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Top 10 Undervalued Stocks To Buy For 2021

What happened

VirnetX Holding (NYSEMKT:VHC) stock gained 19.4% in February, according to data from S&P Global Market Intelligence. The software and intellectual-property company scored a big legal win against Apple (NASDAQ:AAPL) in January, as an appeals court shut down the tech giant’s challenge to a previous ruling that found it had infringed on patents held by VirnetX. The decision sent VirnetX shares skyrocketing, and the positive momentum continued last month.

VHC data by YCharts.

The appellate court judge presiding over the matter reaffirmed the district judge’s initial ruling finding Apple liable for $439.8 million in damages stemming from patent infringement. VirnetX stock gained 112.5% in January, with most of the stock’s movement related to the case, and the gains rolled into February and March.

Image source: Getty Images.

Top 10 Undervalued Stocks To Buy For 2021: Southern Company (SO)

Southern Company was incorporated under the laws of Delaware on November 9, 1945. Southern Company is registered and qualified to do business under the laws of Georgia and is qualified to do business as a foreign corporation under the laws of Alabama. Southern Company owns all of the outstanding common stock of Alabama Power, Georgia Power, Gulf Power, and Mississippi Power, each of which is an operating public utility company. The traditional operating companies supply electric service in the states of Alabama, Georgia, Florida, and Mississippi. More particular information relating to each of the traditional operating companies is as follows: Alabama Power is a corporation organized under the laws of the State of Alabama on November 10, 1927, by the consolidation of a predecessor Alabama Power Company, Gulf Electric Company, and Houston Power Company. The predecessor Alabama Power Company had been in continuous existence since its incorporation in 1906.   Advisors’ Opinion:

  • [By ]

    4. Southern Company (NYSE: SO) — Southern is one of the nation’s largest power generators, with a portfolio of wind, solar, hydro, nuclear, and natural gas power plants that have 46,000 megawatts of capacity. The company also provides electricity and gas utility service to 9 million residential and business customers.

  • [By ]

    4. Southern Company (NYSE: SO) — Southern is one of the nation’s largest power generators, with a portfolio of wind, solar, hydro, nuclear, and natural gas power plants that have 46,000 megawatts of capacity. The company also provides electricity and gas utility service to 9 million residential and business customers.

Top 10 Undervalued Stocks To Buy For 2021: Entergy Louisiana, Inc.(ELA)

Eland Oil & Gas PLC is focused on building and developing a portfolio of producing upstream oil and gas assets in West Africa. The Company operates in exploration and production of oil and gas reserves in Nigeria segment. The Company’s core assets are the OML 40 license and the Ubima field, both onshore Nigeria. The OML 40 license is situated within the Niger Delta, approximately 75 kilometers northwest of Warri and covers an area of over 498 square kilometers. OML 40 includes Polobo, Abiala South, Opuama, Abiala North, Adagbassa Creek and Ugbo. OML 40’s booked reserves are found in Opuama in the western, and Gbetiokun in the eastern, part of the license. The license area of Ubima Field is approximately 65 square kilometers, located onshore in the northern part of Rivers State and has been carved out of OML 17, which is operated by Shell Petroleum Development Company. Advisors’ Opinion:

  • [By Shane Hupp]

    Elastos (CURRENCY:ELA) traded down 5.4% against the US dollar during the twenty-four hour period ending at 18:00 PM E.T. on September 8th. Elastos has a total market cap of $60.79 million and approximately $1.07 million worth of Elastos was traded on exchanges in the last day. One Elastos coin can now be bought for $7.56 or 0.00121910 BTC on exchanges including Bit-Z, BCEX, CoinEgg and Huobi. Over the last week, Elastos has traded down 26.7% against the US dollar.

  • [By Ethan Ryder]

    Elastos (CURRENCY:ELA) traded 2.8% higher against the dollar during the 1-day period ending at 16:00 PM E.T. on August 31st. One Elastos coin can currently be purchased for $9.84 or 0.00139878 BTC on cryptocurrency exchanges including LBank, Kucoin, Bit-Z and BCEX. Elastos has a total market cap of $78.05 million and $2.90 million worth of Elastos was traded on exchanges in the last day. Over the last seven days, Elastos has traded down 4.8% against the dollar.

  • [By Ethan Ryder]

    Elastos (CURRENCY:ELA) traded down 2.3% against the dollar during the 1-day period ending at 20:00 PM E.T. on June 19th. Elastos has a market capitalization of $150.76 million and approximately $6.03 million worth of Elastos was traded on exchanges in the last day. In the last seven days, Elastos has traded 6.9% lower against the dollar. One Elastos coin can currently be bought for $28.91 or 0.00428971 BTC on major exchanges including Huobi and BCEX.

Top 10 Undervalued Stocks To Buy For 2021: Sony Corp Ord(SNE)

Sony Corporation designs, develops, manufactures, and sells electronic equipment, instruments, and devices for consumer, professional, and industrial markets worldwide. The company offers consumer products and devices, including televisions, video cameras, compact digital cameras and interchangeable single-lens cameras, Blu-ray Disc players/recorders, DVD-video players/recorders, home theaters and audio systems, and portable audio and car audio products. It also provides charged coupled devices, complementary metal-oxide semiconductor image sensors, system LSIs, small- and medium-sized LCD panels, and other semiconductors; and components, such as batteries, optical disk drives, chemical products, audio/video/data recording media, storage media, and optical pickups. In addition, the company develops, produces, markets, and distributes games, such as PlayStation3, PlayStation Portable, and PlayStation 2 hardware and related software; and PCs and flash memory digital audio pl ayers, as well as manufactures broadcast- and professional-use products, Blu-ray discs, DVDs, and CD discs. Further, it produces and distributes motion pictures and television programs, and home entertainment; creates and distributes digital content; operates television networks and studio facilities; and develops entertainment products, services, and technologies. Additionally, the company engages in the music publishing business, as well as provision of various financial services, including insurance, savings products, loans, and credit financing services; and a network service business and an advertising agency business. It also involves in research, development, design, production, marketing, sales, distribution, and servicing mobile phones, accessories, services, and applications. The company was formerly known as Tokyo Tsushin Kogyo Kabushiki Kaisha and changed its name to Sony Corporation in 1958. Sony Corporation was founded in 1946 and is based in Tokyo, Japan.

Advisors’ Opinion:

  • [By Stephen Lovely]

    The video game industry has relied on more or less the same business model ever since games moved from arcades to homes. Video game enthusiasts buy consoles like Sony’s (NYSE:SNE) PlayStation 4 or Microsoft’s (NASDAQ:MSFT) Xbox One (or a gaming-ready computer) and then buy individual games. There have been minor changes over time — like the arrival of digital downloads and marketplaces like the PlayStation Store and Steam — but until recently, games were typically purchased individually. It won’t be like that for much longer. In fact, the first subscription streaming services for video games have already arrived.

  • [By Stephen Lovely]

    Subscription streaming services are starting to look like the future of video games.Microsoft (NASDAQ: MSFT) and Sony (NYSE:SNE) have subscription video game streaming services that work on their consoles. Nvidia (NASDAQ: NVDA) has a streaming service that works on PCs and on its Nvidia Shield TV streaming service. Tech giants Amazon (NASDAQ: AMZN), Apple (NASDAQ: AAPL), and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) are all reportedly considering or developing subscription video game streaming services.

Top 10 Undervalued Stocks To Buy For 2021: Integra LifeSciences Holdings Corporation(IART)

Integra LifeSciences Holdings Corporation develops, manufactures, and markets surgical implants and medical instruments for use in neurosurgery, extremity reconstruction, orthopedics, and general surgery. The company operates in five segments: U.S. Neurosurgery; U.S. Extremities; U.S. Instruments; U.S. Spine and Other; and International. Its orthopedics products include specialty metal implants for surgery of the extremities, shoulder, and spine; dermal regeneration products and tissue-engineered wound dressings; and nerve and tendon repair products. The company also offers neurosurgery and critical care products, including tissue ablation equipment, dural repair products, cerebral spinal fluid management devices, intracranial monitoring equipment, and cranial stabilization equipment. In addition, it provides extremity products, including bone and joint fixation devices, implants and instruments for osteoarthritis, rheumatoid arthritis, wrist and shoulder arthroplasty, carpal tunnel syndrome, and cubital tunnel syndrome, as well as regenerative medicine devices for the treatment of acute and chronic wounds, peripheral nerve repair and protection and tendon repair, and bone graft substitutes. Further, the company offers instruments products, such as specialty and general surgical and dental instruments; and surgical lighting for hospitals, outpatient surgery centers, and physician, veterinarian, and dental practices. Integra LifeSciences Holdings Corporation sells its products directly through various sales forces and other distribution channels in the United States and internationally. The company was founded in 1989 and is headquartered in Plainsboro, New Jersey.

Advisors’ Opinion:

  • [By Motley Fool Transcribers]

    Integra Lifesciences Holdings Corp (NASDAQ:IART)Q42018 Earnings Conference CallFeb. 21, 2019, 8:30 a.m. ET

    Prepared Remarks Questions and Answers Call Participants
    Prepared Remarks:


  • [By Ethan Ryder]

    Get a free copy of the Zacks research report on Integra Lifesciences (IART)

    For more information about research offerings from Zacks Investment Research, visit Zacks.com

  • [By Ethan Ryder]

    Anika Therapeutics (NASDAQ:ANIK) and Integra Lifesciences (NASDAQ:IART) are both medical companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, dividends, risk, earnings, institutional ownership, analyst recommendations and valuation.

Top 10 Undervalued Stocks To Buy For 2021: Just Hold Your Nose and Dive Into Under Armour Inc (UAA)

Down more than 37% since its September-2015 peak (and still within easy reach of new 52-week lows), it would be easy to liken a purchase of Under Armour Inc (NYSE:UAA, NYSE:UA) to catching a falling knife — you generally don’t want to do it. Bolstering the bearish case against Under Armour stock is the fact that even with the steep selloff, UAA shares are still priced at a frothy trailing P/E of 64 [the old ‘UA’ ticker now represents the class C shares; both are still investable].

UAA: Just Hold Your Nose and Dive Into Under Armour StockSource: SandyDover via Flickr (Modified)

There simply aren’t too many stocks the market is willing to value at that level for very long.

And yet, if there was ever an exception to the market’s unspoken limits on price multiples, Under Armour stock is it. As uncomfortable as it may feel to do so, investors may just want to shut their eyes, hold their nose, and dive in.

What Went Wrong fo! r UAA Stock?

For those who’ve kept tabs on Under Armour stock for a while, they’ll know the past year or so has been uncharacteristically disappointing. UAA stock — while it was still UA — advanced 2,500% between March of 2009 and late 2015, entirely in step with revenue growth.

It was a pace that was simply unsustainable though… revenue, as well as the stock’s rally.

In its recently completed third quarter, year-over-year sales growth of 22% was, amazingly enough, relatively disappointing compared to the 28% growth driven in the same quarter a year earlier. Q2’s sales growth pace fell similarly. In fact, that slowing pace has been the norm for roughly a year now.

5 Stocks to Buy for December

It’s not apt to get better anytime soon either. In October, the company warned its sales-growth rate would fall to the lower 20%’s over the course of the next couple of years.

Perhaps worse, margins have begun to dwindle, as the company finds itself spending more and more, but getting less bang for its buck.

This is admittedly a tougher metric to gauge. Per-share profits for Under Armour stock tend to vary widely from one quarter to the next, with the company willing to spend big on team-based sponsorships and celebrity-based endorsements at the drop of a hat, usually in step with a rise to fame rather than on a cyclical basis.

When one takes a step back and looks at the long-term numbers though, it becomes clear that Under Armour has prioritized growth over profits, paying small fortunes (and sometimes large fortunes) to affiliate with high-profile names like Steph Curry and Jordan Spieth.

CEO Kevin Plank says it’s worth the all cost. The persistent weakness from UA and UAA stock, though, says the market isn’t so sure.

The Future Looks Brighter for Under Armour

There was a method to the madness this whole time. It just took Under Armour far longer to reap what it had been sowing for the pas! t several! years … momentum, and a solid foundation. They’re certainly relic ideas in the modern market, where most investors are looking for results in a matter of weeks rather than a matter of years. It has been worth the wait — and expense — for Under Armour though.

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Case in point: Under Armour was recently awarded a 10-year contract by Major League Baseball to provide uniforms for its teams, beginning in 2020.

At 40 players on the expanded roster for 30 MLB teams, with different home and away-game jerseys, there’s a little money to be made with the deal. The real value of the contract, however, is the power of putting the Under Armour logo on the front of those jerseys, providing a constant stream of subtle but powerful advertising. Apparel licensing rights will provide the bulk of subsequent payoff. It’s unlikely Under Armour would have been able to sway Major League Baseball, however, if it hadn’t become the behemoth it has become over the course of the past few years.

As Fortune‘s John Kell explained it:

“As Under Armour gets bigger, it makes it tougher for the company to boost sales at a pace that investors were used to. But there’s one advantage that investors seem to be ignoring. The bigger business means Under Armour can compete for key contracts with sports leagues, individual athletes, and universities. Those deals are important for a brand to become more top of mind with shoppers.”

From here, life actually gets a little easier and relatively less expensive for Under Armour.

Bottom Line for Under Armour Stock

The next new frontier for Under Armour is its direct-to-consumer business, or as it’s more commonly called, e-commerce. The company drove $408 million worth of internet-based sales during the third quarter, or roughly 28% of Under Armour’s total revenue for Q3. That’s actually relatively more e-commerce than most brands are able to drive for themselves, b! ut Under ! Armour wants more.

It’s also getting more. Direct-to-consumer sales were up 29% last quarter, marking another improvement in its e-commerce growth pace even as the pace of sales through brick-and-mortar locales continues to slow.

It’s a key solution to the apparel maker’s problem of thinning margins. Online, Under Armour sells at retail prices rather than wholesale prices.

Whatever the case, e-commerce is another facet that simply wouldn’t have worked quite as well were Under Armour not the readily recognizable name it is now.

Why Micron Technology, Inc. (MU) Stock Is Headed for Blue Skies

To be fair, UAA/UA still aren’t even close to being contenders for any value awards. This is a growth story, and Under Armour stock is priced as a growth stock. There is growth ahead though, and perhaps of more interest to shareholders, there’s now enough scale that margins could take a turn towards respectability again without crimping the company’s capacity to pay for those much-needed endorsements and sponsorships.

Think of it as a coming-of-age story, if you’re truly in for the long run. Just know it’s an idea that isn’t reflected in most analysts’ opinion.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.

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Advisors’ Opinion:

  • [By ]

    Under Armour (NYSE: UAA), a branded performance apparel, footwear, and accessories company, faces competition in most categories. But this is a company where annual profit growth is expected to exceed 28% — and its subscription box experiment is likely to contribute.

  • [By Jim Robertson]

    The Company had also cut back on the space given to Under Armour (NYSE: UAA) with the Chairman & CEO repeatedly blaming them during multiple earnings calls last year for negatively impacting sales; but he noted in the Q&A: we’re enthusiastic about our Under Armour business going forward. But it will remain in the floor space that it has today Under Armour will turnaround in our stores.

  • [By Jeremy Bowman]

    Over the past five years, Nike has been the clear winner as Disney has struggled with the transition to streaming. Nike separated itself from Disney recently when it returned to steady growth in key markets and rivalUnder Armour(NYSE:UA) (NYSE:UAA)began falling apart.

Top 10 Undervalued Stocks To Buy For 2021: Home Depot, Inc. (HD)

The Home Depot, Inc. operates as a home improvement retailer. It operates The Home Depot stores that sell various building materials, home improvement products, and lawn and garden products, as well as provide installation, home maintenance, and professional service programs to do-it-yourself, do-it-for-me (DIFM), and professional customers. The company offers installation programs that include flooring, cabinets, countertops, water heaters, and sheds; and professional installation in various categories sold through its in-home sales programs, such as roofing, siding, windows, cabinet refacing, furnaces, and central air systems, as well as acts as a contractor to provide installation services to its DIFM customers through third-party installers. It primarily serves home owners; and renovators/remodelers, general contractors, repairmen, installers, small business owners, and tradesmen. The company also sells its products through online. As of December 31, 2015, it had 2,274 stores, including 1,977 in the United States, 182 in Canada, and 115 in Mexico. The Home Depot, Inc. was founded in 1978 and is based in Atlanta, Georgia.

Advisors’ Opinion:

  • [By ]

    For example, Home Depot (NYSE: HD) is handing out $5.44 in yearly dividends, supported by $7.29 in annual earnings. That’s a payout ratio of 74% ($5.44/$7.29). Inverse these two figures, and you get a coverage ratio of 134% ($7.29/$5.44), meaning the company rakes in $1.34 of net income for every $1.00 it pays out.

  • [By Stephan Byrd]

    Traders sold shares of Home Depot Inc (NYSE:HD) on strength during trading hours on Friday after an insider sold shares in the company. $155.17 million flowed into the stock on the tick-up and $695.74 million flowed out of the stock on the tick-down, for a money net flow of $540.57 million out of the stock. Of all equities tracked, Home Depot had the 0th highest net out-flow for the day. Home Depot traded up $0.62 for the day and closed at $182.23Specifically, EVP Edward P. Decker sold 23,744 shares of the company’s stock in a transaction that occurred on Tuesday, March 12th. The shares were sold at an average price of $182.93, for a total transaction of $4,343,489.92. Following the completion of the sale, the executive vice president now owns 86,813 shares of the company’s stock, valued at approximately $15,880,702.09. The sale was disclosed in a legal filing with the SEC, which is accessible through this hyperlink. Also, EVP Ann Marie Campbell sold 5,450 shares of the company’s stock in a transaction that occurred on Tuesday, March 5th. The stock was sold at an average price of $184.67, for a total transaction of $1,006,451.50. Following the sale, the executive vice president now directly owns 51,030 shares of the company’s stock, valued at approximately $9,423,710.10. The disclosure for this sale can be found here. Insiders have sold 41,194 shares of company stock valued at $7,553,141 in the last ninety days. 0.25% of the stock is currently owned by company insiders.

  • [By Shane Hupp]

    Home Depot Inc (NYSE:HD) EVP Edward P. Decker sold 23,744 shares of the company’s stock in a transaction that occurred on Tuesday, March 12th. The shares were sold at an average price of $182.93, for a total value of $4,343,489.92. Following the completion of the transaction, the executive vice president now directly owns 86,813 shares in the company, valued at $15,880,702.09. The sale was disclosed in a filing with the SEC, which can be accessed through this link.

Top 10 Undervalued Stocks To Buy For 2021: Sherwin-Williams Company (SHW)

The Sherwin-Williams Company, founded in 1866 and incorporated in Ohio in 1884, is engaged in the development, manufacture, distribution and sale of paint, coatings and related products to professional, industrial, commercial and retail customers primarily in North and South America with additional operations in the Caribbean region, Europe and Asia. Our principal executive offices are located at 101 West Prospect Avenue, Cleveland, Ohio 44115-1075, telephone (216) 566-2000. As used in this report, the terms “Sherwin-Williams,” “Company,” “we” and “our” mean The Sherwin-Williams Company and its consolidated subsidiaries unless the context indicates otherwise.   Advisors’ Opinion:

  • [By Joseph Griffin]

    NumerixS Investment Technologies Inc trimmed its position in shares of Sherwin-Williams Co (NYSE:SHW) by 85.4% in the 4th quarter, according to the company in its most recent Form 13F filing with the Securities and Exchange Commission. The institutional investor owned 600 shares of the specialty chemicals company’s stock after selling 3,500 shares during the period. NumerixS Investment Technologies Inc’s holdings in Sherwin-Williams were worth $234,000 as of its most recent filing with the Securities and Exchange Commission.

