Author: Editor

  • Is Facebook Stock Good to Buy Now?

    Is Facebook Stock Good to Buy Now?

    Is Facebook Stock Good to Buy
    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.

    Is Facebook Stock Good to Buy

    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.

     

  • Macy’s Stock Is a Candidate For The Bargain Hunters This Month

    Macy’s Stock Is a Candidate For The Bargain Hunters This Month

    Macy's Stock Is a Candidate For The Bargain Hunters

    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.

    Macy's Stock Is a Candidate For The Bargain Hunters

    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.

  • Saudi Aramco Is Moving To A Publicly-traded Company

    Saudi Aramco Is Moving To A Publicly-traded Company

    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.

     

  • Sterling is good, the US dollar is trading almost flat

    Sterling is good, the US dollar is trading almost flat

    Sterling is good

    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. 

    Sterling is good

    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.

  • Apple’s Results in Q4 are Really Good, But Some Analysts Weren’t Excited

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

    Apple’s results in Q4 are really good

    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.

  • Fiat Chrysler and Peugeot Merger

    Fiat Chrysler and Peugeot Merger

    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.

     Fiat Chrysler and Peugeot Merger

    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.

  • Cannabis Companies Are Infusing Optimism Into Markets

    Cannabis Companies Are Infusing Optimism Into Markets

    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?

     

  • UGAZ And DGAZ Stocks – How To Trade Them

    UGAZ And DGAZ Stocks – How To Trade Them

    (Updated October 2021)

    UGAZ And DGAZ Stocks

    UGAZ and DGAZ are ETNs tracking natural gas prices.
    Energy exchange-traded products (ETPs) might be a good trading opportunity as much as energy ETFs.

    UGAZ and DGAZ stock closely watch the US Natural Gas Fund (UNG) and UNG tracks the price movements in natural gas. 

    Let’s make a distinction between those two.

    The main purpose of UGAZ (VelocityShares 3x Long Natural Gas) is to increase the daily performance of UNG by three times. That’s 300%. To make this clear, if UNG price grows 1%, UGAZ will display a daily increase of 3%. The best time to trade UGAZ is when you have a bullish sentiment on UNG.

    The main aim of DGAZ (VelocityShares 3x Inverse Natural Gas) is to generate profits from the losses in the UNG fund. DGAZ will increase the losses by three times inversely. Meaning, if UNG price drops by 1%, DGAZ could bring you a gain of 3%. So, the best time to think about DGAZ is when you have a bearish sentiment on the UNG fund.
    As you can see, both UGAZ and DGAZ have 3:1 leverage. That can notably boost your potential profit.

    Trading UGAZ and DGAZ

    If you want to trade them, it’s vital to watch the UNG fund. UNG fund is the basis of ETF that runs both of them. This can be a complex fund but you can go short in the long term and consider both UGAZ and DGAZ. Natural gas is a highly volatile commodity and UNG is not straight associated with natural gas in the physical sense. So, UNG isn’t a clever investment if you keep in mind it fell by more than 90% after its start. Also, it doesn’t pay dividends. Instead, UNG uses future contracts and OTC exchanges to find and copy the natural gas price. It doesn’t hold stocks. So, we can say that UNG isn’t a good investment by itself. There is where UGAZ and DGAZ come to the scene. If you don’t care for dividends and just want to keep the position for a short-time the long-term volatility of FUNG will not affect your investment.

    As we said, UGAZ increases the UNG gains, while DGAZ goes up when UNG falls in price. But keep for the short-term, as long-term holding is never recommended.

    UGAZ and DGAZ trading opportunities

    These products can be risky. Well, you have to follow the news as ETNs give 3-time leverage in a single day. As we said, when the natural gas price rises by 1%, UGAZ will rise by 3%, and DGAZ will fall by 3%. To repeat, if you want to hold UGAZ or DGAZ the percentage performance will oppose your expectations.
    A lot of circumstances may influence these products. For example, politics, global economy, supply and demand, weather, interest rates, and many others.
    The way to trade USO or UNG is to trade options. That will allow you to achieve better risk-reward levels. The profit potential could be tremendous.

