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The Stock Market Is Back in Rally Mode 2024-05-15 15:53:12+00:00 - Wall Street is back in rally mode, with investors seizing on the latest sign that interest rates could begin to fall this year. The S&P 500 rose 1.2 percent on Wednesday, adding to three straight weeks of gains and climbing above its previous record, set on March 28. It marks a sharp shift from the sour mood that helped pull the index more than 5 percent lower at the beginning of April, as investors got used to the idea that high interest rates might stick around for longer, weighing on the economy and the markets. Fresh inflation data on Wednesday morning provided the catalyst for the index to cross through its previous record. The S&P 500 is now nearly 7 percent above its most recent low in April.
How to Buy the Dip and Sell the Rip on Your Stocks with Options 2024-05-15 14:30:00+00:00 - Key Points Buy the dip (BTD) means to buy a stock on a pullback while selling the rip (STR) means to sell the stock into strength. A multi-leg options trade can be used for the BTD-STR strategy selling a cash-secured put and writing a covered call upon execution. A BTD-STR options strategy fosters patience and generates income with potential capital appreciation. 5 stocks we like better than Dutch Bros Investors should be familiar with the expression, “Buy the Dip”(BTD) when it comes to the stock market. It means to buy stocks on a pullback. Traders are also familiar with the expression "Sell the Rip" (STR). It means to sell stocks into the strength. Fending Off FOMO Put together, “Buy the Dip, Sell the Rip” (BTD-STR) is what traders and investors should be doing: buying low and selling high. However, that’s not always the case. Unfortunately, it’s all too common for traders to fall into the fear-of-missing-out (FOMO) trap and chase the rip: buying high and selling low. Waiting for a dip to occur can be tedious since it's human nature to chase stocks when they are rising and walk away when they are falling. Get Dutch Bros alerts: Sign Up The BTD-STR Options Strategy Using stock options, you can buy the dip with stocks and get paid to do so. You can also sell the dip and get paid a premium once you buy it. The BTD-STR strategy should only be used for stocks you are willing to hold longer. It doesn’t mean you must hold the stock long, but you are comfortable holding it because you are familiar with it and believe it will move higher in the long run. To administer the BTD-STR options strategy, we can break it down into 2 parts. Buy the Dip (BTD) with a Cash-Secured Put Rather than place a good-to-cancel (GTC) limit order on a stock, you can use options to buy the dip and collect a premium for it by selling cash-secured put options. For example, an XYZ $50/$55 long strangle is comprised of a long 1 XYZ $55 put option and a long 1 XYZ $50 call option. Sell the Rip (STR) with a Covered Call Once you are executed on the long position, you can collect income via a premium and appreciation by writing a covered call. Depending on how much appreciation you want, you can opt for a smaller premium for a higher potential price rise. Remember, the strike price is the price you will receive for your stock if it closes above it upon expiration. Willing to Hold But Won’t Fall for the FOMO Let’s assume you’re a fan of the consumer staples sector drive-through coffee shop Dutch Bros Inc. NYSE: BROS. You love the products and selection, especially the sugar-free options and the new protein coffee. Dutch Bros drinks are cheaper than Starbucks Co. NASDAQ: SBUX at $3.00 to $4.50 each, and the drive-through makes it a faster experience. The company is planning on opening up to 125 stores this year, and each 950-square-foot store pumps out $2 million in sales annually. Revenues surged 40% YoY in its Q1 2024. You have no problems holding it longer-term but refuse to fall for the FOMO. The future of the company looks strong as it has more room to grow than Starbucks. Example of a BTDSTR Strategy on Dutch Bros Stock BROS had a stellar Q1 2024 earnings release, causing the stock to gap and go running up 30%. BROS went into its Q1 2024 earnings around $28.50 gapped up to $30.14, and spiked up to $36.17. BROS is up against a double top resistance level, trading currently around $35.91. There are 2 gap fill levels at $32.88 and $28.50. Let’s assume you are willing to buy the dip around a 10% pullback to the $32.50 strike level. Executing the BTD Trade Since you're willing to buy at the $32.50 level and hold for a longer duration, you can use the $32.50 strike price to sell a cash-secured put. Note that cash-secured means you should have the capital in your account to pay $32.50 per share if you get assigned. Most brokers will only enable you to sell a cash-secured put if you have the funds to pay from the stock. The July 19, 2024, put option expires in 66 days and pays 70 cents. This lets you complete the BTD portion of the strategy by selling the July 19 BROS $32.50 Put for 70 cents. After you execute the trade, you will be credited $70 in your trading account. If BROS falls under the $32.50 level by expiration, then you will be assigned the stock at $32.50. Keep in mind that you will still be paying $32.50 no matter how far under that strike price BROS falls. This is the risk when selling puts. There is also potential for early assignment if BROS falls deep-in-the-money (DTM). However, since you're a believer in the stock, you are comfortable holding the shares. Executing the STR Trade Once you get filled on the BTD order, you can add the second part of the strategy to your BROS position. To STR, you will write a covered call with an upside strike price for capital appreciation while collecting a premium in the meantime. Let’s assume that you already have a BROS position, and now you will execute the STR leg of the strategy. If your position is at $32.50, you can aim for a round number around the $40.00 strike price. You can write the July 19, 2024, $40.00 covered call for 85 cents. This gives you a $7.50 upside for a potential 18.75% gain and a premium of 85 cents as a credit. If BROS fails to close above the $40.00 by expiration, then you can keep the premium and write another covered call again. You can continue to write covered calls until you are called out. Keep in mind the farther out your expiration, the higher the premium you get paid for it. Plan Your Trade and Trade Your Plan The BTD-STR strategy helps to avoid the fear of missing out (FOMO). FOMO is the all-too-familiar course of action that traders and investors fall into when chasing a hot stock. FOMO is the opposite of BTD because it is more like "Chase the Rip." Pre-selecting a strike price that you're willing to buy and hold on to a stock avoids impulse trading and lets you plan the trade ahead of time. It also provides you with some income while you wait. If you don't get filled by expiration, just place another BTD leg of selling a cash-secured put at your comfortable strike price levels. Once you get filled, move on to the STR leg of the strategy and trade your plan. Before you consider Dutch Bros, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Dutch Bros wasn't on the list. While Dutch Bros currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
US inflation at 3.4% in April, dropping slightly from previous month 2024-05-15 14:20:00+00:00 - Inflation across the US eased slightly last month as concerns about the cost of living loomed over the battle between Joe Biden and Donald Trump for the White House. The closely watched consumer price index (CPI) rose at an annual rate of 3.4% in April, down from an annual pace of 3.5% the previous month. The White House released a low-key statement after the figures were released. “Fighting inflation and lowering costs is my top economic priority,” said Biden. “I know many families are struggling, and that even though we’ve made progress we have a lot more to do.” Policymakers have been surprised by stubborn price growth, which they hope to bring down to 2%. The Federal Reserve has pushed interest rates to a two-decade high to tamp down inflation and had been expected to start cutting them this year. But price gains have remained higher than the central bank’s target and hopes of a rate cut have faded. “We did not expect this to be a smooth road,” Jerome Powell, the Federal Reserve chair, said before the news on Tuesday, “but these [inflation readings] were higher than I think anybody expected.” The “core” CPI, which strips out volatile food and energy prices, rose 0.3% in April, down from 0.4% in the previous three months, according to the Bureau of Labor Statistics. The annual rate of core CPI was 3.6% in April, its lowest rate since April 2021. Rising housing and fuel costs were the two biggest factors behind April’s price increases. “The index for shelter rose in April, as did the index for gasoline. Combined, these two indexes contributed over 70% of the monthly increase in the index for all items,” the Bureau of Labor Statistics reported. Food prices were flat and egg prices dropped sharply – 7.3% – over the month. “While on the surface it is positive to see inflation fall from the previous month, looking at the trend over the past 12 months provides a different picture. Inflation has been bouncing around the 3%-4% range for a considerable period of time now, and this is now arguably singlehandedly preventing the Federal Reserve from pushing the button on rate cuts,” said Lindsay James, investment strategist at Quilter Investors. skip past newsletter promotion Sign up to Business Today Free daily newsletter Get set for the working day – we'll point you to all the business news and analysis you need every morning Enter your email address Sign up Privacy Notice: Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Privacy Policy . We use Google reCaptcha to protect our website and the Google Privacy Policy and Terms of Service apply. after newsletter promotion Inflation has fallen sharply since peaking at 9.1% – its highest level in a generation – almost two years ago. But the pressure exerted by elevated prices on household budgets nationwide has become a key flashpoint in the run-up to November’s presidential election, with a string of polls indicating that the economy is a top issue for voters. Biden has hit back at polls that suggest many Americans question his handling of the economy, labeling them as “wrong” last week. “We’ve already turned it around,” he told CNN. In the interview, Biden also pointed to the robust growth of the US labor market, which has added hundreds of thousands of jobs this year. Trump is, nevertheless, seeking to cast Biden as “the destroyer of America’s jobs”, claiming the president’s policies have fueled “runaway” inflation.