  • [By Motley Fool Transcribing]

    Sherwin-Williams (NYSE:SHW) Q4 2018 Earnings Conference CallJan. 31, 2019 11:00 a.m. ET

    Prepared Remarks Questions and Answers Call Participants
    Prepared Remarks:


Top 10 Undervalued Stocks To Buy For 2021: CompX International Inc.(CIX)

CompX International Inc., incorporated on August 4, 1993, is a manufacturer of security products used in the recreational transportation, postal, office and institutional furniture, cabinetry, tool storage, healthcare and other industries. The Company is a manufacturer of stainless steel exhaust systems, gauges and throttle controls for the recreational marine industry. It operates through two business segments: Security Products and Marine Components. Its security products are offered under the brand names, CompX Security Products, National Cabinet Lock, Fort Lock, Timberline Lock, Chicago Lock, STOCK LOCKS, KeSet, TuBar, StealthLock, ACE, ACE II, CompX eLock, Lockview, System 64, SlamCAM, RegulatoR, CompXpress and GEM. The Company provides marine components under the CompX Marine, Custom Marine, Livorsi Marine, Livorsi II Marine, CMI Industrial, Custom Marine Stainless Exhaust, The #1 Choice in Performance Boating, Mega Rim, Race Rim, Vantage View and GEN-X brands.

Security Products

The Company’s Security Products segment, with one manufacturing facility in Mauldin, South Carolina and one in Grayslake, Illinois, which is shared with Marine Components segment, manufactures mechanical and electrical cabinet locks and other locking mechanisms used in a range of applications, including ignition systems, mailboxes, file cabinets, desk drawers, tool storage cabinets, vending and gaming machines, high security medical cabinetry, electrical circuit panels, storage compartments and gas station security. The Company is engaged in the manufacture and sale of cabinet locks and other locking mechanisms. The Company’s security products include disc tumbler locks; pin tumbler locking mechanisms, including KeSet, System 64 and TuBar; and CompX eLock and StealthLock electronic locks, which provide stand-alone or networked security and audit trail capability for drug storage and other valuables through the use of a proximity card, magnetic stripe or keypad credentials. The Company also has a! product line suitable for customers, which is offered through a North American distribution network to locksmith distributors and smaller original equipment manufacturers (OEMs) through the STOCK LOCKS distribution program.

Marine Components

The Company’s Marine Components segment manufactures and distributes stainless steel exhaust components, gauges, throttle controls, trim tabs, hardware and accessories primarily for performance and ski/wakeboard boats. The Company’s specialty marine component products are high precision components designed to operate within tight tolerances in the marine environment. The marine components include original equipment and aftermarket stainless steel exhaust headers, exhaust pipes, mufflers and other exhaust components; gauges, such as global positioning system (GPS) speedometers and tachometers; mechanical and electronic controls and throttles; steering wheels and other billet aluminum accessories, and dash panels, LED lighting, wire harnesses and other accessories.

Advisors’ Opinion:

  • [By Joseph Griffin]

    Shares of CI Financial Corp (TSE:CIX) have been given an average recommendation of “Hold” by the eight ratings firms that are presently covering the company, Marketbeat Ratings reports. One investment analyst has rated the stock with a sell recommendation and three have given a hold recommendation to the company. The average 12-month target price among brokerages that have covered the stock in the last year is C$25.75.

  • [By Shane Hupp]

    CI Financial (TSE:CIX) had its price objective decreased by analysts at TD Securities from C$25.00 to C$24.00 in a research note issued to investors on Friday. TD Securities’ price target would indicate a potential upside of 12.36% from the stock’s previous close.

  • [By Joseph Griffin]

    CI Financial (TSE:CIX) had its price objective decreased by analysts at TD Securities from C$25.00 to C$24.00 in a research note issued to investors on Friday. TD Securities’ price target would indicate a potential upside of 12.36% from the stock’s previous close.

  • [By Ethan Ryder]

    CI Financial Corp (TSE:CIX)’s share price hit a new 52-week low during mid-day trading on Wednesday . The company traded as low as C$23.92 and last traded at C$23.92, with a volume of 138823 shares traded. The stock had previously closed at C$24.14.

Top 10 Undervalued Stocks To Buy For 2021: Bed Bath & Beyond Inc.(BBBY)

Bed Bath & Beyond Inc., incorporated on October 5, 1971, is a retailer, which operates under the names Bed Bath & Beyond (BBB), Christmas Tree Shops, Christmas Tree Shops andThat! or andThat! (collectively, CTS), Harmon or Harmon Face Values (collectively, Harmon), buybuy BABY (Baby) and World Market, Cost Plus World Market or Cost Plus (collectively, Cost Plus World Market). The Company operates in two segments: North American Retail and Institutional Sales.

The Company’s customers can purchase products from the Company either in-store, online, with a mobile device or through a contact center. The Company also operates Linen Holdings, a provider of a range of textile products, amenities and other goods to institutional customers in the hospitality, cruise line, healthcare and other industries. Additionally, the Company is a partner in a joint venture, which operates approximately seven retail stores in Mexico under the name Bed Bath & Beyond.

The Company sells a range of domestics merchandise and home furnishings. Domestics merchandise includes categories, such as bed linens and related items, bath items and kitchen textiles. Home furnishings include categories, such as kitchen and tabletop items, fine tabletop, basic housewares, general home furnishings, consumables and juvenile products.

The Company operates approximately 1,530 stores plus its various Websites, other interactive platforms and distribution facilities. The Company’s over 1,530 stores operate in approximately 50 states, the District of Columbia, Puerto Rico and Canada, including over 1,020 BBB stores, approximately 280 Cost Plus World Market stores, over 100 Baby stores, approximately 80 CTS stores and over 50 Harmon stores. The Company’s stores range in size from approximately 5,000 to 100,000 square feet. The Company has distribution facilities, which ship merchandise to stores and customers, totaling approximately 6.1 million square feet consisting of over three owned and approximately 10 leas! ed facilities. The Company has approximately 813,000 square feet within over 20 leased and owned facilities for procurement and corporate office functions. In addition, the Company has over seven locations, totaling approximately 14,000 square feet, which are utilized primarily for institutional sales related functions.

Advisors’ Opinion:

  • [By Garrett Baldwin]

    THREE STOCKS: Any one of these cannabis companies could potentially deliver a 1,000% windfall. Click here to learn more…

    The Retail Ice Age could claim yet another victim. Bed Bath & Beyond Inc.(NASDAQ: BBBY) announced it would close another 40 stores. The firm has said it will launch a series of “lab” stores where it will test product sales built around food and home d茅cor. American Airlines Group Inc. (NASDAQ: AAL) has canceled all 737 Max flights through Aug. 19. The cancellations will affect roughly 115 flights per day or 1.5% of the company’s planned flights this summer. It’s unclear how much longer the fleet of Boeing Co. (NYSE: BA) planes will remain grounded around the globe. Boeing has been working on a fix to address the anti-stall software responsible for a crash in Ethiopia in March. Look for earnings reports from Kona Grill Inc. (NASDAQ: KONA), JB Hunt Transport Services Inc.(NASDAQ: JBHT), and American Renal Associates Holdings Inc.(NYSE: ARA).
    Did You See John Boehner’s SHOCKING Marijuana Prediction?

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  • [By Garrett Baldwin]

    Now here’s a closer look at today’s most important market events and stocks, plus Thursday’s economic calendar.

    The Top Stock Market Stories for Thursday
    Yesterday, the European Union granted an extension for England to leave the world’s largest trade bloc. The new deadline for the Brexit is Oct. 31. With MPs in London deadlocked over a deal, the country is still no closer to a resolution than it was the day after the Brexit referendum more than 1,000 days ago. Prime Minister Theresa May said the government would continue to work toward a resolution and aim to depart from the EU as soon as possible. The price of Bitcoin fell 4% to nearly $5,000 after a failed breakout from its 2019 high. The world’s largest cryptocurrency took on an impressive rally over the last few weeks. However, several positive factors are set to break Bitcoin out of its doldrums. CME Group reported a doubling of Bitcoin futures volume in March. Coinbase has released a new card that allows UK and EU citizens to spend Bitcoin like any other currency. And Money Morning Executive Editor Bill Patalon suggests there’s even more upside. Finally, three GOP Senators announced their intention to vote against U.S. President Donald Trump’s latest nominee to the Federal Reserve. Multiple Republicans have expressed concerns about Herman Cain, a former presidential candidate who once served as the president of the Kansas City Reserve.
    Stocks to Watch Today: BBBY, LYFT, T, GOOGL
    Shares of Bed Bath & Beyond Inc. (NASDAQ: BBBY) plunged more than 10% in pre-market hours after the retail firm offered a brutal earnings report Wednesday. Although the company beat earnings estimates by $0.09 at $1.20, the firm reported its first unadjusted annual loss in three decades. The firm also saw a decline in same-store sales. And despite a positive 2019 outlook for the firm, Wall Street doesn’t have much confidence in the stock moving forward. The cable business isn’t easy. Alphabet Inc. (NASDAQ: GOOGL) has ann

  • [By Motley Fool Transcribing]

    Bed Bath & Beyond (NASDAQ:BBBY) Q4 2018 Earnings CallApril 10, 2019 5:00 p.m. ET

    Prepared Remarks Questions and Answers Call Participants
    Prepared Remarks:


Top 10 Undervalued Stocks To Buy For 2021: USANA Health Sciences Inc.(USNA)

USANA Health Sciences, Inc. develops, manufactures, distributes, and sells nutritional and personal care products worldwide. It offers the USANA Nutritionals product line, which consists of essentials, which include vitamin and mineral supplements that provide a foundation of nutrition for various age groups; optimizers that are targeted supplements supporting needs, such as cardiovascular health, skeletal/structural health, and digestive health; and foods comprising low-glycemic meal replacement shakes, snack bars, and other related products that offer optimal macro-nutrition. Its Sense product line comprises personal care products that support healthy skin and hair. The company also offers materials and online tools, such as associate starter kit and product brochures that are designed to assist associates in building their businesses and in marketing our products. USANA Health Sciences, Inc. primarily distributes its products through a network marketing system of indepe ndent distributors. The company was founded in 1992 and is headquartered in Salt Lake City, Utah.

Advisors’ Opinion:

  • [By Max Byerly]

    COPYRIGHT VIOLATION WARNING: “USANA Health Sciences, Inc. (USNA) Director Gilbert A. Fuller Sells 282 Shares” was published by Ticker Report and is the property of of Ticker Report. If you are reading this piece on another site, it was illegally stolen and republished in violation of U.S. and international trademark & copyright laws. The legal version of this piece can be viewed at https://www.tickerreport.com/banking-finance/4147962/usana-health-sciences-inc-usna-director-gilbert-a-fuller-sells-282-shares.html.

  • [By Motley Fool Transcribers]

    USANA Health Sciences Inc (NYSE:USNA)Q42018 Earnings Conference CallFeb. 06, 2019, 11:00 a.m. ET

    Prepared Remarks Questions and Answers Call Participants
    Prepared Remarks:


  • [By Keith Speights]

    USANA Health Sciences (NYSE:USNA) ranked at the top of the list with an astounding total return of more than 32,000%. The company develops nutritional and personal-care products. USANA uses a multi-level marketing approach to sell its products across the world. Last year, less than 12% of its total revenue was made in the U.S.

Hot Blue Chip Stocks To Invest In 2019

They’ve each crafted massive consumer-facing businesses that, over the decades, have delivered awesome returns for long-term shareholders. However, both Procter & Gambleand Pepsiare struggling with market share losses today that have caused Wall Street to turn more pessimistic about their growth outlooks.

The good news is that this sour mood has pushed dividend yields to nearly 4% for these blue chip stocks. But which one might make the better investment today? Let’s take a closer look.

P&G vs. Pepsi

Company Market Cap Sales Growth Operating Profit Margin Dividend Yield
Procter & Gamble (NYSE:PG) $183 billion 2% 15.7% 3.9%
PepsiCo (NASDAQ:PEP) $137 billion 2% 16.5% 3.8%

Data sources: Company financial filings. Sales growth excludes acquisitions and divestments and is on a constant-currency basis for the past complete fiscal year.

Hot Blue Chip Stocks To Invest In 2019: Canon, Inc.(CAJ)

Advisors’ Opinion:

  • [By Max Byerly]

    Here are some of the media stories that may have effected Accern Sentiment’s rankings:

    Get Canon alerts:

    Canon (CAJ) versus Ricoh (RICOY) Head to Head Review (americanbankingnews.com) Everybody loves everybody on Canon-McMillan’s state semifinalist baseball team (msn.com) New imagePRESS Print Servers Powered by Fiery Technology Drive Production Efficiency and Outstanding Image Quality (finance.yahoo.com) Canon tackles flare with new 70-200mm f/2.8, adds serious stabilization to f/4 (digitaltrends.com) Toyotsugu Kuwamura To Retire From Canon U.S.A., Inc. (finance.yahoo.com)

    CAJ has been the subject of a number of research reports. Zacks Investment Research cut Canon from a “strong-buy” rating to a “hold” rating in a research report on Friday, April 6th. ValuEngine cut Canon from a “buy” rating to a “hold” rating in a research report on Tuesday, April 24th.

  • [By Logan Wallace]

    Ricoh (OTCMKTS: RICOY) and Canon (NYSE:CAJ) are both computer and technology companies, but which is the better stock? We will compare the two companies based on the strength of their earnings, risk, analyst recommendations, profitability, institutional ownership, dividends and valuation.

  • [By Max Byerly]

    Canon Inc (NYSE:CAJ) – Stock analysts at Jefferies Financial Group raised their FY2020 earnings estimates for shares of Canon in a research report issued to clients and investors on Wednesday, July 11th. Jefferies Financial Group analyst M. Nakanomyo now forecasts that the technology company will post earnings of $2.60 per share for the year, up from their prior estimate of $2.59.

Hot Blue Chip Stocks To Invest In 2019: Carter's, Inc.(CRI)

Advisors’ Opinion:

  • [By Joseph Griffin]

    Carter’s, Inc. (NYSE:CRI) was the recipient of some unusual options trading activity on Tuesday. Stock investors purchased 2,108 put options on the company. This represents an increase of approximately 1,560% compared to the average daily volume of 127 put options.

  • [By Max Byerly]

    Dimensional Fund Advisors LP grew its holdings in shares of Carter’s, Inc. (NYSE:CRI) by 2.1% during the first quarter, according to its most recent Form 13F filing with the SEC. The firm owned 450,812 shares of the textile maker’s stock after purchasing an additional 9,306 shares during the period. Dimensional Fund Advisors LP owned approximately 0.96% of Carter’s worth $46,930,000 at the end of the most recent reporting period.

  • [By Steve Symington]

    Carter’s Inc.(NYSE:CRI)announced first-quarter 2018 results on Thursday morning, detailing a strong performance in spite of the negative impact of the recent bankruptcy of Toy “R” Us on its large wholesale segment. Though shares initially fell almost 5% early on, Carter’s stock recovered to trade modestly higher by this afternoon.

  • [By Ethan Ryder]

    Carter’s, Inc. (NYSE:CRI) has earned a consensus recommendation of “Buy” from the fifteen ratings firms that are covering the company, MarketBeat.com reports. Two investment analysts have rated the stock with a sell rating, three have assigned a hold rating and ten have given a buy rating to the company. The average 1 year price objective among brokers that have issued a report on the stock in the last year is $120.27.

Hot Blue Chip Stocks To Invest In 2019: Banco Bradesco Sa(BBDO)

Advisors’ Opinion:

  • [By Ethan Ryder]

    News articles about Banco Bradesco (NYSE:BBDO) have trended somewhat positive this week, Accern Sentiment Analysis reports. Accern identifies positive and negative press coverage by reviewing more than 20 million news and blog sources. Accern ranks coverage of public companies on a scale of negative one to positive one, with scores nearest to one being the most favorable. Banco Bradesco earned a news impact score of 0.19 on Accern’s scale. Accern also gave news stories about the bank an impact score of 46.8086143489448 out of 100, meaning that recent press coverage is somewhat unlikely to have an effect on the stock’s share price in the next several days.

Hot Blue Chip Stocks To Invest In 2019: Home Depot, Inc. (HD)

Advisors’ Opinion:

  • [By Motley Fool Staff]

    Across a large swath of the United States, the spring of 2018 felt more like winter, part two. Occasional teases of warm weather repeatedly regressed to low temperatures, bizarrely timed snowstorms, and dismal skies. So it is perhaps understandable that the seasonal sales that Home Depot(NYSE:HD) usually racks up in April didn’t quite materialize.

  • [By Nicholas Rossolillo]

    When many think of e-commerce, Amazon (NASDAQ:AMZN) is what comes to mind. It’s largely the success of the digital retailer that has helped spawn consumers’ fast move to online shopping over the years, and its stock has provided huge returns for investors. However, for those looking to capitalize on further gains in online shopping, brick-and-mortar retailers are catching on. One of the best success stories is Home Depot (NYSE:HD), and its stock is an even better value than Amazon’s.

  • [By Max Byerly]

    Shufro Rose & Co. LLC grew its position in shares of Home Depot Inc (NYSE:HD) by 6.1% in the first quarter, according to the company in its most recent 13F filing with the SEC. The fund owned 17,400 shares of the home improvement retailer’s stock after buying an additional 1,000 shares during the quarter. Shufro Rose & Co. LLC’s holdings in Home Depot were worth $3,101,000 as of its most recent filing with the SEC.

  • [By ]

    The markets were sent skidding lower on Tuesday as Home Depot (HD) posted stronger-than-expected first-quarter earnings, but its same-store sales were hit by the colder winter temperatures that also impacted the key spring period. The stock was down well over 1%.

Hot Blue Chip Stocks To Invest In 2019: Eaton Vance Floating Rate Income Trust(EFT)

Advisors’ Opinion:

  • [By Shane Hupp]

    Relative Value Partners Group LLC grew its holdings in Eaton Vance Floating-Rate Income Trust (NYSE:EFT) by 11.0% in the first quarter, HoldingsChannel reports. The firm owned 799,864 shares of the investment management company’s stock after purchasing an additional 79,578 shares during the period. Relative Value Partners Group LLC’s holdings in Eaton Vance Floating-Rate Income Trust were worth $11,958,000 as of its most recent SEC filing.

Hot Blue Chip Stocks To Invest In 2019: Matador Resources Company(MTDR)

Advisors’ Opinion:

  • [By Ethan Ryder]

    Matador Resources (NYSE: MTDR) and SandRidge Mississippian Trust II (NYSE:SDR) are both oils/energy companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, analyst recommendations, institutional ownership, valuation, dividends, earnings and profitability.

  • [By Logan Wallace]

    Get a free copy of the Zacks research report on Matador Resources (MTDR)

    For more information about research offerings from Zacks Investment Research, visit Zacks.com

Top Low Price Stocks To Buy Right Now

If you are an income investor looking at gold stocks you might be tempted to buy Wheaton Precious Metals (NYSE:WPM), a gold and silver streaming company with a relatively high yield. It’s not a bad stock to own, but it may not be the best dividend stock for your portfolio if you don’t understand a few important basics. Here’s what you need to know before you buy Wheaton for its peer-beating dividend yield.

What Wheaton does

The first thing to understand is that Wheaton Precious Metals is not a miner. It is a streaming company. That means it provides cash up front to miners in exchange for the right to buy gold and silver at reduced rates in the future. It’s a business model that provides Wheaton with wide margins in both good markets and bad because of its contractually locked-in low prices.

Image source: Getty Images

Top Low Price Stocks To Buy Right Now: Corbus Pharmaceuticals Holdings, Inc.(CRBP)

Advisors’ Opinion:

  • [By Joseph Griffin]

    Corbus Pharmaceuticals (NASDAQ:CRBP) has been given a $32.00 price target by investment analysts at Cantor Fitzgerald in a research note issued to investors on Thursday. The firm currently has a “buy” rating on the biopharmaceutical company’s stock. Cantor Fitzgerald’s price objective indicates a potential upside of 484.47% from the stock’s previous close.

