PayPal: A Welcome Addition To My Portfolio

It has been a while since I looked closer into PayPal (PYPL). The payment systems vendor caught my attention at first in October 2017, after the company delivered an impressive quarter that reflected strong growth momentum and improving margins.

Fast forward nearly 18 months and 46% in market value gain, I am ready to add this stock to my Storm Resistance Growth's "All-Equities SRG" portfolio.

Credit: BBC

Growth at the Core of the Investment Thesis

An investment in PayPal starts with a conviction that the company is on the right side of growth trends in the payments processing space. Consistent with my arguments on Visa (V), I believe PayPal is also positioned to benefit from a secular shift in payment methods, from cash and checks to plastic and electronic - a process that is well underway in developed countries but still growing, while incipient in many other global markets.

The fintech's key operating metrics look highly encouraging, as the graph below suggests. Total payment value, or TPV, growth shows little sign of slowing down, despite the drag caused by a fast-declining eBay Marketplace (NASDAQ:EBAY) business - which I expect to account for less than 10% of TPV as early as next quarter and continue to trend towards irrelevance. Meanwhile, the number of total active accounts has been growing at an accelerating pace, even after adjusting for 2.9 million net adds from acquisitions in 4Q18.

Source: Montage using graphs from PayPal's earnings slides

I expect PayPal to use economies of scale to its benefit and improve margins over time, which should bode well for earnings growth. Currently, EPS is forecasted to increase annually at a pace of nearly 20% in the long run (see red line below, implying a reasonable long-term PEG multiple of 1.9x). I believe that this estimate could be surpassed if margins lever up and the crucial Venmo business ($18.8 billion in TPV and growing at a dizzying pace of 80%) is able to drive an improvement in profitability that has yet to materialize.

Data by YCharts

"SRG Factor": A Strategic Stock to Own

Driving home the argument that PYPL deserves a spot in my diversified portfolio is what I call the "SRG factor", with the acronym standing for "storm-resistant growth". I have coined this phrase to describe stocks or portfolios that are able to grow consistently over time while providing some level of downside protection.

In the case of PayPal, two points need to be made here. First, two of the company's key drivers of financial performance are (1) the size of the user base and (2) the volume that they transact. As I have presented earlier, both metrics have been growing robustly and at a consistent pace.

Because PayPal does not rely on new customers "walking in the door" in order to produce sales (it already has access to a sizable potential customer pool, a.k.a. its user base), the company's financial results are likely to be less bumpy and more predictable. As a result, I expect PYPL's price to behave less erratically, after adjusting for the high growth expectations that tend to add more volatility to the stock's performance.

See trailing twelve-month revenue, gross profit and EPS trends over the past three years.

Data by YCharts

Second, and from a historical perspective, PYPL has been a strong performer in both absolute and relative-to-risk terms since the 2015 spin-off, while being only loosely tied with the behavior of the S&P 500 (SPY). The stock's daily return correlation with the equities index has been only 0.6x, while shares have shown signs of resilience even during times of broad market distress.

For example, since the start of the fourth-quarter "quasi-bear" of 2018, PYPL has moved up +19% (weathering an ill-received 4Q18 earnings report) and never dipped more than 14 percentage points. In contrast, the S&P 500 has been down -4% over the past six months, after having lost almost 20% of its market value by the Christmas holiday.

As a result of the low correlations and strong risk-adjusted returns, PYPL has been a great complement to an all-equities portfolio. A 50-50 investment equally split between the stock and the S&P 500 and rebalanced monthly since July 2015 would have returned nearly +22% per year (vs. the S&P 500's +13.9%), while experiencing a -4.4% daily drop at worst (vs. the S&P 500's -4.2%). The risk-adjusted return of the hypothetical portfolio would have been significantly better than that of the S&P 500, as the difference of 0.36 in Sharpe ratio suggests.

See table and chart below:

Source: DM Martins Research, using data from Yahoo Finance

Because of PayPal's growth prospects coupled with the stock's desirable diversification features, I am convinced that the company will be a good addition to my portfolio at current levels.

Members of my Storm-Resistant Growth community will continue to get updates on PYPL (allocation updates, insights, etc.) and the performance of my "All-Equities SRG" portfolio on a regular basis. To dig deeper into how I have built a risk-diversified strategy designed and back-tested to generate market-like returns with lower risk, join my Storm-Resistant Growth group. Take advantage of the 14-day free trial, read all the content written to date and get immediate access to the community.

Disclosure: I am/we are long V. 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.

Top Bank Stocks To Buy Right Now

tags:CM,WFC,FCF,AP,HSBA,

Shares of AVEVA Group plc (LON:AVV) have been given an average recommendation of “Hold” by the nine research firms that are presently covering the company, Marketbeat reports. Five analysts have rated the stock with a hold recommendation and four have issued a buy recommendation on the company. The average 1 year target price among brokerages that have covered the stock in the last year is GBX 2,960 ($38.56).

AVV has been the topic of a number of recent research reports. Numis Securities reiterated an “add” rating on shares of AVEVA Group in a research note on Thursday, June 21st. Citigroup reiterated a “neutral” rating and set a GBX 2,800 ($36.47) price target on shares of AVEVA Group in a research note on Tuesday, June 19th. UBS Group reiterated a “neutral” rating and set a GBX 2,970 ($38.69) price target (up previously from GBX 2,850 ($37.12)) on shares of AVEVA Group in a research note on Friday, September 21st. Berenberg Bank reiterated a “hold” rating on shares of AVEVA Group in a research note on Monday, September 17th. Finally, Barclays upgraded shares of AVEVA Group to an “overweight” rating and lifted their price target for the stock from GBX 2,800 ($36.47) to GBX 3,150 ($41.03) in a research note on Thursday, September 20th.

Top Bank Stocks To Buy Right Now: Canadian Imperial Bank of Commerce(CM)

Advisors' Opinion:

• [By Motley Fool Staff]

  Canadian Imperial Bank of Commerce (NYSE:CM)Q2 2018 Earnings Conference CallMay 23, 2018, 8:00 a.m. ET

  Contents: Prepared Remarks Questions and Answers Call Participants Prepared Remarks:

  Operator

• [By Stephan Byrd]

  Canadian Imperial Bank of Commerce (NYSE:CM) (TSE:CM) declared a quarterly dividend on Wednesday, May 23rd, Zacks reports. Stockholders of record on Thursday, June 28th will be paid a dividend of 1.036 per share by the bank on Friday, July 27th. This represents a $4.14 dividend on an annualized basis and a dividend yield of 4.63%. The ex-dividend date is Wednesday, June 27th.

• [By Lisa Levin] Companies Reporting Before The Bell Target Corporation (NYSE: TGT) is estimated to report quarterly earnings at $1.38 per share on revenue of $16.50 billion. Ralph Lauren Corporation (NYSE: RL) is expected to report quarterly earnings at $0.83 per share on revenue of $1.48 billion. Lowe's Companies, Inc. (NYSE: LOW) is projected to report quarterly earnings at $1.25 per share on revenue of $17.63 billion. Tiffany & Co. (NYSE: TIF) is estimated to report quarterly earnings at $0.83 per share on revenue of $957.49 million. Canadian Imperial Bank of Commerce (NYSE: CM) is expected to report quarterly earnings at $2.23 per share on revenue of $3.40 billion. Citi Trends, Inc. (NASDAQ: CTRN) is projected to report quarterly earnings at $0.9 per share on revenue of $210.70 million. Qiwi plc (NASDAQ: QIWI) is expected to report quarterly earnings at $0.25 per share on revenue of $60.19 million. iClick Interactive Asia Group Limited (NASDAQ: ICLK) is projected to report quarterly loss at $0.06 per share on revenue of $34.87 million.

   

• [By Stephan Byrd]

  Get a free copy of the Zacks research report on Canadian Imperial Bank of Commerce (CM)

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

• [By Logan Wallace]

  Canadian Imperial Bank of Commerce (TSE:CM) (NYSE:CM) – Analysts at Desjardins reduced their Q2 2018 earnings per share estimates for Canadian Imperial Bank of Commerce in a research report issued to clients and investors on Wednesday, May 2nd. Desjardins analyst D. Young now forecasts that the company will post earnings of $2.85 per share for the quarter, down from their prior estimate of $2.86.

• [By Max Byerly]

  Her Majesty the Queen in Right of the Province of Alberta as represented by Alberta Investment Management Corp boosted its position in Canadian Imperial Bank of Commerce (NYSE:CM) (TSE:CM) by 54.3% in the first quarter, HoldingsChannel reports. The firm owned 911,300 shares of the bank’s stock after buying an additional 320,800 shares during the quarter. Canadian Imperial Bank of Commerce comprises approximately 1.0% of Her Majesty the Queen in Right of the Province of Alberta as represented by Alberta Investment Management Corp’s investment portfolio, making the stock its 19th largest position. Her Majesty the Queen in Right of the Province of Alberta as represented by Alberta Investment Management Corp’s holdings in Canadian Imperial Bank of Commerce were worth $103,633,000 as of its most recent filing with the Securities and Exchange Commission.

Top Bank Stocks To Buy Right Now: Wells Fargo & Company(WFC)

Advisors' Opinion:

• [By Stephan Byrd]

  Prudential Financial Inc. cut its holdings in shares of Wells Fargo & Co (NYSE:WFC) by 11.4% during the first quarter, HoldingsChannel.com reports. The fund owned 9,940,464 shares of the financial services provider’s stock after selling 1,281,633 shares during the period. Wells Fargo & Co accounts for approximately 0.8% of Prudential Financial Inc.’s portfolio, making the stock its 15th largest position. Prudential Financial Inc.’s holdings in Wells Fargo & Co were worth $520,980,000 as of its most recent filing with the Securities & Exchange Commission.