    Bottom line

    If you look at the historical data you will find peaks over winter, for example, but also, sometimes the price can make a sharp move down.
    Why does this happen? The natural gas price depends on weather forecasts. So, you have to watch that. If you see the meteorologists are expecting a warm winter you can be sure the demand will be lower. So, pay more attention to DGAZ.
    The other factor that may influence the gas price is the change in natural gas supply. So, you have to keep attention on weekly natural gas storage reports.
    Both will give you the future course of the natural gas price. And, to add more pain, remember, UNG isn’t always successful while mimicking the gas prices. You have to be ready for the UNG price failure.
    UGAZ is a tactical trading tool. It provides 3-time exposure to its reference index, the S&P GSCI Natural Gas Excess Return Index. This ETN is not designed like a buy and holds an investment. The return can differ hugely from its initial exposure.
    It consists of complex effects and extreme concentration on quick period natural gas prospects.
    DGAZ is the inverse product, it is intended to be a tactical trading tool, not a buy-and-hold investment. It is for a one-day holding period.

  • Real Return On Investment

    Real Return On Investment

    Return On Investment

    Return on Investment or ROI, measures the profitability of an investment, for every amount you put in, what profit can you expect.

    Return on investment is a measure practiced to estimate the efficiency of your investment. Also, you can use it to compare the efficiency of different investments. ROI seeks to measure the volume of return on investment in comparison to the costs. So, to calculate ROI, you have to divide the return of your investment by the cost. The result will be displayed in a percentage or a ratio.

    How to Calculate Return On Investment

    ROI formula is:

    ROI = (Current value of investment – the cost of investment)/cost of investment

    Compounding interest sounds like alchemy for many new investors, but ROI is true magic. Particularly when your money rises each year.
    Let’s say you invest $2,000 at 5% interest. You’ll have $3,500 in interest after 15 years. Your initial capital would be grown by $1,500 of interest. But if you invest at a 5% annual compound interest, you will have about $4,158.

    But where is the magic?
    The magic comes now. What if you can earn a higher rate of return?

    What if you invest at 8% or 10%? This can be really important because it is your money and you would like to watch it grow.

    True magic lies in math.

    Let’s say you have an investment goal and also, you know how long you want to hold your investment. For example, you would like to sell some of your stocks after 2 years. Assume you invested $2,000 in the stock. And you did that. You sold your stock for, let’s say, $3,000. Great! You made $1,000 in profit. That is 50% of return which is amazing if you want to calculate it quick and dirty,  and incorrectly. But, you need to factor in your liabilities and annual inflation rate to calculate the real return on investment. Okay, you have to pay a capital gain taxes, for example, it is $150, so you ended at $2,850 which is still good. Yes, your return will not be 50% it is 42.5% after you pay capital gain taxes. Oh, wait! Where is the inflation? Yes, you have to calculate the inflation over those two years. Let’s say the inflation rate is 2.5%.

    $2,850/(1.025×1.025) = $2,713

    Your real value return will be 35.65%.  It is less than 50% of return what you may be expected but it’s still good.
    It was a bit complicated but correct, which is the most important. And it is for two years. Do your own math for longer periods.

    Several things you have to keep in mind.

    A good return on stocks has to surpass inflation, taxes, and fees. Only in that way, you’ll be able to build your wealth.
    Use ROI to compare investments even if they’re not related. It isn’t the same if you are buying blue-chip stock or small-cap. In short, everything is different. But, if you compare only ROI may provide you a clear insight into where you want to direct.

    ROI can be used in combination with the rate of return, which takes into account the time frame, which we did. You can use a net present value or NPV, which we did to calculate the real rate of return.
    The usual return on investment for the majority of investors is about 2-3%. It isn’t great. But if you keep your money in a bank account you will have a negative return, after you factor and pay all taxes and inflation. 

    A  good return on investment is 10-12% per year

    You can beat the market. That is everyone’s goal, right?
    But if you expect to earn 15% or 20% – it’s not going to happen. Or it will happen very rare. Don’t believe in false promises, they are counting on your lack of experience. If you build your financial security on bad premises you will end in a risky field. You may lose all your capital. If you have a more conservative approach to investments you will have a less stressful experience. Investing should give you certainty.

