Stocks Archives

How to Cash in on the Apple Haters

Apple’s secret service must have been nearby (Photo credit: Wikipedia)

There’s a thousand different ways to make money in the markets and one way is just to buy and hold for the long term and just hold on through all the ups and downs. A lot of Apple fans do just that but what if you could increase  your returns by making money on all the Apple haters out there. Right now the stock seems to be meandering a bit and some investors are about ready to move on to something else.

If you are an Apple bull or a buy and hold forever type, consider selling OTM naked puts on Apple stock to increase overall yield – and make money from Apple bears in the process. Apple’s soft quarter and declining product sales, should be an Apple put seller’s dream come true. With the WWDC behind us, Apple stock has remained sideways. Some commentary suggest that many analysts and observers simply weren’t wowed enough to warrant a spike in Apple’s valuation.

There’s a difference between being bearish on a stock and going out and shorting the stock. One either chooses to not add to his position or puts money in other vehicles to generate alpha, while the latter believes the stock will go down so much that he can generate the most alpha by betting against it. Apple Bears are not terribly skeptical or cynical of Apple’s current business model and potential growth, but they do see it slowing down and have calculated that the recent spike in Apple’s stock will subside and fall from its current 52-week highs.

 It’s important to note that when Pacific Crest downgraded the stock this week, Andy Hargreaves only estimated that it would drop $10, or less than 10% from Apple’s current price. Similarly, while not an outright Apple Bear, I do see the price stagnating or declining from its current levels if no major acquisitions or shifts away from the dependency on the iPhone occur.

Key points are:

  • Decline in iPhone sales and no longer #1 in smartphone market share.
  • Decline in iPad sales and global decline in tablet demand.
  • Apple Watch has yet to definitively prove to be the next flagship product.
  • While Services growth is impressive, will it grow enough to offset declining sales in Apple’s main business – selling iPhones.

Learn more about cashing in with Apple

Some of the experts were predicting that the market would be going through a correction in the first month of the new year and now you have the opportunity to add to your portfolio at some bargain prices.

After the worst start in history for U.S. stocks, everyone will be searching for meaning. One strategy has worked for almost seven years, but what about now?

Is it time to “buy the dip?”

Prior Theme Recap

In my last WTWA, I predicted that the start of a new year would focus attention on one of the several different “January effects.” This proved to be a secondary consideration. Instead, news from China rippled around the world, pressuring U.S. trading before Monday’s opening. The China story continued through Thursday. Even a strong employment report on Friday could not reverse the selling pressure. There are some still debating the seasonal effects, but it was a minor theme last week. You can see the sad story for stocks from Doug Short’s weekly chart. (With the ever-increasing effects from foreign markets, you should also add Doug’s World Markets Weekend Update to your reading list).

Jeff Miller

 

 

 

 

Disney Stock About to go Warp Speed?

Many of us believe that Disney stock prices are too low considering the overall success of the company and the great success of the recent Star Wars movie, with at least two more movies in the works.

 In just 20 days, Star Wars has the No. 1 domestic box office haul ever. It has not even launched in China yet, the No. 2 market worldwide. The success of Star Wars is not only going to drive merchandise significantly higher this year, but also demand for the original films, and also in Walt Disney (NYSE:DIS) theme parks. And to put the icing on the cake: Disney has another two Star Wars films lined up for future years, all of which are likely to be equally lucrative blockbusters.

Let’s look deeper into the media world: DIS also has the Marvel Universe, and a dominant kids production that pumps out at least one or two blockbusters each year. With the new Captain America movie later this year, and sequels to Star Wars, DIS is all set to dominate the top of best movies ever for the next five years to come, with several billion dollar movies from its top franchises over this span.

As explained, this continued success feeds into a theme park business that gains pricing power every year, and maintains its popularity. It also gives the company leverage over media outlets that want to distribute its content, allowing DIS to charge partners whatever it wants.

Last but not least, DIS has ESPN. While ESPN has had its fair share of problems, and likely overpaid for rights with the NBA ($1 billion), it is now a leaner company (job cuts) that continues to be the worldwide leader in sports. So yes, DIS had a speed bump with ESPN and subscriptions, but fact is that the NFL, NBA, and NCAA basketball and football continue to grow in popularity year-after-year, and that bodes well for the long-term direction of ESPN, and DIS.

 

Read more from Brian Nichols

 

Zacks Bull of the Day 8-17-15

This Bull of the Day is in the Health and diet category that’s been pushing past all expectations and is now considered a strong buy. Check out Tracey Ryniec’s  post below

Nutrisystem, Inc. is on the right side of the health and wellness debate. This Zacks Rank #1 (Strong Buy) just raised full year guidance for the second time this year.

