News and analysis
Salesforce is a leader of the CRM systems segment. Its stocks are trading at 47% off their peaks. The company continues to post strong business growth despite being in the market for a long time. It has strong financials and abilities to reward its investors. The last quarter revenue reported by Salesforce rose by 14% year-on-year to $7.8 billion, while its operational margin grew by 290 basis points to 22.7%. This is quite impressive as the company suffered because the strong Dollar undermined its revenues outside the U.S. The company’s management has also approved a buy-back program for $1.7 billion.
Management estimates the company will increase its operational margin to 25% in the next couple of years and boost its revenues to $31 billion during this fiscal year, or by 17%. Salesforce announced the cut of 10% of its staff in order to increase profitability. This is quite a common strategy in the tech sector to keep business expansion going.
The company is also active in the M&A market. The last of its acquisitions is the Slack platform that has posted revenues up by 46% during the reporting quarter. Thus, investors may have a wide variety of outstanding products as they buy CRM stocks.
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.
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.
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.
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.
The Graph (GRT) rose this week by 1.0 to $0.1490, getting ready for a breakthrough of the resistance at $0.1500. This move is supported by rising Bitcoin prices that have added 3.0% and are making attempt to break through the resistance of the ascending channel at $38,000 per coin. The graph project itself is developing rapidly. It has recently migrated from Ethereum to layer 2 scaling solution Arbitrum. The team announced new services in the network as part of the "New Era" roadmap. All this may result in higher GRT prices that may move to $0.2000 if the token could pass the resistance at $0.1500.
Coin 98 (CNE) prices added 0.3% to $0.190 this week. This is not much, but essential gains considering the end of the spot Bitcoin-ETF driven rally in the crypto market. CNE is hovering within $0.170-0.200 range and gained 14% during last two weeks, well above Bitcoin that added 5.5% for the same period. A handsome result on nice internal metrics. Network activity, development activity, social media activity are all at pretty high levels. Technically, prices are limited from the upside with the resistance at $0.210, which is 7.5% further up. Such a climb is not a hassle for CNE. But it will require a breakthrough above this level to continue up towards $0.250.
I prefer to book nearly two thirds of my profit on Brent oil futures, which I initially bought close at $80 per barrel on November 8. I took a profit at $84.5/bbl at some point today, which is a fair income to properly take advantage of the chance. Crude price volatility became too high during this month, while uncertainty is still growing ahead of a meeting of exporting countries and also based on somewhat weaker than expected Chinese factory data. The Organization of the Petroleum Exporting Countries and its allies, an informal group known as OPEC+, was rescheduled to meet later on November 30, delayed from the last weekend. Yet, energy ministers still have a potential to agree to a new output targets, including a possibility of extra production cuts or just prolongation and nominal strengthening of control on previous cuts. Therefore, unnecessary risk does not seem reasonable for me, as I feel better to have two fowls in hand than all the three flying. Well, in case the third fowl would fly higher or fall from its current highs instead, one would have more than enough time and space to react.
Chances for a Christmas rally this December are high. Anyway, I want to trade it safe with Johnson & Johnson (JNJ) stocks that are going up traditionally with the rally. I like that JNJ prices are at the lows of the ascending channel, so I have a more chances for a rebound. I will open long trade at $152 with a maximum target at $170-175 per share, which is also the resistance of this channel. The stop-loss would be placed at $140.