a) fighting to defend its position and its existing world order and b) retreating”“The successes of all countries depend on sustaining the strengthening forces without producing the excesses that lead to their declines. The really successful ones have been able to do that in a big way for 200-300 years. None has been able to do it forever”“In order to prevent these from escalating out of control, it will be important for leaders of both countries to be clear about what the ‘red lines’ and ‘trip wires’ are that signal changes in the seriousness of the conflict”“Beyond the elections, a lot hinges on who wins and how they will approach this conflict. That will be a big influence on how Americans and the Chinese approach the Big Cycle destinies that are in the process of unfolding”“Regarding the trade war I believe that we have pretty much seen the best trade agreement that we are going to see and that the risks of this war worsening are greater than the likelihood that it will improve”“If the United States shuts off Chinese access to essential technologies that would signal a major step up in war risks”“Sovereignty, especially as it relates to the Chinese mainland, Taiwan, Hong Kong, and the East and South China Seas, is probably China’s biggest issue”“Perhaps the most interesting relationship to watch is between China and Russia”“The United States’ greatest power comes from being able to print the world’s money and all the operational powers that go along with that. The United States is at risk of losing some of this power while the Chinese are in the position of gaining some of it”Read More: Dalio Sheds Light on Chinese Thinking on Trade Deal: China TodayFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Buying a stock is easy, but buying the right stock without a time-tested strategy is incredibly hard. So what are the best stocks to buy now or put on a watchlist?
Bristol-Myers Squibb (NYSE:BMY) is incredibly cheap. For example, based on earnings estimates, BMY stock trades at just 7.8 times next year's earnings.Source: IgorGolovniov / Shutterstock.com In addition, it has an attractive dividend yield of 3.11%, which is likely to increase soon. I estimate the stock is worth at least $84.47, or 46% more than its present price.And that is after discounting its real worth significantly, to add in a margin of safety. The target price is primarily based on its expected earnings and dividends, its history, and comparisons with its peers.InvestorPlace - Stock Market News, Stock Advice & Trading Tips BMY Stock Earnings and Dividend ExpectationsLast quarter, the company blew away analysts' earnings forecasts. It is likely to do so again this quarter. For example, Bristol Myers was supposed to hit $1.48 earnings per share in the second quarter, according to analysts' average estimates. But the actual EPS came in at $1.63, or over 10% higher than forecasts.This quarter it is likely to do the same thing. Analysts' expectations are again at $1.49 per share, just a penny higher than their low-ball expectations last quarter. * 7 Hot Stocks to Buy on Robinhood Now Moreover, on Sept. 10, Bristol-Myers Squibb declared its fourth quarterly dividend of 45 cents per share. You can see this stellar dividend payment history in the chart below. Click to EnlargeSource: Mark R. Hake, CFA By early December it is likely to announce a dividend increase, if its past history is a good guide. I expect the company will raise the payout by over 10% to $2.00 per share.Bristol-Myers Squibb's historical dividend yield has been 2.97% over the last four years, according to Morningstar. BMY stock is worth $67.34 per share. To get that result, divide $2.00 by 2.97%. That equals the target price of $67.34, or 16.7% more than today's (Sept. 21) price of $57.77. Historical P/E and CompsHistorically, Bristol-Myers Squibb has had very high price-to-earnings (P/E) ratios. You can see this in the chart on the right. Click to EnlargeSource: Mark R. Hake, CFA It shows that the average P/E over the past seven years has been over 28x, but ranged from 9x recently to over 64x earnings.This analysis is based on figures provided on Morningstar's Valuation page for BMY stock.If we apply that earnings multiple to Bristol-Myers Squibb's EPS forecasts for 2021, $7.45, we would have a price target of $209.50. That is over 263% higher than today's price of $57.77. Click to EnlargeSource: Mark R. Hake, CFA Just to be safe, and to introduce a margin of safety, let's use just 50% of that number. So now the target price is $104.61 per share, or 81% higher than today.In addition, we compare the P/E ratios of a number of the drug maker's peers, we find the stock is worth much more as well, as seen on the right.It shows that the average of eight of Bristol-Myers Squibb's peers' P/E ratio is 13.7x forward earnings.By contrast, BMY stock trades at almost half that level at 7.8 times 2021 earnings.This implies that the stock should be worth $102.07, or 76.7% higher than today. But, again, to use a margin of safety I applied a 20% discount. That puts BMY stock's value at $81.47, or 41% higher than today. What to Do With BMY StockSo now we have three ways of valuing Bristol-Myers Squibb