  • [By Sean Williams]

    Among drug developers, none had a more disappointing quarter than small-cap, clinical-stage company Corbus Pharmaceuticals (NASDAQ:CRBP), which fell more than 17%. Corbus is associated with the marijuana industry through its lead drug lenabasum (formerly anabasum), which is an oral endocannabinoid-mimetic drug that binds with naturally occurring CB2 receptors expressed on fibroblasts and immune cells. In particular, lenabasum is being targeted at four indications: systemic sclerosis, cystic fibrosis, dermatomyositis, and systemic lupus erythematosus.

Top Low Price Stocks To Buy Right Now: Fiat Chrysler Automobiles N.V.(FCAU)

Advisors’ Opinion:

  • [By ]

    Specifically, companies like Fiat Chrysler Automobiles (FCAU) , GM and Ford manufacturer the vehicles, but then franchised distributors (i.e., dealerships) are the ones who sell them to the consumer. These dealerships allow for test drives and services centers as well.

  • [By Paul Ausick]

    Ford Motor Co. (NYSE: F) sold 84,639 F-Series pickups in May, topping sales of Fiat Chrysler Automobiles N.V. (NYSE: FCAU) Ram pickups of 46,781 units. General Motors Co. (NYSE: GM) no longer reports monthly sales results.

  • [By Adam Levine-Weinberg]

    A massive fire that devastated an auto supplier plant in Michigan earlier this month is starting to snarl production for Ford Motor (NYSE:F), General Motors (NYSE:GM), and Fiat Chrysler (NYSE:FCAU). All three U.S. automakers are currently racing to mitigate the impact of parts shortages on their output.

  • [By Paul Ausick]

    The bad news for Ford could turn into good news for General Motors Co. (NYSE: GM) and Fiat Chrysler Automobiles N.V. (NYSE: FCAU), makers, respectively, of the Chevy Silverado and the Ram pickups that compete with the F-Series trucks from Ford. A lot depends on how long the supplier plant is offline.

  • [By John Rosevear]

    Fiat Chrysler Automobiles (NYSE:FCAU) and Waymo, the self-driving subsidiary of Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL), said that they have expanded their partnership with an agreement to add tens of thousands of Chrysler minivans to Waymo’s self-driving fleet.

Top Low Price Stocks To Buy Right Now: Home Depot, Inc. (HD)

Advisors’ Opinion:

  • [By Matthew Cochrane]

    Over the past several years, Home Depot Inc. (NYSE:HD) has consistently used technology to counter potential disruptors, such as Amazon.com Inc. (NASDAQ:AMZN), while staying several steps ahead of traditional rivals likeLowe’s Companies Inc. (NYSE:LOW).

  • [By ]

    TD Ameritrade is part of a beta program for Apple’s business chat feature, which also includes companies like Home Depot (HD) and Marriott International (MAR) .

  • [By Paul Ausick]

    The Dow stock posting the largest daily percentage gain ahead of the close Wednesday was The Home Depot Inc. (NYSE: HD) which traded up 3.00% at $180.16. The stock’s 52-week range is $144.25 to $207.61. Volume was about 20% below the daily average of around 5.4 million. There company announced this morning that it plans to hire 1,000 IT workers to strengthen its position against e-commerce behemoth Amazon.

  • [By Logan Wallace]

    OLD Mutual Customised Solutions Proprietary Ltd. lifted its position in shares of Home Depot Inc (NYSE:HD) by 4.9% in the fourth quarter, according to the company in its most recent disclosure with the Securities and Exchange Commission (SEC). The institutional investor owned 19,154 shares of the home improvement retailer’s stock after buying an additional 900 shares during the quarter. OLD Mutual Customised Solutions Proprietary Ltd.’s holdings in Home Depot were worth $3,630,000 at the end of the most recent quarter.

  • [By John Rosevear]

    It’s an abrupt turnaround, as Tesla’s deal with The Home Depot (NYSE:HD) was just announced in February. But as my colleague Travis Hoium pointed out at the time, booths in retail stores haven’t been much of a driver of residential solar sales in the past. It’s possible that Musk looked at the early returns and decided it wasn’t worth continuing.

Top Low Price Stocks To Buy Right Now: Companhia Brasileira de Distribuicao(CBD)

Advisors’ Opinion:

  • [By Lisa Levin] Gainers
    TransEnterix, Inc. (NYSE: TRXC) rose 28.8 percent to $4.03 in pre-market trading after the company disclosed that it has received the FDA clearance for expanded indications for its Senhance Surgical System.
    Global Eagle Entertainment Inc. (NASDAQ: ENT) rose 15.6 percent to $2.30 in pre-market trading.
    Companhia Brasileira de Distribuição (NYSE: CBD) rose 13.2 percent to $24.20 in pre-market trading.
    ZTO Express (Cayman) Inc. (NYSE: ZTO) rose 12.2 percent to $21.65 in pre-market trading. Alibaba and Cainiao agreed to make strategic investment in ZTO Express of $1.38 billion.
    DHI Group, Inc. (NYSE: DHX) rose 10.8 percent to $2.05 in pre-market trading.
    Momo Inc. (NASDAQ: MOMO) shares rose 9.6 percent to $42.68 in pre-market trading after the company reported better-than-expected results for its first quarter and issued strong sales forecast for the second quarter.
    Xenon Pharmaceuticals Inc. (NASDAQ: XENE) shares rose 9.1 percent to $6.00 in pre-market trading.
    Universal Display Corporation (NASDAQ: OLED) rose 8.4 percent to $108.00 in pre-market trading.
    Jupai Holdings Limited (NYSE: JP) shares rose 7 percent to $24.50 in pre-market trading after reporting Q1 results.
    Net 1 UEPS Technologies, Inc. (NASDAQ: UEPS) rose 5.9 percent to $10.61 in pre-market trading.
    Frontline Ltd. (NYSE: FRO) rose 5.9 percent to $5.04 in pre-market trading.
    Evogene Ltd. (NASDAQ: EVGN) rose 5.5 percent to $3.27 in pre-market trading after reporting Q1 results.
    Sears Holdings Corporation (NASDAQ: SHLD) rose 5.5 percent to $3.68 in pre-market trading after gaining 5.44 percent on Friday.
    Kitov Pharma Ltd (NASDAQ: KTOV) shares rose 5.4 percent to $2.16 in pre-market trading.

    Find out what's going on in today's market and bring any questions you have to Benzinga's PreMarket Prep.

  • [By Logan Wallace]

    Companhia Brasileira de Distribuicao (NYSE: CBD) and Alimentation Couche-Tard Inc Class B (OTCMKTS:ANCUF) are both retail/wholesale companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, risk, valuation, institutional ownership, earnings, analyst recommendations and profitability.

Best Gold Stocks To Buy For 2018

In a year so far marked by volatility and uncertainty among some of the old stalwarts of Wall Street, is now the time to consider alternative investments including weed, cryptocurrencies and even gold?

According to a panel of experts at TheStreet’s Investor Boot Camp Conference over the weekend, the answer could very well be yes. Here’s what to know.

Cannabis: Big Companies May Try to Trick You With a Buzz Word

If you’re investing in a company just because you read a handful of headlines about its foray into legal weed, you’re doing it wrong, said Debra Borchardt, co-founder, CEO and editor in chief of the Green Market Report.

Investors have to do their homework to figure out whether companies are simply using the “green rush” concept to attract investors without actually doing anything meaningful in legal weed.

Best Gold Stocks To Buy For 2018: PNM Resources, Inc. (Holding Co.)(PNM)

Advisors’ Opinion:

  • [By Logan Wallace]

    PNM Resources, Inc., through its subsidiaries, engages in the energy and energy-related businesses in the United States. It operates through Public Service Company of New Mexico (PNM) and Texas-New Mexico Power Company (TNMP) segments. The PNM segment is primarily involved in the generation, transmission, and distribution of electricity. It generates electricity using coal, natural gas and oil, nuclear fuel, solar, wind, and geothermal energy sources. As of December 31, 2017, this segment had owned or leased facilities with a total net generation capacity of 2,102 megawatts; and owned 3,200 miles of electric transmission lines, 6,063 miles of distribution overhead lines, 5,828 miles of underground distribution lines, and 254 substations. It also owns and leases office and other equipment, office space, vehicles, and real estate. The TNMP segment provides regulated transmission and distribution services. As of December 31, 2017, this segment owned 978 miles of overhead electric transmission lines, 7,111 miles of overhead distribution lines, 1,241 miles of underground distribution lines, and 116 substations. It also owns and leases vehicles, service facilities, and office locations throughout its service territory. The company serves approximately 773,000 residential, commercial, and industrial customers, as well as end-users of electricity in New Mexico and Texas. PNM Resources, Inc. was founded in 1917 and is headquartered in Albuquerque, New Mexico.

Best Gold Stocks To Buy For 2018: Home Depot, Inc. (HD)

Advisors’ Opinion:

  • [By ]

    Next, on Tuesday, perennial favorite Home Depot (HD) will be reporting. Cramer said it’s gardening season, typically a strong one for Home Depot, and he expects good news.

  • [By Lisa Levin]

    Some of the stocks that may grab investor focus today are:

    Wall Street expects Home Depot Inc (NYSE: HD) to report quarterly earnings at $2.06 per share on revenue of $25.22 billion before the opening bell. Home Depot shares fell 0.04 percent to $191.00 in after-hours trading.
    Switch Inc (NYSE: SWCH) reported weaker-than-expected earnings for its first quarter on Monday. Switch shares dropped 7.18 percent to $14.36 in the after-hours trading session.
    Analysts are expecting Boot Barn Holdings, Inc. (NYSE: BOOT) to have earned $0.16 per share on revenue of $163.65 million in the latest quarter. Boot Barn will release earnings after the markets close. Boot Barn shares gained 1.4 percent to $21.80 in after-hours trading.
    Famous Dave’s of America, Inc. (NASDAQ: DAVE) reported upbeat earnings for its first quarter on Monday. Famous Dave’s of America shares gained 7.69 percent to $8.40 in the after-hours trading session.
    Before the markets open, Eagle Materials Inc (NYSE: EXP) is estimated to report quarterly earnings at $1.08 per share on revenue of $306.04 million. Eagle Materials shares fell 0.09 percent to $105.72 in after-hours trading.

    Find out what's going on in today's market and bring any questions you have to Benzinga's PreMarket Prep.

  • [By John Bromels, Jeremy Bowman, and Daniel Miller]

    We asked three Motley Fool investors to highlight a top dividend-paying stock with a yield above 2% that is supported by a solid business underneath. They came back withMagellan Midstream Partners(NYSE:MMP),Home Depot(NYSE:HD), andFord Motor Company(NYSE:F). Here’s why they chose the way they did.

  • [By Lisa Levin]

    Home Depot Inc (NYSE: HD) reported better-than-expected earnings for its first quarter, while sales missed estimates.

    Home Depot posted Q1 earnings of $2.08 per share on sales of $24.947 billion. Analysts expected earnings of $2.06 per share on sales of $25.22 billion. Sales at stores open at least a year increased 4.2 percent.

  • [By Paul Ausick]

    The Home Depot Inc. (NYSE: HD) traded up 4.49% at $185.36 in a 52-week range of $144.25 to $207.61. Volume of about 6 million shares was about 10% above the daily average. The company had no specific news.

Best Gold Stocks To Buy For 2018: Veritiv Corporation(VRTV)

Advisors’ Opinion:

  • [By Lisa Levin] Companies Reporting Before The Bell
    Dean Foods Company (NYSE: DF) is projected to report quarterly earnings at $0.11 per share on revenue of $1.85 billion.
    Discovery, Inc. (NASDAQ: DISCA) is expected to report quarterly earnings at $0.44 per share on revenue of $1.99 billion.
    Jacobs Engineering Group Inc. (NYSE: JEC) is estimated to report quarterly earnings at $0.89 per share on revenue of $3.63 billion.
    Henry Schein, Inc. (NASDAQ: HSIC) is expected to report quarterly earnings at $0.92 per share on revenue of $3.17 billion.
    Gartner, Inc. (NYSE: IT) is projected to report quarterly earnings at $0.57 per share on revenue of $926.18 million.
    The AES Corporation (NYSE: AES) is estimated to report quarterly earnings at $0.24 per share on revenue of $2.98 billion.
    Expeditors International of Washington, Inc. (NASDAQ: EXPD) is projected to report quarterly earnings at $0.64 per share on revenue of $1.71 billion.
    US Foods Holding Corp. (NYSE: USFD) is expected to report quarterly earnings at $0.32 per share on revenue of $5.98 billion.
    DISH Network Corporation (NASDAQ: DISH) is expected to report quarterly earnings at $0.7 per share on revenue of $3.50 billion.
    Zebra Technologies Corporation (NASDAQ: ZBRA) is estimated to report quarterly earnings at $2.06 per share on revenue of $936.98 million.
    Camping World Holdings, Inc. (NYSE: CWH) is expected to report quarterly earnings at $0.42 per share on revenue of $1.06 billion.
    Perrigo Company plc (NYSE: PRGO) is projected to report quarterly earnings at $1.14 per share on revenue of $1.21 billion.
    Petróleo Brasileiro S.A. – Petrobras (NYSE: PBR) is estimated to report quarterly earnings at $0.28 per share on revenue of $23.80 billion.
    JD.com, Inc. (NYSE: JD) is projected to report quarterly earnings at $0.18 per share on revenue of $15.65 billion.
    Valeant Pharmaceuticals International, Inc. (NYSE: VRX) is projected to report quarterly earnings at $0.6 per share o

Hot Energy Stocks To Own Right Now

Won’t $0.99 per gallon of gasoline be great? That is what some “experts” predict for the summer of 2016. Maybe it will happen; maybe it won’t. What is for sure is that the price of oil has collapsed over the past year, and many U.S. oil companies have gone out of business.

See Also: Kiplinger’s Economic Outlook for Energy

So why did the price of oil drop so much? Was it overproduction from Saudi Arabia? Was it declining global consumption?

3 Myths About Why Oil Prices Dropped
1. Saudi Arabia’s overproduction.

Yes, it is true that Saudi Arabian oil producers have been increasing output. But since the price of oil collapsed, the Organization of the Petroleum Exporting Countries (OPEC) increased its production by only 3.95%, according to data from the U.S. Energy Information Administration (EIA). World production was up 2.23% during the same period, according to the EIA. So yes, OPEC was producing oil at a faster rate than the rest of the world, but does a 3.95% increase really translate into a 75% decline in the price of oil? We don’t think a 3.95% increase in supply justifies a 75% price decline. So it must be something else.

Hot Energy Stocks To Own Right Now: Home Depot, Inc. (HD)

Advisors’ Opinion:

  • [By ]

    The question, then, is where to invest that money once you’ve opened a Roth IRA. Well, you could always invest in a blue-chip dividend payer like Home Depot (NYSE: HD). With a 2.3% yield, a $20,000 stake would put $460 in your pocket each year.

  • [By ]

    Here’s everything you need to know before Tuesday’s opening bell:  

    Amazon (AMZN) and Starbucks (SBUX) will have to pay a new tax to help fund homeless services and affordable housing in Seattle. MSCI will add the stocks of 234 China-based companies to its closely watched Emerging Market Index on June 1. Vodafone (VOD) CEO Vittorio Colao will step down in October after 10 years at the helm.  Investors will analyze earnings from Home Depot (HD) . U.S. stock futures pointed lower ahead of another round of trade talks between the U.S. and China. 


  • [By ]

    Fortunately, some sectors in retail have been disciplined in their store opening plans in recent years. That has left them store bases that actually aid their online business. For instance, Home (HD) and rival Lowe’s (LOW) locations offer ship from store options to customers. Home Depot has found success delivering products straight to contractor job sites. With the stores being used as service centers, that has helped boost the productivity of the locations for the big home improvement retailers.  

  • [By ]

    Over on Real Money, Cramer says that for Home Depot (HD) , it really was the weather. Get more of his insights with a free trial subscription to Real Money.

  • [By Demitrios Kalogeropoulos]

    Lowe’s Companies Inc. (NYSE:LOW)is firmly in runner-up territory in the home improvement market. In its battle against Home Depot (NYSE:HD), the retailer comes up short in key metrics including sales growth, profitability, and financial efficiency.

  • [By ]

    Tuesday, earnings are scheduled for Dick’s Sporting Goods Inc. (DKS) and Home Depot Inc. (HD) . Retail sales statistics for April are also expected at 8:30 a.m. ET Tuesday. FactSet economists forecast a reading of 0.4% growth, down slightly from 0.6% a month earlier. San Francisco Fed President John C. Williams will speak in Minneapolis.

Hot Energy Stocks To Own Right Now: Controladora Vuela Compania de Aviacion, S.A.B. de C.V.(VLRS)

Advisors’ Opinion:

  • [By Adam Levine-Weinberg]

    In late 2016 and early 2017, profitability deteriorated rapidly at Mexican budget airline Volaris (NYSE:VLRS)due to market disruptions caused by the U.S. presidential election. Fears about a crackdown on trade or immigration under President Trump led to a sharp drop in the Mexican peso and a downturn in travel demand. However, Volaris seemed to be on the mend by this time last year, and its stock price rebounded to more than $15 last July.

  • [By Travis Hoium]

    Shares of Mexican airline Controladora Vuela Co Avcn SA CV (NYSE:VLRS) plunged as much as 20.3% in trading Monday after announcing earnings that led to fears of growing competition. At 12:25 p.m. EDT shares were still down 16.6% on the day.

  • [By Lisa Levin]

    Check out these big penny stock gainers and losers

    Prothena Corporation plc (NASDAQ: PRTA) shares dipped 69 percent to $11.48 after a disappointing update relating to the company's treatment for AL amyloidosis. Prothena, a clinical-stage biopharmaceutical company that focuses on therapies in the neuroscience and orphan categories, said a Phase 2b study of its therapy called NEOD001 failed to achieve its primary or secondary endpoints. Prothena's Phase 2b study explored its NEOD001 therapy versus a placebo in previously-treated patients with AL amyloidosis and persistent cardiac dysfunction.
    Gridsum Holding Inc. (NASDAQ: GSUM) fell 44.3 percent to $4.06. Gridsum reported suspension of audit report on financial statements.
    Flotek Industries, Inc. (NYSE: FTK) shares declined 34.1 percent to $4.16 as the company issued weak revenue forecast for the first quarter.
    Akorn, Inc. (NASDAQ: AKRX) dropped 32.3 percent to $13.35 after Fresenius terminated its merger deal with Akorn.
    Chicago Bridge & Iron Company N.V. (NYSE: CBI) fell 31.2 percent to $13.44. Subsea 7 made an unsolicited bid to buy McDermott for $7 per share. However, the acquisition offer is contingent on McDermot terminating its pending merger with Chicago Bridge & Iron.
    Controladora Vuela Compañía de Aviación, S.A.B. de C.V. (NYSE: VLRS) dropped 18 percent to $5.76. Controladora Vuela recently reported first-quarter results that showed a loss for the quarter. Imperial Capital downgraded Controladora Vuela Compania de Aviacion from Outperform to In-Line.
    Atossa Genetics Inc. (NASDAQ: ATOS) fell 18.2 percent to $2.8797 after declining 19.35 percent on Friday.
    Alcoa Corporation (NYSE: AA) fell 12.3 percent to $52.63.
    Luby's, Inc. (NYSE: LUB) shares declined 10.3 percent to $2.448 following Q2 results.
    Aceto Corporation (NASDAQ: ACET) shares tumbled 10 percent to $2.26.
    Pier 1 Imports, Inc. (NYSE: PIR) dipped 9.7 percent

Hot Energy Stocks To Own Right Now: Lannett Co Inc(LCI)

Advisors’ Opinion:

  • [By Peter Graham]

    Small cap generic pharmaceutical stock Lannett Company, Inc (NYSE: LCI) is thesecond most shorted stock on the NYSE with short interest of 55.65% according toHighshortinterest.com. Lannett Company was founded in 1942 anddevelops, manufactures, packages, markets and distributes generic pharmaceutical products for a wide range of medical indications and therapeutic areas. The Company believes its ability to select viable products for development, efficiently develop such products (including obtaining any applicable regulatory approvals), vertically integrateitself into certain specialty markets and achieving economies in production are all critical for its success in the generic pharmaceutical industry in which it operates.

