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15.09.2022
Safe Haven Assets for Long-Term Investments: Broadcom

Broadcom is an American semiconductor and infrastructure software development company. Soon it is expected to close a merger deal with VMware, a cloud computing and visualization company, that will open new cross-sales opportunities for Broadcom to boost its revenues. Broadcom stocks are now 25% off their peak values.

According to the Q3 FY 2022 financial report that ended July 31, consolidated revenues grew by 25% year-over-year to $8.46 billion, and EPS went up by 40% to $9.73 per share. The semiconductors segment, that added 32% year-over-year, was the primary driver for the company’s profit. The company’s free cash flows (FCF) topped $4.3 billion, allowing it to spend $1.7 billion on dividends and 1.5 billion on the shares repurchase program. The company is planning to continue spending at least 50% of FCF on dividends that added 43% every year on average since 2016. 

According to the Q4 FY 2022 forward guidance, the company is expecting its revenues to go up by 20% year-over-year to $8.9 billion and for EDITDA to go up by 25% to $5.6 billion. Broadcom has great experience in expanding its product portfolio by M&A operations, and apparently it will continue on this way. The company is also expected to benefit greatly from the $52.7 billion CHIPS bill in the United States.


15.12.2022
Three Undervalued Value Stocks: Costco

Costco Wholesale Corporation has presented quite disappointing earnings report for the Fiscal Q1 2023. Revenues were reported up 8.1% year-on-year to $54.44 billion missing expectations of $54.65 billion. This is obviously not the reason for long-term investors to remove COST stocks from their portfolios as the company is set to maintain strong financial discipline and cost structure, not to stimulate high growth in the short term at any cost.

The operational margin in financial Q1 2022 was at 3.4%, and in Q1 2023 it was 3.2%. Costco is aiming to provide the most reasonable prices on their products to keep their clients loyal. That is why the operational margin is suffering. Meanwhile, EPS was up by 4.4% to $3.1, and membership fees rose by 6% year-on-year. So, the strategy seems to be buying itself.

Inflation in the United States is expected to return under control over the next year. So, there will be no need to deliver various marketing activities like coupon sales and others while loyal clients will be grateful for the support during the period of uncertainty. Costco is planning to open 24 new stores in 2023, increasing its potential to generate revenues.

16.06.2022
Not Every Tech Stocks are Equally Strong: SAP

SAP stocks have lost 30% since the beginning of 2022. The German tech company develops enterprise software and solutions to manage business operations. For example, one of its services can be used  to manage all business travel financial activities and related spending. In other words, it is quite a routine company with  a stable and strong cash flow. Once SAP software is installed on a corporate level it is hard to do without it as it is deeply integrated into the business core processes. Moreover, SAP is restructuring its business model around its subscription base and this will allow for cash flows to be even more predictable and balanced through the financial year. Such a model is in favourable to Wall Streel investors.

The war in Ukraine has a 300-million-euro negative effect on SAP business, and it is only a marginal 1% of the overall revenue base for the company, while its dominance in the ERP segment is secure. The revenues added 11% year-on-year to 7.08 euros in Q1 2022. The revenues grew by 6% in  Q4 2021.

The company has made some successful M&A deals, acquiring Qualtrics, a cloud-based subscription software platform, that delivered +48% revenue in Q1 2022. This company had a gross margin above 90% in 2021 while SAP’s gross margin was at 70% for the same year.

SAP management promised to triple its cloud-based business by 2025, and boost revenues to 22 billion euros, while operational profit is forecasted to grow by 40% from the current 8.4 billion euros. This is a very extensive growth for the company that has a high P/E ratio at 17. The company may not perform very high growth rates as its younger tech sector peers, but it may certainly recover to new all-time highs in the long-term perspective. However, the sector may require several quarters to recover, and the recovery would be headed by such reliable companies as SAP with a low risk profile.

11.08.2022
Perspective Peers of Ethereum: Avalanche

Avalanche is ranked by Coinmarketcap at the 12th position by market cap with $7.8 billion, which is 4% less than Ethereum’s market cap. AVAX prices dropped by 82% of its peak values, allowing investors to buy it at early 2021 prices. Avalanche’s infrastructure consists of three logically isolated networks, each of these with their own processing, validators, and own set of rules.

This platform is often compared to the existing internet web infrastructure with core connection protocols like HTTP, surrounded by a huge number of networks to their apps. Avalanche allow for the creation of public and private systems as a blockchain or DAG (Directed Acyclic Graph) and for the use of different virtual machines for apps, including EVM engine (Ethereum Virtual Machine) that allows Enthereum network programs to be developed.

