Year: 2019

How to Find Big Opportunities in Investing

Everyone would like to know how to find big opportunities in investing. That’s the point, right? One of the best ways is to notify where traders are overreacting to the news.

By Guy Avtalyon

To find big opportunities in investing, other traders’ extreme fears will help you. For example, traders reacted to news that brokers were cutting their fees. But did you notice a massive rise in their stock price? During the past few weeks, online brokerage stock took hits.

Let’s go step by step. When Charles Schwab announced it would cut all commissions for all trading, E-Trade, Interactive Brokers and TD Ameritrade fell. This news sent brokerage stocks lower because the traders overreacted.

In that period, for example, TD Ameritrade (AMTD) dropped from $48 to $33. The other brokerages experienced a decline in stock price too. Interactive Brokers (IBKR) fell from nearly $54 to almost $45, Charles Schwab Corp. (SCHW) dropped from $43 to $35, etc.

The traders responded to news that brokers are cutting their fees. They had fears about brokerage future without that income and started to sell. But the point is to overcome the fears and recognize the opportunity. When you recognize the bottom in some stocks you actually can see great returns. And let’s take a look at our example again.

What happened with these stocks a bit more after?

Charles Schwab moved from $35 to $42, TD Ameritrade moved from $33 to $39, Interactive Brokers stock rose from $45 to $48, etc. How did this happen? There are no tricks. When some stock becomes oversold and gets stretched in one direction too quickly, too far, you will notice bounce back. That is exactly the time when you have to buy the stock. So, you are profiting while others are feeling fears.

It is simple to recognize when the stock dropped on extreme fears. How to find those big opportunities in investing?

Key technical pivot points

Bollinger Bands

Let’s say you noticed that traders picked a moving average of 20 with two regular deviations up and under that average. When a stock reaches or enters the lower zone, you can be sure the stock is oversold.

RSI and W%R

Use RSI to confirm the indicators that are higher. The oversold condition will appear when RSI goes to or below its 30-line, also when W%R (Williams’ %R) comes to or up the -80-line the stock is considered to be oversold.

MACD

Moving Average Convergence-Divergence is helpful and simple. It helps to confirm the info we get from previously mentioned indicators. MACD is calculated by subtracting the 26-period EMA from the 12-period EMA (Exponential Moving Average).

How to identify investment opportunities?

You will need a bit of magic to find big opportunities in investing.

These four indicators must be matched with one another if you want this to work. They have to be aligned. And moreover, you don’t want to rely on one indicator. You must have all four.
So, what we had with brokerages in October this year? Just to be said, we can use other examples, but this is fresh. We saw the stock dropped due to the fees-pricing fight. Though, we saw the precise time of extreme fear and, at the same time opportunity.

When you see the stock dropped to its lower Bollinger Band, it is a sign that the stock is oversold. Use historical data for that stock and you will find that whenever the lower Bollinger Band is reached or entered the stock turned and bounced back higher from that point.

Use RSI to find big opportunities in investing

But you have to check RSI also. Find the confirmation on what Bollinger tells you. If the RSI is a below-set line the stock is oversold. That the confirmation of Bollinger Band’s story. Check this info in historical data to have a sense of how the stock was performing in case it had lower RSI and if the stock moved to its lower Band.
If you see the stock bounced back higher quickly that is the confirmation and you should buy.

And as we mentioned before MACD and Williams’ %R have to confirm the described condition to be sure you can trade with 85% of success.

Examples of how to find big opportunities in investing

The list is really endless. Big investments may come fro different fields, different companies. For example, some small but developing company can be a better choice than a famous brand.
In case you don’t believe this, let’s see what stats tell us. Small companies are the spine of any national economy. That’s the fact. Small companies employ many people, actually the majority. So, it is easy to conclude that the can be a big opportunity to invest in.
Just keep in mind before you invest in one of them to examine its potential for growth, financial strength. When you go through this process try to find out how passionate management is about business, sometimes that will tell how serious they are about future growth and the company’s future. Especially if you want to invest in some startup.

Big opportunities in investing can be detected in up to 85% of cases.
Put all these indicators together with extreme traders’ fears based on news, and you will see how to find big opportunities in investing.

7th November 2019
Alibaba Stock is Attractive for The Long Term Investment

Analysts have called e-tailer Alibaba Group Holding Ltd “Amazon of China” and for good reason.
Alibaba is one of the few e-commerce companies in the world that can come close to Amazon’s size and growth potential.

By Guy Avtalyon

Update 08/11/2019: Alibaba stock (NYSE:BABA) broke out the $185 level and scored the high. Yesterday it was traded at $186.66.

