5 Reasons to Buy Semiconductor ETFs

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TipRanks

J.P. Morgan Says These 3 Stocks Could Surge Over 100% From Current Levels

After the summer bulls, markets corrected themselves – but more than that, the selling was highly concentrated in the tech sector. The tech-heavy NASDAQ is now leading the on the fall, having lost 11.5% since September 2.JPMorgan strategist Marko Kolanovic points out that much of the market is now well-positioned for a rebound. Kolanovic believes that stocks will head back up in the last quarter of the year.“Now we think the selloff is probably over. Positioning is low. We got a little bit of a purge, so we think actually market can move higher from here,” Kolanovic noted.Acting on Kolanovic’s outlook, JPMorgan’s stock analysts are starting to point out their picks for another bull run. These are stocks that JPM believes they may double or better over the coming year. Running the tickers through TipRanks’ database, we wanted to find out what makes them so compelling.NexTier Oilfield Solutions (NEX)The first JPM pick is NexTier, a provider of oilfield support services. The oil industry is more than just production companies. There are a slew of companies that provide drilling expertise, fluid technology for fracking, geological expertise, pumping systems – all the ancillary services that allow the drillers to extract the oil and gas. That is the sector where NexTier lives.Unfortunately, it’s a sector that has proven vulnerable to falling oil prices and the economic disruption brought on by the coronavirus pandemic crisis. Revenues fell from Q1’s $627 million to $196 million in Q2; EPS was negative in both quarters.But NexTier has a few advantages that put it in a good place to take advantage of a market upturn. These advantages, among others, are on the mind of JPM analyst Sean Meakim. “Admittedly we’re concerned about the sector disappointing the generalist ‘COVID-19 recovery’ crowd given the asymmetry of earnings beta to oil, but with 1) a solid balance sheet (net debt $17mm), 2) our outlook for positive (if modest) cash generation in 2021 (JPMe +$20mm), 3) a pathway to delivering comparably attractive utilization levels and margins, and 4) the cheapest valuation in the group (~20% of replacement), we think NexTier stands out as one of the best positioned pressure pumpers in our coverage,” Meakim opined.In line with his optimism, Meakim rates NEX an Overweight (i.e. Buy) along with a $5 price target. His target suggests an eye-opening upside potential of 203% for the coming year. (To watch Meakim’s track record, click here)Similarly, the rest of the Street is getting onboard. 6 Buy ratings and 2 Hold assigned in the last three months add up to a Strong Buy analyst consensus. In addition, the $3.70 average price target puts the potential twelve-month gain at 124%. (See NEX stock analysis on TipRanks)Fly Leasing (FLY)The next stock on our list of JPMorgan picks is Fly Leasing, a company with an interesting niche in the airline industry. It’s not commonly known, but most airlines don’t actually own their aircraft; for a variety of reasons, they lease them. Fly Leasing, which owns a fleet of 86 commercial airliners valued at $2.7 billion, is one of the leasing companies. Its aircraft, mostly Boeing 737 and Airbus A320 models, are leased out to 41 airlines in 25 countries. Fly Leasing derives income from the rentals, the maintenance fees, and the security payments.As can be imagined, the corona crisis – and specifically, the lockdowns and travel restrictions which are not yet fully lifted – hurt Fly Leasing, along with the airline industry generally. With flights grounded and ticket sales badly depressed, income fell – and airlines were forced to cut back or defer their aircraft lease payments. This is a situation that is only now beginning to improve.The numbers show it, as far as they can. FLY’s revenue has fallen from $135 million in 4Q19 to $87 million 1Q20 to $79 million the most recent quarter. EPS, similarly, has dropped, with Q2 showing just 37 cents, well below the 43-cent forecast. But there are some bright spots, and JPM’s Jamie Baker points out the most important.“[We] conservatively expect no deferral repayments in 2H20 vs. management’s expected $37m. Overall, our deferral and repayment assumptions are in line with the other lessors in our coverage. We are assuming no capex for the remainder of the year, consistent with management’s commentary for no capital commitments in 2020 […] Despite recent volatility seen in the space, we believe lessors’ earnings profiles are more robust relative to airlines,” Baker noted.In short, Baker believes that Fly Leasing has gotten its income, spending, and cash situation under control – putting the stock in the starting blocks should markets turn for the better. Baker rates FLY an Overweight (i.e. Buy), and his $15 price target implies a powerful upside of 155% for the next 12 months. (To watch Baker’s track record, click here)Over the past 3 months, two other analysts have thrown the hat in with a view on the aircraft leasing company. The two additional Buy ratings provide FLY with a Strong Buy consensus rating. With an average price target of $11.83, investors stand to take home an 101% gain, should the target be met over the next 12 months. (See FLY stock analysis on TipRanks)Lincoln National Corporation (LNC)Last up, Lincoln National, is a Pennsylvania-based insurance holding company. Lincoln’s subsidiaries and operations are split into four segments: annuities, group protection, life insurance, and retirement plans. The company is listed on the S&P 500, boasts a market cap of $5.8 billion, and over $290 billion in total assets.The generally depressed business climate of 1H20 put a damper on LCN, pushing revenues down to $3.5 billion from $4.3 billion six months ago. Earnings are down, too. Q2 EPS came in at 97 cents, missing forecasts by 36%. There is a bright spot: through all of this, LNC has kept up its dividend payment, without cuts and without suspensions. The current quarterly dividend is 40 cents per common share, or $1.60 annually, and yields 4.7%. That is a yield almost 2.5x higher than found among peer companies on the S&P 500.Jimmy Bhullar covers this stock for JPM, and while he acknowledges the weak Q2 results, he also points out that the company should benefit as business conditions slowly return to normal.“LNC’s 2Q results were weak, marked by a shortfall in EPS and weak business trends. A majority of the shortfall was due to elevated COVID-19 claims and weak alternative investment income, factors that should improve in future periods […] The market recovery should help alternative investment income and reported spreads as well…”These comments support Bhullar’s Overweight rating. His $73 price target indicates room for a robust 143% upside from current levels (To watch Bhullar’s track record, click here)Overall, the Moderate Buy rating on LNC is based on 3 recent Buy reviews, against 5 Holds. The stock is selling for $30 and the average price target is $45.13, suggesting a possible 50% upside for the coming year. (See LNC stock analysis on TipRanks)To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
InvestorPlace