  • [By ]

    With luck, we’ll one day be able to add these stocks to our long list of home runs. Over the past three years, my subscribers and I have seen gains like 181% on Lannett (NYSE: LCI), 135% on Westmoreland Coal (Nasdaq: WLB), and a striking 242% on Bitauto (NYSE: BITA). Each time, the Maximum Profit system has told us exactly when to buy and when to sell, while we just sit back and count the returns.

  • [By ]

    With luck, we’ll one day be able to add these stocks to our long list of homeruns. Over the past three years, my subscribers and I have seen gains like 181% on Lannett (NYSE: LCI), 135% on Westmoreland Coal (Nasdaq: WLB), and a striking 242% on Bitauto (NYSE: BITA). Each time, the Maximum Profit system has told us exactly when to buy and when to sell, while we just sit back and count the returns.

  • [By ]

    The Best Way To Navigate An Uncertain Market
    As I’ve discussed before, part of the beauty of the Maximum Profit system is its ability to help keep emotions at bay. Regardless of what the future might have in store, the system will help us navigate whatever the market throws at us. That’s how, over the past three years, my subscribers and I have seen gains like 181% on Lannett (NYSE: LCI), 135% on Westmoreland Coal (Nasdaq: WLB), and 242% from Bitauto (NYSE: BITA). Each time, the Maximum Profit system has told us exactly when to buy and when to sell, while we just sit back and count the returns.

  • [By Garrett Baldwin]

    Oil prices are at levels we haven’t seen in years. U.S. crude topped $70 for the first since 2014, as U.S. President Donald Trump appeared increasingly likely to pull out of the Iran nuclear deal and reinforce sanctions on Tehran. In addition, OPEC has announced plans to bolster prices and cap production. For oil investors, Money MorningGlobal Energy Strategist Dr. Kent Moors says it’s time to buckle up. According to Moors, revoking the Iran deal would cause “price chaos” around the globe. And that’s right as driving season starts in the United States. Here’s more on the coming chaos for oil. In deal news, Blackstone Group (NYSE: BX) announced it will purchase Gramercy Property Trust (NYSE: GPT) for $7.6 billion in cash. Grammercy manages commercial real estate. While this may seem like a boring deal, Blackstone is buying a business that churns out cold hard cash for its investors. We want to keep this deal on your radar, because there are many other deals like this coming down the pipeline. We’re going to be discussing one of the best real estate opportunities available very soon – so keep an eye out for updates.
    Three Stocks to Watch Today: AMZN, AAPL, TSN, SBUX
    Shareholders of Amazon.com Inc. (Nasdaq: AMZN) cheered statements made by Warren Buffett over the weekend. The Oracle of Omaha said he messed up by not investing in Amazon and Alphabet Inc. (Nasdaq: GOOGL). “I made the wrong decisions on Google and Amazon,” Buffett said on Saturday. “We’ve looked at it. I made the mistake in not being able to come to a conclusion where I really felt that at the present prices that the prospects were far better than the prices indicated.” Buffett says he now has a “very, very, very high opinion” of Amazon CEO Jeff Bezos. The Oracle believes that Bezos has created something that is “close to a miracle.” Apple Inc. (Nasdaq: AAPL) added another 0.6% Monday, to reach $185.00 per share – a new 52-week high. The uptick came after Warren Buffett announced

Boeing, Caterpillar Prop Up the Dow Thursday

May 18, 2018: Markets opened lower again Friday and while the Dow hugged the break-even line all day, the S&P 500 and the Nasdaq Composite remained in the red for the entire trading session. U.S. trade talks with China have hit a bump in the road and negotiations with Mexico and Canada on revisions to NAFTA missed a deadline of sorts Thursday. Friday’s best performing sector was industrials, probably thanks to Deere & Co. earnings, while the energy performed the most poorly.

WTI crude oil for June delivery settled at $71.28 a barrel, down about 0.3% for the day but up about 0.8% for the week. June gold added nearly 0.2% on the day to settle at $1,291.30 but closed the week down 2.2%. Equities were headed for a mixed close about 10 minutes before the bell as the Dow traded up 0.06% for the day, the S&P 500 traded down 0.20%, and the Nasdaq Composite traded down 0.26%.

Bitcoin futures (XBTM8) for June delivery traded at $8,250, up about 0.3% on the CBOE after opening at $8,150 this morning. The trading range today was $7,940 to $8,295.

The Dow stock posting the largest daily percentage gain ahead of the close Friday was The Boeing Co. (NYSE: BA) which traded up 2.00% at $351.04 in a 52-week range of $176.77 to $371.60. Volume was about 25% below the daily average of around 5.1 million shares. The company had no specific news, but Reuters is reporting that arch-rival Airbus is about to lose a large order to Boeing’s 787 Dreamliner.

Caterpillar Inc. (NYSE: CAT) traded up 1.35% at $155.76. The stock’s 52-week range is $101.27 to $173.24. Volume was about 40% below the daily average of around 5.4 million. The company had no specific news today, but like Boeing is likely getting a bump from Deere’s earnings.

The Home Depot Inc. (NYSE: HD) traded up 1.13% at $187.43. The stock’s 52-week range is $144.25 to $207.61. Volume was about 40% below the daily average of 5 million. The company had no specific news.

Nike Inc. (NYSE: NKE) traded up 0.55% at $71.33. The stock’s 52-week range is $50.35 to $71.60. Volume was about 40% below the daily average of around 7.2 million shares. The company had no specific news.

Of the Dow stocks, 9 are on track to close higher Friday and 21 are set to close lower.

ALSO READ: 3 Mega-Cap Technology Companies Continue to Dominate the Cloud

Cold-Weather Blues, Green Thumbs, and Gold-Plated Failures

In this Market Foolery podcast, host Chris Hill is joined by Foolish investor-at-large Tim Hansen to discuss a trio of topics. First, they review Home Depot’s (NYSE:HD) disappointing quarter. The home-improvement retailer may be Amazon-proof, but it’s not entirely weather resistant.

Next, they debate whether Scotts Miracle-Gro(NYSE:SMG) is as good a “picks and shovels” play as it appears for folks looking to invest in the looming legal marijuana gold rush. And finally, they get politely incensed at the number of 2017’s highest-paid CEOs who did a terrible job en route to their massive paydays. Case in point: Snap’s (NYSE:SNAP) Evan Spiegel topped the compensation list with a $500 million package in a year when his company wound up $720 million in the red.

A full transcript follows the video.

This video was recorded on May15, 2018.

Chris Hill: It’sTuesday, May 15th. Welcome to Market Foolery! I’m Chris Hill. Joining me in studio, it’s investor at large, Tim Hanson. Thanks for being here!

Tim Hanson: Always a pleasure!

Hill:I’m happy that you’re here on a day when we’re going to be talking aboutpublic companiesthat are inone of your areas of, maybe not expertise, butcertainly one of your areas of interest, and that’s gardening. You’re a legit gardener in my book.

Hanson:Thank you! I appreciate that!

Hill:Lest anyone think this is just going to be some big lovefest about gardening,we’re also going to be talking about the list of best-paid CEOs that came out recently, sowe’ll have a little bit of fun with that.

Hanson:Gardening and sarcasm, two things I do well.

Hill:[laughs]Let’sstart with Home Depot,their first quarter report that came out this morning. Their profits were better than expected. Overall sales were down a little bit. Theirsame-store sales were down a little bit. The stock fell,I don’t know, it was down 1.5%,something like that. This really did seem likeone of those situations where,not that Home Depot was ducking any responsibility, but they were justsaying on the conference call, very matter-of-factly, “Yeah,the weather in April was pretty bad, and we got affected by that.”

Hanson:Yeah. Sometimes we laugh at companies that blame the weather,because there are some companies that shouldn’t beaffected by weather that use the weather as a convenient excuse. Butin the case of Home Depot, it’s a very reasonableexplanation, and one that we’ve seen in other companies in this space. It stayedcolder longer, and obviously that preventsa lot of things from happening in the springtime. You don’t get out in the gardenas soon, so you’re not buying seasonal items,maybe you’re not doing some repairs around the housein preparation for the warmer weather,re-staining the deck, things of that nature.

But,overall, they maintained guidance for the year, sothey expect those sales to show back up again.Home Depot has been a multi-yeartremendous retail story. At a time when Amazonis reallycausing weakness in a lot of parts of the retail sector,Home Depot has done a wonderful job ofleveraging not only the proximity of all their stores to Americans to sell to DIY people, but theirprofessional business is growing really nicely. Also, they’requietly building a pretty good e-commerce business, as well.

So, a lot of tailwinds for Home Depot. Particularly, the housing startscontinue to go up. That’s a huge tailwind forHome Depot, especially as millennials and people start moving outof their parents’ basements, that should benefit Home Depot for years to come. I think it’s apretty interesting stock to take a look at.

Hill:Whenyou look at the same-store sales and they break it out by month, youreally see the effect of the bad weather in April,which was much colder and snowier than wetypically see. InFebruary, same-store sales were about 5.5%. March, almost 6%. And that falls off a shelf to about 2%.

Hanson:Yeah,it was a legit excuse. Like I said,Scotts Miracle-Groearningsnot too long ago, and theirresults were much poorer, because obviously, from a seasonal perspective, they’re almost pure-playgardening. And they reported the same problem. So,it’s a credible explanation. They maintained guidance for the year. AndHome Depot has been doing a lot of things right with regardsto being a retailer.

Hill:We’ll come back to Scotts injust a second. One more thing in terms ofthe rest of the fiscal year for Home Depot. We’ve talkedbefore about, look, when there are weather events,particularly in the winter, like significant events,blizzards, that sort of thing — if you’re a restaurant, if you’re a coffee shop,if you’re Starbucksor Chipotle or whoever, and you’relosing sales due to weather, you’re not getting those back.

Hanson:Yeah. You don’t buy two cups of coffee on Tuesdaybecause it was closed on Monday.

Hill:I mean,I do.But I’m making a couple of trips every day. But, with auto companies, when they’redealing with adverse weather, look, if you need to buy a new car and you can’t get out becausethere’s bad snow or whatever,there’s bad weather, well, you’re going to go back the next week ora couple weeks later. IsHome Depot in that second category? Becauseit kind of seems like, look, if you needgardening supplies, if you needto do repairs around the house,maybe you don’t get out there in April when it’s snowing. But,those are sales that just get pushed off by a few weeks.

Hanson:Yeah,I would say that’s the right way to think about it. It’s deferred business,rather than business that disappeared. Ifpeople aren’t buying a home, if they didn’t get a chance go out to open houses over the weekend because of poor weather,that’s not going to cause them to go like, “You know what? Forget that whole home buying thing. Wedidn’t get around to it last weekend, let’s just wait.” So,yeah, I think this business will show back upin the next quarter. Obviously, they already have some visibility the next quarter since it is the next quarter, and they maintained their guidancefor the year, so that probably tells you all you need to know about thatparticular secular trend.

Hill:Andprobably safe to assume that whenever Lowe’s reports their report —

Hanson:It’ll rhyme, yeah.

Hill:– theirApril is probably going to look a lot like Home Depot’s. You mentioned Scotts Miracle-Gro, which is a company we don’t talk about very often. It is astand-alone public company, ticker symbol SMG. You had mentioned how they reported recently,kind of a tough spring for them as well. But,you mentioned something to me this morningabout Scotts Miracle-Gro being a way toplay the growth in the marijuana industry.


Hill:Andsomebody on Wall Street may have tapped your phone or something,because sure enough, a firm came out this morning andupgraded Scotts Miracle-Gro to a buy, put a buy rating on it,specifically for that reason.

Hanson:I think a lot ofmarijuana legalization stocks,obviously, have been part of a marketwhere there’s been a lot of hype, there’sa lot of overvaluation, there’s a lot ofoutright fraud,so on and so forth. A lot of pump and dump schemes have been in this space.

Hill:A lot of penny stocks.

Hanson:Alot of penny stocks. But obviously, as marijuana is legalizedin places, there are business opportunities associatedwith it. What makes Scotts interesting is that the core business is a very stable, branded gardening business,which is Miracle-Gro, Scotts Turf Builder, those sorts of things. This is a business thatgenerates a lot of free cash flow every year, haspricing power,people use the products every day,so on and so forth.

Then,attached to it, they’ve quietly been using that free cash flow and taking on some debt to build avertically integrated greenhousegrowing business,which can easily be applied as a picks and shovels play onmarijuana agriculture, werepeople to start growing that in significant quantities. It’sthings like hydroponics, seed starting kits, indoor soil,lighting, air filters,things of that nature.

It’s a couple hundred million dollar revenue business now,and if you look at the potential growth rates in the industry,this is one of those opportunities wheremarijuana as a commodity,predicting the price there and the demand and the supply is very difficult. If you know that growers are going to be coming into the industry,the people who supply the growerswith the things they needshould do pretty well. And like I said,they’ve assembled a pretty interestingportfolio of brandsto service that market.

Hill: Farmore brands than I would have expected, andsome of them I’ve never heard of.

Hanson:They’re niche. Niche to the gardening community.

Hill:I mean, Roundup, which, controlling weeds that you don’t want.

Hanson:Onthe retail side, yeah.

Hill:Ortho. But, aphenomenal brand which I had never heard ofuntil you mentioned it this morning issomething called Black Magic.

Hanson:This isgardening for the cool kids.Black Magic. They sell the products at Home Depot, and it’s seed trays, seedstarting soil, everything you need to get started.I start my own seeds.I actually experimented withBlack Magicproducts this year, not to grow marijuana buttomatoes and cucumbers and whatnot. But,it’s a hellaciously cool brand. It has a great logo. Ifthey have T-shirts, I want a T-shirt.

Hill:Yeah. First of all,you tell me. “I’m going to do some shopping this weekend.” “Where are you going?” “I’m going toBlack Magic.”

Hanson:Get someBlack Magic.

Hill:There areso many ways you can go. That could be an amazing pizza place.


Hill:Itcould be any number of things. But,the fact that it’sbuilt right into the Scotts Miracle-Groumbrella of brands is fantastic.

Hanson:You know what’s neat is — the majority of acquisitions in corporate America fail tocreate value. That’s pretty well-known, particularly as they get big. But,what’s interesting about Scotts and acquiring these small, nichegardening brands, is that they havedistribution. They can putBlack Magic into Home Depot at a higher price point than Miracle-Gro, andall of the sudden, you have a very interestingshare of the shelf spacein that retail environment, which is,you have a premium product, you have a mainstream product,you have a discount product, and you’retouching the gardening process atbeginning, middle and end.

Thelast time I went to the store, I had to buy seedstarting soil, potting soil,I got peat moss. Allthat is taking share of my wallet,and I’m giving it to one parent company. So,I think it’s a good strategy. Someanalysts in the past have been concerned about theleverage they’ve taken on in order to execute it. But,I think they have more than enough cash flow to pay for it all,and I think it’ll be pretty interesting. Ifmarijuana legalization doesn’t come to the masses,it’s still a pretty reasonable valuation.

Hill:Andyou look at the track record so far. Putting the products aside,look at the job this company has donein terms of capital allocation, andthey’ve built up a nice track record.

Hanson:Yeah, it’snot a huge company, but they’ve done a solid job.

Hill:Ifyou’ve ever wanted to invest inBlack Magic —

Hanson:Now’s the time.

Hill:– nowyou actually can.

It’s nice thatsome of the CEOs of public companies aremaking a good living, because I was really worriedabout some of them. Andcongrats to Evan Spiegel, the CEO of Snap, who,as it turns out, was the highest paid CEO in 2017. He madejust over $500 million.

Hanson:Thatwasn’t all cash, though, was it? No!

Hill:No,much of that came from a huge stock grant that vested when Snap went public.

Hanson:I mean, that’ll be worthless soon.

Hill:[laughs]But here’s the thing. When you juxtapose the just north of $500 millionthat he made in 2017 with the $720 million loss that Snap took in 2017,I can’t help but think,there’s a way to decrease that loss. Youlooked at the list. Whatstood out to you?

Hanson:Thiscame from The Wall Street Journal. What they were pointing out was, was it nine of —


Hanson:Eight of the top 20 —

Hill:Eight of the top 20!

Hanson:– don’t even have their jobs anymore! They included Steve Wynn, who obviously resigned in shame for that. Then,Hunter Harrison, who passed awayafter trying to steer CSX. After successfully turning around some other railroads, he was attracted to CSX by an activist investor. He had health problems and passed away. Still pocketed something on the order of $100 million orsomething along those lines.

It was just fascinating. You like to think, at any company,that you have a pay-for-performance culture, right? That thepeople who are making the money are the people who are helping grow value for the business. And obviously, CEOs makea lot of money. Andthe fact that the turnover is so high for doing a bad job –these people mostly lost their jobs for cause. They were doing a terrible job! And they were making well into nine figures!



Hill:That’sthe thing that always has me scratching my head. Because you’re right. All kidding aside about Evan Spiegel, in general, rather than CEOs being paid a tremendous amount of cash, we’dmuch rather see their interestsalign with the interests ofindividual shareholders like you and me. But,I don’t think I will everstop shaking my head atsome of the pay packagesthat are put together for CEOs who don’t perform, to the point that you made, and also some of the parachutes. Even people who are being fired for cause, it’s like, “Oh,yeah, but we’re also goingto give you this enormous bag of moneyon your way out the door.”

Hanson:Yeah,it’s crazy. In sports,there are obviously some overpaidathletes,but they got overpaid because at some point, they were probably underpaid, or their talents were marketable. There’s some connection there between the compensation and their relative ranking among their peer group. With CEOs, there’salmost no correlation between skill and pay when it comes to C-level management. None. So, why any board ofdirectors feels the need to overpay a CEO to keep them or to hire them whenyou could probably find someone ofequal or greater ability for less moneyif you’re just willing to work a little hardercontinues to baffle me. Andyou have all sorts of corporateexecutive headhunting firms that make a lot of money looking for these people. And yet, there’s no science to it!I mean, I like to measure things and be very quantitative —


Hanson:Yeah,and I believe in meritocracy, so on and so forth. Andthis is a thing that continues to annoy meabout management teams, ishow much money they think they’re worth when it’sdemonstrably not true that they’re worth that money.

Hill:Youjust reminded me, when you mentioned professional athletes, of the great line that Chris Rock had about the difference between being rich and beingwealthy. It was, “Shaquille O’Neal is rich. The owner of the team who signs his paychecks, he’s wealthy.” How’s The Fool 100 Index doing?

Hanson:Well. The index is beating the market year-to-date. We had ourreconstitution at the end of March. We’llhave another one at the end of June. But, yeah,it’s been a nice time to be in large-cap technology stocks. I think the Fool analysts here in-househave done a really nice jobof identifyingthe cream of the crop there. And that’s helped the index stay ahead of the S&P 500 this year.

Hill:If you want more information on The Fool 100 Index,it’s always right there on the main page of fool.com —

Hanson:I mean, if you’re a Foolish investor,I would say it’s a fun index to compete against.I benchmark all of our servicesand stuff against it now,because it’s stylistically a little bitof a better comparison if you’re investing Foolishly, inrecommendations of ours andso on and so forth. You canmake your life a little harder by trying to beat The Fool 100 instead of the S&P.

Hill:[laughs]Nice. You can also go to fool100.com for more information on The Fool 100 Index. Tim Hanson,I’ll let you get back to gardening.

Hanson:Thank you, sir!

Hill:Thank you!

Hanson:As always, people on the program may have interests in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don’t buy or sell stocks based solely on what you hear. That’s going to do it for this edition of Market Foolery. The show is mixed by Dan Boyd. I’m Chris Hill. Thanks for listening! We’ll see you tomorrow!

