The Unclear Status of the New Mate30 Due To the Ban

FunkyFocus / Pixabay

The United States trade ban has been creating quite an impact on businesses, the stock market and other sectors of the economy. The most recent impact has been felt by Huawei, the number two smartphone maker in the world.

Huawei is launching its next flagship smartphone. Unfortunately for consumers, it will not be able to use Google apps and services because of the current US trade ban. The device will be launched without licensed access to the number one smartphone operating system in the world – Google’s Android – or any of Google’s universal apps.

According to Arjun Kharpal,

“The Mate 30 will be showcased at a September 19 launch event in Munich, Germany, the source said. It will be powered by Huawei’s latest processor called the Kirin 990 which is yet to be unveiled. The Mate 30 will be able to connect to next-generation mobile networks known as 5G which promise super-fast data speeds. Huawei is pushing ahead with the launch despite being on a U.S. blacklist known as the Entity List.” (1)

The 5G-capable Mate 30 is scheduled to be revealed on September 19th at an event in Munich, Germany. This is the first major phone released by the company since the U.S. trade restrictions were established. This launch is by a premium company that has seen its shares of the European smartphone market soar by 55.7% in 2018, and now the company is experiencing a blanket of uncertainty due to the impact of the US trade war with China.

Details of the Clash

Discontinuing Trade Activities

Under the new trade restrictions instituted by the US, Google says it would not be possible for the new Huawei phone to be able to host Google services including Maps, YouTube, Pay, Photos, or the Play Store.

Apart from the ban that was extended to software products and services like Google’s Android, the operating system used by Huawei’s smartphones was also affected and has caused other American companies to also stop trade activities with Huawei. As soon as Huawei was placed on the entity list, several American chipmakers confirmed they would stop supplying Huawei with their products, including Intel, Qualcomm, Xilinx, and Broadcom.

As per Sneha Nahata,

“With Huawei’s ban, many US chip companies that supply Huawei also suffered as they derive a large part of their revenue from the telecom company. The PHLX Semiconductor Index fell ~4.02% yesterday.

Chip makers Intel (INTC), Qualcomm (QCOM), Xilinx (XLNX), and Broadcom (AVGO) have reportedly stopped supplying Huawei until further notice. Broadcom stock fell ~5.9% yesterday, and Qualcomm, Xilinx, and Intel fell ~6%, ~3.6%, and ~2.9%, respectively. Memory chip makers Micron Technology (MU) and Western Digital (WDC) fell ~4% and 6%, respectively, while semiconductor stocks Marvell Technology (MRVL), Advanced Micro Devices (AMD) and NVIDIA (NVDA) fell ~3.9%, ~2.98%, and ~3.05%.

NeoPhotonics (NPTN), another US supplier that depends on Huawei for revenue (it contributes ~47% of its total revenue), has fallen 32% since Huawei was blacklisted. Qorvo (QRVO) and Skyworks Solutions (SWKS), which earn ~10% of their revenue from Huawei, fell ~4.16% and ~2.9%, respectively, yesterday.” (2)

Huawei Backlisted

The U.S. government blacklisted the Chinese firm in May over claims that it was a threat to U.S. national security because of its close ties with the Chinese military. The US government also fears the company could provide the Chinese government with a backdoor into foreign communications networks. Huawei has denied all such claims.

The Way Around

The US government had already issued a temporary license in the summer and renewed it again last week. This particular license is for Huawei to maintain its existing device. However, Google says that the license does not extend to new products released by the company such as Mate30. U.S. companies have the liberty to apply for exemption from the ban for specific products. Google has not released any information regarding the matter.

Huawei plans to continue using the Android OS and ecosystem if the U.S. government allows them to do so, if not they will carry on with their development process to nurture their operating system and ecosystem. The company unveiled its very own operating system, HarmonyOS, which can be used if it no longer has access to Android. However, Huawei maintains that Google’s platform would be its first choice.

As per Gareth Beavis, Basil Kronfli,

“Huawei has also said to TechRadar that it will continue to do all it can to support the phones currently out in the wild, and is looking at other implications of Google’s decision.

The company told us: ‘Huawei has made substantial contributions to the development and growth of Android around the world. As one of Android’s key global partners, we have worked closely with their open-source platform to develop an ecosystem that has benefited both users and the industry.’” (3)

Huawei has created a website to answer the concerns customers may have about the Google licensing issues called Huawei Answers. The Managing director of Huawei also stated that nothing has changed for the company and despite the ban, they will continue to provide software and security updates for Android in the short and long term.

The Road Ahead

The way forward for the new smartphone device by Huawei, Mate30 is unclear. It is unclear if Huawei will use its recently launched operating system HarmonyOS on Mate30 or use the Android platform. So far, all sources suggest that Huawei wants to maintain its relationship with Google and still relies on Google.

However, if the company chooses to use the open-source version of Android on the phones, users in some parts of the world may be able to download Google apps themselves; however, the apps will not come pre-installed.

Source links

  1. https://www.cnbc.com/2019/08/30/huawei-to-launch-mate-30-in-september-potentially-with-no-google-services.html
  2. https://articles2.marketrealist.com/2019/05/snap-is-making-up-for-last-year/
  3. https://www.techradar.com/in/news/huawei-ban

 

Top 4 Growth Stocks for August & September 2019

nattanan23 / Pixabay

For years, growth stocks have been recipients of immense gains compared to average stocks. By nature, growth stock in a company is anticipated to grow at a rate considerably above the average for the market. Growth stocks usually do not pay dividends. The reason for this is because companies typically want to reinvest all earnings back into the company to accelerate growth in the short term. Investors then make money through capital gains when they ultimately sell their shares.

Since selling their shares is their only way of making money, growth stocks are often classified as risky investments. If the company does not do well, investors have to bear the loss on the stock at the time of sale. However, because of their inventions oriented style of operating, they often have a very loyal customer base or a substantial amount of market share in their industry.

As per Business Cafe, “While a stock priced on the lower side may have more opportunity and room for growth, the more expensive stock options typically provide a bit more security in the sense that they have a proven track record of steady growth.” 1

Finding the Best Growth Stocks

Currently, growth stocks comprise an array of technology, biotech, and some consumer discretionary companies. The best method for finding the best growth stocks – or the outliers – is by being on the lookout for unusual trading activity.

As per James Chen, “Growth stocks tend to share a few common traits. For example, growth companies tend to have unique product lines. They may hold patents or access to technologies that put them ahead of others in their industry. In order to stay ahead of competitors, they reinvest profits to develop even newer technologies and patents as a way to ensure longer term growth.”