Alibaba stock was traded on Tuesday, November 5 at $182,00 which means that it needs to rally less than 2% to reach $185, the new maximum this year. The best Chinese stocks need to clear one crucial level to be able for a breakout. It is $185 level, a very important level that might give it the strength to move up and hit the $210 the highest price ever got in 2018.

Over the last almost a year and a half we can notice a range of higher lows, so we can easily say it is positive. Yes, but we can also see a set of lower highs. If Alibaba move over $185 that will be a new high and good level for increasing to the $210, historically highest high.

It will be interesting to watch this stock over this month.

Is Alibaba able to do so?

Alibaba reported Q3 earnings on November 1. All expectations are beating because the company reported an incredible increase in sales. The online-retail business rose an awesome 40% year over year in the September quarter.

But that’s not all. The real rise will come on China’s Singles Day on November 11. That is a shopping storm. The original aim of this holiday was dedicated to single people to celebrate not being in relationships. But it turned into something like Black Friday but more huge, more intensive, a real shopping storm. Today it is an indicator of buyers’ sentiment and sales growth. Can you guess who played the big? Maybe the biggest role in turning this holiday to insane shopping of everything has Alibaba.

Singles Day began as a weird celebration for single people in China back in the 1990s. Just write November 11as numbers only. It is 11. 11, right? Singles Day started as a kind of anti-Valentine’s Day when students at Nanjing University began celebrating the fact they are single.

After 10 years Alibaba literally adopted that day and turned it in a day when everyone, no matter single or not, orders themselves a gift.
Online shoppers in China made $30.8 billion in sales last year on that day. This spending orgy has surpassed Cyber Monday in the US for online shopping made on a single day.
Since last year’s score was 27% higher than a year ago, what can we expect this year? We are afraid that any forecasts will be beaten. Have in mind that Alibaba made a billion dollars in sales in the first 2 minutes shopping (actually, it needed only 90 secs). A real retail phenomenon! And Alibaba is a recorder.

Alibaba.com (NYSE:BABA) is the biggest e-commerce and cloud player in China.

In its Q2 earnings report, we can see its revenue increased by 40% annually to $16.65 billion v.s. estimated $180 million.

Company’s generally accepted accounting principles or GAAP net income, include a big profit from its stake in the fintech company Ant Financial, which rose 288% to R$9.9 billion, which is $3.85 per share. If we exclude that profit and some others, the net income increased 40% $4.58 billion, or $1.83 per share. Estimations were beaten again.

After the Q2 earnings report the stock price jumped but for a short probably because of investors’ worries toward the U.S.-China trade war. Also, the economic slowdown in China had an influence.

Should you enter a position in Alibaba?

Alibaba’s focus commerce revenue grew 40% annually, its operating profit rose 32%, preserving its position as Alibaba’s entirely profitable venture.
There are some concerns about the Chinese economy’s slowdown.

Should you invest in Alibaba stock?

Revenue growth of 40% is an amazing amount for a company of virtually any volume. But keep in mind that Alibaba is the world’s seventh-most valuable public company. So, that percentage is a miracle.

The number of their active consumers increased by 19 million last quarter and now they have 693 million users. They have 785 million mobile monthly active users, which is 30 million more over three months. Alibaba aims to have more than 1 billion buyers by 2024, and it looks like it will reach that goal.

How to invest in Alibaba

The best way to invest in Alibaba wisely is by having a long horizon. The company has a fantastic position, its strength in e-commerce is supported by its huge data insights on Chinese buyers, also its increase in market share in the cloud computing industry.

Also, there’s the Chinese growing middle class with increased buying power. The extra income has proven to be important to Alibaba’s continued high growth. Also, there is the Chinese government as a safety net. China supports its favorite companies on the international stage, that’s a fact. Protectionism from the Chinese government works fully in favor of BABA stock, backing it to enter the “buy” choice.

The drawbacks of Alibaba stock

The founder, Jack Ma, stepped down as chairman of the board in September this year. That is a signal the risk is here. What lies behind the company’s founder and former CEO leaving? The other problem is an extremely high bar the Alibaba set for itself.
The risk is that this growth will decelerate. But at what speed? The analysts predicted speed or it will be due to a quick sale by growth investors?

Will Alibaba’s success continue?

The company has one of the most advantageous competitive aspects.

Alibaba’s large market share in plenty of high-growth, scalable, tech-based fields makes it dominate in the coming years. But something must be taken into consideration. China has a great impact on the company, honestly too great. China’s government’s influence is a risk by itself. The additional risks may come due to the trade war. Just compare Alibaba”s valuation to results they have in the last few quarters and you will conclude that investors are paying attention to the trade war.

