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Amid rising raw material costs, supply chain constraints, and labor shortages, the engineering and construction industry took a hit over the past few months. However, with a steady increase in spending across the construction sector and rising federal investments, the industry is expected to rebound soon. Given this growth prospect, adding hard-hit quality engineering & construction stocks EMCOR (EME), MYR Group (MYRG), and Argan (AGX) could be a good idea.



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The engineering and construction industry has been suffering from various headwinds, including surging raw material costs, labor shortages, and deepening supply chain issues aggravated by the Russia-Ukraine war. This has led to major selloffs over the past few months. However, this industry is expected to grow significantly this year, driven by a rise in spending on construction projects.

The engineering and construction industry is preparing for a major shift toward connected construction capabilities by increasing its investments in digital. Furthermore, the Infrastructure Investment and Jobs Act should drive growth for engineering and construction companies over the long run.

Against the backdrop, it could be profitable to buy the dip in fundamentally sound engineering & construction stocks like EMCOR Group, Inc. (EME), MYR Group Inc. (MYRG), and Argan, Inc. (AGX).

EMCOR Group, Inc. (EME)

EME offers electrical and mechanical construction, industrial and energy infrastructure, and building services in the U.S. and the United Kingdom. The company provides design, installation, operation, maintenance services, premises electrical and lighting systems, fire protection and suppression systems, plumbing and high-purity piping systems, controls and filtration systems, crane and rigging, millwright services, and building services.

Last month, EME announced that its Board of Directors had authorized a new share repurchase program to repurchase up to an additional $200 million of its outstanding common stock. The company had nearly $88.70 million remaining under previous share repurchase authorizations on April 22. This new share repurchase program might strengthen the company’s shareholder value.

EME’s Board of Directors declared a regular quarterly cash dividend of $0.13 per share in the same month. The dividend was paid on April 29 to stockholders. The dividend payment regularly reflects the company’s strong capital foundation and consistent cash generation.

In the fiscal 2022 first quarter ended March 31, 2022, EME’s revenues grew 12.5% year-over-year to $2.59 billion, while revenues from the total United States operations segment increased 13% year-over-year to $2.46 billion. Its gross profit improved 3.4% from the year-ago value to $352.56 million. In addition, the company’s net periodic pension income rose 28.7% year-over-year to $1.17 million.

Analysts expect EME’s EPS to grow 7.6% year-over-year to $7.60 for its fiscal year 2022, ending December 2022. It has surpassed the consensus EPS estimates in three of the trailing four quarters. The $10.62 billion consensus revenue estimate for the ongoing year represents a 7.2% rise from the previous year. Furthermore, the company has surpassed the consensus revenue estimates in each of the trailing four quarters.

The stock has declined 20.4% year-to-date and 15.2% over the past year. It closed yesterday’s trading session at $101.37.

EME’s POWR Ratings reflect this promising outlook. It has an overall grade of B, equating to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

EME has a grade of B for Value, Stability, and Quality. Within the B-rated Industrial -Services industry, it is ranked #9 of 91 stocks.

To see additional POWR Ratings (Momentum, Growth, and Sentiment) for EME, click here.

MYR Group Inc. (MYRG)

MYRG provides electrical construction services in the U.S. and Canada. The company operates through two segments: Transmission and Distribution; and Commercial and Industrial. The Transmission and Distribution segment provides a wide range of services on electric transmission and distribution networks and substation facilities. Its Commercial and Industrial segment offers a range of services, including design, installation, and repair of industrial wiring, and installation of traffic networks, roadway, bridge, and tunnel lighting.

On May 5, MYRG announced a new share repurchase program that authorizes the company to repurchase up to $75 million of its outstanding shares of common stock. “We are committed to driving value for all MYR Group shareholders and directing capital to investments that generate strong returns. Today’s announcement reflects the Board’s confidence in the Company’s long-term strategy and our belief that our stock represents an attractive long-term investment opportunity,” said Rick Swartz, MYRG’s President, and CEO.

In January, MYRG’s Canadian subsidiary, MYR Group Construction Canada, Ltd. acquired all issued and outstanding shares of capital stock of Powerline Plus Ltd. and its affiliate. The Powerline Plus Companies brings a high-quality workforce and strong management team that provides excellent customer service. The addition of Powerline Plus Companies to MYRG will strengthen its Transmission & Distribution segment service offerings and expand the company’s market position.