Why Buy a Yield Trap With AT&T?

According to analysts, AT&T (NYSE:T) stock should more than cover its dividend when the company next reports earnings Oct. 26.Source: Jonathan Weiss / Shutterstock.com The consensus among analysts is for 77 cents per share of earnings. The dividend costs 51 cents.But in a world where the 30-year government bond yields 1.4%, AT&T stock is down 6.3% from its last earnings report on July 23. This despite a yield that now totals 7.16% per year. That’s higher than Chevron (NYSE:CVX).InvestorPlace – Stock Market News, Stock Advice & Trading TipsHow can this be? AT&T is the leading provider of mobile services, a business certain to take off with 5G. It is a major provider of wired broadband as well. Its press release on earnings claimed good things are coming from its entertainment unit, WarnerMedia.What’s wrong? The DebtWhat’s wrong is the balance sheet, which showed over $175 billion of debt at the end of June. That’s a debt to equity ratio of .96. Forget the company’s market cap of $207 billion. Its “enterprise value,” the debt and equity combined, is almost $400 billion.Most of the debt was bought to handle two miserable, terrible, horrible, and very bad deals by former CEO Randall Stephenson.It spent $67 billion for DirecTV, a direct-satellite broadcaster, including its debt. It’s now worth much less.Goldman Sachs was hired to examine DirecTV’s possible sale to private equity in May, and a sale to Dish Network (NASDAQ:DISH) is often teased. But nothing has happened yet. DirecTV has lost 7 million customers over the last two years and may bring much less than AT&T paid for it.Then there’s WarnerMedia, for which Stephenson paid $85 billion in 2018. AT&T has been squeezing out costs ever since then, while rivals like Netflix (NASDAQ:NFLX), Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN) have increased budgets. Many of the Warner assets, like CNN, are built for cable TV, and AT&T lost 954,000 of these customers in the second quarter alone. What WorksIt’s clear that what Stephenson bought doesn’t work for T stock.What does work is AT&T Wireless, which has been the company’s bedrock since its 1994 acquisition of McCaw Cellular for $12.4 billion.Despite heavy advertising for 5G, AT&T has been squeezing costs here too. AT&T’s capital budget is about $20 billion, and that includes AT&T fiber deployments.The AT&T capital budget is now lower than that for Amazon, which spent $24 billion over the last four quarters. Amazon is worth $1.58 trillion, or 7.6 AT&T’s. Even with AT&T’s debt added, Amazon is worth nearly four times more. Why Buy AT&T?There are reasons to buy AT&T, based largely on new CEO John Stankey undoing much of what Stephenson did.Take a loss on DirecTV. Sell parts of WarnerMedia, like the movie studio, to Apple, Amazon, or Alphabet’s (NASDAQ:GOOG,NASDAQ:GOOGL) Google, even Facebook (NASDAQ:FB). Spin-off the cable networks like CNN, as a stand-alone company, to a cloud company or through private equity.In other words, dump the garbage and focus on the network. There is enormous growth in 5G, for cars and the machine internet. Serving these last-mile networks are what’s working in the 2020 economy. AT&T shareholders should be benefiting from that change, which has years of runway ahead of it.Instead, they’re stuck with debt and entertainment.This is a situation that can’t continue. Cloud companies need more bandwidth to keep growing. They don’t need to see that bandwidth constricted because carriers are focused on TV, where bandwidth requirements are ultimately limited.You buy AT&T today for the dividend, and you wait for the reorganization. The present company doesn’t work, but its pieces will work for someone. In 2023 AT&T will be a very different company. Take the yield in T stock and wait for the capital gains of a break-up that now looks inevitable.On the date of publication, Dana Blankenhorn owned shares in AAPL and AMZN.Dana Blankenhorn has been a financial and technology journalist since 1978. His latest book is Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, essays on technology available at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or follow him on Twitter at @danablankenhorn. More From InvestorPlace * Why Everyone Is Investing in 5G All WRONG * America’s 1 Stock Picker Reveals His Next 1,000% Winner * Revolutionary Tech Behind 5G Rollout Is Being Pioneered By This 1 Company * Radical New Battery Could Dismantle Oil Markets The post Why Buy a Yield Trap With AT&T? appeared first on InvestorPlace.
SmartAsset