One of the basic ways to fully understand a stock is looking at the near-term trajectory of a stock’s trading activity. The method in which a stock trades in the stock market can often highlight the forward fundamental picture a lot better than simply looking at a company’s financials alone.

Top 4 Growth Stocks

In our opinion, the top four stocks that are seen as long-term growth candidates include Chipotle Mexican Grill, Inc. (CMG), Ciena Corporation (CIEN), PagSeguro Digital Ltd. (PAGS), and Starbucks Corporation (SBUX).

  1. Chipotle Mexican Grill, Inc. (CMG)

Chipotle Mexican Grill, Inc. (CMG), is a leader in fast-casual Mexican dining and a fast-growing restaurant chain. Many technical aspects are considered before classifying a stock as a growth stock. These are the technical facets of CMG stocks that have grabbed the attention of experts a year to date (YTD):

  • YTD outperformance vs. market: +58.65% vs. SPDR S&P 500 ETF (SPY)
  • YTD outperformance vs. discretionary sector: +54.97% vs. Consumer Discretionary Select Sector SPDR Fund (XLY)
  • YTD bullish and rare trading signals

Apart from the technical aspects, it is also important to look deeper to see if the fundamental picture is satisfactory to sustain a long-term investment. Below is the year over year growth of CMG:

  • Q2 2019 YoY revenue growth rate: +13.2%
  • Q2 2019 YoY diluted earnings growth rate: +91.7%
  1. Ciena Corporation (CIEN)

Ciena Corporation (CIEN), is a top networking company that has been growing consistently. Ciena Corporation stocks display bullish unusual trading activity. Out of the several technical areas used to determine if a stock can be termed as a growth stock, here are a few facts about CIEN that stood out to the experts:

  • YTD outperformance vs. market: +13.52% vs. SPY
  • YTD outperformance vs. technology sector: +1.33% vs. Technology Select Sector SPDR Fund (XLK)
  • Latest bullish unusual trading signals

Ciena Corporation also has strong fundamentals for investors to think about when buying its stock as a long term investment:

  • Q2 2019 YoY revenue growth rate: +18.5%
  • Q2 2019 YoY diluted net income growth rate: +266%
  1. PagSeguro Digital Ltd. (PAGS)

Another growth stock to consider buying is PagSeguro Digital Ltd. (PAGS). It is a leading Brazilian payments company. The strongest contender for a long-term growth stock should display increasing volumes as the share price gains, meaning the number of shares or contracts transacted in a security or an entire market in a given period. The strengths of PAGS include:

  • YTD outperformance vs. market: +136.02% vs. SPY
  • YTD outperformance vs. Financials sector: +136.31 vs. Financial Select Sector SPDR Fund (XLF)
  • Recent top-rated buy signals

PagSeguro also displays an impressive growth rate:

  • Q1 2019 YoY total payment volume growth rate: +69.8%
  • Q1 2019 YoY net income growth rate: +108.6%
  1. Starbucks Corporation (SBUX)

Starbucks is a leading retail coffee chain with shares that have been in bull mode this year. Technically, Starbucks Corporation (SBUX) has been impressive, which is why it has earned its place in our list of top growth stocks. Here are a few positive factors for Starbucks:

  • YTD outperformance vs. market: +33.46% vs. SPY
  • YTD outperformance vs. discretionary sector: +29.78% vs. XLY
  • Recent uncommon buy signals

According to Zacks Equity Research, “Starbucks impressive share price performance can be primarily attributed to earnings beat over the past four quarters. Furthermore, the company benefited from a robust performance by the Americas and China-Asia-Pacific segments and store openings. Also, comparable sales from China increased for the third straight quarter. During 2019, the company expects to open 600 net new stores in the Americas.

Following the better-than-expected second-quarter results, Starbucks raised its fiscal 2019 guidance. GAAP EPS is envisioned to be $2.40-$2.44, up from $2.32-$2.37 projected earlier. Also, non-GAAP EPS is expected to be $2.75-$2.79, up from $2.68-$2.73 guided previously.” 2

On the other hand, Starbucks has also been showing a positive fundamental picture as well. Here is a picture of Starbuck’ growth in 2019:

  • Q3 2019 YoY combined net revenue growth rate: +8%
  • Q3 2019 YoY non-GAAP EPS (earning per share) growth rate: +26%

Conclusion

Shares of Chipotle, Ciena, PagSeguro, and Starbucks can be characterized as a potential buying opportunity of growth stocks for the long-term investor. Grounded in their sturdy historical revenue and earnings growth, and various top-rated buy signals from infrequent trading, these stocks could possibly be worth a spot in a growth-oriented portfolio in our opinion.

If growth stocks aren’t your thing, then check our recent blog on the best blue-chip stocks here.

Sources:

  1. https://business-cafe.org/growth-stocks/
  2. https://www.investopedia.com/terms/g/growthstock.asp
  3. https://finance.yahoo.com/news/starbucks-runs-ahead-peers-p-222510742.html

 

Top 5 Under $20 Stocks To Buy For September

Pexels / Pixabay

Several experienced investors and market experts avoid classifying stocks as “cheap” or “expensive”. They tend to look beyond the face value of the stocks and consider their performance in the market and emphasize on earnings, estimate revisions, etc. while they are choosing a stock to invest or buy, which will hopefully be winners for investors.

As per John Divine,

”Trends in asset classes and company financials – as well as stock prices themselves – can be extrapolated to predict outperformers. And for believers in fundamentals, a number of the following stocks look attractive on those terms as well. Nominally cheap stocks, let’s say those trading for less than $15 a share, enjoy higher liquidity, which means narrower bid-ask spreads and confidence you’ll be able to sell when necessary.” 1

Buying Low Priced Stocks

Stocks that are at a lower price point or cheap, are often more volatile and can be more speculative than stocks that trade at higher prices. Although they are volatile; less expensive stocks have the competence and can be attractive to investors for many reasons. They also present the chance to take a larger position in a company.

While market experts are looking for a low priced stock they consider the same parameters and trends that they would consider for other stocks at a higher price. They look for similar trends in growth, value, momentum, and suitably analyze the potential that these companies have.

Top 5 Under $20 Stocks

According to Sanghamitra Saha, [Source (3)]

“In a nutshell, a high dividend feature clubbed with low prices can make an intriguing investment choice at the current level. After all, with low-priced stocks, retail buyers would need less cash to join the market.

Also, stocks below or equal to $20 see huge profits as share price increase of a dollar adds to 5% in one’s portfolio. Meanwhile, stocks priced at $100 or above see 1% or less gain if their share price rises by $1.”