MYRG’s contract revenues increased 7.4% year-over-year to $636.62 million in the fiscal 2022 first quarter ended March 31, 2022. Its gross profit improved 4.6% year-over-year to $80.49 million. Its EBITDA amounted to $39.56 million for the first quarter. The company’s net income and earnings per share came in at $20.69 million and $1.21, respectively, indicating an increase of 3.8% and 3.4% year-over-year. In addition, net cash flows provided by financing activities came at $37.97 million.

The consensus revenue estimate of $719.07 million for fiscal 2022 third-quarter ending September 2022 represents a growth of 17.8% from the same value in 2021. It’s no surprise that MYRG has surpassed the consensus revenue estimates in three of the trailing four quarters. The consensus EPS estimate of $1.44 indicates a 20.3% year-over-year rise for the fourth quarter, ending December 2022. Also, it has surpassed the consensus EPS estimates in each of the trailing four quarters.

Shares of MYRG have lost 23.9% year-to-date and 26.3% over the past six months. It closed yesterday’s trading session at $84.10.

MYRG’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall grade of B, which translates to Buy in our proprietary rating system.

Within the B-rated Industrial – Services industry, it is ranked #32 of 91 stocks. To see additional POWR Ratings (Momentum, Quality, Value, Stability, Sentiment, and Growth) for MYRG, click here.

Argan, Inc. (AGX)

AGX focuses on the engineering, procurement, and construction of natural gas-fired power plants and renewable energy facilities. In addition, it provides commissioning, operations management, maintenance, project development, technical, and consulting services to power generation and renewable energy markets through its Gemma Power Systems and Atlantic Projects Company operations. The company operates through Power Industry Services; Industrial Fabrication and Field Services; and Telecommunications Infrastructure Services.

Last month, AGX announced that its Board of Directors approved an increase in the company’s existing share repurchase program, from $50 million to $75 million. The company is committed to an organized capital allocation strategy that balances returning capital to its shareholders and investing in the business to accelerate growth. With this development, AGX is expected to create greater shareholder value.

In the fiscal 2022 fourth quarter ended January 31, 2022, AGX’s revenues grew 7.1% year-over-year to $125.57 million. The company’s gross profit amounted to $22.23 million for the fourth quarter. Its net other income grew 577.9% year-over-year to $983,000. In addition, its cash and cash equivalents and total current assets came in at $350.47 million and $507.28 million, respectively, as of January 31.

Analysts expect AGX’s revenue for the fiscal year 2023 ending January 2023 to come in at $565.15 billion, representing an 11% rise year-over-year. Street expects the company’s EPS to come in at $3.48 for fiscal 2024, registering an increase of 32.6% from the last year. The company has an impressive earnings history as it has surpassed the consensus EPS estimates in three of the trailing four quarters.

The stock plunged 20% over the past six months and 24.4% over the past year. It closed yesterday’s trading session at $35.86.

AGX’s POWR Ratings reflect this strong outlook. It has an overall grade of B, equating to Buy in our proprietary rating system.

AGX has a grade of A for Quality and a B for Sentiment. Within the B-rated Industrial – Building Materials industry, it is ranked #13 of 48 stocks.

To see additional POWR Ratings (Growth, Momentum, Value, and Stability) for AGX, click here.


EME shares were trading at $102.62 per share on Friday morning, up $1.25 (+1.23%). Year-to-date, EME has declined -19.27%, versus a -15.18% rise in the benchmark S&P 500 index during the same period.


About the Author: Mangeet Kaur Bouns

Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.

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The post 3 Hard-Hit Engineering & Construction Stocks to Buy Right Now appeared first on StockNews.com

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The global supply chain has been under severe stress for a few years. But while those supply chain issues have helped contribute to inflation, they’ve also presented opportunities. There’s greater demand for operations and logistics experts these days as companies seek to find solutions to complicated supply chain and operational issues. If you’re looking for a new career or you want to add to your skill set, the 2022 Full Stack SAP Developer eLearning Bundle will help you become the kind of operations and systems experts that modern companies need today.



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You’ve set your goals, you have your vision and it’s time to take action. Now what? Well, it’s great that you’ve taken the first step — all great achievements start with this.