3 Hot Buyback Plans Supporting Price Action in 2024 2024-05-15 14:10:00+00:00 - Key Points Gen Digital upped the ante with a $2.5 billion increase to the repurchase authorization, now worth about 20% of the market cap. Ulta Beauty has a beautiful capital return program that reduced its share count by more than 4.25% last year. Darden Restaurants is a deep-value, high-yield restaurant stock that is reducing its share count with buybacks. 5 stocks we like better than Gen Digital Share repurchases are a controversial topic because they often do little more than hide the impact of share-based compensation or amplify (at face value) sluggish earnings growth. However, as with the stocks today, share repurchases can drive shareholder value by reducing the share count. The long and short of it is that X value divided by fewer shares equals more value per share for shareholders than before. However, share repurchases alone are insufficient to impact share prices positively. Investment success requires a solid business and an outlook for sustainable growth. Get Gen Digital alerts: Sign Up Gen Digital Ups the Ante With Share Repurchases; Guides for Sustainable Growth Gen Digital Today GEN Gen Digital $25.05 +0.51 (+2.08%) 52-Week Range $15.45 ▼ $25.07 Dividend Yield 2.00% P/E Ratio 26.37 Add to Watchlist is a consumer-oriented cyber safety and security firm operating brands that include Norton Lifelock and Avast!. The company is among the latest to issue a new or add-on share repurchase authorization, which is a big one. The company upped the ante by $2.5 billion to bring the total back to $3 billion. That’s worth 20% of the market cap and more than offsets the impact of share-based compensation. The net result of share-based compensation, dilutive actions, and share repurchases reduced the share count by 1% in FQ4/CQ1 and should continue to do so this year. A dividend compounds Gen Digital's capital return. The stock pays about 2.0%, with shares trading near a two-year high. The payout is reasonably safe, with a payout ratio of 25% and a healthy balance sheet. The company carries some debt and has a moderately elevated 4X leverage ratio, but no red flags are raised. Highlights from the latest report include increased cash, flat assets, debt and liabilities down, and equity flat. The recent pop in share prices is due to the results, which were better than expected and point to sustained growth with margin expansion this year and next. Eight analysts rate this stock with a consensus of Moderate Buy and a price target of $26, about 6% above the latest close. Ulta Beauty has a Beautiful Repurchase Program Ulta Beauty Today ULTA Ulta Beauty $403.41 +1.73 (+0.43%) 52-Week Range $368.02 ▼ $574.76 P/E Ratio 15.49 Price Target $539.55 Add to Watchlist Q4 results and guidance for Q1 did not inspire the market to rally, but the price pullback is an opportune entry point that aligns with the long-term trend. Share repurchases should help support the market at the critical level where a rebound may already be forming. The company authorized a new $2 billion repurchase plan that went into effect this quarter. The $2 billion replaces the $100 million left under the previous allotment and equals 10.5% of the market cap, with shares near a one-year low. Repurchases are significant for this company and offset the lack of dividends. Repurchases in 2023 reduced the average count by 4.27% in Q4 and should remain strong this year. Analysts moderated their price targets following the last earnings report, but the sell-off was overblown. Marketbeat tracks seventeen revisions from twenty-one analysts since the report, including an upgrade, a downgrade, and numerous price target reductions. The takeaway is that the range of targets is narrowing, and the consensus fell compared to last quarter but is still well within the one-year range; analysts still view this stock as a Moderate Buy and imply a 35% upside for its price. Darden Restaurants Has Tasty Returns to Drive Shareholder Value Darden Restaurants Today DRI Darden Restaurants $151.78 +2.84 (+1.91%) 52-Week Range $133.36 ▼ $176.84 Dividend Yield 3.45% P/E Ratio 17.79 Price Target $178.85 Add to Watchlist depressed its market, issuing soft guidance for the year, but is still guiding for growth and margin expansion to support its tasty capital return program. The returns include a high-yielding dividend worth 3.5% with shares near the middle of its uptrending channel. The stock provides a value relative to other high-quality restaurant names, such as Texas Roadhouse NASDAQ: TXRH, and more than double the yield. Regarding repurchases, this company issued a new $1 billion authorization at the end of FQ3, worth 5% of the market cap. Share repurchases reduced the count by an average of 1.7% for the quarter, and another 1.5% to 2.0% reduction is expected by next year. Darden’s balance sheet is still recovering from Ruth’s Chris acquisition but is in fine shape. The cash and current assets are down, but total assets are up, long-term debt is well-managed, and equity is flat. The salient point is that the company is well capitalized, has positive and growing cash flow, and has a low leverage ratio below 1X equity. The company can continue increasing its distribution and repurchasing shares. Before you consider Gen Digital, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Gen Digital wasn't on the list. While Gen Digital currently has a "hold" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
Stocks With Subscription Based Revenue Offer Inflation Protection 2024-05-15 13:35:00+00:00 - Investors should be amazed at where consumer priorities lie regarding monthly payments. Besides ensuring the mortgage and car are paid, consumers will likely emphasize subscriptions. The evidence behind this belief? Financial stocks like Bank of America reported rising delinquency rates on credit cards with declining FICO scores. At the same time, companies like Netflix Inc. NASDAQ: NFLX saw 16% growth in global paid memberships. Key Points Three stocks could become clear targets for investors looking to keep up - or beat - inflation in today's economy. By deriving all earnings from subscriptions, slight price increases could represent additional millions in the top line. Analysts and markets expect a double-digit upside because of this predictability and growth potential. 5 stocks we like better than T-Mobile US Despite the U.S. economy suffering from stagflation, defined as low economic growth with high inflation, consumers still find a way to fit these subscriptions into their budgets. Because of this tendency, investors could consider such businesses part of the consumer staples sector rather than the consumer discretionary group. Get T-Mobile US alerts: Sign Up Knowing that consumers will likely keep paying for their subscription memberships, investors highly value revenue for such businesses, especially amid an uncertain economic environment. Stocks like Spotify Technology NYSE: SPOT, T-Mobile US Inc. NASDAQ: TMUS, and even Netflix could prove outperformers in the coming quarter. Inflation Protection? Yes Please Subscription-based businesses not only achieve predictable cash flows, making them easier to value for Wall Street analysts and more attractive for investors, but they are also able to quickly shrug off the effects of high inflation by raising prices across the board. With 269.6 million global subscribers, Netflix could raise prices by $1 and immediately add nearly $270 million to the top line. Likewise, Spotify’s 239 million users could have the same effect on the company’s financials, especially knowing users will try to avoid the pain of vibe-cutting advertisements. Whether the economy is booming or busting, people will likely always find a way to pay their phone bill because consumers won’t be able to prospect for jobs without a phone (in the case of a bad economy). With 119 million users as of the fourth quarter of 2023, T-Mobile could justify a few extra million in revenue by merely keeping up with inflation. All three of these stocks can protect their investors from inflation just by raising monthly subscriptions to their users. Because of the quality and reliability of these revenues, markets are willing to pay a premium valuation for these stocks, measured on a price-to-sales (P/S) basis. It’s All About Growth, Steady Growth T-Mobile US Today TMUS T-Mobile US $162.68 +0.27 (+0.17%) 52-Week Range $124.92 ▼ $168.64 Dividend Yield 1.60% P/E Ratio 22.13 Price Target $186.33 Add to Watchlist Compared to its peers in the communication industry , T-Mobile stock commands a premium of 50% through its 2.4x P/S versus the sector’s 1.6x average. Spotify follows suit by trading at a 3.9x multiple, which is 290% above the radio and broadcasting industry’s average P/S valuation of 1.0x. Last but not least, investors can see this trend in Netflix’s 7.9x P/S multiple, which is 192% above the streaming industry’s 2.7x. Markets value these companies at a premium for their steady revenue sources and their future expected growth rates. Based on an earnings per share (EPS) basis, analysts believe Netflix's stock could deliver up to 21.2% growth in the next 12 months. Spotify could be set to deliver 41.4% EPS growth this year, which gives investors a leg up above inflation in the U.S. and ensures that this potential investment could outperform the nation's lackluster GDP growth of 1.6% in the past quarter. In another double-digit growth clip, T-Mobile expects to deliver 24.8% EPS growth despite the inflation-choked U.S. consumer. Consumer sentiment declined in April, bringing the index halfway to its all-time low. However, consumers still find enough reasons to keep these companies flowing with steady cash flows, which is why Wall Street keeps them in high regard. Wall Street’s Take Spotify Technology Today SPOT Spotify Technology $303.04 +12.92 (+4.45%) 52-Week Range $129.23 ▼ $319.30 Price Target $306.42 Add to Watchlist Spotify shares trade at 91% of their 52-week high , showing investors that bullish momentum still rules the media company. Analysts at Bank of America see a valuation for Spotify up to $370 a share , calling for as much as 27.5% upside from where the stock trades today. The optimism spills over to Netflix now that the stock has pushed back up to 96% of its 52-week high after a recent earnings hiccup. Recovering its bullish beat, the stock earned an $800 price target from Pivotal Research. To prove these valuations right, the stock must rally 30.5% from where it sits today. Who knew phones could be this exciting? Analysts at TD Cowen see a valuation of $202 for T-Mobile stock, or 25% upside from today’s price. Of course, trading at 96% of its 52-week high helped analysts feel more comfortable backing this winner. The one theme investors need to focus on is predictable revenue; analysts and markets aren’t afraid to bid companies like these up, particularly since nothing else is lining up to beat stagflation. Before you consider T-Mobile US, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and T-Mobile US wasn't on the list. While T-Mobile US currently has a "Buy" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