Stocks under just $20 have potential and can be a good investment decision. Here are 5 stocks that are presently trading for under $20 per share that can be profitable for investors to buy heading into September –

  1. NeoPhotonics Corporation NPTN

Prior Close: $6.14 USD

NeoPhotonics Corporation is a San Jose, California-based firm that makes components for high-speed communications networks and holds a Zacks Rank #2 (Buy) currently and an “A” grade for Growth. NeoPhotonics has seen its stock price jump 73% in the last three months alone.

Based on estimates the stock NeoPhotonics’ current-quarter EPS figure is expected to jump from a loss of $0.05 per share from last year at the same time to 10% higher revenues. These positive changes on both the top and bottom lines are expected to continue for the year ahead as well.

  1. Danone S.A. DANOY

Prior Close: $17.82 USD

Danone is known to sell everything from Evian water to Silk milk and its namesake yogurts. It is essentially a food and beverage brand. DANOY shares have effortlessly outperformed the broader food market’s 6% decline with its shares have been soaring over 27% in 2019.

Another reason for investors to buy Danone stock is that it is a dividend payer, with a strong 1.92% yield at the moment. The firm’s bottom-line estimates have seen an upward movement lately for both fiscal 2019 and 2020. This has enabled it to earn a Zacks Rank #2 (Buy) currently and hold a “B” grade for Growth.

  1. First Horizon National Corporation FHN

Prior Close: $15.36 USD

First Horizon National Corporation is a regional banking, wealth management, and capital market services firm. Its shares have increased have by 12% in the past three months, while its broader industry slipped 6%.

Following its Q2 release, its earnings and estimate revision picture turned far more positive. Experts predict the EPS figure to climb roughly 13% on 5.1% higher sales in 2019. First Horizon also shows an impressive discount of price/sales ratio 2.0 against the industry average of 2.7. They also pay an annualized dividend of $0.56 a share, along with a strong 3.65% yield. [Source (2)]

  1. New York Mortgage Trust, Inc. NYMT

Prior Close: $6.16 USD

New York Mortgage Trust real estate investment trust that invests in residential mortgage loans, that is internally managed. NYMT shares have roughly increased by 5% in 2019 while, the real estate market at large displays an increase of 19%. Despite, a comparative lower climb, the stocks did well and also shows a whopping 13% dividend yield.

[Source (4)] “Earnings Per Share represents the portion of a company’s profit allocated to each outstanding share of common stock. The net income (reported or estimated) for a period divided by the total number of shares outstanding (TSO) during that period.

Data Provider: Data is provided by Zacks Investment Research”

New York Mortgage Trust’s market cap $1.4 billion and REIT’s Q3 2019 revenue is projected to skyrocket 96%. The full-year revenue is expected to surge 73.5% from $78.7 million to $136.6 million. [Source (2)]

  1. JetBlue Airways Corporation JBLU

Prior Close: $16.55 USD

JetBlue Airways stocks stood out since Wednesday after Deutsche Bank analysts said the airline stock’s recent dip has enabled a buying opportunity. JBLU is currently trading at a massive discount compared to its industry in terms of both forward earnings and sales.

The firm’s fiscal revenue for 2019 and 2020 are estimated to increase to 7.1% and 7.9%, respectively and its 2019 earnings are expected to surge 31%, with an added 22% bottom-line growth expected in 2020. Additionally, JetBlue Airways also plans to start its “European service” in 2021, with flights from Boston and New York to London.

Conclusion

When it comes to investing, buying cheap stocks, it is not enough to base your decision solely on absolute price– you have to invest in them relative to some measure of value. Buying cheap stocks based on absolute price alone could be detrimental. While investing in cheap stocks comparative to earnings, cash flow, or assets will make it possible = to protect yourself from the downside while giving you the high probability chance to enjoy the profits of the investments.

Source Links:

Source (1) https://money.usnews.com/investing/stock-market-news/slideshows/best-cheap-stocks-to-buy-for-the-rest-of-the-year?onepage

Source (2) https://www.nasdaq.com/article/10-top-ranked-stocks-under-20-to-buy-heading-into-september-cm1204798

Source (3) https://finance.yahoo.com/news/5-high-dividend-etfs-available-120012250.html

Source (4) https://www.nasdaq.com/symbol/nymt/eps-forecast

 

Best Blue-Chip Stocks to Buy for 2019

geralt / Pixabay

Companies that are multinational firms and have been in operation for a number of years are referred to as blue-chip companies. A blue-chip stock is a stock of a deep-rooted, financially stable, and historically secure corporation. Blue-chip stocks, also known as large cap stocks, are based on the companies’ high market capitalization of $1 billion or more.

Why Invest In Blue-Chip Stocks?

While markets fluctuate and all companies go through sporadic phases of downturns, blue chips are recognized for robust executive management teams that make intelligent growth decisions and smart choices for their high-quality products and services. Popular examples of blue-chip stocks are Coca-Cola, Disney, Intel, and IBM. Blue-chip stocks are often expensive and have a low dividend yield mainly because the return on blue-chip stocks is so close to a sure thing.

Investors entered 2019 with apprehension and uncertainty, following a particularly bearish fourth quarter. However, markets quickly reversed and of late the concern has changed from rising rates to declining rates as global growth loses speed and the Federal Reserve’s tools for dealing with another recession appear very slim.

In our opinion, proven blue-chip stocks with robust business models are a good option with a 10-year Treasury yielding just 1.6%, and conservative investors do not have much to choose from.

As per Inc.com,

“Recent examples of this phenomenon are Yahoo! and Google, two World Wide Web search engines which may eventually enter the ranks of blue chips. Yahoo! was the highest flyer among Web stocks in the late 1990s. Google is the current sensation (2006). Only time will tell if these companies will eventually take on the permanence and stature of an Intel or an IBM. Meanwhile once unquestionable pillars of the Blue Chip temple, like General Motors and Ford, are fighting battles of survival. Thus even in the world of blue chips, change is the only certainty.” 1

Top 5 Blue-Chip stocks

Here are a few of the top five blue-chip stocks you can invest in for the rest of 2019.

  1. Target Corp. (ticker: TGT)

Target is a big-box retailer with a robust business model that is often missed by investors. They are coming off a very successful second quarter which saw online sales soar to 34% and earnings per share (EPS) increased by 20%.

This massive jump in EPS is a result of a long-term strategy. Target has committed $7 billion to invest in store remodels, same-day order fulfillment, and e-commerce to compete against giants like Walmart (WMT) and Amazon.com (AMZN). It wasn’t until the 2nd quarter of 2019 that the emphatic outcome of the long term strategy was proved successful.

Currently, TGT pays a 2.5% dividend.

