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Tuesdays Vital Data: Micron Technology, Inc. (MU), Facebook Inc. (FB) and AT&T Inc. (T)

U.S. stock futures are headed higher this morning, pointing toward a positive open. The Dow Jones Industrial Average is on track to break its four-session losing streak, but corporate earnings have yet to play out.

stock market today

In fact, Dow members The Coca-Cola Company (NYSE:KO) and United Technologies Corporation (NYSE:UTX) release their quarterly reports today.

Against this backdrop, Dow Jones futures are up 0.63%, S&P 500 futures have gained 0.58% and Nasdaq-100 futures are higher by 0.55%.

Turning to the options pits, volume was exceedingly low on Monday. Only about 15.7 million calls and 13.6 million puts changed hands on the session. The CBOE single-session equity put/call volume ratio fell to a two-week low of 0.61. The 10-day moving average held at 0.63.

Leading Monday’s activity, Micron Technology, Inc. (NASDAQ:MU) call options were active following another broadside from analysts at UBS. Elsewhere, Facebook, Inc. (NASDAQ:FB) options activity was the lowest in years heading into tomorrow’s quarterly report. Finally, AT&T Inc. (NYSE:T) is dealing with a collusion probe from the Justice Department ahead of earnings.

Tuesday’s Vital Options Data: Micron Technology, Inc. (MU), Facebook Inc. (FB) and AT&T Inc. (T)investorplace.com/wp-content/uploads/2018/04/04-24-2018-Top-Ten-Options-300×131.png 300w, investorplace.com/wp-content/uploads/2018/04/04-24-2018-Top-Ten-Options-200×88.png 200w, investorplace.com/wp-content/uploads/2018/04/04-24-2018-Top-Ten-Options-400×175.png 400w, investorplace.com/wp-content/uploads/2018/04/04-24-2018-Top-Ten-Options-116×51.png 116w, investorplace.com/wp-content/uploads/2018/04/04-24-2018-Top-Ten-Options-100×44.png 100w, investorplace.com/wp-content/uploads/2018/04/04-24-2018-Top-Ten-Options-114×50.png 114w,https://investorplace.com/wp-content/uploads/2018/04/04-24-2018-Top-Ten-Options-78×34.png 78w” sizes=”(max-width: 566px) 100vw, 566px” />

Micron Technology, Inc. (MU)

Back on April 5, UBS initiated MU stock with a “sell” rating and a $35 price target. The initiation hit MU shares hard, sending them down more than 10% in the next two day. Yesterday, UBS reiterated its “sell” stance on MU stock, with predictable results.

MU stock dropped more than 3% to roughly $49. According to UBS, Micron could lose share in the DRAM and NAND markets in 2019 due to shifts in production and technology.

MU options traders favored calls in the midst of the decline. Volume was light, arriving at 277,000 contracts, or about 93% of MU’s daily average. But, calls made up 69% of all contracts traded.

There are signs that this renewed attention to MU call options may be bulls cutting their losses. Specifically, the May put/call open interest ratio has risen to 0.67 from last Thursday’s reading of 0.60. Rising pessimism amid weak price action is is a bearish signal for MU stock. Traders should keep a close eye on the situation.

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Facebook, Inc. (FB)

Typically, stocks make the most active options listing for the popularity of their underlying options activity — its inherent in the filter after all. Facebook, however, managed to make the list while posting the lowest daily average volume I’ve seen since I began writing this column. And it did so with earnings on tap tomorrow.

Total options volume for Facebook stock came in at about 189,000 contracts yesterday, volume that would be impressive for other stocks. But this activity made up only 37% of FB’s daily average. In other words, Facebook options volume was typically higher two-thirds of the time in the past year.

Despite the low total, call volume made up an average 62% of yesterday’s take, arriving in-line with typical call activity for Facebook.

Facebook is expected to post a profit of $1.36 per share on revenue of $11.41 billion tomorrow. Those figures are up roughly 30% and 42%, respectively, year over year. EarningsWhispers.com puts the whisper number at $1.48 per share.

As for weekly April 27 options, implieds are pricing in a post-earnings move of about 6%. The upper bound lies at $175.75 and the lower at $156. Given that the April 27 put/call OI ratio has fallen from 0.66 last Wednesday to 0.53 today, it appears that FB options traders are betting on a post-earnings rally.

