Stocks in Asia fell Monday following Chinese economic data which suggested that the world’s second largest economy may be losing steam.
China’s economy expanded 6.7% year-on-year in the second quarter, slowing from 6.8% in the previous quarter, Dow Jones Newswires reported. The figure was in line with expectations but the slower number comes at a time when Beijing is gearing up for a trade fight with the U.S.
Industrial output grew 6% in June, noticeably slowing from 6.8% pace in May.
“Growth in industry slowed further in June, underscoring the downward pressures on growth going into second half,” said Louis Kuijs, head of Asia economics at Oxford Economics, in a note. “We expect growth in second half to be challenged by the slow credit growth and softer real estate activity. Also, the intensifying trade conflict with the U.S. will start to weigh on growth.”
The Shanghai Composite
slid 0.5%, while Hong Kong’s Hang Seng
was fractionally lower after erasing most of earlier losses.
The U.S. is a relatively young country—it just celebrated its 242nd birthday this month. In contrast, its rival and biggest trading partner China is more than 3,000 years old.
Yet, by virtue of its economic prowess and global reach, the U.S. has engaged in a fair number of trade wars in its short history.
President Donald Trump recently opened a new chapter in the U.S.’s ongoing battle to protect its economic interests by announcing tariffs on billions of dollars worth of Chinese goods. As expected, China has responded with retaliatory measures.
The European Union and close allies such as Canada and Mexico also have not been spared with their steel and aluminum products subject to new tariffs.
As the Visual Capitalist recently noted, in just the last 100 years, the U.S. has tussled with trading partners over steel, automobile, chicken and even pasta. Often times, it takes many years for these disputes to be resolved if ever.
The visual content website also observed that the U.S.’s journey to nationhood began over unfair trade terms.
“The Boston Tea Party of 1773 was a bold response to an unfair trade measure imposed by a ruling power, and it proved to be a key catalyst that led to the American Revolution,” it said.
But perhaps the most interesting fact highlighted by Visual Capitalist’s chart is that the cost of trade has steadily been dropping, making it cheaper to buy and sell with other countries, suggesting that no matter the threats and tariffs, global trade is likely to continue growing.
Coinbase, the most popular digital-currency platform in the U.S., late Friday said it is exploring adding five new cryptocurrencies to its suite of offerings, which currently includes bitcoin and Ethereum’s Ether.
The trading platform said it is exploring rather than outright adding the aforementioned coins is “part of an effort to be as open and transparent as possible, and is consistent with our process for adding new assets, said Keely Hopkins, an external Coinbase spokesman.
On Friday, the company in a news blog said it can’t guarantee any of the assets mentioned will find a permanent home on its exchange.
Still, the coins up for review were surging, with Cardano up nearly 12% at 14 cents, Zcash was trading nearly 16% higher at $178, Stellar’s coins were up 11% at about 20 cents a lumen. The 0x coin was surging by 26% at 96 cents, while BAT’s coin was up 21% to 32 cents.
Coinbase’s moves come as the bitcoin
the No. 1 digital asset, has been hovering around $6,100 to $6,200 level for the past few weeks, near its lows of 2018.
Bitcoin’s price has fallen around 70% since it peaked in late December of last year at nearly $20,000 and has mostly been in a downtrend since trading above $9,800 in May. A single bitcoin was trading at $6,211.45 late Friday in New York, down 0.6%.
Meanwhile, futures for bitcoin traded on Cboe Global Markets Inc.
settled at $6,187.50, slightly higher than its $6,170 close in the prior day. For the week, it shed 6% based on the most-active Cboe contract and is down 55% year to date. Comex traded bitcoin for July delivery
ended the session at $6,165, edging up from $6,160 on Thursday, with a weekly decline of 5.9%, and a year-to-date slump of 57%.
In the broader virtual-currency complex, Ether tokens
were up 1.4% to $434 ion Friday, Bitcoin Cash was trading 2.7% higher at $698, and Ripple’s XRP coin
was up 0.9% at 44 cents.
Investors are often told that they can safely withdraw 4% of their portfolios every year in retirement in order to fund their living expenses. This is based on the historical returns of stocks and bonds and tends to work well for most people. But to come up with the funds to withdraw, investors often have to sell off some of their assets, which leads to the questions: What investments should be sold? And when?
One way to lessen or even eliminate the need to make these often-difficult decisions is to build a portfolio filled with high-yield stocks. This way, you can live off your dividends, rather than having to sell shares.
To help you in this regard, here are two rock-solid stocks that are currently yielding more than 4%.
Image source: Getty Images.
Dividends at a discount
Obtaining a high yield from a great business typically requires acting in a contrarian manner. By buying when short-term-focused speculators are selling, we can scoop up shares at a discount and obtain a yield on cost that otherwise would not be possible under normal circumstances.
We have one such opportunity today with Cedar Fair (NYSE: FUN) . Investors reacted to the regional amusement park operator’s recent mid-year update with panic selling. Shares sank nearly 8% on the news and now yield 6%.
Investors were likely put off by a 2% decline in revenue driven by a 3% decrease in attendance. Yet this was partially offset by a 3% increase Cedar Fair’s out-of-park revenue and a slight boost in average in-park per capita spending. Moreover, the midpoint of the company’s guidance calls for full-year revenue to rise 3% to $1.36 billion and adjusted EBITDA to increase 1% to $485 million.
Cedar Fair has a slate of new roller-coaster rides debuting this year. It’s also increasing hotel capacity, adding more dining venues, and boosting its entertainment offerings at several of its resorts. Together, this should drive revenue higher in the second half of 2018.
New rides should help Cedar Fair’s sales rebound later this year. Image source: Getty Images.
Looking even further ahead, Cedar Fair owns an additional 1,400 acres of undeveloped land adjacent to its parks — a valuable asset base that it can use to expand its long-term earnings power.
