Category: General

2 Overly Traded Stocks to Avoid This Fall

Posted on by The MarketClub Team

Stubborn inflation, rising interest rates, and consequent market volatility have kept many investors on edge. Inflation shows no signs of slowing, despite the Fed’s aggressive monetary policy tightening.

The consumer price index increased 0.4% sequentially in September, beating the Dow Jones estimate. The headline inflation was up 8.2% on a 12-month basis, hovering near the highest levels in decades.

The surging inflation and hot employment data for September strengthen the case for the Fed announcing a fourth 75-basis-point interest rate hike in next month’s meeting. Given these circumstances, the Conference Board sees a 96% chance of a recession in the United States over the coming 12 months, which might begin before the end of 2022. Moreover, the board projects 2022 real GDP to grow 1.5% year-over-year and 2023 growth to zero percent.

Since the economic headwinds are expected to keep the stock market under pressure, overly traded stock Pfizer Inc. (PFE) and Snap Inc. (SNAP) could be best avoided now, with their intermediate and long-term trends being down.

Pfizer Inc. (PFE)

Popular drugmaker PFE discovers, develops, manufactures, and distributes biopharmaceutical products worldwide. The pandemic made PFE one of the world’s most watched stocks, thanks to its COVID-19 drugs and vaccines. The stock has a market capitalization of $240.55 billion.

Although the company has recently announced some promising deals, acquisitions, and FDA approvals, the stock has declined 27.4% year-to-date, underperforming the S&P 500’s 23% decline. The stock has been underperforming the broader market, with investors pricing in the expected sales decline that the company might experience due to an anticipated slowdown in Covid vaccinations in the near term.

For the fiscal second quarter that ended June 30, 2022, PFE’s revenues increased 46.8% year-over-year to $27.74 billion. However, the company’s revenues largely leaned on sales of its Covid-19 vaccine Comirnaty and its antiviral treatment Paxlovid. The Covid-19 vaccine brought in $8.80 billion in revenue in the second quarter, while sales of Paxlovid totaled $8.10 billion.

Adjusted net income attributable to PFE common shareholders rose 93.5% from the year-ago value to $11.66 billion, while adjusted EPS grew 92.5% year-over-year to $2.04.

Wall Street analysts expect PFE’s revenues to decline in the about-to-be-reported quarter, which ended September 2022. The consensus revenue estimate of $21.33 billion for the fiscal third quarter indicates an 11.5% year-over-year decline. Continue reading "2 Overly Traded Stocks to Avoid This Fall" →

ETF Explores New Signals Behind Corporate Profitability

Posted on by The INO.com Team

There are many factors in play when it comes to a company's ability to succeed and reward shareholders.

One of the most difficult factors to measure has been human capital.

Current accounting methods treat human capital as a current or future expense.

Real estate and production equipment add to the balance sheet. However, a highly-skilled (and well-paid) workforce just detracts from profit and value.

In short, measuring the value of human capital in a business has been downright impossible. How do you quantify who has the best employees or how driven the employees are to drive corporate success?

How do you know when employees feel engaged, feel empowered to innovate, and feel like both the management and the mission align with their values?

Famed author and behavioral economist Dan Ariely is a founding member of Irrational Capital. This investment research firm that has unlocked the connection between companies with a high level of human capital and success in the marketplace.

Irrational Capital's Human Capital Factor (HCF) Index has the potential to change how businesses are valued forever. Continue reading "ETF Explores New Signals Behind Corporate Profitability" →

An Auto Parts Winner in a Greener Future

Posted on by The INO.com Team

The global auto industry is in an all-out drive toward a cleaner and greener future.However, for some suppliers to the auto industry, it has not been a pleasurable joyride.

Instead, current conditions are more like driving on a icy, treacherous mountain road in the middle of a blizzard. Only the most skilled drivers will make it to the bottom of the metaphorical mountain intact.

