Is Apple Stock A Buy After December-Quarter Earnings Miss?

Consumer electronics giant Apple (AAPL) has seen its sales lowered by supply constraints and weakening macroeconomic conditions, which have rocked Apple stock. Still, many investors might be wondering if AAPL stock is a buy right now.

Apple Stock News: iPhone 14 Sales

On Sept. 7, Apple introduced its third-generation 5G smartphones, the iPhone 14 series. It also debuted its Apple Watch Series 8 smartwatches and second-generation AirPods Pro wireless earbuds. Apple stock rose 0.9% on the news.

Analysts praised the innovative new devices but some worried that the premium products would be a tough sell in the current economic climate.

However, demand for the high-end iPhone 14 Pro models has been strong, while sales of the regular models have disappointed.

On Nov. 6, Apple warned that a Covid outbreak at a factory in China would limit the availability of iPhone 14 Pro and Pro Max handsets in the holiday season. The Foxconn-owned factory was “operating at significantly reduced capacity” because of Covid restrictions, Apple said. The factory later saw worker protests that turned violent, according to news reports.

On Feb. 2, Apple said the production disruptions significantly impacted its iPhone sales in the December quarter.

Apple Opportunities For Growth

With the iPhone business maturing, investors are wondering what the next big growth driver will be for Apple stock.

Recently, two businesses have given Apple’s sales and profits a boost: services and wearables.

In the December quarter, Apple’s services revenue rose 6% year over year to $20.77 billion. Meanwhile, its hardware sales declined 8% to $96.39 billion. Services include the App Store, AppleCare, iCloud, Apple Pay, Apple Music, Apple TV+, Apple Arcade and other offerings.

In late October, Apple raised prices for the first time on its Apple Music and Apple TV+ services. It also hiked the price for its Apple One services bundle.

Meanwhile, Apple is facing antitrust scrutiny in the U.S., Europe and Asia for its App Store policies, including its 30% commission fee.

Apple Product Rumors Persist

Apple’s Wearables, Home and Accessories unit saw sales drop 8% to $13.5 billion in the December quarter amid product shortages. This unit includes wearables like the Apple Watch, AirPods wireless earbuds and Beats headphones. It also contains the Apple HomePod wireless speaker and other miscellaneous gadgets.

News leaks suggest that Apple will announce a headset for virtual reality and augmented reality in 2023. The computer headset could be a driver of Apple stock, analysts say.

Meanwhile, speculation continues that Apple is looking to make a self-driving electric car.

Apple Earnings: Miss and Guide Down

Late on Feb. 2, Apple missed Wall Street’s targets for its fiscal first quarter and guided lower for the current period. Still, Apple stock rose 2.4% in the next trading session.

Apple earned $1.88 a share on sales of $117.2 billion in its fiscal first quarter ended Dec. 31. Analysts polled by FactSet had expected earnings of $1.94 a share on sales of $121.4 billion. On a year-over-year basis, Apple earnings fell 10% while sales dropped 5%.

For the March quarter, Apple expects sales to decline about 5%, vs. Wall Street’s estimate for a drop of less than 1%.

In the December quarter, Apple’s iPhone revenue sank 8% to $65.8 billion. Wall Street was looking for $68 billion. Smartphones accounted for 56% of the company’s total sales in the period.

Meanwhile, Apple’s Mac computer sales tumbled 29% to $7.7 billion. However, Apple’s iPad business bucked the downtrend, growing 30% to $9.4 billion in the holiday quarter.

The company’s next earnings report won’t be until late April.

Apple Stock Retreats From Record High

In January 2022, Apple hit a market value of $3 trillion when its shares reached 182.86. It was the first company to reach a market capitalization of $3 trillion.

It notched a record high of 182.94 before pulling back. AAPL stock trended lower in the weeks that followed and it attempted to rally several times last year.

Apple’s Storied History

Apple has been an American success story several times over. First, it ignited the personal computer revolution in the 1970s with the Apple II. Then it reinvented the PC in the 1980s with the Macintosh.

Co-founder Steve Jobs returned to run Apple in 1997 and oversaw a winning streak of innovations that included the iMac, iPod, iTunes, iPhone, iPad and the App Store.

The biggest driver of Apple’s modern success is the iPhone. The game-changing smartphone, which debuted in 2007, sparked years of massive growth and created a loyal base of customers willing to buy Apple products and services.

Exclusive Apple Stock Ratings

After hitting its record high at the start of 2022, Apple stock pulled back as much as 32%.

AAPL stock has an IBD Relative Strength Rating of 37 out of 99. The Relative Strength Rating shows how a stock’s price performance stacks up against all other stocks over the last 52 weeks.

Apple stock has an IBD Composite Rating of 61 out of 99, according to the IBD Stock Checkup tool. IBD’s Composite Rating combines five separate proprietary ratings of fundamental and technical performance into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.