Most importantly, Cedar Fair remains well positioned to crank out steadily rising dividend payments for investors. Its master limited partnership structure allows for the tax-efficient return of capital to its unitholders, and management is committed to raising Cedar Fair’s dividend distribution by 4% annually.
Investors who buy Cedar Fair units today will receive a 6% yield that’s likely to grow faster than inflation in the years ahead. And at an enterprise value -to-EBITDA ratio of only 11, Cedar Fair units are currently trading for a bargain price. Investors can therefore expect to enjoy solid capital appreciation — in addition to robust dividend income — as Cedar Fair executes its long-term growth plans.
Image source: Getty Images.
While Cedar Fair is expanding its parks and resorts, Brookfield Infrastructure PartnersL.P. (NYSE: BIP) is helping to build out the world’s transportation, communication, energy, utility, and sustainable resource networks.
As one of the largest infrastructure companies in the world, Brookfield possesses a vast collection of high-quality assets spanning five continents. It owns and operates toll roads, railroads, ports, cell towers, pipelines, electricity distribution lines, and timberlands — as well as a host of other valuable properties that deliver essential goods and services.
In addition, many of Brookfield’s businesses operate under regulated or contractual frameworks that help to shield their profits from competition. Its industry and geographic diversity also limit its exposure to sector and geopolitical risk. In turn, Brookfield is able to generate reliable cash flow that it passes on to its investors via a steadily rising dividend stream.
Brookfield Infrastructure Partners Stock Price and Dividend Growth, data by YCharts .
Going forward, Brookfield’s long-term goal is to deliver annual distribution growth of 5% to 9%. Massive expansion opportunities in water , data, and smart city infrastructure combined with steady development in its core markets should allow Brookfield to achieve — and possibly exceed — this level of dividend growth.
Better still, Brookfield’s shares now trade for less than 13 times funds from operations and yield 4.7%. Thus, investors have a chance to acquire a greater-than-4% yield from a relatively low-risk, competitively advantaged business that’s set to grow at a healthy rate for many years to come. That’s an opportunity you may not want to pass up.
10 stocks we like better than Brookfield Infrastructure Partners 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 Brookfield Infrastructure Partners wasn’t one of them! That’s right — they think these 10 stocks are even better buys.
They are two of the most dominant stocks of the past decade. Investments in Amazon (NASDAQ: AMZN) and Netflix (NASDAQ: NFLX) have returned 2,500% and 10,600%, respectively, over the past ten years.
While investors who were insightful enough to buy and hold over that time frame caught lightning in a bottle, investors today are left with a difficult question: Between these two, is either stock worth buying? If so, which one?
Image source: Getty Images.
While the two businesses have some similarities — both offer streaming video services — there are lots of differences. That can make comparing them difficult. To bridge the gap, let’s evaluate them each on three different facets and see which comes out on top.
The first aspect we’ll evaluate is financial fortitude. The central question is simple: if an economic crisis were to hit today, what kind of an effect would it have on the company? It doesn’t really matter if the crisis is company-specific or macro in nature. A company can have three different designations: fragile, robust, or antifragile .
Remembering that Amazon is valued at over four times the size of Netflix, here’s how they stack up:
Free Cash Flow (TTM)
Data source: Yahoo! Finance. Cash includes long and short-term investments. TTM = trailing-12-month.
While that move might help secure Netflix’s dominance over the long run, it does introduce short-term fragility that investors need to account for.
Amazon, on the other hand, used to have far more cash than debt on hand. The acquisition of Whole Foods, however, changed that. No matter: The company still has a positive net cash position and positive free cash flow.
I’d say that while Amazon is robust to a financial crisis (it would survive largely unscathed), Netflix is fragile to short-term disruption at this point.
Winner = Amazon.
It might seem silly to even try to nail this one down. For the entirety of their public lives, both Amazon and Netflix have been panned as far too expensive. That hasn’t stopped either from producing eye-popping returns over the long run.
That said, when we consult four popular valuation metrics, here’s what they tell us:
Data sources: Yahoo! Finance, E*Trade, YCharts. P/E = price to earnings; P/FCF = price to free cash flow; P/S = price to sales; PEG ratio = price/earnings to growth. P/E is calculated using non-GAAP (generally accepted accounting principles) earnings per share when applicable.
These numbers are so high across the board that it’s a wild goose chase to say that one company is definitively “cheaper” than another. There are too many moving variables — and the markets these two are capturing are too large to accurately quantify what they could accomplish — to make a call here.
Winner = Tie.
Sustainable competitive advantages
Finally, we have the most important variable: the strength of each company’s moat .
For a long time, I wasn’t particularly impressed with Netflix’s moat. People could switch on a moment’s notice and cancel their subscriptions. But when I sat down to think about it, I realized something: People join Netflix for the original programming . Once they’re in the ecosystem, the meager monthly fee is taken automatically from their credit cards. While switching away is easy, few would even bother to spend the time doing so.
Once I realized this dynamic, it became clear that Netflix’s original programming was the real growth hook. The brand is burnished by Orange Is the New Black , House of Cards , and other popular shows. Not only that, there’s an underappreciated network effect at play as well: As more subscribers sign on, Netflix has more cash to buy content or develop its own in-house. That leads to more content and more subscribers — a virtuous cycle.
Normally, that would be more than enough for me to crown Netflix the winner. But Amazon isn’t a normal competitor. The company benefits from all four major moats:
Brand value: According to Forbes , Amazon has the fifth most valuable brand in the world, worth roughly $70 billion.
Low-cost production : Because of Amazon’s network of fulfillment centers , the company can guarantee two-day delivery for a lower internal cost than anyone else.
High switching costs: While this one is weaker, Amazon Prime subscribers would have a very tough time finding a better deal than the one they currently have.
Add all of those things together and Amazon has an edge here.
Winner = Amazon.