What Is the Rule of 70, and How Do You Use It?

The rule of 70 is used to determine about how long it will take an investment to double in size while growing at a consistent rate of return. The rule is far from exact, but it can nonetheless help you … Continue reading ->The post What Is the Rule of 70, and How Do You Use It? appeared first on SmartAsset Blog.
Benzinga

Exxon Mobil’s Dividend Yield Hits 10%: What Investors Need To Know

Exxon Mobil’s dividend yield has continued to rise in a year that the stock has fallen by more than 50%. What Happened: Exxon Mobil Corporation’s (NYSE: XOM) dividend yield is sitting above 10% as of Thursday.The company paid out a dividend of 87 cents in September. Based on the ex-dividend date of Aug. 12, the annual dividend rate was 7.9%.The dividend yield was 7.9% and 5.8% at the ex-dividend dates of the other dividends paid in 2020.In 2019, all four ex-dividend dates were at yields of 5% or less. In 2018, all four dates were 4.1% or less. Charts dating back to 1989 show that Exxon Mobil’s dividend yield is at its highest-ever level. What’s Next: Exxon Mobil has a history of raising its quarterly dividend payout.The 87-cent quarterly payout has stayed the same for six straight quarters.Since 2008, ExxonMobil has never had the same quarterly dividend payout for more than four straight quarters.MKM Partners analyst John Gerdes has suggested ExxonMobil may need to raise $15 billion in debt to support its dividend over the next two years.Options trading trends are also pointing to a potential dividend cut this year or the next. XOM Price Action: Shares of ExxonMobil were down 0.2% at $34.32 at the close Thursday.Photo by Michael Rivera via Wikimedia. See more from Benzinga * Dave Portnoy Shares Thoughts On Penn Stock Offering, Barstool App Figures * Churchill Capital Launches Fifth SPAC * Spotify, Match Group, Epic Games Join Fight Against Apple’s App Store(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Bloomberg

Ray Dalio Sees Enemy Within as He Ponders U.S.-China Clash

(Bloomberg) — Ray Dalio used the latest installment of his ongoing series on the changing world order to identify clear red lines that, if crossed, could result in a deadly war between China and the U.S., but the real enemy in the conflict may lie within.“Our greatest war is with ourselves because we have the most control over how strong or weak we are,” the billionaire founder of Bridgewater Associates wrote in the essay published on LinkedIn. “The internal wars and challenges in both China and the US are more important and bigger than external wars and challenges.”While Dalio doesn’t think the current trade war has been “taken very far,” any attempt by China to restrict American access to rare earth elements, or by the U.S. to restrict China’s access to semiconductors from Taiwan or crude oil, for example, could signal that the current conflict was about to get a lot worse.Culture, meanwhile, may be the one frontier where the two countries should try and make some inroads.“The main challenge the Chinese and Americans have with each other arises from some of them failing to understand and empathize with the other’s values and ways of doing things, and not allowing each other to do what they think is best,” Dalio wrote in the 17,000-word essay that also pondered the future of the U.S. dollar as a global reserve currency. “Some of these cultural differences are minor and some of them are so major that many people would fight to the death over them.”Key Quotes“Destiny and the way the global power cycle works have now put the United States in the unfortunate position of having to choose between a) fighting to defend its position and its existing world order and b) retreating”“The successes of all countries depend on sustaining the strengthening forces without producing the excesses that lead to their declines. The really successful ones have been able to do that in a big way for 200-300 years. None has been able to do it forever”“In order to prevent these from escalating out of control, it will be important for leaders of both countries to be clear about what the ‘red lines’ and ‘trip wires’ are that signal changes in the seriousness of the conflict”“Beyond the elections, a lot hinges on who wins and how they will approach this conflict. That will be a big influence on how Americans and the Chinese approach the Big Cycle destinies that are in the process of unfolding”“Regarding the trade war I believe that we have pretty much seen the best trade agreement that we are going to see and that the risks of this war worsening are greater than the likelihood that it will improve”“If the United States shuts off Chinese access to essential technologies that would signal a major step up in war risks”“Sovereignty, especially as it relates to the Chinese mainland, Taiwan, Hong Kong, and the East and South China Seas, is probably China’s biggest issue”“Perhaps the most interesting relationship to watch is between China and Russia”“The United States’ greatest power comes from being able to print the world’s money and all the operational powers that go along with that. The United States is at risk of losing some of this power while the Chinese are in the position of gaining some of it”Read More: Dalio Sheds Light on Chinese Thinking on Trade Deal: China TodayFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Oilprice.com

