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Investors Are 'All In' But Selling Could Be a Terrible Mistake

Individual investors were "all in." It felt like the top.
 
The problem was that it wasn't the top.
 
It was early 1998. Investors were betting on a continued uptrend – they had gone "all in" on stocks, based on one measure.
 
If you'd sold then simply because investors were "all in," you would have been kicking yourself later. That's because the market didn't peak until two years later – in early 2000.
 
Said another way, if you'd gotten out when investors first went "all in," you would have missed out on two years' worth of upside.
 
Today, we're seeing the same scenario. Investors are "all in" on stocks, just like they were in 1998. And just like that time, selling early could be a huge mistake.
 
Let me explain…
 
I always want to know what individual investors are doing with their money.
 
It tells us when investments are hated or loved… And how to act as contrarians.
 
Still, the timing around sentiment indicators can be tricky. That's the case with today's "all in" measure for stocks.
 
The American Association of Individual Investors (AAII) has been tracking investor portfolios for decades. One of its surveys covers the cash, stock, and bond allocations of individual investors.
 
According to the latest survey, individual investors' cash positions are at the lowest level we've seen in nearly two decades. Investors hold just 13% of their portfolios in cash right now.
 
Again, cash positions haven't been that low since the dot-com boom. But it doesn't mean stocks are peaking today. Here's how things went last time…
 
In January 1989, individual investors held 36% of their portfolios in cash. Stocks boomed over the next several years. And by March 1998, investors held only 11% of their portfolios in cash.
 
The dot-com boom was in full swing. And investors had gone "all in."
 
Sounds scary, right? Well, it wasn't.
 
From March 1998 to March 2000, the tech-heavy Nasdaq Composite Index gained 177%…
 


Getting out just as investors were piling in would have been a terrible mistake.
 
Today, we're in a similar position. Mom-and-pop investors' cash allocations are at 13%, according to AAII.
 
That tells us that sentiment is getting more positive. Investors are more excited to own stocks. But it doesn't mean a crash is imminent.
 
When cash positions hit similar lows in early 1998, the Nasdaq nearly tripled in less than two years.
 
Now, I'm not saying that stocks are certain to double or triple from here. But we have no reason to expect this is the top just because individuals have moved into the stock market, either.
 
History says the opposite is true… We could still have years of upside ahead of us – along with some of the biggest gains of this bull market.
 
Good investing,
 
Brett Eversole

A few companies have increased their 401(k) match in wake of tax bill what does this mean?

A reporter called recently to ask what I thought about some companies sweetening their 401(k) plans in response to the tax cut. It took me a little while to think about the issue. Heres where I came out.

First, I was pleasantly surprised that some companies decided to make such an immediate and visible response. During the debate on taxes, critics suggested that most of the benefits of the $1.3 trillion reduction in business taxes from lowering the corporate tax rate would go to the owners and not be shared with the workers. The fact that some companies are sensitive to this issue and have made a gesture is nice news.

Read: $1,000 bonus? Visas 401(k) offer could be worth $1 million

Second, improvement in the companys 401(k) match seems like a more substantive change than the far more popular option of paying $1,000 bonuses. It is more likely to be permanent and also recognizes that 401(k) contribution rates are woefully low. A current list (as of Jan. 12), however, shows that of 150 companies reporting an increase in compensation as the result of the tax legislation, only eight increased their 401(k) match:

Aflac
AFL, +1.66%
increased its match from 50% to 100% on the first 4% of compensation (plus a one-time contribution of $500);

Visa
V, +1.32%
increased the base for its 200% match from 3% to 5% of base salary;

Advance Financial, Eberle Communications Group, Nationwide Insurance, Peoples Bank & Trust, SunTrust Banks Inc.
STI, +0.07%
and Western Alliance Bancorp
WAL, +0.78%
also increased matching contributions.

Third, at this point, it is premature to assess the meaningfulness of these corporate gestures. Company profits all else equal will be $1.3 trillion higher over the next 10 years because of the reduction in the corporate tax rate. So far, the changes look like between $1,000 and $2,000 per affected worker and only a few million of the nations 125 million private sector workers have seen a change.