And my winner is…
So there you have it: Amazon wins. While we can throw valuation out the window, Amazon has a stronger balance sheet and a wider moat. That being said, I don’t want to throw too much shade on Netflix either. I have bullish CAPS calls on both companies, and own both in my personal portfolio.
That said, Amazon accounts for over 20% of my holdings, while Netflix clocks in at less than 5%. The reason I’m comfortable with that mismatch are covered above — a wider moat and stronger balance sheet. Having said that, I think both are worthy of consideration in your portfolio.
10 stocks we like better than Amazon 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 Amazon wasn’t one of them! That’s right — they think these 10 stocks are even better buys.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Brian Stoffel owns shares of Amazon and Netflix. The Motley Fool owns shares of and recommends Amazon and Netflix. 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.
The Insider Trading Act of 1988 was established to increase the liability penalties to all involved parties to insider trading. This act came into being due to the increase in high-profile insider trading cases, as well as the increase in monetary values of the trades. The act allows the SEC to order a penalty of up to three times the profit of insider trades, and the guilty parties may serve significant jail time according to the extent of their crime.
BREAKING DOWN ‘Insider Trading Act of 1988’
The Insider Trading Act was signed into law on November 19, 1988, by then-President Ronald Reagan. Its full name was the Insider Trading and Securities Fraud Enforcement Act of 1988, or ITSFEA. The act enabled insider traders to be jailed up to five years, and fined up to the greater of 300% of the amount of money made on the trades or $1,000,000. People who illegally disseminate inside information leading to an insider trade may also be imprisoned and fined.
Since 1988, there have been many notable cases of insider trading. In 2003, the SEC charged Martha Stewart with obstruction of justice and insider trading for her part in the 2001 ImClone case. Stewart ended up serving five months in a federal corrections facility. In September 2017, former Amazon financial analyst Brett Kennedy was charged with insider trading. In exchange for $10,000, Kennedy allegedly gave a friend information about Amazon’s 2015 first-quarter earnings before the earnings report was released.
The history of insider trading
Insider trading occurs when members outside of an establishment are given information which is not available to the public as a whole, and use it to increase their wealth through buying or selling stock. It tends to occur when an unexpected event occurs that significantly impacts a company’s value. Insiders may be accountants, lawyers, stockholders or anyone who possesses private information related to a company’s stock price. While it is not illegal to possess such information, it is illegal to disseminate it or trade on it. Additionally, some insider trading is not against the law and happens regularly.
In 1914, the New York Stock Exchange responded to Goodrich Rubber’s failure to disclose important information regarding a dividend by requiring companies to promptly report actions relating to dividends and interest. Twenty years later, the Securities Exchange Act of 1934 significantly advanced laws surrounding the disclosure of transactions of company stock. Thanks to that act, directors and major owners of stock are required to disclose their stakes, transactions and change of ownership.
One should invest only with one or more goals in mind. This webinar identifies key events and discusses approaches to husbanding our investment dollars.
Chicago, Illinois (PRWEB)July 16, 2018
The Financial Poise INVESTING BASICS 2018 webinar series is intended for the investor who wants to reduce the “unknown unknowns” of investing.
First, a refresher on asset allocation and portfolio theory, i.e., how to array your investments to produce reliable returns over time and temper potential losses. Then two episodes on the “why?” of investing – the goals one pursues, such as financing family events, retirement, and the fate of your assets when you meet your Maker or Makers or fade to black or whatever. Tax and legal and investment professionals have their uses, but you get more from them when you know what questions to ask and what information to insist on receiving. The final two episodes turn topical, taking up special topics, including options and private securities (as well as public securities).
The second episode of the series, Goal Based Investing- Planning for Key Life Events, airs on July 17th at 2:00 PM CST (Register Here) and features Moderator Christopher Cahill of Lowis & Gellen LLP. He is joined by Jonathan Friedland of Sugar Felsenthal Grais & Helsinger, Michael Terrien of West Loop Financial LLC, and Yuen Yung of Casoro Capital to discuss investing with a focus on funding specific life goals.
There is a redundancy in the title for this episode, for one should invest only with one or more goals in mind. This goes along with being the ally of the future version of you – someone you like and hope to admire. This webinar identifies key events and discusses approaches to husbanding our investment dollars.
The INVESTING BASICS 2018 webinar series is produced by Financial Poise.™ Future episodes in the series include “The Legal & Tax Aspect of Investing: Asset Protection; Estate Planning, and Tax Efficiency,” airing on August 14th, “Advanced Investing Topics: Unicorns and Pre-Unicorn Scalable Private Company Propositions,” airing on September 25th and “Options for the Accredited Investor,” airing on October 23rd. Each episode airs at 2:00 PM CST. All episodes premiere live through West LegalEdCenter and then are made available on-demand.
As with every Financial Poise Webinar, each episode is delivered in Plain English understandable to investors, business owners, and executives without much background in these areas, yet is also valuable to attorneys, accountants, and other seasoned professionals. And, as with every Financial Poise Webinar, each episode brings you into engaging, sometimes humorous, conversations designed to entertain as it teaches. Each episode in the series is designed to be viewed independently of the other episodes, so that participants will enhance their knowledge of this area whether they attend one, some, or all episodes.
About Financial Poise™
Financial Poise™ has one mission: to provide reliable plain English business, financial and legal education to investors, private business owners and executives, and their respective trusted advisors. Financial Poise™ content is created by seasoned, respected experts who are invited to join our Faculty only after being recommended by current Faculty Members. Our editorial staff then works to make sure that all content is easily digestible. Financial Poise™ is a meritocracy; nobody can “buy” her way onto the Financial Poise Faculty.™ Start learning today at https://www.financialpoise.com/
National wealth management firm Lucia Capital Group today announced its forthcoming subscription service, ClickGoals, which will offer financial planning advice and investment management services at a range of prices reflecting investors’ service requirements.
In an effort to better serve an ever-widening range of client needs, the new ClickGoals subscription service will target investors with simple portfolios as well as those just starting out.
