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3 Stocks to Avoid as Steel Prices Fall in 2024

Steel prices are trading under pressure in 2024 with VanEck Steel ETF (NYSEARCA:SLX) down about 4% year-to-date. This has promoted commodity investors to draw a list of stocks to avoid in this space. 

The latest data shows that China’s crude steel output remained unchanged in 2023 compared to the previous year, marking a stabilization after consecutive years of decline. Official data revealed that the world’s largest steel manufacturer produced approximately 1.02 billion metric tons of the ferrous metal during the year. 

Unlike 2021 and 2022, when Beijing imposed caps on crude steel output to reduce carbon emissions, there were no such restrictions in 2023. Instead, the focus was on supporting the economy and reviving the struggling property sector.

While the total output for 2023 aligned with forecasts from the state-backed China Iron and Steel Association, it fell short of some analysts’ expectations. Robust demand from sectors like shipbuilding, solar photovoltaic, and automotive partially offset the decline in demand from the property sector. 

Morgan Stanley’s bottom-up analysis forecasts a modest 2.1% growth in steel demand for 2024. However, this growth, when coupled with increasing capacity, is expected to result in falling steel prices.

Along these lines, here are the 3 stocks to avoid amid fears that steel prices may fall in 2024.

U.S. Steel (X)

U.S. Steel (NYSE:X) is a leading American steel producer with operations across the globe. It manufactures a wide range of steel products for various industries, including automotive, construction and infrastructure. As a major steel producer, the company’s stock performance is influenced by factors like steel demand, raw material costs and global trade dynamics.

In addition to steel prices being under pressure, U.S. Steel stock price could also head lower due to the M&A volatility. In December, Nippon Steel (OTCMKTS:NPSCY) and U.S. Steel entered a definitive agreement for the former to acquire the latter in an all-cash transaction at $55 per share, totaling an equity value of about $14.1 billion plus debt assumption, reaching a total enterprise value of $14.9 billion

This acquisition, representing a 40% premium to U. S. Steel’s closing stock price on December 15, 2023, has received unanimous approval from both companies’ boards of directors. However, U.S. Presidential Candidate Donald Trump said he will block Nippon Steel’s planned purchase of U.S. Steel if he retakes the White House. In this case, shares in X would plunge as the M&A upside is extracted from the stock price. 

ArcelorMittal SA (MT)

ArcelorMittal SA (NYSE:MT), is a global steel giant and one of the largest producers in the world. However, the company faces challenges from overcapacity and geopolitical tensions, notably worsened by the conflict in Ukraine. 

With significant operations in Europe, ArcelorMittal grapples with macroeconomic issues, rising production costs and subdued demand, reflecting a tough operating environment for the steel industry at large. Challenges such as macroeconomic issues, escalating production costs and subdued demand have persistently impacted the company’s European division for nearly two years. 

Moreover, the company witnessed production disruptions and constraints across various facilities in Europe, Africa and Brazil, exacerbated by the closure of a plant in Kazakhstan. ArcelorMittal’s Ukrainian unit faces severe operational challenges amid conflict, operating at only 30% capacity. 

Production plummeted by 57% year-on-year, reaching 390 thousand tons in the first half of 2023. Escalating war risks and logistical hurdles prevent the company from scaling up production, posing significant operational constraints. Hence, investors should better avoid MT stock until the visibility surrounding the war in East Europe improves.

Cleveland-Cliffs (CLF)

Cleveland-Cliffs (NYSE:CLF) is a leading steel producer in the United States. With a focus on steel making and iron ore mining, shares in the company rose in recent months amid optimism about the increased profitability in 2024.

The company reported fourth-quarter revenue totaling $5.11 billion, reflecting a marginal increase of 1.3% year-on-year. Loss per share from continuing operations stood at 31 cents, while adjusted EBITDA surged to $279 million, surpassing estimates. For the year ahead, the company anticipates significant reductions in steel unit costs, projecting further decreases of $30 per ton in 2024. 

This strategic move is expected to yield substantial Adjusted EBITDA benefits, totaling approximately $500 million compared to 2023. Moreover, Cleveland-Cliffs forecasts capital expenditure ranging from $675 million to $725 million, indicating a proactive approach towards operational investments. 

The company’s stock rating was recently lowered at Morgan Stanley on expectations that steel prices will fall from current levels. Analysts noted that CLF has the most significant exposure to the automotive sector among the covered North American steel companies. However, this sector is expected to lag this year after a robust performance in 2023. Hence, investors better avoid CLF stock over the coming months.

On the date of publication, Shane Neagle did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Shane Neagle is fascinated by the ways in which technology is poised to disrupt investing. He specializes in fundamental analysis and growth investing.

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Is NIO Stock a Buy or Sell in This Uncertain EV Market?

