Posts Tagged "Project Report"

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.

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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. 



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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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Sports entertainment and media company World Wrestling Entertainment (NYSE: WWE) stock has maintained a choppy range between $45 to $65 for over a year. The iconic wrestling brand survived the stay-at-home mandates to usher in the return of live events. Top and bottom lines were bolstered by its media deal launching the WWE Network on the NBCU Peacock TV streaming service. Its popularity continues to grow with new streaming and content deals with A&E as well as MBC and fictional TV shows to appear on Netflix (NASDAQ: NFLX). WWE branded lottery tickets are expected to hit the market in specific states in 2022. Gaming is a key focus as 85% of WWE’s audience identify themselves as gamers. The Company continues to diversify its revenue streams leaning heavily on expanding streaming and content deals and harvesting the next generation of fans and WWE Superstars. WWE’s Facebook (NASDAQ: META) page has the highest number of followers among any sports league and highest engagement with revenue growth rising 225% and doubling hours watched. Prudent investors seeking exposure to a growing content media empire can look to scale into shares of World Wrestling Entertainment at opportunistic pullback levels.



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Q4 2021 Earnings Release

On Feb. 3, 2022, WWE released its fiscal fourth-quarter 2021 results for the quarter ending December 2021. The Company reported an adjusted earnings-per-share (EPS) profit of $0.70 excluding non-recurring items versus consensus analyst estimates for a profit of $0.54, beating estimates by $0.16. Revenues rose 30.3% year-over-year (YOY) to $310.3 million, falling short of analyst estimates for $324.7 million. Adjusted OIBDA rose 90% to $97.2 million. Full-year 2021 revenues rose 12% to the highest in WWE history at $1.095 billion. The Company expects fiscal Q1 2022 adjusted OIBDA of $90 million to $100 million, representing 7% to 19% YoY growth. The Company launched the Next in Line program that recruits next generation WWE Superstars with 16 collegiate athletes les by Olympic gold medalist Gable Steveson.

Stephanie McMahon Comments

WWE Chief Brand Office and Director Stephanie McMahon underscored that WWE Superstars are in high demand from studios, media outlets and sports properties. Big events help push the brand and drive new deals for media rights and consumer products. She noted that Sascha Banks starred in the cold open for ESPN’s College National Football Championships. Drew MacIntyre presented at the MTV European Music Awards and Big E starred in the cold open of the greatest heavyweight fight in decades between Tyson Fury and Deontay Wilder. Additionally, celebrities and artists from other genres are attending, appearing and in some cases performing at WWE events like Grammy Award-winning artist Bad Bunny in the 2022 Royal Rumble. Mobile games like WWE SuperCard was downloaded 24 million times making it the 2K’s highest grossing mobile game. Director McMahon noted that gamers make up 85% of its audience, therefore gaming is a key focus for the Company as WWE looks to harvest the next generation of fans. Their Next in Line (NIL) program looks for elite athletes with big personalities and large social media followings like John Seton of Elon University with 1.6 million TikTok followers. NIL is a pipeline for next-gen WWE Superstars. The inaugural batch of 16 athletes hail from 13 universities, 7 conferences and 4 sports. She also pointed out a statistic from YouGov that the WWE has more fans 18 to 34 than the NFL, NLB, NBA, UFC, NHL, and NASCAR with 83.7 million subscribers across all platforms and YouTube.

WrestleMania 38

The Company announced that its two-day WrestleMania 38 event was the highest attended and grossed event in its history. Attendance for the event had 156,352 fans at the AT&T Stadium in Dallas, Texas. This broke the previous records set in 2016. WrestleMania is scheduled to occur in Los Angeles at the SoFi Stadium/Hollywood Park in 2023.

