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Get Your Hands On This Record-Breaking Stock (It Won’t Last Long)

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With the S&P 500 doubling up from its pandemic lows of last year, many investors are now thinking about another pullback, whether it is a correction (which is a 10% retreat) or even a crash (defined as a 20% lowering). If you have a longer-term perspective, a sudden drop does not have to be a reason for concern. As we have seen throughout the market’s history, prices always come back to reach new highs. And if you do have the money to buy when stocks are low, corrections can give you opportunities to find great value stocks.

And do not forget that you do not have to sit back and wait for a correction to get good values. They are out there today, many of them within the financial sector. And one of these is Ally Financial.

Ally is higher by 50%

You may believe that since Ally Financial, the nationʻs 18th-largest bank, is up around 50% ytd, it’s one of those stocks that might be overvalued and in line for a correction. You may even be nervous that the stock did not lose value in the last year like many other banking companies — it was up around 21% in 2020. But the truth is, Ally is a good value today and has room to run for the foreseeable future.

Ally is a bank that has operations only online. They have a large revenue generator in auto lending (which makes a lot of sense, since it was GM’s financing sector, General Motors Acceptance Corp., before it was branched off back in 2014).

Ally generated record net income and revenue in the second quarter, with huge y/y gains. Ally generated $1.5 billion in net revenue — an increase of 494% y/y — with $1.3 billion of this coming from auto loans. Net interest margin was up by 112 basis points (or 1.12 percentage points) y/y to 3.55%. Also, credit quality improved: The net charge-off rate was around 0.03%, the best year on record, due to a combination of recovering economy and stimulus.

A cheap and good buy

The outlook for auto sales in the second half of this year is good — not quite as good as in the first half, but strong, this is according to Cox Automotive. Beyond this, the outlook is not so clear, although Ally officials say demand might remain high through 2022 and maybe beyond.

“We are continuing to see incredibly strong demand for vehicles. We actually believe some of that could be pushed out due to availability of new and used cars, combined with, we believe the chip shortage will pressure inventory levels,” Ally CFO Jennifer LaClair stated on the Q1 earnings call. That, in turn, could maintain the high demand into 2022.

What makes Ally a great buy is that its price is very low, as it is trading at only 7 times earnings, well under the average number in the sector. It also features a P/E to growth ratio of 0.30, which means its price is not in line with future growth anticipations. Also, its price to tangible value ratio is only over 1.2, another sign of a stock that is a great value.

Author: Scott Dowdy

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This Stock Could Make You A Millionaire In 9 Years

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AMC Entertainment caught the attention of retail investors earlier this year when it because a meme stock and increased from a low of right under $2 a share in Jan. to a high of around $72 a share in May. At its price right now in the low $30s a-share range, it has decreased by almost 60% from its high. However, since it still sells for 16 times higher than its Jan. low, one might wonder if it holds the potential for a new boost. Could this movie theater stock help some of its investors become millionaires by 2030? Let’s find out.

The state and numbers of AMC Entertainment

AMC had unprecedented pain in 2020 as the pandemic forced closures. To get through it all, the company had a massive share issuance. At the end of June, shares outstanding stood higher than 104 million. Today, they have 513 million shares on the market.

The pandemic continued to have lingering harm on revenue for the two starting quarters of this year. AMC’s revenue for this came in around $593 million, lower by 38% compared with the initial six months of 2020. Nonetheless, with 62% less operating costs during this period, the company lowered its net loss by two-thirds during this time to $911 million.

The company also reported a record $2 billion for liquidity. While its corporate loans of $5.5 billion are still a burden, they have gone down from $5.7 billion at the end of last year as the previously mentioned stock issuances aided the company in staying afloat.

Management also reported that Q2 attendance was at 23% of 2019 levels. However, while the firm did not give specific predictions, admission revenue reached 57% in Q3, up from 18% in the second quarter. Also, the company forecasts better theater-level cash flow by the fourth quarter.

Will AMC lead you to millions?

With enough momentum, no one can say that $200 per share or even $2,000 a share is impossible for AMC.