Read: Fattening 401(k) matches is how to make America great again

Finally, the government is borrowing money to finance this cut in the corporate tax rate. A final assessment must wait until we see how the loan is repaid. The current plan involves trying again to repeal the Affordable Care Act, cutting Medicaid sharply, and cutting basic food assistance to low-income families. These changes will hurt lower-paid workers.

Its always nice to see employers raise their 401(k) match. But, in the end, providing tax relief to business by borrowing the money is likely to end up hurting vulnerable workers.

Hot Undervalued Stocks To Watch Right Now

LM Ericsson Telephone (ERIC)

Welcome. In this article I will give the dollar and cents reasons for how come ERIC looks like a relative bargain in today’s marketplace.

Story

In the trailing ten years ERIC has earned their market cap in free cash flow. This is a signal the company may be undervalued. If ERIC can repeat the performance and earn over $19B in the coming ten years. In a market where many companies are being valued at twice or three times as much free cash flow as they’ve generated over the trailing ten years, this factor alone makes ERIC a relative bargain.

Hot Undervalued Stocks To Watch Right Now: Boston Properties, Inc.(BXP)

Advisors’ Opinion:

  • [By Paul R. La Monica]

    The fund owned big U.S. real estate investment trusts Boston Properties (BXP) and Vornado (VNO), as well as Japan’s Sumitomo Realty, as of the end of last year. REITs are known for their big dividends.

  • [By Markus Aarnio]

    Owens Realty Mortgage’s competitors include American Assets Trust (AAT), Alexandria Real Estate Equities (ARE) and Boston Properties (BXP). American Assets Trust has seen five insider buy transactions and four insider sell transactions this year. American Assets Trust has a dividend yield of 2.78%. Alexandria Real Estate Equities has seen 14 insider sell transactions this year. Alexandria Real Estate Equities has a dividend yield of 4.10%. Boston Properties has seen one insider buy transaction and four insider sell transactions this year. Boston Properties has a dividend yield of 2.43%.

Hot Undervalued Stocks To Watch Right Now: Credicorp Ltd.(BAP)

Advisors’ Opinion:

  • [By Zacks]

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    To read this article on Zacks.com click here.

Hot Undervalued Stocks To Watch Right Now: Cotiviti Holdings, Inc. (COTV)

Advisors’ Opinion:

  • [By Scott Rubin]

    Big gainers on the day included Intersil Corp (NASDAQ: ISIL), which jumped 20 percent on news of a buyout, and Medivation (NASDAQ: MDVN), which added 20 percent on a deal with Pfizer (NYSE: PFE) related to its cancer drug. Cotiviti Holdings Inc (NYSE: COTV) lost around 9 percent in the wake of a mid-day sell-off and Marathon Oil Corporation (NYSE: MRO) fell 7 percent in the wake of a management shakeup.

Hot Undervalued Stocks To Watch Right Now: BioCryst Pharmaceuticals Inc.(BCRX)

Advisors’ Opinion:

  • [By Sean Williams]

    Shares of BioCryst Pharmaceuticals (NASDAQ:BCRX), a biotech company that develops small-molecule drugs to block enzymes involved in disease proliferation, surged as much as 12% today after a report was issued that a highly pathogenic H5N1 bird flu was found in the northern part of Malaysia.

