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https://finnhub.io/api/news?id=32731bcbdd4914c49e73949a5221b30cdbd7f8b103092106bfbad93e08066b2d | The 2 Best Warren Buffett Stocks to Load Up On in September | Warren Buffett's Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) has had an off year. Through the first eight months of 2022, Berkshire's shares have lost over 7% of their value. Berkshire's relative strength in this brutal market is proof positive that the Oracle of Omaha, along with his investment team, haven't lost their touch for stock picking. | 2022-09-05T10:15:00 | Yahoo | The 2 Best Warren Buffett Stocks to Load Up On in September
Warren Buffett's Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) has had an off year. Through the first eight months of 2022, Berkshire's shares have lost over 7% of their value. Berkshire's relative strength in this brutal market is proof positive that the Oracle of Omaha, along with his investment team, haven't lost their touch for stock picking. | AAPL |
https://finnhub.io/api/news?id=208cf42a85fe18335a90574257b9f060f5c748febf22912686af66f4c0c2d222 | Apple (NASDAQ:AAPL) sheds 4.8% this week, as yearly returns fall more in line with earnings growth | When you buy shares in a company, it's worth keeping in mind the possibility that it could fail, and you could lose... | 2022-09-05T09:46:27 | Yahoo | Apple (NASDAQ:AAPL) sheds 4.8% this week, as yearly returns fall more in line with earnings growth
When you buy shares in a company, it's worth keeping in mind the possibility that it could fail, and you could lose your money. But on the bright side, you can make far more than 100% on a really good stock. For example, the Apple Inc. (NASDAQ:AAPL) share price has soared 293% in the last half decade. Most would be very happy with that. It's down 4.8% in the last seven days.
While this past week has detracted from the company's five-year return, let's look at the recent trends of the underlying business and see if the gains have been in alignment.
See our latest analysis for Apple
In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
During five years of share price growth, Apple achieved compound earnings per share (EPS) growth of 23% per year. This EPS growth is lower than the 31% average annual increase in the share price. This suggests that market participants hold the company in higher regard, these days. That's not necessarily surprising considering the five-year track record of earnings growth.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
We know that Apple has improved its bottom line lately, but is it going to grow revenue? You could check out this free report showing analyst revenue forecasts.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, Apple's TSR for the last 5 years was 314%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!
A Different Perspective
We're pleased to report that Apple shareholders have received a total shareholder return of 1.5% over one year. Of course, that includes the dividend. However, the TSR over five years, coming in at 33% per year, is even more impressive. The pessimistic view would be that be that the stock has its best days behind it, but on the other hand the price might simply be moderating while the business itself continues to execute. It's always interesting to track share price performance over the longer term. But to understand Apple better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with Apple .
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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https://finnhub.io/api/news?id=74295f0247b71748f387dad62031886bb330a96e2b60418daa7e5fda24570deb | Tech stocks: MATANA is the new FAANG, analyst says | It's time to rethink who's at the top of the Big Tech food-chain, Constellation Research Principal Analyst & Founder Ray Wang told Yahoo Finance Live. | 2022-09-05T07:55:11 | Yahoo | MATANA is the new FAANG, analyst says
It's time to rethink who's at the top of the Big Tech food-chain, Constellation Research Principal Analyst & Founder Ray Wang told Yahoo Finance Live (video above).
Wang argued that MATANA — Microsoft (MSFT), Apple (AAPL), Tesla (TSLA), Alphabet (GOOG, GOOGL), Nvidia (NVDA), and Amazon (AMZN) – is an upgrade to FAANG by dropping Meta (META) and Netflix (NFLX) while adding Microsoft, Tesla, and Nvidia.
In 2013, when Jim Cramer of CNBC's "Mad Money" coined the term FAANG, many of those companies were thought of as upstarts who'd taken their respective markets by storm. This was especially true of Meta — then Facebook — and Netflix. But now, Wang said, both should be re-assessed. Meta, in particular, needs a new plan.
"Facebook has got to do something besides ads," he told Yahoo Finance. "Once again, they're taking a beating for it. So, is it going to be the glasses? Is it going to be the metaverse? We're not there yet and that's really kind of what the challenge is."
For Netflix, it's a question of growth, and what is and isn't on the table. And because the company's operating on a subscription model, Wang has questions about how much further they could go.
"The reason they're out is because, how many more subscribers? How many more subscriptions are you going to handle?" he said. "Product placement should be where they are, plus the ability to do IP licensing. Look at how Disney makes its money."
Wang stressed that Microsoft, which is often viewed as one of tech's leading legacy names, should be included in the group of tech's most elite leaders (and sometimes has been with the bulky FAAMNG acronym).
"Microsoft has more than just business-to-business and consumer – they've been able to manage both," he said. "They're positioned well for the metaverse. They're positioned well for the cloud and, of course, they've got their gaming business."
Rounding out the new grouping would be Tesla — a well-known success story at this point — and Nvidia.
"Nvidia is a lot more than just the chips that we look at and more than the data center or gaming," Wang said. "They're sitting at the edge between AI, the metaverse, the future of computing, and the way they do their partnerships, they're set up in a way that's going to be dominant for quite some time."
Allie Garfinkle is a Senior Tech Reporter at Yahoo Finance. Follow her on Twitter at @agarfinks.
Download the Yahoo Finance app for Apple or Android.
Follow Yahoo Finance on Twitter, Facebook, Instagram, LinkedIn, and YouTube. | AAPL |
https://finnhub.io/api/news?id=a28d2a12161dd13a669f52d7cdaa5fc1be20bd3dfa9ede611e6d4f7f36586485 | AirPods Pro 2 release date: New Apple earphones to arrive imminently with a range of upgrades, report claims | New earphones should bring better sound alongside other features | 2022-09-05T03:56:51 | Yahoo | AirPods Pro 2 release date: New Apple earphones to arrive imminently with a range of upgrades, report claims
New earphones should bring better sound alongside other features
Apple is about to launch an update to the AirPods Pro, according to a new report.
Apple first launched the AirPods Pro in October 2019. They have stayed unchanged in the years since, even while Apple has updated the non-Pro AirPods.
That is set to change at this week’s iPhone event, however, according to a new report from Apple’s Mark Gurman. Apple will unveil the first update to the AirPods Pro in a livestreamed event that is also rumoured to see new Apple Watches and perhaps other products.
The new AirPods Pro are not expected to undergo any kind of external redesign. While some recent reports have suggested that Apple is working on a new version without the trademark “stalks” that extend out of the ear, for instance, that does not appear to be planned imminently.
The new earphones will however focus on upgrades to the internal specifications. That includes the introduction of a new version of the H1 processor that is in all of Apple’s earphones and headphones and powers their wireless audio.
That better processor will allow for lossless audio, some reports have suggested. That might be done either by upgrading the Bluetooth technology in the earphones – or doing away with bluetooth entirely, and using a new kind of wireless standard.
The new case could also be able to make a noise so that it can be more easily found using Apple’s Find My app. At the moment, sound can only be emitted from the earphones themselves – which means that it is relatively quiet, especially when the earphones are in their case.
Apple will hold its iPhone event on 7 September, with its first on-stage launch since before the pandemic. Alongside new AirPods, it is rumoured to be introducing four new iPhones and up to five Apple Watches.
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Join thought-provoking conversations, follow other Independent readers and see their replies | AAPL |
https://finnhub.io/api/news?id=bc4f692062371659a154f22507fcf964d284e3b29de15e8c542423b527a2a74a | 6 Reasons to Buy Apple Stock Now and Never Sell | From their peaks several months ago, the S&P 500 and the Nasdaq Composite indexes have declined 17% and 26%, respectively, while Apple stock has shed just 13%. Given his extraordinary track record, investors could do far worse than following in the footsteps of legendary money manager Warren Buffett. Lest there be any doubt, Apple is far and away Berkshire's largest holding. | 2022-09-05T03:13:00 | Yahoo | 6 Reasons to Buy Apple Stock Now and Never Sell
From their peaks several months ago, the S&P 500 and the Nasdaq Composite indexes have declined 17% and 26%, respectively, while Apple stock has shed just 13%. Given his extraordinary track record, investors could do far worse than following in the footsteps of legendary money manager Warren Buffett. Lest there be any doubt, Apple is far and away Berkshire's largest holding. | AAPL |
https://finnhub.io/api/news?id=936727097523da987b5ccb57b76febf18cbfb5c9a598afc5426be56b4868c023 | Aurora Innovation: Buyout Hope Isn't Ideal | Aurora Innovation soared on a CEO memo suggesting tech giants could buy the firm. See why I think investors should sell AUR stock on any buyout hype. | 2022-09-05T02:57:24 | SeekingAlpha | Aurora Innovation: Buyout Hope Isn't Ideal
Summary
- Aurora Innovation soared on a CEO memo suggesting tech giants could buy the firm.
- The internal memo actually highlights how the self-driving tech firm lacks the funds to commercialize the technology.
- Investors should sell the stock on any buyout hype.
- Looking for a portfolio of ideas like this one? Members of Out Fox The Street get exclusive access to our model portfolio. Learn More »
At one point, Aurora Innovation (NASDAQ:AUR) was one of the most promising companies in the autonomous driving technology sector. Now, the stock was trading below $2 and the CEO is promoting a buyout from a tech giant. My investment thesis remains Bearish on the stock due to extreme high costs levels while a buyout isn't a great investment thesis.
Buyout Hype
Per Bloomberg, a company memo from CEO Chris Urmson laid out potential scenarios for Aurora Innovation of possible buyouts by Apple (AAPL) and Microsoft (MSFT). While Apple is focused on developing EVs with self-driving technology, the company may or may not be interested in buying Aurora for a premium valuation.
Apple has a net cash balance of $60 billion and generates a ton of free cash flow annually, so the company could easily afford a cash payout to buy Aurora. The stock has market cap of only $3 billion and a 30% premium would only require one of the tech giants to pay ~$4 billion for the firm.
Apple has made several deals in this range such as buying Beats for $3 billion in order to enter the headphone and audio software market and paying $1 billion to buy the modem technology unit from Intel (INTC). Ultimately, the tech giant is still trying to build 5G modems to replace Qualcomm (QCOM) chips several years later, but Apple parlayed the headphone technology into a successful business with AirPods.
The problem with Aurora Innovation is that the company is focused on autonomous highway travel with trucks, not exactly the AVs where Apple is focused with an Apple Car. Baidu (BIDU) has already launched robotaxis in China and Tesla (TSLA) is promoting launching self-driving technology by the end of the year.
Aurora Innovation was once promoted as having the technology to compete with Waymo (GOOG, GOOGL) and Tesla in the sector. Now, the CEO appears to sound desperate looking for a way to cash out in a tough market.
As part of the memo, the CEO outlined tons of options to finance the business including a reduction in force or a merger with another AV business. Neither option seems appealing.
The Aurora Driver technology built by the company is more focused on commercial trucking operations. The company has an AV test with FedEx (FDX), amongst others, on multiple routes in Texas with a safety driver.
Again, this isn't an area where Apple would necessarily have an interest in the business. The tech giant is much more focused on consumer applications and the speculation of an Apple Car development is on either the software side for the infotainment system or an actual EV with AV technology.
Microsoft is more focused on enterprise customers, so possibly AV technology focused on corporate trucking customers would intrigue this tech giant.
Wild Cash Burn
For Q2'22, Aurora reported $171 million in cash operating expenses while obtaining about $21 million in collaboration revenue from Toyota (TM). Total expenses were $217 million due to an additional $46 million in stock-based compensation expenses.
The company has an annualized spending rate of close to $900 million. Aurora burned $225 million in cash from operations in the 1H of the year and another $9 million from property and equipment while originally forecasting a cumulative cash burn of $3.7 billion through 2027 where the company forecast turning profitable.
One really has to question if Apple, or even Microsoft, wants to acquire a business burning that much cash. The company suggests commercial applications won't start until 2024 with the launch of the Aurora Driver truck platform. Aurora hadn't forecast much in the ways of revenues until a few years after launch.
Cleary, the internal memo is trying to address the main question of how Aurora gets to 2027 with a cash balance of $1.4 billion. What appeared like a strong balance sheet, quickly gets depleted in the next couple of years before the platform even launches.
The stock ended up 15% on Friday following the memo leak, but Aurora only trades at $2.43 now. The company is in a weaker position after this memo leak questions the viability of the firm.
Takeaway
The key investor takeaway is that the internal memo from CEO Chris Urmson has to really question the business prospects of Aurora Innovation. The AV technology company valued at $11 billion with the SPAC deal and rumored at higher values in the private markets now appears a shell of its former self with an odd claim that a tech giant might buy the company when the stock valuation is trading at a fraction of the previous amount.
Investors should continue to avoid this stock, especially on any buyout hope.
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This article was written by
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Analyst’s Disclosure: I/we have a beneficial long position in the shares of QCOM either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock, you should do your own research and reach your own conclusion or consult a financial advisor. Investing includes risks, including loss of principal.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Comments (10)
Why not just read the disclosure? It clearly states no position whether long or short in $AUR. Got a position in some Lidar stocks, but we aren't going to justify your allegations.
Any CEO of a public company better understand an internal memo is as good as public information. | AAPL |
https://finnhub.io/api/news?id=138099edfb8d95164a2d8fc0deb91ff1adf89cd63d270c95405f621420fc11ec | iPhone 14 release date: what time is Apple's event and how to watch it live | Apple is planning an iPhone extravaganza this year, returning to a live, in-person launch event for the first time since the coronavirus pandemic as it prepares to reveal its latest smartphone. | 2022-09-05T02:57:16 | Yahoo | iPhone 14 release date: what time is Apple's event and how to watch it live
Apple is planning an iPhone extravaganza this year, returning to a live, in-person launch event for the first time since the coronavirus pandemic as it prepares to reveal its latest smartphone.
The California company is expected to launch four new iPhone models at the event. These will include the iPhone 14 and iPhone 14 Pro, as well as two Max or plus-size versions of each device.
Apple could also reveal upgrades to its other products such as a "Pro" version of the Apple Watch.
The launches follow last year's iPhone 13, 13 Pro, iPhone 13 Mini and iPhone 13 Pro Max.
We are still waiting on the final details of the event, but here is everything we know so far.
When will Apple reveal its new iPhone?
Apple normally sticks to a regular schedule for its iPhone launches. The company is planning to reveal its new devices on Wednesday September 7, according to an invitation for the launch event. The event is due to kick off at around 6pm (BST).
When will the iPhone 14 go on sale?
After Apple does reveal its new phones you can expect a delay of a few days between the event and sales kicking off.
Pre-orders are expected to begin on Friday 9 September for the new models of iPhone. In previous years, fans have had to wait a bit longer for some devices, which came later in the year.
On September 16, the Friday after its main event, the tech giant will release its new iPhone models in stores.
Where to watch Apple's iPhone event
Apple will stream its launch event on Apple.com and on YouTube. You will also be able to follow along on our live blog. | AAPL |
https://finnhub.io/api/news?id=6fe8be1da206fce7a158e9517bc27e9e5ba7b0e9617e57d3e48a47f6d2bef2e5 | Walgreens Dividend Is Now Yielding 5.45% And Is Looking Inexpensive | Walgreens is looking cheap after falling -33.53% YTD and pushing its P/FCF multiple to 8.86x. See how WBA presents an opportunity for capital appreciation. | 2022-09-05T02:00:00 | SeekingAlpha | Walgreens Dividend Is Now Yielding 5.45% And Is Looking Inexpensive
Summary
- Walgreens is looking cheap after declining by -33.53% YTD and pushing its price to FCF multiple to 8.86x.
- Walgreens has created value for shareholders despite its falling share price as its repurchased more than 20% of its shares outstanding since 2015.
- Walgreens has increased its dividend for 46 consecutive years and has been a good steward of financial stability and an allocator of capital.
- I think shares of WBA are too low and present an opportunity for capital appreciation and investors will get paid a large dividend along the way.
- I do much more than just articles at Barbell Capital: Members get access to model portfolios, regular updates, a chat room, and more. Learn More »
Shares of Walgreens Boots Alliance (NASDAQ:WBA) have disappointed shareholders lately, declining -31.88% over the past year and -33.53% YTD. It's been a rough road as WBA started 2022 at $53.06, and shares have slid to $35.27. Not even the enormous 5.45% dividend yield can get shareholders excited as new 52-week lows were just made. The market isn't rewarding many companies these days, but WBA generates billions in profits unlike many popular companies. Nobody knows when the market will, and the current weakness is creating some attractive opportunities for long-term investors. WBA has been in a perpetual decline as shares have lost -56.67% of their value over the previous 5-years. With shares yielding over 5%, I think it's time to consider shares of WBA for an income-focused portfolio.
Walgreens is trading at an attractive valuation even though the market continues to punish its shares
This may not be the best environment to pick winners and losers or see which companies investors are overlooking as the majority of stocks are declining. The Nasdaq is in a bear market, while the S&P is on the verge of crossing over into bear market territory once again. WBA has declined -33.53%, underperforming the major indices in 2022. It's market cap has declined to $30.3 billion, which is now less than the total equity on WBA's balance sheet. WBA is also getting close to trading at a 1:1 ratio to its book value. Many news articles and segments on financial news networks have discussed profitless tech and how companies with non-existent EPS and FCF will continue to be punished in a rising rate environment. Looking at WBA's financials, there are a lot of reasons why I am getting bullish on WBA.
Free Cash Flow (FCF) is often looked at as one of the best measures of profitability as FCF excludes the non-cash expenses of the income statement and includes spending on equipment and assets as well as changes in working capital from the balance sheet. To some investors, FCF is more important to analyze than net income because it's harder to manipulate as it is a true indication of the company's cash. FCF is also the pool of capital that companies can utilize to repay debt, pay dividends, buy back shares, make acquisitions, or reinvest in the business. With every share of stock purchased, you're getting an equity share of the business in return, and your shares represent a portion of the revenue and earnings generated. In my opinion, businesses that generate large amounts of FCF should be rewarded, not discarded.
When it comes to the FCF multiple, I like to pay between 18-22 times FCF for a company's stock, and if I can find good companies trading at less than 18x FCF, my interest immediately elevates. The FCF multiple that the market places on a company can be found by dividing a company's market cap by the FCF produced over the trailing twelve months (TTM). Apple (AAPL), for instance, trades at an FCF multiple of 23.28x ($2.5 trillion / $107.58 billion). I am willing to pay more for a company's FCF if they have a larger growth rate, and AAPL at 23.28x FCF looks very intriguing.
WBA has generated $5.06 billion in cash from operations and allocated $1.62 billion to CapEx putting its FCF at $3.44 billion over the TTM. WBA's market cap is $30.3 billion, which means its trading at 8.86x its FCF. WBA trades at one of the lowest FCF ratios of all the Dividend Aristocrats. International Business Machines (IBM) trades at a FCF multiple of 14.08x ($115.42 billion market cap / $8.2 billion FCF), Johnson & Johnson (JNJ) trades at a FCF multiple of 21.45x ($427.87 billion market cap / $19.95 billion FCF), Kimberly-Clark (KMB) trades at a FCF multiple of 23.59x ($42.7 billion market cap / $1.81 billion FCF), and Caterpillar (CAT) trades at a FCF multiple of 31.28x ($95.46 billion market cap / $3.05 billion FCF).
