Executives, experts, and influencers join the Yahoo Finance team to discuss what's moving the world of finance.
Executives, experts, and influencers join the Yahoo Finance team to discuss what's moving the world of finance.
One San Francisco accountant finishes every client conversation with a discussion about what a Biden administration could mean for portfolios.
As U.S. equity markets trade near all-time highs, coming back from their March lows, several sectors have been left behind, notably banking and energy. I believe that oil stocks are poised for a rally in the coming quarters. Last month, Fitch Ratings forecast that global GDP will fall by 4.4% in FY 2020, which implied a “modest upward revision from the 4.6% decline expected in the June.” Deutsche Bank also believes that the global GDP will “return to pre-virus levels by mid-2021.” In another forecast, the Organisation for Economic Co-operation and Development expects 5% GDP growth in the coming year.InvestorPlace - Stock Market News, Stock Advice & Trading Tips The point I am trying to make here is that the worst is possibly over for the global economy. It also implies that demand for oil will increase in the coming quarters. Crude oil prices have also stabilized, as evidenced by recent price action in commodity-based exchange-traded fund United States Oil Fund, LP (NYSEARCA:USO), and is likely to trend higher with demand growth. 7 Airline Stocks to Buy on Pelosi Stimulus Hopes Considering this macro outlook, it’s a good time a consider exposure to some fundamentally strong oil stocks, specifically four oil stocks with a healthy dividend pay-out. Even if the stock price is sideways, investors can benefit from dividend cash inflow. Let’s take a deeper look into the following stocks. CNOOC Limited (NYSE:CEO) Chevron Corporation (NYSE:CVX) Equinor (NYSE:EQNR) Marathon Oil (NYSE:MRO) 4 Oil Stocks to Buy as the Price of Crude Stabilizes: CNOOC Limited (CEO) Source: Shutterstock I like CEO stock for two primary reasons. CNOOC currently pays an annual dividend of $8.37 and at current levels, has an attractive yield of 8.9%. Further, the stock trades at a price-to-earnings-ratio of just 8.3. Therefore, in addition to dividends, the stock is likely to trend higher in the coming quarters as oil prices recover. Amidst a downturn in the industry, another positive fundamental factor is that CNOOC has a gearing ratio of 25%. With low leverage, the company has ample financial flexibility. Since the company has an annual dividend pay-out of $8.37, it’s also important to talk about the sustainability of dividends. I want to mention the fact that for the first half of FY2020, the company reported free cash flow of 6.4 billion CNY ($957.4 million). Even in the most challenging times, the Chinese oil company has managed to deliver positive FCF. I expect FCF to increase in the coming years. Dividends are therefore safe. Given the strong fundamentals, CNOOC is also on track for a capital expenditure of 80 billion yuan (mid-range of guidance) for the current year. Investments are likely to be higher for the coming year. This will translate into production growth and cash flow upside. CEO stock has declined by 38% in the last 12 months, pretty much in lockstep with oil’s gyrations. I believe that the worst is over for the sector and for the stock. Exposure can be considered at current levels of $93.70. Chevron Corporation (CVX) Source: tishomir / Shutterstock.com Chevron is another oil stock that has strong fundamentals, attractive valuations and an attractive dividend yield. CVX stock has also declined by 38% in the last year and stock upside is likely in addition to dividends. Currently, the stock pays an annual dividend of $5.16, which translates into a dividend yield of 7.28%. Chevron also has a strong balance sheet with a net debt ratio of 17%. In addition, the company has $30 billion in cash and equivalents. The liquidity buffer should help the company to ramp-up investments once oil trends higher and sustains at higher levels. 7 Airline Stocks to Buy on Pelosi Stimulus Hopes The company’s Permian asset is likely to deliver production growth and strong cash flows in the coming years. Even for FY2020, the company expects positive FCF from Permian assets. Therefore, once oil trends higher, the returns from Permian assets will be attractive. With strong fundamentals, quality assets and robust dividends, I expect CVX stock to be a value creator in the coming years. Equinor (EQNR) Source: II.studio / Shutterstock.com I believe that Norway’s Equinor is among the top oil stocks. In the last one year, EQNR stock has declined by 20.8%, outperforming CVX stock and CEO stock and even ETF USO. The stock also has a healthy 2.55% dividend yield. In terms of growth, I believe that the Johan Sverdrup asset is likely to be a game changer for the company. The asset is the third-largest in the Norwegian continental shelf with expected resources of 2.7 billion barrels of oil equivalent. Once phase two production commences in FY2022, daily production from the asset will be 690,000 BOE/day. The company has a 42.6% stake in the asset. The asset will therefore deliver production growth and cash flow upside in the coming years. FCF is likely to be robust considering the point that the company expects full field break-even as $20 per barrel. Of course, Johan is not the only asset. The company has 6 billion barrels of proved oil and gas reserves. With a robust credit rating, the company has financial flexibility for growth. Overall, EQNR stock is worth considering at current levels. In the next 12-24 months, the company can deliver robust returns through stock upside and dividends. Marathon Oil (MRO) Source: IgorGolovniov / Shutterstock.com Among the relatively smaller names in the industry, I like Marathon Oil. MRO stock has slumped by 63% in the last year, but has been sideways for the past six months. I believe that the worst is over and upside is likely in the coming quarters. It’s worth noting that the company recently reinstated dividends with a quarterly pay-out of 3 cents per share. An annual dividend of 12 cents implies a yield of 2.89%. From a fundamental perspective, Marathon reported total liquidity of $3.5 billion as of Q2 2020. In addition, the balance sheet remains strong with an investment grade credit rating. Low break-even assets are another reason to be bullish on the company. In the second half of the year, the company expects positive FCF even if WTI oil is around $30 per barrel. For the next year, free cash flow break-even is expected at $35 per barrel. 7 Airline Stocks to Buy on Pelosi Stimulus Hopes WTI oil currently trades at $40 per barrel and with likelihood of oil trending higher, the company’s dividends are safe. In addition, as FCF swells, fundamentals will further improve. Overall, MRO stock can be a potential doubler in the next 12-24 months. On the date of publication, Faisal Humayun did not have (either directly or indirectly) any positions in any of the securities mentioned in this article. Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modeling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector. As of this writing, Faisal Humayun did not hold a position in any of the aforementioned securities. 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 4 Oil Stocks To Buy as the Price of Crude Stabilizes appeared first on InvestorPlace.