  • [By Lisa Levin] Gainers
    Loxo Oncology Inc (NASDAQ: LOXO) rose 32.7 percent to $65.00 in pre-market trading after the company reported that larotrectinib trial demonstrated 76 percent confirmed objective response rate.
    Dynavax Technologies Corporation (NASDAQ: DVAX) shares rose 22 percent to $7.20 in the pre-market trading session after the company on Friday presented updated data for SD-101 in combination with KEYTRUDA.
    Puma Biotechnology Inc (NASDAQ: PBYI) rose 21.7 percent to $99.75 in pre-market trading as the company disclosed positive PB272 Phase 2 data from TBCRC 022 trial at ASCO17.
    Helios and Matheson Analytics Inc (NASDAQ: HMNY) shares rose 20.7 percent to $3.21 in pre-market trading after the company reported that RedZone has acquired all the assets of Trendit including three technology patents.
    Forestar Group Inc. (NYSE: FOR) rose 13.1 percent to $16.05 in pre-market trading after D.R. Horton, Inc. (NYSE: DHI) proposed to buy 75 percent of Forestar Group for $16.25 per share in cash.
    TG Therapeutics Inc (NASDAQ: TGTX) shares rose 12 percent to $15.50 in pre-market trading after the company said Phase 3 GENUINE trial met primary endpoint with TG-1101 + ibrutinib increasing overall response rate by >70 percent versuss ibrutinib alone.
    Gigamon Inc (NYSE: GIMO) gained 10.8 percent to $43.55. Reuters reported that Gigamon is exploring a potential sale.
    BioCryst Pharmaceuticals, Inc. (NASDAQ: BCRX) rose 8.7 percent to $6.00 in pre-market trading after the company announced Rapivab pediatric sNDA acceptance by the FDA.
    Array Biopharma Inc (NASDAQ: ARRY) rose 7.2 percent to $8.77 in pre-market trading after gaining 5.68 percent on Friday.
    Ehi Car Services Ltd (ADR) (NYSE: EHIC) shares rose 6.4 percent to $10.76 in pre-market trading. eHi Car Services posted Q1 earnings of $0.06 on sales of $89.43 million.
    Skyworks Solutions Inc (NASDAQ: SWKS) rose 5.9 percent to $114.79 in pre-market trading after gaining 0.69 percent on Friday.
    Sorl Auto
  • [By Monica Gerson]

    BioCryst Pharmaceuticals (NASDAQ: BCRX) shares gained 5.98% to $6.91 in the pre-market session after the company has been awarded contract by the National Institute of Allergy and Infectious Diseases to develop BCX4430 for the treatment of Marburg virus disease.

Hot Undervalued Stocks To Watch Right Now: Pound/Rand(PX)

Advisors’ Opinion:

  • [By Ben Levisohn]

    The last twelve months haven’t been kind to Praxair (PX) and Air Products & Chemicals (APD), but UBS analyst John Roberts and team argue that’s about to change, as they upgrade their shares to Buy from Neutral arguing that their earnings can withstand a slowing global economy:

    In our view, the two stocks are more alike than different. NTM P/Es are within ~0.5 pts of each other. Both stocks have declined ~20% from their historical highs the largest corrections in 20+ years aside from the financial crisis…

    Industrial gas stocks have normally grown through changes in FX, oil & China demand within normal historical ranges. And investor concerns around China forAir Products & Chemicals may still prove much bigger than reality. Nevertheless, the combination of FX & oil sector impacts on Praxair, and FX & China issues for Air Products & Chemicals, have been much larger than previously seen. With oil already down, the dollar already appreciated, & China concerns already heightened we believe forward basis would appear to carry only normal risks (& lower if FX & oil are mean-reverting, which some theories support).

    Normal high single digit EPS growth projected for both in 2017 vs 2016: Four large firms serve 70%+ of the global merchant gas market, and price normally contributes ~2% to growth. Customer older captive units being outsourced contributes another 2%. Secular drivers for oxygen include energy savings (i.e. O2 burns more efficiently than air), life sciences (healthcare & microbial processes) nitrogen secular drivers include increasing purity requirements (food freezing & semiconductors). Topline growth ~2x global GDP more normal, with EPS growth ~2x sales growth due to high fixed costs (key variable costs are inexpensive air & power).

    Financial crisis demand drop was only a few %, in line with global GDP drop Most chemicals volumes dropped 10%+ (some 40%

Revising Our Price Estimate For Microsoft To $87

&l;p&g;Microsoft reported&a;nbsp;strong growth in revenues in 2017. Based on the company&a;rsquo;s performance in 2017 and its outlook for the next few years, we have revised&a;nbsp;&l;a href=&q;http://www.trefis.com/company?hm=MSFT.trefis&q; target=&q;_blank&q;&g;our price estimate for Microsoft&s;s stock from $66 to $87&l;/a&g;, which is about in line with the current market price.

