Financial Sector Update for 07/17/2018: BMO.TO, BNS.TO, CM.TO, NA.TO, TD.TO, RY.TO

Shutterstock photo

Moody’s Investors Service said Monday it has taken various rating actions on the deposits, long-term debt and Counterparty Risk Assessments (CRAs) of The Toronto-Dominion Bank (TD.TO), Bank of Montreal (BMO.TO), Bank of Nova Scotia (BNS.TO), Canadian Imperial Bank of Commerce (CM.TO), Royal Bank of Canada (RY.TO) and National Bank of Canada (NA.TO) and their affiliates.

According to a statement, the outlook on the relevant ratings was changed to stable from negative. Moody’s also upgraded these banks’ ratings for contractually convertible subordinated debt (Junior Subordinated Debt). In addition, Moody’s has assigned provisional ratings to the bail-in debt (Junior Senior Unsecured program rating) to be issued by the Canadian banks commencing September 23, 2018. The foregoing rating actions follow the introduction of a bank resolution framework in Canada.

In its updated Banks rating methodology, Moody’s formally designated Canada as an operational resolution regime (ORR) jurisdiction, where going-concern resolution is part of the public policy framework. Going forward, Moody’s said it will adopt the advanced loss given failure (LGF) framework, which it applies to ORR jurisdictions, to evaluate Canadian banks’ liabilities. As detailed in the methodology, the LGF approach assesses the relative loss severity of various rated debt classes in the event of a bank’s failure.

In addition to designating Canada as ORR and the related rating actions, Moody’s also assigned Counterparty Risk Ratings ( CRR ) to the above mentioned banks. Moody’s CRRs are opinions on the ability of entities to honor the uncollateralized portion of non-debt counterparty financial liabilities and also reflect the expected financial losses in the event such liabilities are not honored. CRR liabilities typically relate to transactions with unrelated parties. Examples of CRR liabilities include the uncollateralized portion of payables arising from derivatives transactions and the uncollateralized portion of liabilities under sale and repurchase agreements.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright (C) 2016 MTNewswires.com. All rights reserved. Unauthorized reproduction is strictly prohibited.




Referenced Symbols: CRR

http://articlefeeds.nasdaq.com/~r/nasdaq/categories/~3/rkhgRKtnJTU/financial-sector-update-for-07172018-bmoto-bnsto-cmto-nato-tdto-ryto-cm992149

Will Powell Be Cautious?

Shutterstock photo

Market Drivers July 17, 2018

Kiwi explodes after inflation at 7 year high
Market eyes Powell testimony
Nikkei 0.44% Dax 0.18%
Oil $68/bbl
Gold $1244/oz.
Bitcoin $6700

Europe and Asia:

GBP UK Labor Data 2.5% vs. 2.5%

North America

USD Fed Chair Powell 10:00

It’s been a very quiet night of trade in FX with majors essentially stuck in 20 pip ranges through Asian and early European dealing.

The one exception to the lackluster pace of trade was the kiwi which popped more than 50 pips from session start after New Zealand core CPI figures came in at 1.7% – their highest reading in 7 years.

In Australia, the RBA minutes suggested that the next move in rates may be up if the economy develops as expected, although the central bank cautioned that this was not forward guidance for the market.

Although both New Zealand and Australian economies continue to progress at a steady pace, any immediate change in monetary policy is unlikely, given the global tensions on trade which could weigh on growth later in the year. Both currencies, however, have been grossly oversold and today’s newsflow served as a good excuse to rebalance the positioning.

Meanwhile, in the UK the Labor data came in exactly as expected with average wages printing at 2.5%. The wage growth was slightly lower than the month prior but remains at a pace that would allow the BOE to begin the normalization process by raising rates. Post-release rate hike expectations increased slightly to 75%, but UK monetary authorities continue to be constrained by the risks of Brexit. Today, Governor Carney once again warned that a no Brexit deal would be very damaging for the UK economy.

Still, the market pushed cable to fresh highs for the day as the general assumption amongst traders is that PM May will negotiate for a soft Brexit which will allow BOE to proceed with normalizing rate policy. So far, GBPUSD has been unable to clear the 1.3300 barriers this week, but if North American corps join the buying fray the pair could challenge the barrier before the end of the day.

In North America, the focus will be on Jerome Powell’s testimony in front of Congress with Fed Chairman likely to reiterate the modestly hawkish Fed view. Still, with recent tensions on the trade front and the palpable slowdown in consumer spending, it will interesting to see if the Fed Chair moderates his upbeat view. Any suggestion of a pause in the rate hike cycle could quickly send 10-year rates lower and drag USDJPY below 112.00. Yesterday Minneapolis President Neel Kashkari noted that the Fed should pay attention to the flattening yield curve and pause in order not to trigger a policy mistake. It’s doubtful that Chairman Powell will be that cautious in his outlook, but if he does give it credence the dollar could sell off as the day proceeds.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.




http://articlefeeds.nasdaq.com/~r/nasdaq/categories/~3/wgxbN5dfDwk/will-powell-be-cautious-cm992150

Dollar on Back Foot Ahead of Powell

Shutterstock photo

The US dollar eased in Asia session and the European morning. The greenback had appeared technically vulnerable, and the economic news stream is light.  

The UK employment data were in line with expectations.  The unemployment rate was steady at 4.2% in May, and the average weekly earnings rose 2.5%.   The three-month employment change of 137k was only slightly lower than the April pace of 146k and better than the 115k economists expected.  There is nothing in the report, or in BOE Governor Carney’s testimony today, that gives any reason for investors to have second thoughts about the likelihood of a rate hike at the next MPC meeting on August 2.    

Sterling, unlike most of the other major currencies, remains within yesterday’s range. Yesterday’s high, a little above $1.3290, maybe reinforced a little today by the GBP245 mln $1.33 option that is expiring.  Brexit concerns may also be acting as a drag.  At first, it looked like Prime Minister May was going to block the amendments to the Trade Bill.  Even the sponsor did not expect them to pass.  However, May instead chose to accept them.  

The situation seems rather chaotic, at least from afar, and it is not clear how things will shake out.  The decisive battle within the Tory Party has yet to be fought.  It continues to appear that the signatures of Tory members needed to trigger a leadership challenge, and even if one is triggered, it is not obvious that May would be defeated.  The underlying point is that while there may be dislike for the status quo, there is no agreement on the alternative or the way forward.   

The New Zealand dollar is leading the charge today against the greenback, with only the yen not participating.  The Kiwi was lifted by strong underlying inflation.  The sectoral report showed inflation at a seven-year high near 1.7% in Q2, after the year-over-year increase in the headline rate accelerated to 1.5% from 1.1%.   The low from last week was recorded ahead of the weekend near $0.6725.  It traded up to $0.6840 today.  The $0.6860 area capped it earlier this month.  A move above there would open the door to a return to the $0.6950 area seen in late June.  

The Australian dollar is lagging behind.  Even though the Reserve Bank of Australia reinserted a line that had been dropped last month that indicated that the next move in rates is likely higher, the Aussie is little changed.  Tomorrow Australia reports its employment data. A break of NZD1.0835 could confirm a double top in place, and signal a move into the NZD1.0650 area, where the Aussie had bottomed in mid-June.  

Many markets in Asia fell today, led by Hong Kong’s 1.25% decline.  China, Taiwan, Korean, Thai, and Indonesian shares fell.  Japan, returning from a long holiday weekend, saw the Nikkei raise almost 0.5% and the Topix nearly 0.9%.  Utilities, consumer staples, and financials led the advance.  The energy sector traded heavily after oil fell sharply.   Excluding Japan, the MSCI Asia Pacific Index was off 0.35%, the second day of losses.  With Japanese shares, the MSCI Asia Pacific index eked out less than a 0.1% gain.  

European stocks are faring the same.  The Dow Jones Stoxx 600 is up less than 0.1% near midday on the Continent.  Materials are leading the way, as the sector gains more than 1%.  Industrials and financials are also pulling higher. Telecoms are off 1.2%, and utilities and real estate sectors are softer.  The euro is trading quietly higher and is approaching a five day high.  So far, today is the first session since last Monday that the euro has not traded below $1.17.  

The dollar has been confined to a 20 tick range on either side of JPY112.40.  After breaking higher last week, a consolidative phase has unfolded.  Support is seen a little below JPY112.00.  It has not been below JPY111.90 since initially pushing through the JPY112 level last Wednesday.  There is a $590 mln option at JPY112.50 that will be cut today.  

Oil prices dropped more than 4% yesterday and are struggling to stabilize today.  News that Saudi Arabia increased the oil offered to a couple Asian buyers for August was part of a larger story that can be summed up by saying that concerns about supply disruptions eased, including the re-opening of Libyan parts and an expected to soon return of some Canadian oil.  There is also talk that the US may tap its strategic reserves, though a decision does not look imminent.  The $68 a barrel level may offer a technical base for August WTI.  It is a 61.8% retracement of the rally from mid-June (~$63.60) to the recent high (July 3, ~$75.25).  That said, the technical indicators warn of the risk of a deeper correction.  

The focus in the US session turns to Powell’s testimony before a Senate Committee.  His prepared remarks have already been released.  The interest then is on the questions and answers.  The issues that may interest investors most related to the number of hikes (median dot in June was for four hikes this year after one member changed their forecast) and the shape of the curve.  The flatness of the curve and the risk of inversion is giving the doves on the Fed new reasons to temper the pace.  However, within the context of negative interest rates abroad, the issuance of the debt management office, and the fiscal stimulus, several Fed officials have played down the recessionary implications.   There is also bound to be a discussion of the impact of the tariffs on the US economy.  Powell’s views are clear.  There is already some impact on business sentiment, and it could impact CapEx plans.  