• [By Chris Lange]

  And Wells Fargo & Co. (NYSE: WFC) also is expected to report its most recent quarter results on Friday. The consensus analyst forecast calls for $1.18 in EPS and revenue of $21.81 billion. Shares of Wells Fargo closed at $53.19 on Friday. The consensus price target is $62.30. The 52-week trading range is $50.26 to $66.31.

• [By Matthew Frankel]

  A great recent example of this can be seen in the 2017 annual report of major Berkshire Hathaway stock holding Wells Fargo (NYSE:WFC). Instead of glossing over the company's infamous fake-accounts and other scandals and simply focusing on the good parts of the business, CEO Tim Sloan made the company's problems and detailed discussions of the planned and implemented solutions the central focus of his letter. And, Sloan acknowledged that "we still have work to do."

Top Bank Stocks To Buy Right Now: First Commonwealth Financial Corporation(FCF)

Advisors' Opinion:

• [By Joseph Griffin]

  Get a free copy of the Zacks research report on First Commonwealth Financial (FCF)

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

• [By Ethan Ryder]

  First Commonwealth Financial (NYSE:FCF) was upgraded by investment analysts at ValuEngine from a “sell” rating to a “hold” rating in a report released on Monday.

• [By Logan Wallace]

  Get a free copy of the Zacks research report on First Commonwealth Financial (FCF)

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

• [By Logan Wallace]

  Get a free copy of the Zacks research report on First Commonwealth Financial (FCF)

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

• [By Joseph Griffin]

  Get a free copy of the Zacks research report on First Commonwealth Financial (FCF)

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

Top Bank Stocks To Buy Right Now: Ampco-Pittsburgh Corporation(AP)

Advisors' Opinion:

• [By ]

  This undated photo provided by CFRA shows Sam Stovall, chief investment strategist for CFRA. Stovall said that based on the state of the economy and recent history, company profits should keep rising throughout 2018 and 2019 at least. (Photo: AP)

• [By ]

  Kabul, Afghanistan (AP) -- A Taliban assault on the Intercontinental Hotel in Afghanistan's capital killed at least six people, including a foreigner, and pinned security forces down for more than 13 hours before the last attacker was killed on Sunday, with the casualty toll expected to rise.

• [By ]

  This undated photo provided by BMW shows the 2018 BMW X3, a luxury compact SUV with more traditional design and a starting price of $41,995, including the destination fee. The Audi Q5 and the BMW X3 are two of the most popular compact luxury SUVs out today. Shoppers are typically drawn to the Q5 and the X3 because of their appealing mix of refinement, utility, safety and performance. (Photo: AP)

Top Bank Stocks To Buy Right Now: HSBC Holdings PLC (HSBA)

Advisors' Opinion:

• [By Max Byerly]

  HSBC (LON:HSBA) was upgraded by equities research analysts at Credit Suisse Group to a “neutral” rating in a research report issued to clients and investors on Thursday. The firm presently has a GBX 720 ($9.38) target price on the financial services provider’s stock, up from their previous target price of GBX 680 ($8.86). Credit Suisse Group’s price target suggests a potential upside of 5.82% from the company’s previous close.

• [By Max Byerly]

  HSBC Holdings plc (LON:HSBA) has received an average recommendation of “Hold” from the sixteen analysts that are covering the company, MarketBeat Ratings reports. Two investment analysts have rated the stock with a sell recommendation, ten have issued a hold recommendation and four have assigned a buy recommendation to the company. The average 12-month price objective among brokerages that have issued a report on the stock in the last year is GBX 768.33 ($9.80).

• [By Joseph Griffin]

  HSBC (LON:HSBA) had its target price lowered by equities research analysts at Shore Capital from GBX 721 ($9.60) to GBX 625 ($8.32) in a report issued on Tuesday. The brokerage presently has a “sell” rating on the financial services provider’s stock. Shore Capital’s price objective indicates a potential downside of 14.71% from the company’s previous close.

The Dow Jones Today Is Bogged Down by Brexit Uncertainty

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The Dow Jones today will be bogged down by the weight of global economic uncertainty.

Investors are left gritting their teeth with Brexit now delayed until June, replacing the original March 29 deadline. The delay ratchets up the uncertainty around the deal and signals Brexit may be messier than anyone thought. This comes a day after the Dow Jones Industrial Average saw its biggest gains in a month, thanks to a big pop in Apple Inc. (NASDAQ: AAPL) stock.

More on what's moving the Dow below, including sanctions on Venezuela and the latest pressures facing Boeing Co. (NYSE: BA).

Here are the numbers from Thursday for the Dow, S&P 500, and Nasdaq:

Index	Previous Close	Point Change	Percentage Change
Dow Jones	216.84	+216.84	+0.84%
S&P 500	2,854.88	+30.65	+1.09%
Nasdaq	7,838.96	+109.99	+1.42%

Now, here's a closer look at today's Money Morning insight, the most important market events, and stocks to watch.

The Top Stock Market Stories for Friday This morning, markets are paying close attention to ongoing developments in the United Kingdom. Britain was set to leave from the European Union (aka Brexit) next week, and the government was still no closer to a resolution than they were 1,000 days ago, after voters approved the referendum. However, EU leaders voted to kick the can down the road for another few weeks (April 12) and allow England more time to reach a domestic deal. Prime Minister Theresa May has said that she will return to the House of Commons to attempt to pass a deal or return with "alternative plans."

Marijuana stocks just received one of the biggest "buy signals" yet, and it came from one of the most unlikely sources. These three stocks are flying under the radar… for now. Each of them could see exponential stock price acceleration at any moment, and if you get in before that happens, you could turn a token stake into a lifetime of wealth. But if you're looking for another way to make huge gains in cannabis, check this out now. Keep a close eye on oil prices. Last week, the United States imported no oil from Venezuela. Last November, the U.S. imported 500,000 barrels. This is important given that the U.S. must replace the source of this much crude oil. The sanctions on Venezuela are just one of the three major factors that will drive oil prices to 2019 highs in the third quarter. This morning, U.S. WTI oil was flat at $60 per barrel, while Brent crude was sitting just short of $68 per barrel. Prices faced some pressure today due to ongoing concerns about global economic growth. Three Stocks to Watch Today: BA, NKE, FV Boeing Co. (NYSE: BA) is facing new pressure after an international airline giant canceled a large order of 737 Max planes in the wake of two crashes of the same aircraft in five months. Indonesian airline Garuda said that it still may change its order to another type of Boeing jet. Governments around the globe have grounded 737 Max jets as authorities investigate the two recent fatal crashes. The FBI has reportedly joined a criminal investigation into the certification process for the 737 Max jets. Shares of Nike Inc. (NYSE: NKE) slumped more than 4.5% after the sports apparel giant reported weaker-than-expected sales in North America. Although the firm topped Wall Street EPS expectations and fell in line with revenue forecasts, it reported very weak sales in its Converse brand. Nike executives said its brand is strong overseas, especially in China, where opportunity continues to grow. However, Wall Street is more concerned about Nike's forecast in the United States and Canada for the balance of 2019. Facebook Inc. (NASDAQ: FB) is facing yet another public relations problem this week. According to reports, Facebook revealed that its staff had complete access to the passwords of hundreds of millions of users. According to KrebsOnSecurity, the social media giant stored passwords in "plain text that was searchable by thousands of Facebook employees." Although no evidence suggests any wrongdoing, this is the latest self-inflicted black eye for the company at a time when it continues to face data privacy scandals. These 3 Stocks Are the Key to 2019's Greatest Profits

The 2018 midterm election was a turning point for the cannabis industry.

We expect nothing short of historic profits by the end of the year.

But not all pot stocks will hand you life-changing wins. In fact, often the companies making headlines are least likely to see the biggest gains.

These three stocks, on the other hand, are flying under the radar… for now. Each of them could see exponential stock price acceleration at any moment, and if you get in before that happens, you could turn a token stake into a lifetime of wealth.

I don't know of any other sector providing anywhere near this level of growth now.

Click here to learn more.

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Join the conversation. Click here to jump to comments…

Why Taiwanese Are Parking Their Money In Cambodia, Once An Unlikely Go-To Country

&l;p&g;&l;img class=&q;dam-image bloomberg size-large wp-image-42913808&q; src=&q;https://specials-images.forbesimg.com/dam/imageserve/42913808/960x0.jpg?fit=scale&q; data-height=&q;640&q; data-width=&q;960&q;&g; Traffic moves past high rises in Phnom Penh, Cambodia, on Friday, July 31, 2018. (Photo: Taylor Weidman/Bloomberg)

&l;span&g;Seven years ago, when foreign investors were &l;a href=&q;https://www.forbes.com/global/2012/0409/companies-people-vietnam-david-lin-ho-chi-minh-labor-losing-luster.html#7340e1032d78&q;&g;taking a hard look at the Vietnamese economy&l;/a&g;, Cambodia came up in conversation as an alternative site for cheap factory labor. Among those talking were Taiwanese factory owners. The business people known for fanning out around the world in search of low-cost production bases were trying then to escape the country&s;s depreciating currency and wildcat labor strikes in Vietnam. Vietnam has &l;a href=&q;https://www.forbes.com/sites/ralphjennings/2017/12/27/vietnams-economy-will-soar-again-in-2018-because-investors-just-love-it/#77aab39f55df&q;&g;cleaned up those issues&l;/a&g;, but Cambodia is still drawing more Taiwanese investors now than ever.&l;/span&g;

&l;span&g;Taiwanese investment in impoverished, once war-torn Cambodia&a;nbsp;is growing&a;nbsp;because labor there still costs less than those in Vietnam. The&a;nbsp;&l;/span&g;&l;span&g;impoverished Southeast Asian country is gaining further&a;nbsp;attention today because China has&a;nbsp;developed its infrastructure.&a;nbsp;Those improvements would ease doubts that Taiwanese investors had in 2012 about the high costs of sending in raw materials and exporting finished goods due to the lack of roads and port facilities.&l;/span&g;