Alibaba stock trades at 32 times earnings. Is it in line with revenue growth of 40% and earnings per share increased by 36 %? It’s low multiple. Maybe that’s not a wonder, with shares trading lower than they did 18 months ago. Buying Alibaba stock is a calculated risk and one that could pay very soon if the trade war ends.

6th November 2019
Recession Fears Overflowed Americans

42% of Americans plan to reduce spending, according to the research held by the Consumer Education team at LendEDU
32% reported having no money in an emergency fund and 55% of respondents reported having $1,000 or less.
37% believe their finances are too low to resist a recession

By Guy Avtalyon

Recession fears overflowed not only Americans, but the whole world is also in it too. In late August, the Consumer Education team at the LendEDU conducted a nationally-representative survey of Americans to gauge their sentiment towards the situation of an economic recession. The aim of this nationally-representative survey of Americans to gauge was to better understand how the risk of a recession may change consumer spending and investing habits has been said from the Team.

And if you have some fears and concerns about the coming recession, you are in the right club. According to this survey, more than half of Americans are somewhat or completely worried about a recession and willing to change their habits.

The survey revealed that fears of a recession are modifying habits and, also, that many Americans haven’t positive feelings about their current financial conditions.

Here are some data from the survey:

42% of respondents are planning to spend less and save more due to recession fears
32% of respondents reported having no money in an emergency fund and 55% of respondents reported having $1,000 or less. The median amount was $712.
37% of respondents believe their finances are too weak to withstand a recession and 22% are unsure.

HERE IS THE FULL REPORT

We are all afraid of recession

Even if we are living in a safe-heaven with a booming economy the question of when, not if, a recession will come. The history isn’t helpful, it is contrary. All we know about recession is scary.
When it occurs, many people could be in a very hard financial situation. Some of them are still trying to stand on their feet after the Great Recession in 2008.

That is our reality. The media are full of reports about recession and how fast we will be faced with it. Massive unemployment, doom, misery, and, of course, the stock market breakdown. That is exactly what media reports say.

To make clear what the recession is. When the GDP is negative for two or more running quarters. The decline in personal income or corporate profits, or when the employment decreases, also the production or retail sales are falling, we can say we have a recession.

Many factors may cause a recession. But one thing you have to keep in mind, a recession is only part of the business cycle. And it never lasts forever. The economy will never fall forever.

Why do recession fears grow?

The fears come from a willingness to survive. Sounds controversy, but when you are faced with something you don’t know, or you don’t understand, or you already had a bad experience, you feel fear. But the other side of your brain commands you must survive. So, what are you doing? You are going to find a way to meet your brain’s expectations. Well, when we are afraid of recession the first thing we can do is to cut our expenses if our salaries are decreasing. That means, we have to change our habits.

And this LendEDU survey showed exactly that. The majority prefer to change their habits in order to survive a possible recession.

But when it comes to their investments some intriguing things arose. On a question from the mentioned survey: “Recently, there has been talk about the possibility of an economic recession. While a recession is far from certain, are you planning to change your investment allocation (ex. stocks, bonds, etc.) or investment preferences?”

The majority of participants responded that they would not change investment allocation.

Here are the answers:

No, I am planning to continue investing per usual (44%)
Yes, I am planning to invest more conservatively (16.1%)
Yes, I am planning to invest more aggressively (3.8%)
Unsure, or none of the above (36.1%)

Let’s say that 70% of this 44 % have a well-diversified portfolio. That is in the best case. The other 30% maybe are not informed about how dangerous can be if they don’t change the investment allocation in time of recession or awaiting it.

Recession fears

The stock market can also warn of an approaching recession, but that’s not always the case. The member of the Traders-Paradise team has a witty remark on this, saying that the stock market has guessed ten out of five recessions. Yes, it is a joke but in some cases, the stock market can forecast the recession.

The inverted yield curve, for instance, can show that there will be a recession but not when. One thing is certain, the market can move but the economy couldn’t be changed overnight. The bad data has to be present in the market for a longer period than one month and not even than you cannot be sure that recession is coming.

Claudia Sahm, a Federal Reserve economist suggested a method to detect a recession more quickly. In a new paper, she introduced a system to more quickly detect and react to a recession. The full paper is here

Who can say for indisputable when the next recession will happen? No-one. But if you have recession fears, you are in the great club. A lot of surveys show that Americans are afraid that a new recession will come soon and they are taking some steps as a response. The recession fears are well-known in the whole world. We all feel fears of a recession.