World Wresting Entertainment Stock is Hulking Up

WWE Opportunistic Pullback Levels

Using the rifle charts on the weekly and daily time frames provides a precision view of the landscape for WWE stock. The weekly rifle chart has been in a trading range peaking near the $64.33 Fibonacci (fib) level and bottoming near the $46.98 fib. The weekly uptrend peaked as shares fell under the weekly 200-period moving average (MA) support at $60.41 as the weekly 5-period MA slopes back down at $60.66. The weekly 15-period MA support is stalled at $57.49, and the weekly 50-period MA is rising at $55.11. The weekly stochastic peaked and crossed back down from the 90-band as it leans to test the critical 80-band. The weekly market structure low (MSL) buy triggered above $50.37. The daily rifle chart is forming an inverse pup breakdown with a falling 5-period MA at $60.01 followed by the 15-period MA at $60.45. The daily 50-period MA sits at $59.83 and daily 200-period MA sits at $54.49. The daily stochastic formed a mini inverse pup falling through the 30-band. The daily Bollinger Bands (BBs) have been in a compression and is starting to expand as the lower BBs fall at $58.12 and upper BBs rise at $60.90. Prudent investors can look for opportunistic pullback levels at the $55.99, $54.38 fib, $51.81 fib, $50.37 daily MSL trigger, $48.46, $44.94 fib, $43.15 fib, $41.58, and the $40.15 fib level. Upside trajectories range from the $63.08 level up towards the $86.06 fib level.  

 

 

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After two years of isolation, the desire to travel is as present as ever. What’s changed is not whether we want to travel, but how we want to do it. 

Travelers now prefer self-service over waiting to be served, with tech-enabled ease expected at every step of the process. From online planning and booking to contactless check-in and 24/7 digital concierge. Today’s tech-savvy, hygiene-conscious traveler’s expectations are rapidly accelerating the hospitality tech revolution. Companies must move quickly to meet evolving demands or risk missing the boat. 

In a Stayntouch/NYU Tisch Center of Hospitality Report, 81.7 percent of hoteliers surveyed had implemented at least one new technology during the pandemic, and/or were planning to in 2022. Incorporating technology into day-to-day operations is essential to minimize human error, maximize service efficiency and improve the guest experience.

Related: 3 Trends That are Shaping the Hospitality Industry

Combining the best of high touch and high tech, here are six technology trends reshaping what it takes to stay in business as a hospitality player in 2022:

1. Gamification of travel planning

With cabin fever at an all-time high, the world couldn’t be hungrier for spontaneity. As people contemplate their next getaway, hospitality companies can leverage gamification — using game design elements in non-game contexts — to turn travel planning from a chore into a guilty pleasure.

By interplaying gamification mechanics like challenges, chance and rewards, with elements like points, quests and sharing, companies can capitalize on human motivation. Imagine a travel planning website that challenges users to solve a travel puzzle where they will achieve a score, be ranked on a leaderboard and receive points for their next trip.

Popular European airline Lufthansa introduced Lufthansa Surprise, which allows travelers to choose from nine categories, with themes like nature, cities or partying. Upon picking top choices from seven to twelve European cities, the destination is only revealed after booking. 

Beyond novelty, using gamification for online advertising is proven to boost data driving, customer loyalty, brand awareness, user-generated content, online engagement and revenue. 

2. Virtual reality tours

It’s hard for travelers to imagine their next vacation rental before they arrive. How can hoteliers accurately communicate the curated charm of their boutique Santorini hotel to potential guests? 

Through the use of VR (virtual reality), companies can now give first-person digital tours of their space to future guests. Atlantis Dubai offers a virtual tour highlighting the hotel’s main features through visual immersion. 

The benefit: VR prompts future travelers to daydream about experiencing offerings before they arrive. Compared to other virtual tours, VR increases the elaboration of mental imagery and presence, leading to better brand experience, according to a study in Tourism Management. 

3. Going contactless

One of the biggest changes in the travel industry is how we think about hygiene. Between government restrictions and personal anxieties, hospitality companies can’t afford to miss the mark. 

The adoption of contactless technology like self-check-in, in-room technology, mobile keys and digital payments, increased by 66 percent during the pandemic, according to the Stayntouch/NYU Tisch Center of Hospitality Report. This number is expected to continue rising throughout 2022.

But hygiene isn’t the only reason hospitality companies are rushing to remove human contact from their service. In the wake of a pandemic-induced hospitality labor shortage, many hospitality companies transitioned to contactless check-in/out to reduce staff dependency.

Post-pandemic, we can expect human-to-human contact services to be quickly traded for robot receptionists, facial scan check-in, voice guest control, robot delivery and robot concierge assistants. 

4. Chatbot as a digital concierge

Hoteliers are scrambling to meet 24/7 guest demands. With fewer staff, chatbots are shifting from luxury to necessity. The percentage of hoteliers offering chatbots on their websites is expected to rise to 29.2 percent before the end of 2022, up from only 14.5 percent in 2019, according to the Stayntouch/NYU Tisch Center of Hospitality Report.