The 30% upward revision in our price estimate was driven by growth in revenues from the Productivity and Intelligent Cloud verticals. Furthermore, based on its fiscal 2017 performance, we have revised our margin forecast upwards across verticals as the margin profile for the company improves due to a shift to cloud service. Cumulatively, this has resulted in a $22 per share increase in our valuation for Microsoft. Below we explain the changes in more detail.

&l;strong&g;Productivity And Business Processes Revenues Set To Grow&l;/strong&g;

Microsoft&a;rsquo;s Productivity and Business Processes revenues, which include the Office suite, Dynamic CRM and ERP and LinkedIn, has grown from $27 billion in 2014 to $30.5 billion in FY2017 primarily due to the growth in Office 365 cloud services and Dynamics cloud software. The company continues to roll out integrated productivity solutions, which bundles Windows 10, Office 365, Enterprise security and mobility for organizations, in order to boost its productivity revenues. It is also offering a cross-sales platform that integrates Dynamic CRM and LinkedIn capabilities to its clients to improve its presence in the ERP and CRM domain.

Microsoft&a;rsquo;s revenues from Office 365 &a;ndash; from both the consumer and commercial segments &a;ndash; and Dynamics 365 have improved significantly in the previous years. Considering the adoption of Office among enterprise and consumer clients alike, we expect the revenue run rate from Office 365 to increase further. We also believe that the adoption of Dynamics 365 will positively impact Business Processes revenues, as the platform can leverage Microsoft&a;rsquo;s ecosystem to sell other products by bundling more value-added services. As a result, we currently project segment revenue to increase to $45 billion by the end of our forecast period.

&l;/p&g;&l;p style=&q;text-align: center&q;&g;&l;span style=&q;color: red&q;&g;&l;/span&g;&l;/p&g;

Furthermore, we expect margins to improve as the company is increasingly selling more subscriptions for its cloud services compared to perpetual licenses. These hosted solutions generally have higher profit margins than the traditional suite, and we project the company&a;rsquo;s Productivity and Business Processes operating margin to improve to around 42.5% by the end of our forecast period.

&l;p style=&q;text-align: center&q;&g;&l;span style=&q;color: red&q;&g;&l;/span&g;&l;/p&g;

&l;strong&g;Azure Platform Powers Intelligent Cloud Revenues&l;/strong&g;

The Intelligent Cloud segment (Azure, Server products, and enterprise services) saw its revenues grow by a CAGR of 8.1% over 2014-2017 to $27 billion. While Server products and Cloud services revenue grew in mid-single digits, driven by growth in Microsoft SQL Server, adoption of the cloud-based Azure platform resulted in triple-digit growth in revenues. As a result of these products, the company&a;rsquo;s Cloud revenue run rate exceeded $20 billion in 2017. Furthermore, the Azure platform, which offers IaaS and PaaS services, continues to gain traction and its market share has gone &l;a href=&q;https://www.skyhighnetworks.com/cloud-security-blog/microsoft-azure-closes-iaas-adoption-gap-with-amazon-aws/&q; target=&q;_blank&q;&g;up to 10%&l;/a&g; recently. The company continues to add capabilities such as AI to its Azure hybrid cloud offering. As a result, Azure is fast emerging as an attractive platform for Microsoft&a;rsquo;s clients for Infrastructure as a Service (IaaS) and Platform as a Service (PaaS). Based on these trends, we expect this division to become an important driver for Microsoft&a;rsquo;s value in the coming years. We forecast Intelligent Cloud revenues to grow to over $37 billion by the end of our forecast period.

&l;p style=&q;text-align: center&q;&g;&l;span style=&q;color: red&q;&g;&l;/span&g;&l;/p&g;

We also project operating profit margins to improve to 35% by 2024 as the cloud service ARR grows in the coming years.