But, we need to arm ourselves with these three important words. They will act as a shield to protect us from the roller-coaster ride we have embarked on.

We need to memorize the following three words:

Improvise, adapt and overcome.

These three words have been a lifesaver for me in certain situations and I’m excited to break them down for you.

Improvise

During the entrepreneurial journey, there are times when you get rattled, things go completely wrong and you need to sort stuff out fast. So you need to adopt an attitude of improvisation. Improvising is a key part of the entrepreneurial arsenal that we need. Why? Because at times we have to find solutions or make things work in any way we can on the fly.

Some examples of needing to improvise are:

  • Key functionality in your product demonstration isn’t working and you have 20 minutes before your presentation starts.
  • The payment system isn’t working on your sales funnel and you’re getting messages saying people can’t pay.

With the above examples, you need to manufacture a workaround in any way possible. Trust me when I say, you will need to improvise 100 percent throughout your entrepreneurial journey.

An example of how I needed to improvise was when I had a huge meeting with an investor. Our app, which we were pitching, had a bug that would directly affect our demonstration. So we desperately tried to fix the issue before the meeting but unfortunately, we couldn’t. So my solution was to create a series of screenshots in our presentation and talk through our technology. 

We had a great meeting. We needed to improvise and we pivoted to a workaround that got the job done. So if you’re stuck, there is always a way to improvise and keep on moving forward. 

Related: How to Improvise When Your Presentation Does Not Work

Adapt

When you think about a business or service we launch, we always need to consider the results we see. This is valuable data that can help shape the next iteration of our product or service. The key thing here is that when we get feedback, we must always adapt in a way that will ensure better results in the future.

As an entrepreneur, we always need to adapt and understand our market so we can maximize our success. I guarantee that if you look back at your business and compare it from when you first started to now, you will hardly recognize it. Because, over the years, you’ve adapted it so many times that it’s now much different.

Remember this saying, your customers are your best engineers. This means that their feedback or the results you get force you to adapt and change your model to get better results in the future.

In my experience, we have adapted many times. Adapting is exciting, especially if you’re listening to your customers. When you take on board feedback to adapt, the result is a better user experience for your customers. If you get it right, it means you’re providing a better solution. 

One time when we were adapting to feedback, it actually transformed our business. So don’t be afraid to hear feedback because it may change the trajectory of your growth. 

Related: Why You Need to Learn to Adapt

Overcome

If you’re reading this article, you know that being an entrepreneur is like jumping off a cliff and needing to sew a parachute on the way down. You will need to overcome so much on your journey, so get ready.

Overcoming is the last piece of the puzzle. If you don’t already know this, you are going to come up against obstacles, challenges, competitors, issues, self-doubt and so much more. And as an entrepreneur, you will need to overcome these things to survive, so you can live to fight another day.

I remember the time when I had to dig deep and overcome a particular challenge when we were closing our Series A round. We were just about ready to close the round. We had all our subscriptions taken up. But at the very last minute, a big investor pulled out and we had to keep going. This was tough, but we needed to hustle amongst our network to get in front of more investors. I’m happy to say we overcame the challenge and we closed a very successful investment round. 

Related: 5 Ways to Overcome Self-Doubt as an Entrepreneur 

In conclusion, these are the three power words you need to memorize as an entrepreneur. Improvise, adapt and overcome. What I’ve found is that saying these three words out loud during difficult times in your journey gives you the energy and spark to overcome all sorts of challenges.

So, my last words of advice. When you come up against some difficult times during your entrepreneurial journey, you need to…

Improvise, adapt and overcome.

You’ve got this. Now go for it!

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To avoid burnout, maintain sleep quality and secure sanity it’s necessary to consider strategies beyond a “power nap.”

It is first important to understand what’s depleting your low afternoon drive.

Think of your energy as water in a bucket. After a night of quality sleep, you wake feeling refreshed and start your day with a jug that’s full. Throughout the morning, you expend energy. By the time afternoon rolls around, the water in your bucket has decreased.

The overall amount depends on two things: A) how active you’ve been (physically, mentally or emotionally) and B) how big your bucket was to begin with.

If your H20 holder is small, via illness or insufficient sleep the night before, take note of the following brain boosting hacks.