The EV sector is an increasingly large one – now may be the time to opt for another name

Source: Piotr Swat / Shutterstock.com

The EV sector is full of excellent and innovative companies, but Nio (NYSE:NIO) is one of the only large-cap players that’s provided investors with the jitters. Indeed, Nio was recently put into the S&P 500’s list of underperforming stocks, given the stock’s steep decline in January. This is the start of this NIO stock analysis.

Now, much of this decline can be tied to geopolitical concerns, as well as a shift in investor sentiment toward companies with profitable operations. Nio certainly is among the early-stage companies that require a great deal of patience to hold for years, something many investors don’t seem to have these days.

Now, Nio is a company I’ve been bullish on in the past, but my view has shifted rather dramatically. Here’s what’s driving my increasingly negative outlook for the Chinese EV maker.

Unending Challenges for NIO

Despite achieving over 30% year-over-year sales growth in 2023, Nio’s market share is just 2.1% in the expanding Chinese EV market. Refusing to lower prices like competitors, Nio missed Q3 revenue targets by $50 million and fell short of its 2023 vehicle sales goal by 36%. 

Operating in China’s premium segment amid an economic slowdown poses risks, particularly as housing prices decline. Indeed, most investors know that the Chinese EV market is competitive, but it’s certainly among the most competitive in terms of price globally. With a Chinese consumer that’s increasingly tapped out, and many conservative consumers looking to avoid debt on higher-priced vehicles, Nio may be forced to give up margins to achieve market share growth. That’s not great for current or future investors, and dynamic value-conscious investors shouldn’t like it.

Nio’s European operations also face challenges with unsatisfactory sales, which have been attributed to consumer preferences for local brands like Renault and Stellantis. Concerns arise over potential EU tariffs and a slowdown in EV demand post-early adoption from current buyers remains a key focal point of bears. This is a central part of my NIO stock analysis.

Little Room to Run

In 2024, the EV market saw many of its core challenges persist. Higher interest rates (globally) have led car buyers to reduce their budgets and their loan amounts, forcing EV makers to slash prices. While generally positive for existing consumers, this sort of trend provides a backdrop of unprofitable growth, something I don’t like with any company.

Nio’s ongoing losses and slowing EV demand in China suggest an uncertain path forward. Investors may seek better opportunities elsewhere.

Analysts foresee a bleak long-term future for NIO stock due to declining EV sales and intense competition. Weak market conditions may persist, impacting deliveries and margins in FY24. Given uncertainties, investors may want to consider selling NIO stock here. Despite initial optimism and institutional backing, profitability remains elusive amid substantial operating losses are likely to continue for some time.

NIO is Overvalued

At a price-sales ratio of 1.45-times compared to BYD’s (OTCMKTS:BYDDF) 0.87-times sales multiple signals NIO stock could be significantly overvalued here. The company’s relatively lower revenue numbers and higher losses per EV sold suggest that the company’s path to profitability may be much longer than expected. Personally, that’s something I don’t like to see.

The days of high-margin EV sales in China appear to be over, and we’re entering a new tough grind in this sector. My pick in this space remains BYD, given its size, scale and relatively cheaper valuation. There’s simply not enough to like about Nio’s current offering to justify buying this stock at current levels, in my view. This concludes my NIO stock analysis.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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7 Unstoppable Software Stocks Set to Soar in 2024

After witnessing some of the hottest software stocks skyrocket to dizzying valuations over the past few years, many investors wonder if opportunities remain in this high-flying sector. With sales multiples stretching well into the double digits for companies like Snowflake (NYSE:SNOW) and Datadog (NASDAQ:DDOG), I believe the easy money has already been made. Many of these momentum darlings now seem primed for a pullback after their parabolic rises.

However, don’t be fooled into thinking there isn’t still untapped potential in lesser-known software names. Targeting more niche players with stable business models (but lacking the hype) can still provide significant upside. With the breakneck speed of technological innovation, software has become the driving force behind nearly every industry. Software stocks have handsomely rewarded investors over the past decade and will continue to do so if you rotate into the right ones. Here are seven software stocks to look into right now.

ACV Auctions (ACVA)

The used vehicle market has taken a hit, as purchasing power deteriorated after the post-pandemic demand boom. With inflation squeezing disposable incomes, middle and lower-middle-class buyers curtailed spending on big-ticket discretionary items like used cars. Consequently, many used car retailers saw business drop-offs. However, I believe the tide is turning, and ACV Auctions (NASDAQ:ACVA) presents an intriguing opportunity as a standout in this niche sector.