The US will report industrial output, which is expected to bounce back from a 0.1% decline in May.  Manufacturing should recover the 0.7% decline.  Capacity utilization rates may reach a new three-year peak above 78%.  After the markets close, the May TIC data and API oil inventory estimate will be released.  Through April, the US imported an average of $67.38 bln a month according to the TIC data.  In the same period last year, the average was $54.35 bln and in 2016, the average in the Jan-April period was $34.5 bln.  

This article was originally published on Marc to Market.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.




http://articlefeeds.nasdaq.com/~r/nasdaq/categories/~3/t8TmdhjA_0w/dollar-on-back-foot-ahead-of-powell-cm992148

Five Below Reaches Analyst Target Price

Shutterstock photo

In recent trading, shares of Five Below Inc (Symbol: FIVE) have crossed above the average analyst 12-month target price of $101.75, changing hands for $103.43/share. When a stock reaches the target an analyst has set, the analyst logically has two ways to react: downgrade on valuation, or, re-adjust their target price to a higher level. Analyst reaction may also depend on the fundamental business developments that may be responsible for driving the stock price higher – if things are looking up for the company, perhaps it is time for that target price to be raised.

There are 12 different analyst targets contributing to that average for Five Below Inc, but the average is just that – a mathematical average. There are analysts with lower targets than the average, including one looking for a price of $85.00. And then on the other side of the spectrum one analyst has a target as high as $117.00. The standard deviation is $10.323.

But the whole reason to look at the average FIVE price target in the first place is to tap into a “wisdom of crowds” effort, putting together the contributions of all the individual minds who contributed to the ultimate number, as opposed to what just one particular expert believes. And so with FIVE crossing above that average target price of $101.75/share, investors in FIVE have been given a good signal to spend fresh time assessing the company and deciding for themselves: is $101.75 just one stop on the way to an even higher target, or has the valuation gotten stretched to the point where it is time to think about taking some chips off the table? Below is a table showing the current thinking of the analysts that cover Five Below Inc:

Recent FIVE Analyst Ratings Breakdown
Current 1 Month Ago 2 Month Ago 3 Month Ago
Strong buy ratings: 7 7 5 5
Buy ratings: 2 2 2 2
Hold ratings: 4 4 4 4
Sell ratings: 0 0 0 0
Strong sell ratings: 0 0 0 0
Average rating: 1.77 1.77 1.91 1.91

The average rating presented in the last row of the above table above is from 1 to 5 where 1 is Strong Buy and 5 is Strong Sell. This article used data provided by Zacks Investment Research via Quandl.com . Get the latest Zacks research report on FIVE – FREE .

The Top 25 Broker Analyst Picks of the S&P 500 »

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.




Referenced Symbols: FIVE

http://articlefeeds.nasdaq.com/~r/nasdaq/categories/~3/yqiu0CnGk_E/five-below-reaches-analyst-target-price-cm992137

INDUSTRY FOCUS // Tech // 05-31-2018

Chinese hardware manufacturer Xiaomi went live on the Hong Kong stock exchange this week, and international investors can finally get in on the action. In this week’s episode of Industry Focus: Tech , host Dylan Lewis and Motley Fool contributor Evan Niu tell long-term investors what they should know first.

Click play to find out how Xiaomi makes its money, and how the Apple (NASDAQ: AAPL)  of China’s business model could hardly be more different from Apple’s; why Xiaomi products haven’t come to the U.S. yet, and why that probably won’t change any time soon; what hoops international investors will have to jump through to buy the stock; the most important risks to watch; and more.

A full transcript follows the video.

10 stocks we like better than Walmart
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, the Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks  for investors to buy right now… and Walmart wasn’t one of them! That’s right — they think these 10 stocks are even better buys.

Click here  to learn about these picks!

*Stock Advisor returns as of June 4, 2018
The author(s) may have a position in any stocks mentioned.

This video was recorded on July 13, 2018.

Dylan Lewis: Welcome to Industry Focus , the podcast that dives into a different sector of the stock market every day. It’s Friday, July 13th, Friday the 13th, and we’re talking about Xiaomi. I’m your host, Dylan Lewis, and I’m joined on Skype by senior tech specialist Evan Niu. Evan, it’s been a minute since we’ve done a show together. How’s your summer been going?

Evan Niu:  It’s good. Kids are going to Dallas next week to visit the grandparents. Me and my wife will have a nice little break, get some actual time alone.

Lewis:  What’s the plan for that? Are you going to do stuff around the house, maybe take a little weekend trip?

Niu: I don’t know yet. We have a friend coming to town, actually. It’ll be nice to hang out with adults. [laughs]

Lewis:  I’m actually heading out of town this weekend as well. We’re pre-taping today’s show because I’m going to be on the road on Friday, heading out to Austin to visit some friends. Just keep that in mind as we talk about recent numbers and recent news, there might be some slight changes to some of the metrics that we’re talking about, specifically market cap, as we get into the Xiaomi, this new issuance. But, I’m glad everyone seems to be having a good time so far this summer, Evan.

This name, Xiaomi, that we’re going to be talking about today, is one that listeners may have heard of before, because [it tends] to come up when we talk smartphones and fitness wearables. Why don’t you talk a little bit about what they do? This is going to be a name that consumers hear more and more in the next decade.

Niu:  A few years back, Xiaomi used to be all over the news. They were this up-and-coming smartphone maker in China. They were selling so many units. They made a name for themselves initially by having these flash sales that would get tons of people really excited to buy their stuff. Then they’d run out of stock, and that creates more hype.

Generally speaking, they’ve made a name for themselves by offering really, really good hardware at very, very affordable prices. We’re essentially talking about premium flagship specs at mid-range and low-end price points, which obviously appeals to a lot of price-conscious consumers. They have pretty good products that are priced very aggressively. They’ve seen a lot of success there. At one point, they were actually the most valuable start-up in the world.

Lewis:  They are in the Chinese market. The reason we are talking about them this week is because shares just hit the Hong Kong stock exchange earlier this week. It seems like it’s been a rough start for this company so far.

Niu:  Right. The valuation has come down a little bit since those private days. Right when the shares started trading, I think they closed down the first day, which is never something you never want to see for any IPO, because it shows that there’s not a lot of investor demand for the stock. But it’s been a roller coaster ever since then. It’s been up and down a little bit, a little choppy trading. The company blamed that lackluster debut on President Trump’s trade war with China, which is ongoing and continues to escalate. All of these traders had an overhang for what normally could be a momentous milestone, to hit the public markets.

Lewis:  This is something we’ve seen impact shares of a lot of Chinese big companies. We’ve seen it with Tencent ; we’ve seen it with Alibaba (NYSE: BABA) in particular over the past couple of months. Something that’s going to basically impact any Chinese manufacturer that’s big enough to have international exposure.

I want to do a quick note for folks that are looking to do their own homework on this company, Xiaomi is spelled like X-I-A-O-M-I. It’s a little tricky, it’s not a phonetic spelling.

Niu:  It’s Chinese pinyin, it means little rice.

Lewis:  [laughs] I didn’t know that! That’s awesome. They may be little rice, but they’re making a lot of money. A lot of people are talking about them in relationship to Apple. There’s a very natural comparison, because they’re both in the consumer hardware business. But I think they have totally different approaches to hardware, and you really notice that when you look at their books.

Niu:  They’ve always invoked this Apple of China nickname, not because of, like you mentioned, strategically speaking, which we’ll get on later. It’s mostly because Xiaomi has been probably the most shameless with copying Apple in as many ways as possible. The product designs are almost identical; their marketing strategy and the way they make their website; even, the founder and CEO, Lei Jun, dresses like Steve Jobs with black turtlenecks. He even did this One More Thing presentation at one of their product unveilings a couple of years back, which is obviously a trademark of Steve Jobs.

They have all these ways that they basically just rip off of Apple. Of course, the company has always denied it, but the evidence has been around for years. That’s why they’ve earned this nickname, even though he actually doesn’t like being called the Apple of China.

Lewis:  When we think of Apple, we think of a really premium hardware business, and they make pretty good margins on their hardware. The strategy is quite a bit different with Xiaomi.

Niu:  Right. Apple, their thing has always been to focus on product depth as opposed to product breadth. You take a very small number of products and put everything you have into developing those products to be the best they can be. It’s pretty crazy. Tim Cook said recently, you can fit all of Apple’s products on a kitchen table. It’s crazy that they can generate over $200 billion in revenue based on products that you could put on a single kitchen table, and they’re all there.

Xiaomi takes the opposite approach. They do product breadth. They offer something like 1,600 different products, which is insane. They have air purifiers, they have scooters, they have routers, they have TVs, fitness trackers, it’s insane. It’s kind of overwhelming. It’s a total opposite approach. They try to do everything at once, which has the risk of spreading yourself too thin. And, on the pricing side, they price very aggressively. They’re trying to really make things as affordable as possible, which is obviously also in contrast to how Apple does it.

Lewis:  You mentioned all their product lines. Smartphones make up 70% of the company’s top line. They also have a huge bucket of what they call IOT and lifestyle products, which is basically any consumer product under the sun. It’s incredible, you talked about it before, how many different products they make. That’s 20% of their top line. You have 90% coming from consumer hardware, and those segments produce 9% gross margins. The reason for that is, the company has made this commitment to consumers, saying, “Our net profit margins will not exceed 5%. If they do, we’ll pass whatever we got incrementally back to our consumers.”