Looking further through WBA's financials, I found two metrics that were also interesting. WBA has $31.16 billion of total equity on its balance sheet. As WBA's market cap is $30.3 billion, it's currently trading at a -2.75% discount to the equity on its balance sheet. Most companies trade at a premium to equity, and WBA has now fallen below a 1:1 ratio. The other aspect that looks interesting is WBA's book value. On WBA's balance sheet, its book value per share is $30.38. WBA currently trades at a 16.1% premium to its book value. For value investors, the P/B ratio is a timeless method for finding stocks that could be mispriced. A P/B ratio of less than 1 could be an indicator that the market has misunderstood a company and undervalued it. As WBA is trading close to a 1:1 book value, there could be an underlying opportunity in its shares.
WBA is approaching Dividend King status and continues to allocate capital back to shareholders
WBA is a Dividend Aristocrat approaching Dividend King status as it increased its annual dividend for 46 consecutive years. WBA's share price has been declining, but that hasn't stopped WBA from rewarding its shareholders with a growing dividend and buybacks. WBA generates billions in FCF and puts that pool of capital to work. With every share repurchased, shareholders own a larger part of the equity in WBA, and with every dividend increase, shareholders receive a larger portion of the earnings each share generates.
Since WBA's last stock split in 1999, its quarterly dividend has increased by 1,377% going from $0.0325 to $0.48. WBA pays a dividend of $1.92 per share, which is a 5.45% yield. In the TTM, WBA has generated $6.22 in EPS, placing its annual payout ratio at 30.87% of its earnings. WBA's dividend has a 5-year growth rate of 4.63%, with 46 years of consecutive increases. At today's prices, WBA is generating considerable amounts of income and, after 4 more increases, will be considered a Dividend King.
WBA has also used its profits to buy back shares. In 2015 WBA had 1.09 billion shares outstanding. Since then, WBA has used its FCF to buy back 224.5 million shares, reducing its outstanding shares by -20.62%. With each buyback, WBA increases the amount of equity its remaining shares represent, and its EPS and revenue per share are spread among a lower float. While many companies continue to issue shares and dilute shareholders, WBA not only increases equity for its investors but has provided decades of dividend increases. I think this is something that is overlooked and that companies who create value for shareholders through buybacks and dividends should be rewarded, not discounted. WBA is doing this from a position of financial stability, not weakness.
Conclusion
I believe shares of WBA have gotten too cheap and lost in the havoc created by the declining indices. Today, WBA trades at 8.86x FCF, trades at a discount to its equity, and is getting close to a 1:1 P/B. WBA generates $134.52 billion in revenue and billions in profits. Today you are able to pick shares up at a steep discount and get paid a dividend that exceeds 5% while you wait for a turnaround. I think WBA could be a great income stock and a capital appreciation generator if you take a long-term approach. For investors who WBA has burned, maybe now is the time to consider dollar cost averaging into the position and reinvesting the dividend. WBA's track record suggests that future buybacks and dividend increases will occur as they have an impeccable track record of generating FCF. When the markets finally recover, I could see WBA trading over $50 per share once again.
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Analyst’s Disclosure: I/we have a beneficial long position in the shares of WBA, AAPL either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Disclaimer: I am not an investment advisor or professional. This article is my own personal opinion and is not meant to be a recommendation of the purchase or sale of stock. Investors should conduct their own research before investing to see if the companies discussed in this article fit into their portfolio parameters.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Comments (164)
Long WBA, losing my shirt, and holding on with white knuckles. Right now,
off to Walgreens for flu shots!
think I'll stick with drugstores in the good old USA.seekingalpha.com/...
Long WBA. | AAPL |
https://finnhub.io/api/news?id=010c4a6370a09868386761c50c2825cb701ca4f094db8a8d13339ea79fa27888 | Apple event: When is the iPhone 14 and Watch release date? | Apple will hold a major event next month, it has announced. The presentation is almost certain to see the release of the iPhone 14 and new versions of the Apple Watch. It may be structured similarly to the WWDC event in June, which saw select journalists and developers invited to watch the broadcast on a screen at Apple Park. | 2022-09-05T01:59:23 | Yahoo | Apple event: When is the iPhone 14 and Watch release date?
Apple will hold a major event next month, it has announced.
The presentation is almost certain to see the release of the iPhone 14 and new versions of the Apple Watch.
And it will take place on 7 September, at 10am local pacific time, it said in an invitation sent to journalists.
Some were invited to Apple’s campus in Cupertino, suggesting that the event is likely to include some in-person participation. It may be structured similarly to the WWDC event in June, which saw select journalists and developers invited to watch the broadcast on a screen at Apple Park.
The invitation did not appear to hold any clues as to what Apple was preparing to announce. It only included the line “Far Out” and an abstract image of the Apple logo – and while the company’s invitations are often pored over for clues, they rarely offer any meaningful hint of what might be coming.
The event is being held slightly earlier in the year than usual. Apple tends to hold its iPhone event in the second or third week of September, and some had expected that it might be held on the 14th.
An early event is also likely to bring an early release date for the new products. The iPhone tends to be released on the Friday a week after the event – if Apple follows a similar pattern this year, that would see it launch on 16 September.
Apple is rumoured to be preparing four new iPhones: a Pro and non-Pro version, in two different sizes. Unlike previous years, the same two sizes will be offered in both versions of the phone, and the iPhone Mini is rumoured to be finished.
Most of the upgrades will come specifically to those Pro models. The notch at the top of the display is said to have been swapped for a small cutout in the display, and that screen is also rumoured to be always-on
Full details of the rumoured changes coming to the iPhone can be found here.
As well as those phones, Apple is expected to release three new versions of the Apple Watch – one more than usual. As well as the standard aluminium and steel versions, Apple is expected to release to release a new “Pro” model, with a bigger display and a more rugged design.
The Apple Watch usually arrives on the same schedule as the iPhone.
Apple has also been said to be working on new AirPods Pro earphones, new iPads, and updated Macs. But at least some of those products may be saved for a rumoured October event.
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https://finnhub.io/api/news?id=0d7538081551839751d5ed6e0d2cde265f5815f0cf188a56f0a0abfe3f3b5d7c | When is the next Apple event? | Apple is holding perhaps its biggest event of the year, revealing the iPhone 14, new Watches and more with the event announced for 7 September, at 10am local pacific time. Apple has now confirmed when exactly the reveal will take place. The release dates will not be revealed until later, but there is plenty of information to make a good guess about when the new iPhones will be released. | 2022-09-05T01:27:26 | Yahoo | What time is the Apple event?
Related: Fix Your Own Phone With Apple’s Self-Repair Service
Apple is holding perhaps its biggest event of the year, revealing the iPhone 14, new Watches and more with the event announced for 7 September, at 10am local pacific time.
The event will take place in September – with the release of those new products coming along soon after.
Apple has now confirmed when exactly the reveal will take place. The release dates will not be revealed until later, but there is plenty of information to make a good guess about when the new iPhones will be released.
You can read everything that is likely to be revealed at the “Far Out” event here.
Launch event
Apple’s launch event, named Far Out, will take place on 7 September, at 10am local pacific time.
That launch is relatively early, especially when compared with the last couple of years of pandemic-inflected launches, when the phones did not fully arrive until October. It is not clear why Apple has sped up the schedule – but it could be anything from an attempt to get out ahead of any economic bad news to the setup of the calendar.
It will be a livestreamed online event, as usual. But in a first since the beginning of the pandemic, Apple appears to be hosting select media at an in-person event at the Steve Jobs Theater on its campus, too.
Release date
The release date is even more reliable than the launch date: it almost certainly comes a week and a half after the phone is first revealed.
Given the 7 September launch, that would put the most likely release date as 16 September. That will probably be the case for the iPhone as well as the new Apple Watches.
In recent years, that launch date hasn’t included all of the phones; manufacturing problems have led some of them not to arrive for weeks. But those problems do not appear to be affecting availability for the iPhone 14, and there is nothing to suggest any of them will be delayed.
This will almost certainly be confirmed during the launch event, as usual.
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https://finnhub.io/api/news?id=e4b3b2aacad92dd21589edc5c160cabbf76158405889877a88b203983ec2b181 | What time is the next Apple event? | Apple is holding perhaps its biggest event of the year, revealing the iPhone 14, new Watches and more with the event announced for 7 September, at 10am local pacific time. Apple has now confirmed when exactly the reveal will take place. The release dates will not be revealed until later, but there is plenty of information to make a good guess about when the new iPhones will be released. | 2022-09-05T01:27:02 | Yahoo | What time is the Apple event?
Related: Fix Your Own Phone With Apple’s Self-Repair Service
Apple is holding perhaps its biggest event of the year, revealing the iPhone 14, new Watches and more with the event announced for 7 September, at 10am local pacific time.
The event will take place in September – with the release of those new products coming along soon after.
Apple has now confirmed when exactly the reveal will take place. The release dates will not be revealed until later, but there is plenty of information to make a good guess about when the new iPhones will be released.
You can read everything that is likely to be revealed at the “Far Out” event here.
Launch event
Apple’s launch event, named Far Out, will take place on 7 September, at 10am local pacific time.
That launch is relatively early, especially when compared with the last couple of years of pandemic-inflected launches, when the phones did not fully arrive until October. It is not clear why Apple has sped up the schedule – but it could be anything from an attempt to get out ahead of any economic bad news to the setup of the calendar.
It will be a livestreamed online event, as usual. But in a first since the beginning of the pandemic, Apple appears to be hosting select media at an in-person event at the Steve Jobs Theater on its campus, too.
Release date
The release date is even more reliable than the launch date: it almost certainly comes a week and a half after the phone is first revealed.
Given the 7 September launch, that would put the most likely release date as 16 September. That will probably be the case for the iPhone as well as the new Apple Watches.
In recent years, that launch date hasn’t included all of the phones; manufacturing problems have led some of them not to arrive for weeks. But those problems do not appear to be affecting availability for the iPhone 14, and there is nothing to suggest any of them will be delayed.
This will almost certainly be confirmed during the launch event, as usual.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies | AAPL |
https://finnhub.io/api/news?id=a7fff2ac69fe27276371aa5462b6904fabe6f6bb0af929f3f111052788eb8cc2 | 7 Growth Stocks That Could 10X by 2027 | It takes courage and conviction right now to snap up growth stocks to buy that could appreciate 10-fold over the next five years. | 2022-09-05T00:44:00 | InvestorPlace | MarketWatch published an article early in 2022 which highlighted last year’s best-performing S&P 500, mid-cap, small-cap, Nasdaq-100, and Dow 30 stocks. Some of the names on the five lists were cited by analysts as the top growth stocks to buy in 2022.
We know in hindsight that growth stocks weren’t the best bet over the past eight months. That distinction goes to energy stocks. The energy stocks in the S&P 500 jumped almost 45% in the first eight months of 2022. Out of the 11 sectors in the index, utilities is the only one besides energy in positive territory in 2022. The S&P 500’s utilities rose 3.4% through the first eight months of 2022.
For this article, I’m tasked with selecting seven growth stocks to buy that have a better-than-average shot of appreciating ten-fold over the next five years.
I’m going to take at least one name from each of the five MarketWatch lists.
And to qualify for this column, stocks will have to have an average rating of “overweight” or “buy” from Wall Street analysts.
|NVDA||Nvidia||$136.47|
|DKS||Dick’s Sporting Goods||$108.23|
|PRFT||Perficient||$73.49|
|MRNA||Moderna||$138.57|
|AAPL||Apple||$155.81|
|ORLY||O’Reilly Automotive||$702.70|
|CCRN||Cross Country Healthcare||$24.79|
Nvidia (NVDA)
Nvidia (NASDAQ:NVDA) gained 125.5% in 2021. It had tumbled 54% in 2022 through Friday.
However, the analysts remain bullish on NVDA stock. Of the 44 covering NVDA , 35 rate it a “buy” or an “overweight.” Only one analyst has a “sell” rating on it. Their average price target for the shares is $211.02, more than 50% above its current share price.
The chip maker’s three-year annualized average revenue growth is 32%.
That’s the good news. The bad news is that NVDA expects its Q3 revenue to fall by 17% compared to the same period a year earlier. Also, it took a $1.34 billion charge in Q2 to account for the inventory that it wrote down due to slower-than-expected revenue growth.
CEO Jensen Huang remains confident that the gaming market will rebound.
“While Gaming navigates significant short-term macroeconomic challenges, we believe the long-term fundamentals in Gaming remain strong,” Huang stated on the company Q2 earnings conference call.
“NVIDIA RTX has redefined computer graphics and is now supported by almost 300 games and applications. NVIDIA’s GeForce GPUs are the most coveted brand by gamers, representing 15 of the top 15 most popular GPUs on Steam.”
NVDA stock hasn’t been this low since April 2021, more than 17 months ago. I like the chances of its share price rising ten-fold over the next five years.
Dick’s Sporting Goods (DKS)
Dick’s Sporting Goods (NYSE:DKS) gained 116.4% in 2021. It has given 6% back in 2022.
Of the 26 analysts covering DKS stock, 13 rate it a “buy” or an “overweight.” Only one rates it a “sell,” and analysts’ average price target on the name is $124.78, about 16% higher than its current share price.
Investors who did not carefully read the retailer’s earnings report would likely have wrongly concluded that it had a dud of a quarter. It did not. That’s far from the truth.
The 5.1% decline in Dick’s same-store sales may scream “run for the hills,” but the retreat came on the heels of a 20% increase in SSS in Q2 of 2021. Even more impressively, Dick’s net sales of $3.1 billion last quarter were 38% higher than in the same period of 2019.
And, as Executive Chairman Ed Stack pointed out, its earnings before taxes (EBT) in Q2 was equal to its EBT for all of 2019.
“The state of our industry is strong, and we remain in a great lane. DICK’S is the clear market leader, and as a result of our transformation, we are well-positioned to extend our lead and deliver long-term sales and earnings growth,” Stack stated in the company’s quarterly press release.
Maybe DKS stock won’t appreciate ten-fold over the next five years, but you can be darn sure that you won’t lose much on the shares either. Their risk/reward outlook is excellent.
Perficient (PRFT)
Perficient (NASDAQ:PRFT) gained 171% in 2021. It’s down 43% in 2022.
The Missouri-based company is a consulting firm that helps its customers utilize digital technologies to better engage with their customers. It provides its services to healthcare, financial services, manufacturing, automotive firms, and companies in several other industries.
Over the past three years, its average annualized revenue growth was 15.2%. Out of nine analysts, seven rate it a “buy,” with two “holds” and no “sell” recommendations. Their average price target on the shares is $115.25, 52% versus its current level of $72.77.
The company’s Q2 results were excellent. Its revenues rose 21% year-over-year while its earnings per share, excluding some items, jumped 26%. For all of 2022, it expects revenue of $915 million at the midpoint of its guidance. On the bottom line, the midpoint of its outlook equates to adjusted EPS of $4.30
Based on the company’s 2022 guidance, it’s trading at 17.6 times its EPS and 2.9 times its sales. Those are both reasonable given its growth prospects.
In July, the company announced that it would expand in India by adding new locations in Hyderabad and Pune, and increasing the office space in three other cities. The move adds approximately 73,000 square feet of office space for almost 2,000 new employees.
These additions should meaningfully increase its revenue.
Moderna (MRNA)
Moderna (NASDAQ:MRNA) gained 143% in 2021. It’s down 45% in 2022.
August ended with some good news for MRNA. First, it announced on Aug. 31 that the U.S. Food and Drug Administration (FDA) approved the company’s emergency use authorization (EUA) application for its Omicron-targeting Covid-19 booster vaccine for adults 18 and over. A day later, Health Canada issued the same approval.
Moderna will initially supply 12 million doses to Canada, which will have an option to purchase an additional 4.5 million doses.
In early August, Moderna reported its earnings for the first six months of 2022. On the top line, its revenues rose 71% YOY to $10.8 billion. On the bottom line, it earned $6.7 billion from its operations, 56% higher than during the same period a year earlier.
Moderna is generating so much cash that it finished Q2 with $18.1 billion of cash and investments, up from $17.6 billion at the end of December. Moderna is trading at three times its cash. That’s a cheap valuation.
Despite its low valuation, analysts are lukewarm on MRNA. Of the 19 analysts covering its stock, only seven rate it “overweight” or “buy.” Most have “hold” ratings on it and one has an outright “sell” rating on the shares. However, the analysts’ median target price is $197.00, versus its current price of $138.
Moderna’s pipeline is substantial. It has 31 of its 43 development candidates in clinical trials. One or two of those are bound to pay off in a big way.
Apple (AAPL)
Apple (NASDAQ:AAPL) gained 34.6% in 2021. It’s down a little more than 12% in 2022.
A Barron’s article from August made an interesting point about Apple’s size being a big negative for AAPL stock.
“As the largest U.S. company by far—with a market capitalization more than $500 billion greater than the number-two, Microsoft (MSFT)—Apple is widely owned and has a tendency to drag around, and be dragged around by, the major indexes,” Barron’s contributor Jack Denton wrote.
“After all, it makes up more than 7% of the entire S&P 500. If Apple was its own sector, it would have the seventh-largest weighting out of 12 and be almost twice as large as the energy sector.”
Despite the concerns about China’s slowing economy hurting Apple’s sales, analysts remain relatively upbeat about its stock. Of the 41 analysts covering AAPL, 32 rate it “overweight” or a “buy.” Only two have an “underweight” or a “sell” rating on it.
Apple’s services business continues to be very profitable. In the first nine months of 2022, the gross margin of its services business was 72%, almost double that of its products business.
O’Reilly Automotive (ORLY)
O’Reilly Automotive (NASDAQ:ORLY) appeared in my July column, called the 7 Best Retail Stocks to Buy Now. ORLY made the list because it consistently grows its free cash flow. It’s up almost 20% in 2022 relative to the S&P 500. Over the past five years, it’s up four-fold compared to the index.
ORLY gained 56% in 2021. Analysts generally like the stock. Of the 24 covering it, 17 have “buy” or “overweight” ratings on it, and their average price target is $768.63, versus its current price of $701.50.
I know that doesn’t seem like much of a difference. However, the shares perform well over the long haul. Since 2000, they’re up 8,400%, representing a compound annual growth rate of 22.8%.
This little snippet from CEO Gregory Johnson’s Aug. 23 speech encapsulates the state of O’Reilly’s business:
“So when you look at a 2-year stack basis, that comp will be 21%; 3-year, 28.5%. Gross margin year-to-date 51.6%; operating margin, 21.1%. And we’ve opened 116 net new stores and are on track to meet our projection of 175 to 185 stores for the year,” Johnson stated.
“Diluted earnings per share came in at $15.94. We generated $1.2 billion in free cash flow and repurchased $2.2 billion worth of our stock year-to-date under the stock repurchase program.”
As I said earlier, O’Reilly knows how to grow its free cash flow, but it’s also better than most at allocating it. Over the long-term, you won’t do much better than ORLY.
Cross Country Healthcare (CCRN)
Cross Country Healthcare (NASDAQ:CCRN) gained 213% in 2021, so it’s not surprising that it’s cooled off in 2022. However, relative to the Russell 2000, it’s up more than 9% on the year.
Cross Country works with healthcare clients such as hospitals, outpatient clinics, ambulatory clinics, physician practice groups, and other healthcare-related facilities to recruit and staff their businesses. The demand for its services is very strong.
Over the last three years, its revenue has grown at an annualized rate of 27.1% , while its operating income rose by an average of 104.4% annually. That’s some pretty good growth–and I don’t think that the firm is going to stop growing anytime soon.
It’s fair to say that the sequential decreases in its financial results that occurred in Q2 will continue in the back half of the year as staffing shortages dissipate, returning to more normal historical levels.
For example, in Q3, the company expects revenue of $610 million at the midpoint of its guidance. That’s 62.5% higher than a year earlier but down 19% from the previous quarter. Its adjusted EPS should also fall in Q3 versus Q2.