Related: How to Wake Up Early

Hydrate 

Dehydration is an overlooked, yet common contributor to feeling fatigued (and often confused with sleepiness). Refill your bucket with a tall glass of actual agua.

Nourish yourself

It’s common to reach for hyper-palatable foods (i.e. those high in sugar or fat) to help power through an afternoon. A more energy-sustaining choice is a macronutrient-balanced snack. Taking an uninterrupted 20-30 minutes away from workspaces to receive pleasure from your grub comes with the added benefit of feeling nourished.

Vary your tasks

 If you’ve been sitting at your computer and using mental energy all morning, it’s useful to get physical in the afternoon. While a walk outside in daylight may be enjoyable and useful for helping you sleep at night, this technique doesn’t necessarily imply exercise. If you’re working from home, you can do something simple like emptying the dishwasher.

Engage in what excites you

Boredom can masquerade as low energy. Have the types of challenges that originally interested you been solved or otherwise delegated? Are you spending your afternoons in aspects of your business you find routine or tedious? Reconnect with something you’re deeply passionate about and you’ll notice your energy soar.

Float in the trough

Set a timer for 10-15 minutes, close your eyes, and lie down on your back with your feet flat and knees bent. This position is called “constructive rest” because it helps to release tense muscles, relieve eye strain and induce a “relaxation response” in the nervous system.
If you’re unable to honor and surrender to your mind-body’s need for rest during the day, it’s likely you’ll struggle with being still at night. Therefore, becoming a skilled “rester” may have the welcomed side effect of improving your sleep.

If you also have an over-achieving personality, it may be even more beneficial to set more reasonable expectations about what can get done in a day. 
Related: 4 “Unproductive” Habits That Make You More Productive

Navigate your night

This might mean increasing your sleep opportunity (i.e. giving yourself more time in bed for added REMs) or unpacking less obvious contributors to insomnia challenges.

Just as there are many reasons why you may feel wide awake at 3 am, there can be many causes for feeling “low and slow” in the afternoons. It’s important to consider the underlying reasons and to adapt your strategy (and techniques) to your situation. 

Making more skillful choices about your afternoon energy will not only help you in the second half of your day, but will also preserve your nightly sleep and help you maintain long-term health and well-being.

Related: 4 Changes to Make to Your Day so You Get Better Sleep Tonight

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Are you facing a moment, or the moment?

It’s a critical distinction we often lose sight of. When we’re facing a big decision, grappling with a change, or wondering whether to seize or pass on a new opportunity, we tend to raise the stakes on ourselves. We treat our decision as critical — as make-or-break, do-or-die. It’s the last train leaving the station! The game-winning shot in your hands! Everything seems to hang in the balance.

My advice: Take a breath. Calm your emotions. Then ask yourself my simple but profound question — are you facing a moment, or the moment?

I’ll give you an example.

My friend Jenny Illes Wood is high up at Google, and she has built a popular program there called Own Your Career. She gives workshops on how Googlers can increase their influence, develop new skills, better advocate for themselves, and so on, and tens of thousands of her colleagues subscribe to her email newsletter. She imagined that one day she might write a book inspired by all this — but she has two small kids and a busy job, so she was in no rush to do it.

Related: The 4 Actions You Must Take to Find Your Opportunity

Then a colleague introduced her to a book agent. The conversation went well. Jenny couldn’t stop herself; she talked to a few more agents. Suddenly she had multiple agents saying they wanted to work with her, and she was calling me in a panic. “I don’t know what to do,” she said. “I don’t have time to write a book, but I’m so excited and don’t want to miss this opportunity!”

So I asked her: Are you facing a moment, or the moment? Sometimes in life, we really do only get one shot. But most of the time, we get many shots. We can do something now, or we can do it later. Or maybe we never do it at all — it’s just one of many opportunities that we turn down, because we cannot do everything, and that’s OK.

In my estimation, I told her, she is facing a moment. If a book agent is interested now, then a book agent will be interested later. And in fact, she might benefit from writing a book later. She’ll have more time to develop material, she’ll have a larger public profile, and she’ll have even more Googlers on her mailing list. But that’s not to say it must happen later — she could also do it now and use the book to accelerate her other goals.

The point is, she should decide based on what’s best for her and the project, and not because she feels like this is her one chance to do it.