&l;span&g; &l;/span&g;&l;span&g;&a;ldquo;Cambodia offers an attractive combination of low salaries, less than China, and now decent infrastructure,&a;rdquo; says Stuart Orr, a professor of strategic management focused on China at Deakin University in Australia.&a;nbsp;&a;ldquo;Ten years ago, the lack of commercially viable road transport and the lack of rail transport as well as the high cost of shipping from its only&a;nbsp;international cargo port would have made it unattractive as a manufacturing investment location.&a;rdquo;&l;/span&g;

&l;strong&g;&l;span&g;Numbers tell the Taiwan-Cambodia story&l;/span&g;&l;/strong&g;

&l;span&g;Cambodia-bound investment from Taiwan over the past six years totals about $568 million and most of that poured&a;nbsp;in just the past two years, according to figures from the economic affairs ministry&s;s Investment Commission in Taipei. Taiwanese companies invested about $171 million in 2017 and $181 million last year, a record high, data show. There were 15 projects by Taiwanese companies last year in Cambodia, a six-year high.&l;/span&g;

&l;span&g; &l;/span&g;&l;span&g;&l;/span&g;&l;strong&g;&l;span&g;&l;em&g;More on Forbes:&l;/em&g; &l;/span&g;&l;/strong&g;&l;span&g;&l;a href=&q;http://www.forbesindia.com/article/cross-border/cambodia-embraces-booming-chinese-investment/51313/1&q; target=&q;_blank&q;&g;&l;em&g;Cambodia embraces booming Chinese investment&l;/em&g;&l;/a&g;&l;/span&g;

Westerners might&a;nbsp;remember&a;nbsp;Cambodia best for&a;nbsp;its civil war under &l;a href=&q;http://www.historyplace.com/worldhistory/genocide/pol-pot.htm&q; target=&q;_blank&q;&g;Communist leader Pol Pot&l;/a&g;&a;nbsp;who masterminded the genocide of more than 2 million civilians in the so called &q;killing fields&q; in the 1970s and plunged the country into decades of poverty. Cambodia has been a staunch ally of China, which has been helping Cambodia build its infrastructure. As of August 2018, China had &l;a href=&q;https://hkmb.hktdc.com/en/1X0AEUQS/inside-china/China%E2%80%99s-Investment-in-Cambodian-Infrastructure-Totals-US2-Billion&q; target=&q;_blank&q;&g;pumped $2 billion into the country&a;rsquo;s infrastructure&l;/a&g;.&a;nbsp;Since it began aggressively building in Cambodia two years ago under its $1 trillion &l;a href=&q;https://www.forbes.com/sites/greatspeculations/2018/09/04/chinas-belt-and-road-initiative-opens-up-unprecedented-opportunities/#5bda5e9d3e9a&q;&g;Belt-and-Road initiative&l;/a&g;, China has&a;nbsp;expanded a port,&a;nbsp;opened a road network and made plans for two new airports. About 70% of Cambodia&a;rsquo;s roads are Chinese-funded, Orr says.

&l;span&g;Those developments in turn support Chinese trade in Cambodia, consistent with Belt-and-Road goals.&a;nbsp;Chinese President Xi Jinping&a;nbsp;said last month the Belt-and-Road initiatives in Cambodia should be accelerated,&a;nbsp;&l;a href=&q;http://www.chinadaily.com.cn/a/201901/22/WS5c460154a3106c65c34e5af8.html&q; target=&q;_blank&q;&g;state-run &l;em&g;China Daily&l;/em&g; in Beijing reported&l;/a&g;.&a;nbsp;&l;/span&g;&l;span&g;China is investing in power generation as well, says Carl Thayer, emeritus professor at University of New South Wales in Australia. More power will help the textile industry, he says. &a;ldquo;The Chinese have moved in in a bigger way,&a;rdquo; Thayer says. &a;ldquo;All these high-rise buildings and condos and everything else they&a;rsquo;re doing need energy, so China is into hydropower.&a;rdquo;&l;/span&g;

&l;strong&g;&l;span&g;Who&a;rsquo;s moving to Cambodia?&a;nbsp;Check your closet.&l;/span&g;&l;/strong&g;

&l;span&g;Cambodia is particularly drawing foreign garment manufacturers. &l;a href=&q;http://www.grandtwins.com.kh/&q; target=&q;_blank&q;&g;Grand Twins International&l;/a&g;, a Taiwanese garment manufacturer even&a;nbsp;listed on Cambodia&s;s nascent stock exchange in 2014. It didn&a;rsquo;t&a;nbsp;expect that much investment, according to &l;a href=&q;https://www.dowjones.com/scoops/grand-twins-may-price-cambodia-ipo-around-2-40share-sources/&q; target=&q;_blank&q;&g;media reports at the time&l;/a&g;, but it became the second foreign firm to list on Cambodia&a;rsquo;s stock exchange, a sign of confidence in the country.&a;nbsp;&l;/span&g;

&l;span&g;Media reports from Cambodia say it&s;s&a;nbsp;&l;a href=&q;https://www.phnompenhpost.com/business/huge-loss-grand-twins-despite-efforts-toward-expansion&q; target=&q;_blank&q;&g;trying now to export&a;nbsp;more summer clothes to Asian markets&l;/a&g; while holding onto its chief client, Adidas.&a;nbsp;&l;/span&g;

&l;span&g;Another Taiwanese investor &l;a href=&q;http://www.sheico.com.tw/en-ww/about/milestone.php&q; target=&q;_blank&q;&g;Sheico Group&l;/a&g;&a;nbsp;built&a;nbsp;factories in Cambodia in 2008 and 2013 to makes underwear and wet suits.&a;nbsp;&l;/span&g;&l;span&g;Sheico opened its&a;nbsp;first factory to take advantage of Canadian and European tariff breaks on exports from Cambodia while avoiding higher wages in China, the company says in a statement to &l;em&g;Forbes&l;/em&g;. Its two Cambodia factories occupy about 70,000 square meters and employ some 4,800 people.&a;nbsp;&l;/span&g;

&l;img class=&q;size-large wp-image-10108&q; src=&q;http://blogs-images.forbes.com/ralphjennings/files/2019/03/Sheico-Group-factory-in-Cambodia-photo-courtesy-of-Sheico-Group-1200x797.jpg?width=960&q; alt=&q;&q; data-height=&q;797&q; data-width=&q;1200&q;&g; Taiwanese-owned Sheico Group factory in Cambodia. (photo courtesy of Sheico Group)

One of Sheico&s;s plants operate near the Vietnamese border near the regional trade hub of Ho Chi Minh City,&a;nbsp;making it ideal for importing supplies and exporting clothes, the company says, The second factory is near the Phnom Penh &l;a href=&q;https://pnh.cambodia-airports.aero/&q; target=&q;_blank&q;&g;international airport&l;/a&g;. Cambodian officials are working with&a;nbsp;Beijing-based,&a;nbsp;state-run China Development Bank among others to build a 2,600-hectare, $1.5 million new&a;nbsp;terminal complex there. &q;Both properties are close to factories in Vietnam that&a;nbsp;have&a;nbsp;dying and fabric production,&q; the statement says.

&l;span&g;Picking sites near transit hubs &q;makes sense,&q; says&l;/span&g;&a;nbsp;John&a;nbsp;&l;span class=&q;il&q;&g;Brebeck&l;/span&g;, senior adviser at the&a;nbsp;&l;span class=&q;il&q;&g;Quantum&l;/span&g;&a;nbsp;International Corp. investment consultancy in Taiwan.&a;nbsp;&q;Infrastructure can do a heck of a lot,&q; he says. &q;A road gets built and economic activity picks up.&q;

&l;/p&g;

4 Pharma Stocks That Could Swing A Major Deal Soon

Retail and institutional investors aren't the only ones who used the fourth-quarter selloff last year as a buying opportunity. 

Bristol-Myers Squibb (NYSE: BMY), one of the largest U.S. pharma companies by revenue, didn't waste any time scooping up biotech Celgene (Nasdaq: CELG). Announced on January 3, the $74 billion acquisition is the second-largest pharmaceutical M&A deal ever (after the $87 billion merger of Warner-Lambert and Pfizer (NYSE: PFE) twenty years ago).

Despite the price tag, it was still a bargain. Even though BMY offered a 53.7% premium to CELG's closing price on January 2, the latter, which lost $30 per share between August 30, 2018, and year-end, still trades below its 52-week high. This price action shows how unexpected the deal was, and how little of the future M&A premium was "baked" into the price of CELG before BMY has made its move.

Identifying potential M&A targets is a difficult process, but it can be worth the effort. After all, a jump of 30%, 50% or even more is a nice payoff... But it's never wise to simply invest in a stock on the hopes that it will one day be acquired -- hence the research part. 

---Recommended Link---

9 Game Changing Predictions for 2019 Want to know where the money will be in 2019? Discover over a dozen potentially life-changing recommendations inside our special new report, 9 Game-Changing Investment Predictions for 2019. Click here for the full details now.

I, for one, am keeping an eye on several companies that may be worth something to a larger peer. As I've explained several times recently, I think we're on the cusp of a new wave of medical innovation that will prove to be one of the largest wealth creation opportunities of our lifetime. And while the big pharma players will certainly benefit -- it's the smaller companies that are often on the cutting edge of these developments. 

As soon as I complete my research, my Fast-Track Millionaire readers will be the first to know about it in an upcoming issue of my newsletter. 

Big Pharma Stocks In The Market For Deals
In the meantime, I am doing something else entirely. To start with, I wanted to see which companies in the large pharma and biotech industries could become the acquirers down the road. For that, I reviewed some of the largest companies in the industry for what they might have to lose due to upcoming patent expirations.

