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Amazon and the Compelling Case for 30% Upside 2024-05-13 12:55:00+00:00 - Key Points Shares of Amazon are on the verge of cruising into blue-sky territory. A strong earnings report and multiple bullish calls from analysts are driving momentum on the bid. The technical factors also support the potential for upside. 5 stocks we like better than Amazon.com Few would have expected Amazon.com Inc.'s NASDAQ: AMZN rally to continue strong when it kicked off at the start of last year. The tech titan’s shares had just taken a 50% haircut in the face of rampant inflation and a broad flight from equities, and there were serious concerns all around. However, what started in January 2023 as a brief and final leg down to 2018 levels soon turned into a bottom. Notwithstanding a couple of bumps along the road in the meantime, it’s been, broadly speaking, one-way traffic. Just as high inflation was hurting Amazon two years ago, its retreat is helping it now. Get Amazon.com alerts: Sign Up The effect is doubled for Amazon compared to the average tech company. Lower inflation helps drive consumer spending on Amazon's e-commerce platform while also strengthening the case for lower borrowing rates, which reduce costs. Considering the Potential But with its shares after tagging a fresh all-time high this past Thursday, what kind of legs does this rally have, and what can investors expect for the coming months? According to one team of analysts, however, the short answer is more gains, 25% more of them to be specific. This is according to the team o at Citigroup, who last week boosted their price target on Amazon shares from $215 up to $225. The move came off the back of Amazon’s Q1 earnings report from the last day of April, which impressed Citi enough to have them revising their outlook. The team feels even with the recent share price appreciation, the market is still underestimating the company’s growth potential. This is good news for those of us on the sidelines, as Citi’s price target implies an upside of some 30% from where shares closed on Friday. But just how realistic is this, and what kind of support does that case for a 30% upside have? Strong Earnings Well, for starters, there’s no getting around to the fact that Amazon crushed analyst expectations for their earnings report, with solid beats on both headline numbers. The company’s revenue was up 13% year on year, and was Amazon’s second highest revenue print ever. The fact that it was below Q4’s record will be of little concern to Amazon investors, given that Amazon’s year-end quarter is consistently at its best every year. There was solid growth in their cloud business, with CEO Andy Jassy pointing out that “the combination of companies renewing their infrastructure modernization efforts and the appeal of AWS’s AI capabilities is reaccelerating AWS’s growth rate”; this is already at an incredible $100 billion annual revenue run rate. This is solid news for investors to hear, especially with Amazon's and the broader market's shares on the verge of all-time highs. Getting Involved And it wasn’t just the Citi team that came out bullish. More than a dozen bullish updates came from Argus, Wells Fargo, BMO Capital Markets, and Morgan Stanley, which all reiterated their Buy or Outperform ratings and gave the stock a price target well above $200. Amazon.com, Inc. (AMZN) Price Chart for Monday, May, 13, 2024 If Amazon shares trend up here in the coming weeks, they’d be breaking properly into blue sky territory for the first time since 2020. The technical factors suggest there’s a ton of room to the upside, too, with the 10% dip in the second half of April helping to have taken some of the steam out of the rally. The stock’s relative strength index (RSI), a measure of its overbought or oversold status, swung from the former towards the latter in the back half of April. Though it’s been trending up since then, at 57, it’s still getting heated up again, which bodes well for those of us eyeing the 30% upside. Before you consider Amazon.com, 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 Amazon.com wasn't on the list. While Amazon.com currently has a "Buy" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
Sweetgreen: Is There Meat Behind the 30% Earnings Surge? 2024-05-13 12:30:00+00:00 - Key Points Sweetgreen is a fast-casual restaurant chain specializing in healthy, sustainable, locally sourced salads and bowls. Sweetgreen posted an adjusted EBITDA of $100,000 in Q1 2024, an improvement from a loss of $6.7 million in the year-ago period. Sweetgreen raised full-year 2024 revenue guidance to $660 million to $675 million, up from $655 to $670 million. 5 stocks we like better than Sweetgreen Fast casual restaurant chain Sweetgreen Inc. NYSE: SG shares catapulted 34% on its Q1 2024 earnings report. While the retail/wholesale sector company still lost money and missed earnings estimates, losing 5 cents more than the loss of 18 cents consensus estimates, shares still skyrocketed to the bewilderment of bears. The question arises as to why the shares reacted the way they did. The retail/wholesale sector company has a 12.54% short float. Sweetgreen competes with fast-casual restaurants like Chipotle Mexican Grill Inc. NYSE: CMG and CAVA Group Inc. NYSE: CAVA. Get Sweetgreen alerts: Sign Up Sweetgreen Transformation Sweetgreen Today SG Sweetgreen $32.36 +0.80 (+2.53%) 52-Week Range $8.64 ▼ $34.45 Price Target $25.75 Add to Watchlist Sweetgreen is a fast-casual restaurant specializing in healthy salads and bowls that places heavy emphasis on fresh, sustainable and locally sourced real food. Their goal is to become carbon neutral by 2027. The staff chops up 30 fresh ingredients daily to prepare their premium, high-quality salads. The goal is also to become carbon neutral by 2027. In October 2023, the company made a major pivot to include proteins like salmon and meats, including steak and chicken options, to appeal to a wider audience. The test launch of its caramelized garlic steak across the Boston market in February 2024 was an overwhelming success that was indicated in its Q1 earnings. There’s the Beef The caramelized garlic steak became a dinner-time favorite. It was included in nearly one in five dinner orders. The company began rolling out steak on its menus. These are 1005 grass-fed, pasture-raised steaks from ranches that are aligned with the company's high quality and sourcing standards. Daily Ascending Triangle Breakout Pattern SG formed a daily ascending triangle breakout pattern. The ascending trendline commenced at $18.44 on May 2, 2024. The flat-top resistance was at $24.07. The breakout triggered the earning gap to $30. The daily relative strength index (RSI) surged to the 75 band. Pullback support levels are at $16.56, $15.51, $13.72 and $12.30. Looking Below the Headline Numbers While the headline EPS of a 5-cent miss wasn't very impressive, the company was able to turn an adjusted EBITDA of $100,000, which was a vast improvement from a loss of $6.7 million in the year-ago period. Revenues surged 26.2% YoY to $157.85 million, beating $152.02 million consensus analyst estimates. Most impressive was the comparable store sales growth of 5%, which was above the 3% comp guidance. In fact, the comps improved each month sequentially in the quarter, especially after the caramelized garlic steak launch. Average unit volume (AUV) was $2.9 million, consistent with the year ago period. Surprising Digital and Online Order Growth Sweetgreen's loyalty program is a hit. Its digital orders grew to 59% of total sales. Of those sales, 56% came from within its digital channels. This rate of digital orders is exceptionally high among any restaurant and fast food brands. The company opened 6 net new restaurants in the quarter. Raising Guidance Sweetgreen raised its full-year 2024 sales guidance to $660 million to $675 million, up from $655 to $670 million. Adjusted EBITDA was raised from $10 million to $19 million, up from $8 million to $15 million. Sweetgreen raised its comp guidance to 4% to 6%, from 3% to 5%. The company expects to add 23 to 27 new restaurants in 2024. In 2025, it plans to return to a net unit growth rate of 15% and above 20% in 2026 and beyond. AI and Robotics in the Future Sweetgreen is also planning to implement artificial intelligence (AI) for predictive options and recommendations and robots that will make fresh salads in under 3 minutes. This will cut down on labor costs, one of the company's largest expenses. CEO Insights Sweetgreen CEO and Co-Founder Johnathan Newman commented, “Restaurant-level profit for the first quarter was $28.5 million, a nearly 70% increase from a year ago. Additionally, we generated positive adjusted EBITDA for the quarter. As I shared on our last call, our strategies are simple: continue building our brand by creating great products and guest experiences, and expand our connection to guests by building and operating great restaurants.” Sweetgreen stock forecast and price targets are at MarketBeat. Before you consider Sweetgreen, 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 Sweetgreen wasn't on the list. While Sweetgreen currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
Feds probing Amazon self-driving robotaxi unit Zoox after 2 rear-end crashes 2024-05-13 12:16:00+00:00 - Detroit — Amazon's self-driving robotaxi unit is being investigated by the U.S. government's highway safety agency after two of its vehicles braked suddenly and were rear-ended by motorcyclists. The National Highway Traffic Safety Administration said in documents posted on its website Monday it will evaluate the automated driving system developed by Zoox. Both crashes happened during daytime hours, and the motorcyclists suffered minor injuries. In both cases, the agency confirmed that the Amazon vehicles were operating in autonomous mode leading up to the crashes. The agency said the probe will focus on the performance of the company's automated driving system during the crashes as well as how it behaves in crosswalks around pedestrians and other vulnerable road users. A message was left early Monday seeking comment from Zoox. A view of an autonomous ZOOX vehicle at the CES 2024, the world's largest annual consumer technology trade at the Las Vegas Convention Center in Las Vegas on January 09, 2024. Tayfun Coskun / Anadolu via Getty Images Zoox reported the crashes under an order issued to automated vehicle companies in 2021. Amazon acquired Zoox in June of 2020 for a price that analysts pegged at over $1 billion. In 2023, the Foster City, California, company said one of its funky-looking four-person shuttles autonomously carried employees on public roads on a mile-long route between two Zoox buildings. The company later planned to launch a shuttle service exclusively for its employees. Analysts say they expect Amazon to use the Zoox system for autonomous deliveries. Zoox vehicles don't have a steering wheel or pedals. The carriage-style interior of the vehicle has two benches that face each other. It measures just under 12 feet long, about a foot shorter than a standard Mini Cooper, and can travel up to 35 mph. Zoox already was under investigation by NHTSA. In March of 2022, the agency began looking into the company's certification that its vehicle met federal safety standards for motor vehicles. The agency said at the time that it would look into whether Zoox used its own test procedures to determine that certain federal standards weren't applicable because of the robotaxi's unique configuration.
