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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.


06.10.2022
Top 3 Financial Stocks: CME Group

CME Group is the largest market place for derivatives. CME stocks dropped by 25% from the beginning of 2022. The only reason for such a decline is the overall market correction and not any business issues. High volatility is a benefit for the company as it offers the most important derivatives to mitigate financial risks. Among those are the most popular S&P 500 index futures and other indexes linked to derivatives, agricultural products, gold, silver, and crude derivatives. So, the company continues to receive decent profit that allows for the payment of high dividends to its investors.

Free Cash Flow (FCF) of the company in 2022 is expected to hit $2.8 billion. CME is improving its efficiency as every Dollar received in 2021 was converted into $0.48 of FCF, while this year this figure is expected to rise to $0.55, and in 2023 to $0.57. Regular annual dividends is at $4 or 2.3% of share value. CME is also paying interim dividends. By doing so, it paid $3.6 regular dividend and $3.25 interim dividends in 2021, or $6.85 per share, slightly above FCF per share at $6.77.

CME has a solid business model and sound financials without substantial debt. These facts allow the management to take more care of the company’s shareholders. The current overall downside configuration offers great opportunities for investors to add CME stocks to their long-term investment portfolios.

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.

11.01.2023
Advanced Crypto Assets: dYdX

DYDX tokens suffered a lot during the ongoing market correction and lost over 95% off their peak prices. dYdX is an advanced decentralised exchange, where clients can exchange cryptocurrencies and derivatives with marginal collateral. There are no KYC procedures to be followed within the exchange, as well as no need to disclose your personal data.

dYdX is runs on the Ethereum blockchain, known for its expensive transaction fees. However, StarkWare solution allows for lower fees as only commissions for trading are charged. The platform now runs on Layer 2 protocol which is incorporated into Ethereum’s  main network. This solution allows for transactions to be conducted instantly, while traders do not have to pay miners for validating transactions.

Market players are closely monitoring the dYdX V4 vehicle, which is  a standalone Cosmos blockchain, featuring a fully decentralised, off-chain, orderbook and matching engine. In other words, developers are going to create the entire trading infrastructure to scale up processes without involving any third-party applications. The service  cancelled two stimulus programs in order to lessen the effects of inflation within the dYdX platform and to support token prices.

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.

The Rally is Unavoidable: Arlo

Arlo is a maker of surveillance cameras and services. Its stocks are trading 45% off their 2022 peaks, while rallying 80% from their April 2023 bottom prices. Nevertheless, there is still some room for this stock price to climb. The reason for this possibility emerged after the company presented its Q4 2022 earnings report, where the number of paid subscribers rose above 2 million with 200,000 new clients added during this quarter. Sales of surveillance cameras are dropping, while services sales are gaining momentum. Arlo offers cloud-based storage to its clients to keep their recordings, “smart” door locks, and 4k recording format. The company allows users to install its cameras themselves without any mandatory obligations to contact expensive service providers. The home surveillance market is estimated to be worth $53 billion in the United States alone, and may expand to $78 billion by 2025. Arlo may potentially increase its revenues that were reported at $500 million. Arlo, just like many other similar startups, has not had the chance yet to deliver earning but this may soon change as the company is focused on high margin services with their share at 32% in the revenues compared to 20% a year ago.  

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Young, Yet Cheap: Zuora

Zuora is the company that helps companies and individuals manage their subscription-based services. Its stocks lost about 60% during the recent correction. Stock prices recovered some losses after a publication of a strong financial report for the Q4 2022, but they have some more room to rise. The major driver for the company is that more businesses are turning to a subscription-based model, generating more clients for Zuora. Anyone can manage their subscriptions by themselves, but with the growing number of these subscriptions it would be very tricky to manage them all, especially for firms. There is no alternative in the market as Zuora is entirely focused on subscription issues offering its clients tailored services to manage their revenues and billing services.  Zuora has reported revenues up by 14% year-on-year to $103 million in Q4 2022 beating Wall Street expectations of 11% growth. The company posted that its Annual Recurring Revenues (ARR) are up by 16% year-on-year to $365 million, which is 80% of the ARR expected level by the end of 2023. Strong financial results, together with a rather small market capitalisation at $1.2 billion, makes the company attractive for large corporates that are willing to diversify their business. In other words, adding Zuora stocks to your investment portfolio at current prices looks very attractive for long-term investors.  

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Young, Yet Cheap: Lemonade

Lemonade is a new generation insurance company that targets a young audience. It stocks lost about 93% from peak prices during the past two years. Moreover, these stock prices continue to go down this year despite the rally in the tech sector. The company’s stocks lost more than 10% in 2023, ignoring inspiring financial results and strong positive guidance for 2023. The company has five primary products available in the market, including home insurance, renters’ insurance, car insurance, and pet insurance, all making cross sales even more effective. The company declares its mission as “transforming insurance from a necessary evil into a social good." The company has reported revenues up by 116% year-on-year to $88.4 million on a client base up by 27% year-on-year to 1.81 million in the Q4 2022. Lemonade is mostly reinsuring its risks, causing the insurance premium for agents to decline as the number of clients is increasing. The premium dropped from 72% in the Q4 2021 to 58% in the same period of 2022. Lemonade offers insurances on-line, which is quite valuable for its young audience. These people are growing older, having families and seeing their income rise over time. All these factors lead them to increase their interactions with financial firms, including insurance companies. Thus, targeting the Z generation could be a solid stake for future gains.  

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Young, Yet Cheap: Etsy

Etsy is an e-commerce market place for handmade and vintage items. Its stocks are now trading at 66% off their peak prices, while they were posting records during the pandemic amid booming e-commerce business and the selling of collectables online in particular.  While the world was recovering from the pandemic, revenues dropped significantly. The company reported revenues up by 12.6% year-on-year to $807 million in the last three months of 2022. Wall Street is expecting its revenues to rise only by 8% during 2023. The turnover dropped by 4% over the Q4 2022 on growing revenues from rising fees for sellers. This source of incomes could hardly be considered sustainable. The company has obtained 9.5 million extra users, which is a 51% rise compared to the Q3 2022. This is very positive for the company but revenues are still far from pandemic levels.  Large marketing costs slashed the company’s margins. The company still generates profit, but its EBITDA dropped by 290 basis points to 27.9%. Marketplace continues to be number one in the sector despite continuous efforts by some giants like Amazon to enter this niche market, without much success. Nonetheless, long positions for ETSY stocks without significant positive developments in revenues or incomes are a major risk. It is worthwhile to monitor the company as it may turn out to be a successful story.  

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