AT&T Inc. (T)

AT&T is set to report earnings after the close tomorrow. Analysts are expecting Wall Street is looking for an 18% jump in earnings to 88 cents per share and a 0.2% drop in revenue to $39.29 billion. That said, the Justice Department is casting a long shadow over the event.

We all know that AT&T is in a battle for approval of its acquisition of Time Warner Inc. (NYSE:TWX). However, the company is now facing an investigation into potential collusion with Verizon Communications, Inc. (NYSE:VZ).

According to reports, the DOJ is looking at whether the two companies colluded on wireless-standards to make it harder for people to switch to new phone carriers. Apple Inc. (NASDAQ:AAPL) was among those who reportedly asked the DOJ to look into the issue.

The recent negative attention has had a chilling effect on T options. For instance, the April 27 put/call OI ratio has risen from 0.41 last Tuesday to today’s reading of 0.48. Calls dominated yesterday’s volume, making up 60% of the overall activity. This may be a sign that T options traders are ditching calls in favor of less exposure ahead of what could be a volatile earnings report.

As of this writing, Joseph Hargett held no positions on any of the aforemen

Slowly But Surely, Alibaba Group Holding Ltd Will Feel the Burden of Being a Powerhouse

Over the course of the past few months, at separate times, I’ve argued that sooner or later, time and competition are going to catch up with Amazon.com, Inc. (NASDAQ:AMZN). Though its ever-increasing size allows it to reach deeper into consumers’ pockets in more ways, each of a company’s moving parts makes the whole machine more prone to failure.

It’s a warning that also needs to be passed along to Alibaba Group Holding Ltd (NYSE:BABA) shareholders, particularly in light of some recent developments from its top competitors.

It may not matter right now, or even a few months from now, but other e-commerce and internet companies — frustrated with Alibaba’s dominance — are finally starting to find ways to beat Alibaba at its own game.

Partnerships Are the Key

How does the old saying go? Eventually, every contest becomes a two-horse race?

It’s not a universally true, immutable axiom. There is quite a bit of credibility to the idea, though. The Coca-Cola Co (NYSE:KO) and PepsiCo, Inc. (NASDAQ:PEP) were for all intents and purposes the only relevant soda players when soda was their core product. All other players were either acquired or obliterated.

The same idea more or less applies to AT&T Inc. (NYSE:T) and Verizon Communications Inc. (NYSE:VZ), which dominate the United States’ telecom scene, leaving the rest of the industry fighting for leftovers and scraps.

Times have changed a bit, though. Now, an outright merger or acquisition is less likely than a formidable partnership intended to take aim at the dominant player in an industry.

Enter SINA Corp (NASDAQ:SINA) and JD.Com Inc (ADR) (NASDAQ:JD). The former operates one of China’s search engines, and the latter is of course China’s second-biggest e-commerce outfit.

The two have teamed up to share information that will ultimately give both parties greater insight about consumer behaviors. Not that Alibaba isn’t armed with plenty of consumer behavior data of its own, but it’s a direct jab at China’s e-commerce powerhouse.

Were it the only team-up of its ilk, it might be able to be dismissed. It’s hardly the only one, though.

Case(s) in point? Late last year, Chinese gaming and app outfit Tencent Holding/ADR (OTCMKTS:TCEHY) partnered up with JD.com and purchased a stake in China’s third-largest e-commerce platform, Vipshop Holdings Ltd – ADR (NYSE:VIPS).

Early this year, JD partnered with Meili in a move that’s intended to woo female shoppers away from Alibaba’s Tmall.

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Then just this month, JD.com made a pitch to European makers of luxury goods, saying it could do a better job of keeping counterfeit goods in check than Alibaba has. And, maybe it can. If nothing else, the sheer size of Alibaba’s Tmall makes it difficult to keep close tabs on every listed item.

These recent developments are, more importantly, a microcosm of the competitive thinking and partnering being done almost exclusively to slow Alibaba down. When the whole world is gunning for you specifically, enough shots will eventually hit the target to create trouble.

To that end, know that Alibaba won’t be stifled by one sweeping blow. It will be nagged into submission by all the nickels and dimes it has to spend to remain the beast it’s become.