Think of the chatbot as a digital concierge, bringing the concierge desk to the palm of guests’ hands. This means a 24/7 ability to engage users, answer their questions and fulfill their requests. Marriott International’s Aloft Hotels created ChatBotlr, allowing guests to make requests from their smartphones, from toiletry deliveries to morning wake-up calls. 

Hospitality companies might implement guest messaging applications via guests’ own smartphones, such as Knowcross, Runtriz, Zingle, Guestware or Beekeeper. They could also install voice assistants like Volara or Intelity in the room.

5. IoT for room control and customization

With the trend toward efficiency, sustainability and customization, IoT (Internet of Things) empowers hoteliers to keep up. When installed in a hotel room or short-term rental, IoT technology allows guests to personalize room settings like room temperature and lighting. They can even reduce energy consumption by automatically turning off the lights when no one is using the room. 

IoT allows hoteliers to not only tailor the experience to guests’ needs but also anticipate them. Imagine coming home after a night out to a room set at 70 degrees, with the bedside lamp and aromatic diffuser already on. IoT can gather sophisticated data to create these intuitive spaces.

6. Location-based services 

Today’s travel is all about customized, localized experiences and hoteliers can use location-based services to create them. By seeing a guest’s location via their smartphone, hospitality companies can offer more intuitive local recommendations. Without needing staff assistance, guests can instantly access local information, such as the nearest grocery store or the best pub in town. 

A guest’s location can also improve day-to-day marketing and guest satisfaction efforts. For example, staff can send special offers to guests’ mobile devices when they’re near the hotel spa or bring water to a guest’s room post-workout. Additionally, knowing staff locations means quicker response times for guests, like sending the nearest employee to a guest request on the fifth floor. 

Related: Here’s How AI Is Going to Reshape the Hospitality Industry

Hospitality tech revolution predictions 

After a momentous year in history, the hospitality industry cannot expect a return to normal. Today’s traveler wants more contactless support, self-service and risk-free travel. If hospitality companies are going to keep up, technology will be paramount. 

Between gamified travel planning, VR tours, contactless service, chatbots, in-room IoT and location-based services, it’s a whole new world for hospitality players. But it’s up to us to stay in the game by embracing tech-enabled efficiency, customization and flexibility with open arms.

Related: How to Impress Guests in a Changing Hospitality Industry

 

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This week on The MarketBeat Podcast, Kate welcomes back a repeat guest, MarketBeat contributor Chris Markoch. Chris tells us about three U.S. stocks that he believes will continue to show strength, regardless of what is going on in the economy.



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  • Walmart: Hired the former CFO of PayPal. What does this mean for Walmart’s digital transaction initiatives?
  • Will this mean synergies with PayPal?
  • What is Walmart doing in the area of health care?
  • Nucor: What is going on with a stock with a low P/E ratio that’s also trading at new highs?
  • How will the Russia/Ukraine war affect Nucor’s pricing power and revenue growth?
  • Why investors should wait until after Nucor reports earnings to make any kind of trade
  • Camping World: Is the stock undervalued at the moment?
  • How the stock is performing relative to 2020, when outdoors activities became popular in the early days of the pandemic?
  • How demand for RVs is affecting Camping World
  • How should investors analyze Camping World’s technicals and indicators when considering a buy?

Stocks mentioned in this episode 
Walmart (WMT)

Nucor (NUE)

Camping World (CWH)

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Walmart is a part of the Entrepreneur Index, which tracks some of the largest publicly traded companies founded and run by entrepreneurs.

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Don’t Think Twice About Adding These 3 Quality Stocks 
The beauty of investing in stocks is that anyone can get involved and start adding shares of quality companies without having a massive budget. All it takes is some research and a bit of determination to get involved in financial markets, and with many of the biggest companies in the world seeing their share prices pull back hard to start the year, there are some great deals to be had. A $1000 budget is a good starting point for new investors or for people that are interested in using some of their savings to scoop up shares of solid companies, as this will cast a wide net and allow for plenty of options to choose from.



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Certain companies stand out as being worthy of adding to your portfolio at almost any level, as these market-leading businesses have been known to provide reliable gains over the long run. That’s why we’ve put together the following list of 3 no-brainer stocks to buy with $1000 below. Let’s take a deeper look at why these are great picks to consider at this time.