“The goal is to match the value of services provided with the end cost to the client,” said Ray Lucia Jr., chairman and CEO of Lucia Capital Group. “We look at our services as a combination of financial planning and investment management. Some clients need a lot of financial planning advice and are less focused on investment management services, while others focus more heavily on investment management services and have little need for financial planning advice. That’s why we’ve created a way for our firm to service a wide range of investors’ needs that’s independent of how much those clients choose to invest with us. With the rollout of ClickGoals.com, you can be our client for a low monthly subscription fee and expand your relationship over time into our other programs where we offer more advice and investment management services. It’s our way of showing we are here to help in whatever capacity is best for you.”
ClickGoals, expected to start as low as $50 per month, will be a powerful tool for investors not needing considerable financial advice. ClickGoals subscribers will be given access to a Personal Financial Dashboard where they can securely view all of their accounts in one place (such as bank accounts, credit card balances, and investment accounts). Subscribers will also gain access to budgeting and goal planning tools on a self-directed basis. In addition to receiving complimentary coaching services related to managing their Personal Financial Dashboard, for a fee subscribers will also be able to work with CERTIFIED FINANCIAL PLANNER™ professionals for project-based services, such as asset allocation and portfolio risk management, education funding, life insurance gap analysis, retirement probability (using a Monte Carlo simulation), and other what-if scenarios. Project-based services are expected to be priced at a modest $97 per engagement. Lastly, subscribers will also receive access to globally diversified portfolios providing market access at internal expenses that are a fraction of the standard cost. Investment management services for these accounts is included in the monthly subscription fee.
“As we strive to constantly exceed the expectations of our clients, we are extremely proud of this lineup of services designed with our clients in mind,” said Joe P. Lucia, president of Lucia Capital Group. “By leveraging our technology behind the scenes, we aim to provide seamless, hassle-free transitions between services as clients’ needs evolve over time.”
Lucia Capital Group employs a wealth of technology in order to make its ClickGoals subscription service flourish. In addition to contracting eMoney and Riskalyze as the firm’s primary technology providers, Lucia Capital Group also utilizes Schwab Institutional Intelligent Portfolios for its digital investing platform, Salesforce for CRM, Orion Advisor Services for trading and portfolio management, and its own proprietary Bucket Strategy Illustration Software for retirement planning services.
Currently, Lucia Capital Group offers two levels of service to its clientele: the Lucia Wealth Program and the Private Client Program.
The Lucia Wealth Program is for investors nearing or living out their retirement. In addition to receiving all benefits that will be offered by the ClickGoals program in the fall, Lucia Wealth Program investors work with a dedicated financial advisor and enjoy access to a wide range of investment management services (including mutual fund and ETF model portfolios; individual stock portfolios; advisor-directed services, including management of legacy positions; and other personalized investment management, including alternative investments and annuities).
The Private Client Program provides advice and financial coaching for high-net-worth investors. Advisors servicing this client group focus on providing a completely personalized investment program, covering individual equity and fixed-income investments, as well as individualized tax management for specific securities.
ClickGoals is expected to launch in fall 2018. For more information, visit ClickGoals.com.
Information presented should not be considered specific tax, legal, or investment advice. You should always seek counsel of the appropriate advisor prior to making any investment decision. All investments are subject to risk including the loss of principal. This material was gathered from sources believed to be reliable; however, its accuracy cannot be guaranteed.
Different types of investments and/or investment strategies involve varying levels of risk, and there can be no assurance that any specific investment or investment strategy (including the investments purchased and/or investment strategies devised by LCG) will be either suitable or profitable for a client’s or prospective client’s portfolio, thus, investments may result in a loss of principal. Accordingly, no client or prospective client should assume that the presentation (or any component thereof) serves as the receipt of, or a substitute for, personalized advice from LCG or from any other investment professional.
The Bucket Strategy® involves investments subject to risks, fees, and expenses. There is no guarantee that any investing strategy will be profitable or provide protection from loss.
Raymond J. Lucia Jr. and Joseph P. Lucia are registered representatives of, and offer securities through, Lucia Securities, LLC, a registered broker dealer, member FINRA/SIPC. Advisory services offered through Lucia Capital Group, a registered investment advisor and an affiliate of Lucia Securities, LLC. Registered representatives of Lucia Capital Group only conduct business in the states where they are currently licensed. Registration with the SEC does not imply a certain level of skill or training.
eMoney, Riskalyze, Schwab Institutional Intelligent Portfolios, Salesforce, and Orion Advisory Services are not affiliates of Lucia Capital Group or any of its subsidiaries.
Sophie brought the Top Gun program from concept to reality, and more importantly, she exudes a passion and unwavering commitment to the personal development and professional enrichment of everyone who crosses her path.
REDONDO BEACH, Calif. (PRWEB)July 16, 2018
Civic Financial Services announced Director of Learning and Development, Sophie Kim, has been recognized by HousingWire as a 2018 Rising Star, a distinction given to the top up-and-coming leaders in the mortgage industry. The 46 winners represent a variety of backgrounds and occupations within the housing industry, but all of them exhibit an outsized impact on the industry and the businesses they represent.
“Sophie has played an integral role in the training and development initiatives at CIVIC, including the creation of our elite training program, Top Gun,” said William J. Tessar, President of Civic Financial Services. “Sophie brought the program from concept to reality, and more importantly, she exudes a passion and unwavering commitment to the personal development and professional enrichment of everyone who crosses her path.”
The focus of the Top Gun Program, created by Kim, is to help sales professionals without lending experience learn all aspects of private money lending – the CIVIC way. When CIVIC first began its search for top talent to participate in the coveted program it received 1,186 applications, of which over 100 candidates were interviewed and only 14 were selected. Now seeking candidates for the third class, the program entails a six-week structured course, followed by 6-8 weeks of one-on-one mentorship with senior level Account Executives. After graduating from the program, the Top Gunners then move to a full time Account Executive position with annual earning potential well over $100,000.