ACV Auctions brings transparency and efficiency to dealers. Dealers can buy and sell inventory through the company’s live auctions, while leveraging vehicle inspections, transport, financing, and inventory management services. Despite the sector downturn, ACV Auctions has maintained strong growth momentum. Its top line expanded even amidst the industry chaos. And while its share price remains down 61% from its peak, ACV has held up better than other used vehicle retailers.

With profitability potentially on tap for 2024 and explosive earnings growth expected afterward, I believe the market under-appreciates ACV Auctions’ prospects. Analyst’s 2025 earnings per share estimates put its forward price-earnings ratio at 27-times, which is quite reasonable for a high-growth SaaS business. Consensus estimates see earnings per share rising 9-fold from 2025 to 2031 alongside 20% annual revenue growth. Given the immense TAM in used vehicle auctions and ACV’s leadership, I see substantial upside even from today’s depressed valuations. This makes ACV a compelling, under-the-radar software stock to buy before what I expect to be a vertical ascent.

Opera (OPRA)

Beyond its classic Opera (NASDAQ:OPRA) browser and Opera Mini, Opera has refreshed its browser lineup to appeal to youth. Opera GX is tailored to gamers and integrates well with streaming platforms like Twitch and Discord. Opera canvassed modern internet users by baking in features like AI capabilities, a crypto wallet, and a VPN. The moves have paid off – many Gen Zers have switched to this browser from Chrome.

Despite industry turmoil, Opera delivered 11 straight quarters of 20%+ revenue growth. Its latest results blew away expectations. The company brought in $103 million in revenue, representing 20% year-over-year growth, while the company’s adjusted EBITDA margin hit 23%. Additionally, Opera’s 2024 revenue growth is estimated at 15%, with earnings per share expected to hit $1. At just 12-times 2024 earnings, I believe Opera looks extremely undervalued, particularly for a software company putting up this kind of growth.

As Opera continues enhancing its innovative browser and expanding its user base, I see a tangible upside even after its stellar 63% returns this year. The market may be snoozing on Opera now, but with its attractive growth-value proposition, this niche software stock appears positioned to soar considerably higher in 2024.

PDD Holdings (PDD)

PDD Holdings (NASDAQ:PDD) owns two e-commerce platforms – Pinduoduo and Temu. As China’s second most popular platform behind Alibaba (NYSE:BABA) in terms of monthly active users, Pinduoduo made tremendous inroads in Chinese e-commerce. Its Groupon-style model, built around social interactions and aggressive discounts, has proved enormously successful.

Notably, Temu represents PDD’s effort to translate this formula to international markets, focusing on rock-bottom pricing. Temu becoming the top-ranked iPhone app in the U.S. highlights that even wealthy populations crave its unbeatable everyday value.

Despite some post-pandemic wobbles, PDD stock boasts striking momentum – up 320% off its March 2022 bottom and 60% over the past year. Revenue rocketed 94% year-over-year in Q3, as the company blew away estimates by 28%. The company’s 2023 earnings per share figure is set to double by 2026. And even at 2023 projections, shares trade at a digestible 24-times earnings, quite inexpensive for a Chinese internet giant growing this briskly.

Once Chinese sentiment rebounds, I expect this niche e-commerce juggernaut to regain its premium multiple as Wall Street remembers the immense long-term potential ahead. PDD looks poised to continue handsomely rewarding investors over the next decade.

Mitek Systems (MITK)

With digital transformation accelerating across sectors, demand for user identity verification and transaction security solutions continues to expand rapidly. Yet many identity specialists trade at demanding valuations after strong runs. Mitek Systems (NASDAQ:MITK) presents an overlooked opportunity trading at just 11-times forward earnings, despite leadership in critical growth areas spanning fintech, deposits, and biometrics.

Mitek built the first mobile check deposit technology, which is now used by millions. This technological breakthrough has provided a deep competitive moat, which remains to this day.

The company’s portfolio of solutions leverage proprietary AI and machine learning to enable secure user onboarding, identity corroboration, and transaction protection. High customer loyalty and a sticky revenue base provide ballast, while a recent management shakeup aims to unlock shareholder value.

While pandemic pressures temporarily depressed fintech activity, Mitek appears poised to ride renewed momentum. Consensus forecasts call for steady, low double-digit earnings and revenue growth in the coming years. But with shares lagging peers and catalysts emerging, I believe 2024 could prove a breakout year for Mitek. This overlooked identity verification play has quietly built an enviable competitive position and trades at a reasonable valuation today, given its growth prospects over the next decade.

Zeta Global Holdings (ZETA)

Zeta’s (NYSE:ZETA) integrated data-driven marketing platform leverages AI to equips brands to analyze consumer behavior, build higher-converting digital campaigns, and make ad spending more impactful.