An Inflation Test Looms Over the Economy and the Election 2024-05-13 11:19:38.854000+00:00 - Another inflation surprise? Wall Street is increasingly divided over whether the Fed will cut interest rates by Election Day. New inflation data out this week will go a long way toward settling that question, as polls show that President Biden is struggling to convince voters that he’s done a good job on the economy. It’s a big week for economic data with mixed signals on inflation. A first-quarter uptick in inflation has forced the Fed to keep borrowing costs at a 23-year high. Economists see a slight improvement, forecasting that April’s Consumer Price Index report on Wednesday will show that inflation moderated slightly last month. Such good news would follow a tamer than expected May 3 jobs report, which saw wage growth easing. (Economists will also be watching Tuesday’s Producer Price Index and retail sales data on Wednesday.) What will it take for the Fed to start cutting rates? The central bank “will need to see at least three benign core inflation prints, perhaps even four, before easing policy,” Sarah House, senior economist at Wells Fargo, wrote in a research note last week. That makes the C.P.I. data crucial, she added, as “time is running out on the clock for even a late summer rate cut.”
Mercedes workers in Alabama face anti-union message ‘barrage’ before election 2024-05-13 11:01:00+00:00 - The United Auto Workers (UAW) union is setting its sights on its next big union victory in the south, at two Mercedes-Benz plants in Vance and Woodstock, Alabama. Coming off the historic union election win at the Volkswagen plant in Chattanooga, Tennessee, 5,200 workers are to begin voting in their union election from 13 May to 17 May. The UAW’s recent win at Volkswagen to represent about 4,300 workers was one of the biggest union election wins in manufacturing in the past 16 years. “It’s just time for a change,” said Kay Finklea, a quality inspector who has worked at the Mercedes-Benz plant for 23 years. Finklea said that the pay, benefits, and work hours had stagnated or worsened since she started and the balance between work and life had deteriorated. “They say we’re supposed to work 10 hours a day, but they actually work us 12 hours a day, so by the time you get home, you’re exhausted, beat, and you don’t have time to do anything but get a quick bite, shower and lay down to get ready to wake up and do it all over again,” Finklea added. “My thing is let’s give ourselves a chance, let’s invest in us, let’s form our union and work to try to make things better for everybody.” The UAW has aimed its union-organizing effort at eliminating the “Alabama discount”, part of the economic development model in the US south in which wages are kept lower than the rest of the US. The union has highlighted the differences between the stagnant pay for workers and the immense profits of the automakers and the exorbitant salaries of executives. Mercedes-Benz has made $156bn in profits over the last decade and profits grew 200% in the past three years, according to the UAW. Top wages at Mercedes, which vary based on seniority and department, currently lag behind the hourly wage gains the UAW won at the big three domestic automakers in late 2023. The UAW has also noted it would take two years for a production worker at top pay to make what a Mercedes-Benz executive makes in a week. Mercedes-Benz’s management board members gave themselves a 78% pay increase in 2023. The Mercedes-Benz union election is the UAW’s second big test in the southern US. The union launched an organizing drive aimed at unionizing 150,000 autoworkers at non-union plants in the US after winning historic gains in their contracts at General Motors, Stellantis and Ford last November. Those gains won after a high-profile “stand-up strike” incited significant support for unionizing among other autoworkers. skip past newsletter promotion Sign up to First Thing Free daily newsletter Our US morning briefing 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 Rick Webster, who started working at the plant for a contractor in 2016 but officially began working for Mercedes in October 2022, said: “It’s time for Alabama workers to stand up and unite not just at Mercedes, but at Hyundai, Honda and Toyota. It’s time for everybody to stand up and have a voice and we need to end the Alabama discount.” Webster said that since the union drive had gone public, Mercedes management had inundated workers with texts, emails, messages and meetings urging workers to vote no in the union election. Local elected officials and business groups, including the Republican governor of Alabama, Kay Ivey, have vehemently opposed the UAW’s organizing efforts. The UAW has filed several unfair labor practice charges against Mercedes-Benz over the company’s opposition to the union campaign, including filing charges in Germany, where the company is headquartered. “It is a daily barrage of text messages, emails, and there’s an app we have for work for every kind of announcement you can think of and we’re getting two to three notifications daily. Every day before the shift, we have to sit in the team room and watch anti-union videos,” said Webster. “It’s just been a constant barrage. Everybody is just sick and tired of it.” Mercedes-Benz has denied allegations of labor law violations but has openly opposed the unionization effort. “MBUSI [Mercedes-Benz US International] fully respects our team members’ choice whether to unionize and we look forward to participating in the election process to ensure every Team Member has a chance to cast their own secret-ballot vote, as well as having access to the information necessary to make an informed choice,” a Mercedes-Benz spokesperson said in an email.
Woolworths shelves left bare across parts of Queensland after ‘terrible IT problem’ 2024-05-13 10:45:00+00:00 - A “terrible IT problem” is behind empty shelves at some Woolworths stores in Queensland. In scenes reminiscent of the panic buying of the early Covid pandemic, some Woolworths chains have been stripped of fruit and vegetables. Not sure what is happening with Woolies but empty shelves happening in both Woolies Banyo and Woolies Nundah, excuse given "supply issues" — Just Janelle (@Bundynelle) May 12, 2024 Paul Harker, the chief commercial officer, speaking at the Queensland parliament’s inquiry into supermarket pricing, said the problem came down to a “warehouse management system upgrade” that had gone wrong. He said the problem had led to delays in getting stock to stores across Brisbane and south-east Queensland. “We’ve had a terrible IT problem,” Harker said, adding it had caused “carnage”. “We’re not particularly happy about the situation,” he said. “We’re working very hard to improve it. We apologise to our customers that we have had issues. “I might add we’re continuing to take the committed stock from our suppliers, even if we can’t get it out.” Harker said any unused stock sitting in warehouses would be donated to food bank and other charities, to ensure they do not go to waste. “Certainly, our heartfelt apologies [go] to our customers that may have been disappointed when they came in … to buy something that’s not on the shelf.” A spokesperson for Woolworths told Guardian Australia the issue had affected multiple distribution centres in Brisbane. “Orders to some of our Queensland stores have been delayed due to operational issues at one of our distribution centres in Brisbane. skip past newsletter promotion Sign up to Morning Mail Free daily newsletter Our Australian morning briefing 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 “Some stores may be stocking less fruit and vegetables, milk and chicken than usual. Product purchase limits are not in place,” they said. Users took to social media to complain about the empty shelves. In a Facebook group dedicated to news in the Redlands area in Brisbane, Hugh O’Neill said it was “weird” to see the empty shelves. “Weird to see so many empty shelves at Woolies in Birkdale. Supply issues ????,” he wrote. User Stephen Wilson commented, saying “Cleveland’s was a ghost town on veggies”. The Woolworths spokesperson said they expected to see some improvements in supply levels “in the coming days”.