Why Natural Gas Prices Are Set To Soar

After years of low natural gas prices, fundamentals are beginning to improve, and this week’s rally in gas futures sets the stage for higher gas prices this winter
Benzinga

Why Harley-Davidson Quit World’s Largest Motorcycle Market

Iconic U.S. motorcycle brand Harley-Davidson Inc (NYSE: HOG) has decided to exit India – the world’s largest motorcycle market, as a part of its “Rewire” strategy of having a leaner operating model.What Happened: Harley had been struggling to make in-roads in India’s motorcycle market dominated by low-cost players. As a result, it decided to shut shop in India as a part of its restructuring strategy introduced by Jochen Zeitz, chairman, president, and CEO, who had joined in May this year.Harley expects to complete the revamp in the next 12 months, which will include a reduction of approximately 70 employees, and a restructuring cost of $75 million.The company has hired former Tyson Foods, Inc. (NYSE: TSN) executive Gina Goetter as the new Chief Financial Officer, effective Sept. 30.”India is a high volume, low margin market. They weren’t structured to play that game, being at the very pointy end of the pyramid. The lifestyle element that goes with owning a Harley bike is also not fully developed in India yet,” Hormazd Sorabjee, Editor of Autocar India told BBC.The coronavirus pandemic has dealt a blow to the bike maker, which was struggling already with an average sale of 3,000 units a year.The company could not beat the affordability of Royal Enfield, which dominates the premium motorcycle market. Harley’s bikes in India started at INR 450,000 ($6,100) compared to Royal Enfield’s lighter vehicles selling for INR 200,000 ($2,717.67), reports the Financial Times.Why It’s Important: Harley’s exit comes after General Motors Company (NYSE: GM) and Ford Motor Company (NYSE: F) scaled back its India operations. The country’s auto sector has been struggling for some time and Japanese carmaker Toyota Motor Corp (NYSE: TM) has decided to not expand in India owing to higher taxes, reports FT. Indian Prime Minister Narendra Modi’s “Make-in-India” has had limited success in this regard.This will not bode well with the Trump administration, which has accused India of unfair treatment. It can be a sticking point with the U.S., with whom India is negotiating a free trade agreement, according to BBC.See more from Benzinga * Soaring COVID-19 Cases Dampen European Markets * Asian Markets Remain Mixed On Hopes Of Fresh US Stimulus * Delay TikTok Ban Or Defend By Friday, Judge Tells Trump Administration(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
TipRanks