    Bottom line

    ROI is a popular measure due to its simplicity and versatility. Typically, use ROI as a simple measure of your investment’s profitability. Use the ROI on a stock investment. The calculation isn’t difficult. It is easy to understand. If your investment’s ROI is net positive, it is good. Avoid negative ROI, it is a signal of a net loss.

  • Big Market Players Are on Schedule

    Big Market Players Are on Schedule

    Big Market Players Are on Schedule
    The earnings reports season is continuing. So far companies’ earnings were better than awaited.

    by Guy Avtalyon

    Big market players are on the schedule this week.

    UPDATE 30/10/2019

    GE shares rose more than 11% after the company’s earnings report and beat analyst expectations. General Electric also boosted its cash flow for the year.
    Apple and Facebook each topped market expectations after the closing bell on Wednesday. Their stocks rose in after-hours trading.
    Apple posted earnings of $3.03 per share opposite to analysts’ expectations of $2.83 per share. Revenue was $64 billion and it was expected the $63 billion.
    Facebook also topped expectations with earnings at $2.12 opposite to the $1.91 forecast. Revenue was $17.65 billion vs. $17.37 billion forecasted.

    UPDATE 29/10/2019 

    Alphabet (GOOGL) didn’t match earnings expectations in Q3 2019. The earning is$10.12 per share and was expected $12.42.
    Alphabet shares dropped by 4% as the company failed expectations for earnings per share, but recovered and set at around 2%.
    The rest in the company’s report was almost as investors expected.

     

    It is time for the big market players to reveal reports for the fiscal fourth-quarter earnings.
    For example, Tesla stock reported a surprising profit and it’s stock price rose, but the Twitter stock fell. Last week about 21% to $30.75 on Thursday.  Among 168 S&P 500 companies that have reported earnings until Thursday morning, 80.4% hit or overcome analyst expectations.

    The companies have reported revenue hits about 62% of the time this season. This week we are waiting for several big players to raise the numbers.

    Monday, October. 28

    First is the Alphabet (GOOGL) on Monday (today). It has come under increased regulatory supervision, but shares stand good at 20%. Wall Street is predicting earnings of $12.28 a share on sales of $40.3 billion.

    Big Market Players Are on Schedule

    Wednesday, October. 30 is a day for a really big market players

    Apple stock (AAPL) has been up 54% in 2019. Recently the company announced that the new generation of iPhones went better than expected. The demand for new models increased and Apple has grown service offerings. For example, Apple Pay and Apple TV+ produced a lot of gains.

    We will see. Wall Street is predicting earnings of $2.83 a share with sales of $259 billion.

    Facebook is on schedule on Wednesday too. The market hasn’t paid much attention to regulatory concerns. Facebook shares (FB) have increased by 42% in 2019. Forget how Zuckerberg was grilled In US Congress and what did AOC ask him and Mark’s eye-rolling and constant sipping from a bottle with water.

    Wall Street estimates call for earnings of $1.90 a share and sales of about $17.4 billion.

    Facebook is followed by General Electric. Its stock (GE) could rise 23% this year, but it is down for 21% in a one-year period. The truth is that investors will keep attention on cash flow, debt reduction, and debt from legacy insurance liabilities. Wall Street estimates call for earnings of 12 cents per share and purchases of $28.9 billion.

    Big Market Players Are on Schedule

    Friday, November. 1 is reserved for Exxon Mobil (XOM).

    The company earnings have been spent on projects in the Permian Basin and in other countries. Goldman Sachs recently reported that earnings for the whole energy division should jump in 2020. Exxon Mobil stock increased by 1.3% during this year but decreased by 12% in a one-year period. For Q3 2019, Wall Street estimates earnings of 67 cents per share on trades of $60.9 billion.

    Bottom line

    As we know, good companies are delivering on-going earnings and revenue extension of at least 25%. For a long time, Facebook undoubtedly achieved that, the FB stock went higher and higher. Will Facebook get back to the winning trends?

    There’s a lot of skepticism toward Facebook’s future. Its new privacy-focused strategy might depress revenue growth. At the same time, an investigation, regulation, and legislation could restrict Facebook’s vigor. The same may happen to FANG stocks: Facebook, Amazon, Netflix, and Google. Really big market players.