  1. Johnson & Johnson (JNJ)

Johnson & Johnson (JNJ) have been on the list of blue-chip companies and stocks for several years. They do not have fancy or innovative products, and the sales growth recorded by the company is essentially flat in 2019. Yet, Johnson & Johnson has been thought of as a reliable blue-chip stock for over a century.

Sales for JNJ would have been on the rise in the mid-single digits internationally right now if the dollar was stronger. The company also expects a 4% to 6% EPS growth this year. The company’s pharmaceutical division provides support for the long-term health of the underlying business.

Currently, JNJ shares offer a 2.9% dividend.

  1. Berkshire Hathaway (BRK.B, BRK.A)

The company’s intrinsic value has been progressively improving over the last few years, nonetheless, shares have basically remained unchanged or increased over the last 20 months. This gives investors a great opportunity to buy Berkshire’s share at its cheapest valuations in that same time frame.

Market experts and investors believe that Berkshire’s earnings are extremely understated in today’s low-rate environment and that the company’s $100 billion of excess cash shown will be put to good use soon. In the past, this has proved to be true.

  1. Walmart (WMT)

Walmart is regarded as one of the best blue-chip stocks. The reason for this is because historically Walmart has been able to weather any potential recession with relative ease. In 2008, a year of financial upheaval to the economy and markets, Walmart sales increased by 7.2%. In the same year, the company also improved its dividend by 8%, and shares returned 20% – performing better than the S&P 500 by 58.5% points in a single year.

In spite of the rise of Amazon, Walmart is still leading 11 years later. It is showing-off the highest revenues of any company in the world at $514 billion last year.

As per Marketrealist.com explained,

“Walmart (WMT) stock is scaling new highs thanks to the continued momentum in its comparable sales and better-than-expected earnings performance in the past several quarters. Walmart stock is up 19.3% on a YTD basis and closed at $111.13 on June 21, which is a tad lower than its 52-week and all-time high of $112.19. Comparable sales for Walmart’s US business continued to impress markets and have grown in the past 19 consecutive quarters on the back of increased traffic. Moreover, its Walmex region (Mexico and Central America) has also posted stellar growth.” 3

  1. AT&T (T)

After several years of underperforming, AT&T’s shares are finally on the rise. Now, they are also on the road of what looks to be a more sustainable and longer-term pattern. The telecom and the entertainments sector are largely resilient to economic uncertainty and are fundamentally recession-proof. AT&T has managed to increase its exposure to these sectors after the $85 billion acquisition of Time Warner closed in 2018.

With this new move, the proud owner of networks like HBO, CNN, TNT, in addition to Warner Brothers, the company is primarily focused on paying off its debts.

Currently AT&T stocks are at 5.8% dividend which is second to Royal Dutch Shell (RDS.A), among large-cap stocks. The high dividend yield is becoming increasingly irresistibly and alluring to investors as the yield curve flattens and interest rates slowly fall again.

Conclusion

According to Lyn Alden Schwartzer,

“A company’s return on invested capital (ROIC) is its annual operating income with taxes removed, divided by its invested capital. This is a more accurate measure than return on equity (ROE), because it cannot be gamed with high leverage.” 2

In our opinion, the ideal time to buy blue chip stocks is after the company discloses an unsatisfactory earnings report or after a public relations blunder. The stock is will definitely dip then, making it possible to for you to buy low and sell high later.

Not interested in Blue-Chip Stocks? Check out our recent articles on the impact of the US-China Trade War on the economy.

Sources:

  1. https://www.inc.com/encyclopedia/blue-chip.html
  2. https://seekingalpha.com/article/4273481-3-blue-chip-stocks-buying
  3. https://marketrealist.com/2019/06/walmart-stock-is-hitting-new-highs-whats-driving-it-higher/

 

Top 5 Long Term Investments Stocks

The financial market is on everyone’s mind, especially after the 800-point drop in the Dow last week. It was recorded as one of the worst days in the U.S. stock market this year. When troubling times hit the economy, investors tend to scramble for security.

Building a Strong Portfolio

The ideal solution for many investors is for high returns with no or minimal risk. However, only the inverse is true. A good way to deal with market risks is to hedge your investments. Long term investments are a great way to limit the volatility of the stock market and the risks involved in investing. You can build a portfolio with a mix of high risk and low return investments for a stable journey. A robust portfolio of long-term investments makes it possible to provide income for later in life, and for the rest of your life.

[Source (3)]

Long-term investing involves assuming a certain level of risk in the pursuit of higher rewards. This comprises investing in equity-type investments, like stocks and real estate. Long-term investing is primarily about wealth creation.

As per Nancy Tengler, “Retirement is 20 years of unemployment. Stocks provide a hedge against inflation even when the inevitable bear market arrives. With the real 10-year Treasury yield at 0.20%, bonds could be riskier than stocks over the next 20 years.” 1

What to Expect with Long Term Investments

Consistent Market Success – Many of us are pursuing consistent market success and one of the ways of achieving it is by expanding the time horizon.  Looking for the hits of the week and investing in them can give you profits for the immediate time frame; however, an unanticipated turn of events can derail your position. Thus, picking ideas from the best long-term stocks can improve your odds significantly.

Capital appreciation – The bulk of your long term investment is generally consisting of equity investment because of their potential for capital appreciation. Capital appreciation tends to produce double-digit returns, which will consequentially lead to growing the value of your portfolio for likely many times over in the future.

Key Principles of Long Term Investing

Ride Out the Ups and Downs – A common point of contention for many investors is that their investments can fall in value at any given time. Since they are primarily equity investments, there is no guarantee of principal.

But then again, since you are holding them for the long term, the stocks will have a chance to recover with time.

Maximize Investment Returns – Most experts will recommend holding stocks for longer, to get 100%, 200% or more rather than a 50% gain in five years.

Spread Out Your Investments – There is a wide variety of asset classes with different levels of risk that you can invest in. However, it is difficult to know for sure which will perform the best, or avoid dips so the best strategy is to typically spread out your investments.

  Top Four Stocks to Buy For the Long Haul

  1. Wayfair (NYSE: W)

Consumer behavior towards e-commerce outlet is a sure-fire trend you can bank on. Hence, Wayfair (W) is a good option. Wayfair is an online retailer of home goods like furniture and decorative products. W has been performing and generating nearly 45% direct-retail sales growth last year which has led to a rapid rise in W stock. The investors have seen their stock price double since 2017.

  1. FedEx (NYSE: FDX)

FedEx is viewed as a strong contender for top long term stocks. However, with Trumps’ foreign policy a key consequence is the on-going tariff wars with China. Since China is an exporting power, international couriers like FedEx have taken a beating.