25 Unstoppable Stocks to Buy No Matter What

There is a lot of noise in the stock market. Every day, discrete events send stocks up and down. These discrete events can be company-specific, like earnings reports, murmurs about mergers and acquisitions, analyst upgrades and downgrades, or investor presentations. Those discrete events can also be macro-related, including economic data or geopolitical news.

Nonetheless, every day, multiple events happen, causing the stock market volatility that we’ve been seeing from day to day.

Day traders would be wise to continue paying attention to each and every crackle of noise in this market. Long-term investors, however, will find it in their best interest to ignore that noise.

With that in mind, here is a list of 25 stocks that should, regardless of near-term noise, head significantly higher over the next several years due to secular growth tailwinds. 

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Unstoppable Stocks to Buy No Matter What: Apple Inc. (AAPL) apple stockSource: Yuanbin Du Via Flickr

It is only fitting that this list starts with the biggest publicly traded company in the world, Apple Inc (NASDAQ:AAPL).

Apple got to this point ($930 billion market cap) by selling the world a ton of iPhones, iPads and Mac computers. But that business is drying up. Everyone who wants an iPhone, iPad or Mac already has one, so there aren’t really any new buyers in the market. Instead, Apple just gets the upgrade buyers every year.

Bears think this is a problem. But it’s not. Apple is shifting from consumer technology company to software technology company. Through various software services like iCloud, Apple Music, Apple Pay and the App Store, Apple is starting to monetize its massive iOS ecosystem. These software revenues are higher margin than the hardware revenues, and they are also more predictable (most of the money comes from subscriptions), so Apple is actually turning into a company with higher margins and more predictable revenue streams.

As this transformation plays out over the next several years, AAPL stock will head higher. The stock is pretty cheap on its face, trading at just 16-times forward earnings, and there is a bunch of cash on the balance sheet that will be weaponized over the next several years in the form of dividends, buybacks and acquisitions.

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Unstoppable Stocks to Buy No Matter What: Axon Enterprise Inc (AAXN) Source: Axon

Although it is lesser known than Apple, Axon Enterprise Inc (NASDAQ:AAXN) is undergoing a similar transition from largely a hardware company to a software and hardware company.

Axon was formerly known as Taser International, and the business used to be selling tasers and other smart weapons to law enforcement agencies around the world. While selling all those tasers, the company also developed body cameras and accompanying cloud solutions to help store and analyze law enforcement data.

Because the company saw the writing on the wall that this body camera and cloud business was the future, they rebranded as Axon last year, and decided to give away a body camera for free to every police officer in the U.S. in an attempt to win over body camera and cloud contracts.

That plan has worked out beautifully. Now, essentially everyone who took part in the free trial, is a paying customer of Axon.

This growth story is still in its early stages. Law enforcement agencies globally are outdated. They desperately need a technology makeover. They also desperately need to reduce police shootings and misbehavior, two hot topics which have eroded the public’s trust in police. Axon provides the best-in-class solutions to fix both of those problems.

As such, AAXN stock, which is already up 110% this year, should continue to head higher over the next several years.

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Unstoppable Stocks to Buy No Matter What: Adobe Systems Incorporated (ADBE) ADBE Stock Has the Right Stuff to Keep the Momentum GoingSource: Shutterstock

One of my favorite cloud companies is Adobe Systems Incorporated (NASDAQ:ADBE).

ADBE dominates a niche part of the cloud that is dedicated to creative solutions. A few years back, the company shifted its business model from selling hardware to selling software, and shifted its core Adobe solutions to the cloud. In doing so, Adobe made its solutions subscription-based, so now consumers would have to pay repeatedly for a product that they used to only pay once for.

Naturally, Adobe users were upset. But that didn’t stop them from paying. They paid the subscription fee because there is essentially no other player in this market that is even close to offering solutions on-par with Adobe.

Consequently, Adobe has marched its way to unrivaled dominance in the creative solutions cloud market. This market is only growing, and Adobe is only growing with it. As such, ADBE stock, which is up more than 70% over the past year, will continue to be an out-performer over the next several years.

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Unstoppable Stocks to Buy No Matter What: Amazon.com, Inc. (AMZN) Source: Shutterstock

This list would, of course, be incomplete without including perhaps the biggest secular growth giant of them all, Amazon.com, Inc. (NASDAQ:AMZN).

The bears pound on the table about valuation regarding AMZN stock. But those bears must have sore hands, because they’ve been pounding on the table about valuation ever since AMZN was a $300 stock five years ago. Now, Amazon is near $1,600, and its current valuation (200-times trailing earnings) is actually cheaper than its valuation 5 years ago (~1000-times trailing earnings).

That is the beauty of the Amazon growth story. Amazon spends a bunch of money to grow market share in very important secular growth markets, like e-commerce and cloud services. The near-term result is super-charged revenue growth on anemic profitability, and that makes the valuation look absurd.

But then Amazon dominates a secular growth market, peels back those investments, and profitability ramps on what has become a massive revenue base. The long-term result, then, is super-charged revenue growth with super-charged profit growth. That makes the valuation look more reasonable.

Thus, as Amazon continues to grow as a company, AMZN stock will continue to grow into its valuation. Until something major knocks this secular growth company off its winning course, this is a stock to own for the next several years.

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25 Unstoppable Stocks to Buy No Matter What: Alibaba Group Holding Ltd (BABA) The Safer Way to Play Alibaba StockSource: Shutterstock

Any discussion about Amazon would incomplete without talking about its China counterpart, Alibaba Group Holding Ltd (NYSE:BABA).

For all intents and purposes, Alibaba is the China Amazon. The company dominates the digital commerce scene in China and most of Southeast Asia. They also operate a rapidly growing cloud business. Alibaba is also making huge pushes into offline retail, grocery, smart home, and artificial intelligence. Essentially, anything that Amazon is doing in the U.S., Alibaba is doing on the other side of the Pacific Ocean.

That makes Alibaba an equally big growth company as Amazon. In fact, Alibaba is actually growing more quickly than Amazon because China’s consumer class is booming right now. This boom should persist, and carry over to other parts of Southeast Asia over the next several years. Therefore, BABA should continue to be a big growth story over the next several years.

Also, Alibaba actually has really high margins considering its big-growth nature (adjusted EBITDA margins in core commerce were 43% last quarter). That means that this big revenue growth story already has big profit growth. That is the type of set-up that leads to a winning stock in a multi-year window.

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25 Unstoppable Stocks to Buy No Matter What: Baidu Inc (BIDU) Baidu Inc stock bidu stockSource: Shutterstock

Another hyper-growth China internet company that should out-perform over the next several years is Baidu Inc (ADR) (NASDAQ:BIDU).

Just like Alibaba is the China Amazon, Baidu is the China Google. And as the China Google, Baidu has become part of the underlying fabric of the internet in China and Southeast Asia. Thus, as internet usage continues to expand in those still developing and urbanizing markets, Baidu will benefit from higher usage and deeper engagement.

Moreover, digital advertising, which is Baidu’s core business, is booming in China. Roughly 5 years ago, less than 20% of total ad dollars in China went to digital channels. Now, nearly 60% of all ad dollars go to digital sites. Plus, the overall ad market is growing at a high single-digit pace, implying huge growth for the digital advertising segment.

Baidu is a key player in that red-hot digital advertising market in China, and as such, should be set-up for long-term success. The company also has tangential growth drivers through cloud and smart home, neither of which are priced into BIDU stock at current levels (the stock trades at just 25-times forward earnings).

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25 Unstoppable Stocks to Buy No Matter What: Walt Disney Co (DIS) Walt Disney Co Stock Is Due for a Magical Run HigherSource: Shutterstock

Most of the stocks on this list have a history of success over the past several years, but not Walt Disney Co (NYSE:DIS). Owning largely to cord-cutting headwinds and persistent pain at the company’s ESPN segment, DIS stock is actually down 5% over the past three years.

The good news is that these headwinds are starting to move into the rear-view mirror. Disney is making an all-out push into the streaming world. Part 1 happened just a few weeks ago with the launch of ESPN+, which is essentially an on-demand, streaming version of ESPN with exclusive content. Part 2 will happen next year, when Disney launches its own Netflix-like service with Disney content.

Because Disney owns the best content in the world (think Stars Wars, Marvel, Pixar, Disney originals, and potentially even assets from Fox), Disney’s streaming service will be met with very high demand. At that point in time, Disney’s cord-cutting pain will take a backseat to what will be red-hot subscriber growth through Disney’s streaming service. DIS stock, which trades at just 14-times forward earnings, could explode higher on a positive sentiment shift.

Moreover, sports gambling is legal now. ESPN will certainly become a big player in what will be a large and growing sports betting market in the U.S. As that market grows, ESPN will find a way to grow with it.

All in all, despite its under-performance over the past several years, DIS stock will be a big winner over the next several years as certain tailwinds gain traction and offset current headwinds.

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25 Unstoppable Stocks to Buy No Matter What: Facebook Inc (FB) fb stock facebookSource: Shutterstock

If you want the long and detailed explanation about why to buy Facebook Inc (NASDAQ:FB), read here. Otherwise, here’s the short of it.

Facebook shook off what was its worst PR incident in company history with the Cambridge Analytica scandal and proceeded to report arguably its best quarter ever. That is a testament to not only how good management handled the situation, but also how powerful the Facebook machine has become.

This power comes in many forms. Everyone has a Facebook account (essentially 2 out of every 3 people in the world who can have a Facebook account, do have a Facebook account). That number could move closer towards 3 out of 3 considering that Facebook’s user growth remains very strong in geographies with low internet penetration.

Moreover, because of this massive size, Facebook can replicate essentially any internet-based business and successfully operate it at scale (think Instagram Stories and WhatsApp Status, or even think Messenger, which is just a messaging component the company added to Facebook). Also because of its massive size, Facebook’s advertiser demand is sky-high, and that demand will only grow once Messenger and WhatsApp get started on monetization.

Then there is everything else happening at Facebook outside of the core social networking apps. There is Facebook Watch, which could be huge in the streaming space, and Facebook Workplace, which could be huge in the enterprise social networking market. There is also Facebook Marketplace and the build-out of native payments capability, both of which could quickly turn Facebook into an e-commerce marketplace.

All together, there are many, many reasons why FB stock is a must-own for the next several years. Considering the still cheap valuation (less than 25-times forward earnings), FB stock could be a big winner in a multi-year window.

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25 Unstoppable Stocks to Buy No Matter What: Fortinet Inc (FTNT) Source: Dennis van Zuijlekom via Flickr

One of the best markets to gain exposure to over the next several years is cybersecurity. As everything goes online, including both important and valuable data, that data will need to be secured and protected. Thus, demand for cybersecurity solutions will only soar over the next several years.

One of the best investments in this space is Fortinet Inc (NASDAQ:FTNT). Fortinet is a really big, really strong cybersecurity company. Revenue growth over the past five years at Fortinet has run in the 20%-plus range, a sign that demand for the company’s solutions is both strong and stable. Most recently, the company reported 17% revenue growth, yet another sign that demand isn’t slowing by all that much despite increasing scale.

FTNT stock is a bit pricey at nearly 40-times forward earnings. But considering the secular growth prospects of the company and its strong track record of robust revenue growth, a 40-times forward multiple seems reasonable.

Thus, while FTNT stock might run up against some valuation friction in the near-term, this stock is a long-term winner due to its leadership positioning in a secular growth market with increasing necessity.

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25 Unstoppable Stocks to Buy No Matter What: Alphabet Inc (GOOG) google stockSource: Shutterstock

Of all the FANG names, Alphabet Inc (NASDAQ:GOOG) is currently the weakest. Digital advertising revenue growth remains robust, but the shift to mobile is hurting margins because Google search wasn’t designed for mobile, so click-through rates are lower. Moreover, margins are being dragged down even further by Google’s big investments into cloud, smart home, and AI.

The near-term result is that while revenue growth remains robust, profit growth is weak. That has left GOOG stock range-bound in the $1,000 to $1,200 range for the past several months.

Longer-term, though, this stock will head considerably higher.

Revenue growth will never be a problem for this company. Google search is part of the underlying fabric of the internet, so as long as internet usage continues to increase, Google’s ad business will grow at a robust rate. Meanwhile, Google Cloud and smart home are still ramping. Plus, Waymo is getting ready to launch a self-driving car service, and this could be the beginning of Waymo generating billions of dollars in revenues.

Margin growth will also come back into the picture soon. Google’s core ad margins will remain pressured by the mobile shift. But eventually, those big investments into cloud, AI, and self-driving will peel back, and be replaced by super-charged revenue growth. That will lead to margin expansion and super-charged profit growth.

Thus, while GOOG stock is seemingly stuck in neutral right now, this won’t last forever. Eventually, margin compression will end, and GOOG stock will break higher.

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25 Unstoppable Stocks to Buy No Matter What: GrubHub Inc (GRUB) 3 Reasons to Be Cautious About GRUB StockSource: Shutterstock

The at-home economy has arrived.

Whereas we used to go shopping at the mall, we are now more frequently shopping at home through Amazon. Whereas we used to go to the movie theater, we are now more frequently watching movies at home through Netflix.

Along these same lines, whereas we used to go out and eat, we are now more frequently ordering food online and having it delivered to our doorstep through apps like GrubHub Inc (NYSE:GRUB).

Because of this parallel, GRUB is somewhat on the same growth trajectory as NFLX and AMZN. Indeed, revenue growth at GRUB is currently bigger than revenue growth at NFLX and AMZN, and GRUB stock has outperformed both NFLX and AMZN stock over the past year.

GRUB won’t ever get a hundred billion-plus valuation like NFLX and AMZN because it is attacking a much smaller market, and that market has a lot more competition. But the company is in the right space of online food ordering and delivery, and is powered by the right growth drivers as at-home economy adoption only accelerates over the next several years.

As such, GRUB stock should be a big winner over the next 3-5 years.

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25 Unstoppable Stocks to Buy No Matter What: Home Depot Inc (HD) How Home Depot Is Winning With MillennialsSource: Mike Mozart via Flickr (Modified)

Home improvement retailer Home Depot Inc (NYSE:HD) is one of the more stable and secure investments in the market.

The company is often seen as the heartbeat of the U.S. economy. So long as the U.S. economy is healthy, HD will report good numbers and the stock will head higher. Considering that the U.S. economic growth outlook is only improving and that HD continues to report robust numbers, it looks like HD stock will continue to be a winner for at least the next 2-3 years.

Beyond that, of course, HD stock is susceptible to a big pullback if the U.S. economy goes sour. But even back in 2008, the stock’s peak-to-trough decline wasn’t worse than the market’s peak-to-trough decline (both fell about 50%).

Thus, in a worst-case scenario, I see HD stock as market-performer over the next several years. In a best-case (and more likely) scenario, HD stock should be able to continue to deliver out-sized returns to shareholders.

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25 Unstoppable Stocks to Buy No Matter What: iRobot Corporation (IRBT) Why the Rebound in IRBT Stock Will ContinueSource: Shutterstock

The robots are coming, and there isn’t a better way to play this robot revolution on the consumer front than iRobot Corporation (NASDAQ:IRBT).

iRobot is the company behind the ultra-popular Roomba robotic vacuum. Adoption of the Roomba has soared over the past several years as adoption rates of robotic vacuums in the U.S. have gone from zero up to roughly 10%. That is why IRBT’s revenue growth has remained resiliently above 20% despite increasing scale.

But adoption rates are still only at 10%. Because robotic vacuums are simply automation (they take a simple human task and delegate it to a robot), adoption rates of these machines will continue to march higher over the next several years. As such, IRBT should be able to keep growing revenues at a 20%-plus clip.

The only risk here is competition. Competition, though, has been a risk for IRBT for several quarters now, and it has yet to show up in the numbers. Instead, as competition has supposedly increased, IRBT’s revenue growth trajectory has actually improved while gross margins have headed considerably higher.

All in all, IRBT stock will head higher over the next several years as consumer robotics adoption goes mainstream.

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25 Unstoppable Stocks to Buy No Matter What: JD.Com Inc (JD) JD Stock Is Sitting at Make-or-Break SupportSource: Daniel Cukier via Flickr

China e-retail giant JD.Com Inc(ADR) (NASDAQ:JD) has fallen on tough times recently, with the stock dropping nearly 30% off its early 2018 highs.

But the near-term concerns seem unnecessarily short-sighted. Margins are in retreat in the near-term because the company is investing big in order to grow its business. Namely, JD wants to expand its e-retail operations globally, make a big push into offline retail, automate its warehouses, and become a big player in the AI space.

Those are good investments that should yield positive long-term results. Thus, bears freaking out over near-term margin compression as a result of good investments seem to be missing the big picture.

In the big picture, JD is following in the footsteps of Amazon, which is big revenue growth on anemic profits, followed by big revenue growth accompanied by big profit growth. Eventually, JD’s big investment era will end, and margins will ramp higher on a considerably larger revenue base. At that point in time, earnings will roar higher and power a long-term upward trajectory in JD stock.

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25 Unstoppable Stocks to Buy No Matter What: McDonald’s Corporation (MCD) Mcdonald's stockSource: Shutterstock

When it comes to the fast casual food sector, nobody does it better than McDonald’s Corporation (NYSE:MCD).

It seems every other QSR chain, from Chipotle Mexican Grill, Inc. (NYSE:CMG) to Subway to Taco Bell to all those poke and super-food shops, lives and dies by the trend. When the QSR trend is in their favor, they do well. And when it’s not, they don’t do well.

MCD is exempt from this because its biggest value props (price and convenience) don’t trend. Consumers always want price and convenience. McDonald’s dominates on price and convenience. Therefore, consumers continue to go to McDonald’s in great frequency.

It also helps when MCD is on trend. And recently, the company has gotten on-trend by revamping its menu to include healthier, fresher options that are more in-line with today’s health-conscious consumer.

Overall, due to its unparalleled value prop in price and convenience, MCD will continue to dominate the QSR space, and MCD stock will keep heading higher.

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25 Unstoppable Stocks to Buy No Matter What: Momo Inc (MOMO) The Rally in Momo Stock Has More Runway AheadSource: Shutterstock

What is the internet without online dating?

Momo Inc (ADR) (NASDAQ:MOMO), China’s big online dating platform, would argue that it isn’t much. And they’d be right. Although only 1 in every 10 U.S. adults had used online dating as of 2016, that number was nearly 25% for teenagers in 2015 (and is presumably way higher today). Clearly, the youth are using online dating, and that means that online dating is indeed a big part of the future internet.

That is good news for Momo. The company is behind the dominant online dating platform in China. Therefore, as China internet usage surges and the Chinese internet landscape starts to look and act like the U.S. internet landscape, online dating in China will turn into a big growth industry.

Indeed, this is already happening. Momo reported revenue growth of nearly 60% last quarter.

These big growth prospects, however, are being materially undervalued by the market. MOMO stock trades at just 16-times forward earnings, a multiple which doesn’t match up with its 60% revenue growth.

As such, MOMO stock is a case of big growth converging on a discounted valuation, a pairing which should propel significant share price out-performance over the next several years.

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Long-Term Buy 17: Netflix, Inc. (NFLX) netflix stockSource: Shutterstock

By now, it should be clear that Netflix, Inc. (NASDAQ:NFLX) is marching towards world domination of the entertainment industry.

Back in 2011, Netflix split apart its DVD and streaming businesses. Everyone cried wolf, and subscribers quit platform en masse. But a year later, cable television viewership in the U.S. peaked. And seven years later, Netflix has 56 million streaming subscribers in the U.S. and 125 million globally.

Clearly, Netflix is doing something right.

That something right is delivering a whole bunch of quality content to consumers in an on-demand, multiple-screen fashion, and doing so at a very a low price point. In this sense, Netflix’s streaming services enhance the two most important things to consumers, price and convenience.

Because of its enhanced price and convenience value prop, Netflix will continue to grow its subscriber base at a robust rate until a majority of TV households around the world have a Netflix subscription. Moreover, because Netflix so so cheap, the company has a lot of wiggle room to raise prices, thereby boosting revenues and margins.