Here's a list of four large pharmaceutical companies, all facing or about to face some of the most notable patent losses, along with a discussion of how these companies are addressing the challenge. I wouldn't be surprised if a company or two from this list becomes an acquirer of a smaller peer down the road. 

Swiss giant Roche Holding (OTC: RHHBY) owns several large drugs already facing or about to face the patent cliff, including Rituxan, Avastin, and Herceptin. Its near-term future, much like that of the rest of the companies in the table, will largely depend on how successfully it will continue to defend these drugs' exclusivity.

Rituxan, also known as MabThera, is a huge drug for Roche. It's a biologic first developed by Genentech; this fact alone should tell you everything you need to know about that drug's old age -- Genentech was acquired by Roche 10 years ago. Rituxan was approved by the FDA nearly a decade earlier, in November 1997.

It was a pioneering treatment for cancer, and as such, it used to hold the title of the best-selling cancer drug in the world. In 2018, it generated $4.3 billion in the United States alone. Thanks to the difficulties of copying and approving of a generic version (called biosimilar) of a biologic drug, here in the United States, Rituxan/MabThera has been holding on: sales in 2018 have even grown compared to the previous year.

The picture in Europe is different, thanks to the easier process for approving biosimilars, and more dangerous for Roche: there, Rituxan/MabThera has already lost about half of its revenue.
Also acquired with Genentech, cancer drug Avastin is another potential revenue loss due to patent expiration. And here is one more Roche medicine that faces a biosimilar threat as soon as a few months from now (second half of 2019). Herceptin, another cancer drug, was first approved in 1998 and still brings in nearly $3 billion a year. The drug is set to lose its patent protection in June.

GlaxoSmithKline (NYSE: GSK) has fought for its asthma drug Advair, including the patented inhaler, for a few years now. Now, however, it seems to be finally facing off against generic competition. Just a month ago, on February 8, GSK announced that it plans to make an "authorized generic" version of Advair available. This is likely in a response to the FDA approving the first generic version of Advair on January 30, and an attempt to save at least some of the $1.4 billion in annual sales.

Here's one more in the same vein: Gilead Sciences (Nasdaq: GILD). This venerable biotech has been fighting to protect slumping revenue from its Hep C treatment franchise. To do so, Gilead is also going the generic route: the company, much like GSK above, is going to sell generic versions of its own medicines Epclusa and Harvoni. 

It's a highly unusual move inasmuch as this decision to launch cheaper generics comes only a few years after the FDA approved these medicines (Harvoni in 2014 and Epclusa in 2016). But if this is how GILD wants to protect its Hep C franchise, if not the entire revenue stream (Harvoni alone sold $4.9 billion worth in 2016, although this number has been on the decline ever since, falling to $4.4 billion in 2017 and as low as $1.2 billion in 2018). This approach is worth watching -- it may save GILD much of its otherwise lost revenue.

Of course, we cannot talk about patent cliff without mentioning AbbVie (NYSE: ABBV), the owner of the world's bestselling drug, Humira. While Humira, a biologic for rheumatoid arthritis and other maladies, still sells as much as $20 billion a year -- a massive number by any measure -- the stock of ABBV has been in the dumps, down more than 30% year-over-year.

Even though ABBV has more than 100 patents covering Humira, and despite its 2017 patent win over Amgen (Nasdaq: AMGN) requiring AMGN to wait until 2023 before issuing its own copy of Humira, the battle for generic Humira isn't over.

Just this January, ABBV reported a 17.5% decline in fourth-quarter revenue generated by Humira outside of the United States as the bestselling drug saw competition from biosimilars in Europe for the first time. The 2023 patent protection, which still stands domestically, resulted in a 9.1% increase in Humira's U.S. revenue -- a drastic difference that demonstrates why pharma companies try to keep patent protection at almost all cost for as long as they can. This year alone, Humira's revenue will decline by some $2 billion, all thanks to the advances of biosimilars in Europe.

Action To Take
Let's keep our eye on this group... While each has their own unique challenges with regard to patent expirations, any one of them could easily make the decision to put the cash flow from their blockbuster drugs to good use by acquiring a smaller pharma or cutting-edge biotech company in the near future.

In fact, I just recently profiled a small-cap biotech company in the most recent issue of ​Fast-Track Millionaire that would be perfect for one of these bigger players... It's a younger company showing enormous promise in the field of cancer treatment by targeting at the cellular level. It just went public last year -- and is already well on its way to blockbuster status. (To learn how to join us and get the name of this stock, go here.)​

Head to Head Survey: Park City Group (PCYG) and Castlight Health (CSLT)

Park City Group (NASDAQ:PCYG) and Castlight Health (NYSE:CSLT) are both small-cap computer and technology companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, analyst recommendations, institutional ownership, risk, earnings, valuation and dividends.

Volatility & Risk

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Park City Group has a beta of 1.62, suggesting that its stock price is 62% more volatile than the S&P 500. Comparatively, Castlight Health has a beta of 1.55, suggesting that its stock price is 55% more volatile than the S&P 500.

Earnings and Valuation

This table compares Park City Group and Castlight Health’s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Park City Group	$22.04 million	7.21	$3.40 million	$0.15	53.33
Castlight Health	$156.40 million	3.61	-$39.71 million	($0.16)	-24.56

Park City Group has higher earnings, but lower revenue than Castlight Health. Castlight Health is trading at a lower price-to-earnings ratio than Park City Group, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Park City Group and Castlight Health’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Park City Group	18.95%	11.07%	8.92%
Castlight Health	-25.39%	-12.93%	-9.74%

Insider and Institutional Ownership

27.9% of Park City Group shares are owned by institutional investors. Comparatively, 51.2% of Castlight Health shares are owned by institutional investors. 39.9% of Park City Group shares are owned by insiders. Comparatively, 22.6% of Castlight Health shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of current recommendations and price targets for Park City Group and Castlight Health, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Park City Group	0	0	0	0	N/A
Castlight Health	0	1	4	0	2.80

Castlight Health has a consensus price target of $5.20, suggesting a potential upside of 32.32%. Given Castlight Health’s higher probable upside, analysts clearly believe Castlight Health is more favorable than Park City Group.

Summary

Park City Group beats Castlight Health on 9 of the 13 factors compared between the two stocks.

About Park City Group

Park City Group, Inc., a software-as-a-service provider, designs, develops, and markets proprietary software products in the United States. The company offers ReposiTrak MarketPlace, a supplier discovery and B2B e-commerce solution that is used for sourcing products, and enables to screen and choose suppliers; ReposiTrak Compliance and Food Safety Solutions, which reduces potential regulatory and legal risk from their supply chain partners; and ReposiTrak Supply Chain Solutions, which enables customers to manage relationships with suppliers. It also provides ScoreTracker, Vendor Managed Inventory, Store Level Ordering and Replenishment, Enterprise Supply Chain Planning, Fresh Market Manager, and ActionManager supply chain solutions. In addition, it provides business-consulting services to suppliers and retailers in the grocery, convenience store, and specialty retail industries, as well as professional consulting services. The company primarily serves multi-store retail chains, wholesalers and distributors, and suppliers. Park City Group, Inc. was founded in 1990 and is headquartered in Salt Lake City, Utah.

About Castlight Health

Castlight Health, Inc. provides a software-as-a-service platform used for health benefits navigation for employees in the United States. Its platform matches employees to the resources their employers make available to them; managing a condition; and assists them to manage their benefits. The company also offers communication and testing, implementation, and user customer support services. It serves customers in a range of industries, including education, manufacturing, retail, technology, and government. The company was formerly known as Ventana Health Services and changed its name to Castlight Health, Inc. in April 2010. Castlight Health, Inc. was founded in 2008 and is headquartered in San Francisco, California.

Top 5 Financial Stocks To Watch Right Now

tags:WSB,PMF,EBSB,SKT,PBIB,

April 4, 2017: Markets opened lower Tuesday following some indifferent results in Monday’s session. Utilities and energy paced the sector trading with financials and healthcare dragging equities lower. The political winds are blowing investors first one way, then another, as President Trump prepares for a first meeting with China’s President Xi Jinping and we all prepare for the non-farm payrolls report due Friday. WTI crude oil for May delivery settled at $51.03 a barrel, up 1.6% on the day. June gold added 0.4% on the day to settle at $1,258.40. Equities were headed for a mixed close shortly before the bell as the DJIA traded up 0.17% for the day, the S&P 500 traded down 0.03%, and the Nasdaq Composite traded flat.

All three major indexes traded very near the break-even line just minutes before the closing bell. The closing tally could finish with either a small gain or a small loss for any or all of the indexes.

The DJIA stock posting the largest daily percentage gain ahead of the close Tuesday was Caterpillar Inc. (NYSE: CAT) which traded up 2.10% at $94.21. The stock’s 52-week range is $69.04 to $99.46. Volume was about 20% below the daily average of around 5.2 million. The company was upgraded to Goldman Sachs’ Conviction Buy list this morning.

Top 5 Financial Stocks To Watch Right Now: WSB Holdings Inc.(WSB)

Advisors' Opinion:

• [By Garrett Baldwin]

  Markets have been under pressure once again by the U.S. Federal Reserve. Inflation levels are going through the roof… but the people in charge of managing it have been lying to Americans for years. Now it's time to get even. Money Morning Liquidity Specialist Lee Adler has the perfect way to make a lot of money when no one is looking. Read it here.