Although FedEx delivered great results for the fourth-quarter fiscal 2018, investors panicked on FDX stock due to shipment-slowdown fears. Nevertheless, this is where a long term investment will help reap the benefits of long term investing because of benefits from the e-commerce trend.

  1. Welltower (NYSE: WELL)

Welltower is a real estate investment trust in the segment of senior housing and assisted-living facilities. They also handle memory-care communities, post-acute care facilities and medical-office properties.

Currently, Baby Boomers represent the largest living generation in the U.S. and a significant number of this demographic are already at retirement age. Soon they will require these types of services which could boost the outlook for WELL stock. This segment is often considered a good investment for a long-term strategy.

  1. Rosetta Stone (NYSE: RST)

Rosetta Stone is a maker of language-education software. RST has already proved its position in the markets, with a 50% jump, so far in 2019. However, it will still require some patience moving ahead.

With Google Translate, Rosetta Stone had some poor sales and earnings performances. However, learning languages is much more than mere translation. Banking on the message that computers can’t yet duplicate learning foreign languages, RST has the chance to consistently surprise investors.

Bonus

Yet another popular stock for long term investment as per Jim Carter,

“Murphy USA Inc. (NYSE: MUSA) has been recommended as a long term growth stock according to analysts at Beta Research. With their stock price currently trading around $92.08, the firm has proven a solid track record of growth over the past few years. Investors might consider the stock as a long term growth candidate as the firm has yielded 14.50% earnings per share growth over the past 5 years and -4.20% revenue growth over that same time frame.” 2

Conclusion

Start your journey of long-term investment with stocks. They are paper investments that are easier to manage when compared to a property or a business. In a lot of ways, investing in stocks is similar to investing in the economy because these stocks represent ownership in profit-generating companies.

Not interested in long-term investment with stocks? Check out our recent post on the booming cannabis industry here.

 

Source Links

Source (1)https://www.usatoday.com/story/money/columnist/2019/08/13/invest-and-make-millions-never-too-late/1982068001/

Source (2)https://stockvisionary.com/in-it-for-the-long-haul-long-term-growth-pick-murphy-usa-inc-nysemusa/140043/

Source (3)https://www.forbes.com/sites/garymishuris/2019/01/15/how-to-invest-for-the-long-term-in-a-volatile-market/#4bd70b576882

 

Best Financial Stocks for Income Investors

While the U.S. economy continues to grow and add jobs, talk of a recession is increasingly in the air as a result of several worrying signs. Growing economic jitters and uncertainty over the ongoing trade war with China is causing investors to become nervous and apprehensive about their investment in the stock markets.

Policymakers are aggressively taking steps to strengthen the economy, such as the Federal Reserve’s latest decision to lower short-term borrowing costs.

In precarious times like these, investors often are unsure when or if they should buy stocks. However, most experts would say the best counsel is to hold out on all the investments already made and avoid making any rash decisions.

As per James Brumley, “It has been said (and verified) that 95% of true “day traders” — the most aggressive and active of all market participants — end up losing money by being too active for their own good. Conversely, the fact that Warren Buffett’s favorite holding period is “forever” and how he’s got a track record most investors would envy is just as telling.” 1

Learning from the 2008 Financial Crisis

Some investments may seem riskier than others. Investing in banks and financial institutions are often categorized as unsafe, especially after the 2008 financial crisis that resulted in the great recession that rocked Wall Street. At that time, it was fairly common to believe that big banks were among the most stable companies in the market. After all, these institutions were at the center of all commerce with massive assets on their balance sheet. Although financial stocks were once a safe investment for many low-risk investors, after the financial crisis, they have been slow to put their trust back into financial stocks.

According to Alexander Kurov, “But the short answer, for most investors, is the exact opposite: Stick to your long-term plan and ignore day-to-day market fluctuations, however frightening they may be. Don’t take my word for it. The tried and true approach of passive investing is backed up by a lot of evidence.” 2

It’s been over a decade since the financial crisis of 2008. There are now more robust regulations in place and the general restructuring of capital markets indicates that big banks and financial institutions could once again be treated as smart investment opportunities for long-term income.

Top financial stocks in 2019

Here are some financial stocks of different types that are likely poised to deliver consistent dividends for shareholders.

Citigroup (ticker: C)

In many ways, Citigroup was the prime mover for the new type of integrated full-service banks. After the merger with Travelers Group in the 1980s, the strategic changes built cross-sell services across the organization and empowered all arms of the megabank.

Although the 2008 financial crisis had a serious impact on Citi’s overall operations and Travelers (TRV) was eventually spun off in 2002, it continues to hold its position with approximately $150 billion market cap as one of the most powerful and entrenched entities in the sector.

They are also one of the more generous banks when it comes to dividends.

Current yield: 3.3%

[Source (3)]

Ameriprise Financial (AMP)

Wealth management firm Ameriprise Financial with $17 billion in market capitalization, is not as comfortable as Citi; nonetheless, it is still a sizeable financial stock with deep enough pockets to be competitive.

AMP is based out of Minneapolis and involved in business with Midwestern clients. AMP’s 2008 purchase of H&R Block’s financial advisor business and 2009 purchase of Columbia Management created new clienteles to fuel its continued growth and success. AMP shares are up currently five times from their 2009 lows, and dividends have amplified at an equally impressive rate from 17 cents in 2009 per quarter to 97 cents as of this summer.

Current yield: 3.1%

Principal Financial Group (PFG)

Another big financial stock that could be a great investment opportunity for low-risk investors is the Principal Financial Group (PFG). PFG continues to get bigger even as other entities sell off underperforming assets in this competitive setting.

Recently, PFG acquired 7.5 million U.S. retirement clients from Wells Fargo & Co. (WFC) which resulted in doubling its business that caters to people with employer-sponsored 401(k) programs. This type of client is exactly the kind of stable business that is exciting for dividend investors because it displays a modest but steady stream of cash inflow.

The same could be said about PFG stock, which yields a dividend that is approximately twice that of the typical S&P 500 component at present.

Current yield: 4.1%

KeyCorp (KEY)

Keycorp is a well-established financial stock that is worth exploring for the dividends. It is a regional bank headquartered in Cleveland with operations in 15 states and nearly 1,200 retail branches. Although it is not as large as the biggest banks, it records about $6.5 billion in annual revenue and offers the stability investors are looking for in a bank.

If it were to get any bigger, KEY would have to aggressively expand beyond mortgages and small business loans into risky investment services like its larger peers. If it were any smaller it would not have deep enough pockets to weather a downturn. Since KEY has found a perfect balance, it could be perfect for long-term dividend investors.