If you’re looking to add a leading retailer that should put up strong numbers in any economy, targeting shares of Target makes a lot of sense. With around 2,000 stores and counting across the United States and a rapidly growing e-commerce business, this is absolutely one of the strongest stocks in retail. Target is a no-brainer thanks to the company’s established brand and the moves the company has made to expand its omnichannel sales, with older stores being renovated to serve as fulfillment centers. The company has also developed successful private brands, which grew an 18% in FY 22 to $30 billion in revenue.
Target is a prime example of a company that thrived during the pandemic, but investors should still expect decent sales growth this year even as the company faces tough comps. Finally, the fact that Target has been partnering with national brands like Ulta Beauty and leveraging its loyalty program could mean big things for the company over the long term, especially if it can continue gaining insights from its customer data. At a 16.86 P/E ratio, Target shares are much cheaper than peers like Costco and Walmart, yet another solid reason to consider adding exposure.

Let’s face it, most investors are going to look into the tech sector at some point for buying opportunities, as these companies are driving both innovation and the world’s economy further. Microsoft stands out as a no-brainer pick in that sector for a few different reasons. First, the fact that it’s the world’s largest software company is a huge plus, as it tells investors that this is an established business that should continue putting up consistent earnings numbers for years to come. Products like Office, Windows, SQL Server, Xbox, and more are best-sellers that generate billions in revenue each quarter, which is certainly reassuring for conservative investors that want tech exposure.
In addition to the established cash cows, Microsoft’s enterprise cloud business Azure offers plenty of growth potential over the next decade too. In fact, the company grew Azure at an impressive 50% rate during fiscal 2021. Azure offers a great way for enterprise clients to try hybrid cloud environments since many existing companies are already using Microsoft solutions, which is a huge competitive advantage going forward. Finally, the fact that this stock has pulled back about 17% year-to-date means that investors can add exposure to one of the best companies in the world at a price well off of 52-week highs.

The health care sector is always a great place to look for investment opportunities, and that certainly holds true as we continue making our way out of a global pandemic. CVS Health stands out as a solid option given that it’s the largest pharmacy health care provider in the U.S. The company has done a lot to change its business for the better in recent years, including remodeling stores to include expanded services and acquiring one of the largest health insurers in the country, Aetna. Those moves are already paying off, and the fact that CVS is a leader in medical insurance, pharmacy benefits, and retail healthcare product should excite long-term investors.
Back in February, CVS posted better-than-expected full-year results including 12% EPS growth, which is certainly a sign of a company heading in the right direction. There’s also a lot to like about the 2.12% dividend yield here, and with a forward P/E of 12.54, it’s hard to argue against at least nibbling on shares at current levels. Healthcare spending makes up a massive portion of the overall economy, and that isn’t going to change anytime soon, making CVS Health a no-brainer.

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It’s been an unusual start to 2022 in the stock market. Flashy growth names are out. Steady value names are in. 



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After the S&P 500 staged a sharp recovery last month, escalating Russia-Ukraine tensions and a more hawkish Fed have dragged the benchmark down 6% year-to-date. But with the value portion of the S&P flat for the year, there continues to be a sizable gap between value and growth stock performance. 

Historically, one of the best places to weather market storms has been the personal care products industry. Companies that sell well-known hygiene, beauty, and nutrition items tend to fare well in volatile conditions because consumer demand is relatively steady. Many also pay a dividend which can help soften the blow of market downturns.

Lately makers of household goods have faced cost inflation pressures like everyone else. But given that demand is inelastic for our everyday necessities, price increases are largely being absorbed by shoppers. This makes these three household names stocks to own for the current market environment.

What is a Good Defensive Stock? 

Church & Dwight (NYSE: CHD) wins the award for most stable household and personal products company. No other stock in its peer group has finished up in each of the last 14 years. Up 1% year-to-date, that streak may persist. 

It is Church & Dwight’s portfolio of popular consumer brands that continue to support the stock’s amazing upward trajectory that dates back to 1982. From Arm & Hammer and OxiClean to Orajel and Waterpik, consumers don’t think twice about reaching for the company’s products regardless of the economic backdrop. You name it—the 1987 crash, the dot com bubble, the 2008-09 financial crisis, and the pandemic—Church & Dwight has not only survived it but thrived through it all.