Bottom Line for BABA Stock

Don’t read too much into the warning, if you’re asking yourself, “Should I buy Alibaba stock today?” Though it’s something that may adversely impact the Alibaba stock price in 10 years, it’s not going to matter much over the course of the next 10 days, or even the next 10 months. Much can happen in the meantime, and the Alibaba story is still a good one.

You can never afford to assume an organization is perpetually invulnerable, though. Just ask the Eastman Kodak Company (NYSE:KODK) or Xerox Corp (NYSE:XRX), neither of which saw the winds of change blowing in time to do anything about it.

That’s not to suggest any headwind Alibaba could meet will be as dramatic as the plunge into obsolescence that Xerox and Kodak suffered. It is to say, though, that investors need to be very careful about making assumptions. BABA isn’t necessarily the bulletproof name some believe it is.

And for what it’s worth, it’s not like Amazon doesn’t continue to face more and more seemingly innocuous threats as well.

Take for instance how Walmart Inc (NYSE:WMT) and Alphabet Inc (NASDAQ:GOOGL, NASDAQ:GOOG) got together late last year to develop a voice-activated shopping app for Google’s smart speaker.

Neither company was theoretically the best partner for the other to cocreate the platform. In both cases, Amazon itself was arguably the more potent partner. But neither company feels like continuing to feed its competition. BABA is in that same boat as Amazon.

It’s a small step to be sure, but enough small steps can add up over time.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter, at

Upcoming Earnings: Industrial Conglomerate GE Reports Friday Morning

Industrial conglomerate General Electric Company (NYSE: GE) is scheduled to report earnings before market open on Friday, Apr. 20.

CEO John Flannery has faced plenty of challenges since he took over in August 2017, working to streamline the massive company and improve transparency. In recent quarters, GE’s issues have been numerous and well publicized.

In the time that Flannery has been at the helm, GE has halved its dividend; it took a surprise $6.2 billion after-tax charge in Q4 2017 related to GE Capital’s insurance portfolio, while adding $15 billion to its reserves  for future payouts over the next seven years; and recently restated 2016 and 2017 financials, reducing earnings by $0.30 per share. The restated financials also included adjustments related to pensions, cash flows and income taxes.

Clearly, the company’s turnaround efforts, which include a multi-year plan to improve GE Power as well as exiting more than $20 billion worth of business over the next several years, are going to take time.

There have been some signs of progress from Flannery’s plan so far. When GE reported Q4 2017 results, it generated $9.7 billion in adjusted cash flow from operating activities for fiscal 2017, compared to guidance of $7 billion.

Since announcing plans to exit $20 billion in business, it has sold its industrial solution business in a $2.6 billion deal to ABB (ABB) and recently announced a $1.05 billion deal to sell healthcare IT businesses to private equity firm Veritas.  And Bloomberg reported that several companies are considering a bid for GE’s Jenbacher unit for more than $3 billion.

On tomorrow’s calls, analysts are likely to be digging in to get a better idea of restructuring progress.

GE Earnings

For Q1 2018, GE is expected to report adjusted EPS of $0.11 on revenue of $27.88 billion, according to third-party consensus estimates. In Q4 2017, revenue missed estimates, coming in at $31.4 billion versus expectations for $32.7 billion, and earnings also came up short by a penny at $0.27 per share after removing charges and one-time items.

GE previously lowered its earnings guidance for all of fiscal 2018 to a range of $1.00 to $1.07, but analysts seem to think that’s a little optimistic given they have an average estimate of $0.95. Out of 17 analyst ratings, earnings estimates range from $0.87 to $1.04 per share.

GE Options Trading Activity

Around GE’s upcoming report, options traders have priced in a 4.8% share price move in either direction, according to the Market Maker Move indicator on the thinkorswim® platform. Implied volatility was at the 76th percentile as of this morning. 

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GE 1-YEAR CHART. GE shares have dropped from a 52-week high of $30.54 all the way to a new 52-week low of $12.73 on March 26. The stock has bounced a little bit off that level and has been trading around the mid-$13 range for the past few sessions. Chart source: thinkorswim® by TD Ameritrade.  Not a recommendation. For illustrative purposes only. Past performance does not guarantee future results.