Meme Stocks Have a Pulse Again, AMC’s Rally Follows GameStop’s 2024-05-15 12:37:00+00:00 - Key Points AMC stock is attempting to join GameStop in what could be the revival of meme stocks. Focusing on fundamentals, investors will soon find out why these stocks fall under the 'meme' category. Facing severe dilution in AMC's lack of cash flow, investors could be better off without this added risk. 5 stocks we like better than Squarespace The meme stocks saga of 2021 marked one of those historical moments in financial case studies. Unfortunately, it will be tied to those like the Tulipmania during the 1600s. Because the underlying financials of stocks like GameStop Corp. NYSE: GME aren’t that great, triple-digit rallies in their stock prices spell nothing but trouble for those investors who buy into the hype. What happened to GameStop in 2021 could be looking to make a second chapter in history after recently hitting a trading halt after an 80% jump in a single day. It is now day two of this rally, and other consumer discretionary stocks linked to this meme mania have seen similar price action, with AMC Entertainment Holdings Inc. NYSE: AMC being the next one in line for this historic rally. Get Squarespace alerts: Sign Up AMC stock rallied by similar magnitudes this week, amplifying the market’s new ‘risk on’ environment and pushing for stocks with not-so-great financials into investment-grade valuations. However, investors should have much more to take away from this behavior than just buying and praying for higher prices ahead on these meme stocks. It’s All About Risk Perception AMC Entertainment Today AMC AMC Entertainment $5.48 -1.37 (-20.00%) 52-Week Range $2.38 ▼ $62.30 Price Target $5.54 Add to Watchlist During 2020-2021, barely a stock—or crypto—didn’t rally by triple-digits over a relatively short period. The reason? The Federal Reserve (the Fed) was forced to drop interest rates to near zero due to the COVID-19 pandemic. When interest rates are that low, so are bond yields and savings accounts (APYs). Hence, investors justify taking on a bit more risk to make an adequate return on their money. It's pretty simple math. Well, it isn’t always good news, as bubbles like the meme stock mania – and arguably Bitcoin – can form, and that’s where investors need to be extra careful with how much they scrutinize their investment prospects. Now that the Fed is looking to lower rates again, those investors and traders who got used to easy returns may look to make a few bucks on the same trend repeating itself. Still, it may not come around this time. A Different Battlefield When the Fed cut interest rates during 2020, the economy had fallen to dangerously low levels of growth, meaning that any stock with a decent earnings per share (EPS) growth rate for the year would likely draw enough buying pressure to beat the lackluster economic growth. This time, the U.S. economy is suffering from stagflation, defined as low economic growth with high inflation. 2020-2022 lacked this high inflation factor, meaning that EPS growth and healthy cash flow are as crucial as ever for investors to consider today. And that is why AMC should spell out all kinds of red flags. The triple-digit rally in this stock is due primarily to the influence that GameStop has had on other stocks considered ‘meme’ level. So, investors need to understand what constitutes ‘meme’ status. It’s for entertainment, really. Investing in stocks that are hot and popular, despite their lack of any profitability or ways to keep funding their activities, is considered part of a gamble that will likely not pay off during stagflation times today, it might have worked during 2020-2021 when inflation wasn’t that much of an issue. A Better Point to Take Home: Cash Flow Other areas of the economy could offer similar upside to these meme stocks, with the added bonus of financial stability to carry a business through these stagflation times. Investors could take Squarespace Inc. NYSE: SQSP as a recent example. Private equity firm Permira offered to take Squarespace private in a $6.9 billion deal, which is a multiple of roughly 30x the company’s free cash flow (operating cash flow minus capital expenditures); of course, this premium multiple is justified considering the 17% five-year compounded average growth rate (CAGR). The stock popped more than 30% on the news; while these are not meme-level returns, they are justified by sound fundamentals. In the case of AMC, there is no operating cash flow to speak of, and a net outflow of more than a billion in the past two years is far from justifying any investment in this meme stock. Because a transformation of the movie theatre industry is unlikely to happen soon, AMC’s current financial standing won’t turn overnight to justify today’s valuations. They need cash to keep theatres open, and no debt investors are lining up due to AMC’s poor credit profile, so investors stand in front of aggressive dilution. Over the past year, AMC management took advantage of the high stock price to issue as many as 130,000 shares, diluting unsuspecting shareholders at a massive level. Unlikely to strike oil any time soon, AMC’s lack of free cash flow will potentially require management to keep diluting shareholders even further if the company is to avoid bankruptcy. Before you consider Squarespace, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Squarespace wasn't on the list. While Squarespace currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
Can a Warner Bros. Discovery and Disney Bundle Fend Off Netflix? 2024-05-15 12:00:00+00:00 - Key Points Warner Bros. Discovery missed Q1 2024 EPS estimates by 20 cents as revenues dropped 6.9% YoY. The company grew its subscribers to 99.6 million, up two million QoQ, and global average revenue per user (ARPU) rose 4% QoQ to $7.83. Warner Bros. Discovery announced a partnership with Disney to offer a new bundled streaming package that will include Disney+, Hulu, and MAX and launch in summer 2024. 5 stocks we like better than Warner Bros. Discovery Media and entertainment giant Warner Bros. Discovery Inc. NASDAQ: WBD shares initially tanked to $7.50 on its Q1 2024 earnings results. But the consumer discretionary sector giant recovered quickly on news of its new partnership with The Walt Disney Co. NYSE: DIS for a streaming bundle that would include Disney+, Hulu, Discovery, and MAX streaming services. The streaming wars are starting to heat up again as alliances are made to take on the incumbent giant Netflix Inc. NASDAQ: NFLX, which commands 44% of the US streaming market with nearly 270 million subscribers. Warner Bros. competes with streaming service Comcast Co. NASDAQ: CMCSA-owned Peacock with 34 million subscribers, Paramount Global NASDAQ: PARA with 71.2 million subscribers, and Amazon.com Inc. NASDAQ: AMZN Prime with over 200 million subscribers. Get Warner Bros. Discovery alerts: Sign Up Over 20 Brands Combined Warner Bros. Discovery has well-known brands like HBO, CNN, HGTV, Food Network, Discovery Channel, TLC, and MAX. When combined with Disney+ and Hulu, additional brands include the iconic DC brand, which owns immortal superheroe IPs including Superman, Batman, Wonder Woman and the Flash, Star Wars, and Pixar, along with ABC and FX. It's reminiscent of the cable TV packages except that it's on streaming. There's no information yet on whether the bundle will include live sports. A Streaming Juggernaut to Take on Netflix The combined total of subscribers between Disney+ (153.6 million), Hulu (50.2 million), and MAX (99.6 million) would total 303.4 million, making it the largest combined streaming partnership on the planet. Of course, a good chunk of members likely overlaps between services since Disney already offers a Disney+, ESPN and Hulu combined bundle for a single price. Additionally, existing subscribers to the individual packages may also decide to save money and convert to the bundle. The new Disney and Warner Bros. Discovery bundle is expected to launch in summer 2024. Warner Bros. Discovery President of Global Streaming and Games JB Parrette stated, “This new offering delivers for consumers the greatest collection of entertainment for the best value in streaming and will help drive incremental subscribers and much stronger retention. Offering this unprecedented entertainment value for fans across all the complimentary genres these three services offer presents a powerful new roadmap for the future of the industry." Daily Descending Triangle Pattern WBD is forming a daily descending triangle pattern. The descending trendline commenced at $9.51 on March 12, 2024, capping bounce attempts at lower highs towards the $7.51 flat-bottom lower trendline. Shares attempted to break down on April 30, 2024, when they fell through to $7.34, but quickly bounced back up to retest the ascending trendline again. WBD is attempting to break through the $8.02 ascending trendline resistance. The daily relative strength index (RSI) is also attempting to bounce through the 50-band, which has been a resistance band that it hasn't been able to cross since January 4, 2024. Earnings Missed Warner Bros. Discovery Today WBD Warner Bros. Discovery $8.20 -0.36 (-4.21%) 52-Week Range $7.34 ▼ $14.76 Price Target $13.32 Add to Watchlist A $200 Million Surprise Flop Warner Bros. Discovery reported a Q1 2024 EPS loss of 40 cents, which missed consensus estimates by 20 cents. Revenues fell 6.9% YoY to $9.96 billion, missing analyst estimates of $10.22 billion. Global direct-to-consumer (DTC) subscribers rose 2 million to 99.6 million over Q4 2023. Global DTC average revenue-per-user (ARPU) rose 4% QoQ to $7.83. Distribution revenue fell 6% YoY due to a decline in U.S. pay-TV subscribers, partially offset by an increase in U.S. contractual affiliate rates and Argentina inflation impacts. Advertising revenue fell 11% due to audience declines in news networks and domestic general entertainment combined with a soft linear ad market in the U.S. and Latin America. EMEA growth partially offset the decline. Video game fans were long awaiting the release of “The Suicide Squad: Kill the Justice League” by Rocksteady Studios, owned by Warner Bros. Rocksteady made its name with arguably the greatest superhero videogame made in 2015 called “Batman: Arkham Knight," which prompted a series of follow up games under the Arkham banner. Shockingly, the long-awaited Suicide Squad release was an undeniable flop as Warner Bros. Discovery took a $200 million hit to its EBITDA in Q1 2024 as a result. On the bright side, the Q1 results wouldn't have been so bad if you backed out of the video game flop. Moving forward, it's a one-off event, hopefully. Revitalizing the Lord of the Rings Series Warner Bros. Discovery CEO Dave Zaslav helped shares receive some optimism by announcing that its studio is in early script development for a new Lord of the Rings movie series with Peter Jackson and his writing team. The initial release rate would be in 2026, and the working title for the first movie is "Lord of the Rings: The Hunt for Gollum." Upbeat CEO Comments CEO Zaslav was upbeat during the conference call, pointing out how MAX Is gaining traction, with subscribers rising by two million in the first quarter of 2024. Ad sales also accelerated in its DTC segment, driven by a record March Madness and steadier ratings overall. Free cash flow improved by $1.3 billion YoY to $400 million even in its seasonably weakest quarter, which is Q1. International Expansion Accelerating with Exclusive Paris Olympics Coverage Warner Bros. Discovery MarketRank™ Stock Analysis Overall MarketRank™ 3.70 out of 5 Analyst Rating Moderate Buy Upside/Downside 62.6% Upside Short Interest Healthy Dividend Strength N/A Sustainability N/A News Sentiment 0.21 Insider Trading N/A Projected Earnings Growth Growing See Full Details Zaslav stated that since the start of the year, they've expanded from a single market in the U.S. to 39 countries with its Latin America launch. They will add 25 markets across Europe with new markets in Belgium and France ahead of the Paris Olympics. MAX will be the exclusive place to watch every part of the Olympic games. Zaslav also noted that MAX is doing better than expected with its bundle deal with Netflix and Verizon Communications Inc. NYSE: VZ. He expressed his confidence that they would hit their full-year 2025 adjusted EBITDA goal of $1 billion. With $90 million in positive EBITDA in Q1, they are off to a strong start. Churn is trending down in the U.S. and hit an all-time low in Q1. While ad sales fell 7% YoY in the quarter, he continues to see sequential improvement starting in Q2. Italy, Germany and Poland led to positive revenue growth in the EMEA. They are still negotiating with the NBA to renew their deal and have the right to match any third-party deal that is offered. Key Banc Sees a Silver Lining Analyst Brandon Nispel of Key Banc upgraded shares of WBD to Overweight from Sector Weight with an $11 price target. Nispel believes estimates have bottomed out, and the resolution of the NBA contract will be a positive catalyst. Subscriber growth DTC, profitability, and ARPU growth were all positive factors driving the upgrade. Nispel believes the stock’s valuation will bounce back to the historical 6.5X EBITDA and 15X free cash flow levels, up from its current 5.8X and 11X levels, respectively. Warner Bros. Discovery analyst ratings and price targets are at MarketBeat. Before you consider Warner Bros. Discovery, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Warner Bros. Discovery wasn't on the list. While Warner Bros. Discovery currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