Niu:  Right. That’s starting this year. They laid that out in the prospectus, that’s what they’re going to do. Not clear what they mean by that, how they’re going to do that. But, presumably, it would probably mean they’ll cut prices or something going forward if they’re too profitable. Basically, they’re trying really hard to get these products into as many people’s hands as possible and doing that with low prices.

Lewis:  That makes sense for a lot of the markets they’re serving. They’re big in China, they’re really big in India, and these are developing markets where there isn’t as established a middle class, there isn’t as much disposable income for a lot of consumers there. So, coming out with tech products that are basically, to spec, what you could be getting for Apple, at half the price, is going to be very appealing.

Niu:  Right. Obviously, Apple does very well in China, but not in terms of unit volumes. They have a very big business there, but Xiaomi and local Chinese smartphone companies in general do much better than Apple in China in terms of unit volumes. Certainly, very true in India. Xiaomi is the No. 1 smartphone vendor in India by volume. Apple has an almost non-existent share because of these dynamics with consumer spending in emerging markets. They just don’t have the money to buy a $1,000 iPhone X.

Lewis:  And if you look at worldwide, Xiaomi is gaining on all of these major smartphone manufacturers. I mentioned that this is a name you’re going to continue to hear. As of most recent IDC data, Xiaomi was No. 4 by units as of Q1. They’re trailing Samsung , Apple, and Huawei. But they are gaining on them pretty quickly. That 28 million units figure during Q1 was good for 88% year over year growth. In that time, Samsung posted declines. Apple and Huawei posted 3% and 14% growth respectively. Xiaomi is blowing them out of the water, in terms of growth rate.

Niu:  They’ve really bounced back. You saw a lot of headlines in 2013, 2014, 2015, as they were growing, and their valuation was going up. But they had a pretty big hit, and it dipped in 2016. They disclosed their unit volumes. They did 66 million in 2015, smartphones. That dipped to 55 million in 2016. Then, I think, when that starts to come down, their valuation came down, too, because that’s not something investors like to see. But then, in 2017, they spiked all the way back up to 91 million. So, they were able to rebound and recover, in terms of unit volumes, by quite a bit there.

Lewis:  Thinking about profitability for this business, working with 5% margins and hardware when you have a lot of overhead costs associated with everything you’re doing as a business, is going to be difficult. I think long term, when you look at this business, it’s that remaining 10% of revenue, the services revenue, which they hope will grow and be a way for them to supplement what they’re doing to grow out a big installed base on their hardware side.

Niu:  Right. That’s one thing where they do share what Apple’s trying to do. And not just Apple. Lots of companies like to build these services businesses, because recurring revenue tends to be more profitable, you have more visibility. They have made a lot of progress here, growing their platform. Their platform is called MIUI. At this point, they have about 170 million monthly active users on the platform. That’s a pretty strong number. Those are people that are buying stuff, using their services, all sorts of stuff. The more you can grow that number … And, their average revenue per user on that side is also going up. They are getting good engagement from those users that are increasingly spending a little bit more and more money each year.

Lewis:  I mentioned the 9% gross margins on the hardware side. Gross margins for the services is roughly 60%. A little bit more what you’d expect for a platform-type business. That revenue mix is advertising online games and some entertainment content, very similar to the services segment at Apple. All of the segments for Xiaomi are posting huge growth. Actually, services is posting the smallest growth, even though it’s the smallest segment, which is interesting. Their hardware businesses are doing very well.

Niu:  They’re really popular, just because they offer so much stuff. It’s kind of insane how much stuff they do.

Lewis:  All of this bubbles up to a business that did roughly $17 billion in sales in 2017. I say roughly because we are adjusting to dollars. They don’t state their financials in dollars. At a $50 billion valuation, roughly, that means they’re trading at somewhere in the neighborhood of 3 to 3.5 times sales. It’s a big business. Evan, what do you see as the long-term look for them? Are they going to be able to make up what they’re doing on the hardware side with growing out the services segment? Is that the approach here?

Niu:  I think that’s what they’re certainly trying to do. They are making progress. On top of that, they’re also trying to expand internationally. We’ve already talked a little bit about India. They’ve been eyeing the U.S. market for many years, and I think they might start selling more products this year. But the big challenge is that the U.S. has really strong intellectual property laws. If they come into the U.S. market and something they do copies Apple or anyone else too closely, they have a big risk of getting sued over it; whereas China is notorious for having very weak IP laws. In general, that’s why so much counterfeit stuff is made in China across all sorts of industries and markets and products.

That’s one of the big hurdles that’s always kept them out of the U.S. It’s not clear how they’re going to address that, or what they will change to avoid that risk. But beyond that, other than the U.S., they’re now in 74 different countries. They are expanding outside of the U.S. internationally quite a bit.

Lewis:  Ahead of the show, we actually got a listener question from Colin in the U.K. He wanted to know a little bit about Xiaomi, sent us some questions. He also sent us a video review that featured a Xiaomi vacuum cleaner and his dog Sam. That was awesome. I appreciated getting that. [laughs] You mentioned the 74 countries they’re in. He was curious, what does the international plan look like? They seem to be opening a small number of shops in Europe. You look at their financials by geography over the last couple of years. In 2015, 94% of revenue came from mainland China. By 2017, that was down to 70%. Their expansion plans seem to be taking root, they seem to be increasingly less reliant on China. You mentioned that they are the No. 1 provider by units in India, as well. It seems like they’re getting outside of their core market.

Niu:  They’re definitely starting to expand a little bit. I think the challenge is going to be balancing the cost associated with expanding operations. If you try to do too much too fast, you could blow through too much money, and those investments might not pay off. They do need to take a measured approach and be really selective in the markets they expand into and the products they expand into those markets. But so far, they are making progress reducing their reliance on just China as their only market.

Lewis:  Colin has another question. He noted that he bought a device sold as a Xiaomi vacuum cleaner, but it had no Mi or Xiaomi branding on it. This is a product that came from one of their third-party hardware relationships. He was curious how these worked.

Niu:  They don’t develop all of these products in-house. Certainly, they focus primarily on their tech gadgets, like smartphones, laptops, tablets, etc. For most of the other stuff that they sell, it’s done through this ecosystem of partners. They basically invest in and collaborate with a bunch of third-party manufacturers to create and develop these devices. Some of them share branding, some of them don’t. They do have a wide spectrum of these relationships. That’s where most of these other products actually come from. Again, it’s hard to imagine them putting a bunch of money into an air purifier or a scooter. But they are investing in these other companies. They have a stake in them. It’s not just a traditional distribution wholesale relationship where you’re buying it from them and selling it to someone else. They’re investing in these other companies, and then some of those are being co-branded under their Mi brand.

Lewis:  And this is something that gives them ubiquity as a consumer hardware brand in these markets. I have to imagine, though, that at a certain point, if they don’t become a meaningful portion of sales and continue to grow, then it turns into a distraction for a business that’s primarily a smartphone business.

Niu:  Exactly. They’re putting quite a bit of money into these things. There’s something like over 200-210 ecosystem partners that they have invested in, of which 90 are focused on IOT, smart hardware, lifestyle products. As you mentioned before, that’s about 20% of revenue. It’s a decent chunk of the business, but you don’t want to put too much in. There is a good brand benefit, because like you said, they’re ubiquitous in China because they have so much stuff and their brand is instantly recognizable, even though other companies are doing some of the leg work with some of the smaller, niche products that not everyone is buying. They don’t want to spend too much money on it, but they seem to be doing alright with this strategy so far.

Lewis:  Evan, the natural question any time we do a show that looks at a company’s prospectus, because shares just started trading, is, is this something that’s worth looking at as an investment? Is this something I should have on my watch list? There are some hurdles to that with Xiaomi before we even get into business viability because of the way that they have listed and the exchange that they’re on.

Niu: They’re only trading on the Hong Kong exchange right now. It’s not clear yet if they’ll offer an ADR, which is an American depository receipt, which is where a U.S. financial institution will buy a bunch of shares, hold on to the shares, and issue receipts for those shares, and the receipts are what’s traded. That’s one of the easiest ways for U.S. investors to invest in international companies, is through ADRs. But, as of right now, it’s not clear if there’s going to be one.

If you wanted to buy it, you’d have to talk to your broker, to actually go to an international trading desk and place an order on the international exchange. That typically comes with much greater fees; you can have delays in order execution, you can have liquidity issues. There are a bunch of different little things that make international trading a little tricky.

Also, on the reporting side, it’s worth noting that international companies don’t use U.S. GAAP; they use IFRS, which is international financial reporting standards. The way they report the numbers is also slightly different. A lot of different things that U.S. investors should be mindful of if they’re interested in this company.

Lewis:  Are you interested in this company, having gone through their prospectus, Evan?

Niu:  I didn’t go through all 600 pages of it. [laughs] But, no, I’m not really too into it. They don’t really have the kind of things I personally look for in a company. I prefer a company that’s a little more profitable. And there are some corporate governance things that we didn’t get too deeply into. Lei Jun has a pretty big stake in the company; he has a lot of controlling interest, and I never really like those issues. We’ve talked about those before in the past. So, there are a couple of things that are keeping me away, but I don’t think it’s a terrible business.

Lewis:  Yeah, I think that this is a company that has a lot of things going for it that maybe a GoPro (NASDAQ: GPRO) or Fitbit (NYSE: FIT) wouldn’t in the hardware space. They have ubiquity and seemingly a very strong brand attachment with their offering. I think that there’s really something there on the services side. But, when they’re capping margins to make their prices more accessible, that only gives them so much cash to operate with. You see the precedent that Apple has set with commanding really good margins and creating a cash cow business with their iPhone segment. I worry that Xiaomi might struggle to do that, particularly because services is such a tiny portion of the overall business. If that starts to change, then I think the interest level for me is a little higher.