Steady sales volumes have translated to strong cash flow that enables Church & Dwight to reinvest in the business and reward shareholders. The dividend, while a modest 1%, has been increased in each of the last 27 years. Better yet, the board authorized a $1 billion share repurchase program that should provide downside protection for the remainder of the year. 

Church & Dwight shares aren’t cheap at 31x trailing earnings. But like its products, it is a price well worth paying for given the company’s track record in good times and bad. 

Is Procter & Gamble a Relatively Safe Stock?

Procter & Gamble (NYSE: PG) has been around since 1837, which speaks to the company’s durability and merits as a safe defensive play. Along the way it has amassed a portfolio of well-known consumer brands including Luvs diapers, Tide laundry detergent, Charmin toilet paper, Head & Shoulders shampoo, and Vicks cold & flu relief. Chances are you’ve tossed many Procter & Gamble products in your shopping cart without even knowing who owns it. 

The company’s massive product empire is the engine that drives some of the highest quality financial statements in the industry. Operating cash flow is perennially healthy as is profitability. Procter & Gamble exited 2021 with a whopping $11.5 billion of cash. This, along with solid interest coverage ratios, afford it solvency and flexibility in even the toughest of economic conditions.

As a result of its consistent financial position, Procter & Gamble has raised its dividend for 65 consecutive years. The stock has had its share of dips in recent years tied to pandemic headwinds but has repeatedly recovered to new highs. When it comes to low risk ways to generate long-term portfolio growth and income, Procter and Gamble is head and shoulders above its large cap peers.

Is Colgate-Palmolive a Low-Risk Stock?

Colgate-Palmolive (NYSE: CL) is easily recognized for its namesake brands, but there is plenty more where the toothpaste and dish soap came from. Ajax cleaners, Murphy’s oil soap, Speed Stick deodorant, and Hill’s pet food are some of the company’s diverse consumer brands. It’s this diversification along with a global diversification that drive solid cash flow generation year after year.

The stock’s climb from $60 to $80 over the last 10 years may seem like watching paint dry to investors who are accustomed to faster growth. However, this is precisely how you’d hope a conservative household products name to behave. It has been virtually void of noteworthy downturns throughout its trading history, a reflection of its modest but predictable growth metrics and fundamental quality. 

With a nearly 40% share of the global toothpaste market, Colgate-Palmolive will continue to deliver for shareholders for as long as people are brushing teeth. A growing pet nutrition business and the reliable revenue coming from the home and personal care divisions make the stock a surefire bet. Thanks to the surge in pet adoption and spending in the wake of Covid, Hill’s Science Diet has become an increasingly important growth driver.

Meanwhile, management is investing in the company’s digital capabilities to capture shifting consumer preferences worldwide. E-commerce sales were up 27% last year. They will continue to be a key part of the strategy, proving you can indeed teach an old dog new tricks. 

Colgate-Palmolive boasts a 59-year dividend hike streak of its own and currently offers a 2.3% yield. It isn’t a stock investors will clean up on, but it can produce bright smiles during rough times.

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“Pump up the volume” isn’t just a catchy house song from the late 80’s. 



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It’s also what gets the party started when it comes to stock rallies.

To many traders, volume—the number of shares that exchange hands within a certain time period—is the most important indicator. That’s because a pick-up in the level of trading activity can presage a significant uptrend or downtrend.

A volume spike can occur for any number of reasons. Often there is a major company announcement or industry-specific news that generates high interest in a stock. Other times, it can stem from a large institutional or insider transaction.

Depending on the investor’s time horizon, there are several ways to identify which stocks are experiencing volume surges. One commonly used metric is ten-day average volume as a percentage of 90-day average volume. High values point to stocks with unusually high trading activity. 

When a high-volume name is also well-liked by sell-side research analysts, it can signal to the market that an underlying catalyst is taking shape. Here’s why the volume is being turned up on these three companies.

Is Lululemon Athletica Stock a Buy? 

The 90-day average daily volume on Lululemon Athletica inc. (NASDAQ: LULU) is roughly 1.48 million shares. Over the last ten days the average volume has jumped to 2.29 million shares. The resulting 1.5 ratio can be interpreted as so—recent trading activity is 1.5x, or 50%, greater than normal.

The pickup is mainly the result of the apparel maker’s fourth-quarter earnings report of March 30th. A 31% increase in profits confirmed the strength of the brand and lululemon’s booming direct-to-consumer business. This caused the stock to gap up in more than five-times the 90-day average volume. 