Live Nation’s Revenue Funnels Deliver a Half-Billion-Dollar Beat 2024-05-15 11:45:00+00:00 - Key Points Live Nation is the world’s largest live entertainment company and owns the world's largest ticketing services company, Ticketmaster. The company reported a Q1 GAAP EPS loss of 53 cents, but revenues surged 21.5% YoY, beating consensus analyst estimates by a whopping $520 million. Live Nation continues to ride the insatiable demand for live entertainment, with fans growing 21% YoY, sponsorship revenues rising 24% YoY, and arena fan attendance rising 40% YoY. 5 stocks we like better than Live Nation Entertainment Live Nation Entertainment Inc. NYSE: LYV shares surged 10% on its Q1 2024 earnings release despite missing EPS estimates by 53 cents and still losing money. The consumer discretionary sector giant is the world's largest producer of live music concerts and entertainment events. It also owns the largest ticketing service, Ticketmaster. Large is the theme with the company, and its revenue beat can only be described as large at $520 million in its first quarter of 2024. Live Nation competes loosely with other live events companies like TKO Entertainment Inc. NYSE: TKO and Madison Square Garden Co. NYSE: MSG and ticketing services like StubHub, which merged with Viagogo. Get LYV alerts: Sign Up The Moat Continues to Grow Live Nation is so massive that it has been accused of anti-competitive practices. Its moat includes a controlling interest in over 335 venues worldwide, including over 150 in the United States. Some of its top artists include U2, Drake, and Bruno Mars. The company plans to open at least 12 major venues globally in 2024 and 2025, with the capacity for over 8 million additional fans expected. Arenas saw 40% attendance to almost 10 million fans worldwide. It's year-to-date ticket sales for shows in 2024 in the first quarter were 86 million. The company projects more broken records for major concert tours and sales in 2024 as the demand for live entertainment continues to surge as consumer discretionary spending shifts to experiences from goods and products. Daily Descending Triangle Breakout Pattern LYV is forming a daily descending triangle breakout pattern. The descending trendline formed at the $107.07 swing high, capping bounce attempts at lower highs. The flat-bottom trendline is at $87.61. LYV shares gapped 8% on its Q1 earnings and proceeded to break through the $96 resistance. Shares are still attempting to stay above the descending trend line. The daily relative strength index (RSI) has gone flat at the 56-band. Pullback support levels are at $94.28, $91.12, $87.61 and $85.27. Insatiable Growth Live Nation Entertainment Today LYV Live Nation Entertainment $96.48 +0.65 (+0.68%) 52-Week Range $76.48 ▼ $107.24 P/E Ratio 91.89 Price Target $116.83 Add to Watchlist Fan Demand Continues Strong Live Nation reported Q1 2024 GAAP losses of 53 cents per share, missing analyst estimates for a loss of 18 cents. Operating losses were $37 million. Adjusted operating income rose 15% YoY to $367 million. Revenues surged 21.5% YoY to $3.8 billion, crushing consensus estimates for $3.28 billion by $520 million. Food & Beverage spending rose 10%. Live Nation sold 77 million fee-bearing tickets. Sponsorship revenues rose 24% YoY to the highest Q1 ever. Fan growth rose 21% YoY to 23 million fans. Live Nation concert ticket sales for overall arena and amphitheater shows pacing was up double-digits. Confirmed shorts for large venues, including stadiums, arenas and amphitheaters, were up double-digits. Over 85% of full-year shows at large venues were booked, up from 75% last year. Arenas led attendance growth by 40% YoY with nearly 10 million fans. International Artists' Appeal Grows Compared to five years ago, the fan count for international artists across its top 50 global tours nearly doubled. Ticket sales for Latin shows in the United States rose double-digits YoY. The confirmed U.S. short count for Afrobeats surged 400%, and Latin was up 40% YoY. Europe had similar surges. Festival attendance grew double-digits, led by Latin American markets. Global Ticketing Expansion and Sponsorships Net new enterprise tickets grew to seven million YTD, with 70% coming from international markets. Over 112 million fee-bearing tickets were sold YTD, up 4%. Live Nation booked over 85% of expected sponsorship committed for the year, a double-digit jump. Adjusted operating income (AOI) for sponsorships grew 36% YoY to $130 million. A Shift Towards Niche Music Festivals Live Nation Entertainment MarketRank™ Stock Analysis Overall MarketRank™ 4.77 out of 5 Analyst Rating Buy Upside/Downside 21.3% Upside Short Interest Healthy Dividend Strength N/A Sustainability -1.77 News Sentiment 0.48 Insider Trading Selling Shares Projected Earnings Growth 64.03% See Full Details Live Nation CEO Michael Rapino noted the company has over 100 festivals worldwide, driving up YoY ticket sales by double-digits. Festivals are starting strong in 2024. They're a huge business around sponsorships, which are up 20% YoY on festivals. The trend in three-day massive festivals with a unique headliner appeals to everyone. Even Coachella or Bonnaroo is tough to get headliners since they're making so much in stadiums and arenas. For this reason, Live Nation is seeing great success with the one and two-day festivals appealing to a niche with 35,000 attendees. Rapino commented, “So we are seeing probably a shift to more niche one or two-day festivals with higher per heads, higher sponsorship value and less big swings across, let's go after a three day 100,000 people. There's still, though, the Coachellas, the Lollapaloozas, the Austin City Limits, they're kind of passage of right.” He concluded, “But to us, a big part of our business overall, it's a nice piece in our overall portfolio to drive our sponsorship business, and it's on a global basis, a nice piece of our overall portfolio.” Live Nation analyst ratings and price targets are at MarketBeat. Before you consider Live Nation Entertainment, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Live Nation Entertainment wasn't on the list. While Live Nation Entertainment currently has a "Buy" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
Jeremy Hunt and Mel Stride warn against benefits ‘lifestyle choice’ 2024-05-15 09:28:00+00:00 - The UK chancellor and the welfare secretary have suggested that too many people are claiming unemployment benefit as a lifestyle choice after a rise in joblessness. Jeremy Hunt and Mel Stride used a joint article in the Times to ramp up the government’s anti-welfare rhetoric in the run-up to the general election. It came a day after data from the Office for National Statistics showed unemployment increased by 166,000 between the final three months of 2023 and the first three months of 2024, pushing up the jobless rate from 3.8% to 4.3%. Labour seized on the figures to claim that Rishi Sunak’s economic plan was not working. In their article, Hunt and Stride said the number of people out of work owing to long-term sickness was a “challenge”. But they added: “Unemployment benefits should only be there as a safety net, not a lifestyle choice.” They rekindled a traditional Conservative party trope by suggesting those on benefits were shirking work. Hunt and Stride wrote: “With around 900,000 vacancies in the economy there are ample opportunities for people to get on and get ahead in the world of work.” And they insisted the UK’s labour market was healthy: “The headline figures published by the ONS yesterday will of course attract attention, but our economic record is strong and our labour market resilient. “Indeed, the ONS itself has expressed some caution about the data being produced by its surveys over a number of months, so it is important not to be alarmist.” They pointed out that the number of people classed as economically inactive in the UK was lower than in 2010, and better than rates in the US, Italy and France. And they claimed thousands more would be helped back into employment by the government’s back-to-work programme. They added: “The road to recovery is never entirely smooth – there are bumps, twists and turns. But by standing up to the issues of our day, we will grow the economy and raise living standards for hard-working Britons.” The economic outlook was “better than many would have you believe”, they said, adding: “For the last 10 months wages have increased faster than inflation. Inflation is down from 11% to just 3.2%, and is on track to fall to around 2% this month. “Since January the UK’s economy has grown at the fastest rate in two years – faster than any other G7 country and even faster than the United States.” skip past newsletter promotion Sign up to First Edition Free daily newsletter Our morning email breaks down the key stories of the day, telling you what’s happening and why it matters Enter your email address Sign up Privacy Notice: Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Privacy Policy . We use Google reCaptcha to protect our website and the Google Privacy Policy and Terms of Service apply. after newsletter promotion The TUC’s general secretary, Paul Nowak, accused Hunt and Stride of “gaslighting the British public on the state of the UK labour market”. He said: “Unemployment shot up by over 160,000 over the last quarter and record numbers of people are becoming economically inactive because they are too sick to work. “Instead of punching down, the Tories should be tackling our sky-high waiting lists and improving access to treatment. And they should be laser-focused on improving the quality of work in this country. “People need jobs they can build a life on. But under the Conservatives we have seen an explosion of low-paid and insecure work that has led to eye-watering levels of in-work poverty. “Before handing out lectures, Jeremy Hunt and Mel Stride should try surviving on a zero-hours contract.”
Inside the Rent Inflation Measure That Economics Nerds Love to Hate 2024-05-15 09:03:13+00:00 - There’s a three-letter abbreviation that economists have started pronouncing with the energy of a four-letter word: “O.E.R.” It stands for owner’s equivalent rent, and it has been used to measure American housing inflation since the 1980s. As its name suggests, it uses a combination of surveys and market data to estimate how much it would cost homeowners to rent the house they live in. But three years into America’s price pop, it has become almost cliché for economists to hate on the housing measure. Detractors blast if for being so slow-moving that it does not reflect up-to-date conditions in the economy. Critics argue that it uses convoluted statistical methods that make little sense. The most intense haters insist that it is giving a false impression about where inflation stands. “It’s just not adding anything to our understanding of inflation,” said Mark Zandi, chief economist of Moody’s Analytics and a frequent adviser to the Biden administration. Full disclosure: The New York Times called Mr. Zandi for this article because he has been one of the many economists grousing about O.E.R. on social media. He said he was “not a fan.”