Also, Apple ranked No. 5 on IBD’s 2022 100 Best ESG Companies list. ESG is short for environmental, social and governance.

AAPL Stock Technical Analysis

For the past 58 weeks, AAPL stock has been consolidating with buy point of 183.04, according to IBD MarketSmith charts. It ended the regular session Feb. 10 at 151.01.

In a positive sign, Apple stock has been trading above its 50-day moving average line, as well as its 200-day line. Also, its relative strength line has been rising lately as it outperforms the S&P 500 this year.

Apple stock has an IBD Accumulation/Distribution Rating of A-, indicating institutional buying of shares.

Source: finance. yahoo.com

Executives are doing a great job talking down the US economy: Morning Brief

Powerful executives running public companies are collectively doing a great job at 1) worrying investors about the path forward for profit and cash flow growth this earnings season; and 2) managing expectations so their business could potentially beat earnings estimates even if the U.S. enters a mild recession in 2023.

And if CEOs sound dreary on earnings calls this reporting season, it’s probably because they have a lot of concerns on their minds.

According to a recent Conference Board survey, “the number one concern for CEOs around the world is the economic downturn and recession.” Inflation – also no friend to the top and bottom lines – comes in second.

“What we are hearing from retailers is better than what we heard in the fourth quarter, but it does vary through retailers,” XPO CEO Mario Harik said. “On the industrial side, quite a bit of strength.”

PepsiCo CFO Hugh Johnston told that he wouldn’t be surprised if there was a mild recession in the U.S. this year.

“Frankly, we are coming out of 2022 which was just an outstanding year,” Johnston explained. “I mean, 14% revenue growth, strong EPS. Obviously, the company is just firing on all cylinders. We have good momentum coming into the year, but we are also aware of the fact in a high-interest rate environment it could start to drag at some point.”

Amid the cautious C-suite talk and relatively weak earnings growth, the S&P is up about 6.5% so far in 2023 the year and the Nasdaq is up nearly 12%.

Corporate America may be on to something, however. If we are not at the beginning of a new bull market, then we could be in for a rude awakening at some point in 2023.

“I think at some point we are going to break last year’s lows on the S&P 500 and Nasdaq,” Academy Securities strategist Peter Tchir told. “In particular the Nasdaq, we are going to go through that because everyone got bullish again and we are going to realize oops, this is not as good.”

Happy Trading!

Source: finance.yahoo.com

2 Industrial Stocks To Buy Hand Over Fist in February

These stocks will generate steady earnings and pay out dividends for decades to come.

Inflation rocked the U.S. economy in 2022. Rising prices across the board led to higher costs for consumer products. But one company’s cost is another’s revenue, and in the cases of rising commodity, energy, and agricultural prices, plenty of sectors benefited from these trends last year.

The industrial sector is a good hunting ground for stocks that will benefit from rising inflation, specifically with railroads and defense contractors. Here is one railroad and one defense contractor with durable earnings streams to buy in February.

1.Lockheed Martin: one reliable customer

Lockheed Martin (LMT 1.37%) has been a mainstay of the defense industry for decades, becoming one of the largest customers for the U.S. government and its allies. It supplies missiles, helicopters, satellite systems, fighter jets, and many other products for war departments. Some of the company’s revenue comes from cost-plus contracting, which gives contractors like Lockheed Martin a guaranteed return on projects. These kinds of contracts are part of the reason why the company can ride through periods when wages and input costs are rising quickly, as is happening today. And even if cost-plus contracting goes away, Lockheed is still the sole supplier for many weapons systems like the cutting-edge F-35 fighter jet. Regardless of the contract structure, Lockheed will likely be a monopoly supplier to the U.S. government for decades to come.

With governments — especially the U.S. government — always wanting the latest in defense/war technologies, Lockheed has an incredibly steady and predictable business. Last year, it generated $66 billion in sales and $6.1 billion in free cash flow. More importantly, its backlog grew 11% year over year to $150 billion, a lot of which has been driven by countries wanting to increase their defense spending post the Russian invasion of Ukraine. For example, Finland signed a $9.4 billion deal for the new F-35 fighter jet last year, which will create an earnings stream for many years as the aircraft is deployed and maintained.

Management takes this steady cash flow and returns it to shareholders through dividends and share buybacks. Over the last 10 years, Lockheed’s dividend per share is up 165%, while shares outstanding are down 21%, and its dividend is currently yielding 2.60%. If dividend growth and buybacks continue for the next few decades, shareholders of Lockheed stock will achieve solid long-term returns.

2.Union Pacific Corporation: a durable railroad operator

Railroad company Union Pacific (UNP -0.05%) operates in a different industry from Lockheed Martin but actually has similar competitive advantages helping it consistently generate profits. As one of the only railroad operators throughout the western half of the United States, companies that want to ship items by rail have no choice but to use Union Pacific’s routes. That allows the company to earn steady profits regardless of its input costs, as it can just pass them on to customers.