The last time lululemon saw this much trading activity in a single day was September 9th. It reported a blowout quarterly report and said it was on pace to reach its 2023 revenue target much sooner than anticipated. Two months later the stock climbed to a record high near $500. 

Lululemon may have $500 in its sights again after last week’s volume spike of about 8 million shares matched what we saw in September 2021. Wall Street is again playing catch up raising EPS forecasts and price targets. Twelve of 16 firms are calling the stock a buy including Cowen & Co. which has a Street-high $507 target. 

Is the Bottom in for Shopify Stock?

We haven’t seen this kind of volume in Shopify Inc. (NYSE: SHOP) since the early days of the pandemic. That’s when the stock soared as businesses big and small scrambled to build their e-commerce capabilities and adjust to the unusual economic environment.

This time around the technology platform provider for merchants finds itself back at the bottom of the hill some 60% below its November 2021 peak. Daily volume has consistently been above average of late which suggests the downtrend may finally be over. Shopify shares have recovered nearly $200 from last month’s low and some say the rally has just begun.

Wells Fargo is among those that think Shopify remains attractive despite its days of hyper growth likely being over. This week the firm initiated coverage of the $700 stock with an Overweight rating and $834 target. Three other firms have offered bullish sentiment—but with far more bullish targets in the $1,000 to $1,500 range.

No one on the Street is calling Shopify a ‘sell’ and even the most cautious price targets suggest $100 upside. Perhaps the biggest bull, however, is Barton Investment Management. The Pennsylvania-based hedge fund exited the year with Shopify as a 27% position in its Focused Growth fund. 

Why is Hasbro Stock So Volatile Lately?

The rise in volume on Hasbro, Inc. (NASDAQ: HAS) has coincided with a downtrend that has persisted since the stock jumped to $105 last month. The iconic toy maker is currently trading around $85 per share, a price that most on the Street find attractive. 

This week Jeffries gave Hasbro its sixth buy rating of the year alongside a $115 target. This came after BMO Capital gave the stock a neutral rating and target that matches its current price. 

The bullish case on Hasbro points to the strength in its gaming segment which includes popular brands such as Magic: The Gathering, Nerf, and Transformers. The bears, on the other hand, remain concerned about lingering pandemic headwinds like higher materials and freight costs.

Hasbro’s 1.4x 10-day-to-90-day volume ratio reflects a stock that has become polarized amid a heated proxy fight with investor Alta Fox Capital Management. It’s difficult to say how that will end, but what’s more certain is the success of Hasbro’s budding gaming franchise.

As the company continues to push into the original entertainment content space, growth has followed. The integration of Entertainment One (of Peppa Pig fame) was evident in Hasbro’s 40% bottom line growth last year. And with the forward P/E down to 17x and volume trending higher, Hasbro shareholders can expect more fun and games ahead.

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BlackBerry will need more than its iconic name to impress investors 

BlackBerry (NYSE:BB) stock took a plunge the day after reporting mixed earnings. The company beat on non-GAAP earnings and surprised with a positive 6 cents per share as opposed to the negative one cent per share that analysts expected.  



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And the miss on revenue wasn’t terrible. The real issue for the company was its forward guidance. In 2021, the company received a considerable amount of revenue from licensing sales of patents from its legacy mobile device business. That revenue has mostly been accounted for and that means going forward the company will have to rely on the other business units to pick up the slack. 

Therein lies the problem.  

BlackBerry posted $749 million in revenue in 2021. That was down from the year before. And next year, management is guiding for $705 million on the high end. That makes for some tough math.  

Going forward the company will make its revenue primarily through its cybersecurity products and its IoT products. At its core, BlackBerry has always been about cybersecurity. However, on the company’s earnings call, it said it expects revenue from the cyber sector to be flat in 2022.  

Meaningful Revenue is Years Away 

That leaves the company’s IoT solutions. And that brings us to IVY, the company’s scalable cloud-connected software program. IVY is an acronym for Intelligent Vehicle Data Platform. It has the potential to provide EV manufacturers with a universal solution that allows them to collect data from multiple sensors in a safe, consistent way.  