So, Americans, you are not alone.

5th November 2019
Is Facebook Stock Good to Buy Now?

If you are able to put the policy aside, the answer to the question from the subtitle is NO.

By Guy Avtalyon

Facebook stock gained 1.03% on Friday, 1st Nov 2019, and rose from $191.65 to $193.62. It has won 3 days in a row. FB is FANG stock and had a strong third-quarter earnings report. Over more than one decade Facebook stock rose almost 600%. There were bad and good times for this social network giant. The question is will FB continue to gain or it will pause.

Zuckerberg’s company’s market cap is $525 billion, the company has a huge assortment of platforms Facebook, WhatsApp, Messenger, Instagram and every day attracts more and more users. In recent years its advantage for marketers and advertisers persists extremely valuable. Maybe today more than ever. More than 2.2 billion people use its services every single day.

Is Facebook Stock Good to Buy Right Now?

Do you know what is interesting? This giant is still growing. All of these make it favorable to the investor who knows to respect the low price of the stock. Currently, it is $193.62, at that price the stock was traded on Friday, 1st Nov 2019.

The company’s earnings potential showed in its Q3 earnings report that earnings per share surged 20% to $2.12, and was estimated by experts at $1.91 earlier. Facebook had to pay penalties and everyone knows why but the company earned $8.38 per share. Investors don’t lose faith so easily. The company’s P/E ratio is 23.

That follows two quarters of decreasing Facebook earnings but as we mentioned the company had important legal expenses. But if you exclude those expenses Facebook had 5 quarters in a row with a wide margin.

Revenue grew a faster 29% to $17.65 billion.

Facebook management warned again of a notable revenue deceleration in the fourth quarter, with a more reasonable deceleration that will continue during the next year.

You should view the FB stock as a long-term investment because it looks like a fantastic opportunity. The current price isn’t high, which is great for investors with a large horizon. If you are seeking strong returns, Facebook is the right choice for you. But even with great performances, history has shown that it is hard to beat the market with brands, with popular companies. So, think about that.

The summary of Facebook stock:

for the past 30 days, the high stock price was $198.09, and low was $173.09.
during the past 3 months high was $198.09 and low was $173.09.
52 week FB highs were $208.66 and low $123.02.

During the last trading day, the stock changed 2.21% from a day low at $189.91 to a day high of $194.11. Volume dropped in the last trading day on Friday by -20.39 million shares. As a result, 21.31 million shares purchased and sold for about $4 125.76 million. Facebook Inc is a strong buy candidate with a potential gain of 1.03%.

Is FB stock undervalued?

Why do we are sure? To have a clear sense of stock value just make a comparison with similar companies. For example, let’s compare FB stock with McDonald’s. McDonald’s reported adjusted revenue growth of almost 6% last quarter and Facebook grew revenues 27%. So, yes FB stock is undervalued. McDonald’s stock was traded at $193.94 on Friday

Having all this in mind, we can say that FB stock is undervalued, it cannot be traded at the same valuation as McDonald’s. There is no sense.

Yes, Facebook had security problems and still has to improve them. But after they finish it the focus will be on increasing profits. Facebook could clearly turn back into 40%-plus revenue growth and a 20%-plus profit growth company.

The price of $205 and more is real. This at $193 isn’t.

4th November 2019
Macy’s Stock Is a Candidate For The Bargain Hunters This Month

Bargain hunting indicates that a stock is undervalued and is therefore worth less than it should be. Being ready to choose undervalued stocks is pretty much a talent. How stock can be undervalued? This one is.

Macy’s Inc (NYSE:M) is undervalued stock. How do we know that? We all could see, now almost at the end of the year, it was the worst-performing stock in the S&P 500 in 2019. The company cut its earnings guidance and the stock fell for 48%.

But here is the tricky part. Don’t you dare to think that some stock is worthless when it touches the bottom? Don’t! When some stock is cheap it is still an opportunity to buy it. Such stock doesn’t deserve to be ignored. You must have a bigger picture and evaluate the market capitalization, the price of the whole company. The market cap of Macy’s is $4.813 billion. Not too much but still. Let’s go further. Macy’s is still a profitable company that makes almost $1 billion in profits this year. The company was forced to cut its guidance because the gross margin has fallen from 38.5% to 39.7%. That was one of the reasons.

But its sales proceed to drive in the right way with a rise of 0.4% over the last 11 months.

Moreover, Macy’s has a lot of expensive real estate that it’s slowly twisting capable to consolidate the value.

