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24.11.2022

Apple stocks have had a very impressive performance amid a clearly bearish market while losing only 20% of their peak values. However, investors should be prepared for elevated turbulence in these stocks considering the situation in China.

China’s zero-tolerance policy to COVID-19 led to a massive exit of employees from Zhengzhou city plant amid fears over tightening curbs. Over 200,000 workers are rumoured to have left the plant. If this is true, the production of iPhone 14 Pro and iPhone 14 Pro Max would be very complicated with no clear outlook on when it could be resumed. The delivery delay shown on Apple’s website has already hit six weeks. Americans who ordered the brand new IPhone for Thanksgiving Day will only receive it for Christmas now. Meanwhile the last two months of the year are very valuable for any mass-market company in terms of holiday sales.

Apple is planning to move iPhone production to India. But that would require years. The company has already invested $75 billion in the Chinese market and now this investment may be at risk as the ruling Communist party in China may put a local ban on the sale of Apple products. China is the third largest market for Apple with the United States at the first place with $153 billion and Europe at the second with $95 billion. Wall Street is expecting Apple’s earning to go up by five percent over the next three years. So, any troubles with production in China may alter these forecasts.

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.

11.08.2022

Perspective Peers of Ethereum: Avalanche

Avalanche is ranked by Coinmarketcap at the 12^th 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.

28.12.2022

The Most Generous Corporates: Capital One

Capital One Financial corporation shares are trading at 50% off their peak prices. This has inspired the management of the company to deliver a massive buyback program bringing the buyback yield to 19.3%. Together with 2.7% dividend yield, this has made the company one of the most generous in the market. COF shares are in great demand among investors that are focused on value stocks, such as Oakmark Fund with more than $45 billion in assets under management.

The specialisation of Capital One is mostly credit cards, auto loans provided to substandard borrowers, or in other words, people with high credit risk profiles. This business is highly profitable, although it does bear high risks too. The company says it has a reliable risk assessment model in place to run the business. The lender generates not only higher margins compared to its peers, but overruns regulators’ requirements of capital adequacy with 13.6% vs required 6%. Considering these criteria, the company is in line with some of the largest banking institutions in the world, like JP Morgan with 14.1% and the Bank of America with 12.8%.

The company’s capital base, which is built on clients’ deposits, is enough to conduct high-margin lending. Such a model of cheap resources is not only profitable but it is also stable. Capital One has a margin of 10-15% on its tangible equity. The interest for the company’s services is unlikely to decline in the foreseeable future considering the current economic environment. So, COF shares could be selected for long term investments with the upside potential of 30-40% once the market starts recovering.

28.12.2022

The Most Generous Corporates: eBay

eBay stocks are trading 50% off their peak prices despite significant progress in key businesses that increase the possibility of an increasing turnover of the auction platform. The dividend yield of the company is at 2.2%, while its buyback yield is at an impressive 24.4%. So, the overall reward for investors is at 26.6% in 2022, a record among public corporates. eBay has bought back shares for $5.3 billion during the last four quarters. So, outstanding shares have been reduced to 551 million from 685 million a year ago.

The company is actively developing collectable trading, including an acquisition of TCGplayer, a marketplace where enthusiasts exchange their collectables like Pokemon, Magic: The Gathering and others. The most important service that the platform provides is guaranteed authenticity of the collectables that ensures the buyers will not be subject to scams and also protect sellers from any malicious fraud. eBay has recently made this service available for jewellery above $500.

The company has published strong forward guidance for Q4 2022 with turnover at $17.8 billion, revenues at $2.46 billion, and EPS at $1.06. The EPS in the Q4 2021 was at $1.05. So, considering the tense situation in the retail market this year, any figures above record values of 2021 should be considered an achievement. eBay stocks will be able to recover rapidly to their peak prices once the market reverses to the upside, and that would mean 100% profit from the current values.

MetadoroIn-house analytics

16.06.2022

Not Every Tech Stocks are Equally Strong: eBay

eBay stocks are traded at 50% of their peaks in 2021. The company was once the hot stock on Wall Street but since that time, few investors were expecting these stocks to rapidly expand. However, the pandemic boosted the company’s business, while the elevated demand for collectibles (Pokemon cards) contributed to bring the platform’s turnover to a new high over the last years. The company’s management used the situation to expand eBay business and introduce its own payment system.

The platform’s turnover dropped 17% year-on-year to $19.4 billion in Q1 2022. The turnover rose marginally before the pandemic – by 7% in Q1 2019 compared to 29% in Q1 2021. Now it seems that the pandemic effect was a single shot, and now it is fading away. Revenues dropped by 5% year-on-year to $2.35 billion in Q1 2022, while the 2022 revenue forecast was downgraded to $9.6-9.9 billion down by 3-6% vs $10.3-10.5 billion up by 0-3% previously expected.

Removing pandemic restrictions would likely have a much more negative effect on the e-commerce than expected before. By themselves collectibles would not provide turnover growth at the same high rates as Amazon but they are certainly strong leaders in other segments of e-commerce. So, investors should think twice before adding EBAY stocks to their portfolios.