Nutrisystem is famous for weight loss programs including Nutrisystem My Way, its 28-day food delivery program. Feeding on the healthy food frenzy sweeping the nation, the company’s meal choices including 100 foods which do not contain artificial preservatives or flavors.

Plans can also be customized for specialized diets, including those with Type 2 diabetes or pre-diabetes.

Another Beat and Raise

On July 29, Nutrisystem reported its second quarter results and beat the Zacks Consensus Estimate by 4 cents. Earnings were $0.41 compared to the consensus of $0.37.

Revenue rose 17% to $130.3 million as both direct and retail channels remained strong. Diret rose 15% year over year while retail grew 43%.

Gross profit margin jumped 80 basis points to 52%.

Full Year Guidance Raised

Very few companies are beating and raising this year in tough market conditions, but momentum from early in the year continued. It raised full year guidance for the second quarter in a row.

Earnings are now expected to be in the range of $0.87 to $0.97 up from its previous guidance of $0.81 to $0.91. Guidance is now up sharply from earlier in the year when the company was only looking for $0.73 to $0.83.

Zacks Bull of the Day

Picking Stock Market Winners the Easy Way

Picking winners in the Stock Market can be confusing, complex and time intensive sometimes but here’s a system that isn’t really new but it can get you moving in the right direction.

Every week the government and other entities release economic reports that cover all areas of the economy – from retail sales to housing, to international trade to consumer sentiment.

In fact, on virtually any given day there could be anywhere from one to a handful of reports.

And while the financial media does cover them, they usually focus on headline numbers without doing a deeper dive.

This is unfortunate because within these reports often exists money-making details that can quickly be uncovered with just an extra few minutes of reading.

For example, in the Employment Situation report, it details what sectors saw the most new jobs or labor force expansion, and which ones contracted.

I can remember countless times where that report got me into the right sectors and industries at the right time before anybody else was talking about them.

In fact, I still remember getting into housing in early 2012 while everybody else was staying as far away from it as possible. But, after seeing construction jobs continue to rise in report after report after report, I knew the housing market had turned. And that was one of the first alerts to the housing recovery – for those who knew where to look.

But the headline number and the obligatory one-or-two-sentence write ups on many news sites missed the best part of the story by not going the extra mile (or paragraph).

Well here we are again, with more stock-picking insight, straight from last week’s Employment Situation report. Last week it showed that some of the biggest job creation came from these three industries:

1) Retail Trade +36,000
(up 322,000 over the past year)

2) Food Services and Drinking Places +29,000
(up 376,000 over the past year)

 

Zacks employment strategy

It’s one of the “Sin” segment of stocks that some investors would prefer not to invest in but the dividend returns are nothing to sneeze at. They’re well established companies with good track records and have been paying a decent dividend for years. It’s worth taking a look.

For many companies, brand awareness is the make or break factor that contributes to their success. In the alcoholic beverage industry, the same rules apply. Brown-Forman (NYSE:BF.B), Anheuser-Busch InBev (NYSE:BUD), and Diageo plc (NYSE:DEO) have survived all these years because they own widely known brands such as Jack Daniels, Bud Light, and Captain Morgan. The growth at these companies has slowed considerably over the years, but due to the nature of the business, there is a large barrier to entry. For many of these brands, the process of making the alcohol takes years, so it is quite difficult for competitors to enter the market and become immediately successful. Although the growth has slowed, similar to tobacco stocks, the alcoholic beverage companies continue to generate stable cash flow that is in return handed over to investors, a trend that looks to be ongoing for years to come.

In this article I will highlight three dividend companies in the alcoholic beverage industry and focus on their results from the latest quarter as well as their dividend growth potential.

 

See more on beer, whiskey, wine

Top Dividend Stock for Retirement Portfolio

Planning for your retirement can be as easy as finding a top rated company that’s been around for a long time, has increased and paid out a dividend forever and you can pick it up on the cheap right now.

Dividend growth investors for a more secure retirement are a special breed. We see value when there may not be as much value as we would like. We see an opportunity to increase our income right now when a dividend aristocrat like Johnson & Johnson (NYSE:JNJ) is already correcting by 10% or more.

The focus is income for retirement, and my approach is to avoid timing the market and by taking advantage of what I consider fair pricing for a super juggernaut stock like JNJ.

Well, to my naive approach I see a stock that is not going out of business, is part of everyone’s lives around the world, has a name brand that is recognized by just about everyone, and has paid and increased its dividend for more than 25 consecutive years (52 years to be exact), through good and bad times and has even beaten wall street estimates this quarter.

Yes the company had guided lower back in April, so the results seems to have disappointed some analysts. That being said, it was less than a month ago that even Jim Cramer suggested that JNJ could unlock 50% more growth within the company itself by perhaps breaking the company up into three separate entities. That may or may not happen, but I believe that even if the company stays the way it is, dividend growth investors can now take advantage of an accidental high yield of 3.07% due to the drop in the share price from its 52-week highs.

