These 2 Retail Giants Are Trading at a Steal

Few sectors have been hit as hard as the Retail Sector (XRT) over the past nine months, with the ETF finding itself down 45% from its highs at its June lows.

This shellacking should not be a huge surprise, given that the group was coming up against impossible year-over-year comps in Q1/Q2 2022. This was related to the benefit of government stimulus on sales in the year-ago period, with margins also under pressure due to labor inflation and higher shipping costs.

The index is now finally lapping this unfavorable period, but it’s dealing with another issue: worries about a global recession.

While few sectors are hit harder than retail in a recessionary environment, all businesses are not created equal, and many can weather the storm much better than their peers.

This is especially true of the businesses that lean more towards staples than discretionary or those companies that benefit from a trade-down environment, with these being off-price retailers.

If the sector is destined for lower prices once a recession is confirmed (which looks like a high probability), it’s understandable that some investors aren’t in a hurry to invest. However, I believe two names stand out as cheap with high-quality businesses that should outperform the group.

Let’s take a closer look below: Continue reading "These 2 Retail Giants Are Trading at a Steal"

Chart Spotlight: Marathon Digital Holdings (MARA)

Cryptocurrencies are showing big signs of life again.

Look at Bitcoin, for example. After crashing to a low of $19,097, BTC is now back up to $22,960. Not only is that great news for cryptocurrencies, it’s a strong catalyst for mining stocks, like Marathon Digital Holdings (NASDAQ: MARA).

After all, miners rise and fall with the price of Bitcoin.

Technically, MARA just broke above double top resistance dating back to late May 2022. Now, from a current price of $11.48, we could see a potential bearish gap refill around $16 a share. If Bitcoin can continue to recover, MARA could even retest $30 at some point.

Granted, there are some red flags...

Not only is MARA at its upper Bollinger Band, it’s also over-extended on Williams’ %R, Fast Stochastics, and on Relative Strength. So, there is some concern. However, if Bitcoin can continue to push higher, MARA is sure to follow.

MARA Chart with Trade Triangles

Source: MarketClub

Helping, BTIG analyst Mark Palmer believes Bitcoin could quadruple from current prices to $95,000 by 2023, as noted by U Today.

Changpeng Zhao, the CEO of Binance believes Bitcoin could rally to $70,000 in “a few months or years,” he said, as quoted by The Guardian.

Even the CEO of MicroStrategy, Michael Saylor has been buying weakness in Bitcoin, too.

Fundamentally, there’s a lot to like about MARA, as well.

In the second quarter of 2022, the company produced 707 self-mined Bitcoin, an 8% increase year over year from 654 bitcoin mined in Q2 2021. Year-to-date Marathon Digital produced 1,966 Bitcoin, a 132% increase year over year. In addition, the total number of miners installed and awaiting energization at Texas facilities increased to 29,640 miners.

Marathon Digital also just secured a five-year deal with Applied Blockchain, which builds and operates data centers throughout America.

With that, Marathon “secured approximately 254 megawatts of new hosting arrangements for its Bitcoin mining operations, with an option to increase to 324 megawatts, from a variety of hosting providers. Marathon believes it has now secured ample hosting arrangements to support the Company’s previously stated goal of approximately 23.3 exahashes per second of computing power for Bitcoin mining,” as noted in a company press release.

That’s big news for MARA, and signals that the company will survive the rout.

From a current price of $11.48, I’d like to see the Marathon Digital Holdings stock test $16 a share, near-term. Longer-term, I’d like to see it test $30 again.

Ian Cooper
INO.com Contributor

Disclosure: This contributor did not hold a position in any investment mentioned above at the time this blog post was published. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.

An Oil Stock to Ride Out the Looming Recession

At the moment, the oil market is much like the famous quote from the beginning of “A Tale of Two Cities.”

It is a tale of two markets: the futures market for oil (controlled by Wall Street) and the physical market, which reflects the real-world demand for oil. Both factor in many dynamics inputs, notably whether we’re actually heading into a recession.

Which Tale to Believe?

The price of oil dropped by about $15 a barrel in a few days in the futures market, thanks to recession worries. That pushed the global benchmark Brent crude oil price below $100 per barrel for the first time since April.

However, in the real world, there is no sign of a slowdown in demand for oil. In fact, it’s quite the opposite.

Premiums for the immediate delivery of oil are at record levels. For example, Nigerian Qua Iboe crude oil was offered at $11.50 a barrel above Brent, while North Sea Forties crude was bid at Brent-plus-$5.35—both all-time highs!

Here in the U.S., WTI-Midland and WTI at East Houston traded in June at a more than a $3 premium to U.S. crude futures, the highest in more than two years. And though both grades of oil have since edged off those highs, they are still trading more than 60% higher than at the start of June. Continue reading "An Oil Stock to Ride Out the Looming Recession"

Golden Opportunity for These 3 Mining Stocks

It’s been a tough year for investors in the Gold Miners Index (GDX), with the ETF shedding 38% of its value since its April highs.