The $1.7 Billion News That Sent Plug Power Stock Surging: Here's What You Need to Know Before Buying 2024-05-15 08:16:00+00:00 - In this video, Motley Fool contributors Jason Hall and Tyler Crowe discuss the recent conditional loan approval that would be a lifeline for Plug Power (NASDAQ: PLUG), and what investors need to know before thinking about buying shares. Stocks also discussed include Linde (NASDAQ: LIN) and Bloom Energy (NYSE: BE). *Stock prices used were from the afternoon of May 14, 2024. The video was published on May 14, 2024. Should you invest $1,000 in Plug Power right now? Before you buy stock in Plug Power, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Plug Power wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $553,880!* Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. See the 10 stocks » *Stock Advisor returns as of May 13, 2024 Jason Hall has no position in any of the stocks mentioned. Tyler Crowe has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Linde. The Motley Fool has a disclosure policy. Jason Hall is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through their link they will earn some extra money that supports their channel. Their opinions remain their own and are unaffected by The Motley Fool. The $1.7 Billion News That Sent Plug Power Stock Surging: Here's What You Need to Know Before Buying was originally published by The Motley Fool
Why Aurora Cannabis, Tilray Brands, and SNDL Inc. Stocks Lit Up on Tuesday 2024-05-15 07:56:00+00:00 - Marijuana stocks are moving higher on Tuesday after Marijuana Moment reported on a new initiative in Congress that could give marijuana demand a lift. According to the weed-news source, the House Armed Services Subcommittee on Military Personnel is recommending the U.S. military cease testing recruits for marijuana use. Weed stocks lit up in response. As of 2 p.m., Aurora Cannabis (NASDAQ: ACB) shares were up 6%, Tilray Brands (NASDAQ: TLRY) was up 6.8%, and SNDL Inc. (NASDAQ: SNDL) was doing best of all, scoring a 10.2% gain. Uncle Sam to end cannabis testing? As Marijuana Moment reported, the subcommittee is drafting language for Congress' 2025 National Defense Authorization Act (NDAA), which would make this ban on marijuana testing federal law. If passed, it would represent yet another step in a whole series of steps approaching full-scale legalization of marijuana at the federal level. These steps include a SAFER law on marijuana banking reform, which enjoys widespread support from both major political parties; a less popular Marijuana Opportunity Reinvestment and Expungement (MORE) Act that would legalize the drug entirely; and last month's Drug Enforcement Agency recommendation that marijuana be reclassified as a low-risk Schedule III controlled substance. It's worth noting that the subcommittee's desire to end marijuana testing among military recruits doesn't mean the full committee will include this language in the 2025 NDAA or that Congress will vote to approve the language. What it might mean for marijuana stocks But what if the language does make it into law? Banning marijuana testing of military recruits could help ease the military's well-known problems hitting recruitment goals, at the same time as it removes an obstacle to wider marijuana use -- presumably boosting marijuana sales and use. That being said, the overall effect on marijuana sales would probably be negligible. Investors in marijuana stocks are reacting to what looks like good news, but I think they are marijuana investors are overreacting today. Should you invest $1,000 in SNDL right now? Before you buy stock in SNDL, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and SNDL wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $553,880!* Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. Story continues See the 10 stocks » *Stock Advisor returns as of May 13, 2024 Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends SNDL and Tilray Brands. The Motley Fool has a disclosure policy. Why Aurora Cannabis, Tilray Brands, and SNDL Inc. Stocks Lit Up on Tuesday was originally published by The Motley Fool
Stock market today: Wall Street rallies to records after inflation slows 2024-05-15 06:57:13+00:00 - NEW YORK (AP) — Hopes that inflation is finally heading back in the right direction swept through Wall Street Wednesday and ignited a record-setting rally for U.S. stocks. The S&P 500 jumped 1.2% to top its prior high set a month and a half ago. The Nasdaq composite added 1.4% to its own record set a day earlier, and the Dow Jones Industrial Average gained 349 points, or 0.9%, to beat its all-time high set in March. Relief came from the bond market, where Treasury yields eased to release some of the pressure on the stock market. The moves resulted from strengthening expectations among traders that the Federal Reserve may indeed cut its main interest rate this year. Stocks that tend to benefit the most from lower interest rates helped lead the market. Homebuilders were strong on hopes that cuts by the Fed could lead to easier mortgage rates, with Lennar, D.R. Horton and PulteGroup all rallying more than 5%. Big Tech and other high-growth stocks also rode the wave of expectations for lower rates, and Nvidia’s gain of 3.6% was the strongest force pushing the S&P 500 upward. Real-estate stocks in the S&P 500 climbed 1.7%, while stocks of electricity companies and other utilities rose 1.4%. The dividends they pay look better to investors when bonds are paying less in interest. The optimism came from a report showing U.S. consumers had to pay prices for gasoline, car insurance and everything else in April that were 3.4% higher overall than a year earlier. While that’s painful, it’s not as bad as March’s inflation rate of 3.5%. A person passes an entrance to the Wall Street subway station in New York on Wednesday, May 15, 2024. Trading on Wall Street is muted early ahead of the U.S. government's latest reports on inflation and retail sales. (AP Photo/Peter Morgan) Banners for Pinterest, displayed to mark the fifth anniversary of the company's listing, hang on the front of the New York Stock Exchange in New York on Wednesday, May 15, 2024. U.S. stocks are rising toward records with hope that inflation is heading back in the right direction. (AP Photo/Peter Morgan) Perhaps more importantly, the slowdown was a relief after reports for the consumer price index, or CPI, earlier this year had consistently come in worse than expected. That string of disappointing data had washed out forecasts for the Federal Reserve to lower its main interest rate soon. The federal funds rate is sitting at its highest level in more than two decades, and a cut would goose investment prices and remove some of the downward pressure on the economy. “There was a lot lying on today’s CPI print to prove that disinflation was simply delayed these last three months and not derailed,” according to Alexandra Wilson-Elizondo, co-chief investment officer of the multi-asset solutions business in Goldman Sachs Asset Management. A separate report showed no growth in spending at U.S. retailers in April from March. It was a weaker showing than the 0.4% growth economists expected. Slowing growth in retail sales could be seen as a positive for markets, because it could reduce the upward pressure on inflation. But a stalling out also raises worries about cracks forming in U.S. consumer spending, which has been one of the main pillars keeping the economy out of a recession. Pressure has grown particularly high on lower-income households. “Hopefully the consumer isn’t running out of steam, but with pandemic savings spent, rising delinquencies, slower wage growth, and now flat retail sales, a more abrupt slowing of the economy can’t be ruled out,” said Brian Jacobsen, chief economist at Annex Wealth Management. That could threaten one of the main hopes that’s rallied the U.S. stock market toward its records: The Federal Reserve can pull off the balancing act of slowing the economy enough through high interest rates to stamp out high inflation but not so much that it causes a bad recession. A separate discouraging report released in the morning, meanwhile, said manufacturing in New York state is contracting more than expected. On Wall Street, Petco Health + Wellness helped lead the market after soaring 27.9%. It named Glenn Murphy, who is CEO of investment firm FIS Holdings, as its executive chairman. On the losing end were GameStop and AMC Entertainment, as momentum reversed following their jaw-dropping starts to the week. GameStop fell 18.9%, though it’s still up 126.5% for the week so far. AMC Entertainment sank 20% after it said it will issue nearly 23.3 million shares of its stock to wipe out $163.9 million in debt. All told, the S&P 500 rose 61.47 points to 5,308.15. The Dow added 349.89 to 39,908.00, and the Nasdaq jumped 231.21 to 16,742.39. In the bond market, the yield on the 10-year Treasury eased to 4.34% from 4.45% late Tuesday. The two-year yield, which moves more closely with expectation for Fed action, sank to 4.72% to from 4.82%. Traders are now forecasting a nearly 95% probability that the Fed cuts its main interest rate at least once this year, according to data from CME Group. That’s up from just below 90% a day before. In stock markets abroad, Shanghai’s fell 0.8% after China’s central bank left a key lending rate unchanged. Indexes were mixed elsewhere in Asia and modestly higher in Europe. ___ AP Writers Matt Ott and Zimo Zhong contributed.
Stock market today: Nasdaq closes at record high, meme stocks surge again ahead of inflation data 2024-05-15 05:37:00+00:00 - Meme stocks soared again on Tuesday, as US equities broadly finished the trading day higher. The moves follow comments from President Biden on new China tariffs as investors count down to Wednesday's heavily anticipated look into consumer prices. The S&P 500 (^GSPC) and Dow Jones Industrial Average (^DJI) jumped about 0.5% and 0.3%, respectively. The tech-heavy Nasdaq Composite (^IXIC) climbed about 0.8% to reach a new record close of 16,511 — its first record since April 11. President Biden spoke Tuesday afternoon about the administration's decision to announce a new wave of tariffs across an array of Chinese goods. The White House plans to raise duties on $18 billion in Chinese imports, which include electric vehicles, steel, aluminum, semiconductors, medical devices, and more. Meanwhile, new data on Tuesday showed wholesale prices increased 0.5% month over month in April, above the 0.3% consensus expected. That was according to the latest release of the Producer Price Index, which measures prices producers receive for goods produced. But the release also showed March's monthly price increase was revised lower to a decrease of 0.1% from an initial reading of a 0.2% increase. The mixed bag helped Wall Street largely shrug off the report. The more crucial reading of inflation is expected on Wednesday with the release of the Consumer Price Index. For his part, Fed Chair Jerome Powell said Tuesday that PPI was more "mixed" than "hot," reiterating during a question and answer session that he does not expect the central bank's next move to be a rate hike. In individual movers, the meme-stock train rolled on. AMC (AMC) shares surged, up as much as 120% before paring gains to close up just above 30%. GameStop (GME) also more than doubled at one point before finishing up around 60%. A rally in meme darlings has dominated the early week as the return of an influential social media star kick-started a new mania for meme stocks. Read more: How does the labor market affect inflation? LIVE COVERAGE IS OVER 11 updates Nasdaq hits record Meme stocks soared again on Tuesday as US equities finished the trading day higher ahead of a crucial inflation print on Wednesday. The S&P 500 (^GSPC) and Dow Jones Industrial Average (^DJI) jumped about 0.5% and 0.3%, respectively. The tech-heavy Nasdaq Composite (^IXIC) climbed about 0.8% to reach a new record close of 16,511 — the highest level since April 11. Here comes the CPI report... Higher energy prices, fueled by an increase in gas prices, are expected to contribute to a "relatively firmer headline CPI print," Bank of America economists Stephen Juneau and Michael Gapen wrote in a note to clients last week. "The good news is that gasoline prices have fallen in May as geopolitical risks to higher oil prices have eased for the time