Over the last 10 years, Union Pacific has grown its free cash flow by 124%, hitting $5.7 billion over the last 12 months. Like Lockheed, Union Pacific consistently returns cash to shareholders in both dividends and repurchases. The dividend per share is up 280%, and shares outstanding are down 34.5% in the last 10 years. Investors currently get a 2.5% dividend yield each year for holding the stock, indicating to me that shares are inexpensive at the moment.

With urban areas spaced widely across a large land mass, railroads have been a shipping mainstay in the United States for over 100 years. I would bet that they will likely stick around for at least another few decades, if not much longer, as the geography of the West Coast is not changing anytime soon. That bodes well for investors looking to buy Union Pacific stock and hold on for many years.

Source: fool.com

Fed’s interest-rate hikes make T-bills an attractive, safer investment

A short-term saver? Say thanks to the Federal Reserve.

One benefit of the Fed’s interest-rate hikes aimed at wresting control over inflation is that savers looking for a safe investment for a year or less can now get the best yields in ages from Treasury bills, or T-bills.

Savings rates have jumped from just about zero to more than 4% in the past 12 months on these short-term securities issued by the federal government. On Jan. 24, a one-year T-bill was yielding 4.7%, up from a rate of 0.57% a year ago. A six-month T-bill was at 4.82% on Jan. 23, compared with 0.36% last January, and the three-month T-bill was yielding 4.58%, up from 0.13%.

And as long as the Fed keeps interest rates high — which seems likely after Wednesday’s quarter-point hike — investing short-term money in T-bills has a certain drama-free appeal with modest returns.

While this is not a get rich quick scheme, “T-bills currently offer savers better yield than most online savings accounts and short-term [certificates of deposit],” told Ken Tumin, a senior industry analyst at LendingTree and founder of DepositAccounts.com.

What are T-bills

reasury bills — like i Bonds and Treasury inflation-protected securities, or TIPS — are issued by and backed by the U.S. government. I bonds, for example, pay interest for up to 30 years. T-bills are the ticket for people looking for short-term savings of up to a year.

Additionally, savers can reap tax savings on T-bills, which are exempt from state and local income tax.

“That can make a 4.6% yield equivalent to a 5% yield for a CD in a state with an income tax,” Tumin said.

How T-bills works

T-bills are sold at a discount to their face value; when the bill matures, your interest is the difference between what you paid and the T-bill’s face value. For example, if you bought a $1,000, one-year T-bill at a rate of 4%, you would shell out $960 upfront and receive $1,000 at the end of the year.

You must buy on auction dates, which occur weekly for all maturities, except the one-year T-bill, which is set for every four weeks. Most individual investors make a noncompetitive bid, which means you land the average yield set at auction. (Emergency funds might be best held in high-yield savings accounts.)

Want to sell before the maturity date? That can be “a bit of a hassle,” told Tricia Rosen, a financial planner and founder of Access Financial Plannin.

When you buy through TreasuryDirect — the government’s website — you must hold new Treasury marketable securities for at least 45 calendar days before transferring or selling them (even if it’s a four-week security). Interest is paid when the security reaches maturity.

You won’t pay a penalty or fee if you want to hop out early like you would if you withdrew from a CD early. However, you could possibly lose money, if the sale price of the T-bill is lower than the original purchase price, which you are guaranteed at maturity.

“For individual investors, Treasury bills may be better suited as a way to diversify your portfolio rather than a replacement for your emergency savings,” said Greg McBride, senior vice president and chief financial analyst at Bankrate.com. “If you had an unplanned expense and needed to sell prior to maturity, you wouldn’t be able to sell it on TreasuryDirect but would first have to transfer it to a bank, broker, or dealer.”

Where to purchase T-bills

You can buy newly issued Treasuries in terms ranging from four weeks to 52 weeks through your bank or brokerage, which may charge a commission. Or, you can buy them online for a minimum of $100 through the government’s TreasuryDirect program, with no commission.

Large firms, however, such as Charles Schwab, Fidelity, and Vanguard, do not charge a fee when you buy a T-bill. That said, the minimum order for a new-issue Treasury is typically $1,000 in face value when you purchase it via a brokerage. And if you want to purchase T-bills for individual retirement accounts (IRA) accounts, you must go through a broker. For those nearing retirement, these can be a smart place to set aside cash without the worry of what’s going to happen with the stock market.

“T-bills are paying a slightly higher rate than other short-term investments, and the Treasury Direct website is easier to navigate than it was a few months ago before they revamped it,” Rosen said. “So it’s a good idea for someone who is in a high tax state.”

Source: finance.yahoo.com

This Online Brokerage Will Pay You $3,500 Just To Open An Account

Online brokerages are battling each other to win your account. And some are willing to pay up for it.

