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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.

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.

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: 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

11.07.2024

Applied Materials Fired at Our $250 Target

In the third decade of May, we have attempted to justify fundamentals under a potential rise of Applied Materials (AMAT) share price to the target around $250. Conclusions were based on the company’s beating expert pool estimates in both revenue and profit lines of its quarterly financial numbers, the company's own better projections and AMAT's universal integration to many manufacturing processes of Global Foundries, Huawei, Taiwan Semiconductor etc. Most of these chip production chains continued to grow fast. And so, AMAT shares already made it all the way from a $220 area, less than two month ago, to $255.

Some investment houses responded that premium valuations for AMAT and some other semiconductor equipment stocks are quite normal at current conditions and may lead to extra growth. The segment is up 46% year-to-date, exceeding the SOX index, Raymond James analysts wrote in a client's note. They are expecting "at least high-single digit growth in 2025/2026", citing "cyclical recovery, long-term demand for next-generation artificial intelligence (Gen AI), geopolitical tailwinds, and increased competition in the foundry space", also mentioning recent capex announcements by Micron Technology (MU) as a sign of "industry-wide investments". The group raised its price targets for Applied Materials to $275 from $235. MU price added 4% during the last trading day, widening its summer price rebound, with NVIDIA and AMD leaders rapidly gathering fresh bullish momentum as well.

We also believe that distributing money with a gradual movement of stop profit orders to levels 3-5% lower than the current ones and retaining at least half of previously purchased stake in AMAT looks an intuitively better solution than immediately closing highly profitable positions in the stock.

AMAT

Bash

11.07.2024

All Set to More Record Highs

Taiwan Semiconductor's (TSM) report this week added another bright chapter in the global AI history. The world's very first dedicated semiconductor foundry and now the exclusive supplier of NVidia's and Apple's most advanced chips announced its revenue for June reached 207.87 billion in Taiwan’s Dollars (roughly $6.4 billion). This marked a substantial growth of nearly 33% YoY, while the company's revenue number for the last 6 months (January through June) has also been 28% better compared to the similar period in 2023. Both figures were above average analyst projections, so that TSM shares listed on NYSE quickly rose by more than 3.5% on July 10, adding one more percentage point at the pre-market on July 11.

US-Sino trade war threats surrounded the island's economy for many years, and so I personally keep myself aside from direct investments into Taiwan stocks. Meanwhile, this prominent chipmaker's shares are not only outperforming the US broad market barometer but are serving as a bellwether for the further stage of the NVidia-led AI rally. For example, some of my long-term favourites like Micron Technology (MU) and Advanced Micro Devices (AMD) already added about 4% to their corresponding market value in sync with TSM's extra step up.

You may say that AMD jump was supported by the acquisition deal of Silo AI, which brought AMD's a reputable European team in open-source, and multilingual large language models. That's true but this bare fact alone was hardly a sufficient reason for many investment houses to instantly raise their target prices for AMD to $200 or above. By the way, the AI behemoth Microsoft added more than 1.5% the same day, while the NVidia flagship suddenly put 2.63% in its piggy bank. Well, this is another stage of the AI trend, which is hard to stop. The S&P 500 (US 500) just closed above 5,600 points for the first time.

It is all obviously coming to more record highs in NVidia, along with the whole circle of its satellite stocks like MU, AVGO, QCOM etc. A perfect moment to swear an oath of holding the entire AI-based part of the stock portfolio at least for two or three more months.

TSM

Rafael Quintana Martinez

Money Manager de alto rendimiento, con una sólida formación académica, profesional y de campo. Más de 9 años de experiencia especializada en el comercio de mercados financieros internacionales. La devoción, la fiabilidad, la responsabilidad y la ética impulsan mi vida. Actualmente me desempeño como Analista Senior para Metadoro. https://metadoro.com/es https://mx.investing.com/members/contributors/235587671/ https://es.tradingview.com/chart/EURUSD/rE9gVips/

10.07.2024

Dash is Looking to the Upside

Dash (DSH) is adding 6.5% to $23.77 this week, though it reached a higher point at $24.37 on July 9. The altcoin has fully recovered from its 20% decline experienced in early July. Currently, Dash prices are nearing the trend resistance at $24.00-25.00. If prices manage to surpass this resistance, they could continue to rise towards $30.00.

There are minor internal developments to support Dash. Its price movement is likely to align with the broader market trend. If Bitcoin (BTC) climbs above $60,000, DSH could also rise above the $25.00 level.

DSHUSD

MetadoroIn-house analytics

09.07.2024

Wall Street Sceptics Are Getting Rare

U.S. Federal Reserve (Fed) chair Jerome Powell is heading to Capitol Hill today for a semi-annual congressional testimony. Only one week ago, Mr Powell noted he and his colleagues need additional data to be sure that inflation pressure has already laid down on the track to the central bank's notorious 2% target. So, similar comments are expected from the Fed's Chair. Meanwhile, the FedWatch Tool on Chicago Mercantile Exchange (CME) shows that more than 70% of private traders are betting on the launch of interest rate cutting already on September 18, with less than 15% feeling the Fed may keep rates unchanged even after its next meeting in early November. The cautious rhetoric of Fed officials does not bother the Wall Street optimists as most of them are inclined to attribute uncertain words to central bankers' intention of just doing no harm to price dynamics ahead of proper time. Yet, most investors hope that the Fed will do what's necessary in a crucial election year to avoid even a slightest hint, which could potentially derail the current market rally, as neither political side would like to see the S&P 500 surprisingly tumbling. In addition, Trump's chances of coming back to the White House look high. During his previous term, the ex-president persistently vowed for low or better extremely low, interest rates for the sake of economic growth. If so, Fed members would obviously like to take their first step on this path with their own hands, and not upon a potential request from the White House.

There is little doubt among Wall Street legends, as a herd of bulls is marching ahead. Strategists at Oppenheimer, a New York City based brokerage and investment bank, which was founded in 1950, raised its year-end target price for the S&P 500 broad market barometer to 5,900, up from 5,500. Analysts mentioned economic "resilience, driven by the Fed’s cautious monetary policy", and also increased their average earnings projection in 2024 for the S&P 500 to $255, up from $250, citing an "innovation cycle that could benefit all 11 sectors of the S&P 500", as it shows signs of "being both cyclical and secular coupled with cross generational demographic needs that suggest a shift in mindset regarding equities".

To put it simply, every Dick, Tom and Harry could say the cash is burning their hands while assets are not. Constant desire to save each bundle of Dollars or Euros from the fire of inflation is one driver, while the generative AI (artificial intelligence) based hope for investigating consumer data to raise corporate profits from smart offering goods and services is another one. This is probably not the last revision for the S&P 500 target by various investment houses.

As to the camp of sceptics, it looks relatively rare and divided. Morgan Stanley's Mike Wilson said in an interview with Bloomberg that "the chance of a 10% correction is highly likely sometime between now and the election", only adding that the "third quarter is "going to be choppy", while he estimated the probability of "stock prices closing the year higher than they are now" at 20% to 25%, with "your likelihood of upside from now until year-end is very low, much lower than normal", because the rally drove the S&P 500 to a 17% increase this year following its 24% surge in 2023. Yet, Morgan Stanley's analyst, who was calling for a bigger market correction since last Christmas, now has nothing against an opportunity of new price highs in nearest months before predicted correction. He also added that he "isn't particularly concerned about a pullback", but instead, it could create more opportunities for investors to buy in since current valuations are "unexciting".

US500