However, the lingering affects of the shutdowns make getting to such share levels very improbable. And even though AMC is recovering, their recovery does not mean guaranteed prosperity. Given the lack of a clear path to sustainable growth, investors should not think that help from AMC in their quest for $1 million, and taking the numbers out to 2030 will likely not help make this entertainment stock a millionaire maker.

Author: Blake Ambrose

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2 High-Tech Stocks Whose Dividends Might Double

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The market’s highest-yielding stocks are not always the best of investments. Their yields might simply be high due to their stocks crashing, and they could be spending over 100% of their earnings and free cash flow (FCF) on their dividends — which shows a dividend cut might likely happen.

Instead of going for high yields, investors should instead focus on well-managed companies that can afford to double their dividends due to good earnings and growing FCF. These firms might give lower yields now, but their stocks will possibly outperform other high-yielding stocks over the long term. These two stocks fit the bill: Nvidia and ASML.

2. Nvidia

Nvidia began paying dividends back in 2012, but the chipmaker has not impressed investors looking for income with its tiny yield of only 0.08% and inconsistent hikes. Nvidia used only 7% of its FCF on these payments over the previous 12 months, so it’s clearly more focused on expanding its business than giving huge dividends.

This makes sense, since Nvidia must maintain its lead against its rival AMD in the GPU market while creating new high-end GPUs for both driverless cars and data centers. It has been inorganically pushing forward with its takeover of Mellanox and its planned acquisition of Arm Holdings.

However, its $40 billion Arm purchase, the world’s leading mobile chip designer, has hit a wall of opposition from some antitrust regulators. If their takeover fails, Nvidia might repurchase shares or increase its dividend — like Qualcomm did after its failed purchase of NXP — to appease its investors.

Analysts believe Nvidia’s earnings and revenue to rise 58% and 49%, respectively, this year, as it ships more data center and gaming chips. The stock is remaining shockingly cheap at 12 times forward earnings, and a large dividend boost might make it even more attractive.

3. ASML

The Dutch semiconductor equipment maker ASML began paying dividends in 2008 and has increased its payout annually over the previous five years. It currently gives a forward yield of 0.4%, but it spent only 18% of its FCF on these dividends over the previous year.

ASML’s dividends are low because of two reasons. First, it prefers buybacks instead of dividends, which used around $5.1 billion and $1.4 billion of its FCF, respectively, over the previous 12 months. Second, ASML’s stock quadrupled over the previous three years and lowered its yield.

ASML dominates the sector for high-end lithography machines, which Samsung, TSMC, and Intel all need to manufacture their latest and greatest chips. The global chip shortage — and the escalating competition between the world’s top chip producers — is fueling a growing demand for ASML’s products. All it takes is one dividend doubling to make this stock a true gem for both income and growth.

Author: Steven Sinclaire

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Biden Prepares New Monthly Benefits Program — Will You Qualify?

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President Biden is expected to announce his largest-ever boost to the food stamp program this week, permanently boosting aid for the around 42 million Americans who are on the program.

The average benefit will reach $157 per person from $121, The NY Times said, citing an official in the administration. That translates to a boost of around 40 cents a meal. For a family of four people, the maximum benefit will go to $835 a month, up around 21% from the pre-pandemic limit.

The increase will happen on October 1.

The move is among the ways that Biden can increase financial help for Americans without Congressional backing. The Agriculture Dept. will increase payments through the Supplemental Nutrition Assistance Program by changing its list of foods that are needed for a healthy diet.

Biden’s increase concludes a process that started in his first days in office. In a late Jan. order, the president asked the USDA to look at the Thrifty Food Plan, which includes the foods that decide SNAP payments. The White House argued the plan did not accurately reflect households’ financial and nutritional needs.

The food plan was originally set to be changed by 2022, but the Biden executive order hastened that process and is now bringing higher benefits before this year is over.

The fiscal cliff

The announcement comes only weeks before greater SNAP benefits were going to lapse at the end of September. Last year, congress supported a 15% supplement to the program, and Biden’s move will offset that increase’s expiration and leave SNAP recipients with permanently bigger payments.

The Sept. deadline was a part of a larger set of expirations called the “fiscal cliff.” A range of pandemic-era programs were going to end in Sept., with Republicans saying that the economic recovery made these programs obsolete.