The company’s market cap isn’t mentioned accidentally. Macy’s expects to sell assets for $100 million profit and already has a real estate that was priced at about $16 billion by the investment firm Cowen. It was 3 years ago. Compare this value in real estate with its market cap. If you calculate the company’s real estate, plus $100 million in asset sale gains plus future rising sales, plus dividend yielding 9.96%, what can you conclude?

Macy’s is the candidate for the bargain hunters.

The real lure for value seekers. To reveal all about Macy’s we will tell you that it is risky stock regarding the change in retail. The whole truth is the stock is currently trading at a P/E of less than 5.

A stock’s price is a mixture of investor estimates for future growth/revenue/dividends/ and it is only a matter of belief as to whether some stock is undervalued. It is always a question will your estimation for the company’s future growth be firmer than the estimation of other investors.

The point is to be able to notice the value. The value investing will help you to improve long term returns.

Normally, value investors are looking for stocks with low-value multiples and ratios. The most popular variant is the P/E or stock price to earnings ratio. That will not account for growth, of course. A low P/E seems good.

Why analyze Macy’s stock as a candidate for bargain hunters?

The stock market is an almost all-time high, and value stocks are often ignored. But recently, the investors are paying more attention to value stocks. So, maybe it is a good time to analyze some of them. Our first suggestion is Macy’s Inc but there are more value stocks out there and worth your attention. They are lately undervalued which makes them favorable if your estimation shows the growth potential in the future. Macy’s has a great history. It was founded in 1858 by Rowland Hussey Macy. Moreover, in 2015, Macy’s was the largest U.S. department store company by retail sales. Today it has 584 stores throughout the US, Guam and Puerto Rico.

In the second quarter of 2019, Macy’s shares dropped more than 13%. On August 14, shares were worth $15.82. That was their lowest since February 2010.

Our current pick for a candidate for bargain hunters is Macy’s Inc. Watch this stock.

4th November 2019
Saudi Aramco Is Moving To A Publicly-traded Company

by Gorica Gligorijevic

Saudi Arabia announced on Sunday that it had approved plans for Saudi Aramco to go public
This I.P.O. could be the biggest ever, but does it fall short of Saudi Arabia’s goals.

Saudi Arabia announced on Sunday that it had approved plans for Saudi Aramco to go public. This is one of the world’s most gainful company is close to its long-wanted goal: to become a publicly-traded company. The Saudi Capital Market Authority said that Aramco intended to sell an undefined percentage of its shares. Trading could easily start next month.

Bankers on the event have reported the Saudi government that investors will probably value the company at between $1.6 trillion to $1.8 trillion.

Saudi Arabia has to compromise on valuation and said it is ready to accept less than the $2 trillion, the amount that Crown Prince Mohammed bin Salman has said the oil giant is worth. According to media reports, the valuation could easily be around $1,5 trillion.

The zeal to take a lower valuation shows the prince has confidence in his judgment and that he is sure of $2 trillion estimates. This IPO is a central part of the Vision 2020 plan to modernize the Saudi economy. This is a very competitive plan and we can recognize the plan to surpass the $25 billion by Alibaba Group Holding Ltd. in 2015.

Aramco is examining increasing next year’s dividend by an additional $5 billion to $80 billion to get more investors.

Saudi Arabia’s most prosperous families are supporting demand for IPO, but bankers are still attempting to approach to international investors. With that purpose, they have invited money managers in London for a series of meetings next week. An increase in the dividend will support that effort. Aramco’s dividends are still below that paid by oil giants like Royal Dutch Shell Plc and Exxon Mobil Corp.

More about Saudi Aramco privatization

The partial privatization of Aramco will be the biggest shift to the Saudi oil industry since the company was nationalized in the 1970s. Saudi Aramco pumps 10% of the world’s oil from the fields under the Saudi deserts. It is Saudi’s most profitable company globally and the spine of the country’s financial and social security.

Taking a main position in the deal has been one of the biggest contests for global banks. More than 20 banks are working on this deal, with the leading roles have Citigroup Inc., Goldman Sachs Group Inc., and JPMorgan Chase & Co.

The way to today’s resolution hasn’t been so nice. The investors refused the Prince Mohammed’s $2 trillion valuations, the initial plan to list Aramco in New York or London was discarded in favor of a Riyadh flotation only.

Aramco will be faced with the global movement against climate change that’s targeted the world’s largest oil and gas companies. Since the demand for oil is rising all this century Saudi Aramco has to meet that because using oil will peak in the next few decades despite rising electro-cars.