Though advertising demand volatility poses risks in the interim, Zeta’s offerings could prove essential for businesses navigating fluid consumer patterns. The company’s earnings per share are projected to nearly double from 32 cents in 2023 to 58 cents in 2025, alongside 17%-20% annual revenue growth. With 2022 losses of $279 million on $591 million in sales, profitability improvements are clearly a priority.

Importantly, analysts expect revenue to reach $1 billion in 2025, accompanied by around $100 million in earnings. Trading at 32-times forward earnings and three times sales, Zeta looks underpriced to me, given its growth potential. As the company continues to execute, ZETA stock may hold substantial upside from today’s levels.

UiPath (PATH)

While generative AI has grabbed headlines lately, robotic process automation leader UiPath (NYSE:PATH) continues making inroads in key areas of the economy. Essentially, UiPath empowers companies to automate repetitive workflows. UiPath does this by leveraging proprietary AI to help organizations boost efficiency, workplace productivity, cost savings, and customer satisfaction. Despite the vital role automation plays in enhancing enterprise agility, PATH stock currently trades nearly 68% off its 2021 highs.

However, UiPath is quietly building impressive momentum on strong execution and technological differentiation. Integrating generative AI to ease automation development paired with over 10,000 enterprise customers and the potential for nearly $300 million in 2024 non-GAAP operating profits make UiPath an appealing turnaround candidate. With analysts potentially underestimating UiPath’s profit potential based on its historical performance, I believe the stock looks attractively priced around 8-times 2024 projected earnings.

The automation wave remains in its early innings, and UiPath has cultivated defendable leadership after years of innovation. If execution remains consistent, UiPath appears positioned to ride renewed momentum on large, underpenetrated opportunities across SMBs and enterprises. Currently, PATH stock offers investors intriguing risk-reward upside. It’s a stock I think is worth buying, for those who can stomach some volatility.

Five9 (FIVN)

Five9’s (NASDAQ:FIVN) cloud contact center platform integrates voice, messaging, AI, analytics, and workforce optimization to transform legacy on-premise infrastructure. Trading range-bound for months, I expect FIVN stock to break out in 2024.

The company continues to gain market share in its key segments, powering enterprise contact center migration to the cloud. Profitability runways support significant equity upside even from current reasonable valuations. Indeed, Five9 holds tangible upside in my view if execution endures.

Its solutions should only increase in strategic necessity as digital engagement expands. Five9 appears positioned to deliver significant rewards to patient investors from current prices. Specifically, the company’s earnings per share are expected to double from 2023 to 2027 and then double again from 2027 to 2032. Revenue growth should be even faster, potentially reaching $4.5 billion by 2032. That’s the kind of growth long-term investors should be after.

On the date of publication, Omor Ibne Ehsan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Omor Ibne Ehsan is a writer at InvestorPlace. He is a self-taught investor with a focus on growth and cyclical stocks that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as cryptocurrencies and penny stocks. You can follow him on LinkedIn.

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3 Stocks Most at Risk of a Catastrophic Collapse in 2024

To be completely upfront, stocks to sell represent a terribly unpopular subject for obvious reasons. Still, I hope you’ll extend me some rope so that I can make my case. Each of the companies you see appear on this list for the following main reasons:

  • They all skyrocketed sharply this year.
  • Worse yet, they feature questionable business models or relevance.
  • Generally, their 15 minutes of fame may be up.

Ultimately, what I’m trying to do is to protect you from the occasional irrationality of the market. You might be enthralled with these ideas and that’s okay. Just consider a different perspective as part of your due diligence. And on that note, here are (in my opinion) the stocks to sell.

Ambow Education (AMBO)

Based on Barchart’s year-to-date performance screener, Ambow Education (NYSEAMERICAN:AMBO) clocks in as one of the top performers, gaining a stratospheric 120%. And most of that performance occurred recently, with AMBO skyrocketing 150% in the past five sessions. Specializing in educational software and hardware, Ambow’s platform should enable hybrid online and offline learning. That may be the future of education.

Except maybe it’s not. I’m not trying to cast aspersions as I believe the concept is intriguing. However, back when the Covid-19 crisis forced so-called distance learning protocols, the matter sounded better in theory. However, in practice, teachers suffered through significant challenges. I anticipate more of the same moving forward.

Yes, Ambow states that the company has a long history of success in China. But that’s a different country, a different culture. Here in the U.S., educational technology (edtech) firms have had mixed success. Plus, on a technical (analysis) level, AMBO shows a high pole warning in its point-and-figure (P&F) chart.

I think the signs are clear. You should consider AMBO one of the stocks to sell.

Pop Culture Group (CPOP)

While you shouldn’t judge a book by its cover, Pop Culture Group (NASDAQ:CPOP) just seems an odd enterprise. According to its website – it’s in Chinese so something may have been lost in translation – Pop Culture goes by the brand nickname “Pupu.” Essentially, it’s a Chinese hip-hop culture company that broadly supports friendship between the U.S. and China. As for its core business, the company provides event experiences focused on disseminating hip-hop elements.