  The Top Stock Market Stories for Wednesday In addition to Trump's concerns about China and trade, the President also stated that he is unsure whether a summit with North Korean leader Kim Jong-Un will take place as planned. Multiple media outlets this morning are questioning if the event will take place. The summit is tentatively planned for June 12. Banking stocks were on the move after Congress passed new laws designed to reduce regulations for thousands of financial institutions. The new rules will ensure that smaller banks are not facing the same strict rules as the bigger giants. The financial sector has been lobbying to changes to the Dodd-Frank Act since its inception after the 2008-09 financial crisis. Facebook Inc. (Nasdaq: FB) CEO Mark Zuckerberg met with members of the European Union on Tuesday. The CEO of the social media giant outraged European Parliament members after reportedly dodging questions about user privacy and the firm's collection of personal data. During the conversation, EU members questioned whether Facebook is a monopoly and pondered if the firm should be broken up due to antitrust concerns. Three Stocks to Watch Today: TGT, LOW, TIF Shares of Target Corporation (NYSE: TGT) fell nearly 6% after the retail giant fell short of earnings expectations before the bell. The firm reported earnings per share of $1.32. This figure missed Wall Street earnings expectations by six cents. The retail giant blamed poor spring weather for its performance and said that its bottom line has been impacted by the costs of upgrading its physical locations. Lowe's Companies (NYSE: LOW) stock gained

Top 5 Financial Stocks To Watch Right Now: PIMCO Municipal Income Fund(PMF)

Advisors' Opinion:

• [By Shane Hupp]

  Institutional investors and hedge funds have recently modified their holdings of the business. Lavaca Capital LLC purchased a new stake in Pimco Municipal Income Fund in the fourth quarter worth about $36,000. Lindbrook Capital LLC purchased a new stake in Pimco Municipal Income Fund in the fourth quarter worth about $50,000. Winslow Evans & Crocker Inc. increased its position in Pimco Municipal Income Fund by 46.2% in the fourth quarter. Winslow Evans & Crocker Inc. now owns 9,500 shares of the financial services provider’s stock worth $120,000 after buying an additional 3,000 shares in the last quarter. Cito Capital Group LLC purchased a new stake in Pimco Municipal Income Fund in the fourth quarter worth about $126,000. Finally, GWM Advisors LLC purchased a new stake in Pimco Municipal Income Fund in the fourth quarter worth about $131,000.

  WARNING: “Pimco Municipal Income Fund (PMF) Hits New 1-Year High After Dividend Announcement” was published by Ticker Report and is owned by of Ticker Report. If you are viewing this news story on another domain, it was illegally stolen and republished in violation of US and international copyright & trademark laws. The original version of this news story can be accessed at https://www.tickerreport.com/banking-finance/4199787/pimco-municipal-income-fund-pmf-hits-new-1-year-high-after-dividend-announcement.html.

  Pimco Municipal Income Fund Company Profile (NYSE:PMF)

Top 5 Financial Stocks To Watch Right Now: Meridian Interstate Bancorp Inc.(EBSB)

Advisors' Opinion:

• [By Shane Hupp]

  Meridian Bancorp (NASDAQ:EBSB) was upgraded by equities research analysts at BidaskClub from a “sell” rating to a “hold” rating in a report released on Saturday.

• [By Ethan Ryder]

  Get a free copy of the Zacks research report on Meridian Bancorp (EBSB)

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

• [By Logan Wallace]

  BidaskClub upgraded shares of Meridian Bancorp (NASDAQ:EBSB) from a hold rating to a buy rating in a research report sent to investors on Friday morning.

• [By Shane Hupp]

  Get a free copy of the Zacks research report on Meridian Bancorp (EBSB)

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

Top 5 Financial Stocks To Watch Right Now: Tanger Factory Outlet Centers Inc.(SKT)

Advisors' Opinion:

• [By Ethan Ryder]

  American International Group Inc. lowered its stake in Tanger Factory Outlet Centers Inc. (NYSE:SKT) by 3.3% during the 1st quarter, according to the company in its most recent disclosure with the Securities and Exchange Commission. The firm owned 189,090 shares of the real estate investment trust’s stock after selling 6,489 shares during the period. American International Group Inc. owned approximately 0.20% of Tanger Factory Outlet Centers worth $4,160,000 as of its most recent SEC filing.

• [By Brian Feroldi, Leo Sun, and Demitrios Kalogeropoulos]

  Want proof? We asked these Motley Fool investors to highlight a dividend stock that pays a higher yield than Verizon. Here's why they picked Tanger Factory Outlets (NYSE:SKT), Cedar Fair (NYSE:FUN), and STORE Capital (NYSE:STOR). 

• [By Jeremy Bowman, Leo Sun, and Steve Symington]

  To take advantage of that potential boom, we asked three of our retail writers for their top picks for May. See why they recommend Dollar General (NYSE:DG), Tanger Factory Outlet Centers (NYSE:SKT), and Home Depot (NYSE:HD).

• [By Motley Fool Staff]

  In this week's installment of "One to Watch," Fool.com contributor Matt Frankel, CFP, explains why retail real estate investment trust Tanger Factory Outlet Centers (NYSE:SKT) is at the top of his watchlist. And, host Jason Moser suggests that listeners keep an eye on Ellie Mae (NYSE:ELLI) -- just hours before it announced it was being acquired!

Top 5 Financial Stocks To Watch Right Now: Porter Bancorp Inc.(PBIB)

Advisors' Opinion:

• [By WWW.GURUFOCUS.COM]

  For the details of PATRIOT FINANCIAL PARTNERS GP, LP's stock buys and sells, go to http://www.gurufocus.com/StockBuy.php?GuruName=PATRIOT+FINANCIAL+PARTNERS+GP%2C+LP

  These are the top 5 holdings of PATRIOT FINANCIAL PARTNERS GP, LPBanc of California Inc (BANC) - 2,850,564 shares, 32.49% of the total portfolio. Meta Financial Group Inc (CASH) - 397,069 shares, 25.6% of the total portfolio. Guaranty Bancorp (GBNK) - 1,391,767 shares, 23.3% of the total portfolio. MBT Financial Corp (MBTF) - 2,060,302 shares, 13.08% of the total portfolio. Sterling Bancorp (STL) - 323,980 shares, 4.31% of the total portfolio.
• [By Max Byerly]

  Media stories about Porter Bancorp (NASDAQ:PBIB) have trended somewhat positive this week, Accern Sentiment reports. Accern identifies negative and positive news coverage by analyzing more than twenty 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. Porter Bancorp earned a media sentiment score of 0.07 on Accern’s scale. Accern also gave news coverage about the financial services provider an impact score of 44.3359026173577 out of 100, indicating that recent news coverage is somewhat unlikely to have an effect on the stock’s share price in the near future.

Money and Marriage: 6 Steps to Talking Family Finances With Your Spouse

Some of us like wine tasting with our spouses. Some of us enjoy kayaking. But hardly any of us love a good couples' chat about finances. In fact, a Wells Fargo survey found that for Americans, money is the No. 1 most difficult topic to discuss -- even harder than death, politics, or religion. Yet a TD Bank survey found 90% of couples who say they are in a happy relationship talk about money once a month, whereas 68% of unhappy couples say they discuss it less often.

Clearly talking about money is part of a healthy relationship -- so why don't more couples discuss their dollars and cents? The answer is complicated. Gender differences have a little to do with it; the Wells Fargo survey found that half of the women who responded said it was difficult to talk with others about personal finances, versus 38% of men.

Debt is a factor, too. A Ramsey Solutions survey found that the more debt a couple had, the more likely they were to fight. Not talking about credit-card debt can also lead to sneaky behavior; in a separate study, 32% of respondents said they've hidden their credit card debt from their significant others. That can't be good for a marriage.

Money is a complicated topic, and we understand the impulse to avoid it rather than face a potential fight. But happy couples do talk about the family finances more regularly than unhappy couples do. Reaching the same page about this sensitive topic is worth the investment, so here are six steps to talking with your spouse about money without ending up yelling at each other (we hope). 

Don't let difficult conversations about money get between you and a happy marriage. Source: Getty Images.

1. Set the stage

With any hefty topic, it's best to dig in when both partners feel ready. No one likes to talk shop when they come home from a long day at work, tired and hungry. Some suggest setting and preparing for a "money date" -- a night earmarked for the discussion of your finances, free from the distractions of TV, kids, cell phones, and the like. Some may want to get out of the house and make this a true date night, while others may find it easier at home. Either way, I suggest opening a bottle of red wine. 

2. Ease into the conversation

If you anticipate that the discussion might get contentious, Trent Hamm from the Simple Dollar money blog suggests admitting faults first. This is a good way to acknowledge that none of us is perfect; it's like saying, "It's not you, it's me." If you feel your spouse is spending too much money, take a look at the budget over the past few months -- there may be things you splurged on as well. Admit that you have your own flaws, and understand that everyone has a different relationship with money, one that comes from their individual background and has been forged over many years. As with any important topic worth discussing, when it comes to money, it's best to be patient.

3. Find commonality

A difficult conversation will go more smoothly if you can find common ground. Start off by posing questions; asking "When do you want to retire?" "Where should we live in retirement?" or "Where will the kids go to college?" will help get you both thinking about the same things. Try to get specific with your answers: "I want to retire in 15 years," "I think the kids should go to public college instead of private." This will help make the goals more realistic. Finally, write the goals down so you can both reference them at your next money date.

4. Look at the numbers -- but don't point fingers

It helps if you have prepared a balance sheet and can both look it over. This is a great next step, as it ensures both spouses are aware of the complete family picture. Credit-card balances, mortgage debt, car loans, student loans, investment accounts, and college accounts should all be listed and put out in the open for both partners to see.

Be careful not to judge or make comments if, for instance, one spouse has all the debt in their name. This will quickly shut down the conversation. Instead, have another glass of wine and talk about the good things you've accomplished so far, like how much you have saved or the progress you are making toward paying down a debt. 