Tough Sledding for Auto Suppliers

Most auto suppliers are already feeling a squeeze due to rising energy prices and rampant inflation in other parts of the supply chain. They have little choice but to shoulder most of the extra costs of making their components sustainable to help the automakers meet their environmental targets.

And make no mistake: the carmakers are pushing their suppliers hard. For example, Reuters reports that BMW expects all of its battery and many of its steel and aluminum providers to produce materials made using renewable energy, while Volvo Car is targeting 25% recyclable plastic in its cars by 2025.

Consequently, many suppliers to the automobile industry are making large investments to “green” their companies, doing everything from developing recyclable parts to using renewable energy.

Simultaneously, many of these same firms have little leeway to raise the prices they’re charging automakers, which are themselves focused on reducing costs. Automakers are spending tens of billions of dollars to shift their focus to producing electric vehicles.

This difficult situation faced by the auto parts industry was summed up nicely by Joe McCabe, CEO of the research firm AutoForecast Solutions, who told Reuters: “We use the term disruptive all the time, but it’s much more than just disruptive. We’re going to see a real big shakeout the next five, 10 years in the auto supply chain.”

In other words, the auto industry’s move to a greener future, alongside the supply-chain problems that began during the pandemic and soaring costs, has killed the profit margins for auto parts suppliers and created a perfect storm for the industry.

It is likely that only the strongest and shrewdest companies will survive this extinction event in the sector. The rest will go the way of the dinosaur.

One company that I believe will survive is TE Connectivity (TEL). It is able to pass along price increases to its customers, and it pays a dividend, too. Continue reading "An Auto Parts Winner in a Greener Future" →

3 Stocks to Leave Out of Your Retirement Portfolio

Posted on by The INO.com Team

The Fed announced its third consecutive 75-bps interest rate hike last week, which has caused the benchmark indices to plunge. The S&P 500 has lost 5.2% over the past week and 23.3% year-to-date. Moreover, Goldman Sachs slashed its 2022 year-end S&P 500 target to 3600, down 16.3% from 4300.

According to Chris Zaccarelli, Chief Investment Officer, Independent Advisor Alliance, Charlotte, NC, “The Fed is going to raise rates until inflation comes back down, and they will cause a recession in the process.”

Also, Steve Hanke, a professor of applied economics at Johns Hopkins University, said, “The probability of recession, I think it’s much higher than 50% — I think it’s about 80%.”

Given the uncertain economic outlook, fundamentally weak stocks Uber Technologies, Inc. (UBER), Workhorse Group Inc. (WKHS), and AppHarvest, Inc. (APPH) might be best avoided for your retirement portfolio. These stocks do not pay dividends, which is the key requirement for a stock to be added to a retirement portfolio.

Uber Technologies, Inc. (UBER)

UBER develops and operates proprietary technology applications in the United States, Canada, Latin America, Europe, the Middle East, Africa, and the Asia Pacific. The company operates through three segments: Mobility; Delivery; and Freight.

On September 25, 2022, Pomerantz LLP announced the filing of a class action lawsuit against UBER and some of its officers, alleging violations of federal securities laws. The suit is on behalf of a class of all persons and entities except Defendants that purchased or acquired UBER common stock between May 31, 2019, and July 8, 2022.

UBER’s revenue came in at $8.07 billion for the second quarter that ended June 30, 2022, up 105.5% year-over-year. However, its net loss came in at $2.60 billion compared to an income of $1.14 billion in the year-ago period. Moreover, its loss per share came in at $1.33, compared to an EPS of $0.58 in the prior-year period.

UBER’s EPS is expected to decline 367% year-over-year to negative $4.67 in 2022. Its EPS is estimated to remain negative in 2023. It missed EPS estimates in three of the four trailing quarters. Over the past year, the stock has lost 42.3% to close the last trading session at $26.89. Continue reading "3 Stocks to Leave Out of Your Retirement Portfolio" →

See Mentor in Action and Get 50% Off

Posted on by The INO.com Team

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Mentor can steer you through portfolio design based on your investing needs.

Continue reading "See Mentor in Action and Get 50% Off" →