Interestingly, hip hop and other components of Black American popular culture has taken root in China. So, it’s not out of the question for CPOP stock to rise higher. However, it’s also true that the Chinese government has taken action against its own hip-hop stars. Given the heightened censorship environment – along with rising geopolitical tensions – it’s quite possible that the communist government could clamp down on certain cultural catalysts.

Similar to Ambow Education, shares of Pop Culture Group have printed a warning sign in its P&F chart. Here, it’s a long tail up pattern, which points to a possible reverse of optimistic sentiment. Frankly, I think it’s one of the stocks to sell.

Digital World Acquisition Corp (DWAC)

Previously, I thought that former President Donald Trump would have an excellent chance of winning a non-consecutive reelection. If so, that would bode well for Digital World Acquisition Corp (NASDAQ:DWAC). DWAC is a special purpose acquisition company or SPAC that the real estate mogul is attempting to merge with Trump Media & Technology Group.

However, I’m not so sure now because of pop superstar Taylor Swift. I don’t know much about Swift. Still, I do know that she champions women’s rights. And when I heard that many conservative voices are targeting the singer – basically to warn her to not get involved politically – I thought it was the silliest action to take.

Of course she’s going to get involved politically! Such barbs would likely only fuel her resolve.

Because of the unparalleled popularity and influence of Swift, she can turn the election in favor of President Biden and the Democrats. Plus, with Trump’s surprising number of business failures and shady dealings, DWAC may be on a short lease on life. Based on the Swift effect, I must reassess my take on Trump and his SPAC.

It just might be one of the stocks to sell.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.

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Wall Street Favorites: 3 Dividend Stocks With Strong Buy Ratings for February 2024

In a bullish or bearish stock market, it is always a great time for investors to buy into stocks that offer great dividend yields. That’s because it is a stable stream of income, and unless a company decides to lower its overall yield, dividend income will remain stable even in a bearish market.

A few sectors typically offer greater dividend payouts to investors, such as Real Estate Investment Trusts (REITs). They are legally obligated to give investors 90% of their taxable income back to investors in the form of dividend payments. Other industries offering higher-than-average dividend payouts are financial services and utilities companies.

Below are companies for investors seeking great options for dividend stocks that are also strong buys on top of increased returns from stock price appreciation.

Innovative Industrial Properties (IIPR)

Source: gvictoria / Shutterstock.com

Innovative Industrial Properties (NYSE:IIPR) is the largest supplier of real estate capital to the regulated cannabis industry, with over 100 properties in 19 states.

Over the past six months, IIPR has seen its share price increase by 19% following dividend increases and a recent earnings beat that excited investors.

Innovative Industrial Properties saw consistent dividend growth over the last six years and continued the trend with the recent news that it raised its dividend ratio by 1.1% to 7.37% annually. The dividend payout to investors is now $1.82 per share quarterly.

On Nov. 1, IIPR reported earnings results for the third quarter of 2023, stating total revenue and earnings per share rose by 10% compared to the previous year. After this report, its share price spiked due to better-than-expected results regarding revenue and expense totals.

Its stock came alive in recent months with improved financial and strategic acquisitions and dividend increases. That followed a period of uncertainty regarding its stability after being downgraded by Piper Sandler (NYSE:PIPR) in June 2023 and issues regarding tenant delinquency.

Manulife Financial (MFC)

The homepage of the Manulife Financial (MFC) website.

Source: Shutterstock / chrisdorney

Manulife Financial (NYSE:MFC) offers financial services and products such as asset management, annuities, financial planning and multiple types of life insurance. Manulife also provides corporate services such as property insurance and business management services.

The company offers investors a dividend yield on an annual basis of approximately 4.84%. It is distributed quarterly for 30 cents per share. And MFC has also seen consistent dividend increases for a decade now.

On Feb. 14, it announced earnings for the fourth quarter of 2024, showing net income rose by 81% compared to the year before, along with a 9.6% increase in its dividend payout.

In December 2023, Manulife announced it entered into a partnership with Scannell Properties and StepStone Real Estate, totaling $1.2 billion, to allow for the restructuring of industrial assets.

Following its recent earnings report, its share price increased 10%; over this past year, it grew 26%. Manulife has experienced impressive growth due to an earnings beat and dividend increases. And that makes it a great option for a strong buy, high-dividend yielding company.

Park Hotels & Resorts (PK)

AHT stock: the front of a hotel with ornate columns

Source: Shutterstock

Park Hotels & Resorts (NYSE:PK) is a REIT that owns and operates over 40 hotels and 12 resort locations. PK also has affiliate deals with brands such as Hyatt, Hilton and Marriott. All of its portfolio is in the U.S., particularly major city centers.