Tessar added, “In less than two years of service Sophie has added such a tremendous value to our organization, and I could not be more proud of the recognition the Rising Star bestows upon her.”
“This year’s class of Rising Stars represents the best in young leadership within the mortgage finance arena,” said Caroline Basile, HousingWire’s Online Editor and member of the selection committee. “I’m impressed by the achievements of this year’s winners and look forward to seeing what each of them accomplishes in the mortgage and housing finance economy in the future.”
CIVIC FINANCIAL SERVICES is a private money lender, specializing in the financing of non-owner occupied investment properties. CIVIC was created by its parent companies, Wedgewood and HMC Assets LLC, to empower and serve investors who don’t fit traditional lending criteria. We are young, optimistic, energetic and changing the face of the hard money industry. We are backed by Wall Street and have the resources that support our commitment to work swiftly and tirelessly until your deal is done. We simplify and streamline the lending process through modern innovations, proactive communication, and hard work. At CIVIC you are not a number, you are a partner. Whether you’re an experienced investor or a first-time borrower, we are here to help you break through traditional lending barriers to unleash ever-increasing success. Wedgewood and HMC, two of the most respected names in residential real estate, provide CIVIC with unparalleled valuation expertise in the real estate vertical as well as access to low-cost capital. With these resources, CIVIC is able to keep all operations in-house so loans are managed more closely, quickly, and efficiently.
Trade fears have slammed markets around the world, but U.S. stocks are rising as strong profits and spending lead investors to overlook the risks of a downturn.
The S&P 500 and Dow Jones Industrial Average have gone up all but one day since the U.S. and China imposed tariffs on $34 billion of each other’s goods on July 6. The S&P 500 is now up 4.8% for the year.
However, international markets have taken a hit: the Shanghai Composite has dropped 14% for the year, South Korea’s Kospi Composite Index has shed 6.3%, Germany’s DAX has lost 2.9% and Japan’s NikkeiStock Average has declined 0.7%
With the trade tariffs, the U.S. is “shooting itself in the economic foot,” said Richard Bernstein, chief investment officer of investment adviser firm Richard Bernstein Advisors.
Should global trade slow broadly or the prices of goods jump, that could in turn cut into spending by consumers and businesses. A 10% rise in import costs could hurt foreign sales and chip away 3% to 4% from per-share earnings growth, Bank of America Merrill Lynch analysts found in a report.
“The markets are kind of treating the trade dispute as cheap talk. That’s a bit of a miscalculation from the political risk point of view,” said Mark Rosenberg, chief executive of GeoQuant, which uses artificial intelligence to project geopolitical developments and their impact on markets. “There is going to be some more concrete damage.”
The U.S. stock market’s resilience amid tense trade talks suggests investors are viewing trade-related market ructions as buying opportunities instead of warning signs. The S&P 500, which fell 0.7% on Wednesday after the Trump administration unveiled plans to place tariffs on an additional $200 billion of Chinese goods, rebounded 1% over the following two days, more than recovering from those losses.
Going back to the beginning of March, when trade feuds flared up, the S&P 500 has erased daily declines of at least 1% in an average of 12 trading days, according to the WSJ Market Data Group, and trading volumes have been relatively muted. By contrast, it took an average of almost 17 days to rebound in the three years through February.
The U.S. is in a better position to withstand economic downturns, some analysts said, even if other countries are hit, making the U.S. market a relative haven. Even after a nine-year stock rally, U.S. corporate earnings are strong and consumer confidence is robust. That stands in contrast to the global growth outlook, which has cooled as business activity has slowed and a strengthening dollar has roiled emerging-market debt and currencies.
Goldman Sachs estimates exports to China make up 1% of U.S. gross domestic product. That makes it unlikely tariffs will have a material impact on the earnings growth of U.S. multinational companies, according to the firm.
“If somebody’s going to get hurt if we engage in some kind of trade war, it’s far more likely to be China than the U.S.,” said Mark Grant, chief global strategist and managing director at B. Riley FBR Inc.
To some, the market’s calm also reflects the outlook that tariffs won’t substantially threaten corporate profits. Analysts remain optimistic about future earnings: Bank of America Merrill Lynch raised its 2018 and 2019 earnings-growth estimates for the S&P 500, citing strong U.S. economic data and better-than-expected earnings in the first half of the year.
“It’s pretty difficult to get a really dire economic scenario just from the tariffs,” said Ed Campbell, a senior portfolio manager at QMA. He said his firm, which is more optimistic about growth in the U.S. than in the rest of the world, has been skewing the equities in its multiasset portfolio toward U.S. stocks.
Morgan Stanley researchers found about a fifth of the volatility in the U.S. stock market since the beginning of March can be explained by trade risk.
“Trade risk is not systemic across equities,” said Brian Hayes, a quantitative analyst at the bank. “There were idiosyncratic risks, but it was not affecting the overall market.”
Still, some parts of the market are already reflecting burgeoning unease, investors said.
Investors are pouring more funds into the S&P 500 utilities sector—considered a safer bet because of its relatively big dividend payouts. The sector has risen 8.1% over the past four weeks, soaring past the broader index’s 0.9% advance across the same period. Shares of smaller, more domestically focused U.S. firms, which are seen as more insulated from global issues, have also outperformed, with the Russell 2000 more than doubling the S&P 500’s gain for the year.
The gap between yields on short- and longer-term Treasurys has narrowed to nearly 11-year lows, something some analysts worry points to an increasingly murky outlook among investors about economic growth.
Short-term rates have exceeded longer-term ones before every recession going back to at least 1975. Analysts are divided over what the recent flattening of the yield curve signals, with some arguing it has largely stemmed from short-term interest rates rising with the Federal Reserve’s rate increases and others saying it reflects the risk that restrictive trade policies will cut into global growth.