Current yield: 4.5%

MetLife (MET)

Although MetLife is popularly known for life insurance, it is much more than an ordinary insurance company. Some of the services it offers are pension risk transfer, investment services and administrative services for employer-sponsored benefit programs.

Essentially, this is what translates to investors as an attractive income investment. It has a diversified revenue stream with a consistent reliance on steady and robust business lines. Stockholders can be assured that MET shares will likely keep giving generously for several years to come.

Current yield: 3.9%

Conclusion

With several signs pointing to a possible recession, in our opinion, low-risk investors can continue to rely on financial stocks largely because of the robust regulations that have been built around it post the great recession in 2008.

Not interested in financial stocks? Check out our recent post on the US-China trade war here.

 

Source Links

Source (1) – https://investorplace.com/2019/08/10-best-stocks-to-buy-and-hold-forever/

Source (2) – https://theconversation.com/how-to-invest-if-youre-worried-a-recession-is-coming-122003

Source (3) – https://walletinvestor.com/stock-forecast/c-stock-prediction

 

The Impact of US, China Trade War on Economy

All wars have collateral damage. In the case of the China trade war, the long-term supremacy of the U.S. is one of them. Regrettably, the trade war initiated by the United States will likely inflict serious damage to the global economy. Countries that impose tariffs and countries that are subject to tariffs would experience losses in economic welfare, whereas countries on the side-lines would experience collateral damage.

For China, the US-China trade war has up until now ‘only had a restricted impact on Japan’s lukewarm economic growth’, but the impact is likely to spread if Washington imposes further consents on Chinese imports. Japan is the second-biggest economy in Asia and the third-biggest in the world behind the US and China, hence the risks are high not only for Japan — but for global trade.

According to Business Radio Podcasts,

“Of the two likely outcomes of the tariff war, Berkovich identified the implications for the financing of the U.S. debt is more significant in the long run. Thus far, trade with China has helped finance U.S. debt, and a reduction in the volume of that trade means others have to pick up the tab. “When we shut down the trade channel by which dollars are sent out to broaden and come back as purchases of assets, we are actually forcing the debt in the U.S. to grow,” he said. “We’re forcing U.S. households to buy the debt, and that’s going to long term drive the economy down.” 1

What Does This Mean for Consumers?

1 .Price Rise

The 10% tariffs announced a couple of weeks ago will increase prices on just about everything American consumers buy including items like smartphones, toys, shoes, and furniture. The increase in tariffs could cost the average household an additional $650 a year, according to estimates from Kathy Bostjancic, Chief U.S. Financial Economist for Oxford Economics.

2. Stock Market Turbulence

The most recent escalation in the trade war caused panic among investors, causing all three major U.S. stock indexes to nose-dive. Investment analysts expect the instability to continue until the United States and China find common ground with their differences.

The volatility has an impact on the value of workers’ 401(k) plans and other retirement accounts, although investors are usually advised against making changes until the markets stabilize a bit.

3. Dip in Interest Rates

The Federal Reserve lowered the benchmark interest rate on July 31, due to the growing trade tensions, which was also seen as one of the main risks to the economy. Economists predict that the Fed will cut rates to limit the damage to the economy if the trade situation continues to worsen.

The low-interest rate may have a mixed effect on people. On one hand, mortgages and auto loans are inexpensive, but then again their savings would earn less interest.

[Source 2]

Increased Economic Angst

A prolonged trade war is bad news for the overall economy. Businesses tend to hold off on investing in new projects or hiring until a trade deal is in place. Such a pullback could cause a sluggish job market which, in turn, could affect consumer spending, which is the principal driver of the U.S. economy.

Resolving the trade war relatively soon will help encourage businesses to increase investments and persuade consumers that it’s safe to spend.

Is This an All-Out Trade War?

Dark times may soon be a reality for the U.S. economy as the repercussion of President Trump’s latest threat on August 1 to levy 10% tariffs on roughly $300 billion of imports from China. In response, China tolerated the Yuan to weaken against the dollar and thus mitigating the impact for Chinese exporters.

Trump has also ordered additional tariffs of 25% and 10% respectively, which are to be imposed on steel and aluminum imports into the U.S., on national security grounds. Although the tariffs do not target China particularly, China is the leading producer of both steel and aluminum and has long been accused by the U.S. and others of abandoning cheap metal in international markets.

Although Trump is openly steering towards China, it currently looks more likely that the U.S. and China will look to bring about some sort of solution that will not threaten or harm either economy. China’s leadership has long-stood on a foundation of support derived from providing continued growth and development, while Trump has often publicized the performance of the U.S. stock market during his tenure and the on-going development of the US economic picture.

As per HIS Market,

“The timing of the trade war (never good) could not be worse. It is occurring as monetary stimulus is beginning to wear off, oil prices are elevated, and political risks are on the rise. Global growth is beginning to slow—the only question is, how much?” 3

Not interested in the impact of the U.S.-China Trade war? Check out our recent post on the 5 Biggest Tech Stocks here.

For more information:

www.7stocks.com

Source Links:

Source (1): https://knowledge.wharton.upenn.edu/article/u-s-china-tariffs/

Source (2): https://www.cnbc.com/2019/05/13/china-is-raising-tariffs-on-60-billion-of-us-goods-starting-june-1.html

Source (3): https://ihsmarkit.com/solutions/us-china-trade-war-impacts.html

 

Thinking of Long Term Investment? Gold Could be the Best Choice

The financial market is on everyone’s mind, especially with the 800-point drop in the Dow on Wednesday. It was recorded as one of the worst days in the U.S. stock market this year. When troubling times hit, investors tend to scramble for security.

Building a Strong Portfolio

The ideal deal for many investors is, for high returns with no or minimal risk. However, only the inverse is true. Hence a good way to deal with market risks is to hedge your investments. Long term investments are a great way to limit the volatility of the stock market and the risks involved in investing. You can build a portfolio with a mix of high risk and low return investments for a stable journey.

Gold Is an Investor’s Safe-Haven,

According to Marc Faber renowned global investor, and author of The Gloom, Boom & Doom report, “Investors should lower their long-term return expectations from the equity market.” He advised investors to start adding gold to their investment from a long-term perspective amid global growth concerns and heightened trade tensions. Marc Faber also expects gold rises by about 20% over the next 2-3 years. (1)

The Need of Gold

Gold, normally, flourishes as a safe-haven in times of uncertainty. Global trade wars, tensions between Iran and western nations, and slowing global economies are all adding to a feeling of uncertainty. The need for gold is the most common and deep-rooted commercial instinct of the public. In times of insecurity and ambiguity, this instinct becomes even more prominent.