Avalanche includes C-chain to create smart contracts that are processed on an advanced EVM engine, P-Chain that coordinates validators that process transactions and also allows for the creation and management of new subnetworks, and X-Chain which is a directed acyclic graph regulating issuance and trade of cryptoassets. DAG systems record new transactions on top of the old ones, allowing for processing speed to be increased and for capacity substantially. It is quite different to other blockchains, where transactions are compiled in blocks in order to be processed.

The advantage of Avalanche is that it provides anyone with the opportunity to create his or her own isolated blockchain with its own set of parameters, including access to apps and the programming language with which it will work. Every subnetwork can process around 4,500 transactions per second compared to 14 processed by the Ethereum network.

04.08.2022
Ethereum’s Most Important Update

ETH is a native token for the Ethereum blockchain and is one of the two most reliable digital assets in the market along with Bitcoin. Ethereum is the first platform that became a hub for thousands of blockchain apps and other digital solutions. The recovery of ETH prices to November 2021 peaks at $4,900 would bring investors 190% profit.

Second layer solutions (Layer2) were introduced to improve stability and effectiveness of the Ethereum blockchain. These are blockchain network add-ons that are added on top of the primary blockchain. The most popular add-ons are Arbitrum, Loopring, Immutable X, and Polygon that have recently partnered with Meta (Facebook owner). In other words, the Ethereum blockchain network has a much broader use than the native blockchain itself.

Ethereum developers promise to release a new Proof-of-Stake (PoS) consensus protocol in late 2022. This protocol will allow miners to stake tokens to a special deposit to mine blocks. Some networks within the Ethereum blockchain have moved to PoS protocol this summer, while others are expected to move to this protocol in the middle of September.  This move will allow for the increase of processing capacity of the network to almost 100,000 transactions a second from the existing 30 transactions and lower commissions. This would also allow for ETH to switch to the deflation model when coins are algorithmically burned, while some coins would be removed from circulation as they would be blocked by staking - more than 13 million ETH or 10% of overall coins in circulation are blocked by staking. The problem is that coins are blocked for a long period of time and cannot be sold or exchanged for fiat currency.

Rafael Quintana Martinez
Money Manager de alto rendimiento, con una sólida formación académica, profesional y de campo. Más de 9 años de experiencia especializada en el comercio de mercados financieros internacionales. La devoción, la fiabilidad, la responsabilidad y la ética impulsan mi vida. Actualmente me desempeño como Analista Senior para Metadoro. https://metadoro.com/es https://mx.investing.com/members/contributors/235587671/ https://es.tradingview.com/chart/EURUSD/rE9gVips/
Dogecoin Is Struggling to Keep Its Recent Gains

Dogecoin (DOGE) is down 5.6% to $0.2530 this week, underperforming the broader crypto market, where Bitcoin (BTC) declined by 1.0% to $96,164. The memecoin briefly dropped to $0.2419 before recovering slightly, following U.S. President Donald Trump’s renewed threats of a 25% tariff on pharmaceuticals, semiconductors, and vehicle imports. Investor reaction was moderate, but DOGE fell below the midpoint of its ascending channel. A return above this level is crucial to avoid further declines to $0.2000—or, in an unlikely bearish scenario, even $0.1000.

Despite the current weakness, Dogecoin retains upside potential. The U.S. Securities and Exchange Commission (SEC) is considering an application for a spot DOGE ETF, which could drive institutional interest. Additionally, continued support from high-profile backers, including Elon Musk, strengthens its long-term appeal.

5
A "Carpe Diem" Approach to Minor Corrections in Gold

Gold prices blew the horn of a hasty retreat from their recently achieved historical highs. April futures for the yellow metal have restored an offensive line below $2900 per troy ounce last Friday, which lies slightly south of the record peak value at $2968.50. U.S.-Russia talks on potential Ukraine peace deal make the risk-off mood quieter these days. Yet, one may hardly expect a quick reversal from an overall bullish trend in golden assets. Uncertainty over global trade issues is still an important source of worries for conservative investors into the bonds denominated both in the U.S. Dollars and Euros. Gold cannot be a direct rival to high-yielding stock instruments or crypto transactions. When it comes to Gold prices, we should rather take into account a potential decrease in guaranteed income that can be expected from public bonds at lower interest rates. The further dovish policy moves by central banks may be postponed but they are still just around the corner.