Given the uncertainty, some are projecting a dire scenario if the trade strife heightens. The S&P 500 could fall as much as 21% to around 2200 if the U.S. and China slap 30% tariffs on each other’s goods and global auto tariffs are levied, UBS analysts found in a report.
But so far, the markets are “ascribing a very low probability” of a worst-case scenario panning out, said Keith Parker, chief U.S. equity strategist at UBS.
“There’s too much at stake on both sides to let relationships deteriorate to that point,” Mr. Parker said.
As presidential visits go, President Donald Trump’s trip to the U.K. may have been a little underwhelming.
First there were the hordes of protestors decrying everything from his policies to his choice of hairstyle. Then there was that giant Trump balloon wearing nothing but a diaper. And if that wasn’t bad enough, the British media are now reporting that Trump had been given the royal snub.
Prince Charles and Prince William both reportedly informed officials that they were not interested in meeting with Trump and as a result, Queen Elizabeth had to greet him alone when he arrived for tea at Windsor Castle on Friday.
“This business of Prince Charles and Prince William not being there for the Trump visit was a snub,” a source told the Sunday Times. “They simply refused to attend. It’s a very, very unusual thing for the Queen to be there on her own. Usually she is accompanied by somebody.”
The newspaper also noted that Trump “failed” to properly greet her with a bow and then walked in front of her as they were about to inspect the honor guard.
U.K. officials apparently played down the absence of events with the royal family in Trump’s itinerary, noting that the president was not on a state visit.
The Sunday Times reported that Prince Charles had prior engagement and Prince William was participating in a charity polo match.
However, a government official also told the newspaper that Trump’s time with the Queen was “kept to the bare minimum.”
“The Queen will do her duty, but among the wider family, they were not as enthusiastic as they were when Obama came over,” he said.
The Daily Mirror contrasted the royal family’s subdued welcome for Trump with President Barack Obama’s visit in 2016 when he not only dined with Queen Elizabeth and Prince Philip but was also invited to a private meeting with Prince William, Princess Kate and Prince Harry.
Flashy men are not fooling anyone. Least of all, women.
Men who drive fast cars and like to live large are regarded as being more interested in short-term hook-ups or affairs than marriage. That’s according to a study by Daniel Kruger, a faculty associate at the University of Michigan and Jessica Kruger, a clinical assistant professor at the University at Buffalo in New York, and published in the academic journal Evolutionary Psychological Science.
Both men and women rated the man with the flashy car as being more interested in brief sexual relationships and gave him low marks as a potential family man.
In the study, two groups of undergraduate students rated two fictional men on their perceived dating and parenting skills, interest in relationships and attractiveness to others. Both men had the same budget, but frugal “Dan” spent his $20,000 on a car for reliability, while flashy “Dave” spent $15,000 on his car and used $5,000 to pimp his ride with larger wheels, a paint job and a sound system.
Men and women rated the man with the flashier car as being more interested in brief sexual relationships and gave him low marks as a potential life partner or family man. The frugal guy—who didn’t feel the need to paint his car and add more bells and whistles—received top marks as a potential life partner, parent and provider by both genders, the study found.
“Compared to women, men have a greater tendency to conspicuously display their wealth,” the researchers wrote. “This is consistent with their typical role as providers and is thought to be a way for them to advertise their intentions about a relationship. Across cultures, a woman’s preference for a certain partner at a specific time reflects the type of partnership she is considering.”
Wealthy men and women look for different things
Wealthy men and women have different priorities when it comes to choosing a mate, previous research concluded. Men with higher incomes showed stronger preferences for women with slender bodies, while women with higher incomes preferred men who had a steady income or made similar money, according to a 2016 survey of 28,000 men and women aged between 18 and 75.
Men with higher incomes showed stronger preferences for women with slender bodies, while wealthy women preferred men with a steady income.
The study was conducted by researchers at Chapman University in Orange, Calif., and was published in “Personality and Individual Differences.” Women felt it was more important that their partner made at least as much money as they did (46% versus 24% of men) and had a successful career (61% versus 33% of men). Men favored a fit body (80% versus 58% of women).
And men with more education also had stronger preferences for female partners who were “good looking” and slender, whereas this was not a concern for women. Some 95% of men with an advanced degree said it was “essential” that their partner was “good looking” versus 77% of those with a high school education or less, that study found.
Slender bodies are associated with youth as the body’s metabolism slows as one grows older and, as such, could represent fertility for men, while women pay attention to things that enhance their security and survival, and that of their family. Cultural factors, of course, can greatly influence the extent of these preferences, the researchers theorized.
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.
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.
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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.
Sirius XM (NASDAQ: SIRI) quietly continues to build its subscriber base despite seemingly being less needed in the marketplace than it once was. The satellite company has added customers even with the rise of unlimited access to nearly all music created for around $10 a month and the proliferation of podcasts.
Numbers were up across the board in the first quarter for Sirius XM , which operates on the calendar year and has not yet reported second-quarter results. Net income rose $289 million in Q1 ($0.06 per share) from $207 million ($0.04 a share) during the same period in 2017.
The company added 330,000 subscribers in the quarter to top 33 million paying customers for the first time. Total revenue rose accordingly, climbing 6% to $1.4 billion. In addition, Sirius XM reaffirmed its 2018 full-year guidance that calls for 1 million new customers and revenue of approximately $5.7 billion.
Satellite radio comes installed in many new cars. Image source: Getty Images.
While some of Sirius XM’s success can be attributed to its strong subscriber numbers, the company has also helped its stock price by buying back shares. In Q1, the satellite provider spent $295 million buying back over 52 million shares of its stock.
That, plus the company’s improving finances and subscriber gains, cheered investors. After closing at $5.36 at the end of 2017, shares rose to $6.77 at the end of June, a 26% gain, according to data from S&P Global Market Intelligence .