All in all, Netflix has two huge growth drivers over the next several years through global adoption and price hikes. The combination of those two growth drivers will propel NFLX stock higher in a multi-year window.

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25 Unstoppable Stocks to Buy No Matter What: Nike Inc (NKE) Despite the Markets Seeing Red, NKE Stock Could Rally 20%Source: Shutterstock

Nike Inc (NYSE:NKE) has long reigned as the king of the athletic retail industry.

The company’s dominance has been threatened time and time again over the past several decades, most recently by adidas, but each threat proves to be fleeting. The end result is that Nike continues to remain king of athletic retail.

This will continue over the next several years. Not only does Nike have a robust athlete portfolio in the critical big-growth basketball and soccer markets, but the company is also pivoting towards becoming more of a lifestyle brand with universal appeal, not just a performance brand with athlete appeal. This transition will only expand Nike’s market leadership position, and make the brand more appealing to more consumers.

Granted, NKE stock has had a run-up recently, and is pushing up against some valuation barriers (30-times forward earnings is a pretty big multiple for this stock). But near-term valuation friction aside, NKE stock should out-perform in a multi-year window due to its unparalleled leadership position in a big-growth and big-demand athletic retail market.

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25 Unstoppable Stocks to Buy No Matter What: Nvidia Corporation (NVDA) NVIDIA Stock (NVDA) Won't Stay Down Long After Shocking AnalystsSource: Shutterstock

The company with perhaps the broadest exposure to multiple nascent secular growth markets over the next several years is Nvidia Corporation (NASDAQ:NVDA).

NVIDIA makes the chips which power tomorrow’s world. These chips are used in everything from artificial intelligence to cloud data-centers to automation to high-end gaming to high-performance computing. Because of this, NVDA has exposure to multiple markets that have big growth potential over the next 5-10 years. That gives NVDA stock a big and diverse multi-year growth trajectory.

NVDA stock does, however, trade as if that is the case. The stock features a greater than 30-times forward earnings multiple, which is pretty big. But in the context of the company’s exposure to multiple high-growth markets, that 30-times forward multiple doesn’t seem so big.

All in all, over the next several years, NVDA stock will continue to be a winner as investment into AI, data-centers, and automation accelerates.

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25 Unstoppable Stocks to Buy No Matter What: Palo Alto Networks (PANW)

One of my favorite sayings in the market these days is, “Another day, another hack, another reason to buy a cybersecurity stock” .

But that saying could just as easily read, “Another day, another hack, another reason to buy Palo Alto Networks Inc (NYSE:PANW)”.

In other words, Palo Alto Networks is so big and so good at what they do that the company may as well be a substitute for the entire cybersecurity space. The company not only dominates the cybersecurity space, but that dominance comes with a consistent track record of 20%-plus revenue growth and healthy operating margin expansion.

This growth will continue. PANW’s customer base continues to grow at an absurd rate, while revenue growth continues to run at a 20%-plus rate. Sustained sizable growth in both user base and revenues illustrates that PANW is fully reaping the secular tailwinds pushing forth cybersecurity solution adoption globally.

Over the next several years, this strong growth will lead to PANW stock heading materially higher.

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25 Unstoppable Stocks to Buy No Matter What: Proofpoint Inc (PFPT)

Cybersecurity company Proofpoint Inc (NASDAQ:PFPT) isn’t as big as the other cybersecurity giants on this list. But what Proofpoint lacks in size, it makes up for in growth.

Proofpoint isn’t like the Palo Alto Networks of today. It isn’t big, nor does it operate at 20% operating margins, nor is it the poster-child for the entire cybersecurity space.But Proofpoint is like the Palo Alto Networks of yesterday. The smaller version that was growing at 50% per year and expanding margins from 7% to 20%.

Last quarter, Proofpoint reported revenue growth of 40%. That is a big number. It is also bigger than the revenue growth the company reported the quarter before that (36%).This year, Proofpoint expects revenues to grow by 37%. That is the same growth rate as last year. It is also the same growth rate the company has maintained for the past five years.

In other words, this massive 30-40% revenue growth story isn’t slowing down at all. Meanwhile, operating margins are also ramping higher, and are expected to reach 14% by 2020.

In totality, PFPT has PANW written all over it. PANW stock has gone from $40 to $200 over the past 5 years. A similar rally could be in store for PFPT stock over the next 5 years.

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25 Unstoppable Stocks to Buy No Matter What: Shopify Inc (SHOP) 3 Reasons Shopify Stock Can Rally Almost 20% to $170Source: Shopify via Flickr

I’ve said it before and I’ll say it again. Few stocks in the market are supported by as powerful of a growth narrative as e-commerce solutions provider Shopify Inc (NYSE:SHOP).

The whole world is moving towards decentralization. Technology companies are taking power from the few, giving it to the many, and creating systems that optimally pair supply with demand. And its working.

Uber did this in the transportation industry. Airbnb did this in the accommodations space. YouTube has done in this in the entertainment world, while Netflix has done this in the content production realm. Facebook, Instagram, Twitter, Snapchat… all of those have done that in the information world.

Now, Shopify is decentralizing the digital commerce space. The company provides digital commerce tools which allow anyone to sell anything online. In the same way that Uber said anyone can drive and make money and that Airbnb said that anyone can rent out living space and make money, Shopify is saying that anyone can run a e-commerce shop and make money.

This is the future of e-commerce. And Shopify is spearheading it. As such, SHOP stock should be a big winner over the next several years.

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Long-Term Buy 23: Tencent Holding (TCEHY) Insider Selling Concerns Just Created a Buying Opportunity in TCEHY StockSource: Shutterstock

The China internet growth narrative it still in its infancy relative to the U.S. internet growth narrative. Quite simply, U.S. internet adoption rates are right around 90%, while China internet adoption rates are still below 40%.

That means there is still a ton of growth left until China’s internet landscape is fully saturated like the U.S. internet landscape.

With that in mind, why wouldn’t you want to invest in China’s Facebook? TENCENT HOLDING/ADR (OTCMKTS:TCEHY), often labeled as China’s Facebook due to its billion user WeChat/Weixin app, is a hyper-growth company with broad exposure to China’s booming internet landscape.

That wast most evident in the company’s recent quarterly results, wherein revenues increased by 48% year-over-year, operating profits increased by 59% year-over-year, and net profits increased by 65% year-over-year.

Because of the still low internet penetration rates in China, this big growth supporting TCEHY is here to stay. Consequently, TCEHY stock will remain a big winner over the next several years.

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Long-Term Buy 24: Take-Two Interactive Software, Inc (TTWO) 'Fortnite' Isn't a Threat to TTWO StockSource: Shutterstock

The video game is red-hot right now for two reasons.

First, video game publishers are figuring out how to optimally squeeze more money out of each video game buyer. Before, video game publishers used to make money on the physical video game sale. Now, video game publishers are making money on the physical video game sale, as well as through embedded micro-transactions. Thus, average revenue per each video game player is actually increasing by a lot right now.

Second, the video game industry is being injected with some cool next-gen technology. The most obvious example of this is the Nintendo Switch, which caused an unprecedented rise in video game demand last year.

Both of these tailwinds will persist. Micro-transactions will only grow in popularity over the next several years, while next-gen technology like VR/AR have yet to fully hit the video game world. Plus, the whole eSports category provides a strong tailwind. Because of this, video game stocks remain top investments over the next several years.

In this world, my top pick is Take-Two Interactive Software, Inc (NASDAQ:TTWO). The company has an exceptionally robust product portfolio that includes games like Grand Theft Auto which have enduring demand. TTWO is also the king of micro-transactions, and makes a bunch of its money through in-game purchases.

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Long-Term Buy 25: Weibo Corp (WB) Digital Ad Growth Should Push WB Stock to $200Source: Shutterstock

A lot of people call Weibo Corp (ADR) (NASDAQ:WB) the Chinese Twitter Inc (NYSE:TWTR), but Weibo would probably be offended by the comparison. After all, Weibo has nearly 25% more users than Twitter.

But Twitter has a bigger market cap.

That doesn’t make much sense. Twitter’s larger market cap is simply a result of bigger revenues. But those bigger revenues are the result of higher ARPU, which is the result of the U.S. digital ad market being bigger and more complete than the China digital ad market.

Eventually, China’s digital ad market will be significantly bigger and just as complete as the U.S. digital ad market. At that point in time, Weibo’s ARPU should be on-par with, if not greater than, Twitter’s ARPU. Considering Weibo’s user base is 25% larger, that should translate to at least 25% higher revenues and a 25% bigger valuation.

Because of this, WB stock should remain a big winner over the next several years.

As of this writing, Luke Lango was long AAPL, ADBE, AMZN, BABA, BIDU, DIS, FB, GOOG, HD, IRBT, JD, MCD, MOMO, PANW, S

Should You Buy Home Depot Stock After Earnings? 3 Pros, 3 Cons.

Home Depot Inc (NYSE:HD) disappointed investors with a rare soft earnings report on Tuesday. The company did beat on EPS by two cents. It came up very short on the revenues line, however, with $24.9 billion in sales falling $270 million short of expectations. That left Home Depot with just a 4.4% year-over-year growth rate. That wasn’t enough to please investors. HD stock is trading down modestly following its earnings report.

That may not be a fair reaction, however. As we’ll see in the pros and cons below, the earnings miss was largely driven by the weather. Bulls and bears disagree on the broader ramifications of that. Zooming out, Home Depot is the best player in its field, but its stock also fetches a premium valuation. That said, is Home Depot stock worth buying today?

HD Stock Cons

Will 2018 Miss Guidance?: HD stock bulls will say that this sales miss was weather-driven and not important. They have a valid point. But they could be wrong.

Reuters quoted an analyst who doubted that Home Depot will make up all the lost sales in future quarters: “The lower-than-expected sales could pressure Home Depot’s ability to meet its full-year targets,” Loop Capital analyst Laura Champine said. “How much of the sales they’ve missed will they get back? That’s the key.”

Indeed, given Home Depot’s steep discounting on items such as patio furniture, the company may see a more than one quarter impact on its profitability.

Largely Played Out Market: Within the United States, there’s likely not much opportunity for additional stores. For example, in the latest quarterly report, we see that Home Depot added just four net stores over the past year.

That means that growth opportunities going forward will be diminished. The company has done well internationally. It is one of Canada’s largest home improvement chains. Additionally, it has more than 100 stores (and growing) in Mexico, which should be a booming market in coming years. All that said, without much growth opportunity in the United States, expect long-term margins to decline as competitors cut prices to try to maintain market share. As a mature market, investors shouldn’t expect the same eye-popping growth that Home Depot stock previously delivered.

More Expensive Than Lowe’s: HD stock is significantly more expensive than stock in its chief rival, the Lowe’s Companies, Inc. (NYSE:LOW). Lowe’s stock is selling at 21x trailing PE and 14x forward PE. That matches up favorably against Home Depot stock at 25x trailing and 19x forward PE. The comparison looks even worse for Home Depot once you realize that it has a far more leveraged balance sheet than Lowe’s which should, in theory, make Home Depot more profitable.

On a revenues basis, HD stock also looks pricey. The market values HD stock at $221 billion for $100 billion in annual revenues. Whereas Lowe’s has a market cap of $72 billion against $69 billion in revenues. That means that the market is willing to pay a dollar for a dollar of Lowe’s revenue, but more than 2x that for a dollar of Home Depot revenues. Home Depot has the better brand, but is it worth that much of a premium?

HD Stock Pros

Earnings Softness Was Weather-Driven: Home Depot’s management said that unusually cold weather this spring caused the earnings miss. Due to abnormally chilly conditions across much of the U.S., folks delayed the start of their gardening and yardwork this year. That led to, predictably, serious volume declines for products such as fertilizers. Specifically, that led to the CEO stating that: “The miss in terms of garden was significant against what we planned”.

Management suggested this was merely shifted demand, not an overall loss. So far, the company sees May sales growing at a double-digit rate, making up for much of the first quarter’s shortfall. Overall, that allowed Home Depot to maintain guidance for the full year. On the whole, the bulls say that the earnings miss won’t have lingering effects for Home Depot stock.

Web-Resistant Retailer: Retail used to be a classic sector for investors. Lately though, given Amazon.com, Inc.’s (NASDAQ:AMZN) monopolization of wide swaths of the retail landscape, investors have given up on shopping investments.

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Home Depot stock, however, has fared well despite the so-called retail apocalypse. There are several good reasons for that. For one, Home Depot has expanded internationally in Mexico with its huge construction market. Within the U.S., do-it-yourselfers seem to still benefit from having in-store help to guide purchases. Also, for certain projects, getting a part or tool is an immediate need, where the consumer won’t wait two days for delivery. Finally, many of Home Depot’s products are heavy or bulky, making online shipping uncompetitive with the company’s streamlined supply chain.

Huge Dividend/Buyback: HD stock treats its shareholders well. Management has been jacking up the dividend for more than a decade now. Over the past 10 years, it has averaged a 16% compounded dividend growth rate. During the past five years, as the housing market recovered, management has gotten even more generous, with a 24% dividend growth rate.

That means that while Home Depot stock yields 2% now, a buyer five years ago is now getting 5.7% on their initial investment. Don’t overlook the power of a modest starting yield that grows explosively. On top of that, Home Depot is buying back tons of stock. Since 2010, the amount of Home Depot stock outstanding has plunged from 1.8 billion shares then to just 1.15 billion today. That creates a ton of value for the remaining stockholders and supercharges returns and dividend growth.

HD Stock Verdict

Home Depot is the best-in-class retailer in its niche. It’s largely Amazon resistant, and has built a nice web presence itself. Furthermore, its international efforts, particularly in Mexico, give it further growth opportunities even with the US market tapped out.

That said, HD stock is expensive in its own terms and compared against Lowe’s. The U.S. market is unlikely to perform nearly as well as in the past, leading to falling profit margins. Home Depot is a great company, but the stock price reflects that already. As for what the stock will do for the remainder of 2018, much will come down to whether this earnings whiff was a one-off or the start of a problematic trend.

At the time of this writing, the author held no positions in any of the aforementioned securities. You can reach him on Tw

10 Stocks To Watch For May 15, 2018

Some of the stocks that may grab investor focus today are:

Wall Street expects Home Depot Inc (NYSE: HD) to report quarterly earnings at $2.06 per share on revenue of $25.22 billion before the opening bell. Home Depot shares fell 0.04 percent to $191.00 in after-hours trading.
Switch Inc (NYSE: SWCH) reported weaker-than-expected earnings for its first quarter on Monday. Switch shares dropped 7.18 percent to $14.36 in the after-hours trading session.
Analysts are expecting Boot Barn Holdings, Inc. (NYSE: BOOT) to have earned $0.16 per share on revenue of $163.65 million in the latest quarter. Boot Barn will release earnings after the markets close. Boot Barn shares gained 1.4 percent to $21.80 in after-hours trading.
Famous Dave’s of America, Inc. (NASDAQ: DAVE) reported upbeat earnings for its first quarter on Monday. Famous Dave’s of America shares gained 7.69 percent to $8.40 in the after-hours trading session.
Before the markets open, Eagle Materials Inc (NYSE: EXP) is estimated to report quarterly earnings at $1.08 per share on revenue of $306.04 million. Eagle Materials shares fell 0.09 percent to $105.72 in after-hours trading.

Find out what's going on in today's market and bring any questions you have to Benzinga's PreMarket Prep.

Pfenex Inc (NYSE: PFNX) shares surged over 25 percent in after-hours trading after the company announced the positive top-line PF708 study results in Osteoporosis patients that showed no imbalances in severity or incidence of adverse events. Pfenex shares climbed 25.41 percent to $7.65 in the after-hours trading session.
Analysts expect AZZ Inc. (NYSE: AZZ) to report quarterly earnings at $0.44 per share on revenue of $231.53 million before the opening bell. AZZ shares dropped 0.66 percent to close at $45.05 on Monday.
Vipshop Holdings Ltd – ADR (NYSE: VIPS) reported weaker-than-expected earnings for its first quarter on Monday. Vipshop shares dipped 14.45 percent to $12.91 in the after-hours trading session.
After the closing bell, PetIQ, Inc. (NASDAQ: PETQ) is projected to post quarterly earnings at $0.12 per share on revenue of $108.58 million. PetIQ shares rose 1.29 percent to close at $19.63 on Monday.
Restoration Robotics Inc (NASDAQ: HAIR) reported downbeat results for its first quarter on Monday. Restoration Robotics shares dropped 19.77 percent to $3.45 in the after-hours trading session.

10 Stocks To Watch For May 15, 2018

Some of the stocks that may grab investor focus today are:

Wall Street expects Home Depot Inc (NYSE: HD) to report quarterly earnings at $2.06 per share on revenue of $25.22 billion before the opening bell. Home Depot shares fell 0.04 percent to $191.00 in after-hours trading.
Switch Inc (NYSE: SWCH) reported weaker-than-expected earnings for its first quarter on Monday. Switch shares dropped 7.18 percent to $14.36 in the after-hours trading session.
Analysts are expecting Boot Barn Holdings, Inc. (NYSE: BOOT) to have earned $0.16 per share on revenue of $163.65 million in the latest quarter. Boot Barn will release earnings after the markets close. Boot Barn shares gained 1.4 percent to $21.80 in after-hours trading.
Famous Dave’s of America, Inc. (NASDAQ: DAVE) reported upbeat earnings for its first quarter on Monday. Famous Dave’s of America shares gained 7.69 percent to $8.40 in the after-hours trading session.
Before the markets open, Eagle Materials Inc (NYSE: EXP) is estimated to report quarterly earnings at $1.08 per share on revenue of $306.04 million. Eagle Materials shares fell 0.09 percent to $105.72 in after-hours trading.

Find out what's going on in today's market and bring any questions you have to Benzinga's PreMarket Prep.

Pfenex Inc (NYSE: PFNX) shares surged over 25 percent in after-hours trading after the company announced the positive top-line PF708 study results in Osteoporosis patients that showed no imbalances in severity or incidence of adverse events. Pfenex shares climbed 25.41 percent to $7.65 in the after-hours trading session.
Analysts expect AZZ Inc. (NYSE: AZZ) to report quarterly earnings at $0.44 per share on revenue of $231.53 million before the opening bell. AZZ shares dropped 0.66 percent to close at $45.05 on Monday.
Vipshop Holdings Ltd – ADR (NYSE: VIPS) reported weaker-than-expected earnings for its first quarter on Monday. Vipshop shares dipped 14.45 percent to $12.91 in the after-hours trading session.
After the closing bell, PetIQ, Inc. (NASDAQ: PETQ) is projected to post quarterly earnings at $0.12 per share on revenue of $108.58 million. PetIQ shares rose 1.29 percent to close at $19.63 on Monday.
Restoration Robotics Inc (NASDAQ: HAIR) reported downbeat results for its first quarter on Monday. Restoration Robotics shares dropped 19.77 percent to $3.45 in the after-hours trading session.

L Brands: So Much More Than Victoria’s Secret

Things are looking good if you are a fan of the Victoria’s Secret brand. While the world’s most renowned women’s lingerie brand usually sells its good at a hefty price tag, consumers now get the opportunity to buy these articles at a large discount as new promotions and limited time offerings are being featured in the stores and on the website on a daily basis. While this is great news for the Victoria’s Secret consumer, it is a thorn in the eye of the investors who have placed their money in L Brands, the mother company behind Victoria’s Secret. L Brands shares are down 46% YTD, and some sell-side analysts are convinced that L Brands shares still face more downside.