I have grappled with this myself, in many ways. I’ve struggled over whether to pursue jobs or say yes to new projects, all because I wasn’t sure if anything like them would ever come again. In fact, I’ve even grappled with Jenny’s same question about writing a book: I spent years on the fence, wondering when the time was right.

Related: Are You Too Efficient to Innovate?

Ultimately, I developed a way to answer these questions about timing. I started to think not about the opportunity in front of me, but about what I wanted the outcome of that opportunity to be. A job is not just a job; it’s a set of experiences and learnings. A project is not just a project; it’s an accomplishment that sets you up for future projects. The more we understand what we want from these things, and how they play a role in our larger vision of ourselves, the better we can decide if they’re something we need now, later, or never.

In my case, I see a book as the spark for larger opportunities. I wanted to make sure I understood what I wanted those opportunities to be, and that I had the people and infrastructure in place to take advantage of them. That’s why I waited for years, and why I finally said yes. My book, Build for Tomorrow, comes out in September!

Is it a moment, or the moment? That’s your starting point. And you’ll know when to act when you can finally say this: “It is my moment.”

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Every entrepreneur is looking for ways to be more productive and efficient. But sometimes, you just can’t get organized enough on your own. If you need a little help reaching your productivity and efficiency peaks, look no further than Lunatask.



Lunatask

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Yes, I know that this commentary normally comes out Friday evenings. But life got in the way yesterday and had to push it out to this morning. Gladly the S&P 500 (SPY) was closed and we do not miss a beat on getting ready for the week ahead. Speaking of which, from here I see 2 very different paths for the market. One a glorious bounce. One a descent into bear market. Which will it be…and what will we do about it? That is what we will cover in this week’s POWR Value commentary. Read on below for more….



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(Please enjoy this updated version of my weekly commentary from the POWR Value newsletter).

The starting point for today’s discussion is to tackle my fundamental review of the bull and bear case which was shared in detail this Wednesday 5/4 for the Platinum Members monthly webinar (watch it here >).

Watching this 30 minute presentation is time well spent. But if you are short on time right now, then here is the summary…

Both bull and bear market outcomes are possible from here. Sometimes it’s easier to see the reasons to be bearish because fear is a much stronger motivator than greed.

And in that camp we have high inflation + hawkish fed + bad market sentiment = a nasty elixir that could devolve into bear market.

On the other hand, history shows that it is much harder than you imagine to create a recession and bear market and that the bull wins out the majority of the time. That is why we stay in bullish conditions 5-6X more than bearish conditions over our lifetimes.

Summing it up, I think the case for bull market is stronger than bear market. The main reason for that is that there is a lot of one time “nonsense” inside the -1.4% GDP read for Q1 that does not really tell the story of the economy’s health.

That is why corporate leaders are in general raising guidance for the rest of the year after their Q1 earnings reports. These business executives are adept at knowing the pulse of their customers.

And if they saw any whiffs of weakness, they would say so in their outlooks to lower guidance and thus make it easier to beat estimates going into the next quarterly report.

On top of that you have the well respected GDPNow model from the Atlanta Fed which is currently flashing a +2.2% reading for Q2 GDP. The Blue Chip Consensus panel of economists is a few ticks higher at +2.8%.

Adding up these points is to refute the idea of a looming recession which is the main cause of bear markets.

Unfortunately devolving into bear market conditions down the road is quite possible because sometimes the leading cause of bear markets is not a weak economy…but rather weak stock market which acts as a catalyst to slow the economy in the future.

This one is a little bit of a brain teaser at first. So read it twice to make sure that the idea sinks in.

The original view of the market was that investors as a group were GREAT prognosticators of the future. That they often predicted recessions 4-6 months in advance by selling off during good conditions only for the evidence of the recession to unveil itself down the road.

Meaning that a near term correction during good times was often times a leading indicator of recession and bear market down the road.

More and more evidence shows this is not really the case. Perhaps here is the more logical sequence of events…

The market can sell off at any time for any reason. And typically bull markets endure 1-2 harsh corrections per year before bouncing back on their way to new highs.

However, sometimes those corrections last a bit longer. And put more strain on investor psyche. Which starts to give investors a pessimistic view of what the future holds.