Niu:  Yeah, that would definitely change the investing narrative, for sure, if they could build up this profitable services business.

Lewis:  Anything else before I let you go, Evan?

Niu:  No, I think we’re OK.

Lewis:  Enjoy your weekend off! [laughs] Listeners, that does it for this episode of Industry Focus . If you have any questions, or if you want to reach out and say hey, you can shoot us an email at industryfocus@fool.com , or you can tweet us at @MFIndustryFocus. If you want more of our stuff, subscribe on iTunes or check out The Fool’s family of shows over at fool.com/podcasts .

As always, people on the program may own companies discussed on the show, and The Motley Fool may have formal recommendations for or against stocks mentioned, so don’t buy or sell anything based solely on what you hear. Thanks to Anne Henry for her work behind the glass today. For Evan Niu, I’m Dylan Lewis. Thanks for listening and Fool on!

Dylan Lewis owns shares of Apple. Evan Niu, CFA owns shares of Alibaba Group Holding Ltd. and Apple. The Motley Fool owns shares of and recommends Apple, Fitbit, and GoPro. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.




http://articlefeeds.nasdaq.com/~r/nasdaq/symbols/~3/pm2cl_dE6h0/industry-focus-tech-05-31-2018-cm992080

Twitter’s Fake User Purge Was Long Overdue

According to The Washington Post , Twitter (NYSE: TWTR ) suspended about 70 million accounts over the past three months to purge its network of spam bots and fake users. That revelation initially stunned investors, who assumed that Twitter had wiped out over 20% of its 336 million monthly active users (MAUs).

However, Twitter CFO Ned Segal subsequently clarified that “most” of the removed accounts weren’t monthly active ones, since they had been inactive “for 30 days or more.” Segal noted that if Twitter had removed 70 million MAUs, investors “would hear directly” from the company.

A cloud full of social networking users.

Image source: Getty Images.

Twitter’s willingness to purge its network of questionable accounts represents a step in the right direction for the social network, but it was long overdue. Let’s look back at Twitter’s fake user problems, and how the company previously turned a blind eye to those problems.

Twitter’s fake user problem

Last year, a study by the University of Southern California and Indiana University found that up to 15% of all Twitter accounts were bots designed to like, retweet, or follow certain accounts to grow their own social clout. Twitter’s lack of rules for users controlling multiple accounts and using bots as marketing tools exacerbated the problem.

Unlike Facebook (NASDAQ: FB) , which mainly connects users to their friends and family members, Twitter is designed as a soapbox for self-promotion. Since Twitter users with just a few followers weren’t taken seriously, a black market for selling fake followers flourished. Last year, The New York Times bought 25,000 followers for a test account for $225 to demonstrate how easily Twitter’s follower counts cloud be inflated.

Twitter largely turned a blind eye to those problems until the aftermath of the 2016 election. Like Facebook, Twitter was implicated in helping Russian propaganda outlets spread divisive, fake news stories to sow the seeds of social chaos.

A hacker in front of a Russian flag.

Image source: Getty Images.

In January, Twitter alerted about 1.4 million U.S. users that they had possibly liked, retweeted, or followed about 50,000 Russian-sponsored accounts during the election. The following month, it rolled out new restrictions on how users and apps can automate tweets in a bid to combat spam and propaganda accounts. The latest three-month purge of spam and fake accounts represents a continuation of that strategy.

Why Twitter is finally growing up

Twitter has constantly been judged by its user growth. Back in 2013, then-CEO Dick Costolo claimed in an internal memo that Twitter could hit 400 million MAUs by the end of the year. Five years later, Twitter is nowhere near that target, and its growth is decelerating.

Q2 2017

Q3 2017

Q4 2017

Q1 2018

MAUs

328 million

330 million

330 million

336 million

YOY growth

5%

4%

4%

3%

Source: Twitter quarterly earnings.

In the past, Twitter was notoriously reluctant to purge bots and fake users. Back in 2015 it blamed Apple (NASDAQ: AAPL) for reducing its MAUs after an iOS update logged off some users and blocked Apple’s Shared Links feature from automatically aggregating tweets. In other words, Twitter was annoyed that iOS bookmarks weren’t being counted as “active users”.

However, Twitter’s advertising revenue growth has been improving over the past two quarters as its shift toward smaller advertisers with cheaper ads gradually paid off.

Q2 2017

Q3 2017

Q4 2017

Q1 2018

Ad revenues

$489 million

$503 million

$644 million

$575 million

YOY growth

(8%)

(8%)

1%

21%

Source: Twitter quarterly earnings.

As investors focus more on Twitter’s ad revenues instead of its peaking MAU growth, it makes sense to finally clear out spam accounts and refine the company’s public image. The timing would also be ideal, since Facebook has been in the penalty box ever since the Cambridge Analytica scandal compromised the personal data of up to 87 million users.

Twitter reaches a much smaller audience than Facebook’s 2.2 billion MAUs, but it also requires much less personal data than the social media giant. Therefore advertisers looking for a viable alternative in social media could flock to Twitter and bolster its ad revenues.

The key takeaway

Twitter’s user purge isn’t a magic bullet for all its problems, but it indicates that the company is cleaning up its act to reassure advertisers that their promoted content doesn’t show up amid a river of spam, hate speech, and propaganda tweets. That’s definitely a step in the right direction for this evolving company.

10 stocks we like better than Twitter
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now… and Twitter wasn’t one of them! That’s right — they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of June 4, 2018

Leo Sun owns shares of Apple. The Motley Fool owns shares of and recommends Apple, Facebook, and Twitter. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.




http://articlefeeds.nasdaq.com/~r/nasdaq/symbols/~3/uypRjI87ot8/twitters-fake-user-purge-was-long-overdue-cm992077

Apple's New MacBook Pros Put It Back in the Game for Back-to-School Season

One of the most important periods for the personal computer market is the back-to-school shopping season, so computer makers generally want to have fresh new systems to offer shoppers during this time.

Apple (NASDAQ: AAPL) , which market research company IDC says was the fourth-largest personal computer vendor by unit shipments during the second quarter of 2018, released new MacBook Pro computers on July 12 — just in time for the back-to-school shopping season.

Apple's MacBook Pro.

Image source: Apple.

Let’s go over what Apple’s brought to the table and why these new systems position the company’s MacBook Pro lineup to continue to lead the premium portion of the notebook personal computer market.

Upgrades across the board

The new systems incorporate a number of solid upgrades. Apple’s moving from Intel ‘s (NASDAQ: INTC) seventh-generation Core processors to its eighth-generation Core chips. These new processors are good for as much as a 70% boost in processor performance for the 15-inch MacBook Pro and a doubling in processing power for the 13-inch model, according to Apple.

The 15-inch model is also now configurable with 32 GB of memory, which addresses a limitation of last year’s model that some buyers weren’t too thrilled about . The 13-inch model, however, is still limited to 16 GB.

The new systems also integrate Apple’s T2 chip, which Apple says “delivers enhanced system security with support for secure boot and on-the-fly encrypted storage.” It also, Apple says, enables the “Hey Siri” functionality on the new devices — a feature that was previously limited to Apple’s iOS devices.

And, finally, the new computers feature Apple’s True Tone display technology, which adjusts the color temperature of the display to match the lighting conditions surrounding the machine. This is a feature that’s been available on Apple’s iPad lineup since 2016 and on the iPhone models that launched last year.

All told, these are solid upgrades to Apple’s MacBook Pro lineup. The processor performance improvement alone is probably the biggest leap in advertised performance gains for the MacBook Pro in several generations, something that should appeal to power users.

The bigger picture

Apple’s Mac business represents a small portion of the company’s overall sales figures — 11% during fiscal year 2017. So, from a big-picture perspective, the performance of Apple’s Mac business isn’t something that’s going to have a dramatic impact on Apple’s financial performance or stock price either way.

Apple’s financial performance is still very much driven first and foremost by its iPhone product line. However, that doesn’t mean that the other businesses should be neglected, since, in aggregate, they make up a sizable chunk of Apple’s total revenue.

Fortunately, it looks like Apple is starting to focus even more on strengthening its Mac hardware and software.

With the releases of these two new MacBook Pros, Apple has positioned itself well to compete for high-end notebook personal computer sales over the next year or so.

With that in mind, Apple’s work with respect to the Mac isn’t done yet. It still needs to update its iMac desktop line as well as its 12-inch MacBook . Fortunately, according to TF Securities analyst Ming-Chi Kuo, those will be coming later this year.

Speaking of Kuo, he also says that Apple is preparing a lower-cost MacBook product for later this year as well. Apple has been selling its rather dated MacBook Air computer at lower price points for a while now (for some context, the current MacBook Air uses a processor that’s more than three years old). That product is sorely in need of a refresh.

The new MacBook Pros represent a solid start to what should be a rather substantial set of refreshes and additions to its Mac product portfolio.

10 stocks we like better than Apple
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now… and Apple wasn’t one of them! That’s right — they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of June 4, 2018

Ashraf Eassa has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.




http://articlefeeds.nasdaq.com/~r/nasdaq/symbols/~3/TsKJh-63xS0/apples-new-macbook-pros-put-it-back-in-the-game-for-back-to-school-season-cm992064

Monday Apple Rumors: Apple Expanding Face ID to More Devices in 2018

Shutterstock photo

InvestorPlace – Stock Market News, Stock Advice & Trading Tips

Leading the Apple  (NASDAQ: AAPL ) rumor mill today is news of Face ID plans. Today, we’ll look at that and other Apple Rumors for Monday.