Some, such as the pause to student loan payments, were extended to avoid a too-fast pullback in federal support. Others, such as the eviction moratorium, were not re-upped and have caused concerns about reversing financial help while new virus cases are happening. The Biden White House renewed some sections of the eviction ban in a last-ditch drive in August, but legal battles are still brewing to cancel this extension.

Author: Scott Dowdy

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Employers Forced To Give Extreme Gifts To Attract Workers

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The hiring logjam has revealed some signs of letting up in July.

But firms in the trenches are attempting to meet labor demand still report a market that is still unbalanced — and tilted towards those seeking work.

“No matter what your source right now, fundamentally there are 40% more jobs available today than there were before covid started,” Ian Siegel, the ZipRecruiter CEO, said. “And that was already a hot job market.”

As of June, a record 10.1 million opening were now in the United States. But as ZipRecruiter reported in its Q2 letter to shareholders, the market is now in “disequilibrium.”

“What you are seeing is an unprecedented world for job seekers,” Siegel said. “If you are looking for work, there is an abundance of them. If you are looking to make more per hour, there is a huge opportunity right now to get a job that gives you more. This is a job seekers’ market more than we have never seen before.”

As of the jobs report from July, there were 5.7 million less people employed than pre-pandemic peaks of Feb. 2020. And even with some Fed officials beginning to talk about the role retirements might have in stopping the labor market from getting back to pre-COVID levels, there are still millions of possible workers on the sidelines right now.

The national expiration of extra unemployment benefits in Sept. might be a catalyst to attract people back to the workforce. A return to school might also solve any child care-related reasons for being out of work. And, as we have seen time and again, large employers with more resources are continuing to ramp up incentives and pay to match their employment demands.

And to fill these spots, employers are removing requirements.

Earlier this year, we stressed data from Indeed.com that revealed a rise in the use of phrases such as “hiring urgently” and more jobs reporting sign-on bonuses or other incentives. These are things that ZipRecruiter is seeing take over its platform too.

“Just to give perspective, the number of jobs that ask for a college degree or over five years experience has been cut in half,” Siegel reported.

“The job descriptions that read ‘no experience required’ has doubled. Employers are increasing wages. They are offering bonuses and better schedules,” he said.

Author: Blake Ambrose

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2 Dividend Stocks That Never Stop Sending You Checks

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They are not the types of names you see people bragging about owning. The fact is, dividend stocks are the workhorses for investors, more so than you may suspect — even if their top use is only to create cash used to buy growth companies.

With that in mind, if you are wanting to increase your total exposure to dividend companies — here are two great companies that have turned into even more attractive bets in just the previous few weeks.

1. IBM

Yes, the same IBM that was once a tech titan but has faded into a backdrop of irrelevancy is returning! Indeed, things have changed for the company. Now the company’s focus is on things such as cloud computing, AI, and mobility, while legacy products like mainframes and PCs are somewhat of an afterthought.

The new IBM works. The revenue decline that has been happening since 2012 has actually began to level off — only suffering lately due to COVID-19 — en route to good sustained growth. The same is true for profits. Analysts collectively believe the company’s top-line growth will be around 1% this year and next to push per-share earnings growth of 25% and 10%.

The key to the good disparity is the changing business income mix.

IBM is moving away from a small focus on hardware and software packaged with services, which typically have higher profit margins. There is even more to this story, however. As CFO Jim Kavanaugh recently went over the company’s 2019 purchase of Red Hat “for every $1 of business we get on the hybrid cloud we get $3 to $5 of software drag and $6 to $8 dollars of services.” This recurring revenue helps to fund recurring dividend payments — which is this case here, giving a yield of 4.6%.

2. Southern Company

Most dividend stock lists usually include a utility firm. This one is no exception. Looking at the Southern Company, which even with a 24% stock-price gain for the previous year still has a trailing yield of just below 4%. That is a better payout than most utility companies.

Boring? You bet. But that is the point. you will never experience any serious stock-price expansion with the Southern Company. You will, however, enjoy income streams given with great reliability as customers don’t usually neglect their utility bills. This means monthly payments come in like clockwork.

There are also higher-yielding options, but Southern Company’s has something of a pedigree. It has not failed to make their quarterly dividend payments for over 70 years now, and it has increased its annual payout once a year for the previous 20 years. So it is reasonable to believe the company will do whatever it takes to keep their streak going.