Park Hotels offers investors a huge dividend yield of approximately 24.5% and is paid out quarterly for 93 cents per share.

Barclays (NYSE:BCS) recently upgraded Park Hotels & Resorts from Equalweight to Overweight and raised its price target to $19 per share.

On Jan. 22, the company released fourth-quarter full-year earnings results for 2023, showing operating income increased threefold, and earnings per share nearly grew fivefold compared to the previous year.

Park Hotels & Resorts’ share price grew over 19% within the last six months due primarily to its earnings beat following the Q3 earnings report. Park Hotels’ large dividend payout and Strong Buy rating make it a perfect choice for investors looking for solid companies with impressive dividends.

As of this writing, Noah Bolton did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Noah has about a year of freelance writing experience. He’s worked with Investopedia dealing with
topics such as the stock market and financial news.

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The Best 7 Tech Stocks to Buy for AI Cloud Exposure

Cloud AI combines the power of artificial intelligence with the power of cloud computing. That combination offers significant benefits to businesses of all sizes. Those competitive advantages make cloud AI stocks potentially much more valuable.

Better, research firms believe that compound annual growth rates over the next 5 years will approach 40% for cloud AI. Those projections are a strong signal there is much more growth to come. That being said, here are some of the top AI tech stocks to consider.


One of the top AI tech stocks to consider is IBM (NYSE:IBM), which many investors believe is an underappreciated AI stock. That was the market perception of the company’s earnings release at the end of January.

The reason the markets responded so positively in late January was simple: IBM reported that its book of business for AI workloads grew substantially. In fact, its book of business doubled on a sequential basis signaling that those who had previously ignored it should continue to do so at their own peril.

Further, IBM projected that revenue would grow at a rate that is potentially double what Wall Street had been expecting. The company is flush with cash that will allow it to pursue that growth and other avenues. Investors should consider IBM for its newfound positioning as a formidable AI name but also for the income it provides through its dividend. It’s a potent mix of growth potential and income.

Palantir (PLTR)

Palantir (NYSE:PLTR) just recorded its fifth consecutive quarter of GAAP profitability. Palantir is arguably known more for its public side business than its commercial business. While government revenues continue to make up the majority of the company’s business, its commercial side is quickly closing the gap. Palantir’s government revenues reached $324 million in Q4, growing by 11%. Commercial revenues weren’t far behind –  at $284 million –  and grew by 32%. 

The company continues to show the market that it is much more than a right leaning company destined to derive its business from the government primarily. Instead, Palantir is proving that it is every bit as capable as other AI firms in serving the commercial side.

Alibaba (BABA)

Now is the time for bottom fishers to consider Alibaba (NYSE:BABA), another one of the top AI tech stocks to own.

Alibaba’s recent performance is not as bad as it may appear. Yes, competitors including PDD Holdings (NASDAQ:PDD) continue to threaten Alibaba. And yes, 5% sales growth in the December quarter was slightly lower than expected. Net income also dropped precipitously. However, Alibaba is sending signals of confidence overall regarding its cash positioning. The company concurrently announced a $25 billion share repurchase program. 

So, there are plenty of positive signals for investors willing to take a contrarian position at the moment. Beyond that, investors also need to consider that Alibaba Remains the dominant competitor in China’s cloud market. The company maintains a near 40% market share that dwarfs its next closest competitors. 

Amazon (AMZN)

Amazon (NASDAQ:AMZN) is the leader in the cloud space thanks to its dominant Amazon web services (AWS). However, when it comes to cloud AI, Amazon continues to be a step behind its competition. However, analysts believe that Amazon is roughly six months behind its competitors.

With regards to earnings, Amazon’s revenues and operating margins beat consensus estimates by a wider margin than either of those chief competitors. Many pundits continue to worry that Amazon will watch its massive AI Cloud opportunity slip through its fingers resulting in a weaker performance. That simply hasn’t been the case thus far.

Alphabet (GOOG, GOOGL)

Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) released its Bard AI chatbot shortly after Microsoft released its chatbot. Better, the company continues to invest heavily into AI to improve search, YouTube, and Cloud. Plus, the company continues to grow, as seen with its double-digit growth on a top-line basis in Q4.

Cisco (CSCO)

Cisco (NASDAQ:CSCO) will continue to be one of the better stocks to invest in for those concerned with security and stability.

The company is continuing to invest heavily in building for the AI Cloud cybersecurity era. Enterprises of all sizes are worried about the security risk that AI poses to their businesses. Thus, they continue to invest heavily in securing their networks. That is one of the areas in which Cisco Systems excels. it’s also going to continue to be an ongoing area of opportunity for growth.Cisco Systems is one of the most established It networking firms overall. 