Monday Apple Rumors: Apple Expanding Face ID to More Devices in 2018 Face ID : A recent rumor claims that Apple will be bringing Face ID to more devices this year , reports BGR . According to this rumor, the tech company has plans to release three smartphones this year with Face ID. It also claims that there will be two new iPad Pro tablets coming out in 2018 that will also support Face ID. It’s unclear if all of these devices will have the notch found in the display on the iPhone X.

MacBook Pro : Customers hoping to upgrade their MacBook Pro keyboards are out of luck , MacRumors notes. Apple has been replacing and fixing keyboards in older MacBook Pro laptops that have stopped working. The release of the 2018 MacBook Pro includes a new, third-generation keyboard. Some customers are hoping that AAPL would use this keyboard to replace the ones with issues. However, the tech company says that the third-generation keyboard is exclusive to the 2018 MacBook Pro.

Emoji : Apple is teasing its new emoji that will be coming out later this year , reports 9to5Mac . The tech company is showing off 70 new emoji that will be added to its devices when new updates release this Fall. The new emoji coming from AAPL are based on designs that have been approved for Unicode 11.0. This will bring the total number of emoji available up to 2,832.

Check out more recent Apple Rumors or Subscribe to Apple Rumors EmailSubscribe to Apple Rumors : Apple Rumors RSSRSSAs of this writing, William White did not hold a position in any of the aforementioned securities.Compare Brokers

The post Monday Apple Rumors: Apple Expanding Face ID to More Devices in 2018 appeared first on InvestorPlace .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.




Referenced Symbols: AAPL

http://articlefeeds.nasdaq.com/~r/nasdaq/symbols/~3/aC4dzhPQwPE/monday-apple-rumors-apple-expanding-face-id-to-more-devices-in-2018-cm992022

Technology Sector Update for 07/16/2018: CRM,AAPL,SPCB,BBOX

Shutterstock photo

Top Tech Stocks

MSFT -0.57%

AAPL -0.34%

IBM -0.40%

CSCO +1.64%

GOOG -0.39%

Technology stocks were lower in late trading, with shares of tech stocks in the S&P 500 index slipping almost 0.3% while the Philadelphia semiconductor index was down over 0.1%.

Among technology stocks moving on news:

Salesforce.com Inc ( CRM ) was been trending lower Monday afternoon, dropping as much as 1%, after the customer relationship management software company said it has signed a definitive agreement to acquire Datorama, a cloud-based, artificial intelligence-powered marketing intelligence and analytics platform for enterprises, agencies and publishers. The company did not say how much it paid for Datorama, although the Israeli business new website Calcalist said Salesforce.com will pay over $800 million in cash, citing two people familiar with the matter. More than 3,000 global agencies and brands use Datorama for optimizing their marketing campaigns, automating reporting and accelerating data-driven decisions, Salesforce said.

In other sector news:

– Apple ( AAPL ) was fractionally lower in late Monday trading following reports the tech giant continues to grapple with disappointing iPhone sales in India, with steep tariffs on imported gadgets sending customers in the world’s fastest-growing smartphone market to lower priced rival phones made by Samsung and Xiaomi. Several key sales executives – including the national sales and distribution chief and the head of commercial channels and mid-market business along with the head of telecom carrier sales – recently have left Apple’s India unit, Bloomberg reports, citing sources, while the company’s head of operations in India, Michel Coulomb, is being blamed for being slow to cultivate business relationships in the country.

– SuperCom ( SPCB ) tumbled Monday, dropping as much as 13%, after the cyber-security company reported a 15.7% decline in its fiscal Q1 revenue compared with the year-ago period. Net sales for the three months ended March 31 fell to just over $7 million from $8.3 million during the first three months of calendar 2017

but still matching the Capital IQ consensus. Excluding one-time items, the company earned $0.07 per share, reversing a $0.06 per share during the same quarter last year and easily beating the Street view expecting an $0.08 per share net loss.

– Black Box ( BBOX ) retreated to within a penny of its 52-week low on Monday, falling over 16% to 1.91 a share, after posting a gaping fiscal Q4 net loss, reporting a $3.37 per share net loss during the three month ended March 31 compared with a $0.12 per share net loss during the same quarter last year, as sales dropped 6.8% year-over-year to $194.0 million. Analyst estimates were not available for comparison. Looking forward, the company sees Q1 remaining flat to slightly lower from the preceding quarter and improved gross profit margin during the current quarter.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright (C) 2016 MTNewswires.com. All rights reserved. Unauthorized reproduction is strictly prohibited.




http://articlefeeds.nasdaq.com/~r/nasdaq/symbols/~3/Rs5GzPGsYAE/technology-sector-update-for-07162018-crmaaplspcbbbox-cm991926

Why Universal Display Corp. Stock Has Fallen by 50.2% in the First Half of 2018

What happened

Shares of Universal Display (NASDAQ: OLED) fell 50.2% in the first half of 2018, according to data from S&P Global Market Intelligence . Most of the plunge happened in the first three months of the new year, based on a disappointing earnings report and potentially bad news out of Cupertino, Calif.

Two young bueinesspeople spread their hands in confusion over what they see on a shared computer screen.

What? Image source: Getty Images.

So what

The technology researcher that makes it possible to build modern smartphone and TV screens on organic light-emitting diodes (OLED) saw share prices tripling last year , largely due to Apple (NASDAQ: AAPL) finally including OLED screens in its popular iPhone product line. But the same investors who flocked to Universal Display based on Apple’s involvement were also quick to sell out and run away when it turned out that high-end iPhone sales might stall in 2018.

On top of the Apple-centered speculation, Universal Display also fell short of Wall Street’s earnings targets in February. However, that miss sprung from an $11.5 million one-time tax expense to account for last December’s overhaul of corporate tax rules. Without that item, adjusted EPS of $0.93 would have crushed Wall Street’s $0.85 target.

Now what

Universal Display’s stock price was arguably overheated in early 2018, based on a single customer whose business certainly is welcome but by no means game-changing. The company already serves a large portion of the larger-volume Android market, plus big-screen TV sets and lots of embedded devices. And it has an eye toward OLED lighting panels as a long-term growth driver.

I would not hesitate to recommend starting a position in Universal Display at these prices, or adding to your existing holdings. The recent plunge makes even less sense than the skyrocketing Apple-focused gains of last year.

10 stocks we like better than Universal Display
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now… and Universal Display wasn’t one of them! That’s right — they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of June 4, 2018

Anders Bylund owns shares of Universal Display. The Motley Fool owns shares of and recommends Apple and Universal Display. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.




http://articlefeeds.nasdaq.com/~r/nasdaq/symbols/~3/35-VDYZtZFs/why-universal-display-corp-stock-has-fallen-by-502-in-the-first-half-of-2018-cm991873

Why Cirrus Logic, Inc. Shares Fell 26% in the First Half of 2018

What happened

Shares of digital audio processor specialist Cirrus Logic (NASDAQ: CRUS) fell 26.1% in the first half of 2018, according to data from S&P Global Market Intelligence . The company was exposed to weak Apple (NASDAQ: AAPL) iPhone sales, and the Cupertino account represents about 80% of Cirrus’ quarterly sales.

So what

The close relationship with Apple is hugely positive for Cirrus and its shareholders when times are good for its largest customer. But when Apple says that it will build fewer iPhones in 2018 than previously expected, Cirrus Logic investors suffer. That’s what happened in February , driving Cirrus shares 10.6% lower.

A worker with hardhat and toolbelt shrugs helplessly as a red charting arrow crashes downward through the concrete platform under his feet.

Image source: Getty Images.

The stock continued to fall through March and April, with no company-specific news to explain the drops. Over this span, independent market researchers continued to report softening demand for smartphones, which could translate into even weaker Apple results — and as you know, that’s bad news for Cirrus Logic.

Now what

Cirrus Logic is showing its volatile side these days. The stock is currently trading 40% below its 52-week highs and just 16% above its yearly lows. It has seen three sharp price increases and seven single-day drops of at least 5% each in 2018 alone. The company is working hard to find a foothold in the larger Android market, but Apple is Cirrus’ lifeblood until further notice. You can treat this stock as a more volatile way to invest in Apple itself.

10 stocks we like better than Cirrus Logic
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now… and Cirrus Logic wasn’t one of them! That’s right — they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of June 4, 2018

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool recommends Cirrus Logic. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.




http://articlefeeds.nasdaq.com/~r/nasdaq/symbols/~3/Bsi4WsSGSzI/why-cirrus-logic-inc-shares-fell-26-in-the-first-half-of-2018-cm991675

The Bond Bull Market Set to Return

Shutterstock photo

The Bond Bull Market Set to Return

(New York)

Anybody who is worried about a pending bond bear market might take some solace in recent news. Bond markets are becoming increasingly skeptical of the Fed’s bullish stance on the economy, and traders believe there won’t be nearly as many rate hikes as the Fed says. The US has just seen a weak inflation report, and a flattening of the yield curve, both at home and in the Eurodollar market, spells ill for the economy. So while the Fed says it will continue to hike rates into 2020, top market analysts are saying things like “The markets are telling us that there is a pretty high risk of economic slowdown or recession at the end of 2019” (Janney Capital Management).

