News and analysis
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.
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.
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.
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.
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.