The company continues to release products and services tailored to that opportunity. In early February Cisco Systems unveiled its ‘Identity Intelligence’ product. 

It’s clear that Cisco Systems seeks to grow that opportunity and will continue to be a strong player in the cyber security area. Beyond that, Cisco Systems stock is a stable choice overall for investors. It includes a respectable dividend yielding 3.1%. The income it provides is yet another reason to consider investing.

Microsoft (MSFT)

Microsoft (NASDAQ:MSFT) has taken advantage of the emergence of artificial intelligence as much as any other firm. The company continues to invest heavily in the application of AI to its Azure Cloud business. 

It also beat earnings expectations, with its cloud segment accounting for $33.7 billion in revenues during the most recent quarter. Those revenues were $1.5 billion higher than anticipated, another indication that its AI Cloud is very strong. 

Microsoft is applying AI throughout its business. One of the major concerns at this point is that of a.com era style collapse. investors worry that valuations have gotten out of control yet Microsoft is proving that it can monetize AI. There are some concerns that enterprises remain unwilling to spend $30 per head for its CoPilot AI Integrations in its Office products. Microsoft isn’t perfect but I’d argue that the company has done just about as good as anyone could expect in regard to its adoption of AI at this point. 

On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.

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3 Super-Hot Stocks at Risk of a Serious Comedown

Going against a trend and shorting hot stocks doesn’t usually work out well.

As the saying goes, the market can remain irrational longer than you can stay solvent. For months (it feels like years, though), bears have been calling for an imminent Nvidia (NASDAQ:NVDA) crash. But, on the contrary, shares kept climbing and knocked many short sellers off their feet (reminiscent of meme stock mania).

But these three hot stocks are different. Rather than vague “it feels too high,” these stocks face material risks to their top and bottom lines that will be apparent over a fairly short period. If you hold any of these hot stocks, now is the time to look for an exit.

Affirm Holdings (AFRM)

Affirm Holdings (NASDAQ:AFRM) has been on a remarkable run, delivering returns beyond 180% over the past year. However, all hot stocks eventually come to an end, and the fundamental weaknesses in AFRM’s business model position it as a prime candidate for selling in 2024.

As you may be aware, Affirm’s primary offering is its buy now, pay later (BNPL) model, providing consumers with short-term micro-loans at the point of sale. However, it’s important to note that individuals gravitating towards BNPL solutions typically have lower creditworthiness. With credit card delinquency rates soaring, it’s only a matter of time before a significant portion of Affirm’s BNPL loans go unpaid.

In its latest filing, an examination of Affirm’s balance sheet reveals a notable $30 million quarter-over-quarter increase in its allowance for credit losses (anticipated delinquency write-offs). This rise occurred before the holiday sales season. That is the time when many consumers likely extended their credit card limits and relied on Affirm’s BNPL services. Overall, prevailing consumer and macroeconomic trends do not bode well for Affirm in the near term, positioning it as one of the top hot stocks to sell.

SoFi Technologies (SOFI)

Like Affirm, SoFi Technologies (NASDAQ:SOFI) is on the list of this year’s hot stocks within financial services. Also like Affirm, the hot stock’s status is overblown and subject to credit risk. While I like SOFI over the long run, and use them as my primary bank, I can’t quite get behind the overblown reaction to recent earnings.

SoFi Technologies stands out as one of the few companies capable of expanding its net loan portfolio. It has steadily increased over the past few quarters to surpass $21 billion today. However, this expansion introduces a new risk factor. SoFi’s borrowers, particularly those refinancing student loans, typically belong to a younger demographic with lower overall net worth and limited capital liquidity. Consequently, SoFi’s loan rates tend to be on the higher end, ranging from 8.99% to over 25%.

In my view, the company’s heavy reliance on personal lending exposes it to significant borrower credit risk going forward, particularly amidst a surge in consumer loan delinquency rates.

Tesla (TSLA)

I wish it wasn’t the case, but following last month’s earnings, Tesla (NASDAQ:TSLA) is one of the hot stocks investors should avoid in 2024.

While Musk rightly asserts that Tesla transcends being just a car company, with its burgeoning AI and robotics sectors holding potential for long-term success, its current focus must center on the viability of electric vehicles (EVs) in a shifting economic landscape.

Throughout 2023, aggressive price reductions led to dwindling margins. This was compounded by declining demand for EVs, signaling challenges ahead for Tesla in 2024. The predicament is not novel. As highlighted in this week’s earnings report, Tesla’s growth is expected to decelerate significantly.

Morningstar analyst Seth Goldstein succinctly captures this sentiment, stating, “Tesla is signaling that the days of 50% or even 30% to 40% growth year-over-year is not going to happen in 2024.”