It’s been a tough year for investors, with the ETF shedding more than 45% from its multi-year highs. A gold price decline exacerbated this tumble. For the weakest producers, this is a concern.

While this has led to many investors steering clear of the sector, some miners are now at their lowest multiples since the 2015 bear market bottom, when margins were half what they are today. Many miners were carrying considerable amounts of debt.

Today, this same group of producers will enter Q4 2022 in net cash positions, are paying out dividends double that of the S&P-500 (SPY), and are much more disciplined, learning from past mistakes. To summarize, I see this as a rare opportunity to buy a few high-quality businesses.

Let’s take a look at three stand-out names below: Continue reading "Golden Opportunity for These 3 Mining Stocks"

Here's Another Crisis the Fed Can Fix

Now that the geniuses at the Federal Reserve are on their way to engineering a soft landing — taming inflation while avoiding a recession — maybe their next task should be trying to fix the U.S. retirement system.

For the past year or so I have been bombarded with phone calls, emails and regular junk mail to sign up for Medicare, and this past weekend I finally reached the American Holy Grail: Medicare eligibility. It used to be Social Security, but with medical insurance so outrageously expensive Medicare has become the ultimate goal. 

Over this time I've found out the difficulties of trying to maneuver through this vast labyrinth of government benefits. Let me tell you, it ain't easy, so prepare yourself when it’s your time. 

How the government ever came up with this plan, I’ll never know, unless its intention was to deliberately confuse the heck out of its oldest citizens and to create a whole industry to help people navigate it. In that it has succeeded.

The first thing you need to know is that Social Security and Medicare are joined at the hip, but not exactly. While you’re eligible for Social Security starting at 62, you have to wait until 65 before you can sign up for Medicare, which again, is the more important of the two, unless you’re lucky enough to have your medical insurance covered by someone else, like your employer. For the vast majority of everyone else, however, Medicare is a critical benefit.

Maybe Bernie Sanders’ idea of Medicare-for-all isn’t such a great idea, but at least the two should start at the same time, just to avoid confusion.

First there’s the question of when to start taking Social Security. While you can start taking benefits as early as 62, you don’t reach your “full” payout until later, depending upon when you were born. For those born in 1957, you reach “full” retirement age at 66 and 6 months; add another six months if you were born in subsequent years.

Now, don’t confuse “full” retirement age with your “maximum” Social Security benefit, which occurs when you turn 70.

Confused yet? I’m just getting warmed up.

Most of the advice you hear about when to start taking Social Security is that you should wait until you reach your “full” benefit or, better yet, your “maximum” benefit. That’s because benefits rise by about 8% a year between 62, when you’re eligible to collect, and beyond. And the difference is indeed meaningful. For example, if you start collecting when you’re 62, rather than 66 ½, your monthly benefit will be reduced by $725, or 27.5%. Now that’s every month for the rest of your life.

While it may indeed be more financial advantageous to wait for the bigger payout, the fact is lots of people can’t – they need the money now. In fact, about a third of eligible recipients start collecting as soon as they can, at 62.

Waiting to collect isn’t always the best advice. If you believe you have a short life expectancy, either because of your lifestyle, family medical history, or both, it may be wise to start collecting early.

You also need to consider the amount of money you will forgo by waiting until “full” or “maximum” retirement age – that’s a lot of monthly payments you’ll be missing. In fact, the breakeven point between the two occurs around age 78, so if you don’t think you’ll live to see that, it may be wise not to wait to start collecting.

Now let’s get back to Medicare, whose rules are just as complicated.

There are several parts to Medicare. Part A, which covers hospitalization, is free. Yes, you heard that right - FREE.

The most expensive medical expense you can probably face is spending a night in the hospital, which Medicare estimates costs an average $13,600. And yet that coverage is free. I kid you not.

Part B covers your doctor visits, but there is a fee for that, which comes directly out of your Social Security payment. You are automatically enrolled in both Part A and B when you start collecting Social Security (I told you they were joined at the hip).

Part D covers your medicines, but not all the drugs you take are covered by Medicare (neither are dentistry, eyecare, and hearing aids, i.e., the stuff you really need when you’re old). There’s a fee for this, too.

Which brings us to Medicare “supplemental” insurance and “advantage” plans, which sound the same but are completely different. You’ve probably heard about them on TV.

As the name implies, supplemental insurance — which you also have to pay extra for - picks up some of what Medicare doesn’t cover (see above).

Advantage plans, by contrast, largely take the place of Medicare, but their premiums and coverages range all over the place. In case you were wondering, Advantage plans are also known as Medicare Part C.

I failed to mention that Social Security and Medicare make up the lion’s share of the federal budget and run out of money every few years, at which time Congress has to “fix” them to make them appear solvent for a while, which usually means making them even more complicated.

So maybe the Fed is the right place to seek a solution. It seems to solve just about all our other financial problems.

George Yacik
INO.com Contributor

Disclosure: This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.