Solar Storm Crashes GPS Systems Used by Some Farmers, Stalling Planting 2024-05-13 09:50:08+00:00 - The powerful geomagnetic storm that cast the northern lights’ vivid colors across the Northern Hemisphere over the weekend also caused some navigational systems in tractors and other farming equipment to break down at the height of planting season, suppliers and farmers said. Many farmers have come to rely on the equipment, which uses GPS and other navigational technology and helps them to plant more efficiently and precisely by keeping rows straight and avoiding gaps or overlap. But over the weekend, some of those operations in the Midwest, as well as in other parts of the United States and Canada, temporarily ground to a halt. In Minnesota, some farmers who had planned to spend Friday night sowing seeds were hamstrung by the outages. “I’ve never dealt with anything like this,” said Patrick O’Connor, the owner of a farm about 80 miles south of Minneapolis that mainly grows corn and soybean. Mr. O'Connor said that after being rained out for two weeks, he got into his tractor around 5 p.m., hoping to spend the night planting corn. When he received a warning about his GPS system, he called a technical help line and was directed to a message saying there was an outage and nothing could be done to fix it.
U.S. Awards $120 Million to Chipmaker to Expand Facility in Minnesota 2024-05-13 09:01:07+00:00 - Federal officials will provide up to $120 million in grants to Polar Semiconductor to help the company expand its chip manufacturing facility in Minnesota, the Biden administration announced on Monday, the latest in a string of awards meant to strengthen the U.S. supply of semiconductors. Commerce Department officials said the grant would help Polar upgrade technology and double production capacity at its facility in Bloomington, Minn., within two years. The company produces chips that are critical for cars, defense systems and electrical grids, federal officials said. “We are making taxpayer dollars go as far as possible while crowding in private and state investment to create jobs, secure our supply chains and bolster manufacturing in Minnesota,” said Laurie Locascio, the under secretary of commerce for standards and technology. The funding stems from the bipartisan CHIPS and Science Act, which lawmakers passed in 2022 to ramp up the domestic production of commercial semiconductors, the tiny chips crucial for most electronics, including smartphones, computers, cars and weapons systems. The law gave the Commerce Department $39 billion to distribute to companies to incentivize the construction and expansion of new plants in the United States.
PayPal Stock Is a No-Brainer Buy Right Now 2024-05-13 06:30:00+00:00 - PayPal (NASDAQ: PYPL) has been a turnaround investment opportunity for some time, but the reversal is taking longer than many would like. Still, that doesn't discount how great of an investment PayPal could be once the rest of the market finally gets on the same page. PayPal gained momentum in the first quarter, and I wouldn't be surprised if it's in the beginning stages of a rally, making the stock a no-brainer buy. PayPal's Q1 was a great sign for investors PayPal's fall from grace has been a long and drawn-out process. Since peaking during the summer of 2021, the stock has fallen more than 70% and has stayed relatively flat over the past year. But that doesn't mean PayPal has been doing nothing. Within that year, a new CEO took over for longtime frontman Dan Schulman. Alex Chriss has been at the helm for a little under a year but has actively sought opportunities to transform the business, focusing on where PayPal can operate more efficiently. This has worked, as PayPal's operating margin in Q1 was close to its highest for a few years. PYPL Operating Margin (Quarterly) Chart Additionally, PayPal's products continue to see strong use. Total payment volume rose 14% year over year to $404 billion, and the revenue scrapped from that total increased by 9% to $7.7 billion. PayPal's growth and improved efficiency dramatically helped the company's profits. Generally accepted accounting principles (GAAP) earnings per share (EPS) rose 18% to $0.83. That's strong growth by itself, but it's even more impressive when you consider that management was only guiding for mid-single-digit EPS growth. It also beat on revenue guidance, as it only expected 6.5% to 7% revenue growth. For the second quarter, it brought back its projection for 6.5% to 7% revenue growth and flat earnings growth (when investment portfolio gains are accounted for), but it raised full-year guidance from flat to mid- to high-single-digit growth. Those are significant results, yet the market responded by selling the stock off by 2% the following day. This doesn't make sense, and it shows how entrenched most of the investors in the stock market are against PayPal stock. But when you look at the valuation, you'll see it's just a matter of time before this stock pops. The stock is still cheap During its decline, PayPal's valuation has reached unbelievable lows. PayPal's stock now trades for about 16 times earnings, regardless of whether forward earnings are used or not. PYPL PE Ratio Chart This indicates Wall Street analysts believe that PayPal won't grow that much, although it has already beaten expectations in one quarter in 2024. Story continues Additionally, the S&P 500 trades at 22.6 times trailing and 20.7 times forward earnings, which means PayPal trades at a sizable discount to the market. Very few times can investors buy a company with PayPal's footprint that's growing at a respectable rate and trading well below the market's price. Chriss and his team have shown investors that they are looking all over the business for improvement opportunities and are finding plenty of them. PayPal's turnaround is far from complete, and with a lot of room left to go, PayPal's stock looks like a fantastic buy, although the market has yet to get on board. Should you invest $1,000 in PayPal right now? Before you buy stock in PayPal, 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 PayPal 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 $550,688!* 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 6, 2024 Keithen Drury has positions in PayPal. The Motley Fool has positions in and recommends PayPal. The Motley Fool recommends the following options: short June 2024 $67.50 calls on PayPal. The Motley Fool has a disclosure policy. PayPal Stock Is a No-Brainer Buy Right Now was originally published by The Motley Fool
Tesla Is Still Down 25% in 2024 Despite Its Monster Jump. Is the Stock a Buy? 2024-05-13 06:12:00+00:00 - Being a Tesla (NASDAQ: TSLA) shareholder isn't for the weak stomach. The company's stock movements can be erratic, and many people may worry if they're not used to the volatility. Tesla's stock popped more than 10% the day after its recent earnings release. However, since the start of 2024 the stock is still down over 25%. So, is this pop the start of a new bull run for Tesla? Or is it an overreaction? Tesla's Q1 results were disappointing to many investors When analyzing Tesla, the first fact is that the stock does not trade solely on how the business is currently doing. Instead, Tesla's future projects and product launches are given a lot of weight. This becomes evident when you look at the company's first-quarter results, which weren't great. Revenue was down 9% year over year, and its gross margin decreased from 19.3% to 17.4%. This continues a concerning trend, as Tesla's gross margin used to set it apart from other auto manufacturers. Now, it's in line with others. TSLA Gross Profit Margin (Quarterly) Chart Declining revenue and shrinking margins weighed heavily on Tesla's earnings per share (EPS), which declined 53% year over year to $0.34. Perhaps the most concerning metric is that Tesla's free cash flow fell into negative territory, meaning Tesla is now burning cash to function as a business. This is all troublesome to investors, but the newest information on the conference call made many investors look right past these poor results. New products have investors excited Tesla investors envision an all-electric vehicle fleet with Tesla as the dominant player in the space. This vision also includes new technologies like automated taxis and semitrucks, although those are just ideas on paper right now. However, investors are about to get a look into one of these technologies in a few months. In August, the world will get its first look at Tesla's robotaxi, which it calls the Cybercab. A lot hinges on this release, as a part of Tesla's current valuation likely includes capturing the people-and-goods transportation market. Tesla also hinted at updating its product launch roadmap. Previously, Tesla expected these new vehicles to arrive in the second half of 2025. Now, it expects them in the first half of 2025 or even late this year. This new round of vehicles will include a "more affordable model," which many investors have been waiting for. If Tesla can mass produce an electric vehicle cheaply, it may entice more drivers to buy one that is only suited for commuting shorter distances rather than long trips. Story continues The investor's vision of what Tesla can be is shaping up, and we'll have a lot more information by this time next year. However, the current status of Tesla's business is a bit troublesome. So, should you buy the dip? I'd only say "yes" if you're a Tesla believer. It isn't a bad thing to be a believer, as Tesla's vision is quite impressive. However, if the world is more hesitant to switch to an all-electric fleet, this vision may not have the financial means to support Tesla's valuation, even if its product launches are all successful. Where to invest $1,000 right now When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for two decades, Motley Fool Stock Advisor, has more than tripled the market.* They just revealed what they believe are the 10 best stocks for investors to buy right now… and Tesla made the list -- but there are 9 other stocks you may be overlooking. See the 10 stocks *Stock Advisor returns as of May 6, 2024 Keithen Drury has positions in Tesla. The Motley Fool has positions in and recommends Tesla and Uber Technologies. The Motley Fool recommends General Motors and recommends the following options: long January 2025 $25 calls on General Motors. The Motley Fool has a disclosure policy. Tesla Is Still Down 25% in 2024 Despite Its Monster Jump. Is the Stock a Buy? was originally published by The Motley Fool