The question one has to ask however is, whether or not Victoria’s Secret is really the most important entity within the L Brands consortium. Surely, it is undeniable that Victoria’s Secret is the most famous brand within the group, and in terms of revenues, it towers over the other brands. When shifting the focus to operating income, however, it becomes clear that there are other brands in the portfolio that are contributing more to the bottom line than Victoria’s Secret. While most bullish pitches about L brands argue that the problems at Victoria’s Secret are short-term related and that it is a strong brand that is set to make a turnaround, I look at L Brands in a different way. I do not deny the potential of a Victoria’s Secret turnaround, nor do I question the strong brand. The numbers however prove that Victoria’s Secret is in a severely troubled state, and I am of the opinion that actions chosen by management are insufficient. I however believe the case can be made that the Bath & Body Works brand is severely undervalued within the L Brands group and that the market does not fully appreciate the optionality that L Brands has in creating value by spinning off or discontinuing certain parts within the group.

An introduction

L Brands was founded in 1963 when founder and current CEO Les Wexner opened his first “The Limited” store. In 1969, Wexner took the company public and in 1982 Wexner acquired the Victoria’s Secret brand for USD 1 million. After acquiring and spinning of several brands such as Abercrombie & Fitch (ANF) and the sale of its oldest brand “The Limited”, the current L Brands group looks as follows:

Victoria’s Secret: L Brands’ flagship brand and world renowned lingerie brand. Pink: Separate store concept from Victoria’s Secret but grouped under the latter, Pink is a women’s lingerie retailer focused on teenagers, college students and young professionals. Bath & Body Works: Market leading speciality retailer in home fragrances, candles, soaps, La Senza: Women Lingerie retailer, focusing on a younger target audience than Victoria’s Secret. Henri Bendel: Upscale retailer of handbags, accessories, women clothing and fragrances.

I will go in more detail on these segments, but first, let us have a look at the revenue and operating profit contribution of these segments.

As stated in the prologue of this analysis, the Victoria’s Secret brand takes the largest part of the revenue contribution for its account. While revenue contribution declined from 63% of total sales in FY15 to 58% in FY17, the brand still contributes significantly more than the second largest contributor Bath & Body Works. La Senza & Henri Bendel are grouped under the “Other” segment.


L Brands revenue distribution – Source: Author calculations/L Brands financial statements

While Victoria’s Secret is the main revenue contributor, it is not the main contributor towards the operating income line. While it historically generated more operating income than Bath & Body Works, the latter has overtaken Victoria’s Secret as main source of operating income. Interesting to note is the negative contribution of the other segment.

operating profit
L Brands operating profit distribution – Source: Author calculations/L Brands financial statements

Let’s take a closer look at the different segments.

Victoria’s Secret

Victoria’s Secret is the iconic women’s underwear brand that is sold globally. It is known for its yearly fashion show that is watched by millions of people in more than 200 countries and for its lingerie models, the “Victoria’s Secret Angels”.

Within L Brands, Victoria’s Secret represents three subgroups: Victoria’s Secret Lingerie, Victoria’s Secret Beauty, and Pink. One could easily assume that Victoria’s Secret Lingerie overshadows the other two in value, but it is important to understand that Victoria’s Secret Beauty features 4 of the top 20 fragrances in the US and that Pink represents a USD 3bn+ sales base with a sales/square feet ratio above the Victoria’s Secret’s shops.

As stated above, Victoria’s Secret is not doing too well at the moment due to a number of factors. The problems started when previous VS CEO Sharen Turney decided to leave the company in February 2016. Founder Lex Wesner took over the CEO role again and decided to restructure the business. The business was split up in the three aforementioned segments and each received its own leader. Denise Landman who has over 15 years of tenure at Pink would resume leading the Pink segment. Jan Singer, who worked for more than a decade at Nike (NKE) was hired to lead the lingerie segment and Greg Unis came over from Coach (TPR) to lead the beauty segment.

A more radical decision was the choice to exit the swimwear industry and other product categories, thereby giving up 1bn USD in sales in order to be able to focus on the core products, bras and panties. VS management was convinced that they could offset the operational deleveraging from the swimwear exit by accelerating the growth in underwear sales. Unfortunately, for the management, the restructuring coincided with the surge of new fashion trends. Bralettes, a more fashion inspired type of bra which offers less support than a structured bra quickly gained popularity. The lack of differentiating power within bralettes and the significantly lower average selling price created the additional problem of negative same store sales.

Some of the promotions on a random day – Source: Victoria’s Secret website

This brought Victoria’s Secret in the position where it is being forced to offer discounts after discount in order to keep its topline up. These promotions include lower prices, free items such as panties and totes, large discounts on combinations, reduced basket size to qualify for free shipping or a combination of those things. While this allows Victoria’s Secret to grow its revenues lines, it is putting significant pressure on the margins and the profitability of the brand.

Just have a look at the operating profit contribution of Victoria’s Secret over the past years

Victoria Secret Operating Profit

Victoria’s Secret operating profit – Source: Author calculations/L Brands financial statements

Furthermore the market seems to be worried about increased competition, the high exposure to B- and C-class malls and the promotional environment.

There is no denying that we are in a promotional environment and Victoria’s Secret is not the only one offering large discounts. In a way, this is related to the aforementioned surge in popularity of bralettes. While constructed bras require some sort of design expertise in order to design bras that are both fashionable and offer the necessary support, bralettes target women with an A- or B-cup size and thus require less support. This handicaps Victoria’s Secret as they cannot really leverage their manufacturing expertise within this segment and are left to compete on the fashion aspect. Needless to say, the amount of players that can compete on fashion is far larger than those that can compete on design. This has allowed players such as American Eagle Outfitters’ Aerie (NYSE:AEO) to enter the market. With no clear differentiating aspects other than brand and fashion, it is impossible for Victoria’s Secret to warrant the same premium pricing that it has for constructed bras. The lack of product differentiation has turned the bralettes market in a market that competes on price and promotions. Whether or not bralettes are here to stay is a topic on which I will not comment. If it turns out that bralettes are more fad than fashion then Victoria’s Secret will be a prime benefactor of the return to constructed bras.

As to the exposure to the B- & C-class malls, I think the market may be overreacting a bit. I think the problems that Victoria’s Secret is facing have much more to do with the promotional environment and current fashion trends than with their mall exposure. Obviously, the fall in mall foot traffic is negatively impacting Victoria’s Secret sales but L Brands has repeatedly stated that their B- and C-class malls are actually the most profitable stores that they have. While the performance between these A-malls and C-malls is almost similar, the rent expense of the latter category is far below the level of the A-malls making these stores more profitable. With 99% of the store base cash flow positive, there is no immediate issue. On the long term, it will be interesting to see how the company will position itself. In recent years, Les Wexner has voiced his belief that the mall environment will remain viable several times. According to him, this is just a phase in which the out of favour chains get replaced by more attractive brands. He stated that he would be indifferent or even happy to see the Nordstrom (NYSE:JWN) and Macy’s (NYSE:M) stores get replaced by Tesla (NASDAQ:TSLA) dealerships, restaurants and other places that attract people (source: 2017 Investor Conference). The company has therefore increased investments in its employees in order to maintain the best associates (which have a tenure of more than 10 years on average) . I have found L Brands’ focus on the digital channels to be insufficient in the recent past but I am pleased to hear that the company is now investing more in the e-commerce segment. Especially since management confirmed that online sales are more profitable than in-store sales.

Performance comparison A-malls vs C-malls – Source: Investor Handout L Brands

Some bears also claim that Victoria’s Secret fails to inspire the younger generation shoppers but a recent study by Goldman Sachs actually reveals Victoria’s Secret as one of the most loved brands for Generation Z members and Millennials.

Bath & Body Works

Bath & Body Works is the leading U.S. speciality retailer for home fragrances, candles, hand sanitzers, soaps and moisturizers. While the total revenue number generated within this segment is much smaller than that of the Victoria’s Secret segment, the B&BW operating margin that is nearly twice as high as the one of VS has resulted in Bath & Body works becoming the main contributor to the operating income line.

B&BW Operating profit
Bath & Body Works operating profit – Source: Author calculations/L Brands financial statements

The thing that attracted my attention within this segment is the continuous strong growth in topline. In the first quarter of 2017, B&BW reported $678m in revenue. Now that the total first quarter sales of 2018 are revealed, we can see that the B&BW segment generated $760m in sales, a 12% increase compared to the previous year. I checked the monthly sales calls for all three months included in this quarter and noticed that unlike the Victoria’s Secret segment, the merchandise margin remained flat compared to the previous year in all three months. The increase in revenue is thus fuelled by market share gains and increased demand instead of additional discounting.

It is clear that the recent store remodels with a White Barn integrated in the Bath & Body Works store is paying off its dividends.

When looking at the high price paid by Natura cosmetics (OTC:OTC:NUACF) for the much lower margin struggling Bodyshop, one could start to wonder how much a high margin, fast growing market leader within this segment could be worth. This is something that will be discussed in the valuation section further down in this analysis.

One could argue that B&BW brand name is less valuable than that of Victoria’s Secret and that this segment has less of a moat than the lingerie division but it is also the case that this segment is higher margin and that it is less fashion-dependable. In all cases, it is clear that Bath & Body Works is a very valuable business.

The international segment

The international segment covers those Victoria’s Secret and Bath & Body Works stores outside North America.

The division can be split up in three sub-segments: the wholly owned stores, the franchise partners and the travel retail stores.

L Brands has chosen to own and operate its own stores in the same way as it does in North America in only two foreign markets, the United Kingdom and China. The margins and other financial metrics for these stores are similar to those in the United States. The wholly owned stores represent 20% of the revenues generated in the international segment.

Travel retail represents 20-25% of the international segment’s revenues. The stores within this sub-segment are those that you can find in the various airports all over the world. The stores operate on a wholesale model that generates above company average margins of around 30%. Management believes that revenues within travel retail can increase by factor 2.5 in 5 years’ time (Source: L Brands Investor Meeting 2016).

The majority of the revenue originates from the franchise partners that operate on a royalty basis. L Brands wishes to cooperate with a limited number of partners that can each manage a large geographical area. Currently 33% of the royalties received are used to support the international sales team while 66% ends up in the operating profit line. The interesting aspect here is that there is significant operating leverage potential as you have a certain fixed cost base within the international sales team expense base.

A lot of the international market is still untapped for L Brands. The company stated that Western Europe has the same potential as the United States, yet is it is mainly untapped. As a European, I would agree with this statement. A quick check with my female colleagues confirmed that which I already discovered on my credit card after my partner takes the liberty to use it: women love the Victoria’s Secret brand and its products. Belgians who wish to order Victoria’s Secret goods however have to order it online, pay international shipping fees if they order for less than $120 and then wait for 10-14days before it arrives. It is also impossible to return goods to a store, which creates additional costs if one wishes to return the goods. Therefore I can’t grasp why L Brands hasn’t looked more aggressively for a partner that can serve these high income Western European markets. One can only imagine how much more Europeans would purchase if they actually had the opportunity to visit a store or to order it from a local distribution centre that provides free one-day shipping and returns.

While the profitability of the international segment is currently depressed due to a rapid store build-out in China and due to Brexit-related problems, it must be noted that the operating margin of this segment was in the low twenties before the China expansion. While it may take 2-3 years before start-up costs fade off and the new stores reach maturity, it should be expected that the international segment will be a large contributor to L Brands operating profit growth.

The ‘Other’-segment

This segment features all of L Brands other ventures, which mainly consist of intimates brand La Senza and high end handbag maker Henri Bendel.

These ventures have a combined revenue base of nearly $600m but sadly for L Brands, have a negative operating income of over $160m. This operating loss is not a one off result due to a one time restructuring or anything like that. The past four years, this segment has posted an operating loss with negative mid twenty operating margins.

Other segment Operating Profit
‘Other Segment’ operating profit – Source: Author calculations/L Brands financial statements

While Les Wexner, who has build out the Victoria’s Secret and Bath & Body Works segments almost from scratch, probably believes that he can also turn these brands in billion dollar ventures, the question remains if Victoria’s Secret can afford to continue to invest in these brands. Not only in terms of time and attention but also in terms of financial resources.

While it is probably impossible to eliminate the entire operating loss as the other divisions would have to take over certain overhead costs, let’s assume that the company can reduce the operating loss by $130m by shutting down Henri Bendel and La Senza. This would have lifted FY2017 operating income from $1,728m to $1,858m, thereby raising the operating margin to 14.7% from the actual 13.7%.

Moreover, shutting down these brands is a very unlikely scenario. While these brands are loss making, they do have value for private equity players. Assuming just a 0.25 EV/sales ratio would bring in $150m for L Brands if one assumes that all debt stays with L brands. A sale would also prevent the company from having to take on any restructuring costs.

Afbeeldingsresultaat voor taylor swift henri bendel

Henri Bendel add – Source: Henri Bendel Twitter Page

The question remains whether or not, CEO Wexner will be open to divesting these brands. Without the pressure of an activist investor, I would not count on an early departure from these brands.


Let us have a closer look at management. As stated earlier, the founder Les Wexner currently serves as CEO and he has a 16% stake in the company. This should align his interest with that of the long term shareholders. It could however also be the case that this large stake is preventing activist investors from coming in and pushing for value creation. Elliott Management Corp’s recent win over Vivendi (OTC:OTCPK:VIVEF) in the Telecom Italia (BIT:TIT) case however shows that a large stake from an opposing shareholder does not have to prevent shareholder activism.

I believe there are both good things and bad things to say about Wexner’s management. It is clear that Les Wexner has delivered outstanding results in the past decades and that he has build one of the most renowned apparel brands in the world. Wexner has bought and sold brands at exactly the right time and he has always been on top in regarding to changes in the retail environment. It can be argued however that ever since he took back the reigns in 2016, he made some questionable decisions. Discontinuing the swimwear division to reignite growth in the lingerie division would probably have awarded Wexner with a lot of credit if it had worked out but things turned out quite differently. Victoria’s Secret discontinued its profitable swimwear line but actually saw lingerie sales declining and the company had to resort to aggressive promotions in order to maintain the top line. I am by no means a retail expert but even I know that continued promotions are very harmful for a premium brand on the long term. Let’s face it, when have you seen significant discounting on top luxury brands such as Hermes (OTC:OTCPK:HESAY)?

It is also quite clear that the almost 81-year old Wexner is not the greatest fan of e-commerce and that he has not awarded enough attention to the digital channel. His view on the mall environment may very well be correct but it does bear some risk.

An important question to ask is how long the almost 81-year old Wexner seeks to continue leading the company. His children are in their late teens and early twenties and it is well possible that Wexner wishes to spend more time with his family now that he has reached a more advanced age. Does this mean that he would be more open to a restructuring of the company, including the divestment of La Senza and Henri Bendel as well as a spinoff of Bath & Body Works? Would he be open to a sale of either Victoria’s Secret or B&BW to a private equity player? Given Wexner’s age, these may become very relevant questions in the coming years.

CFO Stuart Burgdoerfer has an excellent reputation as CFO and he has held leadership roles at some of the world’s top companies such as The home Depot (NYSE:HD), PepsiCo (NASDAQ:PEP) and Pizza Hut (NYSE:QSR).

Interesting to note is that Burgdoerfer recently sold a large amount of shares in an open market sale. He sold his shares at around $39 and $42 per share. While insider selling does not necessarily mean that the management is expecting more bad results, we should certainly assume that this is a possibility. The big question however is whether or not we should expect more bad news in the coming months. Was his open market sale triggered by his knowledge of quarterly results coming in at the lower end of the guidance or does he have knowledge of something more severe, such as a dividend cut coming up? I personally expect no large dividend cuts and I would actually prefer if the dividend was lowered in exchange for more share buybacks.

Insider Open Market Activity- Source Bloomberg Portal

Then there are also the CEOs of the various divisions:

Denise Landman: Pink

While Pink has comped negative comparable sales in the last two months, it is undeniable that she has build out a strong brand with many loyal followers. I am confident that she can continue to grow the brand in the coming years.

Greg Unis: Victoria’s Secret Beauty

Victoria’s Secret Beauty has been one of the strongest performing sections within VS ever since the restructuring. Unis has significantly reduced the number of SKUs within the beauty segment and he is well underway to growing the beauty business.

Jan Singer: Victoria’s Secret Lingerie

If I was Les Wexner, I would be starting to doubt Ms. Singer’s management of the brand. While the swimwear division was cut in order to reignite growth in the lingerie division, the performance of the latter division has been lacklustre with no clear sign of improvement. As an investor, I am particularly annoyed by Ms. Singer’s evasion of any and all questions regarding the turnaround. Regardless on whether the question is about average selling prices, margins, volumes, bralette penetration or any other subject, the answer is nearly always the same. According to Jan Singer, it is all a matter of having that customer connection, having the goods that the client needs in every part of her life, having goods that inspire her. Either Singer does not have any answers on these various questions and she herself is struggling to find solutions or she knows the answers but doesn’t wish to reveal them as they don’t paint a pretty picture about Victoria’s Secret’s future. In both cases, her evasive answers are not exactly inspiring any investors to start buying L Brands stock.

Nick Coe: Bath & Body Works

By now, it should be clear that I consider Bath & Body Works to be the gem within the L Brands group. Coe is doing a wonderful job on expanding the business and the recent results have been better than I expected.

Martin Waters: International division

Good old Martin, the chap with the fancy British accent for those who listen to the calls, is the person in charge of the international division of Victoria’s Secret and Bath & Body Works. While I would like to see a more rapid roll-out of the brands in areas such as Europe, I find Waters to be more knowledgeable and open on all investor calls than Ms. Singer. I would give Martin Waters the benefit of the doubt.

Positive to note is that all the management members are very aligned with the long term shareholders as all executives need to hold three time times their base salary in L Brands stock and the compensation committee has shown to significantly reduce compensation when the results are disappointing.

The financial picture

One of the main questions that investors have at this point is whether or not the dividend is safe. It will be hard to answer before we get more financial details when the Q1 results come out.

Free Cash Flow Overview – Source; L Brands Investor Presentation

As you can see in the table above, the dividend is covered but it was only barely covered in 2017. For 2018, L brands guided slightly higher capex spending of around $750m but it also guided towards $900 million in free cash flow (L_Brands_Q4_2017.pdf) which is more than enough to cover the $686m in dividends. One could start to wonder on whether the Q1 results coming in towards the lower end of the guidance will have any impact on the free cash flow guidance. In any case, it would require a major adjustment for the free cash flow to fall to a level that would require a large dividend cut.

It should also be taken into account that free cash flow will rapidly rise again once the international segment stops its aggressive China expansion.

Let us also have a quick look at the financial leverage

Debt Leverage Overview – Source; L Brands Investor Presentation

When looking at the pure financial net debt, you can calculate that it will come in at around 2.05 times net debt/EBITDA assuming net debt of $4,280m and a 2018E consensus EBITDA of $2,085m.

At the beginning of 2018 lease adjusted net debt/EBITDAR was 3.44x or 4.0x if you use adjusted debt/EBITDAR.


Now it’s time to try and put a price on the stock.

In my model I have opted to assume that Victoria’s Secret only makes a minor recovery. I am sure that L Brands bulls will consider my growth numbers far too conservative but if I can prove that L Brands is undervalued using very conservative estimates, then readers should be able to imagine where the stock price could go on a larger recovery.

I assume Victoria’s Secret store sales decline by 4% each year while direct sales grow by 20% in FY18, 15% in FY19, 12.5% in FY20 and then 10% in the outer years. L Brands guides for mid- to high teens direct sales growth in their multi-year plan and VS direct sales grew by 23.4% in Q1 2018.

I expect that operating margins for the segment take a nosedive to a multi-year low of 9.5%. and then steadily recover to 12.5% in FY22. This would assume that VS operating margins never reach the 12.6% operating margin that VS had in its horrible FY17 year, let alone the 18% realized in FY15. I thus consider my estimates to be very conservative.

For B&BW I assume that stores basically grow sales by 3% each year while online sales grow at around 10%. I model slight operating margin pressure to incorporate the possibility of more discounts in this segment. In reality the operating leverage on the higher sales number could easily offset this.

Management guides the international segment to grow low- to mid-twenties percent but I choose to be a bit more conservative in the outer years. I take operating margins of 13.5% in the outer years regardless of the fact that this segment had low twenties operating margins before the China expansion. This should more than offset any bear argument that VS margins have significantly declined since then.