EBAY

458

MetadoroIn-house analytics

12.05.2022

Perspective ETFs in the ESG energy segment: Invesco Global Clean Energy Portfolio ETF

This ETF invests in green energy ventures. The pandemic led to a 300% increase of its share price. But since the beginning of 2022 they have lost 30%, twice as much as the S&P 500 SPY ETF. The net capital which has outflown from the Fund has reached $31.5 billion over the last 12 months, while the major outflow was recorded in December 2021. However, its shares are still seen to be overbought as P/E multiplier is at 24 that is well above the average of 20 for the EFT’s that are linked to the S&P 500, while the dividend yields are above PBD’s numbers.

Inflation in the United States is rising negatively affecting all shares with a high P/E ratio. So, we may expect a further decline of the PBD share price and other similar assets that cannot be protected from rising risks. Traditional energies are looking more attractive on this background and could be a perfect hedge asset amidst geopolitical uncertainties.

PBD

389

MetadoroIn-house analytics

21.04.2022

Three Stocks that Could Draw Bullish Attention: The Bank of America

Shares of The Bank of America (BAC) scrambled above the $40 technical resistance level in late April. However, the price gained more than 6.5% in the first three trading sessions since the publication of the Q1 2022 financial report of the bank, which turned out to be perhaps the best among all the largest U.S. banking institutions that have already reported. This may be especially valuable due to the fact that the banking sector as a whole has been consistently declining since February due to ongoing concerns of the investment community about the steadiness of loan portfolios in the face of a potential threat of stagflation, which is increasingly being mentioned by various economists.

A pick-up in lending activities, as well as beating market expectation on both the top and bottom line, including 80 cents of equity per share vs the average Wall Street estimates of just 75 cents and the best-ever result in first quarter revenues of $23.23 billion, helped to attract some dip buying as the Bank of America was trading with an almost 25% discount against the highest price of the beginning of the year. The BAC’s CEO Brian Moynihan encouraged investors with his prediction of a "significant NII [net interest income] improvement through the next several quarters". He also told CNBC’s Jim Cramer on "Mad Money" that spending is healthy despite roaring inflation. U.S. consumers "are a very strong force" and "their loan balances are down, they have plenty of borrowing capacity and they have plenty of spending capacity... In the month of March ’22 versus March ’21, the consumers … spent about 13% more than they did last year, but importantly, in the first couple weeks in April, that numbers moved back to 18%, indicating faster spending in consumers", he added.

The Federal Reserve’s (Fed) plans of rising interest rates fuel expectations of higher banking income when loan rates will also rise for consumers and businesses, but the ultimate consequences of this process are not yet clear due to possible side effects on the economy and therefore on the loan portfolio's stability. Different stocks of the banking sector also have a good chance to resume their bullish trend at some moment thanks to the rising yield of U.S. Treasury bonds, which is now close to 3% for the benchmark 10-year public debt securities. This may increase the total income from bank reserves invested in such assets. However, a wide understanding that yields are still far away from their maximum values and will soon grow much stronger following inflation, gives the demand a strange form of rather postponed or protracted demand, so the market is still very selective in relation to bank stocks and tends to choose the best options.

BAC

226

MetadoroIn-house analytics

21.04.2022

Three Stocks that Could Draw Bullish Attention: Johnson & Johnson

The story of the recent market moves for Johnson & Johnson (J&J) is very similar to that of Procter & Gamble, as are the fundamental drivers behind the growth. The outer difference of the technical character is that the price of J&J has already managed to rewrite its historical highs above $185 per share. J&J's capitalisation growth since January 2021 is about the same at 17.5%. The big difference is that the turnaround of J&J's consumer health care production, which include trademarks like Aveeno, Clean & Clear, Carefree, Dabao, Johnson’s Adult and Johnson’s Baby, Le Petite Marseillais, Listerine, Lubriderm etc, was about $14.6 billion in 2021 while the pharmaceutical branch of the company's sales, including drugs for many different diseases, such as pulmonary hypertension, prostate cancer, attention deficit/hyperactivity disorder (ADHD) and psoriasis, made $52 billion.

The company creates about 0.8% of the world's entire healthcare products, and still has a lot of space to expand. From the geographical point of view, its U.S. related first quarter numbers increased 2.8% while overseas global revenue added 13%. The pharmaceutical branch generated a sales increase of 9.3% while the MedTech segment gave 8.6%. J&J CEOs provided a solid full year’s outlook even after its equity per share of $2.67 showed its best-ever result since the company's foundation in 1886, also mentioning that 2022 should be the 11th consecutive year that the pharmaceuticals business has grown faster than the global market.

J&J still has an anti-COVID vaccine department, which is currently in a most uncertain stance because of both the demand's structural changes and the excessive supply of other shots, like Pfizer and Moderna. Therefore, J&J which previously tried to forecast its sales at $3.5 billion of its single-dose vaccine, now says it can no longer predict the particular income size. The J&J vaccine, which sold at the so-called "not-for-profit" price, provided the company with $457 million of its revenue in the Q3 2022, much less than its peers did. Pfizer’s sales forecast for 2022 is $32 billion of its COVID vaccine developed with BioNTech, while Moderna gave a $21 billion forecast. "The slight miss was really around the COVID-19 vaccine and quite frankly it met our internal expectations. There was just a disconnect in how the Street assumed it was going to play out over the year," Chief Financial Officer Joseph Wolk remarked during a conference call on April 19. Anyway, this is not a key component of J&J’s activities in the financial terms.

JNJ

335

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28.12.2022

The Most Generous Corporates: Capital One

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Perspective Peers of Ethereum: Avalanche