Sirius XM faces significant ongoing challenges as it becomes increasingly easy for consumers to access their smartphones in their cars. It may become hard for people to justify paying $15 or more a month when they already pay for a music service and there’s a lot of free talk, news, and comedy available.
To combat that challenge, the satellite company will need to keep offering programming that people can’t get anywhere else. It does that well in sports — where it has game rights to the four major leagues — and it offers Howard Stern, a unique radio talent. Growing that unique pool of content, however, is not going to be easy, as it’s fighting with a number of other players — not just traditional radio — for some rights and talent.
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Shares of Etsy, Inc. (NASDAQ: ETSY) climbed 106.3% in June, according to data from S&P Global Market Intelligence . Shares posted big gains on a strong quarterly report in February and the rollout of the company’s new user toolkit in June.
The company reported fourth-quarter earnings on Feb. 27, with sales and earnings for both coming in well ahead of the market’s expectations. The stock’s next big movement arrived in June, courtesy of new monetization strategies that stand to make the business significantly more profitable.
Etsy’s first-quarter report delivered earnings of $0.15 per share and sales of $136.3 million, coming in well ahead of the average analyst estimate’s call for $0.08 in earnings per share and sales of $133 million. Beyond the solid top- and bottom-line performance, evidence that the company is posting user-engagement growth has brightened the business’ long-term outlook. The company’s share price continued to trend upward in the months leading up to its next earnings report, but it gave up some ground following the first-quarter results release on May 8.
Etsy shareholders didn’t have to sweat the slight stock performance for too long, however. The company issued a press release on June 14, laying out investment and growth initiatives that the market rewarded by bidding up the share price and delivering the stock’s most rapid valuation gains to date.
The announcement detailed a series of new, added-service offerings. Etsy Plus has recently been made available and offers users special customization options, promotional listings, and other features at a monthly $10 rate. In 2019, the company will launch Etsy Premium — which will include all the features of the standard and Plus packages as well as advanced management tools and specialized customer service tailored to larger businesses. Pricing for Premium has yet to be detailed. The company also announced that, starting on July 16, its sales commission fee will increase from 3.6% to 5% .
With improving engagement metrics, international expansion plans, and new monetization initiatives, Etsy’s business looks to become substantially more profitable. 2018 has already seen the company record substantial profits for for the first time since going public.
The overall growth outlook for the e-commerce market gives Etsy a promising backdrop to work against, and the company’s specialized position could help insulate it from the threat of larger competitors. Shares trade at roughly 8.7 times this year’s expected sales and 63 times expected earnings.
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Marvel has been the king of the box office so far this year, accumulating $3.57 billion in worldwide ticket sales through early July, and helping Disney (NYSE: DIS) commandeer a 36% share of the domestic movie industry take. The debut of Ant-Man and the Wasp seems destined to add to the total, marking Marvel’s 20th successive opening at No. 1 in the U.S. box office.
After the blockbuster debuts of Black Panther and Avengers: Infinity War — which collected $640 million and $374 million worldwide, respectively, on their opening weekends — the $161 million achieved by Ant-Man and the Wasp may seem relatively tame by comparison. However, such an apples-to-oranges comparison needs to be put into perspective.
Image source: Marvel.
Some of these things are not like the others
It isn’t reasonable to expect Marvel’s single-character movies to perform on the same level as the Avengers team-up films, so a more practical comparison would exclude them. Looking just at sequels and how they performed relative to the original movies that preceded them levels the playing field.
As shown in the chart above, the latest addition to the Marvel canon is right in the middle of the pack, with its opening weekend box office up 33% compared to the original entry. It’s also important to note that each of the sequels outperformed the origin movie that preceded it.
Another, perhaps more relevant way to measure the success or failure of a movie is to determine how much was left from ticket sales after subtracting the film’s estimated production and marketing expenses. This is a less-than-perfect exercise, as the studios rarely release those figures, but publicly available estimates provide a reasonable proxy.
As a general rule of thumb, a movie doesn’t hit breakeven until ticket sales exceed about twice the production budget, due to marketing and various other costs.
At this point, it’s anyone’s guess what Ant-Man and the Wasp ‘s final box office tally will be, but worldwide ticket sales are already closing in on $300 million. That’s well ahead of the movie’s $130 million production budget, so the film will ultimately be profitable.
What it all means
If Disney has shown anything this year, it’s that the strength of the Marvel brand is growing over time. The ticket sales of each sequel have exceeded the take of their respective predecessors, and Avengers: Infinity War has smashed records, becoming only the fourth film in history to generate more than $2 billion in worldwide box office.
Marvel will eventually produce a dud, but thus far, the studio’s record is unblemished.
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Shares of Glu Mobile (NASDAQ: GLUU) climbed 76.1% across 2018’s first two quarters, according to data from S&P Global Market Intelligence . Shares gained substantial ground following indications that the company is making progress on its turnaround effort.
The mobile-games publisher posted two encouraging quarterly reports in the first half of the year and saw strong early results for the launch of MLB Tap Sports Baseball 18 . The earnings performance and game launch signaled to the market that Glu was successfully moving away from games based on celebrity brands.
Image source: Getty Images.
Following the success of Kim Kardashian Hollywood in 2014, Glu Mobile responded by becoming a company focused on games built around popular celebrities. This approach produced great results in the short term, but a shift in the market’s tastes proved that the strategy wasn’t viable over the long term. While Kim Kardashian continues to be a solid performer the company, other big titles underperformed, and the cost of licensing celebrity brands weighed on the company’s earnings.
The company’s fourth-quarter results were published in February, delivering 73% year-over-year sales growth and demonstrating a successful move away from celebrity-based games. In the company’s next reported quarter, sales climbed roughly 41% year over year — and 69% of its bookings from original intellectual properties that required no license payments. Shares gained roughly 29% in May on the strength of the earnings results and continued performance for its late-March release MLB Tap Sports Baseball 18 . Glu posted another big month of stock gains in June , thanks to the game evidencing staying power and favorable ratings coverage from Piper Jaffray .