3 Top AI Stocks Ready for a Bull Run 2024-05-13 05:13:00+00:00 - Artificial intelligence (AI) has the potential to be one of the biggest revolutionary advancements in technology that the world has ever seen. Companies are just starting to embrace the technology and what it can do. However, the early results are very promising, allowing organizations to become more efficient and better serve their customers. But make no mistake, artificial intelligence is still in its early days, and there are a lot of opportunities for investors to profit from companies helping lead the way with AI. Let's look at some of the best stocks to play the AI bull run. Nvidia No company is benefiting more from AI at the moment than Nvidia (NASDAQ: NVDA). The maker of graphics processing unit (GPUs) has become the backbone of the infrastructure needed to power AI applications in data centers. GPU chips are able to do technical calculations faster and with less energy than central processing units (CPUs), which makes them ideal for use in AI training and inference. Nvidia's GPUs, meanwhile, have become the industry gold standard due to its CUDA software platform, which allows its chips to be programmed directly, saving customers time and money. Nvidia will continue to be the go-to company for building out the more powerful data centers needed to power AI applications. Meanwhile, Nvidia isn't a one-trick pony, and its networking business is also greatly benefiting from AI. Nvidia has been putting up incredible growth, including a more than tripling of its revenue during its most recent quarter. Despite that, the stock is attractively valued at only a 36 forward P/E, setting it up for a bull run as the business grows and investors push up the stock price. NVDA PE Ratio (Forward) Chart Amazon When it comes to AI, Amazon (NASDAQ: AMZN) may not be the first stock that comes to mind. However, the e-commerce giant has been heavily investing in the technology. The company owns the largest cloud business, Amazon Web Services or AWS, which is benefiting from the proliferation of AI. It has also developed two chips, Trainium and Inferentia, to be used specifically for AI applications. On the software side, the company has developed platforms to help customers build their own AI models and applications. Its SageMaker platform helps customers build, train, and deploy machine learning models, while its Bedrock platform gives customers high-performing models from Amazon and other leading AI companies through a single API to help them build AI applications. Amazon has also built out its own AI-powered assistant for software developers, Amazon Q. The AI assistant can write, test, and debug code. It can also answer questions about company policies, products, and other topics. Story continues Amazon has shown in the past that it is willing to spend big to ultimately win big, and AI appears to be no exception. Trading at a forward P/E of around 41, the stock has room to run given the AI growth opportunities in front of the company. AMZN PE Ratio (Forward) Chart SoundHound AI Shares of SoundHound AI (NASDAQ: SOUN) skyrocketed earlier this year on news that Nvidia had made an investment in the AI-powered voice assistant company. However, more recently, the stock has come back down to a more reasonable level. Soundhound's technology helps voice assistants and humans interact more naturally, allowing users to ask more complex questions while getting better answers. The company has made strong inroads in the automobile industry and is making good progress in the restaurant space as well. However, the applications of its technology should expand far beyond these two industry verticals. The company has an attractive recurring revenue business model whereby it gets royalty payments based on volume, usage, or the life of the product. For applications where no product is involved, such as with its restaurant offering, it uses a subscription model. Image source: Getty Images. SoundHound is still relatively small, generating only $46 million in revenue last year. However, it has a large booking backlog of $661 million, which if honored will turn into revenue over the next several years. The weighted average length of its contracts is about six and a half years, with more revenue backend loaded. Much of the company's backlog comes from its relationships with about 20 auto brands and having its technology built into new models of their vehicles. Trading at over 21 times forward sales, SoundHound stock is not cheap. However, its valuation has come down a lot in recent months, and it has a lot of potential to grow if it can continue to move its technology into more products. Getting into smartphones, for example, would be a game changer for the company and the stock. SOUN PS Ratio (Forward) Chart Should you invest $1,000 in Nvidia right now? Before you buy stock in Nvidia, 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 Nvidia 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 $550,688!* 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 6, 2024 John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Nvidia. The Motley Fool has a disclosure policy. 3 Top AI Stocks Ready for a Bull Run was originally published by The Motley Fool
What Is Earnings Season? A Complete Overview of Earnings Season 2024-05-13 05:12:00+00:00 - Key Points Earnings season happens 4 times each year when public companies report numbers from the previous quarter. The SEC requires certain disclosures from publicly traded companies; however, reporting requirements vary based on market cap and where shares are traded. Earnings releases are often market-moving events, but investors must know how to decipher the data before acting. The first quarter has ended, which means earnings season has arrived, and investors are eager to see results. What’s earnings season? Unlike football season, you won’t need to upgrade your cable package or clean the grill. However, you will want to learn how to digest earnings reports and conference calls so your portfolio can built on informed decision-making. Not every company has to follow the same reporting requirements, but the largest public companies all follow a similar script, which means familiarizing yourself with lots of jargon and industry terminology. In this article, we’ll discuss how to play earnings season and what information you should be most conscious of when interpreting earnings releases. Earnings season happens once per quarter when companies publicly release financial data. These releases include data like revenue, margins, expenditures and profits, and executives host a conference to relay the results and take questions from analysts. Get stock market alerts: Sign Up Companies release earnings on predetermined dates so that analysts can join the call and ask questions about the data and guidance provided by executives. While a single earnings report doesn’t always paint the whole picture, these releases offer glimpses inside public firms' machinery and can help detect performance trends. Why Earnings Season Matters for Investors Companies don’t all release their earnings data simultaneously, but they tend to come in batches after the numbers have been compiled from the quarter’s end. Firms release data on their schedules without industry or sector timelines. For example, Walt Disney Co. (NYSE: DIS), BP plc (NYSE: BP), Uber Technologies Inc. (NYSE: UBER), Toyota Motor Co. (NYSE: TM) and Robinhood Markets Inc. (NASDAQ: HOOD) all recorded earnings during the 2nd week of May. Earnings season is a time for public companies to show their work. Numbers are released and compared against analysts’ projections to see whether the firm underperformed or overperformed expectations. Earnings beats (exceed expectations) or misses (underperform expectations) can outsize stock prices and investor sentiment. Impact on Stock Prices Earnings data is released before or after market hours to prevent leaks during trading, but that doesn’t mean the impact on stock prices is muted. Earnings season is often the most volatile time for stocks because large beats can send a stock skyward, while a large miss can send another plummeting. The immediate impact can be fierce, like when NVIDIA Inc (NASDAQ: NVDA) posted an earnings beat for Q4 2023 and the stock gained 16% the following day. Investor Sentiment and Market Trends Individually, an earnings report doesn’t make or break the market. However, when taken into broader consideration, a series of positive or negative earnings data can disrupt market trends and sentiment. Suppose companies consistently beat expectations across different sectors (or the market as a whole). In that case, it's usually a good sign of economic strength, which can embolden investor sentiment and create a wave of buying activity. Investors can track earnings data using MarketBeat’s earnings calendar tools. How Companies Prepare and Present Earnings Reports Releasing earnings is a multi-step process involving both internal and external reviews. Companies gather data internally for their