The company’s biggest growth driver is its Managed Service Programs (MSPs). Between 2015 and 2021, the estimated revenue of these MSPs grew by $800 million to $1.1 billion. The annual run rate of its revenue in Q2 was $2.2 billion. It has approximately 100 customers across more than 550 facilities.
Investors should expect more moderate growth from CCRN– barring any significant M&A transactions — but not a return to the slower growth that it generated before the pandemic.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. | AAPL |
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https://finnhub.io/api/news?id=376ceb130714d0f96a4c3ae45f14f77bd377ce7ad25d265c3f7f97317459f547 | Dow Jones Futures Rise: Market Sell-Off Intensifies; Apple Vs. ANET Stock | The major indexes broke more key support last week. Apple unveils the iPhone 14 Wednesday. AAPL stock is worth watching, but this tech leader looks better. | 2022-09-04T17:22:58 | Yahoo | Dow Jones Futures Rise; Energy Prices Lower Despite Surprise OPEC+ Move, Russia News
Futures rose modestly. Oil prices erased gains despite OPEC+ cut production while natgas fell despite Russia cutting off European natural gas.
Futures rose modestly. Oil prices erased gains despite OPEC+ cut production while natgas fell despite Russia cutting off European natural gas. | AAPL |
https://finnhub.io/api/news?id=512c8dbfb4ff477a245208e7423cae0c99d8db173fa549051a679f242cb736d1 | Trading The Top 10 Stocks From 40 Large Hedge Funds: Trading Update 9/4/2022 | A strategy selecting 10 of the 50 stocks, equally weighted, would have increased total return to 178.0%, an active return of 61.6% vs. SPY. | 2022-09-04T17:24:20 | SeekingAlpha | Trading The Top 10 Stocks From 40 Large Hedge Funds: Trading Update 9/4/2022
Summary
- This portfolio strategy uses the quarterly 13F filings to extract 50 consensus stocks from 40 large hedge funds that have more than $3.5 billion in Assets Under Management.
- From 1/2/2016 to date investing in all 50 stocks, equally weighted, would have produced a total return of 78.5%, an active return of -37.8% when compared to SPY’s 116.3%.
- A strategy selecting 10 of the 50 stocks, equally weighted, would have increased the total return to 178.0%, an active return of 61.6% when compared to SPY.
- Here we report the most recent holdings and the trading signals for 9/6/2022.
Research from Barclays and Novus published in October 2019 found that a copycat stock selection strategy that combines conviction and consensus of fund managers that have longer-term views outperformed the S&P 500 by 3.80% on average annually from Q1 2004 to Q2 2019.
Based on that rational, we previously presented two trading models (in Article-1 and Article-2) that use the top 50 consensus stocks of 40 Large Hedge Funds (listed in Appendix A below), that historically outperformed the S&P 500. The iM-Top50(from 40 Hedge Funds) model holds all 50 stocks equally weighted and has a low turnover. The iM-Top10(from 40 Hedge Funds) model holds a subset of 10 stocks, also equally weighted, but with higher turnover which is rewarded by improved returns.
The performance simulation, and generation of trading signals, for these strategies is done using the platform Portfolio123 and reported below. For more comprehensive description of the 50 stock universe please refer to here.
Note: This update is published on Seeking Alpha, editor permitting, only if the model has generated trading signals.
Model Performance:
Note: The iM-Top10VariableWeight model (green line) is an experimental model. It holds the same stocks as the iM-Top10 model put position weights are adjusted to an inverse function of market capitalization, that is the higher the market cap of the stock the lower the position weight. As a consequence it is difficult to trade as market capitalization changes with the stock price.
Trade Signals for 9/6/2022
|iM-Top10(of 40 Large Hedge Funds)|
|Action||Ticker||Shares||Name|
|SELL||ADBE||67||Adobe, Inc.|
|BUY||QCOM||192||QUALCOMM, Inc.|
|iM-Top50(of 40 Large Hedge Funds)|
|No Trades|
The models trade on the first trading day of the week. Trading signals are published on a weekly basis here on Seeking Alpha (subject to model trading and editor’s acceptance) and on iMarketSignals. Next update on Sunday 9/13/2022
Holdings for iM-Top10(of 40 Large Hedge Funds) as of 9/2/2022
|Current Portfolio 9/2/2022||Cash Flow|
|Ticker||Number of Shares||Weight||Value now||Open Date||Open Costs||Rebal Costs | Return||Dividends Received||Gain to date|
|(AAPL)||179||10.03%||$27,890||08/22/22||($30,109)||—||—||($2,219)|
|(ADBE)||67||8.87%||$24,665||08/08/22||($29,199)||—||—||($4,533)|
|(CHTR)||67||9.81%||$27,278||08/22/22||($29,707)||—||—||($2,429)|
|(DHR)||103||9.98%||$27,750||06/13/22||($25,190)||—||$26||$2,586|
|(INCY)||411||10.38%||$28,856||08/22/22||($30,326)||—||—||($1,470)|
|(MA)||87||10.10%||$28,063||05/02/22||($27,266)||($3,816)||$37||($2,982)|
|(SCHW)||416||10.53%||$29,261||08/08/22||($28,585)||—||$92||$768|
|(TDG)||50||10.81%||$30,060||05/23/22||($28,158)||—||$925||$2,827|
|(TSM)||321||9.34%||$25,969||08/08/22||($28,268)||—||—||($2,299)|
|(V)||140||9.96%||$27,686||12/07/20||($30,865)||$1,269||$360||($1,549)|
Holdings for iM-Top50(of 40 Large Hedge Funds) as of 8/19/2022
|Current Portfolio 9/2/2022||Cash Flow|
|Ticker||Number of Shares||Weight||Value now||Open Date||Open Costs||Rebal Costs | Return||Dividends Received||Gain to date|
|(AAPL)||24||2.09%||$3,739||01/04/16||($2,109)||$4,982||$269||$6,881|
|(ADBE)||9||1.86%||$3,313||01/04/16||($2,118)||$3,218||—||$4,414|
|(ALTR)||69||1.88%||$3,358||08/22/22||($3,714)||—||—||($357)|
|(AMT)||14||1.97%||$3,512||01/04/16||($2,033)||$1,727||$480||$3,686|
|(AMZN)||30||2.14%||$3,825||01/04/16||($1,913)||$3,912||—||$5,825|
|(APP)||140||1.89%||$3,373||05/30/22||($3,147)||($2,402)||—||($2,176)|
|(BRK.B)||13||2.02%||$3,610||05/23/22||($4,343)||$144||—||($589)|
|(BSX)||96||2.18%||$3,887||02/24/20||($3,949)||$152||—||$90|
|(CHTR)||8||1.82%||$3,257||08/22/22||($3,547)||—||—||($290)|
|(CNI)||32||2.10%||$3,744||05/23/22||($4,410)||$819||$23||$175|
|(COUP)||55||1.76%||$3,134||08/19/19||($3,549)||($3,491)||—||($3,906)|
|(CRM)||20||1.72%||$3,074||05/22/17||($2,315)||$840||—||$1,599|
|(CRWD)||20||1.93%||$3,449||05/26/20||($4,210)||$5,621||—||$4,860|
|(DHR)||13||1.96%||$3,502||08/19/19||($3,547)||$3,433||$54||$3,442|
|(DOCU)||57||1.74%||$3,104||08/24/20||($5,118)||($4,258)||—||($6,272)|
|(ELV)||8||2.16%||$3,856||02/28/22||($4,503)||$854||$29||$237|
|(FATE)||133||1.99%||$3,554||02/16/21||($6,499)||($3,851)||—||($6,796)|
|(FIS)||38||1.92%||$3,419||08/22/22||($3,724)||—||—||($305)|
|(FISV)||44||2.50%||$4,463||11/18/19||($3,209)||($1,830)||—||($576)|
|(FOLD)||396||2.54%||$4,538||05/23/22||($4,407)||$1,277||—||$1,408|
|(GFS)||62||2.01%||$3,589||08/22/22||($3,680)||—||—||($92)|
|(GOOGL)||34||2.05%||$3,667||01/04/16||($2,281)||$2,932||—||$4,318|
|(INCY)||45||1.77%||$3,159||02/28/22||($4,566)||$1,507||—||$100|
|(INTU)||8||1.88%||$3,360||02/19/19||($3,523)||$3,219||$112||$3,168|
|(KMX)||39||1.91%||$3,415||05/24/21||($5,377)||$721||—||($1,241)|
|(MA)||11||1.99%||$3,548||01/04/16||($2,088)||$2,636||$144||$4,241|
|(MCO)||12||1.91%||$3,413||01/04/16||($2,044)||$2,791||$259||$4,419|
|(META)||22||1.98%||$3,527||01/04/16||($2,047)||($928)||—||$553|
|(MSFT)||16||2.29%||$4,097||01/04/16||($2,085)||$3,882||$366||$6,260|
|(MU)||62||1.96%||$3,492||08/22/22||($3,634)||—||—||($142)|
|(NFLX)||17||2.15%||$3,844||01/04/16||($2,092)||$687||—||$2,439|
|(NOW)||8||1.95%||$3,476||11/19/18||($2,825)||$3,001||—||$3,652|
|(NVDA)||21||1.61%||$2,866||02/24/20||($3,830)||$6,951||$16||$6,003|
|(QCOM)||24||1.73%||$3,084||08/24/20||($5,106)||$3,168||$238||$1,384|
|(SCHW)||58||2.29%||$4,080||02/28/22||($4,555)||($526)||$24||($978)|
|(SGEN)||24||2.05%||$3,656||01/04/16||($2,099)||$2,907||—||$4,465|
|(SNOW)||26||2.50%||$4,459||02/16/21||($6,487)||($89)||—||($2,117)|
|(SPGI)||10||1.95%||$3,476||05/23/22||($4,544)||$976||$20||($72)|
|(TDG)||6||2.02%||$3,607||01/04/16||($2,071)||$2,572||$1,023||$5,131|
|(TMO)||8||2.44%||$4,348||05/23/22||($4,446)||—||$2||($95)|
|(TMUS)||28||2.23%||$3,975||05/23/22||($4,395)||$704||—||$285|
|(TSLA)||18||2.72%||$4,864||05/26/20||($4,098)||$10,984||—||$11,749|
|(TSM)||43||1.95%||$3,479||11/22/21||($6,768)||$1,599||$61||($1,629)|
|(UBER)||137||2.23%||$3,980||05/23/22||($4,358)||$1,350||—||$972|
|(UNH)||7||2.02%||$3,614||05/22/17||($2,274)||$3,836||$314||$5,492|
|(UNP)||17||2.13%||$3,807||05/23/22||($4,331)||$670||$48||$194|
|(V)||17||1.88%||$3,362||01/04/16||($2,046)||$1,693||$170||$3,179|
|(W)||71||1.98%||$3,527||11/23/20||($5,390)||($5,138)||—||($7,001)|
|(WDAY)||25||2.22%||$3,964||05/26/20||($4,213)||$159||—||($91)|
Appendix A
Hedge Fund Filers:
- Akre Capital Management LLC
- Alkeon Capital Management LLC
- Altimeter Capital Management, LP
- Aristotle Capital Management, LLC
- Baker Bros. Advisors LP
- Barings LLC
- Calamos Advisors LLC
- Capital International Ltd
- Citadel Advisors LLC
- Coatue Management LLC
- D. E. Shaw & Company, Inc.
- Disciplined Growth Investors Inc
- DSM Capital Partners LLC
- Echo Street Capital Management LLC
- FMR LLC
- Fort Washington Investment Advisors Inc
- GW&K Investment Management, LLC
- Hitchwood Capital Management LP
- Jennison Associates LLC
- King Luther Capital Management Corp
- Kohlberg Kravis Roberts & Company LP
- Lone Pine Capital LLC
- Loomis Sayles & Company LP
- Matrix Capital Management Company, LP
- Meritage Group LP
- Panagora Asset Management Inc
- Perceptive Advisors LLC
- Pinebridge Investments, LP
- Redmile Group, LLC
- Renaissance Technologies LLC
- Riverbridge Partners LLC
- Ruane, Cunniff & Goldfarb LP
- Steadfast Capital Management LP
- TCI Fund Management Ltd
- Tiger Global Management LLC
- Verition Fund Management LLC
- Viking Global Investors LP
- Westfield Capital Management Company LP
- Whale Rock Capital Management LLC
- Winslow Capital Management, LLC
This article was written by
Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Comments (4) | AAPL |
https://finnhub.io/api/news?id=ac287ef122ce5b0a3f7c699fe9e70b8d312015bc632b0b522cd9ba4bdb75a92b | Dow Jones Futures Loom: Market Sell-Off Intensifies, Bulls Face Several Hurdles; 5 Stocks To Watch | The major indexes broke more key support last week. Apple unveils the iPhone 14 Wednesday. AAPL stock is worth watching, but this tech leader looks better. | 2022-09-04T10:40:58 | Yahoo | Dow Jones Futures Rise; Energy Prices Lower Despite Surprise OPEC+ Move, Russia News
Futures rose modestly. Oil prices erased gains despite OPEC+ cut production while natgas fell despite Russia cutting off European natural gas.
Futures rose modestly. Oil prices erased gains despite OPEC+ cut production while natgas fell despite Russia cutting off European natural gas. | AAPL |
https://finnhub.io/api/news?id=49688b88a4261e8cb2a9608deefd1800ed9f6af9d127900f35c7fa98b84cb433 | GameStop, Apple, Kroger, NIO, and Other Stocks to Watch This Week | The market is closed on Labor Day. GameStop, NIO, DocuSign, Zscaler, and Kroger report and Apple will unveil new iPhones. Plus, the latest PMIs and an ECB... | 2022-09-04T08:00:00 | MarketWatch | U.S. stock and bond markets will be closed on Monday for Labor Day. It’s a quiet week on the earnings calendar once investors return from the long weekend, but a few major economic-data releases should grab plenty of attention.
Results this week will come from GameStop and NIO on Wednesday, DocuSign and Zscaler on Thursday, and Kroger on Friday. Apple will also host a product launch event on Wednesday, when it is expected to unveil a new lineup of iPhones and Apple Watches.
Economic data releases next week include the Institute for Supply Management’s Services Purchasing Managers’ Index for August on Tuesday. The consensus estimate is for the index to decline by about three points, to 54.
Other data for investors and economists to watch next week will be the Federal Reserve’s sixth beige book of the year on Wednesday and the Department of Labor’s initial jobless claims for the latest week on Thursday.
The European Central Bank also announces a monetary-policy decision on Thursday. Futures markets are pricing in the greatest odds of a 75-basis-point hike, which would bring ECB’s benchmark interest-rate target to 0.75%.
Monday 9/5
Equity and fixed-income markets are closed in observance of Labor Day.
Tuesday 9/6
The Institute for Supply Management releases its Services Purchasing Managers’ Index for August. Consensus estimate is for a 54 reading, about three points lower than in July. The index is well off its record high of 68.4 from November, but still above the expansionary level of 50.
Wednesday 9/7
Appleholds a launch event, titled “Far Out,” at its headquarters in Cupertino, Calif. The company is expected to unveil four new iPhone 14 models and three new Apple Watches, along with other products.
GameStop and NIO report quarterly results.
The Federal Reserve releases the beige book for the sixth of eight times this year. The report summarizes current economic conditions with anecdotal data collected by the 12 regional Federal Reserve banks.
The Mortgage Bankers Association releases its mortgage application survey for the week ending on Sept. 2. Mortgage applications have dropped for three consecutive weeks and are at a multidecade low amid record-high home prices and surging mortgage rates.
Thursday 9/8
DocuSign and Zscaler hold conference calls to discuss quarterly earnings.
Moderna hosts a research and development day, with presentations from its executive leadership, including CEO Stéphane Bancel.
The European Central Bank announces its monetary-policy decision. Traders are pricing in a 60% chance of a jumbo-size 75-basis-point hike, which would bring ECB’s deposit facility rate to 0.75%. At its last meeting, in July, the central bank lifted its key interest rate by half a percentage point, from negative 0.5% to zero. It has been just over a decade since the deposit facility rate was last above zero.
The Department of Labor reports initial jobless claims for the week ending on Sept. 3. Claims averaged 241,500 in August, and have risen steadily this year from historically low levels.
Friday 9/9
Kroger reports second-quarter fiscal-2023 results.
Tapestry, the parent company of fashion brands Coach and Kate Spade, holds an investor day at its headquarters in New York. The company will discuss its long-term strategic initiatives and update its financial outlook.
The Federal Reserve releases the Financial Accounts of the United States for the second quarter. The report gives a snapshot of the nation’s household net worth and debt. In the first quarter, household net worth fell by $544 billion, to $149.3 trillion. It was the first decline since the first quarter of 2020. With the S&P 500 index plunging more than 16% in the second quarter, it’s very likely that the report will show another decrease.
Write to Nicholas Jasinski at nicholas.jasinski@barrons.com | AAPL |
https://finnhub.io/api/news?id=5e3caf9659a6b86e647912932707dac5af13d681b74f48a36e989293979899ce | 7 Monster Stock Market Predictions For The Week Of Sept. 6 | 2022-09-04T05:40:00 | TalkMarkets | Sorry, the page you are looking for has been removed. Let's find a better place for you to go. Back to Home | AAPL |
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https://finnhub.io/api/news?id=b86d363b4ca27e4559a987dfae9f161cb7c182e74d5debe8e6d7a7ad0601836c | Dow Jones Dives Toward Bear Market Lows As AMD, Tesla, On Semi Plunge; What To Do Now | A market rally attempt is reeling as the indexes plunged on Friday's jobs report. Tesla, AMD and On Semi sold off. | 2022-10-07T16:16:47 | Yahoo | Dow Jones Futures: Stocks Near Bear Market Lows On Columbus Day
The market rally attempt is reeling, back near bear lows. What will investors discover on Columbus Day?
The market rally attempt is reeling, back near bear lows. What will investors discover on Columbus Day? | AAPL |
https://finnhub.io/api/news?id=775974dd1b98232bb642ea54f0572eeed03ddd07b6b65db67152af768cd3009f | Weekly Roundup | Despite the late-week selloff, the portfolio had a rather good week, as about a dozen of our holdings outperformed the S&P 500. | 2022-10-07T15:45:00 | Yahoo | Weekly Roundup
Despite the late-week selloff, the portfolio had a rather good week, as about a dozen of our holdings outperformed the S&P 500.
Despite the late-week selloff, the portfolio had a rather good week, as about a dozen of our holdings outperformed the S&P 500. | AAPL |
https://finnhub.io/api/news?id=c1d635cf5fa87690d2237475c11131c6d2902ae76e2803894901899f05ddc1de | 2 Unstoppable Warren Buffett Stocks That Can Turn Sitting Cash Into Growing Wealth | Investors listen to Warren Buffett because of his long-term ability to beat the S&P 500. Between 1965 and 2021, a 56-year timeframe, his Berkshire Hathaway portfolio has logged average returns of 20.1%. Berkshire has also beat the indexes in 2022, with Berkshire stock falling 6% since January versus almost 20% for the S&P 500. | 2022-10-07T13:05:00 | Yahoo | 2 Unstoppable Warren Buffett Stocks That Can Turn Sitting Cash Into Growing Wealth
Investors listen to Warren Buffett because of his long-term ability to beat the S&P 500. Between 1965 and 2021, a 56-year timeframe, his Berkshire Hathaway portfolio has logged average returns of 20.1%. Berkshire has also beat the indexes in 2022, with Berkshire stock falling 6% since January versus almost 20% for the S&P 500. | AAPL |
https://finnhub.io/api/news?id=258d48e6dd1a59f6eeef3c2ffeb8df980dec07dc430ac85a181b3bfd972f124e | Facebook warns 1m users their login details may have been stolen | Facebook is notifying 1m users that their login details may have been stolen thanks to fake Android and Apple programmes posing as legitimate mobile apps. | 2022-10-07T11:36:54 | Yahoo | One million Facebook users warned their login details may have been stolen
Facebook is notifying 1m users that their login details may have been stolen thanks to fake Android and Apple programmes posing as legitimate mobile apps.