In short-term trading at the Apr. 20 monthly expiration and the next several weekly expirations, a lot of the activity has been concentrated at the 14 strike for both puts and calls, just out of the money. At the May 20 expiration, trading has also been heavier at the 14-strike call, while activity on the put side has been mostly at the 13 and 14 strikes. 

Overall during yesterday’s session, trading was heavier on the call side, with a put/call ratio of 0.476.

Note: Call options represent the right, but not the obligation, to buy the underlying security at a predetermined price over a set period of time. Put options represent the right, but not the obligation to sell the underlying security at a predetermined price over a set period of time.

What’s Coming Up

Next week brings results from many of the largest companies in the tech sector:

Google-parent Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG) reports after the close Monday, Apr. 23
Twitter (NYSE: TWTR) reports before market open Wednesday, Apr. 25 and Facebook, Inc. (NASDAQ: FB) reports after the close the same day
Microsoft Corporation (NASDAQ: MSFT), Intel Corporation (NASDAQ: INTC) and Amazon.com, Inc. (NASDAQ: AMZN) report after the close Thursday, Apr. 26

In addition to the tech-heavy week, some of the other companies on the docket are Verizon Communications Inc. (NYSE: VZ), AT&T Inc. (NYSE: T), Ford Motor Company (NYSE: F), General Motors Company (NYSE: GM), Caterpillar Inc (NYSE: CAT), Boeing Co (NYSE: BA), Chevron Corporation (NYSE: CVX) and Exxon Mobil Corporation (NYSE: XOM). If you have time, make sure to check out today’s market update for a look at what else is going on.

Information from TDA is not intended to be investment advice or construed as a recommendation or endorsement of any particular investment or investment strategy, and is for illustrative purposes only. Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade.

3 Terrific Telecom Dividend Stocks

How many days might you go without your mobile phone? My guess for most of the population would be zero days — and for most an hour or so would be taxing.

And how many days might you go without your internet connection? I mean cold turkey, no internet, no browsing, no video or music streaming? Again, for most people, the answer would likely be naught.

Folks are so tethered either by wire or wireless connections that telecom companies have a lock on their customers. And sure, there is some competition. But for most markets, internet companies typically have no competition and swapping from one wireless provider for another is not very common occurrence for many customers.

This makes for a great recipe for strong, consistent and even rising revenues, which in turn provide lots of cash for strong, consistent and even rising dividends. And that’s why I love these 3 solid dividend stocks from the telecom market.

Telecom Dividend Stocks #1: AT&T Stock T Stock Is Still a Buy, But Investors Should Brace for Volatility Source: Mike Mozart via Flickr

Start with Ma Bell, also known as AT&T Inc. (NYSE:T). AT&T provides the far reach of its vast wireless network around the U.S. and continues to expand its offerings via satellite with its Directv, U-Verse and internet services units. And AT&T is also in the works to expand its offerings to include content from Time Warner. Right now, that deal is in the hand of the courts as the U.S. government seeks to block the merger .

AT&T’s revenues are largely steady — but heavy. And margins are fat on its offerings, running at 13% and making for an ample dividend coverage with a payout sitting at only 41%. Little debt for now and ample returns on its capital-intensive assets make T stock attractive for years to come.

And the shares trade at a low price-to-book ratio of only 1.5 times and a mere 1.4 times its trailing revenues. This is a bargain for a dividend yield of 5.66% that’s been on the rise for the past five years.

Telecom Dividend Stocks #2: Verizon Stock Source: Via Flickr

Next is AT&T’s prime competitor: Verizon Communications Inc. (NYSE:VZ). Verizon is actually bigger than Ma Bell in the wireless market — but trails in internet and related services. It also provides online content and other products and services via its acquisition of AOL and Yahoo.

In addition, Verizon also is a prime provider for communications for the U.S. Government. All of this makes for a similar story of ample cash to support a great dividend.

Revenues are solid, if not exactly rising by much. But VZ has even fatter operating margins than AT&T at 21.8%. And that profit rate along with minimal debt makes for a dividend that’s overly protected with a payout rate of only 31.6%.

Verizon’s dividend has risen steadily over the past five years and now yields 4.83%, making VZ a solid dividend stock to call up for your own portfolio.