stock. Using its own dividend forecast and historical yield, the price target is $67.34, or 16.6% higher.Using a historical P/E ratio analysis, the price should be $104.61, using a 50% discount for a margin of safety. That is still 81% higher than today. Click to EnlargeSource: Mark R. Hake, CFA And using a peer analysis, using comp P/E ratios, the price should be $102.07, using a 20% discount. That is still 41% higher.You can probably guess what's next. The average of these three price targets is $84.47, which represents a potential upside of 46.2%.Moreover, even if it takes two years for BMY stock to rise to that target, it still represents a compound annual gain of 20.9% each year.In addition, with its 3.1% dividend yield, the stock's total return each year will be 24%. That is a reasonably good return for most investors.The patient value investor will average cost into BMY stock. It has the potential to gain a substantial amount just based on a re-rating of its multiples.Last quarter the stock rose after its earnings came out, as Barron's Josh Nathan-Kazis reported in May. I suspect the same will happen this quarter. Moreover, the company has already guided for its earnings this year to be between $6.00 and $6.20 per share.Those are the numbers on which I based my valuation. Therefore, I expect that most serious value investors will average cost into this stock to participate in its expected re-rating.On the date of publication, Mark R. Hake did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.Mark Hake runs the Total Yield Value Guide which you can review here. More From InvestorPlace * Why Everyone Is Investing in 5G All WRONG * America's 1 Stock Picker Reveals His Next 1,000% Winner * Revolutionary Tech Behind 5G Rollout Is Being Pioneered By This 1 Company * Radical New Battery Could Dismantle Oil Markets The post Patient Investors Will Stick With Very Cheap Bristol-Myers Squibb Stock appeared first on InvestorPlace.
A reorganization could be the prelude to a separation of its disk drive and flash memory businesses—which could unlock significant shareholder value.
Traders have to be ruthlessly myopic at times. They look at a stock like Occidental Petroleum (NYSE:OXY) and immediately think of Warren Buffett's axiom to be brave when others are fearful. So they buy OXY stock while others are avoiding it. But being cautious isn't the same as being fearful. And being bold doesn't always mean you're making the best trade. But here we are.Source: Pavel Kapysh / Shutterstock.com OXY stock fell over 75% between Feb. 21 and March 20. Since that time, the stock has basically stayed at the same level. It had one brief rally in early June when it climbed nearly 90% in two weeks. But the stock gave up most of those gains in July. And after the company's most recent earnings report in August, Occidental stock has been moving towards the single digits. Why Words MatterWhen you look at the transcript of the company's earnings call at a high level, there were things to like. Words like positive free cash flow come to mind. But there was a sentence from chief executive officer Vicki Hollub that should give every investor a reason to pause. When referring to production growth, Hollub said, "We do not intend to grow production until we have significantly reduced debt and we view the long-term price of WTI to be sustainable at higher levels than where the current curve indicates."InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Hot Stocks to Buy on Robinhood Now And there you have the problem. The company still has a lot of debt to work through, and they won't be able to drill their way out of it. Other than that, everything's fine. The Right Gamble at the Wrong TimeAs a sports fan, I see examples of this all the time. A team acquires a player. It seems risky, but on paper it makes sense. And if everything goes well, the reward easily outweighs the risk.But in far too many cases, something or several somethings go wrong. Other players get injured. The new player just doesn't fit the way he or she was supposed to fit. Or sometimes, you find out there was actually a reason another team wanted to part ways with the athlete.That's how I look at Occidental's current situation. It all started with its $40 billion acquisition of Anadarko Petroleum in 2019. It was a gamble, but on paper it looked like a risk worth taking. At that time, the U.S. economy was humming along. Shale providers were a key reason that the U.S. had developed energy independence. The re-election of President Trump looked like a virtual certainty.Then 2020 happened. Or more specifically, the novel coronavirus happened.Now, Occidental has an asset that it can't make use of and it's layered in debt. And more to the point, Hollub has made it very clear that servicing, and reducing, the debt will be the company's primary objective.Getting back to my sports analogy, this is the moment when the team starts to trade off its other assets because they can't get rid of the big contract that is weighing the team down. It's given euphemistic terms like "collecting assets." But it's basically asking fans to continue to support an uncompetitive product in the hope that