In particular, the people who run the largest corporates are also amongst the wealthiest in the country. No doubt they have a high % of their net worth tied up in the stock market and are well aware of poor stock price conditions.

Thus, the longer these downturns go on…the more damage they see in their portfolio…the more pessimistic they may become on their business outlook.

Thus, it is when those pessimistic views from the stock market start effecting their business decisions…like lowering spending or delaying major investments in company expansion…that is what starts to chip away at economic growth…perhaps enough to cause a recession.

The point is that poor market conditions can very well be the catalyst behind future recessions and bear markets. And indeed this nasty start to 2022 could be just one of those kinds of market conditions.

When you add it all up you still have to appreciate that bull market odds are higher than bear market…but the latter is a very possible outcome which puts us in “wait and see” mode.

This is what leads to 2 divergent paths for the market from here. Let’s quickly spell them out along with the game plan for how to invest in each environment.

Bear Market Path: Drop Below 3,855

I sense that there will be serious support at 4,000 leading to a bounce. And yes, it may be the lasting bounce and we never test lower again. But the true line of demarcation between bull and bear is 3,855…exactly 20% under the all time highs.

If we break below with gusto, and keep heading lower, then we are indeed in bear market territory and that will likely extend to the average 34% decline found in bear markets…maybe a little further given that stocks did achieve higher than normal valuations during this bull cycle and thus more fat may need to be trimmed before bottom is found.

In this scenario investors will want to get more defensive on the break below 3,855. That starts by selling all aggressive stock positions (smaller cap, higher beta, cyclical industries) as they will come down the most.

Storing that extra money in cash is fine until you want to start picking your spots near bottom. However, more speculative investors may want to consider shorting the market with inverse ETFs to make money as the market heads lower.

We will not be doing that in the POWR Value service because it is outside the charter of the publication, which is to always be in the best value stocks…but like I am doing now I will give advice on how you can do that on your own even if not “official” positions in the portfolio.

On the other hand, my Reitmeister Total Return service is precisely built for that bear market flexibility. So if you do not have access to the service, then learn more about it here.

Now let’s consider the flip side of that investment coin…

Bull Market Path: Stay Above 3,855

As stated earlier, this is the more likely path given the economic evidence in hand. However, when you have a correction this deep and going on for this long, then it will likely demand a glorious finish. The kind of finale that shakes all investors to their core.

Perhaps that just happens with a fight over 4,000 where major support will be found. Yet it is not hard to imagine a drop all the way down to the border of bear market territory at 3,855.

That is the kind of drop that strikes fear in the heart of investors that compels a total “I give up” capitulation. And in the dawn of that surrender is a glorious capitulation rally that marks the end of the correction and resumption of the bull market.

In this case you just hold on to the market like a rodeo rider. No matter how much it bucks and tries to throw you off…the tighter you hold on to still be there when that capitulation rally comes.

That’s because that rally will be fast and furious to the upside. Therefore, to be in cash at that time…or net short…is to destroy your entire year as a 10%+ bounce in just a weeks time is not out of the question.

In this case you simply hold onto your favorite stocks with a healthy blend of attractive growth and tremendous upside to fair value. Those will bounce the most as investors rush back in. And yes, these are exactly the kinds of stocks we have inside POWR Value.

I know it’s not easy reading this commentary as both the bullish and bearish outcomes are such realistic possibilities yet 180 degrees different from each other. But truly there is no better advice I can give but “wait and see” as we have the right contingency plans in place for when that moment of truth comes.

I promise to do my best to help us get through this trying time and onto calmer shores.

Stay tuned for what comes next…

If you’d like to see more top value stocks, then you should check out our free special report:

7 SEVERELY Undervalued Stocks

What makes these stocks great additions to any portfolio?

First, because they are all undervalued companies with exciting upside potential.

But even more important, is that they are all A rated Strong Buys according to our coveted POWR Ratings system. Yes, that same system where top-rated stocks have averaged a +31.10% annual return.

Click below now to see these 7 stellar value stocks with the right stuff to outperform in the coming months.

7 SEVERELY Undervalued Stocks

All the Best!

Steve Reitmeister
CEO StockNews.com & Editor of POWR Value trading service


SPY shares closed at $411.34 on Friday, down $-2.47 (-0.60%). Year-to-date, SPY has declined -13.13%, versus a % rise in the benchmark S&P 500 index during the same period.