Telecom Dividend Stocks #3: BCE Stock Source: Shutterstock

Last of the three is BCE Inc. (USA) (NYSE:BCE), which stands for Bell Canada Enterprises but is known simply as Bell Canada. The company is the largest communications company in Canada. It dominates wireless, wireline and internet communications as well as television and other content products and services.

The story with BCE is similar to AT&T and Verizon with lots of cash being generated from its communications assets. But it does have an advantage over its U.S. rivals in that revenues continue to move higher — making a case for a bit more growth for investors.

Margins are fat with operating profits running at 22.6% and debt is low like its southern peers. But the downside is that with some added growth in revenues comes from additional spending. This means a somewhat less defended dividend with a current payout rate of 92.1%

But given revenue growth and the positive operating margins — I see the dividend as safe. It has been bumped up nicely in the past 12 months to a current yield of 5.45%.

BCE makes for a great dividend payer that along with AT&T and Verizon would make for a nice payout trilogy.

Neil George is the editor of Profitable Investing and does not have any holdings in the securities mentioned above.

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8 Biggest Dow Losers So Far in 2018

Over the course of the past week’s five trading sessions, the Dow Jones industrial average dropped more than 1,400 points, the biggest weekly percentage loss in more than two years. Eight Dow component stocks are down at least 10% for the year to date and only six have been able to show a gain so far in 2018.

No one will be shocked to read that General Electric Co. (NYSE: GE) is the worst-performing Dow stock of 2018, down 25.1% as of Friday. The stock posted a new 52-week low Friday at $13.02. As the share price declines, investors worry more about the viability of GE’s dividend payments. At yesterday’s close the dividend yield is 3.41%. For the prior 12 months, GE shares have lost nearly 56% of their value.

Procter & Gamble Co. (NYSE: PG) has seen its share price drop by 17.38% to date in 2018. Shares lost nearly 4% last week and set a new 52-week low of $75.81 on Friday. The stock has long been a favorite defensive holding, and of the eight stocks on this list, its weekly loss was the second smallest. The stock’s dividend yield is 3.52%, and shares are down 16.4% for the past 12 months.

Walmart Inc. (NYSE: WMT) dropped 4.21% last week and shares are down 13.5% for the year to date. The company has been waging anear-life and death battle with Amazon that is both costly and only a moderate success. Walmart’s dividend yield at Friday’s close was 2.39%, and shares still trade up by over 22% over the past 12 months.

Exxon Mobil Corp. (NYSE: XOM) closed Friday down 12.85% for the year to date and down just under 3% for the week. That was the smallest weekly loss of any of the stocks on this list. Exxon was buoyed by last week’s5.6% boost to crude oil prices. The stock’s dividend yield was 4.14% at Friday’s close, and shares are down about 11% over the past 12 months.

Verizon Communications Inc. (NYSE: VZ) has lost about 12.5% of its value since the beginning of the year. Last week’s dip of 4.67% didn’t help, but Verizon did manage to avoid setting a new annual low during the week. The company’s 5% dividend yield helps keep investors in the fold, and some encouraging words about Verizon’s 5G technology also helped moderate losses last week. The stock is still underperforming for the past 12 months, however, down 6.75%.

DowDuPont Inc. (NYSE: DWDP) has posted a year-to-date drop of about 11.5% after losing 7.2% of its value last week. Like Verizon, the industrial firm managed to avoid posting a new low last week, and the stock price is flat over the past 12 months. DowDuPont’s dividend yield was 2.32% at Friday’s close.

Johnson & Johnson (NYSE: JNJ) dropped 6.42% last week to bring its year-to-date loss to 10.5%. Like P&G, this is another defensive stock that investors hold onto for its long history of dividend performance. At Friday’s closing price, the dividend yield for J&J is 2.64%, hardly a dazzler, but an amount that is a virtual lock to be paid. For the past 12 months, its shares have lost just 0.6%.

McDonald’s Corp. (NYSE: MCD) makes this list because its stock is down 9.96% for the year, close enough to 10% for us. Shares lost 4.55% last week, but has still has added just over 20% to its share price during the past 12 months. Not quite as sure a defensive play as P&G or J&J, McDonald’s pays a dividend yield of 2.55% and remains a favorite among some analysts.

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