“Our security researchers have found more than 400 malicious Android and iOS apps this year that were designed to steal Facebook login information and compromise people’s accounts,” said David Agranovich, Facebook’s director of threat disruption.
The malicious apps were uploaded to the Apple and Google Play app stores and posed as innocent, unrelated programmes. Some appeared to be photo-editing software, Facebook said, while others posed as free games or music players.
Apple’s iOS and Google’s Android are the two most widely used mobile phone operating systems in the world, being installed on billions of smartphones and tablet devices.
All of the malicious apps detected by Facebook had been removed from the iOS and Android app stores before the news was unveiled, Facebook added. About 10pc of the fake programmes were on the Apple App Store.
“We are also alerting people who may have unknowingly self-compromised their accounts by downloading these apps and sharing their credentials, and are helping them to secure their accounts,” said Mr Agranovich.
Such apps work by copying the look and feel of features such as the “Sign in with Facebook” button. Instead of checking the username and password with Facebook’s servers, malicious apps simply send them to their creators.
Stolen login information is prized by cyber criminals as it gives access to further personal information about the account holder that can be used for identity theft or other crimes of fraud.
Usernames and passwords are also bought and sold by cyber criminals who match stolen accounts with other information such as home addresses or credit card details obtained from other criminal sources.
Facebook advised users to be cautious about installing mobile apps that required a login to function: “Be suspicious of a photo-editing app that needs your Facebook login and password before allowing you to use it.”
While both Apple and Google attempt to vet new apps being published on their app stores, the task is a vast one: Apple says it hosts 2 million programmes, while Google’s Play Store – the Android equivalent – has slightly more, at around 2.65m. | AAPL |
https://finnhub.io/api/news?id=c488e27c719f95028bc2b3ccd9ae8dbb95dace4c554d5933f4eadf1538207f67 | Biden Tightens China Chip Rules on Chaotic Day for Industry | (Bloomberg) -- The Biden administration announced new restrictions on China’s access to US semiconductor technology, escalating tensions between the two countries and adding fresh complications to an industry reeling from a slump in demand. Most Read from BloombergBiden Says Putin Threats Real, Could Spark Nuclear ‘Armageddon’Kremlin Lets State Media Tell Some Truths About Putin’s Stalling WarMusk's Twitter Takeover Hits Snag Over Debt-Financing IssueBiden Should Hit Saudi Arabia Where It Really | 2022-10-07T09:53:20 | Yahoo | China Says Biden’s New Chip Technology Curbs Will Harm Recovery
(Bloomberg) -- China criticized expanded US restrictions on its access to semiconductor technology, saying they’ll harm supply chains and the world economy.
President Joe Biden administration announced the export curbs on Friday, escalating tensions between the two countries and adding complications for an industry faced with slumping demand.
The measures seek to stop China’s drive to develop its own chip industry and advance its military capabilities. They include restrictions on the export of some types of chips used in artificial intelligence and supercomputing and tighten rules on the sale of semiconductor manufacturing equipment to any Chinese company.
China “has poured resources into developing supercomputing capabilities and seeks to become a world leader in artificial intelligence by 2030,” said Assistant Secretary of Commerce for Export Administration Thea D. Rozman Kendler. “It is using these capabilities to monitor, track and surveil their own citizens, and fuel its military modernization.”
Chinese Foreign Ministry spokesperson Mao Ning said Saturday that the measures, which begin to enter into force this month, are unfair and will “also hurt the interests of US companies,” according to an official briefing transcript. They “deal a blow to global industrial and supply chains and world economic recovery,” she said.
The US is seeking to ensure that Chinese companies don’t transfer technology to the country’s military and that chipmakers in China don’t develop the capability to make advanced semiconductors themselves.
The rules come at a difficult time for the chip industry, which is suffering a steep drop in demand for personal-computer and smartphone components. Shares of many of the world’s biggest semiconductor makers tumbled on Friday following reports that the slump may be even worse than thought.
The government’s actions add another layer of uncertainty for investors already trying to work out how much demand for semiconductors might shrink. Companies such as Applied Materials Inc. and Intel Corp. can’t easily walk away from China, the biggest single market for their products and a key part of a global supply chain for electronics used everywhere in the world.
Chipmaker stocks have struggled throughout 2022, following three straight years where the group climbed between 40% and 60%. The Philadelphia Stock Exchange Semiconductor Index is down nearly 40% so far this year, on track for its biggest annual drop since 2008, and it recently fell to its lowest level since November 2020.
Widespread Losses
The losses have been widespread, with nearly every component of the industry benchmark index in negative territory this year. Nvidia Corp. and Advanced Micro Devices Inc. have declined almost 60%. AMD reported preliminary third-quarter revenue on Thursday that was weaker than expected. AMD and Nvidia have already disclosed that the China-related restrictions on AI chips will hurt their sales.
Nvidia said Friday that the broader regulations won’t have “a material impact on our business,” which is already restricted by previous export controls.
When the new rules come into force, it will be harder for providers of chips used in Chinese supercomputers and related gear to get permission to fill orders. They should presume requests will be denied, according to senior Commerce Department officials.
Commerce also put a raft of restrictions on supplying US machinery that’s capable of making advanced semiconductors. It’s going after the types of memory chips and logic components that are at the heart of state-of-the art designs.
While there will be more latitude for overseas companies needing technology for their own operations in China -- or for parties that can prove they’re making things there for immediate export elsewhere -- Commerce said it will enforce the rules and also cut off support for existing deployments of machinery covered by the restrictions.
While the US is home to the biggest block of companies that design vital electronic components and provide the complex machinery to manufacture them, other regions have capabilities that could undermine some of the government’s efforts.
Commerce Department officials acknowledged that overseas cooperation is necessary to avoid hampering the initiatives and said there are talks with other parties underway around the world on the topic.
Chipmaking gear restrictions cover production of the following:
Logic chips using so-called nonplanar transistors made with 16-nanometer technology or anything more advanced than that. Generally speaking, the smaller the nanometers, the more capable the chip.
18-nanometer dynamic random access memory chips.
Nand-style flash memory chips with 128 layers or more.
For companies with plants in China, including non-US firms, the rules will create additional hurdles and require government signoff.
South Korea’s SK Hynix Inc. is one of the world’s largest makers of memory chips and has facilities in China as part of a supply network that sends components around the world.
“The new measures restrict sale of equipment for memory products of certain level of technology or above, but allow Korean chipmakers to export if they have a license from the Commerce Department,” the company said in a statement. “SK Hynix is ready to make its utmost efforts to get the US government’s license and will closely work with the Korean government for this.”
Separately, Commerce added more names to a list of companies that it regards as “unverified,” meaning it doesn’t know where their products end up being used. The 31 additions are all Chinese. That indicates that US suppliers will face new hurdles in selling technologies to those entities.
The biggest name to be added to the list is Yangtze Memory Technologies Co. The memory-chip maker is widely regarded as being the best bet China has of breaking through into the front ranks of the industry and has made progress with advanced products for chip-based storage.
The US chip industry has expressed concern that moving too aggressively could put domestic companies at a disadvantage. They worry that losing China sales will hurt their ability to spend on innovation and potentially help competitors abroad.
The Semiconductor Industry Association, which represents all of the largest US chipmakers, said it’s evaluating the impact of the new export controls and will ensure compliance.
A bill signed by Biden in August promises to infuse about $52 billion into the US semiconductor industry.
(Updates with response from Chinese foreign ministry in sixth paragraph.)
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P. | AAPL |
https://finnhub.io/api/news?id=ed30d210a273eb4e272b788742ae0b868360c16c698676674f221c0003c761e7 | Tesla: 3 Things That Separate It From Its Competitors | As investors will find out in the not-too-distant future, Tesla is far more than an EV company. Read more to see 3 things that separates TSLA from competitors. | 2022-10-07T09:12:15 | SeekingAlpha | Tesla: 3 Things That Separate It From Its Competitors
Summary
- As investors will find out in the not-too-distant future that Tesla is far more than an EV company.
- There are 3 areas Tesla is increasing expertise in that are creating a wide moat against its competitors.
- The ability to apply machine learning and AI via rapid iteration allows Tesla to target large markets with products and services that could end up being larger than its EV.
I believe it's a mistake to continue to categorize Tesla, Inc. (NASDAQ:TSLA) as an electric vehicle ("EV") company because that undervalues the three major characteristics of the business that can be applied to a variety of sectors and segments of the market that have the potential to drive billions of dollars in sales.
The three things I'm referring to are machine learning, AI, and iteration. When combined together, these are powerful forces with the potential to disrupt numerous markets, or create new ones, as evidenced by the push by Tesla toward self-driving vehicles.
In this article, I want to explore the extraordinary potential Tesla has because it has already worked much of this out via its AI, associated with the millions of hours it has had getting feedback from its EVs. As it continues to improve on the process, Tesla is able to rapidly bring products from an idea to a prototype, to a completed product far quicker than its competitors. This is a tremendous moat when thinking of how Tesla has the expertise in hand to apply this to a wide variety of products and services.
Before I get into specific products and possibilities, I want to show readers how they should view the company long term, based upon similarities between Tesla, Apple (AAPL), and Amazon.com (AMZN).
What will Tesla become?
Like mentioned above, I think it's a mistake to consider Tesla solely as an EV company, even though in the near term that will continue to be the major generator of revenue. The reason why is it limits the growth possibilities inherent in the development of AI and machine learning, combined with failing fast and iteration.
For example, when Amazon was launched as an e-commerce solution for selling books, the thought never entered anybody's mind that the knowledge it would gather through its growing customer base and its supply chain would result in it expanding to AWS and other products, which would be significant in improving the performance of the company.
In other words, Amazon is far more than an e-commerce company, by virtue of its own processes which turned it into a tech company competing on various fronts. To consider Amazon an e-commerce company would only represent a piece of the puzzle that makes Amazon what it is.
The same is going to be true with Tesla in my opinion, as it leverages its strengths to apply them to products and services that have the potential to generate multi-billion dollars in revenue.
Apple is similar when considering its core business of iPhones. A number of years ago investors and analysts expresses concern of the vulnerability Apple had because of its heavy reliance on its iPhone line for growing revenue and earnings.
While the iPhone remains its flagship product, Apple has expanded to a variety of products and services, that together provide a significant addition to revenue and earnings that complement the iPhone, providing a cushion if sales slowdown.
The difference I see between Tesla and Apple is, I believe, that Tesla has the potential to outperform Apple with its future ancillary products, although it has a way to go before it can compete with the iPhone as a core product. An argument could easily be made that the EV market will eventually vastly outperform the smartphone market, and that will be true, but I don't think the EV market is going to go up in the straight line that many adherents and fans of the sector think.
The reason why is there is a huge electrical grid problem that is struggling as green tech is increasingly being used as a higher percentage of the grid. The challenge is, there are already weaknesses being experienced by some grids that have to engage in rolling blackouts in order to allow customers to have access to energy. Picture what that will be like as the number of EVs grow in the market and demand for energy expands in response to the need to charge vehicles. That is a major problem that is just beginning to be realized.
The point there is it's almost certainly going to take a lot longer to meet goals set by governments, which suggests to me the EV sector is going to eventually slowdown in order to allow the electric grid to catch up.
And in the worst-case scenario, people could rise up in anger if they're forced to go without electricity at times, they really need it, putting pressure on politicians and leaders to solve their energy problems by incorporating more fossil fuels into their energy demands.
As it relates to Tesla, this could be a problem in the not-too-distant future that results in a slowdown of demand and sales because of the possible inability of EV owners to charge up their vehicles without putting huge strains on the grid.
Looking ahead, I think Elon Musk understands the vulnerability of Tesla in relying on one sector to grow its business, and in my opinion, is positioning itself to target other growth markets that will move the revenue needle.
My thesis is Tesla, in the years ahead, is going to be an AI company that leverages its tech and data to launch wide variety of products and services that have the potential to catch competitors by surprise, not only from early mover advantage, but by the rapid pace it's able to bring a product to market.
A recent example of that is its Optimus robot.
Optimus robot
If you remember last year at Tesla's AI day, it revealed its plans for a robot that had the appearance of a human being. The announcement was accompanied by a person dressing up like a robot and jumping around on the platform; some people, at first, actually thought it was a robot doing it.
While Elon Musk enjoys doing stuff like that, it was apparent he was serious about the idea behind the robot, understanding it was in fact, at the time, only an idea.
Fast forward to today, and the introduction of Optimus at its most recent AI Day, underscores the ability of Tesla to rapidly develop a product over a period of several months, reinforcing the fact Tesla can fail quickly and make adjustments to improve a product, bearing in mind Optimus is still in its prototype stage.
The purpose of Optimus is to provide a robotic worker that can be used in the home, office or industrial settings that can help with various needs of the particular environment it's working in.
Not only can it bend down and lift up things that have some weight, it also has the dexterity to hold onto smaller tools.
Assuming the potential scale is there based upon demand, Tesla wants to bring the cost down to under $20,000 in order to appeal to as wide a customer base as possible. That means it's working on a variety of skillsets the robot can use to perform a variety of tasks in different settings.
The significance of this isn't Optimus itself, but the underlying AI used to quickly build it. In other words, building the body of the robot is the easy part, designing the software to operate it is the hard part. Being able to do it in a very short time confirms Tesla is able to leverage the AI it is using in its EVs and apply it to other products.
Again, when thinking Tesla can apply this to other products shows the future potential of its AI that goes beyond electric vehicles.
That said, it appears Tesla could have a big winner on its hands as it improves Optimus in a similar way it has been improving its self-driving vehicles. It will probably take several years before we begin to see what type of demand and potential for the robotic worker is.
Concerning competition, other companies like Boston Dynamics and its Atlas robot is far more advanced than Optimus, as it has the ability to perform a variety of acrobatic exercises. Another is Agility Robotics' Digit, which can avoid obstacles (important in environment humans are present in), pick things up and put things down, and walk across different terrains, among other skills.
This isn't surprising when considering Optimus went from idea to prototype in only a few months. Going forward, if Tesla's AI is going to become as powerful as I think it is, it's going to catch up with and surpass its competitors. The fact there are robots more advanced than Optimus gives investors a good benchmark to analyze the progress and capability of Tesla's AI when applying it to designing and building products like Optimus.
One final thing to say about Optimus is, in the near term its primary value will be to attract new workers that like to work on cool things. The battle for engineering talent is huge, and companies providing interesting things to work on will be the winners in the competitive job marketplace.
Another important development for Tesla is its supercomputer Dojo.
Dojo
Dojo is a supercomputer built in-house by Tesla for the sole purpose of teaching its AI. This behind-the-scenes tech is the secret sauce behind the ability of Tesla to quickly make so much progress in the tasks it's working on.
As part of Dojo Tesla has been develop what it calls ExaPOD, which is a way of scaling the supercomputer to improve its performance. The company stated the Dojo ExaPOD includes a spec of 1.1 EFLOP, which translates into a mindboggling one quintillion operations per second. The first ExaPOD or cluster is on schedule to be available by Q1 2023. Below is an example of the ExaPOD.
The company has a goal of building seven ExaPODs. That will make the Dojo the leading supercomputer in the world.
What needs to be considered here is Tesla could have more than enough computer power for the purpose of developing self-driving vehicles. So the obvious question is, why does it need so much computing power? My opinion is it has a number of products and services in mind that we have no idea about.
The most important takeaway is Tesla will have an extraordinarily advanced AI and machine learning system as a result of that type of computing power, that it will be able to fail even faster, giving itself even more of a competitive edge for markets it wants to compete in.
Concerning the near term, when Dojo is fully deployed in 2023, it will have the capacity to accelerate the development of Tesla's FSD models, which will help the company widen its lead against competitors.
Where Tesla stands today
While we're talking about extraordinary future potential for Tesla, we still need to look at where the company stands today in order to manage near-term expectations.
As the company stands today, I think it's valued at close to where it should be. When the company starts to roll out new products based upon its AI expertise and its leading supercomputer, that will change, but it will take some time.
Based upon its EV business, Tesla trades at a huge premium against its competitors, but at 56x forward earnings, it seems to me it's fully valued. That's also reflected in its P/S of 8.9x; which is a hefty number.
With the supply chain working itself out, Tesla shouldn't have too much trouble in gaining the parts it needs to supply the market. The one issue going forward is this: as the interest rates rise, will it end up having a negative impact on demand, based upon affordability?
In other words, as supply issues resolve themselves, the company may be heading into slowing demand. If that's how it works out, it'll probably continue on through the middle of 2023, depending upon how much interest rates fall and if the Fed signals it's done increasing rates.
On the other hand, there is pent-up demand from the supply chain issues, so there could be some decent momentum that higher costs may not have an impact on in the near term.
Conclusion
I've read some thoughts on what investors think Tesla is boosting Dojo for, but it really doesn't matter. Since one ExaPOD is more than enough for its self-driving segment, it's plain to see that Tesla is boosting its supercomputer power in preparation for something big in the future.
What this confirms is Tesla isn't just talking about being more than an EV company, but is taking visible steps to improve its AI and machine learning in order to empower the company to take an idea from concept, to prototype, to a functional product or service quicker than its competitors.
The bottom line is, even though Tesla's EV business has been under pressure lately, it has a lot more in mind for the business than limiting itself to that market, even though it is a very large one that will continue to grow for many years into the future.
It'll be the bread and butter of the company for the next several years, but I'm expecting announcements in the months and years ahead that will give more clarity concerning what it plans on using its advanced AI and machine learning for.
Since it will end up with the most powerful supercomputer in the world teaching and training its AI, the possibilities are endless, although the company will without a doubt focus on large enough markets that will significantly move the needle of the company.
In the present, Dojo will further advance Tesla's already formidable AI expertise, accelerating the advancement of its FSD models and other EVs it's developing.
Once the economy improves, even higher interest rates are unlikely to dampen the pent-up demand with its EVs, and ultimately, its FSD vehicles. There will probably be more short-term pain for Tesla shareholders, but over the long term I believe they're going to be strongly rewarded once sentiment turns positive.
This article was written by
Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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Comments (276)
Unfortunately, I see no evidence of any technological moat at Tesla. Either in the product side nor on the manufacturing side. I see lots of fan sites and smoke and mirrors, but nothing substantive. 100 percent automation was going to be the future at Tesla. Didn't happen. Robots moving too fast to see. Didn't happen. An open topped unit construction architecture that would allow the interior to be installed from above. Didn't happen. Today, it's very large scale die casting of the entire rear subframe assembly. There are very good reasons to seriously doubt whether this will actually lower costs. And we have heard nothing about it since its introduction with much fanfare. Tesla supposed to have some kind of revolutionary new battery. No evidence that it performs any differently from anyone else's batteries, including those that Tesla buys from outside suppliers. The vehicles themselves seem to perform about the same as competing vehicles from companies like Daimler Benz. Tesla has lost leadership in the critical light truck segment, and has lagged behind in electric heavy trucks as well. Manufacture consumer goods as a gigantic mean reversion machine. It is extremely difficult to revolutionize the industry, because, despite the assertion of Tesla fans, every manufacturer optimizes every process all the time. The cult of Elon Musk relies on the notion that everyone else in the automotive industry is an idiot, and that they somehow don't want to optimize their processes or products. When you look at a video of a Tesla assembly line, it looks just like everyone else's. There is a reason for this.
