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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.

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: 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.

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.

24.11.2022

Major Risks for Tech Giants: Apple

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.

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/

18.04.2024

Shorting Gold from Solid Resistance

Gold prices dazzled the market with an unbearable shine last week after prices leapt by 4.4% to $2431 per troy ounce. Following the attainment of new all-time highs, they retreated to $2324. The resistance at $2400-2500 per ounce remains formidable and unyielding. A breakthrough in this zone seems highly improbable. The $2400-2450 range appears secure for initiating short trades. My target is $2200-2220 by the end of April. I will set the stop-loss at $2600 per ounce.

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Rafael Quintana Martinez

17.04.2024

LRC is Struggling to Recover Towards $0.300

Loopring (LRC) saw a decline of 1.6% this week, trading at $0.248. This movement can be interpreted as a consolidation phase following a significant 39% drop over the weekend, which occurred amidst heightened military tensions in the Middle East. Despite the consolidation, prices are currently below the support of an ascending channel that has remained intact since October 20, 2023.

For the fifth consecutive day, the altcoin has been closing below this critical support level. To resume its upward trajectory, LRC would need to stage a recovery of at least 50%, reaching $0.300. While such a recovery is plausible, any further delays in reclaiming this level could lead to a deterioration in prices, potentially pushing LRC below $0.200.

Such a scenario would be detrimental for the altcoin, as it would signify a breakdown from its established channel and could trigger significant selling pressure.

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MetadoroIn-house analytics

17.04.2024

The Best Performing US Bank in the Earnings Week: Morgan Stanley

Morgan Stanley (MS) is one of the best performers among the largely drowning stocks of US banks during this earnings season. Indeed, it managed to hold nearly 2.5% of intraday gains at the regular session of April 16, when its Q1 report came out. Yet, the initial surge in share price reached a 4% of height soon after the opening bell, accompanied by fresh profit taking, as no enthusiastic buyers were seen near these slightly elevated levels. Technically, the two latest candlesticks on MS daily charts turned black despite initial price gaps, which is not a positive sign even for the short-term.

A chance for testing multi-month resistance at nearly $95 per share is still here, because Morgan Stanley showed no essential weaknesses in its own forecasts for the rest of the year, unlike other monster financial institutions including JPMorgan Chase and Wells Fargo, which noted last Friday that their interest payments were below expectations, as the whole banking industry needed to be ready to future Federal Reserve's rate cuts. Rising uncertainty over the central bank's outlook for the borrowing costs prompted the benchmark 10-year public bond yields to soar above 4.65% this week, which is good for interest income, but understates the value of the banking balance sheets, based on the same kind of U.S. bonds which the banks had to acquire for safe haven purposes over the years. Now these bonds rather became the source of financial rigidity, or one may call it awkwardness, leading to the lack of free cash the banks may use for their lending business and investment purposes.

As other Wall Street banking pillars, Morgan Stanley beats consensus estimates in terms of its incredible past performance. Higher investment banking segment helped a lot, which also took place in the case of Goldman Sachs, as another rather positive example. "We saw building momentum in investment banking, both in our M&A and underwriting pipelines across corporate and financial sponsor clients," Morgan Stanley CEO Ted Pick commented, adding that a "multi-year M&A cycle" is to be launched now, and this period may last 3 to 5 years. Geopolitical risks may even create incentive for more deals, he said, when businesses are shifting their international footprint partly because of the two major conflicts. Morgan Stanley also noted it is still bullish on the U.S. economy.

Q1 2024 was the best quarter for MS since April 2022, as the banking group announced its EPS (equity per share) of $2.02 vs consensus estimates of $1.66. A more than 20% surplus compared to average forecasts, yet a rising wave on charts is very modest. Logically, the situation around other banking stocks with worse reported (and especially forecasted) numbers may be even less enjoyable for the bullish camp. We clearly understand that other large banks are usually more dependent on their customers' well-being, rather than investment projects. This is why the Bank of America lost 3.5% on the same day, despite its EPS was also more than 9% above consensus estimates, yet this has not bailed it out to escape from price falling. Competition in high yield from private credit and leveraged loan markets were marked even in the conference call by Morgan Stanley.

The first quarter was good for most U.S. banks, yet the future prospects scared the crowds of investors. If so, they are ready to move down on the stocks of many other big banks and are ready to be no more than just patient in the best cases like Morgan Stanley and Goldman Sachs. There is a great distance between the road of tolerance to potential headwinds and the road of enthusiastic buying on the hot heels of earnings reports. So, other segments seem preferable compared to any banking stocks.

MetadoroIn-house analytics

17.04.2024

Johnson & Johnson Failed To Reverse the Downtrend

Johnson and Johnson (JNJ) was the first member of the health consumer staples club to report in the spring on Wall Street. As a large producer of essential hygiene products, personal care items and services, it could reap the benefits of its unique positioning on markets as most people are addictive in their nature to the same kind of skin health brands and baby medications. JNJ is also one of the world leaders in providing prescription and over-the-counter drugs, surgical equipment and orthopaedic implants, which are difficult to be replaced by anything else. Nevertheless, the stock lost 2.15% of their value on April 16. As a result, a smoothly descending channel on monthly charts since the beginning of 2023 still stands intact.

Nominally, the Q1 growth numbers were even better than expected, with EPS (equity per share) coming out at $2.71 vs $2.64 of consensus projections. Yet, there is almost no increase in profit in absolute terms over the past two years, which means the medtech giant is earning less if adjusted for inflation effects. Therefore, even though J&J performance in the segment of innovative medicine could be called impressive, as it contributed to 63.5% of the company's sales amounting to $13.56 billion against preliminary estimates of $13.47 billion, most large investment houses were not satisfied. Some of them just preferred to moderately cut their mid-term targets for the company's price, in the range of $5 to $10 per share to the current levels around $145, citing a lacklustre in forward guidance parameters for the rest of 2024, foreign exchange headwinds (a reason why international sales declined by 0.3% Y0Y) and other factors like a potential loss of exclusivity for Stelara drug brand, which was designed to treat psoriasis, related arthritis and ulcerative colitis.

Johnson & Johnson sees its adjusted operational EPS to range between $10.60 and $10.75 for 2024, with "Innovative Medicine sales growth is expected to be stronger in the first half of the year". Does it mean that the second part of 2024 would experience a slowdown? Again, the Vision Care business of the giant has narrowed due to "changes in distributor inventory". JNJ's CEOs commented on the strategic acquisition of Shockwave Medical and Ambrx to strengthen the company's cardiovascular and oncology portfolios, which could be important but still questionable from the point of view of future financial return. The session of questions and answers during the conference call also included the multiple myeloma franchises and litigation related to some patents, while the company's representatives affirmed confidence in their solid position. The company's future prospect looks rather optimistic, yet the share price dynamics based on mentioned challenges suggests that prematurely buying of JNJ stock at any levels well above the lows of April 2020 may be unreasonable, if only no fresh fundamental drivers appear.

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