3 ‘Strong Buy’ Stocks With Over 7% Dividend Yield

Markets are volatile, there can be no doubt. So far this month, the S&P 500 has fallen 9% from its peak. The tech-heavy NASDAQ, which had led the gainers all summer, is now leading the on the fall, having lost 11% since September 2. The three-week tumble has investors worried that we may be on the brink of another bear market.The headwinds are strong. The usual September swoon, the upcoming election, doubts about another round of economic stimulus – all are putting downward pressure on the stock markets.Which doesn’t mean that there are no opportunities. As the old saw goes, “Bulls and bears can both make money, while the pigs get slaughtered.” A falling market may worry investors, but a smart strategy can prevent the portfolio from losing too much long-term value while maintaining a steady income. Dividend stocks, which feed into the income stream, can be a key part of such a strategy.Using the data available in the TipRanks database, we’ve pulled up three stocks with high yields – from 7% to 11%, or up to 6 times the average dividend found on the S&P 500 index. Even better, these stocks are seen as Strong Buys by Wall Street’s analysts. Let’s find out why.Williams Companies (WMB)We start with Williams Companies, an Oklahoma-based energy company. Williams controls pipelines connecting Rocky Mountain natural gas fields with the Pacific Northwest region, and Appalachian and Texan fields with users in the Northeast and transport terminals on the Gulf Coast. The company’s primary operations are the processing and transport of natural gas, with additional ops in crude oil and energy generation. Williams handles nearly one-third of all US commercial and residential natural gas use.The essential nature of Williams’ business – really, modern society simply cannot get along without reliable energy sources – has insulated the company from some of the economic turndown in 1H20. Quarterly revenues slid from $2.1 billion at the end of last year to $1.9 billion in Q1 and $1.7 billion in Q2. EPS in the first half was 26 cents for Q1 and 25 cents for Q2 – but this was consistent with EPS results for the previous three quarters. The generally sound financial base supported the company’s reliable dividend. Williams has been raising that payment for the past four years, and even the corona crisis could not derail it. At 40 cents per common share, the dividend annualizes to $1.60 and yields an impressive 7.7%. The next payment is scheduled for September 28.Truist analyst Tristan Richardson sees Williams as one of the midstream sector’s best positioned companies.“We continue to look to WMB as a defensive component of midstream and favor its 2H prospects as broader midstream grasps at recovery… Beyond 2020 we see the value proposition as a stable footprint with free cash flow generation even in the current environment. We also see room for incremental leverage reduction throughout our forecast period on scaled back capital plans and even with the stable dividend. We look for modestly lower capex in 2021, however unlike more G&P oriented midstream firms, we see a project backlog in downstream that should support very modest growth,” Richardson noted.Accordingly, Richardson rates WMB shares as a Buy, and his $26 price target implies a 30% upside potential from current levels. (To watch Richardson’s track record, click here)Overall, the Strong Buy analyst consensus rating on WMB is based on 11 Buy reviews against just a single Hold. The stock’s current share price is $19.91 and the average price target is $24.58, making the one-year upside potential 23%. (See WMB stock analysis on TipRanks)Magellan Midstream (MMP)The second stock on our list is another midstream energy company, Magellan. This is another Oklahoma-based firm, with a network of assets across much of the US from the Rocky Mountains to the Mississippi Valley, and into the Southeast. Magellan’s network transports crude oil and refined products, and includes Gulf Coast export shipping terminals.Magellan’s total revenues rose sequentially to $782.8 in Q1, and EPS came in at $1.28, well above the forecast. These numbers turned down drastically in Q2, as revenue fell to $460.4 million and EPS collapsed to 65 cents. The outlook for Q3 predicts a modest recovery, with EPS forecast at 85 cents. The company strengthened its position in the second quarter with an issue of 10-year senior notes, totaling $500 million, at 3.25%. This reduced the company’s debt service payments, and shored up liquidity, making possible the maintenance of the dividend.The dividend was kept steady at $1.0275 per common share quarterly. Annualized, this comes to $4.11, a good absolute return, and gives a yield of 11.1%, giving MMP a far higher return than Treasury bonds or the average S&P-listed stock.Well Fargo analyst Praneeth Satish believes that MMP has strong prospects for recovery. “[We] view near-term weakness in refined products demand as temporary and recovering. In the interim, MMP remains well positioned given its strong balance sheet and liquidity position, and ratable cash flow stream…” Satish goes on to note that the dividend appears secure for the near-term: “The company plans to maintain the current quarterly distribution for the rest of the year.”In line with this generally upbeat outlook, Satish gives MMP an Overweight (i.e. Buy) rating, and a $54 price target that implies 57% growth in the coming year. (To watch Satish’s track record, click here)Net net, MMP shares have a unanimous Strong Buy analyst consensus rating, a show of confidence by Wall Street’s analyst corps. The stock is selling for $33.44, and the average price target of $51.13 implies 53% growth in the year ahead. (See MMP stock analysis on TipRanks)Ready Capital Corporation (RC)The second stock on our list is a real estate investment trust. No surprise finding one of these in a list of strong dividend payers – REITs have long been known for their high dividend payments. Ready Capital, which focuses on the commercial mortgage niche of the REIT sector, has a portfolio of loans in real estate securities and multi-family dwellings. RC has provided more than $3 billion in capital to its loan customers.In the first quarter of this year, when the coronavirus hit, the economy turned south, and business came to a standstill, Ready Capital took a heavy blow. Revenues fell by 58%, and Q1 EPS came in at just one penny. Things turned around in Q2, however, after the company took measures – including increasing liquidity, reducing liabilities, and increasing involvement in government-sponsored lending – to shore up business. Revenues rose to $87 million and EPS rebounded to 70 cents.In the wake of the strong Q2 results, RC also started restoring its dividend. In Q1 the company had slashed the payment from 40 cents to 25 cents; in the most recent declaration, for an October 30 payment, the new dividend is set at 30 cents per share. This annualizes to $1.20 and gives a strong yield of 9.9%.Crispin Love, writing from Piper Sandler, notes the company’s success in getting back on track.“Given low interest rates, Ready Capital had a record $1.2B in residential mortgage originations versus our $1.1B estimate. Gain on sale margins were also at record levels. We are calculating gain on sale margins of 3.7%, up from 2.4% in 1Q20,” Love wrote.In a separate note, written after the dividend declaration, Love added, “We believe that the Board’s actions show an increased confidence for the company to get back to its pre-pandemic $0.40 dividend. In recent earnings calls, management has commented that its goal is to get back to stabilized earnings above $0.40, which would support a dividend more in-line with pre-pandemic levels.”To this end, Love rates RC an Overweight (i.e. Buy) along with a $12 price target, suggesting an upside of 14%. (To watch Love’s track record, click here)All in all, Ready Capital has a unanimous Strong Buy analyst consensus rating, based on 4 recent positive reviews. The stock has an average price target of $11.50, which gives a 9% upside from the current share price of $10.51. (See RC stock analysis on TipRanks)To find good ideas for dividend stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
InvestorPlace

Workhorse Stock Is Hot, Hot, Hot!