being. Therefore, further increase in the near-term could be more challenged," the economists said. "Core" inflation, which strips out the more volatile costs of food and gas, will likely remain sticky due to higher costs of shelter and core services like insurance and medical care. In March, the BLS noted sharp upticks in core services like motor vehicle insurance, along with motor vehicle maintenance and repair. The indexes jumped 2.6% and 1.6%, respectively, after rising just 0.9% and 0.4% in February. But economists largely expect those trends to reverse. "We expect motor vehicle insurance and maintenance prices to increase at a slower pace in April after both categories saw a surge in prices in March," said Bank of America's Juneau and Gapen. Morgan Stanley added that, in addition to weaker car insurance inflation, disinflation trends should also improve in rents and healthcare. "Cooling labor markets and weak data on new leases indicate further deceleration in rent inflation," Morgan Stanley lead economist Diego Anzoategui wrote in a note to clients last week. "This and the next few months seem to be important months for rent inflation." "We also expect a slight deceleration in healthcare, driven by lower health insurance prices," he said. Read more here. Areas of the market to watch ahead of CPI print A crucial inflation report is set for release at 8:30 a.m. ET on Wednesday. Wall Street expects the Consumer Price Index (CPI) to show prices in April increased 3.4% compared to the year prior, a slight deceleration from March's 3.5% annual gain in prices, according to estimates from Bloomberg. Over the prior month, consumer prices are expected to have risen 0.4%, matching March's month-over-month increase. On a "core" basis, which strips out the more volatile costs of food and gas, prices in April are expected to have risen 3.6% over last year — a slowdown from the 3.8% annual increase seen in March, according to Bloomberg data. Core prices are expected to have climbed 0.3% month over month in April, compared to the 0.4% increase seen in the prior month. How the print compares to consensus estimates will be of particular focus during Wednesday's trading day. Analyzing the day of market action back to May 2023's CPI print, the equity research team at Goldman Sachs led by David Kostin found that "interest rate sensitive pockets of the equity market typically experience particularly large moves on CPI days regardless of the magnitude of the surprise." As seen in the chart below, non-profitable tech and the small-cap Russell 2000 index (^RUT) have moved significantly more depending on where the inflation print lands over the past year. Oil slides amid sticky inflation data Oil prices slid more than 1% Tuesday after sticky inflation data raised concerns that that the Federal Reserve won't want to rush rate cuts. “The slightly higher PPI (producer price Index) this morning is still a cautionary flag for the Fed Reserve to hold rates steady which could be a headwind for crude,” Dennis Kissler, senior vice president at BOK Financial, said in a note to clients Tuesday. On Tuesday West Texas Intermediate (CL=F) traded below $78 per barrel. Brent (BZ=F), the international benchmark price, hovered above $82 per barrel. Oil prices have slid in recent weeks amid an unwinding of geopolitical risks. Analysts now expect oil alliance OPEC+ to extend its production cuts beyond June. Crude futures are up roughly 8% year to-date. Biden on new China tariffs: 'They're cheating' President Biden spoke Tuesday about the administration's decision to announce a new wave of tariffs across an array of Chinese goods. "American workers can outwork and outcompete anyone as long as the competition is fair. But for too long it hasn't been fair," the president said while speaking at the White House's South Lawn. He accused the Chinese government of "cheating" due to heavy state subsidies and "unfairly low" global market prices. Electric vehicles are a prime focus, with duties in that category set to quadruple this year from 25% to 100%. The "future of electric vehicles will be made in America by union workers. Period," Biden said. Other tariff targets include steel, aluminum, semiconductors, medical devices, and more. The administration plans to raise duties on $18 billion in Chinese imports. The announcement comes as President Biden gears up for a rematch against his predecessor, Donald Trump. President Joe Biden speaks in the Rose Garden of the White House in Washington, Tuesday, May 14, 2024, announcing plans to impose major new tariffs on electric vehicles, semiconductors, solar equipment, and medical supplies imported from China. (AP Photo/Susan Walsh) (ASSOCIATED PRESS) Yahoo Finance's Ben Werschkul and Brian Sozzi have more here: Biden's actions notably do not include the lowering of more than $300 billion in Trump-era duties on China. Biden largely re-upped former President Donald Trump's policy — and added new tariffs on certain sectors on top. "The president is taking a tough, strategic approach combining investment at home with enforcement against China in key sectors," national economic adviser Lael Brainard said ahead of the news. Biden's top economic aide also drew a sharp contrast with Trump's trade record in her comments to reporters. She said Trump's moves in office "did not deliver" and that his current 2024 campaign trail promises would spike inflation. Most of the new tariffs announced this week could be felt quickly and are set to be implemented this year. Others — such as new duties on semiconductors and batteries — are set to phase in more slowly in 2025 and 2026. Stocks flat ahead of Biden comments As investors awaited comments from President Biden on recently announced China tariffs, markets were little changed in afternoon trading. The benchmark S&P 500 (^GSPC) and Dow Jones Industrial Average (^DJI) traded flat while the tech-heavy Nasdaq Composite (^IXIC) moved about 0.2% higher. The White House plans to raise duties on $18 billion in Chinese imports and electric vehicles serving are a key focus, with duties there set to quadruple in 2024 from 25% to 100%. Amazon's cloud unit CEO Adam Selipsky to step down Amazon (AMZN) shares slipped less than 1% on Tuesday as the company announced the CEO of its cloud computing business, Adam Selipsky, is stepping down next month. Matt Garman, senior vice president of sales and marketing at AWS, will replace Selipsky as CEO effective June 3, the company said. Yahoo Finance's Hamza Shaban reports: Selipsky's departure comes at a high point for AWS. The cloud services unit is rapidly expanding and has reached a significant milestone of generating a $100 billion run rate. Amazon's broader artificial intelligence strategy runs through AWS, the industry's top cloud service by market share. During the company's most recent earnings report, executives said cloud customers are increasingly signing up for bigger deals with longer commitments, many with generative AI components. "Given the state of the business and the leadership team, now is an appropriate moment for me to make this transition, and to take the opportunity to spend more time with family for a while, recharge a bit, and create some mental free space to reflect and consider the possibilities," Selipsky said. He took over AWS in 2021. Selipsky, whose three-year tenure was defined by the pandemic, oversaw the business as companies were reeling from the disruptions of the public health crisis and pulled back from spending. But the cloud division has since posted swelling sales growth. Last quarter revenue for AWS came in at $25 billion, beating analyst expectations and increasing about 17% compared to the same period last year. Powell: Wholesale prices report wasn't 'hot' but 'mixed' Wholesale prices rose more than expected in April, according to new data released Tuesday. However, when analyzing revisions to March's Producer Price Index, Federal Reserve Chair Jerome Powell argued the release was "mixed." "We had a producer price index reading just a couple of hours ago, and I would say it's actually quite mixed," Powell said during a panel in Amsterdam. "You know, the headline numbers were higher, but they were backward revisions." He added: "I wouldn't call it hot, I would call it sort of mixed." Wholesale prices increased 0.5% month over month in April, above the 0.3% consensus had expected, per the latest release of the Producer Price Index, which measures prices producers receive for goods produced. "Core" PPI, which strips out the volatile food and energy categories, also rose 0.5%, above estimates for a 0.2% increase. Also, in the release, March's monthly price increase was revised lower to a decrease of 0.1% from an initial reading of a 0.2% increase. Speaking broadly about inflation, Powell said Tuesday his confidence in inflation continuing to cool is not as high as it was at the start of the year and that the central bank will need to be patient before lowering interest rates. "We did not expect this to be a smooth road, but these [inflation readings] were higher than I think anybody expected,” Powell said. “What that has told us is that we'll need to be patient and let restrictive policy do its work.” AMC cashes in on the meme frenzy AMC Entertainment (AMC) is cashing in on the revival of the meme stock trade. The struggling theater chain raised $250 million of "new equity capital" through the sale of 72.5 million shares on Monday, per an SEC filing. The completion of the equity offering, which was initially launched on March 28, came as the meme trade roared back into action on Monday. After the reemergence of Keith Gill, also known as "Roaring Kitty," whose bull case on GameStop ignited the meme stock rally back in 2021, sent shares of GameStop (GME) soaring in early action on Monday, AMC quickly spiked in sympathy. The stock has now more than tripled since Friday's close, with shares up nearly 100% in Tuesday's trading action. AMC had been struggling since the pandemic amid a slow return to theaters from moviegoers. In the company's most recent quarter, reported on May 8, AMC produced revenue of $951.4 million, down from $954.4 million in the same quarter a year prior. The company's losses improved, however, with AMC producing an earnings per share loss of $0.62 in the first quarter, a narrower loss than the $1.71 seen in the same quarter a year prior. Wedbush analyst Alicia Reese wrote in a research note on May 9 that the company was focused on "alleviating" its $4.6 billion in debt outstanding. The debt, Reese wrote, "overshadowed" any positive factors happening underneath the surface during the prior quarter. Stocks little changed at open, meme stocks soar Meme stocks soared again on Tuesday as US equities more broadly stayed muted amid a mixed inflation reading. Investors also awaited a Jerome Powell speech that could shed light on the path of interest rates. The S&P 500 (^GSPC), Dow Jones Industrial Average (^DJI), and the tech-heavy Nasdaq Composite (^IXIC) were all little changed at the open on Tuesday. The exciting action of the morning came in meme stocks. AMC (AMC) shares surged, up over 120%, while GameStop (GME) popped about 100% as retail investors piled in for a second day. Trading on both stocks was halted just after the open on Tuesday. Wholesale prices increased more than expected in April Wholesale prices rose more than expected in April, furthering concerns inflation may be stickier than initially hoped and sending futures tied to the major US stock indexes lower. Wholesale prices increased 0.5% month over month in April, above the 0.3% consensus had expected, per the latest release of the Producer Price Index, which measures prices producers receive for goods produced. "Core" PPI, which strips out the volatile food and energy categories, also rose 0.5%, above estimates for a 0.2% increase. Also, in the release, March's monthly price increase was revised lower to a decrease of 0.1% from an initial reading of 0.2% increase. Futures tied to all three major averages turned lower following the news. The Dow Jones Industrial Average futures (YM=F) were lower about 0.1% after the blue-chip benchmark broke an eight-day run of gains on Monday in lackluster trading. Futures on the S&P 500 (ES=F) fell 0.2% while those tied to the the tech-heavy Nasdaq 100 (NQ=F) fell about 0.3%. Meanwhile, the 10-year Treasury yield (^TNX) rose about 5 basis points to 4.53%.