balance sheet, income statement and cash flow statement and review it through many procedures. The company’s executives, legal team and an outside auditor check the data before submission to the SEC. The Role of GAAP GAAP stands for Generally Accepted Accounting Principles, the set of guidelines the SEC enforces regarding earnings releases. Earnings reports must contain certain data, and companies must record items like revenue and expenses in a specific fashion. GAAP helps standardize earnings releases, making it easier to interpret (and verify) the numbers. Commonly Reported Metrics To interpret earnings releases correctly, you’ll need to understand these 3 metrics: Earnings Per Share (EPS) - Total quarterly profits divided by total outstanding shares gives EPS, which measures a company's profitability compared to its industry peers. Revenue - Total sales for the quarter before expenses and operating costs are deducted. Guidance - Sales projections, growth estimates or any other forward-looking statement about the company’s future performance expectations. The Role of Analysts During Earnings Season What is earnings season without the analyst estimates? Analysts who cover specific companies make earnings estimates based on publicly available data and past figures. These analysts come from investment banks and research groups, often from varied backgrounds and expertise. This diversity of viewpoints helps form a consensus using a wide range of data and opinions. Earnings Estimates and Their Importance Analysts don’t have access to insider information and are simply making their best guesses about a company’s future numbers. The incentives to make a favorable estimate are also strong; no CEO wants a bearish analyst to ask questions on a conference call. However, estimates are still crucial because they form a benchmark when aggregated. The resulting stock price movement can be substantial if the company beats or misses the consensus view. Strategies for Investors During Earnings Season How can retail investors use earnings season to their advantage? Here are 3 strategies to consider when digesting company reports. How to Interpret Earnings Reports Plenty of information is released during earnings, and investors should focus on key metrics that can be compared to previous results. EPS and revenue growth were mentioned above, but you should also focus on profit margins (how much of each dollar of revenue is retained as profit) and any outliers like significant one-time expenditures. Business language has a learning curve, so familiarize yourself with industry terms before attending conference calls. Look Beyond the Headlines Have you ever had a bad day at the office? Sometimes, public companies have a terrible quarter, too, but that doesn’t mean it's a sign of things to come. Earnings research often involves digging into the numbers to extrapolate more significant trends. Compare figures against other companies in the same stock sector to see if the performance aligns with industry standards. Review one-time events like chargeoffs or capital purchases, and consider the broader economic scope when evaluating the data. Consider Long-Term Trends vs. Short-Term Results Earnings data only covers three months of the year, a very short time to form opinions about long-lasting trends. That’s why evaluating company earnings is a balance. Investors want to see short-term results because a sequence of good results can spur long-term stock appreciation. However, context is critical, and investors must always consider how earnings data influences short—and long-term performance. Conclusion Earnings season is exciting for investors because good and bad results can generate large stock price moves. However, for long-term investors, earnings season is a balance between past results and future expectations. Earnings numbers and guidance can relay how the company is performing and where it expects to go in the next year. Still, a single earnings release must be considered in a larger context to be useful for investors. Make the Most of Earnings Season with MarketBeat Looking to boost your portfolio during earnings season? Consider using MarketBeat’s tools and research to make better investment decisions. View our products and features today. Before you make your next trade, 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. Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and none of the big name stocks were on the list. They believe these five stocks are the five best companies for investors to buy now... See The Five Stocks Here
Prediction: This Artificial Intelligence (AI) Cloud Stock Will Join Microsoft, Alphabet, and Amazon in the $1 Trillion Club 2024-05-13 04:27:00+00:00 - Right now, there are only seven companies in the world with a market capitalization in excess of $1 trillion. Ranked in order from largest to smallest, those companies are Microsoft, Apple, Nvidia, Alphabet, Amazon, Saudi Arabian Oil, and Meta Platforms. The obvious theme here is that most of these companies operate in the technology sector. Moreover, within technology, Microsoft, Alphabet, and Amazon all share something else in common: Each of them is a dominant force in cloud computing and artificial intelligence (AI). Beyond mega-cap tech enterprises, I see another player quietly emerging at the intersection of cloud AI infrastructure. Let's break down how Oracle (NYSE: ORCL) is making notable strides in AI, and analyze the company's path to a trillion-dollar valuation. Oracle's greenfield opportunity According to Statista, Amazon is the top cloud infrastructure provider with 31% market share as of the end of the first quarter this year. Microsoft and Alphabet round out the top three, with 25% and 11% market share, respectively. With just 2% market share, Oracle trails its big tech cohorts by a considerable margin. However, Oracle's operating results over the last several quarters are quite impressive. For example, through the first nine months of Oracle's fiscal 2024, ended Feb. 29, the company's cloud services revenue grew 26% year over year to $14.5 billion. In the most recent quarter specifically, cloud services increased 25% year over year to $5 billion. By contrast, Amazon's cloud business grew 17% year over year in its most recent quarter. Although Amazon is a much larger cloud operation, Oracle is currently growing at a faster pace. I think this demonstrates that cloud infrastructure, in general, is experiencing accelerated growth, and businesses are using platforms outside of the top three providers. These secular tailwinds should bode well for Oracle over the long run. Image source: Getty Images. Demand is at record levels Outside of revenue, one of the most important metrics that Oracle reports is remaining performance obligations (RPO). RPO is important because it provides investors with a preview of revenue that has been booked but not yet recognized. At the end of the most recent quarter, Oracle's RPO grew 29% year over year and reached an all-time high of $80 billion. Furthermore, during the earnings call, management told investors that roughly 43% of these RPOs will be recognized as revenue over the 12 months. Considering Oracle's backlog is growing faster than its reported revenue, I think it's safe to say that demand for the company's cloud services is robust. Story continues Can Oracle become a $1 trillion business? The chart below illustrates consensus analyst estimates for revenue and earnings per share (EPS) for Oracle over the next couple of years. While these metrics are expected to accelerate, the growth rates might appear somewhat muted compared to other software-as-a-service (SaaS) providers. One reason for this is that Oracle is experiencing declining growth in its on-premise business. Through the first nine months of fiscal 2024, Oracle's on-premise cloud operation generated $3.2 billion in revenue -- a decrease of 11% annually. While this may look like a blemish or even a risk, it actually makes some sense. As on-premise services continue migrating to the cloud, Oracle actually has an opportunity to transition this decelerating component of its business to a new growth leg. Considering Oracle's position in the cloud market relative to larger players, such as Microsoft, Amazon, and Alphabet, the general consensus is that the company will take longer to scale, a view I'm aligned with. Right now, Oracle's market cap is roughly $320 billion and the company trades at a price-to-sales (P/S) multiple of just 6.3. It's easy to see that Oracle trades at a considerable discount to Microsoft specifically, and is trading modestly lower than Alphabet. Considering the rate at which Oracle is growing, combined with its opportunity to turn its on-premise business into a major growth engine, I think there is a good argument to be made that the company's valuation could rise considerably over a long-term horizon -- possibly making the estimates above somewhat conservative. In other words, as cloud database management continues to be an important pillar of the overall AI narrative and digital transformation efforts at the enterprise level, Oracle's valuation multiples should eventually see some notable expansion and the company could one day reach trillion-dollar status. But what investors must realize is that this transition is going to take time. I think Oracle has shown some legitimate progress in an otherwise heated cloud market. I see Oracle as a tremendous buying opportunity among cloud infrastructure businesses, and holding the stock for the long term should result in considerable gains. Should you invest $1,000 in Oracle right now? Before you buy stock in Oracle, 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 Oracle 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 $550,688!* 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 6, 2024 Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Adam Spatacco has positions in Alphabet, Amazon, Apple, Meta Platforms, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Oracle. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. Prediction: This Artificial Intelligence (AI) Cloud Stock Will Join Microsoft, Alphabet, and Amazon in the $1 Trillion Club was originally published by The Motley Fool