Yep. You’re right. For a company that’s just recently turned profitable, and grown at better than 50%, eclipsing a $1T market cap, blowing out EV sales in North America and having the most productive EV factory in the world. There is a LOT they haven’t delivered on. It’s all deferred opportunity though, because nobody else has done it, at volume, either. The whole pie is there, and Tesla will get more than their fair share in EVs and Energy and Software and Hardware. Even through this recession Tesla extends their lead. How do? Profits. Tesla produces EVs that are responsible for ~80% of the profitable EV sales. Tesla doesn’t compete in the light truck category, yet, because margins and battery capacity have made it obvious that opening a new line would just diminish the stellar margins that they’ve already established. And finally, Musk gets beat up consistently for everything under the sun, but your point about thinking he’s always the smartest guy in the room lacks truth. At every earnings call, Tesla event etc he’s always giving praise to the team, giving credit where it’s due. With his time split between Tesla and SpaceX and…so on. He has to trust that his guys and gals will step up to meet challenges. The bad rap is partly his own fault (poor filter), but realize that a good deal of it is political or competitive in nature.
EV's are a long way from dominating the automotive industry. Probably a decade.
Would love to be able to help you, but if you don’t understand the implications of Tesla as a software / hardware company then there’s seriously no way to help.
2. Tesla is an energy-management company
3. Tesla is a data-mining and data-management company.When people compare P/E multiples of other (dissimilar, unrelated, manufacturing) companies, those people reveal their lack of understanding and/or outright denial of the brilliance and head-start enjoyed by Tesla.I sat in on a conference call a few years ago and I distinctly remember Elon stating that, at some point, Tesla's energy production/management revenue would eclipse its EV revenue.Though that statement is almost incomprehensible (given the number of Gigafactories that have popped over the past few years), it is entirely conceivable (RE: Congress' recent clean-energy bills/investments -- and the many that will follow).I will dollar-cost average all the way down... and all the way back up.
2. Tesla is an energy-management company
3. Tesla is a data-mining and data-management company.Tesla's energy production/management revenue will eventually eclipse its EV revenue.
https://youtu.be/Grf9KeZnGLo
https://youtu.be/vGojo4MVq6o
https://youtu.be/wv1l6aTnB_IEvery month people with the system make videos of the success and failures. You can certainly point out it’s late but it’s still improving and they definitely have more work. You are right that the application of multiple products using the same software stack will definitely offer opportunities
Have you ever successfully invested in a growth company before? I don’t think you’re giving great advice. Personally I don’t think history will care much about $200, $300, $400. Those numbers are a consequence of the FED. The numbers that will be important are $600, $800, $1000 and probably rising over the next decade.
Broad Integration + Vertical integration
Pace of innovationThere's plenty more. but these 3 are the primary factors.PS. The stock may crater near term. This is opportunity.
In three months forward earnings (2023) will be as low as 28 if the stock stays flat. Big difference in only a few months. | AAPL |
https://finnhub.io/api/news?id=744cf717df526fdca2a90a5c5ff56862d2b248de465e1435322b9a5fdede165e | 2 Technology Stocks For Your October 2022 Watchlist | Check out these technology stocks for a potential buy and hold opportunity. | 2022-10-07T08:39:30 | StockMarket | Technology is playing an increasingly important role in our lives today. As we become more reliant on technology, it is becoming more important for businesses to invest in technology. With that, technology stocks are a type of stock that represents ownership in a company that produces or uses technology. Technology stocks are popular with investors because they offer the potential for high growth. Notably, some of the more popular technology stocks among stock market investors today are companies such as Amazon (NASDAQ: AMZN), Alphabet Inc. (NASDAQ: GOOGL), and Meta Platforms Inc. (NASDAQ: META) just to name a few. Technology companies often have high-profit margins and strong market demand for their products.
However, investing in technology stocks can also be risky. Technology companies are often volatile and susceptible to sudden changes in the marketplace. When investing in technology stocks, it is important to carefully research the company before making a purchase. You should also be aware of the risks involved.
Furthermore, technology stocks can provide investors with the opportunity to earn high returns, but they can also be risky. Before investing, it is important to understand both the potential rewards and risks involved. If this has you keen on investing in the tech sector, here are two technology stocks to watch in the stock market today.
Technology Stocks To Watch Right Now
- Microsoft Corporation (NASDAQ: MSFT)
- Apple, Inc. (NASDAQ: AAPL)
1. Microsoft (MSFT Stock)
Starting off the list today is Microsoft Corporation (MSFT). In short, Microsoft is an American multinational technology company. Additionally, the company develops, manufactures, licenses supports, and sells computer software, consumer electronics, personal computers, and related services. Its best-known software products are the Microsoft Windows line of operating systems, Microsoft Office office suite, and Internet Explorer and Edge web browsers.
MSFT Recent Stock News
In September, Microsoft reported that its Board Of Directors have declared a quarterly dividend of $0.68 per share. This represents a $0.06 or 10% increase in dividend payment from the previous quarter’s dividend. Moreover, the dividend is payable on December 8th, 2022 to shareholders on record on November 17, 2022.
Separate from that, Microsoft also reported that it will be hosting its 2022 annual shareholders meeting. Specifically, the company’s annual shareholder meeting for 2022 will take place on December 13, 2022.
MSFT Stock Chart
Meanwhile, so far in 2022, MSFT stock has fallen over 29% as of Friday’s mid-morning trading session at $235.68 per share. What’s more, shares of Microsoft stock is currently trading 32.58% off of their 52-week high of $349.67 a share.
[Read More] Top Stocks To Buy Now? 3 Industrial Stocks To Check Out
2. Apple (AAPL Stock)
Next, Apple Inc. (AAPL) is an American multinational technology company. Simply put, the company designs, develops and sells consumer electronics, computer software, and online services. The company’s hardware products include the iPhone smartphone, the iPad tablet computer, the Mac personal computer, the iPod portable media player, the Apple Watch smartwatch, the Apple TV digital media player, and the HomePod smart speaker.
AAPL Recent Stock News
Recently, just last month, the company released its new product lineup to investors. In detail, Apple reported it has launched a new iPhone® 14 Pro and iPhone 14 Pro Max. For context, this new iPhone will include extra features that include an Always-On display, the first-ever 48MP camera on an iPhone, and others. Moreover, the company also reported that they will be introducing the new Apple Watch® Series 8 and the new Apple Watch SE®.
AAPL Stock Chart
Year-to-date, Apple stock is still down 22.50%. Meanwhile, on Friday morning, shares of AAPL stock are trading at $141.14 per share.
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https://finnhub.io/api/news?id=d9145c286e34c376413d3c2383da0db2ed950af345b3d57b69ab4875091f5183 | Alphabet (GOOGL) Expands Pixel Family With Latest Devices | Alphabet (GOOGL) Google's latest device launches strengthen its hardware business and device strategy. | 2022-10-07T07:03:02 | Yahoo | Alphabet (GOOGL) Expands Pixel Family With Latest Devices
Alphabet’s GOOGL division Google is leaving no stone unturned to expand its Pixel family.
At its Made by Google 2022 launch event, the company ended the quest for its long-awaited smartwatch by rolling out its first smartwatch — Google Pixel Watch, which runs on Wear OS software and is powered by Fitbit’s technology.
The watch comes with contactless payments, music control, turn-by-turn directions, heart rate variability, breathing rate, and resting heart rate features, to name a few.
The company expanded its smartphone offering by launching Pixel 7 and Pixel 7 Pro phones, which are powered by next-generation Tensor G2 processor and Android 13. The phones are also equipped with advanced machine learning technology and speech recognition feature.
Apart from the devices, Google gave a glimpse of its Pixel Tablet, which will be launched in 2023. The device will also be backed by a Tensor G2 chip like the new Pixel phones.
The latest move has added strength to Google’s hardware business and bolstered its device strategy.
Alphabet Inc. Price and Consensus
Alphabet Inc. price-consensus-chart | Alphabet Inc. Quote
Growth Prospects
We believe that the latest move will help Google rapidly penetrate the booming smartphone, smartwatch and tablet market.
According to a report by Persistence Market Research, the global smartphone market is expected to reach $982.8 billion by 2031, seeing a CAGR of 6.8% between 2021 and 2031.
Per a report from Facts and Factors, revenues in the global smartwatch market are expected to hit $97.5 billion by 2028, witnessing a CAGR of 21.5% between 2022 and 2028.
Per a report from Maximize Market Research, the global tablet market is likely to reach $53.8 billion by 2029, witnessing a CAGR of 3.4% between 2022 and 2029.
Cut-Throat Competition With Apple
With the latest move, Google ups its device game against Apple AAPL, which continues to ride on its robust device portfolio.
Apple’s flagship device iPhone, which generated revenues of $40.67 billion and accounted for 49% of the total sales in third-quarter fiscal 2022, remains its key catalyst.
The company is continuously gaining strong traction among customers on the back of its iPhone 13 family of devices.
Recently, the company unveiled four iPhone models — iPhone 14, iPhone 14 Plus, iPhone 14 Pro and iPhone 14 Pro Max — at its product launch event.
Apple is also riding on its non-iPhone devices like Apple Watch and AirPod, which enjoy solid customer momentum.
At the same event, the company launched the next-gen Airpods Pro, the Apple Watch Series 8, the new Apple Watch SE, Apple Watch Ultra and updates to Fitness+.
Nevertheless, Google’s strengthening device strategy is likely to give strong competition to Apple.
Zacks Rank & Stocks to Consider
Currently, Alphabet carries a Zacks Rank #3 (Hold).
Investors interested in the broader Zacks Computer & Technology sector can consider some better-ranked stocks like Pure Storage PSTG and Arista Networks ANET. While Pure Storage currently sports a Zacks Rank #1 ( Strong Buy), Arista Networks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Pure Storage has lost 10.8% in the year-to-date period. The long-term earnings growth rate for PSTG is currently projected at 35.5%.
Arista Networks has lost 15.6% in the year-to-date period. The long-term earnings growth rate for ANET is currently projected at 15.7%.
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To read this article on Zacks.com click here.
Zacks Investment Research | AAPL |
https://finnhub.io/api/news?id=74a17a6976baa0058a2a719f65493c59686bf6cab3b2dfd32c5d5ea9d0f213f5 | The Best Mutual Funds Invest Huge Sums In These 24 Stocks | As the market tries to rebound, the best mutual funds bet big on 24 stocks including Vertex, Lilly and Enphase. | 2022-10-07T07:00:37 | Yahoo | The Best Mutual Funds Invest Huge Sums In These 24 Stocks
As the market tries to rebound, the best mutual funds bet big on 24 stocks including Vertex, Lilly and Enphase.
As the market tries to rebound, the best mutual funds bet big on 24 stocks including Vertex, Lilly and Enphase. | AAPL |
https://finnhub.io/api/news?id=b4fa4ae4b6dfa08a823a89f327621c0222a07ed4bdd15d6e81e97f0ecba72f34 | Stocks making the biggest moves midday: CVS, Credit Suisse, AMD, Lyft and more | These are the stocks posting the largest moves in midday trading. | 2022-10-07T06:30:01 | CNBC | Check out the companies making headlines in midday trading Friday.
Ambac Financial Group – Shares of the municipal bond insurer shot up 15.7% on news of settlements with Bank of America that would bring Ambac $1.84 billion. The settlements come out of lawsuits related to the bond insurance policies Ambac used for Bank of America prior to the 2008 financial crisis. Bank of America was down about 2.4%.
Levi Strauss – Levi's dropped 11.7% to a 52-week low after cutting its full-year sales and profit outlook Thursday, as the clothing maker cited issues stemming from the supply chain and the stronger U.S. dollar.
DraftKings – Shares of DraftKings rose 3.3% on a Bloomberg report that the online sports betting company is close to a partnership deal with ESPN.
Lyft – The rideshare company slid 8.7% after RBC downgraded the stock to sector perform from outperform. RBC said competitor Uber, which was down about 4.5%, had "structural advantages."
CVS Health – Shares of CVS dropped 10.5% following a report that the health care giant is in "exclusive talks" to buy Cano Health. The company had already been falling after the Centers for Medicare and Medicaid Services downgraded one of its Aetna Medicare Advantage plans in its annual ratings. Shares of Cano gained 9%.
Tesla, Twitter – The two businesses continued to move following a week of news on Elon Musk reviving his high-profile plans to purchase Twitter. Tesla fell 6.3%, while Twitter lost 0.2%. On Thursday, a judge said Musk needs to complete his purchase by Oct. 28 to avoid a trial.
Credit Suisse – The European bank was up 13.1% after offering to buy back $3 billion in debt securities Friday and sell a famous hotel it owns. It marks another day of tumult for shares of the stock — which hit an all-time low earlier in the week — as market observers questioned the bank's health.
DexCom – Shares of the manufacturer of glucose monitoring devices jumped 7.3% after the Centers for Medicare and Medicaid Services updated a local coverage determination related to such devices. The move could boost the bottom line for DexCom, a key player in the continuous glucose monitoring space.
Apple – The tech giant was down 3.7% despite Morgan Stanley reiterating the stock as overweight, noting elevated lead times for the iPhone. People following the company have raised concern over the performance of the new line of iPhones compared to previous rollouts as Apple yanked plans to increase production.
Meta – The Facebook owner also slid 4% despite being reiterated as a buy by Citi, which noted an appealing risk/reward outlook as Reels revenue increases and new ad formats come into play. The stock hit a 52-week low.
Cannabis companies – Shares of cannabis companies were all down, after initially soaring on news that President Joe Biden wants a review of how marijuana is classified under federal law. Biden also announced he'll pardon thousands convicted of marijuana possession. Tilray Brands, which reported a larger-than-expected quarterly loss on Friday, was down 18.8%. Canopy Growth plunged more than 25.6%, Aurora Cannabis fell 12.8% and Cronos Group lost 15.6%.
Advanced Micro Devices – Shares of Advanced Micro Devices plummeted 13.4% after the semiconductor company issued disappointing preliminary results for the third quarter and said it expects revenue to fall short of its previous $6.7 billion dollar forecast. AMD blamed the shortfall on weakening PC demand and supply chain constraints. Shares of other chip companies including Intel and Nvidia fell on the news.
Unity Software – Shares of Unity, known for its software for three-dimensional design, dropped 8.6%. It contrasts with Needham earlier Friday initiating the stock as a buy with an upside of 39%.
Provention – Shares of the biopharmaceutical company leaped 11.3%, continuing to rally on news Thursday of plans to launch a drug candidate for type 1 diabetes.
— CNBC's Samantha Subin, Michelle Fox, Carmen Reinicke, Tanaya Macheel and Yun Li contributed reporting. | AAPL |
https://finnhub.io/api/news?id=3a61310dc09564bcdc6e1c302c6122a60a6acc2b14effe9e3136b10688b98763 | 11 Best FAANG Stocks To Buy Now | In this article, we will be taking a look at the 11 best FAANG stocks to buy now. To skip our detailed analysis of these stocks and the technology sector, you can go directly to see the 5 Best FAANG Stocks to Buy Now. In spite of the Fed jacking up interest rates, the technology sector […] | 2022-10-07T06:24:03 | Yahoo | 11 Best FAANG Stocks To Buy Now
In this article, we will be taking a look at the 11 best FAANG stocks to buy now. To skip our detailed analysis of these stocks and the technology sector, you can go directly to see the 5 Best FAANG Stocks to Buy Now.
In spite of the Fed jacking up interest rates, the technology sector is continuing to attract investor attention in 2022. With rampant inflation still plaguing the market, the sector was expected to suffer from a loss in popularity. However, its cheaper valuation in a time of economic recession is managing to work in its favor. According to a Bloomberg article published this September, The Nasdaq 100 Index was 35% cheaper than its peak in 2020. Some of the best FAANG stocks like Apple Inc. (NASDAQ:AAPL) still continued to rake in cash and maintain their earnings outlooks, inspiring confidence as far as investors were concerned.
What are FAANG stocks?
The acronym FAANG refers to the top five American technology companies in the market today: Facebook (now known as Meta Platforms, Inc. (NASDAQ:META)), Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL), Netflix, Inc. (NASDAQ:NFLX), and Alphabet Inc. (NASDAQ:GOOG). With Netflix, Inc. (NASDAQ:NFLX) losing the favor of many investors with its performance this year, Microsoft Corporation (NASDAQ:MSFT) is steadily becoming a new member of this group of stocks.
Investors' approach to the markets this year has demonstrated that staying away from the best FAANG stocks like Amazon.com, Inc. (NASDAQ:AMZN) and Microsoft Corporation (NASDAQ:MSFT) is not an option. The sheer size of the tech industry alone makes it the largest of its kind in the S&P 500, making up almost 27% of the index. As a result, many investors are now being pulled towards durable businesses like the FAANG stocks.
According to a Reuters article published this July, Microsoft Corporation's (NASDAQ:MSFT) earnings results added to investor confidence in the tech sector, as they showed that the FAANG stocks were well-equipped to deal with a recession. Microsoft Corporation (NASDAQ:MSFT) rose by about 3.1% in July after the company mentioned it was targeting double-digit growth in fiscal revenue.
Let's now take a look at the 11 best FAANG stocks to buy now.
Our Methodology
We have selected renowned tech stocks that are comparable to the Big Tech companies. These stocks were popular among the 895 hedge funds tracked by Insider Monkey in the second quarter of 2022. They have also reported positive latest earnings and demonstrate growth potential based on projected EPS growth, revenue growth, and free cash flow growth, among other factors. We have ranked these stocks based on the number of hedge funds holding stakes in them, from the lowest to the highest. We have also mentioned analyst ratings and price targets for these stocks.
Best FAANG Stocks To Buy Now
11۔ International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 40
International Business Machines Corporation (NYSE:IBM) is an information technology company providing integrated solutions and services across the globe. The company offers hybrid cloud platform and software solutions, software for business automation, data and artificial intelligence solutions, and more. It is based in Armonk, New York.
An Overweight rating was reiterated on shares of International Business Machines Corporation (NYSE:IBM) on October 6, by analyst Erik Woodring at Morgan Stanley. The analyst also placed a $152 price target on the stock.
The company's revenue has grown by 27.28% year-over-year, and its EPS is expected to grow by 8.97% over the next three to five years. International Business Machines Corporation (NYSE:IBM) has a one-year dividend growth rate of 0.77% as well. Its EPS in the second quarter of 2022 was $2.31, beating estimates by $0.02. International Business Machines Corporation (NYSE:IBM) also brought in $15.54 billion in revenue, beating estimates by $359.15 million.
Citadel Investment Group was the largest stakeholder in International Business Machines Corporation (NYSE:IBM) in the second quarter, holding 2.9 million shares worth about $420.9 million. In total, 40 funds were long the stock, with a total stake value of $948 million.
International Business Machines Corporation (NYSE:IBM), like Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL), and Microsoft Corporation (NASDAQ:MSFT), is one of the top tech stocks hedge funds are pouring into today.
10. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 65
Intel Corporation (NASDAQ:INTC) is a semiconductor company working to design, manufacture, and sell computer products and technologies across the globe. It offers platform products like central processing units and chipsets. It is based in Santa Clara, California.
Ross Seymore at Deutsche Bank has a Hold rating on Intel Corporation (NASDAQ:INTC) shares as of September 8. The analyst also placed a $35 price target on the stock.
Intel Corporation (NASDAQ:INTC) has a forward dividend per share growth rate of 4.21%, and a one-year dividend growth rate of 5.17%. The company has been investing large sums in research and development, manufacturing, and packaging technologies, a move that will benefit it in the long run. This March, Intel Corporation (NASDAQ:INTC) announced plans to invest $85 billion in the above areas.
