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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.

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.

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.

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.

Perspectives of Oil Stocks Are Rising: Pioneer Natural Resources

Shale oil producer, Pioneer Natural Resources’ stocks are trading 10% below its peak prices, while the S&P 500 broad market index has lost 15%. The company’s business is in great shape and this was confirmed by the Q3 2022 earnings report. Nevertheless, PXD stocks lost 5% after the release of the report. Such dynamics are not consistent with the current market situation and the company’s perspectives.

The company is paying generous dividends of $5.7 per share and is planning to increase dividend to $10 in 2023 and to $19 in 2024. This increase is linked to the WTI price forecast that could gradually reach $140 per barrel by 2027. Management is taking advantage of lower PXD stock prices by conducting a buy back on $500 million in Q3 2022 of $4 billion reserved for this program in total. The company expects a free cash flow of $8 billion in 2022.

So why do the company’s stock prices keep falling? The reason is not only the general market correction, but the overall sentiment of investors. Many believe in cyclical movements in the oil market, and that good times would soon change to bad. However, there are no reasons for such pessimism. China is expected to lift its lockdowns soon, while the United States is likely to stop releasing oil from strategic reserves.

The expected recession could hardly undermine oil demand to 2020 levels. Even then demand dropped only by 10%. In other words, the current negative sentiment is seen to be too exaggerated. On the other hand, there are plenty of reasons to follow the company’s management that continues to buy back PXD stocks. 

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Unfair Sell-Off: Qualcomm

QCOM stocks dropped by 9% the day after its quarter earnings report was released. According to the report, revenues grew by 22% year-on-year to $11.4 billion, while EPS hit $3.13 vs $0.78 a year ago. Smartphones are still generating most of the revenues as Apple and Samsung decided to return to Snapdragon chips and the demand for 5G is growing. However, other business segments of Qualcomm are expanding too, including the auto industry segment and Internet of things (IoT).

The financial year of 2022, that ended on September 25, made $1.4 billion ($975 million a year before) from chips sold to automakers. The company forecasts that this segment will expand to $4 billion by 2026. Apple is thought to use its own solutions for a long time and is not expected to be churning out Qualcomm products until 2024. Samsung is planning to continue using Snapdragon chips in 100% of its smartphones that allows Qualcomm to balance risks from a possible Apple withdrawal.

QCOM shares are trading at September 2020 levels and this is not providing a justified valuation of its business. Qualcomm is delivering better results and has realistic growth projections.

872
Unfair Sell-Off: PayPal

PYPL stocks lost almost 7% just after the release of the quarterly earnings report, surprising investors after the company reported that revenue was up by 11% year-on-year to $6.85 billion and transactions volume was up by 9% year-on-year to $337 billion. These strong results were reported amid China’s COVID restrictions and negative affect of the war in Europe. Free Cash Flow (FCF) was up by 37% year-on-year to $1.788 billion, enabling the company to stockpile $16.1 billion of cash by the end of the quarter vs $10.5 billion of debt a year before.

Strong financials helped the company to buy back its own stocks for $939 million and reserve $1 billion more for the next quarter to continue buy backs. This has a positive effect on stocks prices, and on earnings per share (EPS). The company’s management has upgraded its annual EPS up by $0.16 to $4.09.

PayPal has a lot of competition, including  Apple Pay and it allows for American customers to save their credit card information and pay for goods and services with the app. Wall Street expects the company’s revenues to rise by 15-20% every year within the next five years. So, more potential is added to the PYPL stocks.

1021
Unfair Sell-Off: AirBNB

The famous marketplace for short-term apartment rental saw its stocks go down by 15% after the release of its very strong quarter report. Revenues and earnings beat analyst’s expectations and reached $2.9 billion, up by 29% year-on-year, and $1.2 billion, up by 46% year-on-year, respectively. The number of homestays grew by 25% year-on-year to 99.7 million, or by 31% year-on-year to $15.6 billion. Free cash flow (FCF) over the last 12 months was generated at $3.3 billion or 40% of the revenue. These are extremely strong solid numbers for a relatively young and rapidly growing venture.

Impressions are considered to become the  fastest growing drivers for the company in the forthcoming future. The sales of photo sessions, excursions, and master classes – which are additional services for rentals - are expanding. Even the idea of traveling is being redesigned by AirBNB as now the user may scan interesting apartments he or she wants to rent, and then decide if they want to travel to the seaside or to snowy mountains.

BNB stocks are seen to be very attractive for long-term investments. The hospitality industry has greatly recovered from the pandemic, and is looking for a vast number of employees.

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