Glu has stated that it plans to launch several new games this year, so investors should keep an eye on new properties in the pipeline and the performance for already-released games such as Design Home , MLB Tap Sports Baseball 18 , and Kim Kardashian Hollywood . App Annie lists Tap Baseball as the 13th highest grossing free-game on U.S. mobile stores over the past week, indicating that the game continues to be a strong performer for Glu despite a recent downward trend in overall app downloads. The mobile app tracker also lists Design Home as the 10th-highest grossing game in the U.S. market across the stretch.
Glu’s turnaround initiative appears to be proceeding well, but investors should keep in mind that the long-term outlook is less certain. The company is operating in a highly competitive industry and will need to prove that it can sustain its legacy titles and create new hit properties.
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Shares of natural gas transportation technology company Westport Fuel Systems Inc. (NASDAQ: WPRT) have fallen 30.1% in 2018, according to data from S&P Global Market Intelligence , as investors waver on whether the company is a long-term winner. So far, the bad has outweighed the good for Westport in 2018.
The most consequential drop of the year came after first-quarter results were released. Revenue rose 13% to $67.7 million , but net loss from continuing operations improved only 1% to $12.7 million. Management has been cutting costs and selling its compressor business for $14.8 million to focus the business and reduce operating expenses. But shrinking operations and selling assets isn’t a long-term growth strategy.
Image source: Getty Images.
Westport can cut costs short-term, but the real challenge is growing the business beyond the niche market it is today, which will take more investment. And if cost cuts don’t lead to profitability now, it’s unclear when the company could turn around.
Management expects to report positive adjusted EBITDA in the second quarter, which would be a good sign for the company overall. But after years of false starts for natural gas fuels, it’s worth being cautious about management’s projections.
2018 will probably be volatile as investors weigh whether Westport’s financial turnaround is happening fast enough. One thing to keep an eye on is the company’s cash burn and cash level at the end of each quarter. Management has used dilutive share sales to maintain an acceptable cash level, which may be necessary later this year if cash generation doesn’t improve.
I’ll take a wait-and-see approach to Westport’s potential recovery, especially with a long history of disappointment for investors. Natural gas has a lot of potential to lower costs and clean up operations in long-haul trucking, but until we know it’s going to be a profitable business, I’ll remain skeptical that Westport will be a buy.
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2018 is turning out to be a disappointing year for investors in Eldorado Gold (NYSE: EGO) . The gold stock has lost 26.9% in the first six months of the year, according to data from S&P Global Market Intelligence . That still doesn’t look as bad when you realize that Eldorado shares plummeted as much as 41% in just the first quarter of the year before recovering some ground. What should investors make of the gold stock’s wild moves?
Among all the announcements that Eldorado Gold has made so far this year, three stand out: its fiscal 2017 earnings release in March and a positive update on the Greek arbitration ruling, followed by its first-quarter earnings report in April. Now if you plot the stock’s year-to-date price chart, you can correlate the stock’s movement to the three events.
Image source: Getty Images.
Investors began dumping Eldorado shares later last year for two reasons: uncertainty shrouding the miner’s projects in Greece after the government initiated arbitration proceedings to settle long-pending disputes, and falling production from its flagship Kisladag mine in Turkey.
As if that wasn’t enough, Eldorado dealt investors another blow in March, when it reported lower sales and adjusted profit for fiscal 2017 and gave a disappointing outlook for fiscal 2018 that included significantly higher cost projections.
In short, Eldorado is facing all sorts of challenges one can think of, from operational challenges to key development projects in limbo. Investors found some respite in May, when the Greek government announced its intention to resolve the deadlock with Eldorado in the “coming weeks,” but the euphoria was short-lived. Not only has there been no update from Greece yet, but gold prices have also lost significant ground in the meantime. For a gold mining company that’s already struggling with low production and high costs, falling gold prices are the last thing it wants to see.
There’s no reason any investor would want to buy Eldorado shares right now, as the miner isn’t out of the woods yet . Sure, a resolution in Greece will be welcome news, but buying shares on that basis alone is nothing but speculation, more so because it’s difficult to estimate the cost implications and it’ll still take years for Eldorado to bring its projects in the nation online. Mining is a tough business, and you’d perhaps be better off staying away from a struggling gold miner’s stock.
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Uranium prices hold the key to a market turnaround. However, spot uranium prices have barely moved this year, with the average monthly price coming in at around $22.65 per pound in June, compared with $21.88 per pound in January, as quoted by Cameco. For perspective, average uranium price were roughly $23.13 last November.
So why did Cameco shares climb? The rally has more to do with investor expectations of a recovery, and it’s not entirely unfounded.
Image source: Getty Images.
You see, Cameco is among the world’s two largest uranium producers. So the company’s decision to suspend operations at key mines McArthur River and Key Lake starting in January was big news. Meanwhile, the world’s largest uranium producer, Kazakhstan’s Kazatomprom, is also scaling back production. As I explained in a recent article , these developments have fueled hopes among uranium producers around the globe, even as industry experts project production to drop substantially this year and help ease the supply glut and buoy prices.
Meanwhile, Cameco is aggressively cutting costs where possible , which, combined with lower capital spending, sent the company’s cash flows soaring in fiscal 2017, with its free cash flow even hitting multi-year highs. With management projecting cash flow for fiscal 2018 to be similar to last year’s, investors hope Cameco is headed for better days.
Even after its recent run-up, Cameco is trading at historically low price-to-cash flow valuations. That indicates the stock’s still a value buy, but the real upside will come only when uranium buyers, primarily nuclear power reactors, return and there’s substantive evidence of a recovery in prices. That will eventually dictate Cameco’s future, as there’s only so much the company can do on the cost front right now.
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