Why FuelCell Energy, Bloom, and Clean Energy Fuels Rose Today 2024-05-15 04:31:00+00:00 - Renewable energy stocks surged higher Tuesday after Plug Power (NASDAQ: PLUG) announced receipt of a $1.66 billion loan guarantee from the U.S. Department of Energy. Plug currently has two hydrogen fuel facilities producing at full capacity, with a third approaching that mark. Plug says the government assistance will help it to "finance the development, construction, and ownership of up to six green hydrogen production facilities" -- although it's not 100% clear whether it was including its first three facilities in this tally. Either way, Plug's news inspired investors to snap up shares of similar green energy stocks that might be able to attract some federal assistance of their own. As of 1 p.m. ET, shares of FuelCell Energy (NASDAQ: FCEL) stock were up by an astounding 32.4%, and Bloom Energy (NYSE: BE) gained 7.9%. Clean Energy Fuels (NASDAQ: CLNE), which provides renewable natural gas and filling stations for alternative-fuel heavy vehicles, was up by 10.5%. Plug's plans Plug hailed the Department of Energy award as "a major milestone in the U.S.'s commitment to advance the development of large-scale hydrogen production, processing, delivery, and storage," saying it "also underscores the application of green hydrogen to help meet decarbonization goals across multiple sectors of the economy." This doesn't guarantee that other loan subsidies for its peers are in the offing. But it does suggest Plug's award is part of a larger policy that could benefit FuelCell, Bloom, and Clean Energy Fuels. Should you buy FuelCell, Bloom Energy, or Clean Energy Fuels? That being said, it's worth pointing out -- and repeating -- that despite nearly three decades of investing in fuel cell technology, Plug Power has never earned a profit from selling hydrogen fuel or hydrogen fuel cells. According to historical data from S&P Global Market Intelligence, Bloom hasn't turned a profit either, while FuelCell Energy hasn't earned a profit since 1997. Clean Energy earned a profit in 2017... but never since. Maybe government-subsidized loans will help them change that story. Maybe they won't. But I wouldn't buy until I know for sure. Should you invest $1,000 in FuelCell Energy right now? Before you buy stock in FuelCell Energy, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and FuelCell Energy wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Story continues Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $553,880!* Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. See the 10 stocks » *Stock Advisor returns as of May 13, 2024 Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Clean Energy Fuels. The Motley Fool has a disclosure policy. Why FuelCell Energy, Bloom, and Clean Energy Fuels Rose Today was originally published by The Motley Fool
Citi executive in charge of implementing bank's restructuring departs 2024-05-15 03:53:00+00:00 - (Reuters) - Citigroup's Titi Cole, a top executive in charge of implementing its sweeping restructuring plan, is leaving the bank, an internal memo seen by Reuters showed on Tuesday. Cole, as the head of legacy franchises, executed the third largest U.S. lender's plan to simplify the firm by completing the sales of consumer banking businesses in nine non-core markets. CEO Jane Fraser began a sweeping reorganization in September to simplify the bank and improve performance. Investors have rewarded Fraser with a boost in the share price since the overhaul began. The bank has shed legacy businesses in several international markets in recent years and has plans to offload its Mexico consumer banking unit, Banamex, in 2025 through an initial public offering. Cole, who has spent 30 years at Citi, is taking the role of an executive director at a non-profit focused on women and healthcare. Citi also announced Mike Whitaker, head of the bank's operations and technology team, is leaving after a 16-year stint at the bank. Tim Ryan, who most recently led PwC's U.S. franchise as senior partner, will become Citi's head of technology and business enablement. Ryan will also join the lender's executive management team. (Reporting by Lananh Nguyen in New York and Manya Saini in Bengaluru; Editing by Krishna Chandra Eluri)
Overdue Bills Are Rising With US Debt Delinquencies, Fed Survey Shows 2024-05-15 03:47:00+00:00 - (Bloomberg) — US household debt has reached a record and more borrowers are struggling to keep up. Most Read from Bloomberg Overall US household debt rose to $17.7 trillion, according to the Federal Reserve Bank of New York’s Quarterly Report on Household Debt and Credit released Tuesday. That’s an increase of $184 billion, or 1.1%, from the fourth quarter. The data highlight the mounting financial pressures on American families in an age of elevated inflation. The persistent rise in the prices of essentials such as food and rent have strained household budgets, pushing people to borrow against their credit cards to pay for necessities. Consumers have added $3.4 trillion in debt since the pandemic, and that increased debt bears much higher interest rates. Total credit card debt stood at $1.12 trillion in the first quarter of 2024, according to the report. That’s down slightly from the $1.13 trillion in the fourth quarter, in line with seasonal patterns of consumers paying debt incurred over the holidays. But credit card balances are up almost 25% from the first quarter of 2020. “Credit card balances usually rise in the second and third quarters and then they really tend to spike around the holidays in Q4,” Ted Rossman, a senior analyst at Bankrate, wrote in a note to clients. “With inflation and interest rates likely to remain elevated, there’s a very good chance credit card balances will surge to new highs later in 2024.” Fed Chair Jerome Powell repeated Tuesday it will likely take more time than previously thought before the US central bank feels confident enough about the outlook for inflation to lower interest rates. Consumers facing a financial squeeze may be maxing out their credit cards and falling behind on payments, Fed researchers said. They noted in a blog post that “one observable factor that is strongly correlated with future delinquencies is a high credit card utilization rate.” As of March, 3.2% of outstanding debt was in some stage of delinquency. That remains 1.5 percentage points lower than the fourth quarter of 2019, but delinquency transition rates increased for all product types, according to the Fed. Deliquency Woes In a separate post, economists at the St. Louis Fed pointed out that credit card delinquency rates are returning to historically more normal levels after pandemic-related government assistance programs pushed them to unusually low numbers. Story continues They added, however, that “present levels of credit card delinquency are greater than pre-pandemic levels, suggesting that a trend which began prior to the pandemic has accelerated.” About 121,000 consumers had a bankruptcy notation added to their credit reports last quarter, and approximately 4.8% of consumers held some debt in third-party collections. Borrowers using more than 60% of their credit are falling into delinquency at a faster pace than before the pandemic, making up most of the increase in credit card delinquency rates. About a third of balances associated with borrowers using more than 90% of their credit became delinquent in the past year, compared to about 25% before the pandemic. The data show a wide range in credit card utilization rates. About one in six credit card users are using at least 90% of their available credit. And an additional 11% are using between 60% and 90% of their available credit. The Fed researchers found younger borrowers and those with lower incomes are more apt to be financially stressed than older borrowers and those with higher incomes, who may have more credit available. “Millennials were the only group whose delinquencies exceeded their pre-pandemic rate,” New York Fed researchers wrote in a blog post. The Fed’s report showed 6.9% of credit card debt transitioned to serious delinquency last quarter, up from 4.6% a year ago. And for credit card holders aged 18–29, 9.9% of balances were in serious delinquency. “In the first quarter of 2024, credit card and auto loan transition rates into serious delinquency continued to rise across all age groups,” said Joelle Scally, Regional Economic Principal within the Household and Public Policy Research Division at the New York Fed. “An increasing number of borrowers missed credit card payments, revealing worsening financial distress among some households.” Auto loan delinquencies are also higher as the average monthly car payment jumped to $738 in 2023. Close to 2.8% of auto loans are now 90 or more days delinquent — that equates to more than 3 million cars. Auto loans are the second-largest debt category following mortgage debt, with $1.62 trillion outstanding. The biggest household debt holding is for housing. It accounts for more that 70% of the total. That debt is performing well, but homeowners are increasingly tapping their accumulated home equity in the form of a home equity loans. Last quarter $16 billion in additional home equity loans was originated — the biggest increase since 2008 — and $37 billion was added over the past year. Homeowners have about $580 billion in outstanding home equity credit available, the most in about 15 years. Outstanding student loan debt was roughly unchanged and stood at $1.60 trillion. Its difficult to determine how much of that debt is delinquent as missed federal student loan payments will not be reported to credit bureaus until the fourth quarter. (Updates with Powell comment in seventh paragraph.) Most Read from Bloomberg Businessweek ©2024 Bloomberg L.P.
