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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.

11.01.2023

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.

04.08.2022

Ethereum’s Most Important Update

ETH is a native token for the Ethereum blockchain and is one of the two most reliable digital assets in the market along with Bitcoin. Ethereum is the first platform that became a hub for thousands of blockchain apps and other digital solutions. The recovery of ETH prices to November 2021 peaks at $4,900 would bring investors 190% profit.

Second layer solutions (Layer2) were introduced to improve stability and effectiveness of the Ethereum blockchain. These are blockchain network add-ons that are added on top of the primary blockchain. The most popular add-ons are Arbitrum, Loopring, Immutable X, and Polygon that have recently partnered with Meta (Facebook owner). In other words, the Ethereum blockchain network has a much broader use than the native blockchain itself.

Ethereum developers promise to release a new Proof-of-Stake (PoS) consensus protocol in late 2022. This protocol will allow miners to stake tokens to a special deposit to mine blocks. Some networks within the Ethereum blockchain have moved to PoS protocol this summer, while others are expected to move to this protocol in the middle of September. This move will allow for the increase of processing capacity of the network to almost 100,000 transactions a second from the existing 30 transactions and lower commissions. This would also allow for ETH to switch to the deflation model when coins are algorithmically burned, while some coins would be removed from circulation as they would be blocked by staking - more than 13 million ETH or 10% of overall coins in circulation are blocked by staking. The problem is that coins are blocked for a long period of time and cannot be sold or exchanged for fiat currency.

08.12.2022

To The Moon Stocks: Toyota

Toyota stocks are trading 20% off their peaks. The company has made a strategic target hybrid, electric and hydrogen vehicles manufacturing. EV makers are now experiencing some issues with the production of batteries. So, prices on new electric vehicles rose sharply. Car makers and battery producers are working together to increase production, but this is not a one time story and may have an effect in a few years.

Electric vehicles are considered to be rather luxury cars, but they are even more expensive now. Tesla has recently raised its prices for some models by $6,000. Whatever the case, EV production is expensive and prices start at $50,000 per car. Hybrids are more affordable as it may cost around $30,000 for Toyota’s popular RAV4 model, while the same model with the combustion engine would cost $27,500. But the Hybrid version can make up to 51% more miles and leave a significantly lower carbon footprint.

Humanity is moving toward electric transport, but now they are considered to be more of a status vehicle. So, hybrids will be in demand for now and that would allow Toyota to raise its revenues along with improving electric vehicle technology.

Toyota has EV / EDITDA ratio at 11.8 while Tesla has it at the sky-high level of 32 with the same comparable business margins. So, TM stocks are a long term perspective bet.

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

16.06.2022

Not Every Tech Stocks are Equally Strong: SAP

SAP stocks have lost 30% since the beginning of 2022. The German tech company develops enterprise software and solutions to manage business operations. For example, one of its services can be used to manage all business travel financial activities and related spending. In other words, it is quite a routine company with a stable and strong cash flow. Once SAP software is installed on a corporate level it is hard to do without it as it is deeply integrated into the business core processes. Moreover, SAP is restructuring its business model around its subscription base and this will allow for cash flows to be even more predictable and balanced through the financial year. Such a model is in favourable to Wall Streel investors.

The war in Ukraine has a 300-million-euro negative effect on SAP business, and it is only a marginal 1% of the overall revenue base for the company, while its dominance in the ERP segment is secure. The revenues added 11% year-on-year to 7.08 euros in Q1 2022. The revenues grew by 6% in Q4 2021.

The company has made some successful M&A deals, acquiring Qualtrics, a cloud-based subscription software platform, that delivered +48% revenue in Q1 2022. This company had a gross margin above 90% in 2021 while SAP’s gross margin was at 70% for the same year.

SAP management promised to triple its cloud-based business by 2025, and boost revenues to 22 billion euros, while operational profit is forecasted to grow by 40% from the current 8.4 billion euros. This is a very extensive growth for the company that has a high P/E ratio at 17. The company may not perform very high growth rates as its younger tech sector peers, but it may certainly recover to new all-time highs in the long-term perspective. However, the sector may require several quarters to recover, and the recovery would be headed by such reliable companies as SAP with a low risk profile.

SAP

1933

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

1640

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

1878

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

852

271

272

273

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11.08.2022

Perspective Peers of Ethereum: Avalanche

AVAUSD

2421

11.01.2023

Advanced Crypto Assets: dYdX