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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.

24.11.2022
Major Risks for Tech Giants: Tesla

Tesla is unique in terms of its share price. TSLA stocks rallied long before the company established the production of viable and steady electric vehicles (EV) and also thanks to the reputation of its leader Elon Musk. It is true that Tesla sometimes misses its mark and deadlines to launch new models and products but it seems that the crowd invests in Tesla not for its hit-and-run strategy but because of their belief in Musk’s ability to transform our everyday life in the long run.

Tesla stocks are trading 60% off their peak prices thanks to the market correction that has been squeezing the market since the end of 2021. Nevertheless, market participants are discussing some drivers that may hit the company’s business. For example, lower gasoline prices may hamper EV sales. It is true that Americans are now paying around $3.6 per gallon compared to $5 a few months ago. But this driver is largely exaggerated as gasoline prices is not the major reason for someone to buy an electric car. A move towards green energy and minimising carbon footprints is not a short term affair, but a sustainable long-term trend that is supported by governments, including the United States and China. Besides. oil producers forecast global demand will outweigh the supply side over the coming years while also betting on higher prices of fuel. So, no short-term movements of gasoline prices would affect EV buyers, as well as TSLA stock buyers.

The more serious issue is the declining prices for Tesla’s second-hand EVs. Tesla used cars are now 15% cheaper after a summer peak. If this downtrend is sustained pressure on sales of new model could mount. Tesla is planning to increase EV’s quarterly production to 500,000 by the end of 2022 and it is likely to increase production further after launching new production facilities in Berlin and Austin. But Tesla is not a mass market. So, Tesla fans are unlikely to pay much more to get a brand-new Tesla.

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.

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.

Airliners Are Back in Business: General Electric

General Electric stocks are trading 75% off their peak in early 2000s, moving sideways since 2019, and trying to hold its process above $40 per share. This may change for the better soon considering the company’s efforts in the aviation industry. Boeing and Airbus have announced a contract with Air India for 540 aircrafts in the middle of February. Boeing may gain $20 billion on this contract, while Airbus may have even bigger profits of $38 billion. But behind this contract is General Electric as a major sub-contractor. Aircraft firms are very limited in term of engines they can use in aircraft construction. Only GE (GEnx-1B) or Trent 1000 Rolls Royce engines can be installed on Boeing 787. Airbus A320neo requires CFM LEAP 1A engines from GE and Safran or PW1100G from Pratt & Whitney. The sub-contractor is usually not announced just after the signing of the contract, but this time GE reported it will deliver 800 CFM LEAP engines, 20 GE9X and 40 GEnx-1B engines sub-contracting to service these engines for Air India. The tremendous effort will certainly have a positive effect on company stock prices in the long run.  

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Airliners Are Back in Business: Lufthansa

German’s largest airliner stocks lost 50% from peak prices in 2018. Lufthansa stock prices have been seen to be recovering over the last six months amid debt reduction and increased liquidity. The debt situation has changed dramatically to the better as the company is overcoming debts amid strong travel demand. Net debt has decreased to 6.7 billion euros, a level not seen since 2019. So, it may seem that the company has overcome pandemic troubles and left all worries behind. The company increased its traffic by 100% to 102 million passengers in 2022. Revenue was nearly doubled to 32.8 billion euros. Adjusted operating profit (EBIT) reached 1.5 billion euros. This looks very impressive considering 2021 losses of 1.5 billion euros. Lufthansa made this effort only on 72% passenger capacity compared to 2019. Rising capacity utilization and lower fuel prices will contribute to its recovery. Management expects the fleet capacity utilization will rise to 85-90% during 2023. The immediate buying of LHA stocks, that rose by 60% during last few months, may not be a good idea given the risk of correction. But these stocks could be well added to a long-term investment portfolio amid solid recovery of the airline business.  

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Airliners Are Back in Business: Delta Air Lines

Delta stocks are trading 40% off their peak prices despite exceptionally strong performance. The company recorded $45.6 billion in adjusted revenue in 2022 compared to $47 billion in 2019. The operating revenue was at $50.6 billion, including $5 billion from the company’s own refinery. The management expects adjusted revenue to increase by 15-20% in 2023. Earnings per share (EPS) is expected to rise to $5-6 per share by the end of 2023, and above $7 by the end of 2024 compared to $3.2 delivered in 2022. Such forward guidance suggests Delta can recover to its 2019 income level in 2024. However, the company may easily beat its 2019 revenue in 2023 as it is already making income perspectives for 2023 even brighter. The potential of Delta is seen to be underestimated with 2024 EPS consensus at $6.6. But revenue trajectory and better than expected margins may deliver substantially better financial results which will meet management expectations, or even higher. Thus, the company has a good recovery potential.  

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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/
Silver Is Flagging a Recovery

Silver prices have reached an important support zone of $20.50 per ounce forming a potential reversal sign. However, it is too early to consider it as such. The current price of $21.1 is essentially a test zone for an upward correction. The decline may be resumed after it hits the downside target of $19.84. On Friday, March 3, the price is testing the 200 EMA on the H1 chart. If we get a rollback down from this range on the H1 - H4 timeframes, then short trades with the target at $19.84 would be appropriate. These considerations are based on Fibonacci levels and the moving average of the RSI indicator with a period of 14. In addition, the market could stay at strong levels - both support and resistance -  for several days or several weeks, as the case was in December last year.

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