Keep an Eye on Alphabet

Image result for Alphabet INCThere is a reason that Wall Street loves ABC, because it always manages to bring dividends and profits. Alphabet Inc., the parent company of Google, by far is the most sought stock and a healthy investment for years to come due to its prudent business model that not just relies on online advertisements, but also on software distribution, internet of things and upcoming mobile phones dubbed the Pixel lineup.

Considering the pace at which the stock prices increases, Alphabet can reach $1,000 next year, due to a 21 percent rise last year and an expected 20 percent upside potential this year. Google’s revenue grew by 21 percent in 2015, while its smaller rival Facebook grew by 59 percent year on year. Although there is no direct comparison of both companies, the online advertisement business that includes both mobile and digital platforms, are toe to toe. Moreover, Google’s brand and its search engine have been the goto brand for billions of internet users for years.

Alphabet has 28 percent operating profit margin to revenues, while generating $6.9 billion in free cash flows last year. It is also sitting on a cash pile of $78.5 billion, ample to withstand any long-term shocks. It holds a PE Ratio of 19, considered average with other S&P500 stocks of 18. Hence, Alphabet with new innovations is all set to dominate the digital advertising business for some time, making it a neutral stock to hold in all economic conditions.

References

http://www.marketwatch.com/story/buying-this-tech-stock-is-as-easy-as-a-b-c-2016-09-19

http://www.fool.com/investing/2016/09/17/heres-why-wall-street-loves-alphabet.aspx

A Second Look at Oil and Energy Stocks

Image result for A Second Look at Oil and Energy StocksOil prices may see a rebound in September this year as many major OPEC member have started to think over an oil production freeze that can bring back normal demand and supply dynamics to the markets. One major criticism of this strategy is that oil production in major oilproducing nations such as Saudi Arabia, Iran and Russia have already peaked out at their maximum capacities of production. Moreover, many major oil exploration companies such as Royal Dutch Shell Plc, and BP Plc are thinking to invest more in increasing their current capacities rather than indulge in future exploration missions.

Nevertheless, amongst the big players, if you wish to invest in the oil industry, one company is making headlines knowing that no matter what oil prices are, it may end up making profits for all of the tis investors. Core Laboratories N.V. (NYSE:CLB), is topping charts for investors as the number one oil stock to buy and hold, due to its expertise in reservoir optimization. It also happens to be one of the very few companies that can manage to withstand both lower and higher oil prices. Core Lab highly relies on its intellectual property to lower operating expense as a percentage of total revenue.

Oil prices have risen by 25 percent this year, while energy stocks have risen by 14 percent. Bank of America believes that there is still a huge demand for oil products and production should increase, which will bring prices of oil back to the 2011 levels, while offering prudent analysis that whenever oil prices have increased by 25 percent, energy stocks outperform S&P 500 by 90 percent.

References

http://money.cnn.com/2016/08/17/investing/oil-prices-energy-stocks-bank-of-america/index.html

http://www.fool.com/investing/2016/09/04/the-best-oil-stock-you-can-buy.aspx

Netflix is the #1 Stock You Should Buy

Image result for Netflix is the #1 Stock you should buyPiper Jaffray and RBC Capital have some positive news for the media streaming company Netflix. Their surveys and estimates make it one of the most soughtafter stock, which is underperforming now but may rise by another 25 percent soon. The price target stands at $125. It currently trades at around $99-$100 range. In 2015 the stock boosted a return of over 125 percent.

Wall Street Analyst at RBC Capital, Mark Mahaney in a survey conducted in markets such as Brazil, UK, and US, found that investors and subscribers are optimistic about the media streaming services and future growth of Netflix. In their report, they said, “These results showed rising usage, an improving competitive position, and potentially ameliorating impact from the 2016 price increases – clear positives, in our view. All in, we continue to believe that Netflix can grow its subscriber base while increasing the price by continuing to improve its content offerings and proving out its value proposition to users – all this while increasing its profitability.” 54 percent of all responders were using some sort of Netflix services. In the UK 42 percent of respondents used Netflix and market penetration in Brazil may reach 71 percent this year, up from 60 percent last year. One area of concern is from competition by Amazon, who also offers same services, especially their Amazon Prime services, which overlaps with Netflix subscriptions. However, it was found subscribers prefer Netflix.