Surprisingly lucrative bonuses are up for grabs if you open an account with a brokerage or refer a friend to an online broker. Most of the major online brokerages are doing it, including E-Trade, Charles Schwab (SCHW) and Ally Financial (ALLY).

Morgan Stanley’s (MS) E-Trade is the most generous. It’s handing out up to $3,500 if you fund an account with $1.5 million or more.

But don’t worry. Even if you don’t have a million bucks sitting around, brokerages will still pay you.

In IBD’s 2023 Best Online Broker survey, respondents rated the attribute incentives/discounts/pricing 12th out of 18 traits. But everyone loves free money.

Online Brokerages: Bonuses Aren’t Just For Millionaires

Don’t assume you need to be a millionaire for brokerages to offer incentives for your account.

Take E-Trade, for instance. The brokerage pays up the more you put in, but still has attractive offers for lower amounts. E-Trade will pay you $50 for opening an account with as little as $5,000 in it. If you’re able to pony up $20,000 for a new account, that bonus doubles to $100. The bonus keeps rising, reaching $300 for a $100,000 account and $1,200 for a $500,000 account.

To get the bonuses, make sure you enter the BONUS22 code in your application. You must also fund the account in 60 days.

Investor Incentives

Some online brokerages, in fact, are paying ongoing incentives that might appeal most to newer investors with smaller account balances. Take Robinhood (HOOD), the app-based broker that caters to beginning investors. In December, the company launched its new individual retirement account (IRA) offering to help customers save for retirement. Robinhood will match contributions by 1%.

What does that mean in dollars and cents? If you contribute the maximum $6,000, Robinhood will put an extra $60 in your account. “This is not a one-time promotion, but rather a sustainable feature within the Robinhood Retirement account,” said Robinhood spokeswoman Jacqueline White. It’s sustainable because Robinhood keeps contributing to your IRA over time.

“Online brokerages used to offer free trades to attract new clients, but with trade commission for the most part already at zero, they need to find other ways to entice investors to select them,” said Mike Foy, senior director of wealth intelligence at J.D. Power. “Cash offers are common, and some firms are even getting more creative — like Robinhood’s recent announcement that they will match (a portion of) some client IRA contributions.”

Firms are betting that if they can attract assets now, over the long term they will be able to monetize them through selling more fee-based services, including advice and guidance as many investors find they need more help as their wealth grows and their needs become more complex over time. And there’s some evidence that this may be an effective strategy going forward — one example is that we see four out of five (81%) Gen Y DIY investors say they would be interested in an automated or robo-investing service if their firm offered it.”

Sizing Up Online Brokerages’ Offers

Even the largest and most established online brokerages will make it worth your while to work with them.

Charles Schwab, which consistently ranks well in IBD’s Best Online Brokers survey and led the pack in this year’s survey, offers a number of bonuses. Open a new account with at least $50 in the Schwab Starter Kit program, and you can get a bonus of $101. The bonus is put into your new account and you can use it to buy “stock slices,” or a mutual fund-like basket of a number of large stocks.

But Schwab’s potentially most lucrative offer is a bonus of up to $1,000 if you open an account after being referred by an existing Schwab client. The bonus varies based on how much you put in your Schwab account.

The bonus is $100 if you deposit $25,000, going all the way up to $1,000 if you open a $500,000 account. To get your bonus, make sure you get a referral code from the existing Schwab member and fund the account in 45 days.

Just know that bonuses are constantly changing and can vanish at any time.

Fidelity, another top-rated online broker with IBD survey respondents, offered a bonus of $150 for people who opened accounts with at least $50 in its holiday-themed Starter Pack offer. But that offer expired in early December. It has since renewed it. And not all brokers offer bonuses, including Interactive Brokers (IBKR).

Know The Risks

Additionally, most bonuses have stipulations attached that you must follow. Most commonly, you have roughly a month to get the money into the account to get the bonus.

And if you’re planning to close your existing account and move your money, you might face a fee on the way out. Online brokers might charge $50 or more if you transfer your account, sometimes called an ACAT transfer fee. You might be able to avoid the fee if you only transfer part of your old account, not the whole thing.

But there’s also a bonus to help with the fee, too, if you must pay one. For example, if you move an account worth $2,500 or more to Ally Invest, a unit of Ally Financial (ALLY), it will reimburse transfer fees up to $75.

Source: investors.com

3 Best-Performing REITs With Dividend Yields Above 8%

One of the best things about real estate investment trusts (REITs) is the diversity of property types, which allows investors to choose subindustries as well as the ability to choose an investment based on its dividend income or recent momentum.

Some income investors buy REITs strictly for high-yielding dividends. Other REIT investors look for ongoing growth. But every once in a while, it’s possible to get both.