Workhorse (NASDAQ:WKHS) has been absolutely on fire in 2020, with WKHS stock skyrocketing 825% higher this year on the back of abundant investor optimism with respect to the company’s ability to disrupt the last-mile delivery market with a next-gen electric delivery van.Source: Photo from WorkHorse.com This optimism is not misplaced.InvestorPlace – Stock Market News, Stock Advice & Trading TipsAll transportation is getting electrified. The last-mile delivery market represents a very big and highly attractive disruption opportunity in this electrification wave. Workhorse is pioneering a best-in-breed solution to lead this disruption.And, while WKHS has run up a ton in 2020, there’s plenty of upside left in this name over the next few years because the last-mile delivery market is huge (~$18 billion) and Workhorse is still a small company (~$2.7 billion).So buy WKHS stock and hold it for the long haul.Here’s a deeper look. Electrification Is the FutureThere’s no doubt about it. The electrification wave has arrived, and over the next decade, it will proliferate across all transportation verticals, from passenger cars to commercial trucks to last mile delivery vans, and everything in between. * 7 Hot Stocks to Buy on Robinhood Now There are few trends driving this disruption. All of them are here to stay.First, consumer demand is shifting.Young consumers — who were raised to be hyper-aware of the environment and educated on how to reduce carbon emissions — want EVs. A 2018 survey from HPI found that 91% of Millennials are considering buying an electric car for their next vehicle purchase. These young consumers are just now starting to come into jobs and a ton of purchasing power. Over the next decade, they will increasingly drive auto market demand — and if all of them want EVs, then it’s easy to see how EVs take over the passenger car market from a demand perspective in the 2020s.Second, the technology is getting better.Because demand is shifting, more and more resources and talent are being thrown into the EV space. This is resulting in huge advancements in EV technology, specifically on the battery front, where companies like Tesla (NASDAQ:TSLA) are increasingly making smaller and better batteries that last longer, charge faster and take up less space — allowing for more efficient vehicles. Such technological advancements will only persist over the next few years, with a potential jump to solid-state batteries being a huge upward catalyst.Third, the cars are getting cheaper.Thanks to better technology, more streamlined manufacturing processes and increased scale, the cost to produce EVs is dropping dramatically, resulting in huge drops in EV prices. Since 2013, average EV battery pack prices have fallen 76%, according to Bloomberg New Energy Finance. This is resulting in falling EV list prices (the median sales price of a new EV dropped 70% between 2010 and 2016), to a point where these vehicles are now affordable to many Millennial car buyers.Fourth, the need is getting bigger.I live in California. All I have to do right now to be reminded that global warming is getting worse is just look outside, where the sky has been ashy for over a week. The need for us to reduce carbon emissions is only growing every single year, and EVs give everyone a mainstream way to help fix this problem.All in all, then, the electrification of transportation has started… and it’s only going to get bigger and bigger over the next 10 years. To that end, buying Workhorse and other EV stocks offers investors a great way to play this electrification megatrend. Last Mile Delivery Represents a Huge OpportunityThe last mile delivery market represents a huge opportunity for electrification disruption over the next 10 years.Last mile delivery is the last leg of delivering goods via trucks from warehouses to homes. As such, these vans don’t go very far. About 80% of freight in the U.S is transported less than 250 miles, whereas your average EV has about a 300-mile driving range.So EV technology is already good enough to almost fully replace legacy vans in the last mile delivery market.Even further, these vans are run by companies — Amazon (NASDAQ:AMZN), UPS (NYSE:UPS), FedEx (NYSE:FDX), so on and so forth — that are feeling increasing sociopolitical pressure to go green. Indeed, all of these companies have made it a priority to cut carbon emissions over the next few years.Thus, demand is shifting, and the supply is already good enough to be a viable replacement. Connecting the dots, it seems clear as day that by the end of the decade, most of the last mile delivery vans that drive up and down your street will be electric.That’s a huge deal.In the U.S. alone, more than 350,000 last-mile delivery vans are sold every year at an average sales price of $50,000, implying an annual addressable market here of $18+ billion.Workhorse is set to disrupt this $18 billion market, and as the company does, WKHS stock will soar. Workhorse Is Pioneering a Best-in-Breed SolutionThere are lots of EV players out there.Very few of them are targeting their efforts at the last-mile delivery market.None of them have a created a last-mile EV delivery solution that is as robust as Workhorse’s solution.Workhorse’s C-Series electric delivery vans are already more fuel efficient than diesel trucks, with 40 miles per gallon gas-equivalent versus 6 miles per gallon for a traditional UPS truck. They are also already much cheaper, with 65% lower operating costs per mile.I say “already” because diesel trucks aren’t going to get more efficient or cheaper anytime soon. But Workhorse’s C-Series trucks will, as EV battery technology improves over the next few years. Indeed, over the past few years, Workhorse’s trucks have increased efficiency by 25%, reduced operating costs, increased driving range, reduced charging times and reduced weight.So, by 2025, Workhorse’s C-Series electric delivery vans will be miles ahead in terms of efficiency, performance and affordability than diesel trucks and other electric vans.At the same time, Workhorse’s vans are the only medium duty electric van permitted to sell and deliver vehicles in all 50 states. They are also equipped with a wide-reaching distribution deal with Ryder – one of North America’s largest delivery van retailers – and have already scored huge partnership deals with UPS and USPS.Plus, Workhorse is developing drone delivery technology – dubbed HorseFly – to be integrated with its delivery vans. Once fully fleshed out, this tech should only extend Workhorse’s early leadership in this market.Overall, Workhorse is pioneering a best-in-breed EV solution in the last mile delivery market which has high visibility to seeing widespread adoption over the next 5 to 10 years. Huge Upside for Workhorse StockTo be sure, WKHS has rallied in a huge way in 2020 as investors have bought into the long-term bull thesis.But there’s still plenty of upside left.Given that the last-mile delivery market is an oligopoly and that all of the major players will electrify sooner rather than later, it is quite likely that nearly 100% of the 350,000 delivery van market in the U.S. is electric by 2030.If Workhorse nabs just 10% of that market at $75,000 average prices and 15% operating margins, then my modeling suggests that net profits should round out to ~$300 million by 2030. A 20X multiple on that implies a potential future valuation of $6 billion — more than double today’s market cap of $2.7 billion.But, let’s say Workhorse nabs 20% market share. Then we are talking $600 million in 2030 net profits, and a future valuation of $12 billion — up more than four-fold from the WKHS stock price today.Either way, there’s still plenty of fuel in the tank. Bottom Line on WKHS StockWorkhorse stock is a long-term winner. Yes, it’s come a long ways it a short time. Don’t blindly chase the rally. But on the next pullback, buy the dip. Because WKHS still has tons of upside potential over the next few years as the last mile delivery market gets electrified.On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article. The New Daily 10X Stock Report: 98.7% Accuracy – Gains Up to 466.78%. InvestorPlace’s brand-new and highly controversial newsletter… is rocking the industry… delivering one breakthrough stock recommendation each and every trading day… delivered straight to your inbox. 98.7% Accuracy to Date – Gains Up to 466.78%. Now for a limited time… you can get in for just $19. Click here to find out how. More From InvestorPlace * Why Everyone Is Investing in 5G All WRONG * America’s 1 Stock Picker Reveals His Next 1,000% Winner * Revolutionary Tech Behind 5G Rollout Is Being Pioneered By This 1 Company * Radical New Battery Could Dismantle Oil Markets The post Workhorse Stock Is Hot, Hot, Hot! appeared first on InvestorPlace.
Bloomberg