As per Arkadiusz Sieron, “The more distant future is not all clear cut, yet gold finds itself in a more positive environment fundamentally, translating into fewer headwinds. The interest rate cut would work to ease upward pressure on the U.S. dollar, stimulating demand for gold. Moreover, the Fed’s move should add to the recession fears. If everything was rosy, the U.S. central bank would not reduce interest rates. Such worries should drive investors to safe havens such as gold.” (2)

Gold and The Economy

Gold prices have stayed true to their upward trend and have now risen 18% so far this year, as fears of a recession loom large. In the previous week, the U.S. yield curve inverted, laying the framework for the yellow metal to shine even brighter. While the inverted curve is commonly considered a warning that the US economy is headed for a recession, some specialists have contended this view.

Nonetheless, the performance of the gold market suggests traders and investors are seeking refuge in the precious metal. The current gold price rise also indicates that investors are diversifying their portfolio with the rising fear of a global recession, although technically recession is not today’s reality.

According to Frank Holmes, “If you believe negative rates are a real possibility, an allocation to gold and gold stocks might make a lot of sense right now. In the past, gold prices have surged when real yields fell into negative territory. (The real yield is what you get when you subtract the annual inflation rate from a government bond yield.) This is why I always recommend a 10 percent weighting in gold, with 5 percent in gold bullion, the other 5 percent in gold stocks, mutual funds and ETFs. Remember to rebalance at least annually!” (3)

Uncertainties about the global economy have built up primarily because of the US-China trade war. The escalation and de-escalation of US-China trade pressures and the change in US real interest rates are the main elements that have contributed to the gold prices in recent days. They are also the most likely to continue prompting the holdings of financial investors.

Ways to Invest In Gold

As per Annie Nova, “And putting just 5% of your portfolio in gold can do a lot to carry you through market plunges, said Joseph Foster, manager of the Van Eck International Investors Gold Fund. “A small portion hedges against a larger portion of your portfolio against financial risk,” Foster said. And he said the “good times for gold could continue: “We’ll see gold much higher than it is today if we go into a global recession.” (4)

With investor interest rising in the precious metal, here are some options available for investing.

1.      Gold Receipts

It is speculated that one of the earliest forms of credit banking was when goldsmiths would store large quantities of gold and issue a receipt in exchange. Surprisingly, it is possible to invest in gold receipts even today. These receipts can later be redeemed for physical gold. There are some enterprising private “mints” who deal with gold; however, most government mints do not deal privately with gold anymore.

For instance, the Royal Canadian Mint offers electronic tradable receipts (ETRs) supported by their vaulted gold, as well as collectible coins. These ETRs can trade on an exchange or change hands privately and follow the price of the gold that backs it.

2.      Derivatives

Derivatives markets use gold as the underlying asset. They are contracts that allow for the delivery of the gold at a future date. Popular instruments include:

  • Forward Contract
  • Future Contracts
  • Call Options

3.      Digital Gold

This is a facility offered by MMTC-PAMP Pvt. Ltd., a joint venture between MMTC Ltd. and Switzerland-based bullion brand PAMP SA. They make it possible to accumulate gold by buying online through institutions, broking houses and payment platforms. You can regularly buy gold for a minimal amount and the accumulated gold is kept in secure storage in the custody of MMTC-PAMPL. It allows maximum storage of five years after which the investor must take delivery.

4.      Gold Funds

Derivatives offer the greatest deals of leverage; however, an average investor can gain exposure to gold via mutual funds that buy gold or using gold ETFs which are traded like shares on stock exchanges.

5.      Gold Mining Stocks

Gold miners’ ETF such as the Market Vectors Gold Miners (GDX) is a good option to diversify an equity portfolio. Gold mining stocks, owning the stocks of companies that mine for and sell gold, such as Barrick Gold (ABX) or Kinross Gold (KGC) do not give direct exposure to gold. Hence, owning shares of these companies mainly gives the investor exposure to the operating profit margins of that company.

Conclusion

According to the World Gold Council, “One difficulty with gold is that there are no conventional ways to measure or assess it, other than recognizing it as a long-term store of value. Yet we know how it behaves. It likes real interest rates to be falling, along with the currency it is being measured in. This implies that the best possible environment for gold is when inflation is rising, interest rates are falling and the dollar is weakening.” (5)

Owning gold may be a hedge against economic downturns, especially in volatile times. It’s possible that gold could become an essential part of your investment portfolio that helps balance out the risk and offers a stable portfolio. However, in our opinion, it is advised that the exposure should not exceed 10-15% even in these conditions.

Not interested in gold as a long-term investment? Check out our recent post on Costco Stock here.

Sources:

  1. https://economictimes.indiatimes.com/markets/stocks/news/20-return-anyone-gloom-boom-doom-author-tells-you-where-is-the-money/articleshow/70714037.cms
  2. https://www.marketoracle.co.uk/Article65310.html
  3. http://www.usfunds.com/investor-library/frank-talk/what-a-u-s-rate-cut-could-mean-for-gold-prices/#.XVrV1CMzbIU
  4. https://www.cnbc.com/2019/08/16/ways-to-protect-your-money-in-case-theres-a-recession.html
  5. https://www.interest.co.nz/personal-finance/101251/many-investors-buy-gold-instinctively-long-term-store-value-charlie-morris

What Are the 5 Biggest Tech Stocks of 2019? Are These in Your Stock Portfolio?

The consistent and continuous progress of technology has changed the way people live their lives. Along the way, technology has also upended industries and disrupted the status quo. Some of the prominent technology changes that have shaped our world in the past few decades include:

  • Personal computer
  • The Internet
  • Smartphones
  • E-commerce
  • Cloud Computing
  • Social Media & more.

The companies that have managed to catch the bull by its horns and successfully ride the waves of technology advancement now dictate the list of the largest tech stocks. These leading tech stock companies are a mixed bag.

The 10 leading U.S. tech stocks co mbined command a market capitalization of over $5 trillion and the excess revenue they generate alone aggregates to $1.2 trillion.

As per Patti Domm, “Big cap technology stocks hit an all-time high Tuesday, aided by a rebounding semiconductor sector amid some signs of progress in the trade war between the U.S. and China.” 2

The 5 Biggest Tech Stocks

Many of the largest companies in the United States are now part of the technology sector with some having values in the neighborhood of $1 trillion. The people who took the plunge and invested in the best tech stock are likely enjoying exceptional returns.

Here are the largest U.S. tech stocks, as of the end of the first half of 2019.