Take a look at three distinct REITs with dividend yields above 8%. Each underperformed in 2022 but have recently been one of the best REIT performers over one- and four-week time frames.

Western Asset Mortgage Capital Corp. (NYSE: WMC) is a Salt Lake City-based diversified mortgage finance REIT (mREIT) with an emphasis on procuring undervalued mortgage assets. Western Asset Mortgage Capital is externally managed by Western Asset Management Company LLC, which invests in agency residential mortgage backed-securities (RMBSes), nonagency mortgage-backed securities (MBSes) and asset-backed securities (ABSes).

Western Asset Mortgage Capital suffered through a terrible 2022, losing 54.5% from January through mid-December. Since that time, it has a four-week gain of 19.95% and has risen 8.05% over the past five trading days.

The dividend of $0.60 per share was cut to $0.40 per share in April 2022 but has been stable since then. The $1.60 annual dividend per share yields 15.4%.

Global Medical REIT Inc. (NYSE: GMRE) is a Bethesda, Maryland-based healthcare REIT that owns specialized facilities it leases to healthcare systems and physician groups. Global Medical REIT owns and operates 189 buildings with over 4.8 million net leasable square feet across the U.S. It has an average rent escalation of 2.1%.

Global Medical REIT pays a quarterly dividend of $0.21, or $0.84 annually, which presently yields 8.01%. In 2022, Global Medical REIT had a total return of negative 42.35%.

But over the past five days, Global Medical REIT has risen 5.22% and has produced a four-week gain of 13.41%.

Office Properties Income Trust (NASDAQ: OPI) is a Newton, Massachusetts-based real estate company that owns, leases and manages office space. Its 162 properties across 31 states have a solid tenant base, including a high percentage of government offices.

Despite this, Office Properties Income Trust has had declining revenue and volatile earnings per share (EPS) over the past three years. Its occupancy rate of 90.7% is still a bit low but represents a recent increase from 89.4%.

Office Properties Income Trust pays a $0.55 quarterly dividend per share, or $2.20 annually, that presently yields 12.9%. Office Properties Income Trust was down about 40% in 2022, touching a 52-week low in mid-October of $12.21, but has since bounced back to over $17 per share.

As for performance over shorter time frames, Office Properties Trust has gained 4.41% over the past five days. The four-week gain of 24.71% is even more impressive.

There is always a cautionary note to be made with very high-dividend yields, as some companies have high yields because of poor performance and may be at risk of dividend cuts. Investors should always perform adequate research and due diligence before investing in any stock but especially those with very high-dividend yields.

Source: finance.yahoo.com

Mark Cuban tells Bill Maher that buying gold is ‘dumb’ — and wants bitcoin to keep plunging so he can buy more. Here are 3 simple ways to gain crypto exposure

Bitcoin plunged nearly 65% in 2022. But one billionaire investor still likes the world’s largest cryptocurrency: Mark Cuban.

“I want Bitcoin to go down a lot further so I can buy some more,” Cuban said in a recent episode of Bill Maher’s Club Random podcast.

Maher, who self-claims to be “very anti-bitcoin,” owns gold instead. Cuban, conversely, has no time for the yellow metal.

“If you have gold, you’re dumb as f—,” says the Shark Tank star and Dallas Mavericks owner.

Maher argues that gold “is like a hedge against everything else” but Cuban disagrees.

“[Gold] is not a hedge against anything, right? What it is is a store of value and you don’t own the physical gold, do you … Gold is a store of value and so is Bitcoin,” Cuban explains.

He then points out why gold can’t really protect your wealth in times of crisis.

“You don’t own the gold bar, and if everything went to hell in a handbasket and you had a gold bar, you know what would happen? Someone would beat the f— out of you or kill you and take your gold bar.”

If you share Cuban’s view, here are a few ways to gain exposure to bitcoin.

Buy bitcoin directly

The first option is the most straightforward: If you want to buy Bitcoin, just buy Bitcoin.

These days, many platforms allow individual investors to buy and sell crypto. Just be aware that some exchanges charge up to 4% commission fees for each transaction. So look for apps that charge low or even no commissions.

While bitcoin commands a five-figure price tag today, there’s no need to buy a whole coin. Most exchanges allow you to start with as much money as you are willing to spend.

Bitcoin ETFs

Exchange-traded funds have risen in popularity in recent years. They trade on stock exchanges, so buying and selling them is very convenient. And now, investors can use them to get a piece of the bitcoin action, too.

For instance, ProShares Bitcoin Strategy ETF (BITO) started trading on NYSE Arca in October 2021, marking the first U.S. bitcoin-linked ETF on the market. The fund holds bitcoin futures contracts that trade on the Chicago Mercantile Exchange and has an expense ratio of 0.95%.