5. Start planning

Now that the numbers are out in the open and the goals are clearly articulated, it's time to have some fun and start planning! Goals should be shared, so it's best to talk in terms of "we," not "you." If one person has student debt to pay back, the question is "How can we pay off the debt faster?" or "Where can we save in other places to help pay down the loan?" Talking in terms of "we" makes it a team venture, and there's greater buy-in when both partners feel that they are in it together. 

There are several free financial calculators online that can help you get an idea of how much to save for a specific goal and show how paying down debt faster saves you money.

6. Set another date

Assuming you both survived the first money date unscathed and the bottle of red is empty, it's now time to schedule the next meeting. I try to do this once a quarter with my spouse. If you're just having this conversation for the first time, then maybe try once a month till you gain some traction. I find reviewing the balance sheet is an extremely useful tool that helps guide the conversation. It's also good to keep it light and recognize that however daunting any goal may seem, it all starts with communication.

Money shouldn't be a taboo topic for couples. It's too important not to discuss. If you approach it the right way -- by not judging, setting common goals, talking in terms of "we," and having regular conversations over time -- talking about money may get easier and lead to a more enriching marriage, in more ways than one. I'll drink to that. 

National Beverage's Profitability Drops on Reduced Sales Volume

Investors were feeling nervous heading into National Beverage's (NASDAQ:FIZZ) fiscal third quarter earnings report this week. The soda and sparkling water specialist's management team claimed in its last announcement that sales trends had returned to normal at the start of the quarter, following a sharp deceleration in the previous three months.

In its actual results announced this week, the company revealed a further slowing of demand that suggests it is still struggling to reconnect with health-conscious sparkling water fans.

Let's take a closer look.

The raw numbers

 Metric

Q3 2019

Q3 2018

Year-Over-Year Gain (Decline)

Revenue	$221 million	$227 million	(3%)
Net income	$25 million	$41 million	(40%)
EPS	$0.53	$0.88	(40%)

Data source: National Beverage's financial filings. Chart by author.

What happened this quarter?

Sales trends fell into negative territory last quarter as news coverage surrounding the marketing of the LaCroix sparkling water brand continued to hurt demand. National Beverage also had trouble passing along higher costs, which amplified the negative profit impact from its sales volume declines.

Image source: Getty Images.

Here are the key highlights of the quarter. 

Sales declined 3% compared with a 7% increase last quarter and a 13% spike in the fiscal first quarter. Revenue gains have slowed to 8% over the past 12 months, versus 18% in fiscal 2018. Volume decreased 4% year over year, which was partly offset by higher average selling prices. Gross profit margin fell to 36.5% of sales from 40.1% a year earlier due to the falling sales volumes. In addition, manufacturing costs jumped 10% per case sold, compared with a 3.7% increase in prices. The company spent more on marketing and distribution, which helped push expenses up to 22.4% of sales from 20% a year earlier. When combined with the lower gross profit, this shift reduced pre-tax income to $32 million, or 14.6% of sales, from $46 million, or 20.3% of sales in the prior-year period. Higher tax expenses contributed to a 40% decline in net income. What management had to say

CEO Nick Caporella's comments didn't deviate from his characteristically animated style. "We are truly sorry for these results," Caporella said in a press release. "Negligence nor mismanagement nor woeful acts of God were not the reasons," he explained, but instead "much of this was the result of injustice!" Management added more detail in the 10-Q filing, stating that the volume declines were "principally due to widespread media coverage of litigation regarding the marketing and labeling of LaCroix."

Caporella sought to reassure investors by saying that the LaCroix brand was in no danger of taking on lasting damage. "Nothing herein mentioned has detracted from the ultimate value and future of our dynamic company," he said.

Looking forward

These results demonstrate that National Beverage hasn't moved past the branding hit that began to hurt results in the fiscal second quarter. The company could continue to struggle over the coming quarters, especially as it seeks to absorb rising costs in the context of weak sales volumes.

An even bigger concern for investors, and a likely driver of the stock's sharp decline following the results, may be the spotty track record that management has established through this demand challenge. Its early-December prediction of a return to normal growth patterns didn't pan out this quarter, so investors see more reasons to be cautious about the business. Thus, in addition to stabilizing sales, Caporella and his team have to work at regaining investor confidence.

Should Retailers Make You Pay for Free Shipping?

Amazon (NASDAQ:AMZN) long ago set the rules of the e-commerce game by which almost all retailers now play. By training consumers to expect free shipping for their online purchases, the company essentially compelled rivals large and small to fall in line -- if they have any expectation of competing, they too, need to offer some form of free shipping.

Yet the cost to retailers of providing that perk is soaring. UPS and FedEx raised rates this year by 4.9% on average, and hiked the prices of the services used most by residential customers by 30% or more. Even the U.S. Postal Service has increased rates for package delivery. The result is that sellers are absorbing costs in the billions of dollars annually to meet consumers' demand to get something for nothing.

Maybe it's time more retailers considered charging for free delivery. After all, that's what Amazon does.

Image source: Getty Images.

Amazon's secret weapon

Although the e-commerce giant got everyone else to follow its lead on free shipping, Amazon's service isn't actually free at all, as consumers pay $119 a year for it. Even though shipping to customers cost the online retailer $27.7 billion in 2018, up 27% from the year before, it partially offset that expense with the fees from its Prime membership loyalty program.

Amazon has over 100 million members worldwide, and almost 58 million in the U.S., so from one perspective, Prime fees offset its shipping costs by about $12 billion last year. Market research firm eMarketer estimates that by 2021, 57% of U.S. households, almost 72 million in all, will have Prime memberships.

Yet if Prime were nothing but a free-shipping deal, that would still leave $15.7 billion or so Amazon that was out of pocket -- a substantial expense. And as we all know, members get a lot of benefits and services beyond that. The company says it will lay out $5 billion this year on content for Prime Video alone, which takes a considerable bite out of that $12 billion in subscription revenue.

The key point, however, is that most other retailers don't have any built-in income stream designed to offset the costs of providing free shipping; the best they can hope for is to boost their sales incrementally by setting a dollar threshold for customers to qualify for the service.

Walmart requires customers to spend $35 on an order before it qualifies for free shipping; so does Target, but shoppers who use the store's REDCard credit card qualify with orders of just $25. Macy's has a similar policy, and a number of smaller retailers have tighter policies still.

Gap, for instance, requires you to spend $50 on an order to get free shipping, but it usually takes five to seven days to receive it. If you want expedited two-day shipping, it'll cost you $17. American Eagle Outfitters also requires you spend at least $50 to get free shipping.

Time for an upgrade

Retailers reap some obvious benefits from offering free shipping, regardless of the details, such as greater consumer loyalty and engagement. But can they get consumers to acknowledge the costs involved by implementing premium loyalty programs of their own?

Plenty of retailers do have such programs that come with a variety of exclusive perks, but free shipping is often not among them. For example, RH, the former Restoration Hardware, has a $100 per year premium loyalty program that offers discounts and services such as design consultations, but members still pay for shipping. While furniture is an admittedly expensive category to ship, even small items carry a fee.

Others are starting to come around. Where Barnes & Noble has long offered free express shipping for members of its $25-a-year loyalty program, lululemon athletica began testing one last year where for $128 a year, free expedited shipping is included. 

Clarus Commerce says loyalty program fatigue is setting in: The average U.S. household belongs to 29 different programs, but is active in only 12.   On the other hand, Clarus also found 62% of consumers and 75% of millennials would consider paying for a premium program. The key is offering a range of benefits customers find attractive -- free shipping is obviously one that should be considered.

Key takeaway

In reality, of course, there's no such thing as "free" shipping. Customers pay for it through loyalty program membership fees, the costs being baked into the list prices of the items, or both.

Yet retailers are now being caught between consumers' desire for free stuff and the rising rates that UPS, FedEx, and the U.S. Postal Service are charging. If they are going to keep their omnichannel operations profitable, more of them may have to ask their customers pay up front to enjoy that "something for nothing" feeling later on.

The 3 Best Defensive Stocks Come from This Unexpected Sector

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No one expects the best defensive stocks to be soda companies, especially in the new era of healthy living.

But soda stocks actually tap into one of the most powerful global trends, and they'll keep rewarding investors for decades to come.

Our very own Money Morning Chief Investment Strategist Keith Fitz-Gerald has found six "Unstoppable Trends" that will always drive the market, rain or shine. He argues there are always profits to be found in energy; demographics; medicine; war, terrorism, and ugliness; scarcity/allocation; and technology because there are trillions of dollars behind these industries.

That's a great way to start thinking about what could be the best defensive stocks to help you survive the market's ups and downs. We are in the longest bull market in history, and the longer it goes, the more worried investors become.

And soda stocks tap right into the demographics trend because the global population will keep driving demand. People will always need beverages, even if the economy slows down. It's just a matter of what kind.

A 2015 study by Nielsen had 88% of respondents saying they would pay more for healthier foods.

Beverage trends present similar evidence. In 2017, The New York Times reported the number of adults drinking at least one sugary beverage on any given day had dropped from 61.5% in 2003 to just 50% in 2014. The Philadelphia Health Department also reported a 10% drop in soda consumption between 2015 and 2017.

It's clear tastes are trending toward healthier options, which would seem to be the death knell for companies making sugar-loaded sodas.

But they are actually the best play to tap into this new healthy trend, and it means their stocks offer not only sustainable income for your portfolio, but 40% upside too…

Why the Best Defensive Stock Is Also the Best Offense

It may come as a surprise, but soda companies are at the forefront of America's latest health craze. That's making some of the best defensive stocks to pad your portfolio.

Coca-Cola Co. (NYSE: KO) and PepsiCo Inc. (NASDAQ: PEP) are both ranked among the top 300 most powerful companies in the world by Forbes. The list considers revenue, profit, assets, and market value. These companies have delivered an enormous, agile variety of food and beverages for decades. On one end, you have your standard Coke and Fanta; on the higher end, you have Smartwater and Zico coconut water. Then there's an array of energy drinks, teas, and orange juices falling somewhere in the middle.