FINSUM : We think the economy will definitely start to weaken before 2020. Perhaps we will not have a deep recession, but we definitely don’t think there will be continuous hikes for the next year and a half, which is good news for bonds.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.




http://articlefeeds.nasdaq.com/~r/nasdaq/categories/~3/kbX2x9GlXNY/the-bond-bull-market-set-to-return-cm991632

These 3 Prudential Mutual Funds for Spectacular Gain

Shutterstock photo

Prudential Investments, a segment of Prudential Financial, Inc., offers a wide range of funds including both equity and fixed-income, and open- and closed-end funds. The company, which has around $74 billion of assets under management, currently offers services across 41 countries and territories including the United States, Asia and Europe. Investment professionals of the company are also involved in managing assets of major corporations and pension funds throughout the globe. Founded in 1875, Prudential Financial has more than $1.2 trillion in assets under management (as of Mar 31, 2018).

Below we share with you three top-rated Prudential Investments mutual funds. Each has earned a  Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. Investors can  click here to see the complete list of Prudential Investments mutual funds .

Prudential Municipal High-Income APRHAX seeks maximization of income, which is tax-exempted. PRHAX invests a large chunk of its assets in municipal debt securities that are considered fixed-income securities and expected to provide tax-free returns. The fund may also invest in securities that provide interest income which is not exempted from the federal alternative minimum tax (AMT). The Prudential Municipal High-Income A fund has three-year annualized returns of 4.4%.

Susan Courtney is one of the fund managers of PRHAX since April 2005.

Prudential Jennison Mid-Cap Growth A PEEAX invests a large chunk of its assets in equity and related securities of mid-cap companies, which have above-average growth prospects. PEEAX seeks appreciation of capital for the long run. Prudential Jennison Mid-Cap Growth A has three-year annualized returns of 6.6%.

PEEAX has an expense ratio of 1.06% compared with the category average of 1.20%.

Prudential QMA Small-Cap Value Retirement TSVRX seeks above-average growth of capital. TSVRX invests the lion’s share of its assets in common stocks of small-cap companies. The fund invests primarily in companies whose market-cap falls within the range of the S&P SmallCap 600 Index or the Russell 2000 Index. TSVRX not only invests in U.S. equity securities and REITs but also in common stocks of non-U.S. companies. Prudential QMA Small-Cap Value Retirement has three-year annualized returns of 9.7%.

As of May 2018, TSVRX held 302 issues with 1.15% of its assets invested in American Equity Investment Life Holding Co.

To view the Zacks Rank and past performance of all Prudential Investments mutual funds, investors can  click here to see the complete list of Prudential Investments mutual funds .

Want key mutual fund info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week.  Get it free >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Get Your Free (TSVRX): Fund Analysis Report

Get Your Free (PRHAX): Fund Analysis Report

Get Your Free (PEEAX): Fund Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.




http://articlefeeds.nasdaq.com/~r/nasdaq/categories/~3/ehaK0vdgcpw/these-3-prudential-mutual-funds-for-spectacular-gain-cm991619

EBay Unveils Discounts On Thousands Of New Items, With No Membership Required

Shutterstock photo


(RTTNews.com) – eBay unveils big summer discounts on thousands of new items – with no membership required. Beginning at 5am PDT, consumers looking for great deals can shop the things they love at amazing prices on eBay.com/deals. The deals will be refreshed throughout the day, and include top brands like Apple, Samsung, adidas, Dyson, KitchenAid, and hundreds more with free shipping.

eBay said,”For savvy shoppers, eBay’s new Best Price Guarantee applies to popular, best-selling items – and no blackouts this summer. If you find an item for less on an eligible competitor’s website, eBay will give you 110% of the price difference on all qualifying deals and top products.”

“Over the next two-days, eBay is offering shoppers extraordinary value on the things they love,” said Scott Cutler, eBay’s Senior Vice President, Americas. “People everywhere can enjoy incredible deals during this hot summer savings season, and there’s no reason to pay membership fees.”

eBay said its latest deals offer something for everyone at massive discounts – with savings up to 80% off regular retail prices across tech, home, fashion, outdoor gear and more. No matter what passion you choose to follow – from kitchen connoisseur to urban explorer – there’s an item that’s sure to enhance or inspire next adventure.

eBay noted that it has a wide selection of deals every day – all with free shipping and no membership required – at eBay.com/deals.

 Read the original article on RTTNews (http://www.rttnews.com/2914000/ebay-unveils-discounts-on-thousands-of-new-items-with-no-membership-required.aspx) 

For comments and feedback: contact editorial@rttnews.com





Referenced Symbols: AAPL ,

http://articlefeeds.nasdaq.com/~r/nasdaq/symbols/~3/RA9_IYYuVhU/ebay-unveils-discounts-on-thousands-of-new-items-with-no-membership-required-20180716-00449

AUD Falls on China GDP as NBS Sees External Uncertainties Ahead

DailyFX.com

Talking Points:

  • Australian Dollar depreciates despite solid Chinese second quarter GDP
  • Weaker industrial production amidst US Chinese import tariffs hurt AUD
  • China’s NBS does see more external uncertainties for the economy ahead

Find out what retail traders’ Australian Dollar buy and sell decisions say about the coming price trend!

The Australian Dollar depreciated against its major counterparts despite some relatively solid Chinese second quarter growth statistics. China’s economy expanded 6.7% y/y which was in line with expectations and slower than the 6.8% growth seen in the first quarter. Quarter-over-quarter, China’s GDP was 1.8%. This was better than the +1.6% estimate and up from 1.4% prior.

Overall, these economic growth statistics were largely as expected and nothing extraordinary out of the realm of possibilities. Yet, what could have caused some weakness in the Aussie Dollar? And for that matter, the New Zealand Dollar as well? Look no further more than the industrial production figures which also crossed the wires simultaneously with the GDP data.

In June, Chinese industrial production increased only 6.0% y/y versus 6.5% anticipated and 6.8% in May. That was the weakest outcome since March and continues a trend of slowing expansion since April. Perhaps the tariffs US applied on China could be having some effects here. In fact, accompanying the slew of data were some comments from the National Bureau of Statistics of China .

According to the agency, it forecasted more external uncertainties for the economy adding that China faced ‘extremely complicated, grim’ conditions in the first half of this year. All of this could bode ill for the Aussie Dollar. China is Australia’s largest trading partner and economic performance in the former often implies knock-on effects for the latter.

BACKGROUND: A Brief History of Trade Wars, 1900-Present

The sentiment-sensitive Aussie Dollar was paring some earlier gains when Asian benchmark equities initially headed higher after market open as expected . However, this trading dynamic quickly reversed course with the Chinese data helping to pare AUD’s gains. Ahead, keep an eye out for any updates on the US/China tariff situation. Signs that more levies are on their way are likely to dampen sentiment and vice versa.

We just released our 3Q forecasts for currencies like the US Dollar in the DailyFX Trading Guides page

Australian Dollar Trading Resources

— Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

original source

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
Learn forex trading with a free practice account and trading charts from IG .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.




http://articlefeeds.nasdaq.com/~r/nasdaq/categories/~3/FjefCX4CgZY/aud-falls-on-china-gdp-as-nbs-sees-external-uncertainties-ahead-cm991489

3 of the Worst Growth Stocks of 2018 (So Far)

Although it got off to a strong start in January, the U.S. stock market has been volatile for most of 2018 . While that has given many stocks fits, some have been hit especially hard — like those of growing businesses whose shares rose too far too fast. Three such companies are Lending Tree (NASDAQ: TREE) , MaxLinear (NYSE: MXL) , and Universal Display (NASDAQ: OLED) . But just because they’re down doesn’t mean they’re out.

When lenders ask you for business

Bob Hope famously quipped that a bank will only lend to you if you can first prove you don’t need the money. Lending Tree has tried to put some of that power back into the hands of the borrower by creating a marketplace where loans from various banks can be shopped and compared. It’s done a good job, too, with revenue doubling twice in the last three years.

Lending Tree started out offering mortgages, but the addition of other products like credit cards, auto loans, and student loans has helped take the online finance company to the next level.

It may come as a surprise, then, that the stock is down 32% year-to-date (as of July 15). That’s in spite of year-over-year top-line growth of 37% and a 29% increase in adjusted net income in the first quarter. Long-term owners can take solace in the fact that the stock price has surged 3,000% in the last decade, but more recent buyers might feel slighted.

The problem is valuation. Lending Tree’s market cap is $2.9 billion. That’s 79 years’ worth of profits based on the last 12 months, although it’s only 32 times Lending Tree’s projected 2019 earnings. Management has said that full-year 2018 revenue and adjusted EBITDA will expand by as little as 25%. That’s nothing to scoff at, but with much of that growth already priced into shares, a big pullback was inevitable.

A computer screen displaying stock bar charts and graphs.

Image source: Getty Images.

A more-connected world isn’t always a slam dunk

As the reach of the internet continues to expand into new applications, many electronics parts suppliers have experienced transformational growth . MaxLinear — a provider of connection-enabling devices for the smart home, telecom, and other industries — has grown its sales nearly 50% since 2016, including a 25% increase in the first quarter. The stock has fallen 36% this year, though.

MaxLinear’s acquisitions of rival Exar for $700 million ($472 million net of Exar’s cash) and of Marvell Technology Group ‘s home networking business for $21 million drove the sales increase. The idea of these deals was to increase MaxLinear’s footprint in the world of connected things, picking up new sales, and to save on operating costs through merger synergies. So far, that hasn’t panned out.

By the end of 2017, MaxLinear had swung to a loss, and first quarter 2018 earnings were only $0.03 per share. A big contributor to the deteriorating bottom line was that the company had to take out loans to fund its purchases. Interest expense was $3.9 million during the first quarter, eating up most of the company’s $4.4 million operating profit. With sales expected to stay stagnant in the second quarter, the stock has remained under pressure.