&l;p style=&q;text-align: center&q;&g;&l;span style=&q;color: red&q;&g;&l;/span&g;&l;/p&g;

&l;strong&g;Windows OS, Hardware Launches Bolster Personal Computing Division&l;/strong&g;

Over the course of the last two years, Microsoft has ramped down the production of smartphones as the division was not able to make much headway in the smartphone market. As a result, revenues from the phone business have declined by over 95%. However, Microsoft&a;rsquo;s Personal Computing division did well in 2017, largely due to the adoption of Windows OS, the launch of its Surface line of devices and growth in Bing&a;rsquo;s online search ad revenues. As a result, the revenues declined marginally by 4% in fiscal 2017 to $38.7 billion.

While we expect that Windows OS sales for both Windows OEM non-Pro and Pro will continue to outperform PC sales in the coming years, the secular decline in PCs will impact revenues. As a result, we project revenues from the PC division to grow marginally to around $38.4 billion by 2024, aided by growth in revenues from Xbox, Surface line of devices and Bing search.

&l;p style=&q;text-align: center&q;&g;&l;span style=&q;color: red&q;&g;&l;/span&g;&l;/p&g;

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Ray Blancos Pot Report: Your Guide to a Big Pay-Off

Changes in public sentiment and to state laws have created a tidal wave of profits for fast moving investors in pot stocks.

With the pot industry still in its infancy, many of these companies have their best days ahead of them.

If you buy into the right companies now, before the big money starts rolling in, you could stand to make six figures, or more.

Today, Ill show you a few marijuana companies that could have made you rich and then well jump into what we can expect in the coming year.

The First Round of Marijuana Millionaires

Despite the federal government’s continued regulation on marijuana, several marijuana-related companies trade on major stock exchanges.

When marijuana went legal in the U.S., shares of these trailblazing companies shot up like a rocket.

Consider the case of Abbattis Bioceuticals, a Canadian company specializing in natural health products, including one containing cannabinoids. It also sold products to help people cultivate marijuana.

Before Jan. 1, 2014, shares traded for about 2.5 cents per share. By March 21, it was trading for $2.46 a gain of 9,740%.

In other words, you could have bought 1,000 shares for just $25, and cashed out with $2,460.

There was also Fusion Pharm, another company specializing in technology that could help marijuana farmers. Its shares went as high as 2,269% after Colorados pot retailers opened for business.

These companies soared because a pair of U.S. states legalized marijuana for recreational use.

Now with states like California, Massachusetts, Vermont, and New Jersey joining the legal marijuana club, I expect history to repeat itself.

The industrys biggest gains are yet to come.

Todays Marijuana Millionaire Makers

One company Im watching closely is Cara Therapeutics.

Cara is a pain management company working on the next generation of cannabinoid medicine.

Its a pure biotech play, but what makes the company so enticing is that Caras success doesnt depend on U.S. states legalizing marijuana.

Its research falls well within federal FDA regulations, so despite recent rumblings of a crackdown from D.C., Cara can continue with a business as usual approach to operations.

But theres also other good reasons to believe the companys shares will shoot higher in 2018.

The company has a number of therapies in different stages of FDA trials. Once these treatments hit the market, Cara could see a huge revenue boost.

A boost that could book major profits for investors in the near future.

If youre looking for safe pot plays ready to rip higher in the wake of new legal markets opening, look no further than cannabis focused biotechs.

Theres nothing stopping the feds from slowing their operations and many of these stocks are still very cheap to own.

These companies will benefit greatly from the U.S.s newest pot markets.

It’s the perfect time to get in and cash out for big gains with pot in 2018.

For Tomorrows Trends Today,

Ray Blanco

Editors note:[EMERGENCY UPDATE] Its Here The Marijuana Boom

As Ray explained, Californias marijuana market could usher in a golden age of pot investing this year.

Which is why Im sending you this emergency memo right now.

White-hot pot stocks could make you incredible gains, and could take off at any time. Dont miss out. Click here now.