Investors can also consider the Valkyrie Bitcoin Strategy ETF (BTF), which made its debut a few days after BITO. This Nasdaq-listed ETF invests in bitcoin futures contracts and charges an expense ratio of 0.95%.

Bitcoin stocks

When companies tie some of their growth to the crypto market, their shares can often move in tandem with the coins.

First, there are bitcoin miners. The computing power doesn’t come cheap and energy costs can be substantial. But if the price of bitcoin goes up, miners like Riot Blockchain (RIOT) and Hut 8 Mining (HUT) are likely to receive increased attention from investors.

Then there are intermediaries like Coinbase Global (COIN) and PayPal (PYPL). When more people buy, sell and use crypto, these platforms stand to benefit.

Finally, there are companies that simply hold a lot of crypto on their balance sheets.

Case in point: enterprise software technologist MicroStrategy (MSTR). It has a market cap of under $2 billion. Yet its bitcoin count reached approximately 132,500 as of Dec. 27, 2022, a stockpile worth around $2.3 billion.

Source: finance.yahoo.com

3 Growth Stocks Down More Than 80% That Are Screaming Buys in January

Down massively from their highs, these underappreciated stocks look like great buys.

Macroeconomic challenges have reshaped the way the market is thinking about growth stocks. Despite what recent performance might suggest, some stocks that are down more than 80% from their highs are actually backed by promising companies with serious rebound potential. Putting your investment dollars behind the best of them could be a path to stellar long-term returns.

Here’s why investing in these three beaten-down stocks could be a great move to start the new year.

1. Cloudflare

Cloudflare (NET 3.46%) is the world’s leading provider of protection against distributed-denial-of-service (DDoS) attacks. Without these kinds of technologies, bad actors can flood servers with a barrage of access requests that results in a shutdown. The company also provides content-delivery-network (CDN) services that use edge computing to speed up the rate at which information can be sent and received around the globe.

The company ended the third quarter with 1,908 customers generating more than $100,000 in annualized sales, up from 451 in the third quarter of 2019 and good for a compound annual growth rate of 61% over the last two years.

Cloudflare posted a net revenue retention rate of 124% in the third quarter, which means that existing customers increased their spending on its services by 24% compared to the prior-year period. That’s a strong indication that customers are getting great value from the company’s software, and the web services specialist has been having plenty of success attracting new customers as well.

Amid dramatic valuation pullbacks for growth stocks at large, Cloudflare stock now trades down roughly 81% from its all-time high. With the company sporting a market capitalization of roughly $13.2 billion and trading at approximately 10 times this year’s expected sales, the company still has a growth-dependent valuation that could set the stage for more volatility in the near term, but the stock looks poised to be a big winner for long-term investors.

2. Fiverr International

Fiverr International (FVRR 3.72%) operates a marketplace that connects freelance workers with those looking to hire contractors. With the coronavirus pandemic briefly shuttering many offices and then spurring the adoption of increased work-from-home operations, the company’s platform enjoyed surging demand — and its share price was bid up to dizzying levels. Now, the economic backdrop has shifted, and the gig-labor specialist has seen slowing sales growth and a dramatic pullback in its valuation.

While Fiverr’s third-quarter year-over-year revenue growth of roughly 11% came in far below the rates of expansion it had posted in preceding years, the company still managed to maintain positive momentum along key metrics.

The number of active buyers on its platform increased 3% compared to the prior-year period to reach 4.2 million, and average spending per buyer increased 12% year over year. The company’s take-rate, which is a measure of how much the company takes from each job completed through its platform, also hit 30% — up from 28.4% in the prior-year period.

The company also recorded an 81.1% gross margin in the quarter, down from 83.3% in Q3 2021 but still quite impressive in its own right. Non-GAAP (adjusted) earnings per share also rose roughly 9.5% year over year to reach $0.23.

Despite probable continued economic slowdown in the near term, the gig economy looks poised for long-term growth — and Fiverr is on track to play a key role in its evolution. With the stock down roughly 91% from its high, Fiverr could go on to be an explosive winner for patient investors.

3. Roku

Roku (ROKU 4.27%) is another stock that saw a huge valuation run-up driven by pandemic-related conditions. In addition to the low-interest rate environment that helped bullish momentum for growth stocks, the streaming-technologies company benefited from social-distancing and shelter-in-place conditions, causing people to spend extra hours indoors streaming their favorite shows and movies. But those tailwinds have now receded, and Roku stock trades down 91% from its peak valuation level.

With the company’s market capitalization pushed down to roughly $5.8 billion, Roku is now valued at just 1.8 times expected forward sales.

Admittedly, the multiple contraction isn’t entirely unwarranted. After growing sales 51% year over year in Q3 2021, revenue growth in last year’s quarter came in at a much less flashy 12%.