Both Coca-Cola and Pepsi have been expanding their portfolios of electrolyte-filled waters and other healthier choices over the last few years. Coke bought Costa coffee and BodyArmor sports drink last year, while PepsiCo reportedly took in 45% of its revenue from "guilt-free products" in 2017, which included organic versions of many FritoLay snacks.

The "healthy" market has only kept these food and drink giants shaking things up to increase their bottom lines.

They are getting even more innovative, too.

The PepsiCo CFO reported late last year the company was taking a "hard look" at the emerging legal cannabis market. This was only a month after Coca-Cola announced that CBD, or Cannabidiol, was on its radar. Their shared interest in CBD not only signals future revenue growth in an untapped market, it is also a big step toward health consciousness.

CBD is known for its medicinal use, treating ailments such as chronic fatigue, pain, anxiety, and depression. Many smaller companies have sought to create beverages infused with CBD oil, but Coke and Pepsi have the resources to conquer the whole market. CBD could even turn this defensive stock play into great offense if the "year of CBD" goes as expected.

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Plus, these companies have some of the strongest financials you'll find.

Both Coke and Pepsi are expected to increase revenue by 7.6% in 2019. KO currently trades at $45.34 with a high one-year target of $64. PEP goes for $115.40 with a target of $118.68.

KO's price/earnings ratio stands at 30.16 and PEP's at a superb 13.14, while the industry's is 60.10, signaling a great chance to profit from both stocks.

Their growth potential is only reinforced by our proprietary Money Morning Stock VQScore system, which gives both stocks a 3.75, just a notch away from the "buy zone."

Even if their prices don't come down, these stocks have the advantage of brand loyalty and other competitive moats in place to keep them stable.

These are great companies that pay big dividends of 3.2% to 3.5% and are not going away anytime soon. This will help you whenever the markets decide to turn down, or if you just need to add some income to your portfolio.

But if you're really looking for big gains fast, this other food and beverage company could make trouble for Coke and Pepsi. It's projected to grow twice as fast in the next year.

This one registers a perfect 4.75 VQScore, meaning it's an immediate buy.

The Best Defensive Stock to Buy Before the Next Recession

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What the GE-Danaher Deal Means to Both Sets of Investors

The deal to sell General Electric's (NYSE:GE) biopharma business to Danaher (NYSE:DHR) grabbed the headlines recently. Now that the dust has settled on the announcement, it's time to look in more detail at what's really changed.

For Danaher, it's a case of natural evolution. But for GE, it's evidence of a change of emphasis toward debt reduction by CEO Larry Culp.

Danaher buys growth

After the initial euphoria over the deal, GE's stock is now down -- but Danaher's stock has risen by a double-digit percentage. The deal is good news for Danaher, as it continues the company's strategy of refocusing on its growth areas, such as life sciences and diagnostics.

Danaher is already set to spin off its underperforming dental segment, and the purchase of GE's biopharma business is a natural progression of its strategic aims. Not only is it a good fit, but the fact that 75% of GE's biopharma sales come from consumables is also in line with Danaher's long-held goal of increasing recurring revenue.

In a nutshell, the deal adds growth. And it allows Danaher to apply its much-admired Danaher Business System (DBS) -- a set of core principles embodying lean manufacturing processes and continuous improvement -- to the new business in an effort to improve productivity.

Image source: Getty Images.

What it means to General Electric

Of course, Larry Culp knows all about DBS, because he's the man responsible for implementing it at Danaher in the first place. In fact, Culp's highly successful tenure at Danaher, and his proven ability to extract every ounce of productivity from a business, are key reasons that many feel confident in his ability to turn GE around.

For General Electric, the deal should also be seen as a net positive, but understanding why might require some explanation.

The $21.4 billion deal includes $21 billion in cash and the assumption of some $400 million in pension liabilities. It's easy to conclude that this will go a long way toward reducing GE's industrial net debt of around $55 billion (GE Capital also has $66 billion in debt), but there's a snag. In fact, there's an $18 billion snag.

Ever since former CEO John Flannery announced the plan to separate GE Healthcare in June 2018, it's been understood that $18 billion worth of debt and pension obligations would be transferred along with GE Healthcare.

However, as already noted, the biopharma deal will only transfer $400 million in liabilities, and the previously planned Healthcare spinoff is reported to be under evaluation. In other words, GE won't be transferring the $18 billion in debt and pensions anytime soon.

Moreover, GE Healthcare will be left with 86% of its previous Healthcare revenue. And given that GE's life sciences segment grew 8% in its last quarter but the healthcare segment had organic growth of just 6%, it's fair to say that Healthcare's growth rate could slow.

All told, just because GE is selling BioPharma for $21.4 billion, it doesn't mean GE's debt problems are over, because the plan to transfer $18 billion in debt and pensions in a general healthcare spinoff is on hold for now. However, the deal is good news for other, more subtle reasons. 

2 reasons the deal is good news for GE

First, selling the biopharma business separately has, arguably, resulted in a higher price for it than GE would have gotten by including it in a GE Healthcare spinoff. This is in line with the general trend of industrial conglomerates trying to release value by separating disparate businesses from each other.

Second, this is further evidence of Culp's decisiveness in dealing with debt problems. For example, in Flannery's original plan for Healthcare, 80% of the segment was going to be distributed to GE shareholders, with 20% being monetized by GE. Subsequently, Culp has modified the terms of the Westinghouse Air Brake Technologies deal so that GE keeps 24.9% of shares in the new Wabtec, compared to 9.9% under Flannery's plan. Culp also said he was willing to monetize up to 50% of the potential Healthcare spinoff, compared to Flannery's 20%.

The recent deal means GE shareholders now won't receive anything directly from the biopharma business. Instead, GE will "use the proceeds from the transaction to reduce leverage and strengthen its balance sheet," according to the press release. That should do a lot to appease debt holders and strengthen the company's creditworthiness.

The key conclusion for GE investors

The deal marks continued progress in Culp's plan to quash any lingering fears about GE's liquidity. That should be welcomed by investors: Flannery's plan to distribute the lion's share of GE Transportation and GE Healthcare directly to shareholders didn't do much for the share price, or for concerns about the company's debt.

That said, the bearish argument against GE has never been solely about its liquidity; it's also been a question of its run rate of earnings and free cash flow, given an ailing power segment and a troubled GE Capital. The key to the investment proposition at GE remains the shape of the potential earnings recovery at GE Power. 

The market still awaits Culp's guidance on GE Power, and an indication of how long the turnaround will take, but the deal with Danaher will result in a cash infusion, which should at least buy GE more time to deal with issues at GE Power and Capital. 

SunPower Introduces Its Key Product for 2019

If SunPower Corporation (NASDAQ:SPWR) is going to return to profitability in 2019, it's going to be on the back of the solar industry's most efficient solar panels. SunPower has always had a leg up on the competition when it comes to efficiency, and this year, it hopes to expand that margin. 

On Tuesday, the company gave details about its next-generation technology -- now known as A-Series -- solar panels. They'll be the first commercial solar panels over 400 watts and come equipped with a microinverter that makes it easy to install on any home or business. Maybe this is the product SunPower needs to turn itself around? 

Image source: SunPower.

What is SunPower A-Series? 

The biggest difference between SunPower's X-Series product and the new A-Series is size. Solar cells are 65% larger, and the panel itself is larger than previous models. This reduces connection points on the roof and increases the amount of space that's collecting solar energy. 

There's also an Enphase Energy (NASDAQ:ENPH) microinverter attached, which makes wiring simple. SunPower sold Enphase its microinverter business and is integrating the product on residential and commercial solar projects. 

The result is the first 400-watt solar panel for residential and commercial solar with the option to upgrade to a 415-watt model. Homeowners can pack more solar power onto their roofs than ever, but that's not the only thing holding back SunPower as a company right now. 

Cost will be key

There's no question that SunPower can make the most efficient solar cells and panels on the market. What it hasn't proven is the ability to make them at a cost that competes with less-efficient commodity solar panels. 

SunPower's management has said that process improvements with A-Series and a bigger cell should help lower costs and improve margins. Based on the losses that have mounted over the last few years, SunPower needs to improve margins quickly. 

SPWR Net Income (TTM) data by YCharts.

The larger solar cell should help SunPower lower its cost per watt and reduce panel assembly costs. The large solar panel size should also reduce installation costs, which will ultimately help lower the cost to the end customer. Combined, SunPower hopes the improvements will help the company regain profitability. 

Heading down the right track

SunPower is improving in the right places in 2019, doubling down on efficiency and the residential and commercial markets where efficient solar panels are most economical. However, the company has to prove to investors that it can increase margins and get back to profitability before the stock will make a big move higher. 

One challenge SunPower may face is scale. The company will have a small amount of A-Series production in 2019 and may have only a few hundred MW in 2020. It needs to reach multigigawatt scale to compete with rivals in solar manufacturing, which is why management has said it's looking for manufacturing partners to help fund expansion. 

SunPower is heading down the right track in 2019, but there are still a lot of unknowns for investors bullish on the stock. I'd keep an eye on costs, margins, and improving A-Series scale, which will tell us if this company is destined for greatness or will continue muddling along in solar energy. 

Top 5 Penny Stocks For 2019

tags:FFNW,RMCF,XIN,SIRI,IRET,

Zacks Investment Research downgraded shares of Pilgrim’s Pride (NASDAQ:PPC) from a buy rating to a hold rating in a research note issued to investors on Tuesday.