Currently, the stock is underperforming and has disappointing premiums and return on equity. Many analysts have a “Hold” rating on it.

References

https://www.thestreet.com/story/13694996/1/here-s-why-netflix-nflx-stock-is-gaining-today.html

http://www.bloomberg.com/news/articles/2016-08-29/rbc-this-survey-data-makes-netflix-a-1-buy?utm_content=business&utm_campaign=socialflow-organic&utm_source=facebook&utm_medium=social&cmpid%3D=socialflow-facebook-business

Millennials are Buying These Stocks

Image result for EU asks Apple to pay $14.5 billion in TaxesA team led by equity strategist Sarbjit Nahal at the Bank of America Merrill Lynch, has come up with a list of stocks and investment that the millennials are a most enthusiast in buying or would end up buying.

As per the team, “There are 2 billion Millennials worldwide and they have overtaken Boomers to become the largest living generation in U.S. history. But we need to prepare for the rise of the 2.4 billion Centennials, born at the turn of the century and set to live to over 100 years. They are embracing diversity, sustainability, globalization, disruptive technology, peak stuff,’ new business models, and entrepreneurialism like no generation before them, and they are economically optimistic to boot.” The team also thinks that millennials would be able to see an increase in their incomes from $21 trillion in 2015 to $62 trillion in 2030.

Amongst the most loved stocks for the millennials, tech stocks top the charts. Apple Inc., Netflix Inc., Facebook Inc., and other fintech giants can see a huge boost. When it comes to automobiles, Tesla is their favorite. Shares of Tesla trade at $200 per share and are usually hard to find. Other important stocks that make the top 10 include Disney, at $94 a share, and Chesapeake Energy at $6.

As per the managing director of trading at TD Ameritrade, Nicole Sherrod thinks, “That’s a major theme with young people. I think we’re only going to see more and more of that going forward.” On the Fidelity platform, millennials are seen to be more aggressive and active when buying stocks. They take more risks than the Baby Boomers. Many millennials successfully passed the volatilities that were present in the financial markets before and after the Brexit vote. Executive vice president for retirement and investing strategies at Fidelity, John Sweeney said, “They’re learning that when markets get volatile, this is an entry point to step in and buy something that’s on sale.” Millennials are eventually helping make their own retirement plans and it reflects in their trading habits.

References

http://money.cnn.com/2016/06/30/investing/millennial-investors-brexit-market-scares/

http://www.cnbc.com/2016/09/01/the-stocks-millennials-love-to-buy.html

http://www.bloomberg.com/news/articles/2016-08-30/bank-of-america-these-stocks-will-surge-when-millennials-start-making-more-money?utm_content=business&utm_campaign=socialflow-organic&utm_source=facebook&utm_medium=social&cmpid%3D=socialflow-facebook-business

Herbalife Stock Stuck Between Icahn and Ackman

herbal-tea-1410565_640.jpgBillionaire investors Carl Icahn and Bill Ackman have been having a hard time settling on the health supplements and nutritious product company Herbalife. Carl Icahn is the biggest shareholder of Herbalife Ltd, and owns 17 million shares or 18 percent of the stock while Bill Ackman, has a short position of 20 million stocks. In between who is selling and who is not, Herbalife is having volatile times. Add those with the story that Herbalife may have misled its investors too.