An on-again, off-again relationship

Over the course of two years, OLED technology patent-holder Universal Display’s sales and profits skyrocketed. Its stock followed suit, doubling twice through 2016 and 2017. This year has been a different story, with valuation being cut in half as Universal Display has become more dependent on Apple ‘s (NASDAQ: AAPL) iPhone business .

OLED displays have been around for a while, most notably in ultra-high-definition and low-profile televisions. Apple’s premium iPhone X that debuted in late 2017 was seen as the start of a new OLED era , one that would eventually replace older LED screen technology. Debate has swirled around how many iPhones will actually get an OLED screen in the 2018 lineup , though. And every conflicting opinion and research report has sent Universal Display’s stock tanking or soaring.

As with all new tech, adoption comes in fits and starts. However, as the holder of OLED patents, Universal Display wins no matter who uses the tech or what the application is. Plus, despite the market’s confusion on how to value Universal Display’s stock, management was very clairvoyant at the end of 2017 about what to expect in 2018: a year of transition. Sales were expected to slow as display manufacturers gear up for more OLED screen construction before returning to growth during the back half of 2018. The slowdown did transpire in the first quarter, with a 22% year-over-year sales decline; the next event to await is the anticipated rebound.

As demonstrated by these three underperformers, business growth doesn’t always equate to stock growth. For some, like MaxLinear, business expansion comes at too high a cost. For others, like Lending Tree and Universal Display, a pullback in shares is a chance to pick up a stock with the potential to resume strong growth once again.

10 stocks we like better than Universal Display
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now… and Universal Display wasn’t one of them! That’s right — they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of June 4, 2018

Nicholas Rossolillo  and his clients own shares of Apple and Universal Display. The Motley Fool owns shares of and recommends Apple and Universal Display. The Motley Fool is long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.




http://articlefeeds.nasdaq.com/~r/nasdaq/symbols/~3/7P8gJo7SvRE/3-of-the-worst-growth-stocks-of-2018-so-far-cm991482

Intel Could Win All of Apple's Modem Orders This Year

Chip giant Intel (NASDAQ: INTC) entered the cellular modem business in 2011 with the acquisition of Infineon’s wireless division. Since then, Intel has poured a lot of resources into that business with the aim of transforming it from a technology laggard into a leader.

This business scored its first big win under Intel’s wing in the second half of 2016, when Apple (NASDAQ: AAPL) chose to use Intel’s XMM 7360 LTE modem to provide the cellular capabilities for a portion of its iPhone 7-series devices. Intel, yet again, won a portion of the modem orders for the current iPhone 8-series and iPhone X device with its XMM 7480.

Intel's XMM 7560 LTE modem next to a pencil eraser and penny.

Image source: Intel.

Now, the XMM 7360 and XMM 7480 were missing a critical feature — support for a wireless standard known as CDMA. This meant that iPhones based on Intel’s modems wouldn’t work on several major networks that used the standard, capping the share that Intel could gain in the iPhone.

However, Intel’s latest XMM 7560 modem supports CDMA, which could allow the chip giant to, theoretically, win the entirety of Apple’s modem orders for the coming iPhone product cycle. And, according to one analyst, that’s exactly what’s set to happen.

High yields, potential for 100% share

A previous report from Fast Company stated that “Apple is expecting Intel to supply 70% of the modem chips inside the new iPhone models,” with Intel potentially getting all of the orders for the 2019 iPhones “if all goes well.”

At the time of that report, Fast Company said that Intel was struggling with the yield rates — that is, the percentage of the modems produced that ultimately turned out to be salable — of the XMM 7560 chips.

“Only just more than half of the chips being produced are keepers,” Fast Company said.

It seems that Intel worked through those yield issues after all. Analysts with Baird (via StreetInsider ) claim that their “checks” revealed that yield rates on the XMM 7560 were “high” and that Intel could, in fact, win all of Apple’s modem orders for the new iPhones in the second half of 2018.

Although the Fast Company report said that Intel was expecting to get 70% of the modem orders for the new iPhones this year, it did say that “there’s also a chance that if Intel can produce enough chips on time and on budget it could get more of the planned 70% [iPhone modem share]”

Perhaps this upside scenario is set to play out?

Business impact

Apple currently offers the following iPhone product lines:

  • iPhone SE
  • iPhone 6s/6s Plus
  • iPhone 7/7 Plus
  • iPhone 8/8 Plus
  • iPhone X

The iPhone SE and iPhone 6s-series devices don’t use Intel modems at all, and I’d be surprised if Intel even had half of the modem orders for the iPhone 7-series, iPhone 8-series, and iPhone X devices.

As the iPhone 6s/6s Plus roll off and new models are introduced, Intel’s share of Apple’s cellular modem business is set to rise. Not only should Intel have a greater percentage of the modem shipments in Apple’s latest (and best-selling) models, but its average cellular modem content in the legacy models should go up, too.

Moreover, if Intel is successful in capturing all of Apple’s modem business in either this year’s models or the following years’ models, then the company could be on track to eventually be the sole cellular modem supplier for Apple’s iPhones.

A while back, I estimated Intel’s modem business from the iPhone at “over $1 billion per year in revenue.” If Intel is successful in capturing all of Apple’s cellular modem business, then the company could be set to rake in more than $2 billion per year in revenue.

That’s not a game-changer for Intel, which is on track to generate more than $68 billion in revenue this year, but it’d certainly be a nice chunk of change.

10 stocks we like better than Intel
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now… and Intel wasn’t one of them! That’s right — they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of June 4, 2018

Ashraf Eassa has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.




http://articlefeeds.nasdaq.com/~r/nasdaq/symbols/~3/RTcql35zWZU/intel-could-win-all-of-apples-modem-orders-this-year-cm991466

AT&T Wants HBO to Grow Faster

It’s been just weeks since AT&T ‘s (NYSE: T) takeover of Time Warner was approved by a federal judge, but HBO — Time Warner’s prized premium cable network — has already gotten its marching orders.

At a recent town hall meeting with HBO employees, AT&T executive John Stankey said the premium network needs to get bigger and more profitable. He presented a future where the company has significantly more subscribers, who spend many more hours with the network. According to a report in The New York Times , Stankey didn’t mention Netflix (NASDAQ: NFLX) by name, but it was clear in his presentation that he had the streaming-video leader in mind.

Until recently, HBO routinely topped Netflix at award shows like the Emmys, yet Netflix long ago surpassed HBO in virtually every other meaningful category, including domestic subscribers, content, and market value. In the process, Netflix has made Time Warner’s former chief, Jeff Bewkes — who compared Netflix in 2010 to “the Albanian army” — eat his words.

It’s clear why Stankey would envy Netflix. The streaming champ now commands a market cap of $182 billion, more than double Time Warner’s market cap when the deal closed. Netflix has tapped a disruptive technology — streaming — to build a global brand that seemingly can do no wrong in the eyes of Wall Street. It is adding millions of subscribers each quarter. As a result, it’s now the most valuable entertainment company in the world, even though it has relatively slim profits.

HBO, by contrast, has been growing more slowly. However, it is considerably more profitable, generating $2.15 billion in operating income last year on $6.33 billion in revenue: enough for an impressive 34% operating margin.

A character from the show Westworld in the middle of a stylized W

“Westworld” is one of HBO’s many critically-acclaimed shows. Image source: HBO.

Changing of the guard

For years before the AT&T buyout, HBO’s management had insisted that its network, which also oversees Cinemax, was fundamentally different from Netflix. While Netflix bombards its subscribers with thousands of titles that can sometimes be hard to sift through, HBO’s content is carefully curated as the company only seeks to offer its subscribers top-quality shows and movies. While Netflix has garnered eye rolls for resurrecting shows like Full House with the sequel Fuller House , HBO consistently taps top talent to make award-winning shows like Big Little Lies, starring Reese Witherspoon, Nicole Kidman, and Laura Dern.

HBO has sought to use that distinction to appeal to talent. It argues that it can devote a level of attention to stars that Netflix can’t, and that they would get lost in the shuffle at its streaming rival. Last year, HBO chief Richard Plepler summed up the company’s position, saying: “More isn’t better. Only better is better.”

However, Stankey seems determined to tinker with that formula, telling HBO employees that the network must make more money, and that he plans to invest more in order to grow the premium cable channel.

A delicate balance

HBO currently has an annual content budget of about $2 billion, compared to $7 billion to $8 billion at Netflix this year. However, at a time when HBO is competing with tech giants like Amazon and Apple , in addition to Netflix, Stankey is prepared to pour more money into content. He stated that HBO must “move beyond 35 to 40 percent penetration to have this become a much more common product.”

With such a statement, Stankey clearly seems to have Netflix in mind, and he promised “stepped-up investment,” though it was unclear how much. However, HBO is currently a premium product, unlike Netflix, which is geared toward the masses and offers something for everyone: even critically panned big-budget movies like Bright .

While it may be possible for HBO to retain its reputation for quality while accelerating its growth, it won’t be easy to do both. The network already charges more than competitors for subscriptions ($15 a month compared to just $11 a month for the standard Netflix package). And as Plepler has said, part of HBO’s appeal is its curation. It shows only quality programming. The network’s reliance on linear TV also means that it can’t stuff its content library in the same way that Netflix does, as it would eventually run out of time slots.

However, one thing is clear from Stankey’s call. The arms race in streaming will only get more intense as HBO looks primed to build an arsenal to bid for blockbuster content alongside Netflix, Amazon, Apple, and Hulu. What that means for Netflix remains to be seen, as the streamer’s growth has thus far been undisturbed by rivals’ moves.

It’s not surprising that AT&T wants to squeeze more out of its new cash cow, but making HBO into Netflix may be harder than Stankey thinks. HBO faces constraints, like time slots, that Netflix does not; the two companies have different cultures and DNA, and HBO now must please a new meddling corporate overlord.