BlackBerry touts IVY as a being a win-win for consumers and EV manufacturers. Consumers will get an enhanced driving experience. And manufacturers will benefit from lower costs, more efficient operations, and higher revenue. This will particularly true with autonomous vehicles. And BlackBerry does have partnerships with Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN). However, that future is years away. 

BB Stock is a Story For Another Day 

On two separate occasions in 2021, BB stock got caught up with the meme stock movement. It seemed like an odd edition to this band of stocks. However, the company’s name denotes an iconic brand. Perhaps some retail investors were lost in nostalgia.  

And the stock was cheap. A recognizable name and a cheap price went a long way. I wrote about BlackBerry several times in 2021 and I always cautioned investors that the meme stock mania could distract them from what was really going on with BlackBerry.  

I find myself rooting for BlackBerry. It’s a company that’s always been rooted in security. And it may have a role to play in cybersecurity. It also may have a role to play in autonomous vehicles.  

The problem that I have with BlackBerry is that the company is relying on too many factors that are out of its control. Right now that includes semiconductor chips, supply chain difficulties, and automotive production schedules. And that makes it hard to see a reason to buy the stock right now.  

Is there a long-term story here? I still believe there may be. But at this point, the company is projecting full-year revenue to be lower than in 2021. And that will put pressure on what an already high valuation. In summary, BlackBerry is not a meme stock, unfortunately it’s not a buy at this time either. 

 

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Performance in a key niche may very well determine the course of SPWH stock

Sportsman’s Warehouse (NASDAQ:SPWH) continues to fall despite posting a double beat in its most recent earnings report. The outdoor sporting goods retailer posted earnings per share (EPS) of 49 cents outpacing analysts estimates by three cents. On the top line, the company posted $416 million which beat expectations of $406 million.



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One reason for the drop in SPWH stock is that neither number holds up on a year-over-year YOY basis. The company’s earnings were 34% lower YOY from the 75 cents reported for the same period in 2021. The revenue picture was better, but the company still posted 5% less revenue YOY.

Company management also pointed out that margins continue to be under pressure due to the ongoing supply chain difficulties. With that in mind, the company is anticipating its first-quarter earnings and revenue to be lower on a YOY basis as well.

Sometimes when companies report earnings, management gives reasons for lagging performance (weather, fewer shopping days, etc.) that don’t quite ring true. In this case, Sportsman’s Warehouse made it clear that the reason for the drop in revenue was due to lower firearms and ammunition sales.

With this in mind, and considering that the company’s margins remain under pressure, SPWH stock is not a sure thing, despite having a consensus price target that suggests a nearly 60% upside.

One Time the Why Matters

According to the company’s latest 10-K (page 12), Sportsman’s Warehouse derives approximately 54% of its revenue from firearms and ammunition. And management said that the company’s internal data “shows that over 20% of first-time firearm buyers have a propensity to buy a second firearm in the following 12 months.”

Furthermore, the company pointed out that its firearm customers drive 4x more revenue and 2x more transactions than a non-firearm customer. And in 2020 and the first part of 2021, many existing firearm owners began purchasing additional guns and ammunition.

One reason for that was concern that the Biden administration would take a hardline stance on firearm and ammunition sales. However, the administration has softened its language and that may be taking the urgency out of those purchases.

On the other hand, by some estimates there are now 12 million to 15 million new gun owners since the pandemic began. That means that “maintenance sales” of ammunition will be coming off a broader base.

Be Careful With Estimates

According to analysts tracked by MarketBeat, the consensus price target for SPWH stock is $17.33 which represents a 59.75% upside. However, the company has only had three analysts jump in since January of last year. This may be because since December 2020, the SPWH share price was capped at $18 on expectations of a takeover.

The point is with the first earnings report since the takeover fell through there may be other analysts weighing in. And that may move the consensus price down lower.

Is SPWH Stock Worth a Shot?

By the company’s own forecasts, they will deliver sales and revenue that is lower on a YOY basis. In the current market environment, that’s a strong enough signal to stay away. But with the company also likely to see decreased sales in the one area where it arguably has a distinct advantage over many of its competitors, SPWH stock is a tough buy.

However, by many metrics, Sportsman’s Warehouse does appear to have a reasonable valuation. And if the mid-term elections turn out the way that forecasts look at the moment, it may provide a lift to firearm owners particularly as this correlates with the start of hunting season.

But even with that said, you can wait to see at least one or two more quarters of sales data before deciding whether to buy the stock.

 

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