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15.12.2022

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.

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.

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.

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.

MetadoroIn-house analytics

14.07.2022

How Apple is Affecting Qualcomm?

Qualcomm stock prices are highly dependent on the success of Apple’s development of its 5G modems for the Iphone division. This division was recently acquired by Apple from Intel in order to dump chip supplies from Qualcomm that has the monopoly of this type of chip manufacturing. The U.S. Supreme Court gas finally declined Apples bid to continue fighting over two related Qualcomm patents. Qualcomm has estimated that a positive effect will come from an additional $2 of EPS from this trial as the company would receive royalties from Apple even if its smartphones and computers would be equipped only with their own chips. Thus, the decision of Apple to replace Qualcomm CPU chips in Macbooks with their own came as a surprise because Apple would have to pay royalties anyway.

The leading role of Qualcomm in 5G chip manufacturing secures stable cash flows, while Apple is rumored to be failing to create an appropriate replacement for third-party chips, leaving Qualcomm an exclusive chip maker for new Iphone models. Apple forecasted that it would acquire 20% of third-party 5G chips, but now it seems this figure would be close to 100%.

Qualcomm is also benefiting from electric vehicles and self-driving vehicles, as producers secured $16 billion from digital devices that are planned to be produced. According to the company’s management it will boost this business revenue to $3.5 billion a year in the 2024-2026 period. QCOM shares are traded 30% off its peak values with P/E ratio at 9. This ratio is seen to be underestimated as Qualcomm is likely to lower its dependence from Apple as its major client is considering significant progress in many other company divisions, including IoT.

The mid-term target price for QCOM shares is at $150.

QCOM

1021

MetadoroIn-house analytics

07.07.2022

An Undeserved Penalty for AMD

AMD stocks have lost 50% since January 2022 despite elevated demand for semiconductors from data centers and the car manufacturing industry. The major concern of investors was prompted by a statement by the company’s rival Intel that the demand for personal computers is contracting. Intel has lower prices than Alder Lake processors and suspended any recruitments for its production facilities. The company has stopped the construction of new factories as U.S. Congress voted against contributing to the project’s finances. The U.S. Administration had planned to co-fund the project by putting in 30% of $10 billion needed for this project.

How will all this affect AMD? It won’t in anyway. The company continues to hire new employees, and its major market is not personal computers but expensive server equipment. This segment was mostly unaffected by the COVID pandemic. The company had a share of 9% in the segment before the pandemic and it has been increased to 12% in 2022. AMD also increased its share in the smartphone segment to 23% compared to 18% a year ago.

AMD

1098

MetadoroIn-house analytics

07.07.2022

An Undeserved Penalty for Meta

Meta shares (Facebook platform owner) has lost 50% since the beginning of 2022. Facebook and Instagram have dominated the social media industry for a long time with a minor contribution from the Snapchat that was populated mostly by teenagers. A dramatic change came when TikTok emerged - a rapidly expanding short video social media platform. The launch of Instagram Reels and efforts by the U.S. Administration to crack down on TikTok within the U.S. territory were not quite successful in discouraging new Chinese social media expansion. Nevertheless, it is too early for Facebook to be dismissed.

The adult audience spends 38 minutes a day on TikTok, while Facebook and Instagram have these reading at 31 and 30 minutes respectively. The Meta platform is still popular for communication purposes and for posting photos, but not so popular for video content as people prefer to consume videos on other social media platforms. Meanwhile, video content is very important in terms of audience retention. Meta Platform’s CEO Mark Zuckerberg said that people spend over 50% of their time on Facebook using Reels while only 20% of their time is spent on Instagram. New Meta efforts to introduce artificial intelligence algorithms to increase audience involvement in video content may increase Meta revenues even if the platform’s numbers do lack behind that of TikTok. TikTok had one billion active users a month in 2021 with a revenue of $20 billion. Reels have 1.3 billion active users while revenue from reels was recorded at $1.2 billion. Increasing monetization and audience engagement may boost revenues up to $5.6 billion in 2022.

Meta is also likely to decrease financing of it Metaverse as the Reality labs division posted $3 billion losses during the first three months of 2022. The decrease of spending and rising Reels revenues will upgrade price targets for META stocks for the mid-term.