AT&T’s deep pockets could benefit the network, but messing with a formula that’s brought in hundreds of Emmy awards could also prove misguided.

10 stocks we like better than AT&T
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now… and AT&T wasn’t one of them! That’s right — they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of June 4, 2018

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jeremy Bowman owns shares of Netflix. The Motley Fool owns shares of and recommends Amazon, Apple, and Netflix. The Motley Fool is long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.




http://articlefeeds.nasdaq.com/~r/nasdaq/symbols/~3/d63PCjcFkQs/att-wants-hbo-to-grow-faster-cm991450

3 Top Retail Stocks to Buy Now

There’s been a lot of doom and gloom in the retail industry, and with good reason. The emergence of Amazon.com  and the proliferation of e-commerce have created a tough atmosphere for traditional retail. Vacancies at U.S. shopping malls are at their highest level in six years, as more and more brick-and-mortar retailers make the transition to the digital era.

However, there are traditional retailers that have not only succeeded in embracing online selling, but that have created omnichannel capabilities that are drawing shoppers back to physical stores. There are others whose unique value proposition has made them a destination, sidestepping the e-commerce issue.

Let’s look at three retail stocks that have beaten the odds in this challenging environment and are positioning themselves for future success: Best Buy (NYSE: BBY) , Walmart (NYSE: WMT) , and Five Below (NASDAQ: FIVE) .

View through magnifying glass showing stacks of coins topped by sprouting plants.

Image source: Getty Images.

Back from the brink

It’s hard to believe the turnaround that’s taken place at Best Buy over the past several years. The company was left for dead, with the stock dropping below $12 per share in late 2012. Since then, the stock has come roaring back, recently achieving all-time highs near $80 per share.

The beginning of the company’s turnaround coincided with the arrival of CEO Hubert Joly, who joined Best Buy in August 2012. Joly used a multipronged approach to revive the ailing electronics retailer, making several bold moves in the process. Best Buy invested heavily in improving its website, matching prices from online competitors, and training its employees to encourage better interaction with customers. The company also sought to blur the line between physical and online retail, promoting buying online and picking up items in stores.

That overall strategy has been a smashing success. In its most recent quarter , Best Buy’s revenue increased 6.8% year over year, beating its own forecasts and those of analysts, while it’s comparable-store sales jumped 7.1%, on top of 9% growth achieved in the previous quarter . This impressive top line and same-store sales growth drove profits up by 20% compared with the prior-year quarter.

A Best Buy store seen from the outside.

Image source: Best Buy.

Best Buy is focusing on connected-home products and home visits by its Geek Squad technicians to drive future growth, while continuing to blur the line between sales channels. There’s no reason to believe its success won’t continue.

Meeting the challenge

No company epitomizes the challenges faced by traditional merchants better than Walmart. Its relentless focus on value and low prices help make it the world’s largest retailer, but the emergence of e-commerce threatened to undermine that dominance.

After struggling for years with its own web-based sales, the company jump-started its online sales aspirations with the purchase of start-up Jet.com for $3.3 billion in August 2016. The company also acquired the talents of Jet’s founder, Marc Lore, who brought a start-up mentality to the storied retailer, while taking the reins of its e-commerce operations.

Walmart made a flurry of other purchases in rapid succession, including outdoor retail purveyor Moosejaw, men’s clothier Bonobos , and women’s fashion outlet Modcloth, among others. Walmart’s latest move was its biggest yet, acquiring a controlling stake in India’s largest online retailer, Flipkart .

A Walmart associate helping a customer with an in-store pickup.

Image source: Walmart.

Walmart has made a number of other moves to maintain its relevance in the changing retail environment. The company has adopted two-day shipping and is encouraging customers to order online and schedule an in-store pickup. Walmart is also targeting millennial shoppers, a large buying demographic that has typically avoided the merchant.

These moves appear to be taking hold. In its most recent quarter , Walmart grew revenue by 4.4% year over year, exceeding expectations, while same-store sales increased 2.1% compared to the prior-year period. E-commerce sales grew 33% over the year-ago quarter, and Walmart expects its full-year online sales to jump 40% year over year.

Cashing in on fads

While many traditional retailers have struggled with changes in consumer behavior and the e-commerce trend, it’s hard to categorize Five Below as traditional. The discount retailer caters directly to the teen and tween demographic, with everything in its stores selling for $5 or less.

“Five Below carries an ever-evolving and exciting assortment of cellphone cases and chargers, remote control cars, yoga pants, graphic tees, nail polish, footballs and soccer balls, tons of candy and seasonal must-haves for Easter, Halloween, Christmas, and more,” according to its website.

Entrance of a Five Below store with its logo, "Hot stuff. Cool prices."

Image source: Five Below.

In its most recent quarter , Five Below posted net sales that jumped 27% year over year, while net income soared 160%. Comparable-store sales climbed 3.2%. The company’s current base stands at 658 sites in 32 states, but Five Below plans to boost its store count by 125 locations this year and eventually grow to 2,500 locations nationwide, providing plenty of opportunity for growth.

Five Below’s unique positioning as a store where teens and pre-teens can spend their allowance has largely bypassed the e-commerce challenges experienced by other retail stores, but that hasn’t stopped the company from adding an online sales channel to boost its growth. The company’s relentless focus on this niche market should keep it growing for years to come.

The story is just beginning

Worldwide e-commerce sales grew 25% in 2017, driven by a 59% increase in mobile buying. Online sales accounted for 10.2% of total retail, but their portion is expected to soar to 17.5% of sales by 2021. Brick-and-mortar retailers will need to evolve in order to survive this ever-growing trend toward online sales. These three companies have each taken a different approach to this conundrum and have shown that it’s possible to adapt to this new retail reality.

10 stocks we like better than Walmart Inc.
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now… and Walmart Inc. wasn’t one of them! That’s right — they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of June 4, 2018

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Danny Vena owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon. The Motley Fool recommends Five Below. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.




http://articlefeeds.nasdaq.com/~r/nasdaq/categories/~3/v61NF23qqwE/3-top-retail-stocks-to-buy-now-cm991396

New Roku Channel Subscription Helps Unbundle Cable Programming

Roku (NASDAQ: ROKU) is reportedly ready to make its streaming service more cable-like, which isn’t as bad as it sounds. Rather than having to download individual apps to see a particular channel like HBO Now or CBS All Access, viewers will be able to sign up for a video subscription service that will let them choose the channels they want and pay for it all in one place.

According to Variety , which first reported the development, the new Roku service is similar to how Amazon.com ‘s (NASDAQ: AMZN) successful Channels subscription video marketplace operates, where people can subscribe to a particular channel through their FireTV device.

While Roku’s current setup gives viewers access to a broad selection of channels, it’s a rather cumbersome process. First you need to download individual apps to access the channels, and when you’re watching programming on one channel and want to switch to another on a different channel, you have to close one app and launch another to do so. The new service brings it all together and manages the bundle of channels through one program guide.

Woman holding a PC looks at a wall of TV screens.

Image source: Getty Images.

Returning choice to viewers

While the service will be similar to Amazon’s, it’s actually a bigger challenge to the cable companies because it begins to really unbundle the TV-viewing experience. Viewers can pick and choose what programming they want to pay for. And because it is Roku that is doing this, it has the potential to really drive a wedge between the cable operators and those on the fence about cutting the cord.

Roku is the industry leader in streaming devices, with data from research firm Parks Associates estimating that Roku commands an industry-leading 37% of the market (Amazon is moving up quickly with 28%). Its ad-supported Roku Channel is one of the top 15 channels on Roku devices, and Roku-powered smart TVs now account for 25% of all smart TVs sold in the U.S. It added news from ABC, Cheddar, and others to the Roku Channel in April.

In short, for people cutting the cord to cable, or thinking about doing so, it is Roku that offers them the broadest selection of options on how to enhance their TV viewing experience. Making it more simple to consume subscription video more easily could help make the decision easier.

Cable TV has been successful because of its ease of use. There are multiple channels you can subscribe to and watch, and it’s all handled seamlessly within the service. The streaming services are cheaper, but navigation is clunky. Bringing together the ease of use of cable, with the price and benefits of streaming on-demand programming, and doing it through the most prevalent devices on the market, sounds like a winning combination.

The future of television

Already, advertisers are switching their marketing dollars away from cable — some $70 billion is spent on television advertising each year — but as U.S. consumers shift their viewing habits to streaming, the dollars will follow. Roku’s own advertising platform is benefiting from the switch, with revenues from ads and fees surpassing devices for the first time ever in the first quarter.

Cable is still able to reign supreme because it continues to attract the most eyeballs, but the field is changing, and Roku estimates that nearly half of its roughly 21 million active users have already cut the cord to cable, or were never tethered to it in the first place.

Right now, Amazon dominates the a la carte subscription medium with Amazon Channels reportedly delivering more than half of all a la carte subscription services. According to survey data from The Diffusion Group, the service drove 53% of all HBO subscriptions for people who don’t receive it from their cable provider, and it accounted for 70% of Starz direct-to-consumer subscribers and 72% of Showtime direct-to-consumer subscriptions.

Integrating the streamlined viewing package into the Roku Channel would make the most sense, and it would elevate the value of the service even further, helping make it a whole new profit center.

10 stocks we like better than Roku, Inc
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now… and Roku, Inc wasn’t one of them! That’s right — they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of June 4, 2018

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.




http://articlefeeds.nasdaq.com/~r/nasdaq/categories/~3/CqyatsycQpc/new-roku-channel-subscription-helps-unbundle-cable-programming-cm991392