Saudi Aramco could be listed next month

This means the globe’s most valuable company will be traded on the Saudi bourse only. The exchange relaxed a 49% limit for foreign strategic investors in shares of listed companies for foreign investors a few years ago. Saudi Arabia has launched a lot of reforms in the past several years to make it’s stock market attractive to foreign investors.

Saudi Aramco’s dividends

In an effort to make the stock more winning, Aramco wants to pay $75 billion in dividends next year. That would provide investors a yield of 3.75% but only in case if the company meets its goal of a $2 trillion valuation. To be honest, it is a nice yield but still lower than the other big oil companies are paying.

Saudi Aramco is moving forward with an IPO and that could break records and provide investors the opportunity to hold a part of this the most profitable company in the world.

But the Capital Market Authority of Saudi Arabia only said today that it has approved an application to list shares in Saudi Aramco and not say when the IPO would take place or give details on its size. Al-Arabiya, the Saudi news channel, said on Sunday that Aramco would release the prospectus for its listing on 10 November.

Aramco has large oil reserves and huge daily production. Opinions on how much the flotation will grow are broadly different. Even if it is no higher than $1.5 trillion selling 1% of the company would bring $15 billion. Hence, selling 2% could make $30 billion, surpassing the record $25 billion IPO by Alibaba (BABA) in 2015.

Aramco is supposed to sell 5% of the company on two exchanges. An initial listing of 2% on the Tadawul Saudi bourse next month and a 3% listing on some international exchange, that is not selected yet.

Bottom line

By doing so (getting the IPO), does Saudi Arabia show its hopes and, moreover, the interests that no one will find a replacement for oil?
What if this IPO brings Saudi Arabia to among the richest countries in the world, right along with the US and China? Some people are already worried about that.
The time will tell who was right.

3rd November 2019
Sterling is good, the US dollar is trading almost flat

EUR/USD is by far the most important and liquid pair

The dollar index closed yesterday’s trading session in the red zone. The Fed cut its main interest rate range by 25 basis points. The central banks of Canada and Japan held the essential marks of monetary policy at the same level. The release of important economic reports is expected.

Sterling stays good this week and it is possible to have another run at 1.3000 against the US dollar.

The EUR/USD pair is sitting moderately higher on the day at around 1.1160 levels. It is similar to where it was traded on Thursday during the European morning.

Prev Open: 1.11528
Open: 1.11517
Day’s range: 1.11487 – 1.11688
52 wk range: 1.0884 – 1.1623

While buyers are looking to place more upside control with near-term resistance, closer to 1.1179, the important level to look out for will be the 200-day MA 1.1196 and also the offers holding near 1.1200.

Traders are currently 51% net-short GBPUSD.

But wait for the US jobs report later at 1230 GMT.

Buyers are keeping near-term control since the FOMC meeting concluded but unless they can break the resistance levels above, sellers will look to drive the price back lower in the future sessions.

For now, large expiries are seen resting at 1.1150 and 1.1200 so that may factor into keeping the price within a more stingy range before they roll off later today.

The dollar was lower this morning but now losses are seen.

Sterling is good, majors have stabilized. Investors are waiting to see the publication of the US labor market report for October. That could have an important influence on the rate of adjustment of the Fed’s monetary policy. Current economic statements from the United States have been combined. Experts expect a decline in key indicators of the labor market. Presently, the local support and resistance levels on the EUR/USD currency pair are 1.11400 and 1.11750. We suggest opening positions from these marks.

1st November 2019
Apple’s Results in Q4 are Really Good, But Some Analysts Weren’t Excited

Barclays is worried that Apple’s average iPhone pricing is too low
In an attempt to increase its subscriber base for its services, Apple has been selling iPhones cheaper.
The iPhone 11 starts cheaper than last year’s iPhone XR.

Apple’s results in Q4 are great and investors are buying up Apple Inc. (AAPL) shares as the company beat expert estimations. Despite the fact that sales of the iPhone weren’t what was expected but iPad sales and increased Apple TV subscribers add more favorability to these shares.

Both hugely beat what investors anticipated.

Apple’s headlines took most of the attention after the closing bell Thursday. But what if Apple’s historically strong pricing power is slipping, Barclays’ Tim Long is worried.
In an aim to expand its subscriber base for its services, Apple is selling iPhones cheaper. According to Barclays, the price may be too low.

“iPhone revenues were in-line, but we believe ASPs were weaker,” Barclays analyst Tim Long said in a message to clients Thursday.

Don’t miss this How To Know If a Stock is Worth Buying

Apple’s results in Q4 came from services

The truth is that slow iPhone sales at lower prices did not halt Apple to come with the best Q4 revenue ever.