In total, there were 65 hedge funds long Intel Corporation (NASDAQ:INTC) in the second quarter. Their total stake value was $2.5 billion.
9. QUALCOMM, Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 71
QUALCOMM, Incorporated (NASDAQ:QCOM) is a semiconductor company working to develop and commercialize foundational technologies for the wireless industry worldwide. The company operates through its Qualcomm CDMA Technologies (QCT), Qualcomm Technology Licensing (QTL), and Qualcomm Strategic Initiatives (QSI) segments. It is based in San Diego, California.
On September 26, Samik Chatterjee at JPMorgan reiterated an Overweight rating on shares of QUALCOMM, Incorporated (NASDAQ:QCOM). The analyst also placed a $185 price target on the stock.
QUALCOMM, Incorporated's (NASDAQ:QCOM) EPS is expected to grow by 23.02% over the next three to five years. The company's revenue has grown by 29.36% year-over-year, and its forward free cash flow per share growth rate is 50.65%. QUALCOMM, Incorporated (NASDAQ:QCOM) also has a one-year dividend growth rate of 6.08%. Analyst Chatterjee sees a substantial upside in the stock in light of the stock's current valuation.
QUALCOMM, Incorporated (NASDAQ:QCOM) was found among the 13F holdings of 71 hedge funds in the second quarter, and 73 funds in the previous quarter. Their total stake values were $2.8 billion and $3.6 billion, respectively.
8. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 84
NVIDIA Corporation (NASDAQ:NVDA) is another semiconductor company providing graphics, compute, and networking solutions in the US, Taiwan, China, and internationally. It offers game streaming services and related infrastructure, solutions for gaming platforms, and automotive platforms for infotainment systems. It is based in Santa Clara, California.
Joseph Moore at Morgan Stanley holds an Equal Weight rating on shares of NVIDIA Corporation (NASDAQ:NVDA) as of September 21. The analyst also maintains a $182 price target on the stock. Moore believes NVIDIA Corporation (NASDAQ:NVDA) will benefit in the near future, since gaming revenues are set to recover in 2023, seeing how prices in the sector are 28% higher than the baseline price from two year ago. NVIDIA Corporation (NASDAQ:NVDA) had revenue of $6.7 billion in the fiscal second quarter of 2023, beating estimates by $3.47 million.
There were 84 hedge funds long NVIDIA Corporation (NASDAQ:NVDA) in the second quarter, with a total stake value of $3.3 billion. Of these funds, Citadel Investment Group was the largest stakeholder in the company, holding 17.7 million shares worth $2.7 billion.
7. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 87
Advanced Micro Devices, Inc. (NASDAQ:AMD) is another information technology company operating in the semiconductor industry. The company offers chipsets, discrete and integrated graphics processing units (GPUs), data center and professional GPUs, and development services, among more. It is based in Santa Clara, California.
An Overweight rating was maintained on shares of Advanced Micro Devices, Inc. (NASDAQ:AMD) on October 5, placed by analyst Aaron Rakers at Wells Fargo. The analyst also placed a $90 price target on the stock.
Advanced Micro Devices, Inc.'s (NASDAQ:AMD) working capital growth year-over-year stands at a rate of 61.17%. The company's EPS is expected to grow by 30.95% over the next three to five years, and its revenue has grown by 61.74% year-over-year. This October, Advanced Micro Devices, Inc. (NASDAQ:AMD) also led chip stocks higher for the third straight day of gains this month.
Out of 895 funds, 87 funds were long Advanced Micro Devices, Inc. (NASDAQ:AMD) in the second quarter, with a total stake value of $4.8 billion. In comparison, 83 funds were long the stock in the previous quarter, with a total stake value of $6.9 billion.
6. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 106
Alibaba Group Holding Limited (NYSE:BABA) is an internet and direct marketing retail company operating in the consumer discretionary sector. The company provides technology infrastructure and marketing reach to help merchants, retailers, and businesses to engage with their consumer bases in China and internationally. It is based in Hangzhou, China.
On October 3, Jiong Shao at Barclays kept an Overweight rating on Alibaba Group Holding Limited (NYSE:BABA) shares, while placing a $135 price target on the stock.
This October, Alibaba Group Holding Limited (NYSE:BABA) led Chinese tech stocks in the broader market, rising 4.6% on October 4. The company's revenue has grown by 10.87% year-over-year, and its EPS is expected to grow by 1.74% over the next three to five years. In the fiscal first quarter of 2023, Alibaba Group Holding Limited (NYSE:BABA) had an EPS of $1.74, beating estimates by $0.18, while its $30.46 billion revenue also beat estimates by $296.3 million.
Alibaba Group Holding Limited (NYSE:BABA) had 106 hedge funds long its stock in the second quarter, with a total stake value of $7.4 billion. Fisher Asset Management was the largest stakeholder in the company, holding 14.5 million shares worth $1.6 billion.
Distillate Capital Partners LLC, an investment management firm, mentioned Alibaba Group Holding Limited (NYSE:BABA) in its second quarter 2022 investor letter. Here's what the company said:
“Changes & Regional Weights: The largest new position is Alibaba Group Holding Limited (NYSE:BABA), which underperformed considerably and has seen its enterprise value fall by almost two thirds from its peak despite a net cash position on its balance sheet.”
Alibaba Group Holding Limited (NYSE:BABA), like Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL), and Microsoft Corporation (NASDAQ:MSFT), has been on the rise in the tech sector for many year, attracting positive investor attention.
Click to continue reading and see the 5 Best FAANG Stocks to Buy Now.
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Disclosure: None. 11 Best FAANG Stocks to Buy Now is originally published on Insider Monkey. | AAPL |
https://finnhub.io/api/news?id=3506e093b1316a8b5c9515f98a153300a55e8fd7bb232c5cffa5812f5db3370e | U.S. Weekly FundFlows Insight Report: Taxable Bond ETFs Attract Their Largest Weekly Net Inflows Since December 21, 2021, For The Fund-Flows Week | Taxable bond ETFs attracted their largest weekly net inflows since 12/21/21. Click here to read the full US weekly fund flows insight report. | 2022-10-07T04:23:00 | SeekingAlpha | U.S. Weekly FundFlows Insight Report: Taxable Bond ETFs Attract Their Largest Weekly Net Inflows Since December 21, 2021, For The Fund-Flows Week
Summary
- Investors were overall net redeemers of fund assets for the second week in a row.
- On hopes that central banks will pivot to a more dovish stance, investors pushed global markets higher.
- Investors appeared to ignore the latest update to Q2 GDP numbers, which showed the U.S. economy cooled.
- For the first week in three, taxable fixed income ETFs witnessed net inflows.
Investors were overall net redeemers of fund assets (including those of conventional funds and ETFs) for the second week in a row, withdrawing a net $35.4 billion for the Refinitiv Lipper fund-flows week ended Wednesday, October 5. Fund investors were net redeemers of money market funds (-$24.7 billion), equity funds (-$4.5 billion), taxable bond funds (-$4.1 billion), and tax-exempt fixed income funds (-$2.1 billion) for the week.
Market Wrap-Up
After U.S. stocks posted their worst September returns since 2011, the Dow Jones Industrial Average and the S&P 500 indices posted their strongest two-day percentage gains since April 7, 2020, during the fund-flows week. The Dow chalked up its strongest start to a quarter since 1938, according to Dow Jones Market Data. On Friday, September 30, the Dow fell 500 points as stocks locked in their third consecutive quarterly loss - losing 6.66% for Q3. Nonetheless, in a little market-schadenfreude dynamics, on hopes that central banks will pivot to a more dovish stance, investors pushed global markets higher.
On the domestic side of the equation, the Russell 2000 Price Only Index (+2.77%) outshined the other broadly followed indices for the fund-flows week. It was followed by the Dow Jones Industrial Average Price Only Index (+1.99%). The Nasdaq Composite Price Only Index (+0.88%) posted the weakest returns. Overseas, the FTSE 100 Price Only Index (+5.33%) posted the strongest plus-side returns of the other often-followed broad-based international indices, while the Shanghai Composite Price Only Index (+1.50%) and the Nikkei 225 Price Only Index (+3.49%) were the group relative laggards.
For the fund-flows week, the Bloomberg Municipal Bond Index (+0.79%) outpaced the Morningstar LSTA U.S. Leveraged Loan Index (+0.44%) and the Bloomberg U.S. Aggregate Bond Index (-0.22%).
On Thursday, September 29, the U.S. markets plunged on news of an Apple (AAPL) downgrade by a Bank of America (BAC) analyst and after a batch of economic reports reinforced expectations the Federal Reserve will continue its aggressive rate hikes.
Investors appeared to ignore the latest update to Q2 GDP numbers, which showed the U.S. economy cooled to an annualized pace of 0.6%, and instead focused on a report from the Department of Labor which showed that the number of first-time jobless claims fell by 16,000 to 193,000 for the week prior - its lowest since April. The 10-year Treasury yield rose four bps, closing the day out at 3.76%, while the two-year Treasury yield rose nine bps to 4.16% - further pressuring stocks and bonds.
U.S. stocks closed significantly lower on Friday, September 30, after the August personal consumption expenditure inflation index showed core consumer inflation - which excludes food and energy prices - rose by 0.6%, more than analyst forecasts of a 0.5% rise, with stocks posting their lowest closing values since 2020 and cementing their third consecutive quarterly decline. Fanning the flames, eurozone data showed inflation rose at a record pace in September. The 10-year Treasury yield rose seven bps to close at 3.83%.
The Dow witnessed its largest one-day gain (+2.7%) since June 24 on Monday, October 3, as investors assessed the possibility of the Fed being pressured to pivot away from its hawkish monetary policy after the Institute of Supply Management said its manufacturing index fell to a 28-month low of 50.9% in September, lower than the 52% reading expected by analysts.
Adding to the possible pressures, the United Nations called for the Fed and other central banks to stop interest rate hikes to avoid causing significant harm to developing countries by pushing the global economy into a recession. The 10-year Treasury yield declined 16 bps to close at 3.67%.
Stocks continued their ascent on Tuesday, October 4, with the S&P 500 and the Dow posting their largest two-day percentage gain since April 17, 2020, as investors scooped up perceived oversold issues and considered the growing assumption that central banks would become more dovish.
Lending support to those hopes, the Reserve Bank of Australia delivered a smaller-than-expected 25-bps interest rate hike. In other news, U.S. job openings fell to 10.1 million in August - its lowest level since last fall. The 10-year Treasury yield declined five bps to end the day at 3.62%, while the two-year Treasury declined two bps to 4.10%, pushing the two- and 10-year Treasury spread to negative 48 bps (its largest negative value since September 23).
U.S. stocks snapped their two-day winning streak on Wednesday, October 5, after data showed a steady growth in private-sector jobs in September and OPEC+ announced its largest cut in oil production since April 2020. According to ADP, U.S. private sector employers added 208,000 jobs in September, beating analysts’ expectations of 200,000.
In addition, ADP reported annual pay was up 7.8%, further supporting the Fed’s hawkish stance and weighing on equity issues. The 10-year Treasury yield rose 14 bps to 3.76%. Front-month crude oil future prices rose 1.4% to settle at $87.76/barrel after the OPEC+ group said it is reducing its combined crude oil production levels by two million barrels per day starting next month.
Exchange-Traded Equity Funds
Equity ETFs witnessed their second week of net inflows in three, taking in $6.2 billion for the most recent fund-flows week. Authorized participants (APs) were net purchasers of domestic equity ETFs (+$4.0 billion), injecting money also for the second week in three, while nondomestic equity ETFs witnessed their second straight week of net inflows, attracting $2.2 billion this past week. Large-cap ETFs (+$2.7 billion) witnessed the largest net inflows of the equity ETF macro-groups for the fund-flows week, followed by equity income ETFs (+$1.6 billion) and sector-technology ETFs (+$470 million).
Meanwhile, sector-healthcare/biotechnology ETFs (-$689 million) suffered the largest net outflows, bettered by the mid-cap ETFs (-$251 billion).
SPDR S&P 500 ETF (SPY, +$1.6 billion) and iShares MSCI Emerging Markets Min Vol Factor ETF (EEMV, +$1.2 billion) attracted the largest amounts of net new money of all individual equity ETFs. At the other end of the spectrum, Invesco QQQ Trust 1 (QQQ, -$1.8 billion) experienced the largest individual net redemptions and iShares Core S&P Total US Stock Market ETF (ITOT, -$1.2 billion) suffered the second largest net redemptions of the week.
Exchange-Traded Fixed Income Funds
For the first week in three, taxable fixed income ETFs witnessed net inflows, taking in $7.7 billion this week - their largest weekly net inflows since December 8, 2021. APs were net purchasers of government-Treasury ETFs (+$3.5 billion), corporate investment-grade debt ETFs (-$3.0 billion), and corporate high-yield ETFs (+$2.5 billion), while being net redeemers of flexible ETFs (-$1.1 billion).
iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD, +$3.0 billion), iShares iBoxx $ High Yield Corporate Bond ETF (HYG, +$1.9 billion), and SPDR Bloomberg 1-3 Month T-Bill ETF (BIL, +$1.3 billion) attracted the largest amounts of net new money of all individual taxable fixed income ETFs. Meanwhile, iShares Core US Aggregate Bond ETF (AGG, -$779 million) and iShares TIPS Bond ETF (TIP, -$561 million) handed back the largest individual net redemptions for the week.
For the first week in nine, municipal bond ETFs attracted net inflows, taking in $1.2 billion this week. iShares National Muni Bond ETF (MUB, +$595 million) witnessed the largest draw of net new money of the municipal bond ETFs, while iShares California Muni Bond ETF (CMF, -$52 million) experienced the largest net redemptions in the subgroup for the week.
Conventional Equity Funds
Conventional fund (ex-ETF) investors were net sellers of equity funds for the thirty-fifth week in a row - redeeming $10.6 billion - with the macro-group posting a market return of 2.72% for the fund-flows week. Domestic equity funds, suffering net redemptions of slightly less than $6.8 billion, also witnessed their thirty-fifth consecutive week of net outflows while chalking up a 2.53% market gain on average for the fund-flows week. Nondomestic equity funds - posting a 3.21% weekly market gain on average - observed their twenty-sixth straight week of net outflows, handing back $3.9 billion this week.
On the domestic equity side, fund investors were net redeemers of large-cap funds (-$5.3 billion) and small-cap funds (-$853 million). Investors on the nondomestic equity side were net redeemers of international equity funds (-$3.0 billion) and global equity funds (-$849 million) for the week.
Conventional Fixed Income Funds
For the seventh consecutive week, taxable bond funds (ex-ETFs) witnessed net outflows - handing back $11.8 billion this past week - while posting a 0.64% market return on average for the fund-flows week. None of the conventional fixed income fund macro-groups attracted net new money for the week. Corporate investment-grade debt funds (-$6.5 billion) suffered the largest net redemptions for the fund-flows week, bettered by flexible funds (-$1.5 billion) and international & global debt funds (-$1.3 billion).
The municipal bond funds group posted a 1.10% return on average during the fund-flows week (their first weekly plus-side return in nine) and witnessed net outflows for the seventh straight week, handing back $3.3 billion this week. High Yield Municipal Debt Funds (-$930 million) and General & Insured Municipal Debt Funds (-$804 million) suffered the largest net redemptions for the week.
Year to date, the municipal bond funds macro-group handed back $107.9 billion - witnessing the largest net redemption thus far of any full year dating back to 1992 when Lipper began calculating weekly estimated net flows.
Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.
This article was written by
Comments (1) | AAPL |
https://finnhub.io/api/news?id=ef2d07b358bef17f234206c6bec755e986ccea0e943f8b1918faef688b1c88f0 | Taiwan Tensions Spark New Round of US War-Gaming on Risk to TSMC | (Bloomberg) -- President Joe Biden has been explicit in vowing to commit US forces in the event of a Chinese attack on Taiwan. The question occupying US and Taiwanese officials is the fate of the island’s flagship semiconductor industry. Most Read from BloombergBiden Says Putin Threats Real, Could Spark Nuclear ‘Armageddon’Kremlin Lets State Media Tell Some Truths About Putin’s Stalling WarMusk's Twitter Takeover Hits Snag Over Debt-Financing IssueNord Stream Leaks Caused by Detonations in Sign | 2022-10-07T02:01:31 | Yahoo | Taiwan Tensions Spark New Round of US War-Gaming on Risk to TSMC
(Bloomberg) -- President Joe Biden has been explicit in vowing to commit US forces in the event of a Chinese attack on Taiwan. The question occupying US and Taiwanese officials is the fate of the island’s flagship semiconductor industry.
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Contingency planning for a potential assault on Taiwan has been stepped up after Russia’s invasion of Ukraine, according to people familiar with the Biden administration’s deliberations. The scenarios attach heightened strategic significance to the island’s cutting-edge chip industry, led by Taiwan Semiconductor Manufacturing Co. In the worst case, they say, the US would consider evacuating Taiwan’s highly skilled chip engineers.
Estimates by the US National Security Council project that a Chinese invasion and the loss of TSMC could disrupt the world economy to the tune of more than $1 trillion, around twice the value of the entire semiconductor industry’s annual global sales.
That doomsday scenario injects a new dynamic to Washington’s war-gaming that highlights an uncomfortable dilemma: For all the talk of strong support for the government in Taipei, the US has concluded that it’s too dependent on Taiwan for the kind of advanced chips that are essential for the latest smartphones and next-generation military hardware, and is working to build more domestic capacity as a result.
“The focus among policymakers — and this is true of the US and elsewhere — is of understanding where risks are or concentration is,” said Chris Miller, an associate professor at Tufts University and the author of Chip War: The Fight for the World’s Most Critical Technology. The chip industry’s concentration in Taiwan, he said, “has raised red flags.”
The following account of the contingency planning being undertaken was provided by multiple officials and former officials who requested anonymity to speak candidly. They stressed that plans are purely hypothetical and many details remain unresolved.
The US sees Taiwan as a key part of a new chip alliance it’s trying to set up, and last month the Senate Committee on Foreign Relations approved an act conveying staunch support. Despite those reassurances, Taipei is feeling pressured by Washington on the chip front as attempts are also made to reduce Taiwan’s role in the global supply chain, effectively diminishing what President Tsai Ing-wen has called the island’s “Silicon Shield.” China views the democratically governed island of Taiwan as its territory.
The paradox was on show during Kamala Harris’s September visit to Asia. Hours before hailing Taiwan’s technological contributions to the “global good,” the vice president touted a new US bill authorizing $50 billion for semiconductor research and manufacturing in America.
“Our dependence on Taiwan for chips is, you know, cut substantially,” Commerce Secretary Gina Raimondo said Sept. 29, when asked at an Atlantic Council event where she saw the US in 10 years. “It’s just like a new dawn.”
TSMC’s might lies in its leading-edge technologies and its indispensable role in keeping the global economy humming. Companies including Apple Inc., Tesla Inc. and Volkswagen AG all need chips from TSMC, and so does the US military. California-based Intel Corp. is a couple of generations behind the Taiwanese company’s technology and is struggling to catch up.
Taiwan is trying to assuage Washington’s concerns: This week the government pledged to work closely with the US and other allies to prevent China’s military from acquiring its state-of-the-art technology. Taiwan’s Minister of Economic Affairs Wang Mei-hua is visiting the US later this month to discuss supply chain resiliency and geopolitics with relevant stakeholders.
TSMC has meanwhile agreed to build a $12 billion chip fabrication plant, or fab, in Arizona, a facility in Japan, and is mulling a European hub. Yet it has also said it doesn’t plan to move its most advanced technology abroad.