According to Zacks, “Over the past three months, Pilgrim’s Pride’s shares have underperformed the industry. The company’s first-quarter 2018 adjusted earnings of 53 cents per share missed the Zacks Consensus Estimate by a penny. Elevated demand for plant-based protein products might dampen results of meat-product companies like Pilgrim’s Pride. Furthermore, prevalent headwinds like stiff industry rivalry remain causes of concern. However, successful integration activities of the Moy Park buyout will likely help in boosting the company’s European business, going forward. Moreover, premium brands like Del Dia will likely secure sturdier market response in the near term. The company’s unique portfolio strategy is also expected to strengthen its competency, moving ahead.”

Top 5 Penny Stocks For 2019: First Financial Northwest Inc.(FFNW)

Advisors' Opinion:

• [By Max Byerly]

  First Financial Northwest (NASDAQ:FFNW) will be announcing its earnings results on Tuesday, July 24th. Analysts expect the company to announce earnings of $0.26 per share for the quarter.

• [By Stephan Byrd]

  Get a free copy of the Zacks research report on First Financial Northwest (FFNW)

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

• [By Ethan Ryder]

  Get a free copy of the Zacks research report on First Financial Northwest (FFNW)

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

• [By Logan Wallace]

  Get a free copy of the Zacks research report on First Financial Northwest (FFNW)

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

Top 5 Penny Stocks For 2019: Rocky Mountain Chocolate Factory Inc.(RMCF)

Advisors' Opinion:

• [By Ethan Ryder]

  Rocky Mountain Chocolate Factory (NASDAQ: RMCF) and Tootsie Roll Industries (NYSE:TR) are both small-cap retail/wholesale companies, but which is the better stock? We will contrast the two companies based on the strength of their valuation, risk, earnings, institutional ownership, profitability, dividends and analyst recommendations.

• [By Max Byerly]

  Rocky Mountain Chocolate Factory (NASDAQ: RMCF) and Tootsie Roll Industries (NYSE:TR) are both small-cap retail/wholesale companies, but which is the better investment? We will compare the two companies based on the strength of their risk, valuation, dividends, analyst recommendations, earnings, profitability and institutional ownership.

Top 5 Penny Stocks For 2019: Xinyuan Real Estate Co Ltd(XIN)

Advisors' Opinion:

• [By Logan Wallace]

  Mixin (XIN) is a proof-of-stake (PoS) token that uses the SHA256 hashing algorithm. It launched on October 2nd, 2017. Mixin’s total supply is 1,000,000 tokens and its circulating supply is 442,200 tokens. Mixin’s official Twitter account is @XIN_Foundation and its Facebook page is accessible here. Mixin’s official message board is mixin.one/logs. The official website for Mixin is mixin.one.

• [By Shane Hupp]

  Xinyuan Real Estate Co., Ltd. (NYSE:XIN) declared a quarterly dividend on Wednesday, May 30th, RTT News reports. Stockholders of record on Monday, June 11th will be given a dividend of 0.05 per share by the financial services provider on Friday, June 22nd. This represents a $0.20 annualized dividend and a dividend yield of 3.74%.

• [By Motley Fool Transcribers]

  Xinyuan Real Estate Co., Ltd.  (NYSE:XIN)Q4 2018 Earnings Conference CallFeb. 15, 2019, 8:00 a.m. ET

  Contents: Prepared Remarks Questions and Answers Call Participants Prepared Remarks:

  Operator

• [By Stephan Byrd]

  Mixin (CURRENCY:XIN) traded up 6.2% against the U.S. dollar during the 1-day period ending at 20:00 PM E.T. on July 17th. One Mixin token can currently be purchased for approximately $550.98 or 0.07481400 BTC on popular cryptocurrency exchanges. Mixin has a total market cap of $241.93 million and approximately $90,201.00 worth of Mixin was traded on exchanges in the last day. Over the last week, Mixin has traded up 19.1% against the U.S. dollar.

• [By Ethan Ryder]

  Mixin (XIN) is a proof-of-stake (PoS) token that uses the SHA256 hashing algorithm. It launched on October 2nd, 2017. Mixin’s total supply is 1,000,000 tokens and its circulating supply is 438,115 tokens. Mixin’s official message board is mixin.one/logs. Mixin’s official Twitter account is @XIN_Foundation and its Facebook page is accessible here. The official website for Mixin is mixin.one.

Top 5 Penny Stocks For 2019: Sirius XM Radio Inc.(SIRI)

Advisors' Opinion:

• [By Rick Munarriz]

  Shares of Sirius XM Holdings (NASDAQ:SIRI) hit another 12-year high on Monday. The country's lone satellite radio provider would go on to improve its fundamentals, announcing that it's laying to rest a pending legal matter by settling with SoundExchange.

• [By Jon C. Ogg]

  Sirius XM Holdings Inc. (NASDAQ: SIRI) has just received its most bullish sell-side analyst rating on Wall Street. Credit Suisse’s Brian Russo has raised the bar on Sirius XM with an Outperform rating with an $8.50 price target.

• [By Jim Royal]

  Fresh off news that it was buying Pandora Media (NYSE:P), Sirius XM (NASDAQ:SIRI) slumped 8% early on Monday. It's the cheapest the stock has been in months, and investors seemed to jeer the all-stock deal. But if history is any guide, it's a bad bet to go against superinvestor John Malone, whose Liberty empire controls Sirius XM.

Top 5 Penny Stocks For 2019: Investors Real Estate Trust(IRET)

Advisors' Opinion:

• [By Joseph Griffin]

  Get a free copy of the Zacks research report on Investors Real Estate Trust Reit (IRET)

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

• [By Joseph Griffin]

  Get a free copy of the Zacks research report on INVESTORS REAL ESTATE TRUST REIT Common Stock (IRET)

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

• [By Motley Fool Staff]

  Investors Real Estate Trust (NYSE:IRET) Q4 2018 Earnings Conference CallJun. 28, 2018 10:00 a.m. ET

  Contents: Prepared Remarks Questions and Answers Call Participants Prepared Remarks:

  Operator

• [By Shane Hupp]

  Get a free copy of the Zacks research report on INVESTORS REAL ESTATE TRUST REIT Common Stock (IRET)

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

• [By Motley Fool Transcribing]

  Investors Real Estate Trust (NYSE:IRET) Q1 2019 Earnings Conference CallSep. 11, 2018 10:00 a.m. ET

  Contents: Prepared Remarks Questions and Answers Call Participants Prepared Remarks:

  Operator 

Forget T-Mobile, Verizon Is a Better 5G Stock

5G wireless promises to bring faster cellular internet connections and lower latency (speedier communication between devices and cell towers), as well as usher in new wireless devices and services. Investors looking for ways to benefit from 5G have their choices of chipmakers and wireless carriers that are poised to benefit from 5G.

However, while almost all U.S. cellular carriers are already talking about the possibilities of 5G, not all of them have the same potential to benefit. For example, T-Mobile's (NASDAQ:TMUS) management has talked extensively about 5G, but it has already missed some of its own goals for 5G -- and it's trailing Verizon Communications' (NYSE:VZ) 5G plans.

Image source: Getty Images.

What T-Mobile's doing with 5G

Last year, T-Mobile said its 5G network would be live in 30 cities across the U.S. by the end of 2018. That deadline came and went, and the company hasn't yet launched 5G in any cities yet. But at the Mobile World Conference this month, T-Mobile CFO Neville Ray told CNET that one of the reasons the carrier hasn't launched the new network is that 5G devices aren't yet ready.

"We were hopeful, a year ago, that by this time, we would have a device. It's not there yet," Ray said.

While it's true that 5G smartphones aren't yet on the market, it appears that T-Mobile is still a bit behind its competitors in this space. In contrast, Verizon said just a few weeks ago that it would launch 5G in more than two dozen cities by the end of the year and already has a 5G home broadband service available.

T-Mobile says its 5G network will start coming online at the end of this year, but with the company already missing its own deadlines -- and currently focused on its proposed merger with Sprint -- T-Mobile may fall further behind its rivals.

Why Verizon is the better choice

Verizon said recently that it would launch 5G in more than 30 cities in 2019, with some coming in the first half of this year. The company had been cautious about being specific about some of its 5G plans, particularly as AT&T has taken some flack for claiming that part of its network is 5G-capable (Sprint says AT&T is stretching the truth and is suing the company over it).

While it's taking all of the U.S. carriers a while to build out their 5G networks, Verizon has an advantage because it'll be building out 5G on top of its already-robust 4G LTE network. The company consistently ranks at the top of independent studies for the best overall network coverage, and that should help it not only roll out new 5G connections (some of which will use new equipment attached to existing towers), but it will likely help convince more customers to join its network over its rival's as well. Verizon will, after all, be the first carrier to release three 5G smartphones on its network.

Verizon also has a lot of the millimeter wave spectrum that will be important for initial 5G connections. Verizon's purchase of Straight Path Wireless two years ago will help the company bring 5G devices to its network before T-Mobile and others.

Verizon's management has said that the company will spend between $17 billion and $18 billion in 2019 for capital expenditures, and it's likely that most of that money will go to 5G. The company believes 5G will bring $12.3 trillion in global economic output, and Verizon says it'll begin collecting revenue for both 5G mobile and 5G Home services in 2020. Investors should keep in mind that it'll take some time for these investments to pay off, though. Management has said that 5G sales for the company are "expected to contribute more meaningfully to growth in 2021."

This will take some time for everyone

It's worth mentioning that it's going to take some time for both of these companies to get their 5G networks rolled out to everyone in the U.S. One thing that might help boost T-Mobile's 5G future is if its merger with Sprint is finalized later this year. Sprint plans on launching 5G in four cities by this May.

Verizon's plans to flip the 5G switch in 30 markets this year will likely be a defining moment for 5G in the U.S. Verizon will have at least three 5G phones launching its network this year, and -- if it sticks to its proposed timeline -- it'll have the jump on many of its competitors with one of the largest 5G networks.