2 Stocks That Could Create Lasting Generational Wealth 2024-05-13 04:15:00+00:00 - To build lasting wealth with stocks, you want to look for companies with plenty of room to expand for many years. No matter how the stock performs in the near term, a company that grows its revenue significantly over decades will bring the stock along with it. On that note, Amazon (NASDAQ: AMZN) and Roblox (NYSE: RBLX) have a lot going for them right now. Amazon still offers significant growth potential because of its leading position in the burgeoning cloud computing market. Meanwhile, Roblox is a popular interactive platform where younger audiences play games and interact with others. Here's more on why these stocks are promising investments over the long term. 1. Amazon A massive selection of goods, fast shipping, and convenience have been hallmarks of the Amazon brand for over 20 years. The stock has been a truly wealth-building investment, but investors should never underestimate the ability of a great business to keep growing. The main reasons to invest in Amazon boil down to its opportunities in e-commerce and cloud services. The company's technological roots building a superior online shopping experience have allowed it to branch out to other lucrative revenue opportunities like cloud computing. Spending on cloud infrastructure totaled $76 billion in the first quarter and grew 21% year over year, according to Synergy Research. Although Microsoft's Azure cloud service is gaining market share, Amazon Web Services is still the leader. Though AWS has a higher profit margin, the retail side of Amazon is still the core of its business. Amazon's retail and related services generated $496 billion in total revenue over the last year, but that still leaves a lot of opportunity in the $6 trillion global e-commerce market -- based on eMarketer's estimate -- which is continuing to grow. Analysts see the company's earnings per share growing at 23% per year over the next several years. Just as Walmart is still delivering returns for investors after 50 years as a publicly traded company, Amazon could very well be compounding shareholders' investment for decades. 2. Roblox Investing in the growth of interactive entertainment is a good bet, considering the video game industry is expected to grow from $211 billion to over $600 billion by 2029, according to Statista. Consistent with that estimate, Roblox already has reached 77 million daily active users and is still growing. The stock is trading well off its highs. That can be traced back to a high valuation following its direct listing a few years ago and slowing revenue growth in 2022. Roblox is clearly not immune to broader economic pressures on consumer spending, but the discounted share price could look like a bargain after another decade worth of growth. Story continues Roblox offers a variety of games and experiences, including virtual music concerts, to attract people to the platform. It then looks to make money from offering virtual currency that is used to unlock premium content. It's also working on other ways to monetize players, such as welcoming brands to advertise on the platform. Roblox's revenue has accelerated back above 20% in recent quarters, and management expects to grow the top line at least 20% per year through at least 2027. The growing selection of experiences available, such as home construction and other content that appeals to older players, is helping Roblox continue to attract more users and is why the stock should be a long-term winner. Should you invest $1,000 in Amazon right now? Before you buy stock in Amazon, 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 Amazon 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 $550,688!* 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 6, 2024 John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Microsoft, Roblox, and Walmart. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. 2 Stocks That Could Create Lasting Generational Wealth was originally published by The Motley Fool
Bond Traders Wait for CPI to Fuel — or Doom — the Market’s Rally 2024-05-13 03:00:00+00:00 - (Bloomberg) -- Nothing has been setting the US bond market’s direction this year more than the monthly inflation figures. This week will be no exception. Most Read from Bloomberg The release of the April consumer-price index on Wednesday is poised to provide the biggest test yet of the rally that started this month when Federal Reserve Chair Jerome Powell swatted away worries that the central bank may raise interest rates again. It gained steam after the Labor Department reported a slowdown in job growth, pulling yields down sharply from last month’s peaks. The advance has increased the stakes in the upcoming inflation data — which could either extend it or doom it as another ill-fated turnaround. Bank of America Corp. strategists said the market will be in a “holding pattern” until then. This year’s previous CPI reports fueled bond-market selloffs as faster-than-expected readings fanned worries that the Fed’s gains against inflation have stalled. The last one, on April 10, sent 10-year Treasury yields surging 18 basis points, the biggest one-day move caused by the CPI data since 2002. All told, half of the more than 60-basis-point jump in that benchmark rate this year occurred on days when the CPI was released. “The reality of the market right now is where we lurch from data release to data release,” said Jonathan Cohn, head of US rates desk strategy at Nomura Securities International. “There does seem to be some kind of economic softening here — but effectively what it will take for this rally to sustain is the sign off from the CPI data that things aren’t re-accelerating, that we are seeing disinflation come through.” Until this month, the data had largely been underscoring the US economy’s strength, driving traders to unwind once widespread bets that the Fed would cut interest rates several times this year. That reset had saddled investors with fresh losses and sapped conviction about where the market is headed. Futures positions signal that many investors covered short bets on Treasuries as yields crested last month. And overall, such positioning has been volatile as investors navigate the market’s uncertainty, Bloomberg Intelligence’s chief US interest-rate strategist, Ira Jersey, said in a report. “It’s a bit to do with people having put on risk before and gotten burned, with risk takers now being a bit gun shy,” said Cohn. Story continues This month, though, bond prices have risen steadily on fresh signals that the economy and labor market are cooling and will allow the Fed to start easing monetary policy late this year. Ten-year Treasury yields have declined during all but two trading sessions in May, sliding nearly 20 basis points to around 4.5%. More broadly, US Treasuries gained about 1.3% through May 9, clawing back some of the 2.3% loss in April — the worst in more than a year, according to Bloomberg’s index. The CPI is expected to show slowing in inflation. The core rate — which is seen as the best gauge of underlying pressures, because it excludes volatile food and energy costs — is expected to have risen by 0.3% in April from a month earlier, down from 0.4% in March, according to forecasters surveyed by Bloomberg. The overall index is seen rising by 3.4% from a year earlier, compared with the 3.5% increase in March. That’s still well above the 2% rate that’s targeted by the Fed. Several US central bank officials have recently emphasized that policy rates may need to remain high for longer, with Governor Michelle Bowman saying that the recent pace of inflation indicates it may not be appropriate for policymakers to cut interest rates in 2024. In light of the market’s recent rebound, however, traders may see any signs of progress against inflation as a cue to buy. Matthew Luzzetti, chief US economist at Deutsche Bank AG, doesn’t expect a first Fed cut until December. But, he said “investors’ sentiment is certainly more prone to react in the dovish direction, given the momentum.” What to Watch Economic data: May 13: New York Fed 1-year inflation expectations May 14: NFIB small business optimism; producer prices; revisions factory and durable goods orders May 15: MBA mortgage applications; Empire manufacturing; consumer price index; real average earnings; retail sales; NAHB housing market index; Treasury TIC data May 16: initial jobless claims; housing/building permits; NY Fed services business activity; import and export price index; industrial production; capacity utilization; manufacturing (SIC) production May 17: Leading index Fed calendar: May 13: Cleveland Fed President Loretta Mester; Fed Vice Chair Philip Jefferson May 14: Fed Governor Lisa Cook; Federal Reserve Chair Jerome Powell and ECB Governing Council member Klaas Knot speak at special event May 15: Minneapolis Fed President Neel Kashkari; Fed Governor Michelle Bowman May 16: Vice Chair for Supervision Michael Barr; Philadelphia Fed President Patrick Harker; Mester; Atlanta Fed President Raphael Bostic May 17: Fed Governor Christopher Waller Auction calendar: May: 13-, 26-week bills May 14: 52-week bills; 42-day cash management bills May 15: 17-week bills May 16: 4-, 8-week bills --With assistance from Edward Bolingbroke. Most Read from Bloomberg Businessweek ©2024 Bloomberg L.P.