better days are coming.Sometimes it works. And sometimes, well I'm a Cleveland sports fan so this example hits a little close to home. OXY Stock Is a Bet on Higher Oil PricesThat's not a bet I'd want to make. In the last month, I've been doing more driving than usual returning kids to college. And gas prices are going down, way down. This is a stark reminder of the precarious position that all oil companies find themselves in.For Occidental to be anything more than just a quick trade, oil prices have to rise above $40 and stay there. The company has an impressive collection of assets that have value. But for those assets to pay off, the company needs rising oil prices. Otherwise, they're just kicking the debt can down the road. And while that's better than going bankrupt, eventually, the debt will come due.Is that possible? I suppose it is. I'm as optimistic as the next person and I can game theory a set of circumstances that would drive up demand.But in my most fantastic scenarios, I don't see that happening until well into next year. There are too many headwinds in the economy. And that means I just see the price of oil as stuck in neutral.Hollub made a big bet. And right now, that bet is not looking that good. But it's her company, not mine and it may work out in the end. Right now, OXY stock looks like a trade that could make investors some easy money. But the smart money looks to be staying away and so am I.On the date of publication Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. Chris Markoch is a freelance financial copywriter who has been covering the market for over six years. He has been writing for Investor Place since 2019. More From InvestorPlace * Why Everyone Is Investing in 5G All WRONG * America's 1 Stock Picker Reveals His Next 1,000% Winner * Revolutionary Tech Behind 5G Rollout Is Being Pioneered By This 1 Company * Radical New Battery Could Dismantle Oil Markets The post Buying Occidental Petroleum May Be Easy Money, But Itas Not Smart Money appeared first on InvestorPlace.
* This weekend's Barron's cover story offers roundtable picks for the health care revolution. * Other featured articles discuss who could benefit from a conservative Supreme Court and how to find reliable dividend stocks in emerging markets. * Also, the prospects for a recently merged regional bank stock, a pair of restructuring companies, a pandemic winner and more.Cover story "The Pandemic Speeds Up the Health-Care Revolution" by Lauren R. Rublin offers Moderna Inc (NASDAQ: MRNA) and other Barron's roundtable expert picks for the most promising developments and best investment bets in the sector.Daren Fonda's "A Right-Leaning Supreme Court Will Tackle Some Big Business Cases" suggests that a more conservative court may cut back regulation. Is that good news for likes of Facebook, Inc. (NASDAQ: FB) and Ford Motor Company (NYSE: F)?In "Herbalife Faces a Fresh Legal Hurdle," Bill Alpert discusses how a lawsuit that has gathered steam targets 44 of the top distributors of Herbalife Nutrition Ltd (NYSE: HLF). What's next for this Los Angeles-based multilevel marketing company?See why North Carolina-based Truist Financial Corp (NYSE: TFC) could enjoy the fruits of its merger and deliver hefty upside in coming years, according to "Deal Synergies Should Lift This Southern Bank" by Lawrence C. Strauss.In Al Root's "Fortive Is Spinning Off a Business. It's Time to Buy the Stock," find out why Barron's believes breaking up is what industrial technology conglomerate Fortive Corp (NYSE: FTV) needs to get out of a rut.See also: Analyst: Here's Where The S&P 500 Could Be In 20 Years"How to Find Dividends in Emerging Market Stocks" by Lawrence C. Strauss makes a case for emerging markets as a place for investors to find reliable and growing dividend stocks. Is Taiwan Semiconductor Mfg. Co. Ltd. (NYSE: TSM) worth a look now?A Western Digital Corp (NASDAQ: WDC) reorganization could be the prelude to a separation of its disk drive and flash memory businesses. So says Eric J. Savitz's "Western Digital Could Be Worth a Whole Lot More." Would that unlock significant shareholder value?In "Why Rival Bike Peddlers Are a Plus for Peloton," Connor Smith reveals all the things Peloton Interactive Inc (NASDAQ: PTON) has going for it and why investors have been willing to award the exercise equipment maker's stock a nosebleed multiple.Also in this week's Barron's: * Wealth managers who embrace ESG investing * Short sellers who aim to "oust bad actors" * The bright side of the market's bad week * Why credit tightening matters for the economic recovery * How to invest for election chaos * How to recognize zombie companies * Milton Friedman 50 years later * The future of travelAt the time of this writing, the author had no position in the mentioned equities.Keep up with all the latest breaking news and trading ideas by following Benzinga on Twitter.See more from Benzinga * Options Trades For This Crazy Market: Get Benzinga Options to Follow High-Conviction Trade Ideas * Bulls And Bears Of The Week: Chevron, Oracle, Twitter And More * Barron's Picks And Pans: Ackman Picks, Albertsons, Nvidia And More(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.