While Roku’s growth has decelerated significantly, the company still managed to increase average revenue per user roughly 10% year over year in the third quarter, and there are other signs that the company’s long-term growth story is far from over. Roku recently announced that it had reached more than 70 million global active accounts, and it should be able to persevere despite facing a more challenging advertising market in the connected television space.

With macroeconomic headwinds on the horizon, Roku probably won’t be posting meaningful profits in the near future, but the company has a sturdy balance sheet, with roughly $2 billion in cash and equivalents and no long-term debt. While the streaming player is facing a combination of macro headwinds and competition across multiple levels of its industry, Roku has a strong installed base and solid engagement numbers.

Source: nasdaq.com

Why gold prices may be headed for record highs this year

IMF’s Georgieva expects one-third of the world economy to be in recession this year. That could bolster gold.

Gold recently climbed to its highest prices in nearly seven months, feeding expectations that the precious metal is on track to notch record highs this year, after closing out 2022 with a modest loss.

Gold “noticeably” appreciated by about $200 an ounce from November to the end of last year, and continued that trend in the first few days of January 2023, says Edmund Moy, a former director of the U.S. Mint.

Futures prices for gold GC00, 0.16% GCG23, 0.16%, based on the most-active contract, finished last year with a loss of 0.1%, but posted gains of 7.3% in November and 3.8% in December.

The relative strength of the U.S. dollar and higher interest rates had pressured gold. But since November, the dollar has weakened and the Federal Reserve’s interest-rate hikes started to moderate—prompting gold to start making its upward move, says Moy, who is also a senior IRA strategist for gold and silver dealer U.S. Money Reserve.

Whether there is a soft or hard landing for the U.S. economy this year, the global economy is shaping up to have a worse year than last year, he says, and gold “usually rises during a recession, high inflation, or economic uncertainty.”

In a recent interview on CBS Sunday morning news program Face the Nation, International Monetary Fund Chief Kristalina Georgieva said the IMF expects one-third of the world economy to be in recession this year.

Based on his experience as director of the U.S. Mint during the 2008-09 financial crisis, Moy believes signs point to higher gold prices this year, and he wouldn’t be surprised if gold set new records, “topping $2,100 or more.”

Gold futures climbed to a record intraday high of $2,089.20 on Aug. 7, 2020. They settled at $1,859 on Wednesday after climbing to as high as $1,871.30, the highest since mid-June 2022.

Gold can benefit from a recession

Gold typically sees gains in January, according to Adrian Ash, director of research at BullionVault. Gold futures climbed in each of the Januarys from 2014 to 2020, and posted losses for that month in 2021 and 2022, according to Dow Jones Market Data.

Precious metals may benefit as investors use the start of January to review their portfolio and rebalance their holdings of bullion, equities, and bonds, says Ash.

This month may also bring “heavy demand to invest in gold because—looking at the 12 months ahead—wealth managers and private savers alike focus on potential risks to their money, so they’re choosing to buy a little investment insurance for protection.”

Given gold’s gain at the start of the year, many analysts may already need to revise their 2023 forecast, he says.

In a survey conducted before Christmas, BullionVault users forecast a gold price of $2,012.60 for the end of 2023, with nearly 38% of the 1,829 full responses pointing to the need to spread risk and diversify users’ wider portfolios as the top reason for investing in physical bullion.

Looking ahead, however, the U.S. dollar will be a key to gold’s performance this year.

The dollar fell more than 4% in November—its worst monthly performance for over a decade, says George Milling-Stanley, chief gold strategist at State Street Global Advisors. That puts pressure on dollar-denominated gold prices.

Gold has “nothing to fear” from interest-rate hikes, he says. It’s the impact of rate increases on the value of the dollar that is important. If the dollar has peaked, he expects to see gold above $2,000 again this year.

Some market predictions, however, mention prices as high as $3,000 an ounce. Milling-Stanley says that may be “heroically optimistic,” but “nothing in the world of gold is impossible.”

History suggests, he says, that when gold is in a “sustainable long-term uptrend,” which he believes has been in place since the price last touched $250 in 2001, prices tend to move up “stepwise, consolidating at every stage in the upward march.” That’s what he sees as most likely for 2023.

Meanwhile, net gold purchases for official reserves will continue to be a “significant feature” for the gold market as it has been for over a decade, says Milling-Stanley. Net purchases by the central bank complex as a whole have averaged between 10% and 15% of total global demand every year since 2011, with emerging market country central banks the largest purchasers, he says.

“There is every indication that such purchases will continue into the foreseeable future, not just in 2023,” he says.

Source: marketwatch.com

Opinion: It’s time to buy I-bonds again; here are 3 ways to maximize your $10,000 inflation-fighting investment

The current rate is good, but if you hold off until just before the next change, it could be even better.

Another year, another $10,000 you can buy in Series I bonds.