3 Top ETFs for a Diversified Stock Portfolio 2024-05-12 23:30:00+00:00 - Navigating the stock market can be overwhelming, with the need for extensive research, continuous monitoring of market trends, and the inherent risks involved. For those seeking market exposure without the complexities of individual stock selection, exchange-traded funds (ETFs) offer a streamlined solution. A well-chosen set of ETFs can provide comprehensive coverage of the market's key sectors, including large-cap growth, tech innovation, and small-cap potential. Here is an overview of three popular ETFs that offer broad coverage and outstanding long-term performance. Image Source: Getty Images. 1. SPDR S&P 500 ETF Trust The SPDR S&P 500 ETF Trust (NYSEMKT: SPY) mirrors the S&P 500 Index, encompassing 500 of the largest U.S. corporations. Since its launch in 1993, the SPY has achieved a cumulative return exceeding 2,000%, dividends included. With an expense ratio of just 0.09%, the SPY stands out for its cost efficiency, significantly undercutting the category average by 88.6%. While not the absolute lowest among its peers--Vanguard's S&P 500 ETF claims that distinction-- the SPY's affordability is notable. SPY's trading volume is immense, averaging around 70 million shares daily. This liquidity has made it a favorite among day traders and those seeking income through derivatives. The ETF's trading activity is so robust that it has fostered a dedicated community of SPY options traders. 2. Invesco QQQ Trust The Invesco QQQ Trust (NASDAQ: QQQ) tracks the Nasdaq-100 Index, which includes the 100 largest non-financial companies on the Nasdaq exchange. The QQQ's expense ratio comes in at 0.20%, higher than some passively managed funds but still well below the 0.98% category average. The QQQ is also known for its liquidity, with nearly 45 million shares changing hands on an average day. This makes it a prime choice for active traders and those with substantial investments. Over the last decade, the QQQ has delivered an impressive average annual return of 18.8%, outpacing the SPY's 10.8% average. However, the QQQ's tilt toward tech stocks makes it riskier and more volatile than the SPY. 3. iShares Russell 2000 ETF The iShares Russell 2000 ETF (NYSEMKT: IWM) targets the Russell 2000 Index, which is composed of small-cap American companies. Over the past ten years, the IWM has delivered average annual returns of 7.8%, including dividends. While its performance has been more modest compared to SPY and QQQ, small-cap stocks have historically led the market. Should this trend resume once interest rates fall, the IWM is poised to take flight. Story continues The IWM's expense ratio is 0.19%, which, although not the lowest for small-cap ETFs, is substantially less than the 1.00% category average. The ETF enjoys high liquidity, with roughly 34 million shares traded daily, yet it carries a fairly substantial risk profile due to its focus on smaller companies. Final thoughts These three ETFs--SPY, QQQ, and IWM--provide investors with a diversified approach to the stock market, covering the spectrum from large-cap stability to tech innovation to small-cap growth. They cater to investors aiming for a balanced investment portfolio that taps into various market segments. As with any investment, though, it's crucial to align your ETF selections with your personal investment goals and risk tolerance. To lower your risk profile, for example, you could swap out the QQQ or IWM for a low-risk bond fund. Should you invest $1,000 in SPDR S&P 500 ETF Trust right now? Before you buy stock in SPDR S&P 500 ETF Trust, 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 SPDR S&P 500 ETF Trust 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 $550,688!* 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 6, 2024 George Budwell has positions in Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy. 3 Top ETFs for a Diversified Stock Portfolio was originally published by The Motley Fool
Natalie Elphicke’s anti-strike stance ‘incompatible’ with Labour, says TUC president 2024-05-12 22:31:00+00:00 - Keir Starmer is under fresh pressure over the former Tory MP Natalie Elphicke’s defection to Labour after the president of the Trades Union Congress said her vocal support for anti-strike laws should be “incompatible” with the party whip. Matt Wrack, who is also the general secretary of the Labour-affiliated Fire Brigades Union, has described the MP for Dover and Deal’s views as “disgraceful” after she used a parliamentary intervention in March to blame firefighters for the deaths of three people who perished during a national strike. Wrack’s comments have been set out in a letter sent to Starmer this weekend, which has been seen by the Guardian. Senior Labour figures have been forced to defend Elphicke amid claims she lobbied the justice secretary to interfere in her then husband’s rape case – claims her spokesperson has described as “nonsense”. Wrack, who became president of the TUC in September, wrote in the letter that Labour’s decision to admit Elphicke was “alarming” because of the party’s promise to repeal the Strikes (Minimum Service Levels) Act, which effectively bans strike action across parts of the public sector. “Labour’s pledge to repeal this authoritarian legislation within 100 days of taking office, alongside the 2016 Trade Union Act, is a crucial commitment. It is therefore alarming that Natalie Elphicke has been admitted to the parliamentary Labour party. “Elphicke was a cheerleader for the minimum service levels act and has specifically targeted firefighters in her contributions in parliament. “On Tuesday 12 March this year, she spoke in support of the new anti-union laws by blaming striking firefighters for the deaths of three people during a past national firefighters’ strike. This is a disgraceful attack on firefighters, who protect the public and save lives every day, sometimes at great personal cost,” he wrote. “The Labour party is the political wing of the labour movement … Attacking trade union members in this way to justify support for draconian anti-worker laws ought to be incompatible with membership of the parliamentary Labour party. “Natalie Elphicke should never have been given the Labour whip, but these remarks further undermine the decision to accept her into the party. There appears to have been little, if any, due diligence.” Asked on Friday about unease from senior Labour figures about Elphicke’s defection, Starmer urged his party to be “less tribal”. “I am very pleased to welcome Natalie to the Labour party,” he said. “Natalie’s conclusion, having thought about this profoundly, is that Rishi Sunak has effectively lost control of the borders, the Tory party is characterised by incompetence and the Labour party has changed. I think that is a very powerful thing to have said.” Wrack’s intervention comes as Starmer seeks to capitalise on the political momentum generated by both the recent local elections and Elphicke’s defection. The Labour leader will meet the party’s new slate of English mayors on Monday for the first time since this month’s elections, saying that driving regional economic growth will be top of Labour’s devolution agenda. While Starmer wants voters to focus on the economy going into this year’s general election, the prime minister, Rishi Sunak, will give a speech on Monday in which he will attempt to frame it as a choice between a forward-looking Conservative party and a backward-looking Labour. Sunak is facing a gradual bleeding of his parliamentary authority as Tory MPs line up to announce they are standing down at the next election while Labour works to secure more defections. Elphicke, a rightwing Tory MP, shocked Westminster on Wednesday when she crossed the floor and joined Labour MPs at the beginning of prime minister’s questions. The move initially delighted Starmer’s closest allies, showing that even anti-immigration MPs appear to have lost faith in Sunak’s Rwanda deportation plan and his ability to lead the Tories. But Starmer’s decision to accept her into the party has caused upset on his own benches, given her long history of attacking Labour on immigration issues. Jess Phillips, the Labour MP for Birmingham Yardley, told LBC she would “probably have said no” to Elphicke joining the party and there should be an independent inquiry into the latest claims. Zarah Sultana, the Labour MP for Coventry South, who is from the left of the party, told the BBC: “[Elphicke] was a member of the [Eurosceptic] European Research Group; she voted for Liz Truss in the leadership; she’s at odds when it comes to fire and rehire; she has attacked trade unions and their activities; [she’s] not great on the environment either. So unless she’s had the biggest Damascene conversion ever, I just don’t buy it.” Wrack’s letter, written on FBU-headed paper, said the union would be raising its concerns about Elphicke’s views and her admittance to the parliamentary party through formal channels. During parliamentary scrutiny of strike regulations in March, Elphicke expressed her support for plans to allow fire and rescue authorities to issue work notices forcing firefighters to work during disputes. She told the fire services minister, Chris Philp: “It may be helpful to the minister to note that actually three elderly people were reported to have died in the first national firefighters strike – the one that the minister is referring to – and indeed, more recently, the failure to respond to a call-out in the middle of a strike led to a serious incident that very nearly led to loss of life in Essex. “That might be helpful to the minister, to expand on why it is so important that these measures are put in place to save lives.” The FBU has condemned the claims as unsubstantiated. Union bosses and Starmer will discuss Labour’s pledges on workers’ rights in a meeting on Tuesday. The Guardian disclosed on Wednesday that Unite and the FBU were among unions concerned that Labour was watering down proposals on “fire and rehire”, zero-hours contracts and plans for legislation. Key to the criticism from trade unions were changes to the wording of plans to end fire and rehire – removing a direct promise to end the dismissal of workers for rejecting a worse contract. A union source said: “Elphicke’s move across the floor looks like the direction of travel under Keir. He may have to be reminded on Tuesday that the unions will not be messed about.”