Company Microsoft (NASDAQ: MSFT)

Market Capitalization $1.027 trillion

Revenue (TTM) $122.2 billion

Net Income (TTM) $34.9 billion

[Source 1]

Although Microsoft was not the first U.S. public company to be valued at $1 trillion, it has stood the test of time and now stands alone in the trillion-dollar club at the end of the first half of 2019. Microsoft’s cloud computing business’ success and their resilient office software suite enabled Microsoft to generate $122 billion in yearly revenue. This impelled the company to the top of the tech stock heap.


As per Stephen Grocer, “Apple got there first, then Amazon, and on Thursday, Microsoft became the third American company to reach a market valuation of $1 trillion.

It was a brief achievement (Microsoft was valued at about $990 billion by the end of the day), but it underscores the remarkable recovery in technology stocks since their precipitous decline late last year.” 3

One of the primary reasons for Microsoft stock to soar in the last few years was Microsoft’s Azure cloud platform. Microsoft has carved out a solid second position in the cloud infrastructure market after Amazon Web Services in terms of market share.

Company Amazon (NASDAQ: AMZN)

Market Capitalization $932.3 billion

Revenue (TTM) $241.5 billion

Net Income (TTM) $12.0 billion

[Source 1]

The greater part of Amazon’s revenue comes from its e-commerce operation, and that is not likely to change. However, Amazon web services’ (AWS) cloud computing business has grown into a large tech company. In the last year alone, AWS has generated a staggering $27.9 billion in revenue and it is considered the most profitable part of Amazon’s business, with an operating margin close to 30%.

Although Amazon’s direct online sales growth rate has decelerated to a little more than 10%, revenue spawned from third-party sellers is increasing at roughly twice that rate. Revenue from subscription services, like Prime, is also growing much faster.

Company Apple (NASDAQ: AAPL)

Market Capitalization $910.6 billion

Revenue (TTM) $258.5 billion

Net Income (TTM) $57.2 billion

[Source 1]

Apple has an installed base of 1.4 billion active devices, which includes iPhones, iPads, Macs, and Apple Watches. Services like Apple Music have also grown to tens of millions of subscribers. The company produced $11.5 billion in services revenue in the second quarter of fiscal 2019, placing the annual run rate around $45 billion.

However, the U.S. smartphone market has reached a saturation point, and Apple is suffering from a slump in the demand for its iconic devices. iPhone sales contribute heavily to the revenue, even a slight decline in iPhone demand causes a dent in the revenue that will be tough for Apple to fill with services.

Company Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL)

Market Capitalization $750.4 billion

Revenue (TTM) $142.0 billion

Net Income (TTM) $30.0 billion

[Source 1]

Alphabet’s advertising brings in more than 85% of revenue, however, the company has a presence in a wide variety of areas. Alphabet competes with the big wigs, Microsoft’s productivity software market & cloud computing, and Amazon’s e-commerce. All these businesses are part of the Google bracket. Apart from this, Alphabet has several small businesses it refers to as “other bets.”

The “other bets” businesses generated only $595 million in revenue in 2018, losing $3.36 billion on an operating basis. Meanwhile, Google itself generated $136.2 billion in revenue with an operating profit of $36.5 billion. The company’s stock price is reinforced by the profitability of the company’s core advertising business, along with the potential for a few of the “other bets” becoming profitable in the years ahead.

Company Facebook (NASDAQ: FB)

Market Capitalization $550.9 billion

Revenue (TTM) $58.9 billion

Net Income (TTM) $19.5 billion

[Source 1]

Revenue for the social media giant is currently recorded at $55.9 billion over the past 12 months, while net income is approximately $20 billion. The development of the core Facebook platform and the acquisitions of Instagram and WhatsApp have boosted the company’s results. Most of Facebook’s revenue is from selling advertising. The company also sells various hardware products and processing payments for the same generates some revenue.

It will be very difficult for a competitor to overthrow Facebook as the king of social media. Even a never-ending surge of privacy issues hasn’t derailed confidence in Facebook. However, this could still be harmful in the long run.

According to Stephen Clark, “Taking the time to do the full research can help offset the jitters associated with picking stocks. Finding stocks that still have room to head higher can be tricky, but there are still plenty of them out there. Although nobody can say for certain which way the market will trend into the New Year, investors should be on the lookout for opportunities that may present themselves over the next quarter. All eyes will be focused on company earnings when the next round of earnings reports begins.” ⁴

Not interested in U.S. tech stocks? Check out our recent post on Chesapeake Energy Stock here.

Sources:

1. https://www.fool.com/investing/10-biggest-tech-stocks.aspx

2.https://www.cnbc.com/2019/07/23/technology-stocks-rise-to-their-highest-levels-ever-despite-the-trade-war.html

3. https://www.nytimes.com/2019/04/25/business/dealbook/microsoft-1-trillion.html

4. https://stocknewsx.com/2019/08/20/usa-technologies-inc-usat-ppoh-line-above-zero/

Genuine Parts Company is a Good Stock for Dividend Portfolio

Genuine Parts Company (NYSE: GPC) has a long history of returning significant cash to investors in the form of dividends and share buybacks. It has paid a quarterly dividend every year since 1948, and the company has raised its quarterly dividend over the past 63 consecutive years. This year it has raised quarterly dividend by 6% to $0.76 per share, yielding close to 3%.

Source: SeekingAlpha

Dividend investors always like to invest in companies that have a long dividend growth history. In addition, sustainable financial growth along with strong future fundamentals makes Genuine Parts Company a solid play for dividend growth investors.

Genuine Parts Company is engaged in the distribution of automotive replacement parts, office products, industrial replacement parts, and electrical/electronic materials. Its strategy of investing in organic growth opportunities along with acquisitions is supporting financial growth.

GPC has generated sales growth of 15% in fiscal 2018 compared to 2017. Its earnings per share, however, grew at a much faster pace than revenue growth. Its earnings per share of $5.68 in fiscal 2018 increased substantially from earnings of $4.40 per share in 2017. With the significant revenue and earnings growth, its cash flows are also accelerating at a double-digit rate – allowing GPC to return massive cash to investors in the form of dividends and share buybacks.

Its CEO said, “We completed our first full year of operations in Europe and successfully combined EIS into Motion Industries to form a larger and stronger industrial business.  With these and other accomplishments, and our plans in place for the new year, we are well-positioned to further strengthen our global platform in 2019, driving long-term sustainable growth and significant value for our shareholders.”

GPC Genuine Parts Company daily Stock Chart

Source: Finviz.com

The company expects to make 2019 another record-breaking year. Its revenue and earnings are projected to increase at a sharp pace during 2019. Therefore, its cash returns appear safe and sound. Its financial growth and future prospects are helping in enhancing investor’s capital investments. Its share price rose 18% in the last twelve months amid prospects for its penetration in European markets and sustainable growth in financial numbers.