About the Author: Steve Reitmeister

Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks.

More…

The post Bull vs. Bear Market? appeared first on StockNews.com

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Value, Yield, And Growth That You Can Count On 

We could expound for days on the risks facing the market and the potential depth of the oncoming correction but we won’t. Today we’re here to touch base on a few stocks that we expect to do well over the next few years regardless of the broad market and economic conditions. These stocks include what we view as the three pillars of a great investment; value, yield, and growth, and they’ve all got a bullish technical outlook for share prices as well. We don’t know if the S&P 500 (NYSEARCA: SPY) is going into a deeper correction or will maintain the rolling bear market it has been in, but we do know these companies are well-positioned for today’s economic conditions, have growth in the forecast, pricing power, pay high-yielding dividends and can be expected to increase their dividend payouts over time. 



MarketBeat.com – MarketBeat

Kraft Heinz Is A Text Book Turnaround Story

Kraft Heinz (NASDAQ: KHC) is not a new stock to the Marketbeat.com coverage universe but it is a very unique one in that it is a textbook investment turnaround story. We’ve covered this stock for years and the news has only gotten better in that time and now the market is poised for a major breakout. The latest chapter in this story is the analyst coverage. There has not been a robust amount of coverage and there are only 8 current ratings but the sentiment is warming. In light of the early nature of this turnaround story, that is good news and one that could produce a strong tailwind for share prices. 

As it is now, the consensus estimate is 5% below the price action but it is trending higher in the 12, 3, and 1-month comparisons. The activity this year includes one initiated coverage with a price target in line with the consensus and several price target upgrades to include the high price target of $47. That target is just shy of 10% above the current price action but is also a new three-year high and the highest level since the market capitulated post-scandal in 2019. Regardless, KHC is still trading at only 16X its earnings compared to 27X to 35X for the highest valued consumer staples stocks and it is yielding 3.71% which is above the group average. 
Three Stocks To Ride Out A Rough Market 

Kellogg, A Consumer Staple With Pricing Power 

Kellogg (NYSE: K) made headlines when it reported earnings because it proved it has pricing power. This is important in a world where consumers are cutting back on their spending and is expected to help maintain the earnings outlook if not widen the margin. As for the business, organic strength in all categories underpinned the results. The most important factor is that cash flow and free cash flow are up significantly versus last year on internal improvements that should help sustain dividend increases this year. The company currently trades at roughly 17X its earnings while paying out 53% of its Marketbeat.com earnings consensus and yielding 3.3%.
Three Stocks To Ride Out A Rough Market 

Whirlpool Reverses On Mixed Results 

Whirlpool’s (NYSE: WHR) Q1 results may have been mixed in relation to the analyst estimates but a few things are clear. The first is the company’s business is sound and supported by high demand and a large backlog. The second is cash flow and earnings are ample and the dividend is well supported. The third is that trading at only 7.7X its earnings and paying 3.7% in yield it is a deep-value and a high-yielding blue-chip stock that has already seen a 30% correction and begun to rebound. We aren’t predicting great things in terms of share prices but we do see support at $170 and an upward bias in the action so expect to see range-bound trading at the worst. 
Three Stocks To Ride Out A Rough Market 

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Opinions expressed by Entrepreneur contributors are their own.

A SPAC (Special-Purpose Acquisition Company), which can also be termed as a  “shell” or “blank check company”, is included in stock exchanges with the aim of gaining investment by means of public offers with the further confluence with an existing private company. Such entities are administered by the SEC (Securities and Exchange Commission in the United States).

As a rule, a SPAC must grab capital and acquire this or that company within 24 months. After that period, investors will get their funds back. Such entities exist in order to make it easier for nongovernment enterprises to attract investment, with minimum time and effort, so the process of Initial Public Offering listing can be dismissed. 

SPACs appeared in the 1990s and gained popularity in 2020 when investors had a stake in them. More than $13 billion were accumulated in 2019 but in 2020 this number increased to $83.3 billion involving over 50% of US entities that were officially listed on the stock exchange. During Q1 2021, the number had risen to $96 billion, and among listed companies, there were AdTech ones that showed significant success.

Let’s dig deeper into the matter of SPAC companies and find out what advantages they possess particularly for AdTech owners and partners. 