 

Read more about J&J

The constantly changing market always presents opportunities to make a profit. The key is to always be prepared for the coming changes and get in early.

The S&P 500 Index (NYSEARCA:SPY) – often used as a measure of the overall market – is trading at the highest multiples it has seen in over a decade. At roughly 17 times forward earnings, value investors are having a more difficult time than ever looking for names in which to invest. With that in mind, I have laid out what sectors are “must-avoids” as they are the most expensive as well as a few sectors that look like they could be the beneficiary of a value-oriented comeback in the market.

As I laid out in significantly more detail in one of my latest articles, Value Is About To Make A Comeback In A Big Way, I anticipate that value stocks are about to outperform growth stocks over the next five years for the following reasons:

  • Value has lagged growth since mid-2010, with the gap widening especially over the past year.

  • Value has been shown to outperform over longer periods of time.

  • Fearful investors will flee expensive growth stocks in anticipation of a market correction.

  • Most importantly of all, however, growth will significantly underperform value in a rising-rate environment.

See more here

Time to Rethink IBM Stock?

There hasn’t been much to write home about when it comes to IBM stock. It’s been all negative, with a lackluster second quarter, thirteen quarters in a row with a negative performance, dubbed one of the most universally despised companies in the world, blah, blah and more blah. It’s depressing. So, why rethink IBM stock? Because IBM has over$12 billion cash from last year, its dividend yield is a decent 3.2%, and because it has increased its dividend by 18% per year over the past five years. Bob Ciura makes a case for IBM below

It’s no secret that IBM (NYSE:IBM) is struggling. IBM is one of the most universally despised companies in the world. The stock has been on a nearly unimpeded decline for a disturbingly long time. Shares of IBM are down 17% in the past year. In fact, IBM was the worst performing stock in the Dow Jones Industrial Average in both 2013 and 2014. There don’t seem to be enough negative things to say about IBM.

The criticism of IBM got even more heated after the company’s second quarter earnings, when IBM posted its 13th quarter in a row of declining revenue. One bright spot was the company’s progress in what it calls its ‘strategic imperatives’, which are higher-growth businesses like big data, the cloud, and security. Unfortunately, strong growth in these areas wasn’t even enough to satisfy analysts, who were quick to point out that these businesses are still too small to have any material impact.

But it’s worth digging deeper into IBM’s turnaround to find out whether this is actually true.

Strategic Imperatives Are Not Getting Enough Credit

It seems nobody is giving much credit to IBM for its strategic imperatives, but this is a mistake. These businesses are growing at impressive rates. Cloud revenue soared more than 70% adjusted for currency and cloud delivered as a service has reached an $8.7 billion annualized rate. Social revenue jumped more than 40% year to date excluding currency, and mobile revenue has more than quadrupled. Collectively, the strategic imperatives grew revenue by more than 30% over the first two quarters of the year adjusting for currency and divestments.

The bearish argument is that $8 billion represents a drop in the bucket for a company the size of IBM, and therefore the strategic imperatives are too inconsequential to stem the decline in IBM’s other businesses. But again, it’s worth noting that excluding foreign exchange and divestments, the overall decline is very modest. And, should those businesses keep growing anywhere close to 30% per year, it won’t take long at all for those businesses to become a very important part of the overall company.

This is already starting to happen. IBM stated in its 2014 annual report that in 2009, its strategic imperatives represented just 13% of its total revenue. Last year, these businesses accounted for 27%, more than doubling in that time. This year, the percentage will be even higher, and that should only continue going forward.

Read more about IBM here

 

 

 

 

 

 

 

Passive Income From Stock Investing

It’s the stuff of dreams. I like to call it “mailbox money”. It’s not for everybody and it’s not very exciting, but man, it works. In fact it works really, really well. Here’s one guy’s story that collects $450,000 from his “mailbox”.

Retired since 1975, Harry is an experienced investor who has been able to survive and thrive from his initial investment decisions. When I see him, we talk mainly about the stock market, and how to be successful in it. During my last chat with Harry, I asked him whether he has ever sold a stock. His answer surprised me. He said, “No.”

Think about that. Here is someone who invested roughly $700,000 in a basket of stocks, and has never sold a single company he bought in the last 40 years. That is not to say he has not bought anything since 1975. He does reinvest his dividends in new companies, and due to mergers and acquisitions, he will come into new cash that he can invest. He told me this, “I have over five million people working for me right now, and they pay me 9¢ each to work for me.” He told me he is paid $450,000 in dividends from his initial investments in 1975. This is a man who literally survives primarily on his dividend income.

See the full story by Thomas Pound

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