In my model I assume that the other segment does not get divested and that it remains loss making over the entire forecasted period.

I forecast less stock buybacks than guided by the company and less than historically bought by the company as I assume that the company will not want to raise the financial leverage and that there may not be as much cash available after maintaining the dividend.

Then comes the tricky part, what multiple should a company like L Brands be trading at? Looking at trading levels in the past years a 18x-20x multiple should be warranted. Retailers with less known brands and lower margins such as American Eagle Outfitters (NYSE:AEO) trade at 17.8 times the actual earnings. Therefore I believe that a 15x multiple for L Brands is a conservative pick.

Applying that 15x earnings multiple on the $4.37 earnings expected in FY22 brings us to a $65 in 5 years time (I assume that L Brands bulls would actually be very disappointed if L brands only reaches $65 in 5 years time). Together with the assumption that the dividend remains stable at $2.4/share, this would result in a 20% IRR based on Friday’s closing price of $32.33.

L Brands Valution – Source: Author’s Own Calculations

Another way to look at the valuation is by looking at the value of Bath & Body Works within L Brands.

Natura Cosmetics bought The Body Shop for 18 times EBIT (Bloomberg displays The Body Shop’s EBIT at 54.8m as last reported result) . Applying that same multiple on B&BW’s FY18E EBIT would value it at an enterprise value greater than the entire L Brands enterprise value.

Valuation 2
Bath & Body Works Valution – Source: Author’s Own Calculations

Using a more conservative EV/EBIT multiple of 10x, in line with American Eagle Outfitters’ 10.64x, followed by subtracting half of L Brands net debt results in an implied share price of $26.63. One could make the case that B&BW should trade at a higher multiple than AEO as B&BW is growing faster, has much higher margins and is the clear leader in its segment, but once again I prefer to use the necessary level of conservatism.

Now that we have the conservative value of Bath & Body Works, let us see what that implies about the value of Victoria’s Secret.

L Brands Equity Value


B&BW Equity Value


Implied VS Equity Value


Remaining Net Debt


Implied VS Enterprise Value


Victoria’s Secret FY18E EBIT


Implied VS EV/EBIT multiple


Implied Victoria’s Secret EV/EBIT multiple – Source: Author’s Own Calculations

Even when using my very bearish Victoria’s Secret FY18E operating profit forecast, it becomes clear that given the value of B&BW, Victoria’s Secret would be trading at a mere 5.16x EV/EBIT multiple. Additionally, it assumes that the La Senza and Henri Bendel brands are worth nothing as otherwise you would still have to subtract their value from this already insanely low valuation. I also did not include the operating profit of the international division for both VS and B&BW as this is currently near break-even level but in 1-2 years this will be an asset that is significantly contributing to L brand’s bottom line.

Applying a very conservative 8x EV/EBIT multiple on my very depressed VS EBIT forecast, would still indicate a share price of $12.46 when excluding the international sales.

Valuation 3
Implied Victoria’s Secret Share Price – Source: Author’s Own Calculations

Combining the derived share prices of B&BW and VS results in a $39.09 combined share price, more than 20% above Friday’s close. This is also neglecting any value in the La Senza and Henri Bendel brands as well assuming no recovery in the VS brand and excluding the entire international division for both Victoria’s Secret and Bath & Body Works.

So why would anyone invest in L Brands? The true value of Bath & Body Works is not reflected within L brands market cap. A spin-off or sale could realise this value. L Brands has the optionality to divest its La Senza and Henri Bendel brands, thereby bringing in extra cash in addition to boosting its operating profit. The company currently pays a covered 7.42% dividend. A performance turnaround in the Victoria’s Secret brand due to either a shift back to constructed bras or due to a reduction in discounting by competitors could result in a major upswing for the L Brands stock (just see American Eagle Outfitters price graph). The International segment has significant growth prospects. Victoria’s Secret may opt to re-enter the swimwear market. What are the main risks to this investment case? Margin pressure at Victoria’s Secret may get worse, resulting from additional discounting. Continued promotions may dilute the Victoria’s Secret brand name and the company may never be able to return to the position of the undisputed leader in intimate’s apparel. The case stands and falls with the performance of Bath & Body Works. If performance at B&BW worsens significantly then the dividend may no longer be sustainable. The company may maintain its mall exposure, increasing its vulnerability to decreasing mall foot traffic. Catalysts

On the 24th of May, L Brands will reports its Q1 number. It will be interesting to see the operating margins of the different segments. In the April sales report, L Brands stated that earnings per share would come in towards the lower end of the previous guidance. It will be important to see if management gives any further details. Was it due to lower share repurchases or higher start up costs in China or was it due decreasing profitability within the Victoria’s Secrets segment? The most important question that the investment community will have is whether or not L Brands will change its full year guidance. The stock price is bound to show strong movement, whether it be increasing or decreasing. Therefore it may be optimal for real bargain hunters or for those who want to play it safe, to wait till the earnings release before starting a position.


L Brands is often considered as a synonym of Victoria’s Secret and things aren’t going that well for Victoria’s Secret. Therefore, the L Brands stock has taken a dive of nearly 50% this year. While a recovery of the Victoria’s Secret segment would be the fastest way back up from this point, I don’t feel comfortable predicting such a recovery any time soon. I am convinced that the potential is there but in a world where retailers are struggling, it is impossible to say when exactly the promotional environment will ease. I however believe that L Brands has multiple other levers to value creation. First of all, the value of Bath & Body Works, a fast growing higher margin segment is not reflected in the stock price. Then there is the possibility to divest the loss making La Senza and Henri Bendel brands which could help strengthen the balance sheet and significantly raise the group’s operating income. Another long term contributor will be the International division that is currently not contributing much to the bottom line due to large expenses made in the build-out of the China division. As soon as these new stores start generating revenues, the company will get a large boost from the international division. While a lot of these initiatives are 2-3 years away from being delivered or may not be realised at all depending on the choices that management makes, I believe that we are currently at a price level that doesn’t take any of the aforementioned catalysts into account. L Brands is owner operated with all executives owning a large amount of stock in comparison to their base salary and compensation schemes are focused on long term results. Nevertheless, I would welcome an activist investor that could encourage more value creation at L Brands. In the meantime, Investors can collect a 7.4% dividend yield and wait till the situation plays out. There is a small chance that the dividend gets a small cut but I do not expect a large slash in the dividend.

While this is not the usual type of investment that I make, I have decided to start a small position in L Brands after last Thursday’s correction. I will eagerly wait on the quarterly results and earnings call in order to decide on whether I want to build this up to a full position.

Disclosure: I am/we are long LB.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Get Out The Shopping Cart: Retail In Focus Ahead Of Key Data, Earnings

Wall Street goes shopping this week, starting with retail sales data tomorrow and then moving along to earnings reports from some of the major department- and big-box stores. By the time Friday rolls around, investors might have a better sense of how consumers are faring as summer looms.

Stocks ticked higher in pre-market futures trading early Monday despite weakness in European equities markets. Oil climbed a bit, and so did 10-year Treasury yields.

Rough Ride Smoothing Out

The focus on retail this week comes after another impressive session last Friday that saw many investors apparently willing to hold long positions into the weekend and volatility continue to retreat. By the end of Friday’s session, the Cboe Volatility Index (VIX) was trading below 13, down from a spike to 50 back in February and a long train of closes above 20 between February and April.

Earlier this year, the market saw a trend of VIX rising into the weekend, apparently because some investors feared turbulence either in bonds or geopolitics. That wasn’t the case last week, despite a 10-year Treasury yield that continues to scrape up against 3 percent and a number of geopolitical events that still hang over the market, including unrest in the Middle East and coming talks between the U.S. and North Korea.

Another trend the market seemed to buck on Friday relates to the so-called “FAANG” stocks. For most of the year, much of the market often took the lead from FAANGs. Weakness in stocks like Facebook Inc. (NASDAQ: FB) and Apple Inc. (NASDAQ: AAPL) earlier this spring sometimes helped drag the overall market down. On Friday, however, most of the FAANGs other than FB spent time in the red, but the broader market didn’t fall in sympathy. The S&P 500 Index (SPX) actually finished slightly higher, and the Dow Jones Industrial Average ($DJI) posted its seventh-straight stronger close. Only the tech-heavy Nasdaq slumped slightly, but info tech stocks rose more than 3 percent for the full week.

Energy and health care were two of the sectors that performed particularly well last week, with the SPX energy sector gaining 3.75 percent and health care up nearly 2.5 percent. Another name on the weekly leaderboard was financials, up 3.6 percent and maybe starting to emerge a little from recent weakness. Energy got a big boost from crude oil prices moving above $70 a barrel, while health care stocks rallied Friday after the roll-out of President Trump’s strategy to ease drug prices appeared to offer a less scary diagnosis than some company executives had worried might be the case back when Trump campaigned on the issue.

A Different Hero Every Day

The way the market has behaved recently brings to mind the big rally of 2017 and earlier this year when if tech or financials didn’t lead for a day or two, another sector stepped up to the plate and picked up the slack. Every day we’re starting to see a different sector shine, and that’s so important if the market is going to break out of the negative psychology that haunted it for most of the last three months.

Last week’s relatively benign inflation numbers following what many analysts saw as a “Goldilocks” jobs report certainly could be helping. Though the 10-year yield remains near 3 percent, that doesn’t seem to be scaring many people the way it did earlier this year. Instead, everyone seems to be getting comfortable with that level. Still, utilities — traditionally seen as a “rate-sensitive” sector — crumbled more than 2 percent for the week to come in last among all sectors.

Looking ahead, retail sales could be the big report to watch tomorrow morning (see more below), while housing starts and building permits on Wednesday could move focus back toward real estate and how consumers are coping with higher mortgages and rising home prices. Home Depot Inc (NYSE: HD) earnings on Tuesday also are often viewed as a barometer for the housing market.

Earnings Far From Over

Earnings pick up by mid-week as a number of major retailers report, including Macy's Inc. (NYSE: M) and Walmart Inc. (NYSE: WMT). The focus at WMT might continue to be on its online sales performance, while investors could be watching M to see if the company can continue to gain traction as it carries out its turnaround plan after a strong holiday quarter.

On Friday, the spotlight turns to Deere & Company (NYSE: DE). That could be another chance to get a sense of whether industrial companies have seen any impact yet from worsening trade relations between the U.S. and China. DE boosted its outlook last time it reported quarterly earnings, citing stronger conditions in agricultural and construction machinery markets.

Earnings season is drawing toward a close and remains one of the strongest in recent memory. Research firm CFRA said last week it expects Q1 earnings growth of 22.9 percent with every sector posting year-over-year gains. It pegs Q2 earnings growth only slightly lighter at 18.6 percent.

FIGURE 1: SECTOR STRENGTH. The S&P 500 energy sector (candlestick) and health care sector (purple line) are two sectors that have performed well recently, particularly over the last week. Data source: S&P Dow Jones Indices. Chart source: The thinkorswim® platform from TD Ameritrade. For illustrative purposes only. Past performance does not guarantee future results.

Consumer Check-in

April retail sales due first thing tomorrow morning might give investors a better sense of consumer health. The previous month, retail sales jumped a solid 0.6 percent, ending a streak of three down months in a row. However, that 0.6 percent number should be taken in context, because it included very strong automobile sales. The 2 percent rise in auto sales in March might have been an isolated occurrence, because the auto companies earlier this month reported mostly disappointing April sales. With auto sales stripped out of the March report, retail sales rose just 0.2 percent, a relatively tepid pace. If April brings a stronger number, it might indicate that consumers felt a little more like spending in an economy where unemployment remains low. However, April was a chilly month across much of the country, so that might have kept people from going out and spending their money.

Dollar Draws Back

After clawing its way to four-month highs above 93 last week, the dollar index wasn’t able to hold those gains and slipped slightly ahead of the weekend. Still, the dollar index remains at relatively robust levels as the dollar has rallied vs. the euro, yen, and pound recently. The latest boost for the dollar might have been the Bank of England’s decision last week to keep interest rates unchanged, analysts said. However, relatively light U.S. inflation data might have put pressure on the dollar by making some investors a little less certain about just how much the Fed might raise U.S. rates this year.

Mapping the Odds

As far as U.S. rates, there’s not much mystery about what’s coming next. The Fed funds futures market projects a 100 percent chance of a hike by the time the Fed meets next month. If you’re looking for more drama, it’s probably centered on how many moves the Fed might ultimately make this year. At this point, the futures market prices in just under a 50 percent chance of four rate hikes. In a speech last week, Fed Chairman Jerome Powell said the central bank would communicate its interest-rate policy strategy “as clearly and transparently as possible” to avoid market turmoil, The Wall Street Journal reported. He also repeated what some economists have been saying about how other central banks’ efforts to stimulate their economies may be spilling over into the U.S., partly explaining why U.S. bond yields, for instance, have remained relatively low despite the Fed’s tightening policy since 2015.

Home Depot Earnings: What to Watch

Fresh from its first $100 billion sales year ever, Home Depot (NYSE:HD) is set to kick off fiscal 2018 with more positive news for shareholders. The home improvement retailer’s first-quarter results, due out on May 15, likely benefited from U.S. economic growth and more market share gains that were just slightly offset by challenges like increased competition and higher mortgage rates.

Let’s look at what investors can expect from this report.

A customer picks out a piece of lumber.

Image source: Getty Images.

Market-leading growth

Unlike rival Lowe’s(NYSE:LOW), Home Depot is done expanding its store base, and so its comparable-store sales metric, describing sales at existing locations, is the key growth figure to follow. That rate is expected to slow to about 5% in 2018 from last year’s scorching 7% result. But management may update that target on Tuesday to reflect the latest demand trends. Lowe’s current forecast calls for a more modest 3.5% comps improvement this year.

Home Depot executives expressed optimism back in February that broader economic trends, including home price appreciation, housing demand, and job growth, should continue pushing the home improvement industry forward. Recent economic news has supported that view, and so it’s unlikely that investors will hear about an industry slowdown in this report.

In addition to those broader trends, keep an eye on Home Depot’s e-commerce sales. This digital channel is becoming a crucial operating segment, with 22% gains last year. The retailer will need to continue that positive momentum into 2018 if it wants to protect its overall market-thumping growth pace.

Healthy profits

Gross profit margin might see more pressure from hurricane rebuilding efforts, which management predicted would lift sales results (while hurting profitability) at least through the first quarter of 2018. Meanwhile, Home Depot has promised to direct more cash toward growth initiatives like its digital sales channel. Finally, Lowe’s has announced a strategic shift aimed at ending its market share slide, with a focus on getting back to customer traffic gains.

LOW Operating Margin (TTM) Chart

LOW operating margin data by YCharts.(TTM = trailing 12 months).

These issues together could pose a challenge to Home Depot’s market-leading profitability. Thus, it would be good news for shareholders if the retailer can defend its nearly 15% operating margin this year even as Lowe’s comparable figure stays stuck in the single digits.

Cash returns and outlook

Home Depot’s initial 2018 cash-return forecast predicted higher dividend payments but far less spending on stock repurchases, which are slated to fall to $4 billion this year from $8 billion in 2017. However, CEO Craig Menear and his team initially forecast allocating just $5 billion last year toward buybacks before eventually landing on that $8 billion. They also outspent their first 2016 annual target by $2 billion. That’s why, if sales and earnings growth stay strong, I’d expect the retailer to boost its cash return plans for a third consecutive year, perhaps as part of its quarterly report on Tuesday.

Home Depot’s long-term targets aren’t likely to change, though, and the company should continue aiming for an annual revenue base as high as $120 billion by 2020 while operating margin holds steady at roughly 15% of sales. The retailer hopes to take a big step toward that sales result this year as revenue climbs 6.5% to about $107 billion.

Where Will Lowe's Companies, Inc. Be in 5 Years

The future of Lowe’s (NYSE:LOW) is a bit in flux right now. There’s only one thing I can say about it with the utmost confidence: Lowe’s will have a new CEO.

The company announced a succession plan for current CEO Robert Niblock, who will remain CEO until the board finds a suitable replacement. After years of underperforming its potential, as indicated by the rampant success of The Home Depot (NYSE:HD), Lowe’s under a new CEO will have a big task at hand to ramp up sales and profit margin.

Niblock is leaving after putting a plan in place to invest for long-term growth during 2018, taking advantage of recent tax reform. That should put near-term pressure on profit margins, but it could set up Lowe’s for a much better path forward to compete with Home Depot for more traffic and sales.

A Lowe's storefront.

Image source: Lowe’s.

2018 — a year of investment

During Lowe’s fourth-quarter earnings call, management outlined six key areas of investment for the company in 2018.

Collecting more information about customers’ plans and needs through increased data collection, analytics, and partnering with third-party data furnishers. Upgrading technology to deliver more personalized marketing messaging as well as enabling better in-store service. (Lowe’s new digital marketing platform already went live in the fourth quarter.) Improving online delivery and pickup in store infrastructure. It plans to open a new direct-fulfillment center in the third quarter this year. Differentiate product selection through strategic brand partnerships (like Craftsman and Sherwin-Williams). Increase penetration among professionals with improved jobsite delivery and a new workforce development initiative for store employees to become professional contractors. Growing its do-it-for-me business with installations, in-home sales, and project specialists.

Management also pointed out multiple areas for potential improvement, including sales conversion, gross margin, and inventory management.

As a result of the step up in investments, CFO Marshall Croom guided for a 30 basis point contraction in operating margin to about 9.3%. By comparison, Home Depot expects an operating margin of 14.5% for 2018 and reaffirmed its long-term target of 14.4% to 15%.

If Lowe’s can make progress in its six investment areas, it should enable meaningful operating margin expansion over the following four-plus years.

Beyond 2018

At Lowe’s investor day in December 2016, then-CFO Bob Hull guided for an operating margin of 11.2% in 2019. That number seems very much out of reach now considering its plan to ramp up investments in 2018 and continue investing for the foreseeable future. That said, Croom expects operating margin to start expanding again after this year.

Following the setback, Lowe’s could realistically expand its operating margin at a similar pace to last year, when it increased 60 basis points, as it continues to invest. But it’s basically putting itself about two years behind where it expected to be in 2019.

Croom expects average annual sales increases of at least 4% going forward. That still lags The Home Depot’s 4.5% to 6% annual sales growth target through 2020. Growing sales is the key to exercising operating leverage and improving operating margin.

Fortunately, Lowe’s has several opportunities to grow sales faster than that 4% target. After all, that’s what those investments are supposed to capitalize on.

Lowe’s could increase appliance sales as Sears continually closes down stores. At the very least, it should be able to drive store traffic. By its own admission,Lowe’s can do a better job converting store traffic into sales, too.

Lowe’s has also done a poor job attracting professional customers, which can be extremely valuable. As management mentioned in its earnings call, the do-it-for-me market is growing faster than people who want to DIY. That results in a larger share of purchases coming from professionals. Lowe’s is taking initiatives to attract more professional customers to overcome Home Depot’s advantage.

Finally, Lowe’s can improve its online sales, an area in which Home Depot has excelled. Online sales are largely protected from other major online merchants due to the bulk and speciality of most of Lowe’s products.

The Home Depot is already executing on all of those fronts, but the strong housing market with aging houses should provide room for both to grow.

Finding a CEO up to the task

The key to this bullish outlook on Lowe’s is that the company needs to find a new CEO that’s able to execute and remain focused on its plans — something Niblock had trouble with (like when he acquired Rona). The Home Depot remains a formidable competitor, but there’s a significant number of opportunities for Lowe’s if it can execute.

Things are already set up for a new CEO, as Lowe’s laid out what looks to be a good plan for long-term growth. The sales growth outlook from Croom seems conservative enough that it should be able to meet those numbers despite the upcoming CEO transition.

Investors will have to wait until December, when Lowe’s will hold its next investors’ day, to get a clearer picture of where management thinks the company will be in the next few years. For now, things look like they’ll start picking up again next year as the company takes a year off to invest.