Hedge Fund Bets on Lithium Miner After Big Electric Vehicle Win

(Bloomberg) — Formidable Asset Management LLC, a hedge fund that bet on electric-vehicle maker Workhorse Group Inc., and battery maker Nano One Materials Corp. is now putting its money on a lithium mining company.The Cincinnati-based fund sees Lithium Americas Corp. as a “differentiated operator” within the sector that has imminent production, a strategic location for some of its operations and undervalued assets, the fund wrote in a research report on Friday.“Based on the valuation of its competitors (relative to their potential production/earnings) as well as recent prices paid for assets by its competitors, LAC’s current market cap is well below what we believe the value of its assets to be,” firm said in its report.The estimated fair value for the stock is between $15 and $22, which is significantly higher than its Sept. 24 close of $7.18. The stock gained 19% in U.S. trading on Friday and closed at $8.54 with a market cap of about $771 million. Formidable didn’t specify the size of its position in the miner.The hedge fund also noted that its fair value analysis excludes the potential for a higher share price if the market valued Lithium Americas as a battery company, as opposed to just a producer of the raw material.“Even at ‘normal’ lithium prices, the company is being given almost no credit for its Thacker Pass opportunity, which has the potential to be twice as valuable as its Argentinian operation,” it said.Formidable’s bet on electric-vehicle maker Workhorse Group earlier this year, helped the fund rally about 25% in June, beating the S&P 500. The main contributor to the fund’s June performance was its stake in Workhorse, according to a letter seen by Bloomberg. Workhorse surged 600% in the month of June, making it the second-best performing stock on the Nasdaq Composite Index. Since then, Workhorse has climbed another 43%.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Quartz

How much US debt does China own?