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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 the last month, Workhorse Group (NASDAQ:WKHS) had trouble breaking out to new highs. Markets are waiting for the company to finalize a deal with US Postal Service by the end of the year. If it happens, it may win more customers for its electric delivery vehicles. WKHS stock is a high risk, high reward investment. Source: Photo from WorkHorse.com The electric vehicle sector is still very hot. Tesla (NASDAQ:TSLA) led it higher and increased investor interest after its battery day. So, what will it take for Workhorse to keep rising? Workhorse needs to win a lucrative contract to build mail trucks for the USPS. If it happens, the deal would bring the company up to $6.3 billion in revenue. Conversely, short-sellers are betting that the deal will not pan out.InvestorPlace - Stock Market News, Stock Advice & Trading Tips The bearish bet on Workhorse stock is a massive 23.76%. So, if the company comes up empty-handed, it will not generate the expected revenue. That would put plenty of selling pressure next. 7 Airline Stocks to Buy on Pelosi Stimulus Hopes Presently, Workhorse is benefiting from strong investor interest in the EV sector. Tesla is worth over $400 billion in market capitalization while Nio (NYSE:NIO) is up around 20 times from its 52-week low. A similar return on Workhorse is already underway but may potentially reward shareholders more. WKHS Stock and the Future of Delivery Workhorse has two-step van models: the C650 and C1000. The vehicles are 100% electric that is powered by a modular battery pack system. When the vehicle has two battery packs, it will give 35-kilowatt hours. A four-pack configuration will provide 70 kWh. When WKHS gets the USPS contract later this year, it will validate the year-long speculation in shares. Getting $6 billion in revenue would value the stock at around 0.33 times sales, assuming a market capitalization of around $2 billion. Investors will need to exercise patience as they wait for the necessary contract approvals. Governments typically take their time for signing off on contracts, regardless of the size. The impatient investor selling WKHS shares will create a better entry point. If the stock falls again, the total return increases, assuming that it rebounds. Still, investors are justifiably nervous about Workhorse winning a contract of that size. The company expects only 300 to 400 vehicles produced by the end of the fourth quarter this year. Furthermore, WKHS posted revenue of just $92,000 in Q2. The cost of goods topped $1.5 million. This resulted in an 11 cent earnings per share loss in the period. Opportunity for WKHS Stock Workhorse’s 1,200-unit backlog forecast demonstrates the strong demand for its fleet. It has two orders with Ryder but expects all of its channel partners to help it increase its backlog quantity. The company has ample cash on hand, too. It has $105 million in cash after tapping its credit line. So, as the cost of capital falls, Workhorse is in a good position to operate without issuing warrants and options until 2022. Investors should recognize the production ramp from here through to Q4 and beyond. On the conference call, Chief Operating Officer Rob Willison said, “the ramp starts from here and goes up.” He went on to say in Q4, it expects to produce 100 units a month. Next year, producing 150 – 200 monthly is possible, if the market can absorb that volume. In 2021, Workhorse will have a higher capacity in place to mass-produce vehicles. Gross margins may turn positive, too. That will require research and development plus general and administrative costs falling. Your Takeaway Only four analysts have an opinion on Workhorse. The average price target is $23.33 (per Tipranks). If analysts are cautious about the stock, it will not attract as many institutional investors. It is also worth mentioning that insiders sold shares regularly in the last three months. The automated selling may not signal much but it does not give a bullish indicator, either. Keep Workhorse stock on the watch list. If the stock dips sharply, consider starting a position. Disclosure: 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 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 Exercise Patience and Wait to Buy Workhorse Group Stock If Shares Dip appeared first on InvestorPlace.
Advanced Micro Devices Inc. is expected to repeat its story of gaining at the expense of larger rival Intel Corp.'s woes when it reports earnings Tuesday.