Last week, a news was circulating that Carl Icahn wishes to sell some of his stake in Herbalife, and the purchaser is no one else but Bill Ackman. By the weekend, Icahn had rejected the news saying he is not selling any stock but intends to buy more. Icahn bought over 2.3 million more shares by Friday closing. In a statement, Icahn said, “Completely contrary to what Bill Ackman stated on television today, I have never given Jefferies an order to sell any of our Herbalife shares. Icahn’s stake has now risen to 20.8 percent. Icahn called Ackman a liar on CNBC in 2013. CEO of Herbalife, Michael Johnson said, “We appreciate the support of all of our investors and are particularly grateful to Carl Icahn and the conviction he shares, and continues to show in our business.”

Nevertheless, for both Icahn and Ackman, it is not about buying or selling stocks, but to extract the maximum value out of them when they intend to do so.

References

https://www.bloomberg.com/view/articles/2016-08-26/herbalife-deals-and-blockchain-dreams

http://www.marketwatch.com/story/herbalifes-stock-drops-after-ackman-says-he-still-has-a-more-than-1-billion-short-position-2016-08-26

http://www.reuters.com/article/us-herbalife-icahn-idUSKCN11115N

Be Cautious While Investing in big Prison Stocks

This week, the U.S. Justice Department brought a halt to a decade-long experiment, in which it used to hire private companies to help manage the increasing prison population. It brought a huge blow to the For-profit Prison companies that gave these services, as their stock prices tanked. As per the Justice Department, these were not as secure as the federally administered prisons. Sally Yates, Deputy Attorney General in her recent memo issued last Thursday said, Private prisons “simply do not provide the same level of correctional services, programs, and resources; they do not save substantially on costs; and as noted in a recent report by the Department’s Office of Inspector General, they do not maintain the same level of safety and security.”

Assessing the damage, following companies saw drastic fall in their share prices.

Corrections Corp. fell 35 percent to $17.57 at the close of trading, the real estate investment trust’s biggest drop since its initial public offering in 1997. However, it recovered its losses on Friday as only 7 percent of its overall operations may be affected. Moreover, its operations related to the California Department of Corrections and Rehabilitation may not be affected at all.

GEO Group plummeted 40 percent to $19.51, also the largest decline in its 22-year history as a publicly traded company.

However, both companies have seen a bounce back last Friday, showing that the decision has not affected their core business operations. Shares of Corrections Corp. rose 8 percent while those of GEO Group were up 21 percent. Geo Group also announced it got renewed a contract with the Bureau of Prisons. They currently have a “hold” rating on Corrections Corporation and a “buy” rating on Geo Group from Canaccord’s analyst Ryan Meliker.

Refrerenes

http://www.cnbc.com/2016/08/19/private-prison-stocks-bounce-back-after-deep-fall.html

http://www.bloomberg.com/news/articles/2016-08-18/prison-reits-sink-on-report-u-s-to-end-private-facility-use

http://money.cnn.com/2016/08/18/news/doj-to-end-use-of-private-prisons/index.html?iid=SF_LN

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Where to Invest When Markets are at Record Highs

Since 1999, it is the first time when all three major indexes in the United States are at their highest levels. All three haven’t lost more than 1 percent in the past seven weeks, the technical are still bullish and as the US presidential elections near, many think the markets may go down any moment.

One such source of volatility comes from the economy itself, which grew by just 1 percent in the first half of 2016. July retail sales figures were also largely disappointing. The CBOE Volatility Index VIX is up 0.63 percent, lowest for the American markets, makes it easy to understand that not even the Pros and gurus know where the market will go next month. However, if you still wish to invest your money in stocks, you need to follow where the money is leading.

Many of the investors are still putting their money into lucrative ETFs, which saw $10 billion of inflows, in contrast to $3.5 billion of outflows. Bonds saw inflows of $9.8 billion in the past 17 weeks and previous metals saw inflows of $0.9 billion in past 10 weeks. The wisdom of many investors shows that ETFs are the way to go, knowing that the Fed will not increase the rates till December or after the Presidential elections. Investors should caution in these markets, and many should try to keep their positions in cash, rather than going investing in futures where they can lose.