As tensions escalate between the US and China—over trade, Hong Kong, Taiwan, and even TikTok—officials have expressed concern that Beijing could use its stockpile of US Treasury bonds to destabilize the US economy and pressure Washington into backing down. Regular people are worried too: In a 2018 Pew Research Center survey, America’s debt to China was the top concern among respondents in the US, with 89% saying the problem was “very serious.” There’s a lot of fear, confusion, and misapprehension about why the US is in debt to China and what what would happen if China were to call it in.
TipRanks

The Coming 5G Boom Is Not Fully Priced in These 2 Stocks

5G, first introduced two years ago, is expanding past its initial phases and has reached the edge of a great boom. There are 105 5G networks worldwide, and device manufacturers have released over 160 5G smartphones, tablets, and other products onto the commercial market – and there are over 230 million 5G subscribers worldwide. The new tech is here, and it’s ready to expand.That expansion will bring a series of benefits to wireless users. The higher speeds on the networks have gotten the most attention, but 5G will also over 10 times higher data transfer rates, one-tenth the network latency, and far higher connection density capabilities. That last may turn out to be the key to 5G’s long-term success, as related technologies like IoT, autonomous cars, and smart homes multiply the connected devices in our lives.The expansion and benefits of 5G have attracted attention from some of Wall Street’s high-rated analysts; specifically, it has directed the analysts’ attention to the companies that will build and maintain 5G as it expands. These are stocks that are sure to benefit from the network tech, and 5-star analysts say that now – before 5G becomes ubiquitous – is the time to buy in.And with that in mind, we used TipRanks database to pinpoint two top 5G picks from top analysts. These are stocks with Buy ratings and recent share appreciation. Let’s find out what else makes them leaders in the 5G stock boom.Ceva, Inc. (CEVA)The first company on our list, Ceva, is part of the semiconductor industry. The company is a developer of digital signal processing (DSP) technology that is essential to the proper functioning of wireless devices in the consumer, industrial, mobile, and IoT niches. Ceva’s DSP architecture is also becoming an increasingly important feature of 5G capability, and the company has, in recent years, teamed up with handset maker Nokia to collaborate on 5G technology.Ceva saw strong gains in both 1Q20 and 2Q20 as EPS beat the forecasts and showed improvements year-over-year. Revenues in Q2 were $23.6 million, up 28% from Q2 2019. Ceva’s balance sheet is positive, with $157 million cash and cash equivalents and no outstanding debt.Ceva’s share performance has been strong, too. The stock has outperformed the broader markets, and, despite some recent losses, is up 38% year-to-date. Gus Richard, a 5-star analyst with Northland Securities, sees several factors working together to lift CEVA in coming months. He notes the company’s business model, licensing intellectual property and collecting on royalties, and sees its 5G exposure as a net plus. “With the banning of Huawei CEVA’s customer, ZTE, is getting more of the 5G infrastructure business in China and we expect this revenue to increase from $1M in Q2 to $2M to $2.5M in Q3. In addition, we expect NOK to start to ramp next year. Finally, we expect a surge in WiFi, Bluetooth including smart home appliances, such as smart TV, smart speaker, connected lightbulbs, thermostat, and wearables to drive royalty revenue in the coming years.”As a result, Richard upgraded CEVA shares to Outperform (i.e. Buy), and his $48 price target implies room for 29% upside growth in the coming year. (To watch Richard’s track record, click here)Overall, with 3 Buy and 2 Hold reviews given recently, CEVA gets a Moderate Buy rating from the analyst consensus. The stock has an average price target of $48.25, in line with Richard’s and also indicating a ~29% upside potential (See Ceva stock analysis on TipRanks)Skyworks Solutions (SWKS)This mid-cap semiconductor chip maker is major part of Apple’s iPhone supply line. In fact, Skyworks saw 51% of its 2019 revenue from sales to Apple. That Apple exposure, however, makes the connection to 5G clear; Apple is expected to release the new 5G capable iPhone 12 series in the next few weeks, and by some estimates, the device maker can expected up to one-third of its 900 million-strong installed user base to switch to the new devices in the next 18 months. That’s a whole lot chip sales for Skyworks.The company is heavily invested in IoT chips, and its MIMI technology is essential to 5G small cell units, and important part of the network’s infrastructure.Skyworks shares have fully recovered from the mid-winter swoon, and are up 14% year-to-date. Earnings remained positive throughout the height of the corona crisis, and are expected to start turning upwards in the next quarterly report.Rosenblatt’s Kevin Cassidy, another analyst rated 5-stars by TipRanks, was impressed enough by Skyworks’ performance to initiate coverage of the stock with a Buy rating and a $160 price target. His target indicates a potential upside of 17% for the stock. (To watch Cassidy’s track record, click here)Supporting his stance, Cassidy says, “Skyworks is well positioned to benefit from the increasing radio frequency front-end content in 5G enabled devices. We are modeling above semiconductor industry revenue growth of 10% over the next two years. The company can leverage its multiple generations of cellular RF technology leadership and smartphone OEM relationship to expand its customer base. The increasing RF front-end design complexity will continue the company’s long-term margin expansion, in our view. Improving profitability, pristine balance sheet and shareholder friendly policy makes SWKS an attractive Buy in front of the 5th generation of communications.”All in all, the Moderate Buy analyst consensus rating on Skyworks is based on 15 Buy reviews and 7 Holds, set in the past two months. The shares are selling for $136.35 and their average price target of $148.58 suggests a one-year upside of 10%. (See Skyworks’ stock analysis at TipRanks)To find good ideas for 5G stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.