Miller of Tufts, in a recent report for the Center for a New American Security, suggests the US threaten export controls on chip design software and manufacturing equipment in a bid to pressure TSMC to roll out its newest process technologies simultaneously in the US and in Taiwan. He says TSMC could also be pressed to commit that every dollar of capital expenditure in Taiwan be matched at one of its new overseas facilities.
Washington is showing no signs of willingness to exert that kind of pressure.
Taiwan’s economy ministry said in a statement that the chip supply chain is long and complex, involving divisions of labor, with the US, Europe and Japan all playing critical roles. “Rather than saying chip production is centralized in Taiwan, it’s more apt to say that like-minded countries are creating innovation and leadership by focusing on their own strengths,” it said.
Read more on what could happen if China invaded Taiwan
There have always been contingency plans around TSMC. It lies in a seismically active area and it is hugely power intensive on an island that imports most of its energy. But the reality of war in Europe is giving added impetus to the planning for any Chinese attack.
One potential option is for Washington to try to entice TSMC workers to relocate to the US on the last planes out. The US would consider evacuating Taiwan’s chip engineers in a scenario that involves a full invasion.
Yet even if evacuation were feasible, replicating somewhere else the infrastructure that TSMC has established in Taiwan would take years if not decades, cost tens of billions of dollars, and wouldn’t mitigate the impact on the world economy of losing its factories.
At the extreme end of the spectrum, some advocate the US make clear to China that it would destroy TSMC facilities if the island was occupied, in an attempt to deter military action or, ultimately, deprive Beijing of the production plants. Such a “scorched-earth strategy” scenario was raised in a paper by two academics that appeared in the November 2021 issue of the US Army War College Quarterly.
That’s not something under consideration. Still, some former officials with ties to the Pentagon want the Biden administration to devise such a plan, arguing that there would be no other option in an invasion scenario.
“We can’t allow such a valuable equity to fall into Chinese hands, I think it would be nuts,” said Elbridge Colby, a former Pentagon official who helped write the Trump administration’s national defense strategy. Hawks in Washington doubt the Biden administration would pursue so extreme a path, however.
That doesn’t take into account Taiwan’s own plans for its most strategic company. TSMC declined to comment for this article. However, Chief Executive Officer Mark Liu said in a July interview with CNN that the company could not be controlled by force and an invasion would “render TSMC factories inoperable.”
“TSMC and Taiwanese chip firms are all a part of global supply chain,” the economy ministry said. “The notion of snatching TSMC by force doesn’t align with the reality of how the chip industry operates.”
US officials declined to comment publicly on the details of their planning. One said that thinking through worst case scenarios was the defense department’s bread and butter.
Still, in a September interview with Bloomberg Television, National Security Advisor Jake Sullivan described the prospect of a Chinese invasion as a “distinct threat,” without specifying a timeframe for any potential move by China. Global financial firms are reassessing the risks of doing business in China on the back of escalating tensions.
The concern in Taipei is that President Xi Jinping may be tempted to launch an attack to divert attention from a faltering Chinese economy and high unemployment.
China denies any such intention. Beijing blames the US for changing the status quo in the region, including by House Speaker Nancy Pelosi’s August trip to Taiwan. In any case, Xi has myriad other problems at home, and there’s no sign an invasion is imminent.
Chinese Ambassador to the US Qin Gang downplayed the threat of an imminent attack on Taiwan. “People are over nervous about it,” he told reporters in August. Speculation China had moved up the timeline for an invasion is “baseless,” he said.
Internal US meetings on Taiwan have intensified in frequency and scope in recent months regardless. At least two studies are under way, one at the Treasury Department on the overall market impact of an invasion, and one at the National Security Council about supply chains, semiconductors and US dependencies on TSMC.
To reduce its reliance on foreign supplies, the US has incentivized TSMC to build its Arizona fab and secured a $17 billion commitment from Samsung Electronics Co. of South Korea for a new advanced fab in Texas. Samsung, the only company to challenge TSMC at the leading edge, said this week it could add more fabs in the US. Meanwhile, Intel is adding capacities in Arizona and creating a new chip hub in Ohio.
But it will take another two years at least for these plants to come online.
US officials meantime believe China’s approach will harden following this month’s Communist Party Congress, when Xi is expected to secure a precedent-defying third term. They see him emerging emboldened, more aggressive in his territorial assertions and US engagement.
Not all US officials are convinced that Xi would push for a military invasion. But even a blockade or economic coercion would have grave consequences for Taiwan and the global economy.
Lately there’s been “a more acute concern about the prospect that the supply chain could be cut by some action by the Chinese,” whether a D-Day style attack or blockade, said Rupert Hammond-Chambers, president of the US-Taiwan Business Council. Businesses, like governments, are looking much harder at contingencies, he said, “so that if, God forbid, something does happen, they’ve actually got a game plan.”
(Updates with Economy Minister trip to US in seventh paragraph.)
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https://finnhub.io/api/news?id=bbc8db2df4528689c75af299129a55f06f902c27d4a8db6206eb9ebb5798d4ef | Where Will Lucid Motors Be in 5 Years? | In five years, Lucid Motors will stand alone as the de facto brand of luxury EVs. It not only rivals Tesla; it outclasses it in many ways. | 2022-10-07T04:09:00 | InvestorPlace | [Editor’s note: “Where Will Lucid Motors Be in 5 Years?” was previously published in June 2021. It has since been updated to include the most relevant information available.]
Lucid Motors (LCID) is one of my favorite EV stocks in the game. In fact, I’ve been bullish on this company for a while.
And the best part? It continues to prove itself — and why we should all be fans of LCID stock.
Tesla (TSLA) has been the industry leader for years. Indeed, we’ve been bullish on Tesla for so long that we’ve scored our readers 2,000%-plus gains on the stock. But sometimes, even great things must come to an end.
Edmunds’ car experts recently put the two EV makers to the test. And when comparing Lucid’s Air Dream Edition to Tesla’s Model S Plaid, they proved the two can go toe-to-toe.
Both models tied in terms of pricing and value, interior and tech. And in fact, Lucid proved its range and performance were superior. Though the Model S ultimately beat out the newcomer, it was only by an incredibly slim margin. According to Edmunds:
“The Lucid Air is a praiseworthy first effort from a new automaker, thanks in large part to its Tesla-beating range, otherworldly acceleration and head-turning exterior design. For now, the Model S holds a slight edge overall, but if Lucid can work past its teething issues, it may well end…Tesla’s reign.”
Relative newcomer Lucid is giving titan Tesla a run for its money. And this is only the beginning.
Taking Over Where Others Left Off
For years, EV stocks followed TSLA wherever it went. Up or down, all other EV stocks followed suit.
But this is no longer true. It’s becoming clear that Lucid Motors is providing stiff competition for Tesla, especially in the premium, luxury channel. Where Tesla stands to lose a lot of market share, we think Lucid can step in and dominate.
And industry developments have only strengthened this thesis.
Tesla cancelled its Model S Plaid+, its 500-plus mile range version, and the only version capable of rivalling Lucid Motors’s Air Dream Edition in terms of range. This is a big win for Lucid. Its Air Dream stands alone as the best performance EV in the market.
And when Tesla released its Model S Plaid, there were no “mic drop” moments. It was all according to plan. And that’s great news for other companies but not for Tesla. This means it may be maxing out its underlying tech.
That would mean Tesla’s max point is below Lucid’s. And that gives the startup ample room to take the industry lead.
Take a Road Trip With LCID Stock
It looks like Lucid will be the winner of the luxury EV race, at least for the next few years.
That means LCID stock will outperform TSLA. With a $711 billion market capitalization, Tesla is priced to dominate the EV market for the foreseeable future. If it doesn’t, the stock will fall.
Meanwhile, with a mere $22.8 billion market capitalization, Lucid is priced for some market share gains in the EV industry. And if those gains are as large as we expect, LCID stock will power much higher.
A game plan for the next six to 12 months? Sell TSLA stock into strength. Buy LCID stock on weakness.
Over the next three to five years, Lucid stock will meaningfully outperform TSLA from current levels.
Where Will Lucid Motors Be in Five Years?
In five years, here’s where we see Lucid Motors within the broad context of the EV industry.
For one, it’ll be standing alone as the de facto brand of luxury EVs — above Tesla, Audi and Porsche (POAHY). In terms of brand and technology, it will be in a class all its own.
It’ll also have stores in all the high-class malls, like Tesla does today. Those stores will be busier than Tesla’s. And they’ll be nicer and fancier, too.
Lucid Motors will be selling hundreds of thousands of cars a year, at super-high price points, with extremely favorable margins. We’re talking a $20-plus billion revenue company by 2026, with 20%-plus gross margins.
For all intents and purpose, in five years, Lucid will be where Tesla was around 2019 or 2020. And by the end of 2020, Tesla was worth $650 billion.
The Final Word on Lucid
Of course, especially given the continuing market turbulence, we’ve got an eye on LCID and TSLA stock prices now. But what we’re really looking at is Lucid’s impending superiority in the EV industry in the more distant future.
Tesla cancelled its competing model and is seemingly bowing out of the luxury car race. And that makes Lucid’s job much easier.
But LCID stock isn’t the only one on my radar.
In fact, there’s a tiny, $3 technology stock that I think may be the single most compelling 12-month investment opportunity in the market today.
See; the world’s largest company – Apple (AAPL) – is about to enter the EV game. They’ve been working on a super-secret “Apple Car” project since 2015. And late last year, the company reportedly increased investments into the project so as to accelerate its development timeline.
The implication? Apple will launch its own EV likely within the next two years.
Judging by the success of the iPhone, iPad, Mac, and Apple Watch, it seems very probable that the Apple Car is a huge hit. It even seems possible that this car unseats Tesla as the best-selling EV in the market.
If so, the Apple Car could be bigger than the iPhone, iPad, Mac, and Apple Watch put together.
And the $3 stock I’m talking about is – per my analysis – positioned to secure a partnership with Apple to supply a critical piece of technology to make the Apple Car work.
If that sounds like a big deal, it’s because it is. My modeling suggests this tiny stock could soar 40X over the next few years.
So… what’re you waiting for? This may be the most exciting investment opportunity in the market today.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article. | AAPL |
https://finnhub.io/api/news?id=701c871975d9a385006acfd07b1c1c009d73b9890908dbea78ff75edb2a6c823 | These 3 Tech Stocks Are Building the Future | Amazon, Apple, and Microsoft have the innovation and drive to continue influencing the tech world for years to come. | 2022-10-07T04:00:00 | Yahoo | These 3 Tech Stocks Are Building the Future
Amazon, Apple, and Microsoft have the innovation and drive to continue influencing the tech world for years to come.
Amazon, Apple, and Microsoft have the innovation and drive to continue influencing the tech world for years to come. | AAPL |
https://finnhub.io/api/news?id=681b49dc48ad46cb23e41a2d954136d1bd4006eeef9a80cd8dc08fd7e8d1c710 | Apple (NASDAQ:AAPL): a No-Brainer Defensive Stock that Keeps 5-Star Analyst Bullish | Apple (NASDAQ:AAPL), one of the most admired brands in the world, has several strong points to steer it through headwinds as the world heads into the turfs of a rec... | 2022-10-07T03:54:00 | TipRanks | Apple (NASDAQ:AAPL), one of the most admired brands in the world, has several strong points to steer it through headwinds as the world heads into the turfs of a recession. Despite a few hiccups here and there, Wall Street is largely bullish on AAPL stock. Tigress Financial Partners analyst Ivan Feinseth is one of the bulls who recently reiterated his faith in Apple and noted several points to justify his stance.
Analyst Not Too Worried about iPhone 14 Production Plans
Apple was thrown into the limelight recently when Bloomberg reported that the company has reconsidered a second-half production ramp for iPhone 14. This sparked speculations that demand for the flagship device has failed to gain the expected traction.
However, Feinseth feels that “the sell-off in AAPL’s shares over weakness on reported iPhone 14 production reduction is a buying opportunity as it’s all about revenue growth and not unit volume.” The analyst is positive that the top models of iPhone 14 Pro are still experiencing strong demand and “continue to outsell entry-level phones.”
Moreover, Feinseth also opined that buyers of the flagship iPhones are more likely to drive growth and profitability by consuming more expensive Apple Services.
Other Achievements That Highlight Apple’s Strength
Among the major milestones that Apple hit this year is counterbalancing the impacts to its business from the COVID-led lockdowns in China, suspension of business in Russia, and significant currency headwinds.
“AAPL’s industry-leading position and strong brand equity, driven by its innovative ability and powerful cash generation, will continue to generate an increasing Return on Capital (ROC), driving the ongoing growth of Economic Profit and shareholder value creation,” noted Feinseth. The analyst is impressed with the company’s ability to navigate and overcome major headwinds that have led big companies to bite the dust this year.
Feinseth also noted that the CarPlay Interface for vehicles underscores the company’s efforts to expand its presence in the automotive market, which can create a solid path for growth based on the increasing demand for driver assistance systems.
Furthermore, Feinseth also believes that the launch of Apple’s virtual reality headset this year or early in the next year has the potential to pave the way for a “paradigm shift” in Apple’s portfolio of offerings.
Moreover, Feinseth is optimistic that Apple’s solid balance sheet and cash flows will continue to support future growth, acquisitions, and higher shareholder returns.
Is Apple a Buy, Hold, or Sell?
Needless to say, the analyst maintained his Buy rating and $210 price target on AAPL stock, buoyed by the belief that “new product introductions, an ever-expanding ecosystem, and increasing services revenue will continue to drive accelerating Business Performance trends.”
Wall Street is also strongly optimistic about Apple stock, with a Strong Buy consensus rating based on 24 Buys, four Holds, and one Sell. The average price target of $182.97 indicates that AAPL stock can still grow about 30% from current price levels over the next 12 months.
Conclusion: Apple is Worth Taking a Bite Of
Simply put, Apple is too big to fail. The numerous avenues that the company is expanding into have created a strong case for not only growth in its business but also stock appreciation. | AAPL |
https://finnhub.io/api/news?id=2e61d56faaf6192f9c599d1fa25d10a7fabf0ecb61059b18602c0afa0491049a | Apple And The Golden Age Of American Innovation: Is It Ending? | The last 20 years will be remembered as a golden age of innovation, especially for American companies. Click here to read my analysis and the impact on Apple. | 2022-10-07T03:36:20 | SeekingAlpha | Apple And The Golden Age Of American Innovation: Is It Ending?
Summary
- The last 20 years will be remembered as a golden age of innovation, especially for American companies.
- Many new markets were created, but some of the largest such as social media, smartphones, and software are now maturing.
- This article reviews recent innovation and looks at if there is enough new innovation and markets to continue the rapid pace.
- It also includes a look and recommendation for innovation leader Apple.
"We have never seen this much innovation evolving at the same time"
Cathie Wood
Cathie Wood is certainly right about that. However, assuming all new tech would work as intended, grow profitably and indefinitely, and have little competition turned out to be another matter.
A big part of our future will be determined by innovations, so, let's have some fun and try to predict the future.
Purpose of the Article
This article will start with the amazing amount of factors that came together to create this historic surge in innovation and stock market wealth, in the U.S. It will discuss why it happened in the U.S. It will then look at how much these factors will continue into the future. Finally, we will look at Apple specifically as a leader and personification of recent innovation.
A big part of our future will be determined by innovations. So, let's have some fun and try to predict the future. If you have different predictions than mine, please add them to the comment section.
Background
The last 20 years have been a golden era of innovation that propelled the stock market up. In the 20 years ended January 1, 2022, the S&P 500 increased 400% despite two recessions.
On December 2, 2019, I published an article titled The Golden Age Of American Mega Growth Stocks. In the past the largest companies had underperformed due to the law of large numbers limiting growth. In the years leading up to that article, the largest American tech stocks had outperformed the market to the point they became the biggest factor driving the whole market forward.
While many have pointed toward the Fed's policy of easy money, the real source of the strong stock market was massive innovation by American companies of all sizes. This was further enabled by offshoring of labor which kept costs and inflation down. That is because stock prices are comprised of two factors; earnings and a PE ratio (or multiple of earnings to account for future growth). The Fed through interest rates primarily impacts the latter. Most of the stock market gains the last 20 years were due to the former, increased earnings. That came from the proliferation of new markets driven by innovation. The Fed has a lot of impact in the intermediate term, but not in the long term. That has more to do with innovation, management and competitiveness.
Interestingly, the vast majority of this innovation and growth came from American companies. The U.S. has about 4.3% of the world's population but close to 50% of the market capitalization of all stocks in the world. It is not beating the world by 10%, its more like by 1000%. Let's look first at why this is.
Why so Much Innovation in the U.S.?
On January 19, 2019 I published an article titled America's Edge: America Is Still Great Here's How
In it I listed 12 reasons for our superior performance. These are summarized below.
1. Innovation - Despite having 4.3% of the world's population, over 50% of all inventions the past 20 years have been in the U.S. A lot of that is coming from our mega cap growth stocks.
2. Better Universities - There is a reason millions of the best foreign students go to U.S. universities. Many stay here and add to our economy.
3. Immigration - We still lead the world in immigration though recent policies are causing this to falter. Immigrants tend to work hard to take advantage of the opportunities in the U.S. Some become CEOs such as Elon Musk and Lisa Su.
4. Capital - We have by far the largest capital markets. In fact, the value of our stock market is almost as large as the rest of the world combined. Our bond market, private equity and banking system are also the largest.
5. Startups- Startups are more prevalent here than anywhere else. What helps new businesses and large ones entering new markets is the scale of the U.S. market, free enterprise protections, and access to talented employees and capital.
6. Infrastructure- Don't believe the criticisms here. Our roads, airports, ports, transportation and utilities are world class and reliable. Power outages are rare.
7. Military - The U.S. has by far the strongest, best funded military. This has led to numerous innovations to upgrade weapons and infrastructure. It also means more business for corporations.
8. Stability - Despite the current political divide, our government is more stable than most. We only have two significant political parties, which is unusual. There is a strong rule of law, freedom of the press, and a system of checks and balances.
9. Culture - U.S. culture has had the most influence on the rest of the world. However, there is also a corporate culture that has developed that involves non-discrimination, prohibitions of harassment, teamwork, learning and well defined opportunities.
10. Natural Resources - The U.S. is blessed with natural resources and has most of what it needs available domestically. Our farmland is also among the best in the world.
11. Accounting - While there will always be cheating, investors trust the numbers in the U.S. much more than in emerging economies.
12. Large corporations - Believe it or not, this is my number one reason for America's edge. I spent much of my article America's Edge: Yes America Is Still Great Here's How explaining it. But it starts with American innovation, so let's go there.
Innovation by Large U.S. Corporations
Why is innovation so strong in the U.S. versus elsewhere? First of all, we have a strong patent and patent protection system. Companies that innovate get paid and have recourse to sue if their IP is taken without compensation. This is a big reason the Chinese have not come close to matching us despite all their efforts. Secondly, we are importing highly skilled and highly motivated immigrants. They have to be highly motivated if willing to leave their homeland, friends and families to come here. Thirdly, our brand of capitalism allows an unlimited payoff. There is no cap to how much a person or company can be paid from executing on a good idea. Fourthly, the payoff is bigger here than elsewhere due to the size of our economy, the largest in the world by far. Fifth, we are willing to pay what it takes to get qualified people to carry out the research and for management. We just pay more. The highest paying fields are IT and medical, the same fields where most of the innovation is. Finally, we are more willing to take risks. This is due to the potential payoff just mentioned but it's also part of our culture as it is praised. Private equity is willing to lose a lot of money funding good ideas in order to invest in one that makes it big.