The once-obscure Treasury investment soared in popularity last year because of its enticing inflation-adjusted rate, which peaked at 9.62%. That leapfrogged bank deposit accounts and completely trounced negative stock- and bond returns. The caveat? Individuals are limited to $10,000 per year, and those who hit the maximum had to wait until the new year to get more.

So now that you can buy more, the question is, when should you?

The current annualized offering at TreasuryDirect.gov is 6.89%, which is a composite of a 0.4% fixed rate that stays for the life of the bond, and a half-year rate of 3.24% that is good until the end of April. Note that you’re locked into I-bonds for one year, and you lose three months of interest if you cash out before five years.

At the turn of the new year, that’s above comparable investments that are still under 5%, such as high-yield savings accounts, certificates of deposits, TIPS and Treasury bills and notes — but not by quite the margin as last year. The next rate change happens on May 1, and we’ll know the last batch of data that feeds into how the inflation adjustment is calculated in mid-April.

1. Why to buy I-bonds now

Making your decision about when to buy your next batch of I-bonds depends on how you feel about the overall U.S. economic situation. If you feel optimistic that inflation is waning and will go back soon to more normal 2% levels, you may want to buy the full amount now and capture as high a rate as you can.

That’s also the case if you’re not planning on holding your I-bonds for long, and will cash them out once your one-year holding period ends.

Financial planner Matthew Carbray, of Ridgeline Financial Partners in Avon, Conn., has been advising clients to make the full purchase now because he thinks the interest rate will be lower in May and going forward. “I don’t feel inflation will tick up much, if at all, between now and April,” he says.

He went all-in for himself on the first business day of the year. “I like to have my money earning the most it can from day one,” he says.

If you follow suit with your $10,000, there are some ways to buy more throughout the year, primarily with a gifting strategy. You can buy up to $10,000 for any individual as long as you have their Social Security number and an email address. They can claim the gift in any year they haven’t already reached their own individual limit.

You can also get up to an additional $5,000 in paper I-bonds as a tax refund, and then convert those to your digital account. That’s something you want to act on right now. Thomas Gorczynski, a senior tax consultant at his own firm based in Phoenix, is planning to pay extra on his last quarterly tax payment and then set the refund to come in the form of I-bonds. “You can easily overpay your fourth quarter estimated tax payment by Jan. 15, and then quickly file your taxes for a refund — then you’re not letting the government hold on to your money for too long,” he says. “You’re not going to get wealthy on this strategy, but inflation-protected investments should be in every portfolio.”

2. Buy half now and hold half until mid-April

Gorczynski is going with a half-and-half strategy for his main I-bond allotment in 2023. He’s putting money in at the end of January (to get a full month of interest where the money is parked now) not only for himself as an individual, but also for several S Corp business entities that he owns. Then he’s going to wait until the middle of April to decide what to do with the other half of the money.

The key for him is whether it looks like the I-bond fixed rate will rise in May, for which there’s no public formula. So he’s watching the real-yield rates of TIPS as a proxy. “If real TIPS yields have been high the whole time, I may wait and hope for a higher fixed rate. It’ll be a guessing game, but I think if the 10-year TIPS is high, there’s a chance the fixed rate will go higher,” he says.

From a tax perspective, Gorczynski expects to start seeing a lot of questions about how to handle I-bond proceeds, which are not taxable as federal income until redemption (up to 30 years), and are exempt from both state and local taxes. He added a section on the taxation of inflation-adjusted investments to his education seminars for tax professionals. Among the pro tips he shares: If an I-bond is redeemed in a year where there’s qualified education expenses, it can be excluded from federal income, making it an attractive alternative to struggling 529 college savings plans.

3. Hold it all until mid-April

The I-bond rate you get in January is the same you’ll get in mid-April, so unless you have money sitting around that you need to move, you could just wait and see.

“By waiting, the only thing that happens is the clock doesn’t start ticking on your one-year holding period,” says David Enna, founder of TipsWatch.com, a website that tracks inflation-protected securities.

Enna is waiting for the inflation report for March that comes out on April 12, and then will be making a decision about what will be the best deal. You could do half your spending in April and half in May, or push the whole amount into one of the months, depending on which looks better. Enna says you have to look at more than what’s happening with inflation, though, because that only constitutes half of the formula. It’s the fixed rate component that matters long-term. “I-bond investors like higher fixed rates,” Enna says.

The case for buying in April would be if economic indicators show real yields down, the Fed stops raising rates and inflation moderates or drops. Then you might assume that the rate in May will be lower overall than now.

The case for May would be if real yields are up, which would then look like the fixed component would also rise. Then you’d have an investment that’s guaranteed to make that amount above inflation every year, which is good for capital preservation. Inflation could also shoot up if gas prices rise or because of some unforeseen variable, and then I-bond’s inflation-adjusted rate could go up higher. Says Enna: “I recommend buying them every year, but I’m the inflation-protection guy. That’s my thing.”

Source: marketwatch.com