Federal Reserve's governor Christopher Waller said on February 17 that the new White House administration's new tariffs could have only a "modest impact" on inflationary pressures, so that the central bank is going to "look through these effects" when setting the monetary course. Trump's tariff barriers should not stop the Fed from acting "if it is otherwise appropriate", just as Russia's invasion of Ukraine in 2022 or the collapse of Silicon Valley Bank in 2023, as he cited as two bright examples of things which did not prevent the U.S. central bankers from changing the interest rates environment. Even as those effects of tariffs could be "larger than I anticipate", he added, other policies under discussion could have "positive supply effects" to put downward pressure on sticky inflation. He could presumably imply tax cuts and the role of protectionism in boosting domestic production.

Christopher Waller, who was actually appointed to the Fed by Donald Trump in his first presidential term, concluded with the sentence that policy should be on hold "until inflation is falling again", but this should not "paralyze" interest rate moves down, as February's disappointing rise in the U.S. CPI (consumer price Index) reflected seasonal data adjustment and "not rising price pressures". If 2025 would play out like 2024, then rate cuts would follow "at some point this year". FedWatch tool shows broad expectation for the next rate cut move to take place in June or July, even though the Fed is expected to hold its interest rates on pause, within the current range of 4.25% to 4.50%, after its nearest meeting in March. These are the clear fundamentals why Gold prices have stopped near the round figure of $3,000/oz, but also why the current pullbacks may be more of a temporary phenomenon.

The width of this stalling price range is unlikely to exceed $200/oz. Besides, the next and higher goals for Gold are already visible. As an example, the banking group of UBS freshly updated its Gold prices projections by mentioning their new target of over $3,200 and stabilization at "elevated levels" in the coming years. UBS strategists cited "deep-rooted" bullish sentiment when "so much has already happened and it is only February", based on "underinvestment" as well as strong official sector demand, with record-high prices being detected "in just over 6 weeks since the start of the year". After missing some Gold-buying opportunities in 2024, many investors may use a "carpe diem" approach (of making the most of the present moment and giving little thought to the future) to seize on minor market corrections more promptly, suggesting liquidity issues with sensitivity to increases in physical demand.

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Rafael Quintana Martinez
Money Manager de alto rendimiento, con una sólida formación académica, profesional y de campo. Más de 9 años de experiencia especializada en el comercio de mercados financieros internacionales. La devoción, la fiabilidad, la responsabilidad y la ética impulsan mi vida. Actualmente me desempeño como Analista Senior para Metadoro. https://metadoro.com/es https://mx.investing.com/members/contributors/235587671/ https://es.tradingview.com/chart/EURUSD/rE9gVips/
Cosmos Is Likely to Continue Down

Cosmos (ATOM) is down 4.5% to $4.613 this week, underperforming the broader crypto market, where Bitcoin (BTC) has declined by 1.5% to $95,700. More concerning is ATOM’s failure to reclaim the $5.000 support level, which poses a significant downside risk. The token has already erased all its Trump-driven rally gains and set a new yearly low at $3.605.

This weakness could extend further, potentially driving ATOM down to $2.500—a 45.0% drop from current levels. The absence of strong fundamental catalysts leaves the token vulnerable to broader market trends. If sentiment across the crypto space remains weak, ATOM is likely to face continued downside pressure.

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Rafael Quintana Martinez
Money Manager de alto rendimiento, con una sólida formación académica, profesional y de campo. Más de 9 años de experiencia especializada en el comercio de mercados financieros internacionales. La devoción, la fiabilidad, la responsabilidad y la ética impulsan mi vida. Actualmente me desempeño como Analista Senior para Metadoro. https://metadoro.com/es https://mx.investing.com/members/contributors/235587671/ https://es.tradingview.com/chart/EURUSD/rE9gVips/
Buying Dips in Alphabet

Alphabet (GOOG) shares have declined by 10.0% since early February, following a Q4 earnings report that fell slightly short of expectations. The company reported $96.47 billion in revenue, missing the forecasted $96.69 billion. However, other financial metrics remained strong, suggesting the stock is well-positioned for recovery amid a rising market.

Currently, GOOG has reached its uptrend support level and is only 11.50% below its all-time highs. Given this setup, I am considering a long position in the $184–188 range, with a price target of $200–204. To manage risk, a stop-loss at $172 seems appropriate.

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