Warren Buffett "Guaranteed" He'd Get 50% Annual Returns With Only $1 Million As Berkshire's Cash Hoard Soars To Over $189 Billion 2024-05-15 03:30:00+00:00 - Warren Buffett "Guaranteed" He'd Get 50% Annual Returns With Only $1 Million As Berkshire's Cash Hoard Soars To Over $189 Billion Legendary investor Warren Buffett has long advocated for the average investor to regularly put money in an S&P 500 index fund rather than buying actively managed funds. However, that's not to say he doesn't think massive outperformance isn't possible. As far back as 1999, Mr. Buffett famously said he could achieve 50% annual returns if he had only $1 million to manage, stating, "The highest rates of return I’ve ever achieved were in the 1950s. I killed the Dow. You ought to see the numbers. But I was investing peanuts then. It’s a huge structural advantage not to have a lot of money. I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that." Don't Miss: Startup behind ‘the #1 free contractor app' grows 162% YoY, opens its doors for investors at a $100 minimum . Invest in time-tested solution that aims to solve this $600 billion women’s health problem at 80 cents per share. In the most recent Berkshire Hathaway shareholder meeting, the topic came up again, with Mr. Buffett doubling down on his belief he could earn a 50% annual return, explaining his plans would be to "try and know everything about everything small." However, for smaller investors interested in trying to achieve the astronomical returns Buffett says are possible, Buffett cautions investors to not just do it for the money, explaining "With a million dollars, you could earn 50% a year, but you have to be in love with the subject. You can't just be in love with the money; you really got to just find it like a biologist looks for something because they want to find something. It's built in." Of course, that's not to say it'd be easy, likely explaining why Buffett still recommends investors buy passive funds that simply seek to track the market rather than funds run by active managers charging higher fees in an attempt to beat the market. Trending: Invest like a millionaire. Exclusive opportunity to invest in Epic Games $17 billion gaming empire. Outperformance for Warren Buffett's Berkshire Hathaway (NYSE:BRK) remains difficult, due to its sheer size, with Buffett writing in his most recent shareholder letter that "We have no possibility of eye-popping performance" given that "There remain only a handful of companies in this country capable of truly moving the needle at Berkshire, and they have been endlessly picked over by us and by others." At the most recent Berkshire shareholder meeting, Buffett discussed his company's massive $189 billion of cash, saying, "I don’t think anyone sitting at this table has any idea how to use it effectively, and therefore we don’t use it." Story continues With size commonly cited as an enemy of returns, one benefit of Berkshire's massive size and cash pile is its large margin of safety and the assurance that Berkshire could capitalize on any market panic. While Buffett remains patient, one stock that Buffett consistently likes to buy is his own, with Berkshire buying back $2.56 billion of its shares in the first quarter alone. Keep Reading: Amid the ongoing EV revolution, previously overlooked low-income communities now harbor a huge investment opportunity . Here is where your most successful angel investment may be hidden. "ACTIVE INVESTORS' SECRET WEAPON" Supercharge Your Stock Market Game with the #1 "news & everything else" trading tool: Benzinga Pro - Click here to start Your 14-Day Trial Now! Get the latest stock analysis from Benzinga? This article Warren Buffett "Guaranteed" He'd Get 50% Annual Returns With Only $1 Million As Berkshire's Cash Hoard Soars To Over $189 Billion originally appeared on Benzinga.com © 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
5 REITs That Just Received Price Target Increases 2024-05-15 00:30:00+00:00 - 5 REITs That Just Received Price Target Increases Analysts carry a great deal of weight on Wall Street and help to shape investor sentiment. Analyst upgrades & price target increases are great motivations for investors to buy a stock. Consequently, when an analyst upgrades or maintains a previous rating while increasing the price target, investors may anticipate a boost to the share price. Analysts will often review a particular subsector and then increase price targets on more than one stock within a certain sector. Other times when one analyst boosts a rating on a stock, another analyst will soon follow suit. Three analysts at Mizuho have been busy in the last few days, assessing numerous real estate investment trusts (REITs). Here are five REITs that just received Mizuho price target hikes: VICI Properties Inc (NYSE:VICI) is a New York based diversified experiential REIT. It specializes in owning and operating gaming, hospitality, and entertainment properties. Its triple-net portfolio includes hotels in Las Vegas, such as Caesars Palace, MGM Grand and the Venetian Resort. Don't Miss: Warren Buffett once said, "If you don't find a way to make money while you sleep, you will work until you die." Here's how you can collect passive rental income without being a landlord. Elon Musk and Jeff Bezos are bullish on one city that could dethrone New York and become the new financial capital of the US. Investing in its booming real estate market has never been more accessible. VICI Properties was formed as a REIT in 2017 and was a spinoff from Caesars Entertainment Operating Company as part of a Chapter 11 reorganization. The IPO was held on Feb. 1, 2018. Vici Properties' portfolio presently includes 54 gaming and 38 nongaming facilities, with 60,300 hotel rooms and over 500 restaurants, bars, nightclubs and sportsbooks. On May 1, VICI Properties reported first quarter earnings that met consensus estimates and beat the consensus estimate on revenue. On May 10, Mizuho analyst Haendel St. Juste maintained VICI Properties with a Buy and raised the price target from $31 to $32. Realty Income Corp (NYSE:O) is a San Diego-based, triple-net lease REIT. It has over 15,450 properties worldwide. The "Monthly Dividend Company," as it's widely known, is a member of the S&P 500 and an S&P 500 Dividend Aristocrat. Realty Income has increased its dividend 124 times since its IPO in 1994. On May 6, Realty Income released its first quarter operating results. Funds From Operations (FFO) of $1.05 per share beat the estimate of $1.04 per share and revenue of $1.26 billion beat the consensus estimate of $1.10 billion. Story continues On May 10, Mizuho analyst Vikram Malhorta maintained Realty Income with a Buy and raised the price target from $56 to $59. Realty Income recently closed at $54.63. Trending: Want to Create a Passive Income Stream? These High-Yield Real Estate Notes Might Be Your Holy Grail Essential Properties Realty Trust Inc (NYSE:EPRT) is a Princeton, NJ based diversified REIT that owns and manages single-tenant properties with net leases for service-oriented and experience-based businesses. Essential Properties was founded in 2016. It has a portfolio of 1873 properties across 48 states. 99.8% of its properties are presently leased, with a weighted average lease term (WALT) of 14.0 years. First quarter earnings were mixed. On April 24, Essential Properties reported an FFO of $0.42 per share, missing the estimate of $0.46 per share but revenue of $103.50 million topped the consensus estimate of $10.06 million. On May 10, Mizuho analyst Vikram Malhorta maintained Essential Properties Realty Trust with a Buy and raised the price target from $26 to $29. Agree Realty Corporation (NYSE:ADC) is a Bloomfield Hills, MI based triple-net-lease REIT focused on retail properties. Its portfolio includes 2161 owned and operated properties totaling 45 million square feet across 49 states. 69% of its tenants are investment grade, including well-known names like Walmart Inc (NYSE:WMT), Best Buy Co Inc (NYSE:BBY) Dollar General Corp (NYSE:DG) and Kroger Co (NYSE:KR). Agree Realty had a terrific first quarter. On April 23 Agree reported FFO of $1.03 per share, beating the estimate of $1.01 per share. Revenue of $149.453 million was ahead of the estimate of $146.462 million and topped its Q1 2023 revenue of $126.618 million by 18.03%. On May 10, Mizuho analyst Haendel St. Juste maintained Agree Realty at Neutral and raised the price target from $60 to $62. Welltower Inc (NYSE:WELL) is a Toledo, Ohio based health care REIT that owns interests in housing for seniors, post-acute communities and outpatient medical properties. It does this by providing capital to the operators who run these facilities. Welltower was founded in 1970 under the original name of Health Care Fund and was incorporated as a REIT in 1985. Welltower is a member of the S&P 500. Welltower has a total portfolio of 2096 properties, comprised of Senior Housing, Outpatient Medical and Long-term/Post-Acute care across the U.S. On April 29, Welltower reported its Q1 earnings. FFO of $1.01 per share beat the consensus estimate of $0.95. Revenue of $1.859 billion beat the consensus estimate of $1.806 billion and topped Q1 2023 revenue of $1.561 billion. Welltower also increased its FY24 FFO from $3.95-$4.10 per share to $4.02-$4.15 per share. On May 8, Mizuho analyst Omotayo Okusanya maintained Welltower with a Buy and raised the price target from $98 to $105. With the strong earnings reports, it's easy to see why these five REITs received price target increases. However, investors should remember that analysts’ price targets are the highest price expected within the next year and analysts are only correct about 50% of the time. Read Next: Passive income investments are one of the most trusted methods for riding out a recession, so it's no surprise that people are turning to this Jeff Bezos-backed startup to generate monthly rental income without having to purchase their own property. Commercial real estate has historically outperformed the stock market, but few investors have the capital or resources needed to invest in this asset class. This platform allows individuals to invest in commercial real estate with as little as $5,000. "ACTIVE INVESTORS' SECRET WEAPON" Supercharge Your Stock Market Game with the #1 "news & everything else" trading tool: Benzinga Pro - Click here to start Your 14-Day Trial Now! Get the latest stock analysis from Benzinga? This article 5 REITs That Just Received Price Target Increases originally appeared on Benzinga.com © 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Should you tip your French waiter? Here's what to know ahead of Paris Olympics. 2024-05-14 22:47:00+00:00 - Americans are often unclear on when to tip stateside, let alone what customs apply in France. So as they prepare to join the 15 million people around the world traveling to Paris for the upcoming Olympics, some U.S. tourists could use a primer on tipping etiquette in the City of Light. While changing tipping norms at home can leave American consumers frustrated over ubiquitous gratuity prompts these days, a completely different set of unspoken rules govern tipping expectations overseas — and some French restaurant operators may be eager to take advantage of foreigners' ignorance. At restaurants in France, bills automatically include a service fee of 15% to cover servers' wages, so waitstaff there are typically far less dependent on tips to earn a living wage, as they are in the U.S. Instead, it's up to the discretion of the patron to decide if the service was good enough to warrant an extra gratuity of a couple Euros, referred to as a "pourboire" (literally meaning "for drink"). Another cultural difference: All manner of service people, including waiters and salespeople, are typically somewhat less solicitous of customers than they are in the U.S., in part because good service doesn't invite the same kind of monetary reward as in the U.S. In other words, don't expect your waiter to introduce herself by name, American-style — or to serve your food with an ingratiating smile. "The expression of service is not necessarily fast and attentive like it is here in U.S.," said Erika Rodriguez, an operations specialist at travel site Going.com, who has spent the past four summers in France. "That's not to say it's a bad experience, but they want to make clear they are not your servant. They are very direct." Are restaurants taking advantage? It's no secret that European establishments often prefer Americans over other nationalities of tourists precisely because they're inclined to tip. And some visitors to France report that restaurants are trying to squeeze extra cash out of tourists by encouraging them to leave the kind of gratuity they would in the U.S. The trick was so common in St. Bart's the last time she visited, that travel guru Melissa Biggs Bradley, founder of the Indagare travel agency, referred to it as "the St. Bart's scam." "All the restaurants were asking people if they would like to leave tips without acknowledging that gratuity is built in," Bradley told CBS MoneyWatch. Going.com's Rodriguez noted that in Paris, that tactic is more common in touristy spots than at restaurants that mostly draw locals. "They bring you a credit card machine with suggested tips comparable to amounts you leave in the U.S.," she told CBS MoneyWatch. Bending the rules While that is hardly illegal, experts say it does amount to taking advantage of diners who are unfamiliar with foreign customs. Brian Warrener, who has researched tipping norms across Europe and how they differ from those in the U.S., said that some restaurants in France he detected what he referred to as "a little bit of a bending of the rules." "Especially in places where lots of Americans are traveling, restaurants will include a line on the bottom in English saying tipping is not included, even though there's a 15% service charge," Warrener told CBS MoneyWatch. "So they are clearly trying to communicate to folks who may not know the tipping forms in France." He noted that some operators use tablets to accept payment that include prompts for tips of 15% to 30%, a practice he suspects is becoming more widespread in anticipation of visitors arriving in Paris for the Olympics. "In the U.S., that would be an inflated tip, but in France, where tipping is not part of compensation, it's taking advantage," Warrener said. Bradley of Indagare offered advice for avoiding such tipping ruses. "If you pay by credit card and are prompted to leave a tip, ask if service is included," Bradley said. Be forewarned: "They might try to fudge it, but they can't say 'no' when it is. They could say it's a question of whether or not you want to give me something for nice service. But it's absolutely standard, so the assumption should be you're paying the service," he added. How much should I leave at a restaurant in Paris? Given that a service charge is already baked into the total cost of a meal, servers aren't expecting a whole lot extra. But it is common to leave some loose change if you're getting a coffee or meal in reward for good service. For example, rounding up a bill from 13.50 Euros to 14 Euros, or leaving a few Euros, is usually sufficient. "What Europeans are accustomed to doing when they get good service is they'll round up the bill to say, 'Nice job, here's a little something extra,'" Warrener said. He adds that, as a general rule, it's incumbent on tourists to familiarize themselves with other countries' customs before jetting overseas. "If you go to France and don't understand the tipping culture and assume it's like it is in the U.S., they're making it easy for you to make a mistake to their benefit," he said.