The company earned a record of $64 billion in revenue. Yes, iPhone sales are decreasing, but service revenue scored a great high result. That is the new Apple’s strategy and it shows the result. The most important thing isn’t hardware sales, instead, expanding the subscription services.

The $64 billion in revenue is up 2% correlated to Q4 2018, and quarterly earnings per diluted share of $3.03, up 4 percent from Q4 last year. Here is the full report.

The iPhone sales, Apple’s major moneymaker, proceeded to decrease contrasted to last year. This year it brings $33.36 billion in revenue but last year the iPhone sales brought $,3,40bn more. This year’s drop is a bit more than 9%. Also, Mac revenue was down nearly 5% to $6.99 billion. But earnings came from the other side, from the services business. Apple’s services had touched a record gaining $12,5bn in Q4, the previous quarter ended with $11.46 billion gained from the services. During this year Apple got over 120 million subscribers more than last year and now has over 450 million.

Some of Apple’s results in Q4 are not so good

Mac revenue was also down nearly 5% to $6.99 billion, although iPads ($4.65 billion in revenue) and Apple’s wearables/home/ accessories unit ($6.52 billion in revenue) both saw sizable jumps compared to last year.
Shares of Apple surged more than 1% on Thursday, only several hours after the company reported Q4 earnings and revenue. Apple recorded earnings of $3.03 per share on revenue of $64 billion.

Wall Street was foreseeing earnings of $2.48 per share on revenue of $62.99 billion.

Barclays now predicts a 12% average selling price drop in 2019 and a 6.5% average selling price drop in 2020.

On Apple’s official website, you can find a statement:

“Apple is providing the following guidance for its fiscal 2020 first quarter:
revenue between $85.5 billion and $89.5 billion
gross margin between 37.5 percent and 38.5 percent
operating expenses between $9.6 billion and $9.8 billion
other income/(expense) of $200 million
tax rate of approximately 16.5 percent”

From September this year, Apple has three new iPhone models: the iPhone 11, iPhone 11 Pro and iPhone 11 Pro Max.

The iPhone 11 is $699, which $50 cheaper than iPhone XR. These lower prices attracted more customers to Apple’s services business and the company covered the lost gains on the one side with growth on the other. The lower pricing strategy showed good results.

Bottom line

The experts’ concerns are all about average selling prices that were weaker. Investors’ fears are focused on the US-China trade deal. If it falls apart Apple could be faced with rising costs.
The main question now is Apple capable to set new 5G iPhones next year and how much it will cost.
Will Apple be able to charge enough without hurting demand? The lower pricing strategy can be very challenging for 5G. At least, the ASP for 5G iPhones has to be $150 higher.

That’s why Apple’s next quarter will be an intriguing one. Q1 quarter usually includes holiday sales, also it’ll be the first that adds the TV Plus service. Apple is projecting revenue for Q1 2020 in the range from $85.5 billion to $89.5 billion. The revenue in Q1 this year was $84.3bn.

1st November 2019
Fiat Chrysler and Peugeot Merger

Fiat Chrysler Automobiles will merge with PSA Groupe, owner of Peugeot automobiles

Fiat Chrysler (FCA) and Groupe PSA (Peugeot is the largest PSA brand), have agreed to continue a merger. That would form the fourth-largest carmaker in the world. Their boards are working together on a new relationship. The Wall Street Journal reported the companies are moving forward with a merger. Both companies confirmed this news.

The merger will give shareholders of each group equal ownership in the new entity.

On Thursday morning both companies stated that their boards have a mandate to finalize the negotiations in the next few weeks, which means FCA will not tie-up with Renault as was thought this summer.

The merger would create a company with revenues of €170bn, with an operating profit of over €11bn and vehicle sales of 8.7m. That would lead them ahead of General Motors and Hyundai-Kia in sales. The new potential entity would have a market value of between €45-50bn.

The model of the merger is a 50-50 all-stock.

PSA is listed on the Euronext Paris stock exchange.

Since 2014, FCA is officially listed on the NYSE.

After the Fiat Chrysler and Peugeot Merger

When the two companies do a merger, PSA chief executive Carlos Tavares is assumed to lead that new group while John Elkann, Fiat Chrysler’s chairman will hold the same position at the new entity.
Despite this speed, a final agreement of merger needs time and regulatory scrutiny.

According to Reuters, a merger between FCA and PSA could build a “$50-billion giant better placed to tackle a host of costly technological and regulatory challenges facing the global auto industry.” Details were not published, but some aspects have known.