OpenAI's Sam Altman has a new idea for a universal basic income 2024-05-12 21:36:37+00:00 - OpenAI CEO Sam Altman has long supported the idea of a universal basic income. Many in AI think a universal basic income could help mitigate the impacts of the tech on workers. Altman floated a new kind of basic income last week that he calls "universal basic compute." Sign up to get the inside scoop on today’s biggest stories in markets, tech, and business — delivered daily. Read preview Thanks for signing up! Access your favorite topics in a personalized feed while you're on the go. download the app Email address Sign up By clicking “Sign Up”, you accept our Terms of Service and Privacy Policy . You can opt-out at any time. Advertisement OpenAI CEO Sam Altman has an interesting new idea to help those struggling financially. He calls it "universal basic compute." "Everybody gets like a slice of GPT-7's compute," he said on the All-In podcast. "They can use it, they can resell it, they can donate it to somebody to use for cancer research." The idea is that as AI becomes advanced — and embedded into more facets of our lives — owning a unit of a large language model like GPT-7 can be more valuable than money. "You own like part of the productivity," he said. Related stories Altman has long supported a universal basic income — a recurring cash payment, no strings attached, made to all adults in a given population regardless of their wealth and employment status. Altman, like many others in the tech industry, sees a universal basic income as a safety net for people as AI threatens their jobs. Advertisement Altman started his own UBI experiment in 2016, the results of which he said on the podcast would be released soon. The program provided payments of between $50 to $1,000 a month to more than 3,000 enrollees, according to Fortune. Cities and states across the United States have experimented with a version of this called guaranteed basic income. These programs give no-strings-attached cash payments to people based on demonstrated need or social and societal status instead of a population as a whole. Most of those programs have shown positive results, though conservatives are increasingly pushing back on what they see as a form of welfare that could discourage people from working. In Texas, the state supreme court recently blocked a Houston area program from giving low-income people $500 a month. Altman didn't elaborate on how his so-called "universal basic compute" would work, but it's certain to raise some eyebrows — conservative and liberal alike.
1 Spectacular Growth Stock Down 67% to Buy Hand Over Fist, According to Wall Street 2024-05-12 20:57:00+00:00 - Confluent (NASDAQ: CFLT) is a leader in data streaming, which is the technology responsible for many of our live digital experiences. For example, it's the magic behind real-time inventory information when we shop online, which tells us whether a product is in stock before we hit the buy button. Confluent just reported its financial results for the first quarter of 2024 (ended March 31), which revealed further progress toward capturing what could be a $100 billion addressable market in 2025. Its stock popped following the release, and it's sitting on a 36% gain this year so far -- but it remains 67% below its all-time high, so it still has some work to do. The Wall Street Journal tracks 29 analysts covering Confluent stock, and the majority have given it the highest possible buy rating. Not a single one recommends selling. Wall Street doesn't always get things right, but here's why investors might want to pay attention to the bullish consensus on this occasion. Data streaming has a growing number of use cases The year is 2003. Beyonce just dropped her new album, "Dangerously in Love," and you desperately want to hear it. You race down to the local record store and buy a physical copy on disc. You take it home, insert it into your CD player, and blast it on repeat for hours. How times have changed. Today, you can access unlimited amounts of music through streaming services like Spotify, which stores songs in its data centers and feeds them to your smartphone in real-time. No discs or clunky hardware are required. Conceptually, data streaming is quite similar. Businesses used to collect customer and operational data and store it on physical servers located onsite, and managers would come back at a later date to analyze it. They can now store that data in centralized data centers and access it instantaneously, which is a practice called cloud computing. Data streaming allows businesses to ingest their data, process it, and analyze it in real-time in the cloud. This means they can spot trends far more quickly and pivot their sales strategies to suit, and it also allows them to create live experiences for customers to drive more sales. Take global tire manufacturer Michelin, for example. It uses Confluent to track the real-time flow of products across its enormous network, which spans 170 countries, so distributors and customers always know when and where a tire is available for purchase. The company estimates it has reduced its operating costs by 35% thanks to data streaming's ability to drive efficiency. Story continues Artificial intelligence (AI) is a new but fast-moving opportunity for Confluent. A growing number of businesses are using its platform to create AI applications, and even the industry's leading start-up, ChatGPT creator OpenAI, is a customer. One airline used its live data streams through Confluent to build a virtual agent capable of helping customers book and cancel trips, which reduces human agent costs by hundreds of millions of dollars per year. Image source: Getty Images. Strong (but moderating) growth, led by high-spending customers Confluent generated $217 million in revenue during the first quarter. It represented 25% growth compared to the year-ago period, and it was also above the company's forecast of $212 million. However, that growth rate has steadily decelerated over the past year because management is carefully controlling costs to hedge against the challenging economic backdrop. As a result, Confluent's operating costs fell by 5.2% in Q1 (helped by the absence of a one-off restructuring charge in the year-ago period). Marketing costs did tick higher by a modest 2.1%, but that's far less than the company would normally increase its spending in that area. Simply put, pulling back on such growth-focused expenditures can lead to fewer opportunities to generate revenue. But it does come with one major benefit. Growing revenue plus shrinking costs equals more money flowing to the bottom line. As a result, Confluent shrank its net loss by 39% year over year to just $92.9 million. On a non-GAAP (adjusted) basis, which strips out one-off and non-cash expenses, the company generated a profit of $15.8 million. Overall, Confluent is still experiencing strong demand from customers, particularly those in its highest-spending cohorts. It served 5,120 businesses in Q1, and 1,260 of them were spending a minimum of $100,000 annually, which was up 17% year over year. The number of businesses spending at least $1 million annually jumped 24% to 168. It highlights how important data streaming has become to large organizations. Wall Street is bullish on Confluent stock Confluent stock peaked in 2021 -- as did many technology stocks -- at the crescendo of the pandemic-era tech frenzy, which was driven by waves of government stimulus and record-low interest rates. A combination of the reversal in those conditions, and the company's slowing revenue growth, have contributed to the 67% decline in its stock price from its all-time high. However, as I touched on earlier, that slowing growth comes with the benefit of an improving bottom line. If Confluent continues on this trajectory and achieves generally accepted accounting principles (GAAP) profitability to accompany its recent non-GAAP result, it will have a more sustainable business that won't require a cash infusion in the future, whether through debt or a dilutive equity raise. When economic conditions are more certain in the future, the company can easily pivot back to a more growth-oriented posture if needed. With all of that said, Wall Street remains extremely bullish on Confluent stock. Of the 29 analysts tracked by The Wall Street Journal, 17 have given it the highest possible buy rating. A further three are in the overweight (bullish) camp, while eight recommend holding. One analyst is in the underweight (bearish) camp, but none recommend outright selling. The Street isn't right every time, but the Confluent story stands on its own two feet. Based on the company's revenue, it has barely scratched the surface of its addressable opportunity, which could top $100 billion next year. The proliferation of new technologies like AI might even drive that number higher. Should you invest $1,000 in Confluent right now? Before you buy stock in Confluent, 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 Confluent 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 $550,688!* 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 6, 2024 Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Confluent and Spotify Technology. The Motley Fool has a disclosure policy. 1 Spectacular Growth Stock Down 67% to Buy Hand Over Fist, According to Wall Street was originally published by The Motley Fool
A Chinese criminal ring has stolen $50 million by franchising thousands of fake online shops, experts say 2024-05-12 20:53:36+00:00 - A study linked one Chinese criminal organization to over 75,000 fraudulent online shops. The group, known as 'BogusBazaar,' has processed over $50 million in fake orders, the study found. The majority of the 850,000 victims are based in the US and Europe. Sign up to get the inside scoop on today’s biggest stories in markets, tech, and business — delivered daily. Read preview Thanks for signing up! Access your favorite topics in a personalized feed while you're on the go. download the app Email address Sign up By clicking “Sign Up”, you accept our Terms of Service and Privacy Policy . You can opt-out at any time. Advertisement Have you encountered an online shop with deals too good to be true? Well, they probably are, and the website probably is too. As the rise of online shopping took hold during the pandemic, so did the rise of fake online shops and products. SR Labs is a German-based cyber security company that consults with clients in more than 21 countries. The company last week announced the findings of a three-year study, which found that one Chinese criminal organization was linked to more than 75,000 fraudulent online shops. This story is available exclusively to Business Insider subscribers. Become an Insider and start reading now. Have an account? Log in .