Tesla’s stock has already experienced a substantial decline, down more than 20% since January 1st. For investors who have accrued sizable gains from Tesla and are willing to absorb the tax implications, better investment opportunities await this year. For those considering this a buying opportunity, avoid trying to catch a falling knife. I’m a Tesla bull in the long run. But right now, the wisest approach may be to limit Tesla’s exposure to its allocation within a standard index ETF like the SPDR S&P 500 ETF (NYSEARCA: SPY).

On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Jeremy Flint, an MBA graduate and skilled finance writer, excels in content strategy for wealth managers and investment funds. Passionate about simplifying complex market concepts, he focuses on fixed-income investing, alternative investments, economic analysis, and the oil, gas, and utilities sectors. Jeremy’s work can also be found at www.jeremyflint.work.

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NEC spurned private equity offers before selling discounted stake in iPhone supplier, sources say


Reuters exclusively reported that Japan’s NEC received multiple buyout offers from global private equity funds for iPhone supplier Japan Aviation Electronics Industry before agreeing to sell back much of its 51% stake to the Japanese company at a discount, according to five people.

Market Impact

Shares of JAE jumped after Reuters reported the buyout offers, finishing up 14.7% on Wednesday. Shares of NEC closed up 0.6%. 

Article Tags

Topics of Interest: DealsTechnology

Type: Reuters Best

Sectors: Business & FinanceTechnology

Regions: Asia

Countries: Japan

Win Types: Exclusivity

Story Types: Exclusive / Scoop

Media Types: Text

Customer Impact: Significant National Story

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3 Stocks With 5% Dividend Yields for $20 (or Less)

Source: ShutterstockProfessional / Shutterstock.com

Stocks trading for under $20 tend to be more established than their penny stock counterparts which trade for under $5. Yet, they also offer growth potential along with that increased stability. While not as dependable as the revered dividend aristocrats, all three of these 5% dividend stocks will generate passive income for your portfolio.

They offer a compelling mix of growth potential and income through those dividends that can combine to create impressive returns overall. Let’s take a look at those three 5% dividend stocks.

AT&T (T)

AT&T logo on wooden background

Source: Lester Balajadia / Shutterstock.com

AT&T (NYSE:T) is going to continue to make sense for investors who believe in the company’s future growth. The well-known cell and data telecom firm is essentially stagnating but continues to be full of promise.

That means that when AT&T releases earnings that fail to impress, but also don’t disappoint, that there is reason to invest. Which is essentially what happened when AT&T released earnings in late January. There were bright spots and some not so bright spots. Revenues were higher than expected and the company added significantly more postpaid customers than was anticipated. Yet, AT&T missed earnings by a few cents.

Investors who stick with AT&T as it navigates the evolving wireless landscape will be rewarded with a dividend yielding 6.5%.

Ambev (ABEV)

website image for ambev

Source: Anton Garin / Shutterstock.com

There are a lot of metrics to suggest that Ambev (NYSE:ABEV) stock deserves a place in your portfolio. Its shares are very cheap and currently trade for roughly $2.50. However, the analysts with coverage of Ambev believe it can run as high as $5 per share and give it a consensus target price of $3.43. The stock includes a dividend yielding just above 5%. It’s easy to see why investors are interested in Ambev due to the combination of price appreciation and income.

Investors who are looking for an investment in the brewery sector could do much worse than Ambev.The company has momentum in its favor and is ranked higher than 79% of competitors in the brewery beverages sector.

Beyond that, Ambev is financially secure overall and particularly skilled at creating value. The company has grown its revenues quite rapidly over the past 3 years. Additionally, Ambev is quite cheap based on its P/E ratio.

Kinder Morgan (KMI)

Kinder Morgan logo on a sign outside the company headquarters in Houston.

Source: JHVEPhoto / Shutterstock.com

Kinder Morgan (NYSE:KMI) is among the better known midstream energy stocks available to investors. The company operates pipeline transportation infrastructure critical to the energy industry.

The company’s current dividend yields 6.8% and the company expects it to continue yielding above 6% in 2024. KMI has stated that it anticipates paying $1.15 per share in dividends during this year.

One of the most compelling reasons to consider investing in Kinder Morgan in 2024 is underlying uncertainty in the energy markets. Kinder Morgan expects the price of West Texas intermediate to average $82 in 2024. However, geopolitical instability could result in higher energy prices than the company anticipates. That would obviously be a benefit to Kinder Morgan and would improve its top and bottom line results.

Kinder Morgan’s Earnings and distributable cash flow declined by 10% and 4%, respectively in the fourth quarter. Investors who put their money behind Kinder Morgan are clearly betting on instability pushing energy prices higher while also banking dividend income from KMI.

On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.

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