For example, the Journal published that the new company would be “legally domiciled in the Netherlands,” with “operational headquarters in the U.S., France, and Italy.”
Further details and any influence on employment are not yet transparent. The known fact is that FCA has plans to add nearly 5,000 jobs to the Detroit factory to build SUVs. So, the obvious conclusion is that a merger would eventually help FCA in Detroit.

It isn’t a secret that the Peugeot Group has plans to re-enter the U.S. market. The merger with FCA would provide it through the Chrysler/Dodge/Jeep/Ram dealer network.
To adjust the value of the two companies, the PSA shareholders should get about a €3bn dividend from the sale of the 46% stake in parts carmaker Faurecia.
FCA shareholders will receive a €5.5bn ($6.12 billion) cash payout and incomes from the sale of its robot-making Comau unit, estimated at between €200m to €300m.

New headquarters

The new group will be based in the Netherlands, a neutral location, where FCA is domiciled and listed in Paris, Milan and New York. The Financial Times reported the FCA will “continue to maintain a significant presence in the current operating head-office locations in France, Italy and the US.”

Around €3.7bn in predicted annual run-rate synergies are targeted, 80% during the first 4 years. The total one-time cost of achieving the synergies is estimated at €2.8bn, the two companies revealed in the statement.

Bottom line

Carmakers are facing large investments in electric cars. That is the reason behind the merge. Costs. This merger would create one of the biggest carmakers groups in the world with well-known brands Citroen, Jeep, Opel, Alfa Romeo, Peugeot, and Vauxhall. This has the potential to be a true rival to Volkswagen, Toyota and the Renault-Nissan Alliance.

The merger of those two companies looks as wise given the global competition, capital power, and industry complexity from autonomous technologies.

This could create a global automotive leader.

31st October 2019
Cannabis Companies Are Infusing Optimism Into Markets

There are so many prejudices about cannabis stocks. Yes, the truth is that most cannabis stocks are losing money. But if you take a look at the industry as a whole you will find it is profitable from the beginning.

Yes, the bulk of cannabis companies based in the US and ADRs are trading trade over the counter. But several cannabis companies are traded on the NASDAQ. That adds liquidity as opposed to the OTC market. Anyway, some investors prefer NASDAQ listed cannabis companies.

But investors are also very informed that hot investments, like cannabis, demands time to improve. This kind of investment isn’t profitable from the beginning, and investors know that. Several reasons lie behind this. First of all, it is regulation.

Regulatory issues have essentially restricted growers to set their products into dispensaries. And taxing the legal pot consumers, also. The end result is that the black-market is blooming. It will take time to fix all these issues. The consequence is that a lot of cannabis companies gain losses.

But there is one rare part – extraction service providers. Investors are able to recognize them easily, they are present in the market. For example, MediPharm Labs (OTC:MEDIF), or Neptune Wellness Solutions (NASDAQ:NEPT). Their clients can use resins, and cannabinoids, edibles, or infused non-alcoholic drinks.

The cannabis industry has begun to shift into the green.

Moreover, as the cannabis industry has grown, uplisting from an OTC market to a high-ranking U.S. exchange has become a great achievement for many growing cannabis companies.

The NASDAQ was the first automated exchange and has long been synonymous with technology and biotechnology. The cannabis companies on the NASDAQ work in the biotech area of the industry. Here are the NASDAQ-listed cannabis stocks we want you to pay attention to.

Cronos Group Inc. (NASDAQ:CRON)

It is a Canadian company that holds and wants to locate subsidiaries and licensed producers. Last year Altria invested $1.8 billion in Cronos.

Corbus Pharmaceuticals Holdings Inc. (NASDAQ:CRBP)

It is a cannabis biotech company that researches, developing, and manufacturing. All their products are for cannabis drugs for chronic, inflammatory and many other diseases.

GW Pharmaceuticals Plc. (NASDAQ:GWPH)

This company is developing a selection of CBD drugs. For example, Sativex for the spasticity associated with multiple sclerosis and tumor pain. Also, Epidiolex for the therapy of childhood epilepsy. Their products are in use in countries outside the US with regulatory approval. Epidiolex has FDA permission as a therapy for two forms of early-onset epilepsy. GW Pharmaceuticals is developing its products for glioma, autism, and schizophrenia therapy.

Bottom line

The most interesting thing about these cannabis companies is that they are starting to uncover their true potential. Or we are starting. And for now, the best choice for investors is extraction companies.

This subsidiary cannabis niche is now profitable. Can you imagine how much they can increase in the coming years?

30th October 2019