Related: BFLY: Is Butterfly Network a Buy Under $6?

Benefits 

Those businesses that choose to be included in public listings by means of SPAC take precedence over the traditional process of IPO listing.

First, the solution involving a SPAC is saving time and the whole process can be finished within several months whereas a traditional IPO requires more than one year. This is explained by the fact that there are fewer requirements to blank check companies and SPAC shares may be purchased by the public at large before a merger/acquisition. Apart from that, the process of IPO is not an easy way to go: it requires the solving of many issues concerning legal questions, marketing issues and accounting details. In addition, there’s no guarantee that the desired capital will be obtained.   

Moreover, the insecurity and fragility of the market caused by the Covid-19 pandemic made many businesses go the SPAC way. It helped them to set high stock prices and be able to maximize funds as well as keep the sustainability of share value. In most cases shell companies are usually controlled by experienced investors who know the ins and outs of private equity and thus business owners don’t have to worry about the forthcoming process of acquisition or convergence. Special funds-in-trust secure public investors’ share capital till merging. If it ends with elimination, these funds divide the share capital between the public stakeholders.

Vulnerabilities

Shell companies’ investors might also face many risks. There’s no assurance that a merger will take place as expected or that it will happen at all. Some SPAC companies are missing proper control and disclosure and that may cause problems with investments, e.g. lead to fraudulent capital spend. 

There are no overhead expenses like commissions or salaries for the management staff before the acquisition or confluence takes place, so the company executives and the team are not always motivated to succeed. Moreover, there is also no basis for competing interests because it’s restricted for managers to unite with any party that is in affiliation with insiders unless stockholders acknowledge such merging.  

Revenues generated from SPAC companies may appear to be much lower than expected as the hype gradually decreases. According to Goldman Sachs, stocks of at least 70% of IPOs fueled by shell companies were worth less than $10 each.

Many SPAC companies tend to blend in with companies that need massive funding and have no certain financial projections. In such cases a SPAC is is the only way for them to attract capital as risks and possible speculations are rising.

Related: Financials Sector in 2022: What to Focus on This Year

AdTech

Despite the controversy surrounding SPACs, AdTech companies seem to align the hype with the advertisement industry’s growth just fine. Last year, Taboola Inc. began trading with a $2.6B valuation and merged with ION Acquisition Corp 1 – a green flag for all industry players to put their feet on new ground. Another company that successfully merged with ION Acquisition Corp 1 for $1.3B was Innovid.

In 2021, AdTech investors had more opportunities to park their money for decent returns, from the $1B AdTheorent to $11.1B ironSource SPAC deals. In total, the first quarter of 2021 has seen a $23.7B-worth investment pool for advertising and marketing companies, where 67% came from mergers and acquisitions. 

In contrast to SPAC trends on a broader market, AdTech investors are satisfied with the revenue they receive as stock valuations are increasing. The reason is quite simple: programmatic keeps growing and delivering. According to the forecasts made by eMarketer, global digital ad spending will amount to nearly $650B by 2024, making it one of the fastest-growing areas of digital industries.

Unlike in other industries, there haven’t been any SPAC-related scandals in AdTech. Indeed, IronSource and Taboola had experienced some reduction in their valuation, but by the end of December 2021 the former company had fully recovered and the shares of the company were at an all-time high. Whether AdTech will have its own Nikola case remains to be seen. So far the biggest risks for reputation and share value are the ones associated with ad fraud – the activity which must be stopped before any pre-listing due diligence occurs.

As of today, SPACs remain the strongest tool for AdTech players to jump into public capital. With digital advertising, connected TV, and e-commerce establishing themselves as fixtures of “the new normal” amid the global pandemic, taking this road might be a great option to expand onto. In early 2022, we should expect to see more companies putting their SPAC plans on the table.

AdTech companies seeking additional funds might find SPAC a welcoming entry ticket to a public offering. It is true that some AdTech giants, including The Trade Desk and PubMatic have preferred IPOs, trading the extra potential cash for their privacy limitations, regulatory obligations, stricter financial controls, and so on. But not everyone is ready to take the hard road in a fast-paced world, which might still be on the brink of new lockdowns or significant regulatory changes.

Related: Why Strategic Venture Capital is Thriving in a Founder’s Market

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