Innovation the Past 20 Years
Below is a list of new markets created just in the past 20 years. While the technology in many cases predated that, these markets started generating large revenues and became world changing in the last 20 years.
-GPS
-Streaming
-The Cloud
-Online search and ads
-Smart phone
-Apps
-Solar farms
-Wind farms
-Electric vehicles
-Social media
-Cryptos
-Online payments
-Online gaming
-Artificial intelligence
-Fracking (saved oil industry in U.S. and pushed back peak oil)
-Private space
-HD TV
-Smart TV
-Genetic mapping
-CRISPR (gene editing)
-Video conferencing (trend to remote working)
-Drones Ride hailing
-4G and 5G
Of these, smart phones and social media have had the most impact and are ubiquitous in our lives. Additionally, there have been huge strides and growth in software. Software has been around much longer than 20 years but as the cliché goes, it has eaten the world. Many of the fastest growing companies the past decade were software providers.
A major problem is that many of the major new markets that have driven innovation and revenue growth are maturing. These include GPS, smart phones, social media, online advertising, streaming, apps, online payments, fracking, HD and smart TV, video conferencing, ride hailing and telecommunications (now 5G).
Future Innovation Sectors
There is certainly more coming which are not big revenue generators yet today. Those already in the works include;
-Self-driving cars and trucks
-Small modular reactors (small safer nuclear plants)
-Virtual reality (already here but not generating much revenues yet)
-Drone deliveries
These are addition to growth in the innovation categories previously listed. There will always things we didn't think of that turn out to be big. My best guess is a major growth area in the future will be around extended life. Specifically stem cell grown organs and anti-aging treatments.
Innovation the Next 20 Years
There remains a lot of growth ahead. In addition to the coming innovation sectors, I mentioned just above, there remains a lot of growth left in those that have grown tremendously the last 20 years. These include;
-Solar farms
-Wind farms
-Electric vehicles
-The cloud
-Online gaming
-Artificial intelligence
-Private space
-Genetic mapping
-CRISPR (gene editing)
-Drones
-The cloud
Of those above, I see the biggest growth in AI, the cloud, and genetics such as CRISPR. I still expect the largest innovation from U.S., though the rapid development of other parts of the world should narrow the lead some. Specifically, there has been a lot of technological development in Southeast Asia, and not just China.
Innovation Needs
To keep innovation going at or above historical levels the following is needed.
-Capital
-Capitalism - profit incentives
-Risk takers
-Rule of law
-Educated workforce
Things that can slow it down include;
-Excessive regulation
-Excessive taxes
-A major geopolitical event
Some of the negatives are already happening. The US and European governments pushing back against monopolies held by the largest tech companies. In fact, I believe the Golden Age of mega caps is probably over. They will face a continuing tide of regulation and government pushback.
For that reason, a lot of the new innovation may need to come from smaller more nimble companies.
The Next 3-5 Years
I expect a slowdown or lull in innovation for the following reasons;
1. The biggest trends the last 20 years were in software, smart phones and social media. Those markets are maturing. Newer ones are not yet large enough to carry the baton forward at the same speed.
2. The IPO market is temporarily mostly shut down. This cuts off a major source of capital to the new generation of innovators.
3. We usually enter an age of sobriety following major innovation periods. Bubbles pop, excess capacity is reduced, and investors are less willing to take risks. I believe we will see this for several years.
4. We are moving away from globalization which is almost always a negative toward economic development as it reduces potential markets, suppliers and access to capital and is inflationary.
5. We are likely entering into a recession. I have written three articles on SA about why I expect a recession. Recessions slow R&D spending and capital raising.
Innovation in the U.S. will not go away and may not even slow. There is a critical mass of well-educated and trained scientists, engineers, mathematicians, IT professionals and managers to keep it going. But the days of accelerating innovation are probably over for a while.
Apple
Apple, Inc. (NASDAQ:AAPL) essentially invented some of the largest markets in the world today, including the smart phone, the PC, tablets, the app store, and the current method of online music sales. It used to be large corporations couldn't move quickly with new innovations but Apple has historically proven that wrong. However, Apple has introduced few new products or services in recent years. It's CEO, Tim Cook, who I greatly admire, has focused more on improving the existing products and efficiencies and moving more into services.
Revenue growth has slowed due to a maturing of most of its markets, especially the iPhone. The iPhone represented 49% of total revenues in the most recent quarter and its revenue growth was only 2.5% YoY. The latest iPhone 14 had few significant new features. Perhaps after 14 generations Apple is running out of new ideas. Apple lately seems to be maintaining a slow growth in smart phones. Apple gets a huge profit margin on its phones versus competitors in part because it has created a sticky ecosystem for them and because it has more features.
Revenue growth was 33% in 2021 after being only 3% in the two years ended 2020. The year 2021 appears to be anomaly due to Covid, and the huge stimulus package that followed. Revenues totaled $304.2 billion in the nine months ended June 25, 2022, up 8% from one year earlier. However, revenues slowed to up only 2% in the most recent quarter. EPS growth has been better and is currently running up 5-10%. This is primarily due to stock buybacks and improved margins.
Apple has done better in recent years expanding existing markets than introducing new products. Tim Cook is a great manager and operator, but not the innovator Steve Jobs was. To be fair, no one is. Apple clearly will need new markets if it is to resume solid revenue and earnings growth. It has a history of little significant M&A activity indicating growth will need to come organically. Their best prospect for a new market appears to be autonomous car software. However, based on obstacles run into by Tesla (TSLA), Waymo and others, getting that last 1% of development needed will be tough. It does not appear to be something that will help in the next few years. Instead, Apple has been growing EPS more with stock buybacks and improved margins.
Recent headlines indicate things are slowing and even declining.
1. Bank of America Analyst Wamsi Mohan recently lowered his rating on Apple to neutral from buy and cut his price target to $160 from $185, while also lowering fiscal 2023 estimates. "We see risk to this outperformance over the next year, as we expect material negative [estimates] revisions driven by weaker consumer demand (Services already in slowdown and we expect products to follow)," Mohan wrote in a note to clients.
2. Bloomberg reported on September 28, 2022, Apple is pulling back on iPhone production
3. On October 3, 2022 Morgan Stanley reported the App Store saw net revenue decline 5% year-over-year in September. This had been a significant growth area in the past.
4. On October 6, 2022, UBS noted that wait times for the new iPhone 14 product line have eased, indicating "flattish" year-over-year growth for the September quarter.
Apple Valuation
Apple currently trades at a PE ratio of 23.5 versus the average S&P 500 PE ratio of 15. Does Apple deserve an above market PE ratio despite below market revenue growth? Let's look at the reasons it does first then why it doesn't.
Apple is the bluest of blue chips right now which makes it a defensive holding in a recession or economic slowdown. That makes it similar to other slow growers with big moats like P&G (PG) and Coke (KO) which have similar above market PE ratios. Apple also has a very large moat, a strong balance sheet and one of the best CEOs. It has the ability to juice growth through acquisitions though it has done little of size in the past. Apple has a large enough R&D budget that can still create products with very large total addressable markets, though none appear imminent.
There are also a number of reasons it shouldn't have this much of a premium over the market. Its growth is at or below the market average at this point. Apple is facing the law of large numbers. The bigger you are the harder it is to grow. There are a lot less $25 billion new potential markets than $1 billion new markets. Apple is also probably not recession-proof based on its high-end products. Consumers trade down in a recession. It has not gone through a real recession with most of its current products. Apple gets huge margins on its largest product, the iPhone. Those margins may not be sustainable with innovations to the iPhone diminishing.
I compared Apple to other extremely strong but slower growing companies and two mature mega cap blue chip tech companies. The non-tech peers are all blue chips with huge moats, and extremely strong balance sheets but slower growing like Apple is now. The two tech peers are also extremely strong with huge moats, but faster growing than Apple.
Apple currently has a PE ratio of 23.5 to current year estimated earnings which is slightly above the non-tech peer group and similar to its tech peers, despite much lower growth. Revenue growth for Apple YoY was 8% in the last 3 quarters and 3% in the most recent quarter. That makes it more similar to the non-tech blue chips. Based on this comparison Apple should have a moderately lower PE ratio. It should also be noted, Apple is probably more cyclical in a recession than all but Alphabet.
Normally, I would rate Apple a hold based on the factors listed above. That is what I expected to do when I started this article. But the peer comparison, recent headlines along with a looming recession and the likely impact on Apple moves me to a sell recommendation. The stock closed at $146.40 on October 5, 2022. My 1 year price target assumes a PE ratio of 22 based on the comparables above, and is $134.
Takeaway
Apple is symbolic of a slowdown in innovation among the mega cap tech companies but not innovation overall. Innovation at Apple has slowed to the point where, along with other reasons, it no longer deserves a well above market PE ratio so I recommend a sell.
I believe American innovation will continue, though with a bit of a lull (due to reasons previously given), as long as we remain a capitalist nation that doesn't penalize innovation.
I have identified a number of new and existing markets where major innovations are probably coming. Please feel free to discuss others you see in the comment section below.
This article was written by
Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Comments (68)
Aptera. It is currently accepting pre IPO investments.
It is solar powered for up to 40 miles a day, and has options for up to 1000 miles per charge range. It is has less aerodynamic drag than an F150 rear view mirror.
Cost starts at $25900.
- choosing the shortest queue
- finding the TV remote
- learning a physical skill by imagining what we are actually doing
- remembering the name of that person
- seeing all the field of play in a sports game
- action replay
- designing a special space
- always seeing the danger when driving
- finding stars in the sky
- finding birds in the trees
- finding leaks in the roof
- choosing prescription lensesI could keep going for ages.AR is going to be so much more than fingers on a screen.
As for stability, I‘m not as convinced that this will be a positive for the US in the future. The current political divide is a symptom of a weakness of the political system, which the Republicans exploit ruthlessly.
I see one additional innovation area: bio technology with most important protagonists Moderna and BioNTech. And please, it is short sighted to claim that COVID is a onetimer. | AAPL |
https://finnhub.io/api/news?id=da1cbd2c88f45755bab821bd634a990d6abba093508123f2a411313c67990e58 | Key Apple Supplier Clocks 48% Sales Growth In Q3 | Taiwan Semiconductor Manufacturing Company Ltd (NYSE: TSM) reported a September revenue growth of 36.4% year-on-year to NT$208.25 billion. Revenue for January through September 2022 totaled NT$1.64 trillion, up 42.6% Y/Y. Revenue for the third quarter grew 48% Y/Y to NT$613 billion ($19.4 billion), above the consensus of NT$603 billion, Bloomberg reports. The report noted that rising revenue at Apple Inc’s (NASDAQ: AAPL) most crucial chipmaker signals that the most prominent players in the $550 | 2022-10-07T03:01:48 | Yahoo | Key Apple Supplier Clocks 48% Sales Growth In Q3
Taiwan Semiconductor Manufacturing Company Ltd (NYSE: TSM) reported a September revenue growth of 36.4% year-on-year to NT$208.25 billion.
Revenue for January through September 2022 totaled NT$1.64 trillion, up 42.6% Y/Y.
Revenue for the third quarter grew 48% Y/Y to NT$613 billion ($19.4 billion), above the consensus of NT$603 billion, Bloomberg reports.
The report noted that rising revenue at Apple Inc’s (NASDAQ: AAPL) most crucial chipmaker signals that the most prominent players in the $550 billion semiconductor industry may bypass the severe downturn helped by resilient demand for electronics products.
Apple backed off plans to increase production of its new iPhones, raising questions about underlying electronics demand.
Samsung Electronics Co, Ltd (OTC: SSNLF) expects Q3 FY22 sales of 76 trillion Korean won versus actual sales of 73.98 Korean won in Q3 FY21.
Samsung expects operating profit likely to drop nearly 32% to 10.8 trillion won compared to the same period last year.
Other chipmakers, including Micron Technology, Inc (NASDAQ: MU), warned against a tougher market as inventories build up and order cut by the data center and consumer tech clients.
Price Action: TSM shares closed lower by 0.17% at $74.35 on Thursday.
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© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved. | AAPL |
https://finnhub.io/api/news?id=c1fd5a089dcf782902f501cda44f41bec335d00ef35a25eac9da3739130f43b6 | These 2 Stocks Make Up 52% of Warren Buffett's $325 Billion Portfolio | Few people command the attention of Wall Street professionals and everyday investors quite like billionaire Warren Buffett. Since taking the reins of Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) in 1965, the Oracle of Omaha, as he's come to be known, has created more than $615 billion in value for shareholders and generated an aggregate return on his company's Class A shares (BRK.A) of 3,641,613%. In other words, there's plenty of reason for Wall Street and investors to pay attention to what Buffett is buying, selling, and holding. | 2022-10-07T02:21:00 | Yahoo | These 2 Stocks Make Up 52% of Warren Buffett's $325 Billion Portfolio
Few people command the attention of Wall Street professionals and everyday investors quite like billionaire Warren Buffett. Since taking the reins of Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) in 1965, the Oracle of Omaha, as he's come to be known, has created more than $615 billion in value for shareholders and generated an aggregate return on his company's Class A shares (BRK.A) of 3,641,613%. In other words, there's plenty of reason for Wall Street and investors to pay attention to what Buffett is buying, selling, and holding. | AAPL |
https://finnhub.io/api/news?id=7bee7eddb44d8f15773d81eb2e98ff12458e3ad12bae7acd3f9363cf5239697d | Community Bank & Trust, Waco, - GuruFocus.com | GuruFocus Article or News written by insider and the topic is about: | 2022-10-07T02:01:00 | GuruFocus | Community Bank & Trust, Waco, Texas recently filed their 13F report for the third quarter of 2022, which ended on 2022-09-30.
The 13F report details which stocks were in a guru’s equity portfolio at the end of the quarter, though investors should note that these filings are limited in scope, containing only a snapshot of long positions in U.S.-listed stocks and American depository receipts as of the quarter’s end. They are not required to include international holdings, short positions or other types of investments. Still, even this limited filing can provide valuable information.
PO BOX 2303 WACO, TX 76703
As of the latest 13F report, the guru’s equity portfolio contained 129 stocks valued at a total of $281.00Mil. The top holdings were AAPL(11.69%), MSFT(3.86%), and JNJ(3.23%).
According to GuruFocus data, these were Community Bank & Trust, Waco, Texas’s top five trades of the quarter.
Apple Inc
Community Bank & Trust, Waco, Texas reduced their investment in NAS:AAPL by 4,393 shares. The trade had a 0.2% impact on the equity portfolio. During the quarter, the stock traded for an average price of $156.95.
On 10/07/2022, Apple Inc traded for a price of $143.09 per share and a market cap of $2,337.17Bil. The stock has returned 3.05% over the past year.
GuruFocus gives the company a financial strength rating of 6 out of 10 and a profitability rating of 10 out of 10.
In terms of valuation, Apple Inc has a price-earnings ratio of 24.00, a price-book ratio of 40.29, a price-earnings-to-growth (PEG) ratio of 1.69, a EV-to-Ebitda ratio of 18.29 and a price-sales ratio of 6.18.
The price-to-GF Value ratio is 0.85, earning the stock a GF Value rank of 7.
Campbell Soup Co
The guru sold out of their 8,626-share investment in NYSE:CPB. Previously, the stock had a 0.14% weight in the equity portfolio. Shares traded for an average price of $49.04 during the quarter.
On 10/07/2022, Campbell Soup Co traded for a price of $46.77 per share and a market cap of $13.99Bil. The stock has returned 14.27% over the past year.
GuruFocus gives the company a financial strength rating of 4 out of 10 and a profitability rating of 8 out of 10.
In terms of valuation, Campbell Soup Co has a price-earnings ratio of 18.69, a price-book ratio of 4.19, a price-earnings-to-growth (PEG) ratio of 46.73, a EV-to-Ebitda ratio of 12.62 and a price-sales ratio of 1.65.
The price-to-GF Value ratio is 0.97, earning the stock a GF Value rank of 5.
The Walt Disney Co
Community Bank & Trust, Waco, Texas reduced their investment in NYSE:DIS by 3,595 shares. The trade had a 0.11% impact on the equity portfolio. During the quarter, the stock traded for an average price of $107.02.
On 10/07/2022, The Walt Disney Co traded for a price of $98.61 per share and a market cap of $182.38Bil. The stock has returned -42.99% over the past year.
GuruFocus gives the company a financial strength rating of 5 out of 10 and a profitability rating of 8 out of 10.
In terms of valuation, The Walt Disney Co has a price-earnings ratio of 58.16, a price-book ratio of 1.93, a EV-to-Ebitda ratio of 18.80 and a price-sales ratio of 2.25.
The price-to-GF Value ratio is 0.62, earning the stock a GF Value rank of 8.
Citigroup Inc
Community Bank & Trust, Waco, Texas reduced their investment in NYSE:C by 5,907 shares. The trade had a 0.09% impact on the equity portfolio. During the quarter, the stock traded for an average price of $49.4.
On 10/07/2022, Citigroup Inc traded for a price of $42.74 per share and a market cap of $83.39Bil. The stock has returned -37.72% over the past year.
GuruFocus gives the company a financial strength rating of 3 out of 10 and a profitability rating of 5 out of 10.
In terms of valuation, Citigroup Inc has a price-earnings ratio of 5.51, a price-book ratio of 0.46, a price-earnings-to-growth (PEG) ratio of 1.04 and a price-sales ratio of 1.16.
The price-to-GF Value ratio is 0.63, earning the stock a GF Value rank of 10.
Target Corp
During the quarter, Community Bank & Trust, Waco, Texas bought 1,477 shares of NYSE:TGT for a total holding of 13,131. The trade had a 0.08% impact on the equity portfolio. During the quarter, the stock traded for an average price of $160.1.
On 10/07/2022, Target Corp traded for a price of $153.585 per share and a market cap of $71.69Bil. The stock has returned -29.67% over the past year.
GuruFocus gives the company a financial strength rating of 5 out of 10 and a profitability rating of 8 out of 10.
In terms of valuation, Target Corp has a price-earnings ratio of 17.70, a price-book ratio of 6.77, a price-earnings-to-growth (PEG) ratio of 1.26, a EV-to-Ebitda ratio of 10.38 and a price-sales ratio of 0.69.
The price-to-GF Value ratio is 0.69, earning the stock a GF Value rank of 10.
Please note, the numbers and facts quoted are as of the writing of this article and may not factor in the latest trading data or company announcements.
Want to provide feedback on this article? Have questions or concerns? Get in touch with us here, or email us at [email protected]!
This article is general in nature and does not represent the opinions of GuruFocus or any of its affiliates. This article is not intended to be financial advice, nor does it constitute investment advice or recommendations. It was written without regard to your individual situation or financial goals. We aim to bring you fundamental, data-driven analysis, The information on this site is in no way guaranteed for completeness, accuracy or in any other way. | AAPL |
https://finnhub.io/api/news?id=00ef79b77a0927e8fa23df970e0dbfcfa420b1b86cb6fb2e39887ed97223f630 | Market Rally Roars, 5 Growth Stocks Near Buy Points; Apple, Big Earnings Due | The market rally has stepped up on Fed pivot hopes. Snowflake is among 5 high-growth stocks near buy points. Apple headlines a huge week of upcoming earnings. | 2022-10-21T16:54:13 | Yahoo | Dow Jones Futures Signal Market Rally To Extend Gains; Tesla Cuts Model 3, Y Prices In China
Futures signaled further market rally gains. Snowflake leads 5 growth stocks near buy points. Tesla cut Model 3 and Y prices in China.
Futures signaled further market rally gains. Snowflake leads 5 growth stocks near buy points. Tesla cut Model 3 and Y prices in China. | AAPL |
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