Author: Blake Ambrose

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Tech Heavyweight Returns To Its Former Glory (For 3 Reasons)

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Sometimes investing into stocks is simple. Find the best ones and buy shares whenever the market turns negative against them. It can be counterintuitive. How can stocks with the best historical performance still give great returns? But it’s true. Winners do keep winning.

Take Amazon.com as one example. The stock has brought in 167,900% since its IPO and 1,530% just in the previous ten years — after many said its best days were gone. Despite these gains being in the past, I just bought more shares. Here is why.

Changing of leadership

Amazon’s new CEO, Andy Jassy, is said to be more even-keeled than Bezos. His focus to detail is truly unique. He joined Amazon after graduating from Harvard Business School and has helped Amazon Web Services (AWS) grow since the cloud computing group was created in 2003. He has grown it into more than half of the firm’s operating profit. AWS has given $52.7 billion in revenue over the previous 12 months. That would make it the 61st largest firm by sales in the country if it were a stand-alone company.

AWS

Amazon has created an expertise in operating its huge computer infrastructure thanks to its retail operations and created AWS as a way to give that expertise to other companies.

What used to take large investment in servers, staff and real estate can now be rented from Amazon by the minute. The company provides over 200 services to companies all over the world.

The company unit continues to expand. It is opening new areas to increase their availability of the AWS services across the world. In fact, it is not only growing, it is accelerating. AWS revenue has increased faster in each of the previous two quarters. That performance, and what it might mean in the long term, is one of my top reasons for buying more shares.

A fair valuation

Amazon stock is rarely cheap. It has traded under 24 times operating cash flow only during times of panic. And those cannot be predicted.

After its Q2 earnings were released, the stock has gone down almost 9%. The company’s quarterly sales and forecast also fell short of projections. Currently, the estimate from analysts is for $490.3 billion in revenue for the entire year. Despite the last quarter’s hiccup, the previous few years can be used to project the rate of operating cash flow.

Using the pre-pandemic 13.7% in 2019 as our guide, the stock’s $1.67 trillion market cap is around 24.8 times normalized operating cash flow for this year. That would be level with historically good times to purchase shares. And this is just one more reason I was glad to buy more shares of Amazon.

Author: Blake Ambrose

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Central Banks Make a Market-Shaking Move — Will You Be Affected?

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Recently it was said that Brazil’s central bank bought more than 62 tons of gold. But it was not only that these buys were made that was important, but also the speed. Gold telegraph stressed the 62 tons were purchased over a time frame of three months. This now places the national reserves around 130 tons.

On top of this, central banks bought 333.2 tons, an uptick of 39% over the reported 5-year average in the initial half, and around 199.9 tons during the second quarter. The biggest buys were recorded in Hungary and Thailand (including the nation fo Brazil), with a boost of 214 tons.

Data from the WGC highlighted that worldwide demand for jewelry in H1 reported 873.7 tons, 17% under the ’19 average, increasing during the second quarter, reaching 390.7 tons, y/y, an uptick of around 60%.

Egypt’s demand climbed by 58.5%, or 14.9 tons, during 2021’s H1, in comparison to 9.4 tons, year-on-year. The info revealed that the demand for jewelry inside Egypt went up during H1 of this year to 13.6 tons, an uptick of 58%, in comparison to 8.6 tons (YOY). The total demand for gold bars and coins increased to 1.2 tons, or 33.3%, in comparison to 0.9 tons during this same exact time last year.

These numbers are pretty tricky as the global demand lowered in the first part of the year by around 11% of last year to get to 1833.1 tons but there was a lowering in the second quarter of 2021 by 1% on a yearly basis to 955.1 tons. Also, the overall global demand lowered by 1%, on a yearly basis, in the second quarter of 2021 to 955.1 tons.

The overall global demand for gold bullion and coins came to 594.5 tons in H1 of this year, the strongest we have seen since 2013. Demand went to 243.8 tons in the second quarter, an increase of 56%, year-on-year; the best quarter we have seen since 2013.

Author: Scott Dowdy

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Elon Musk Finds A New Favorite Crypto — It’s Not Bitcoin

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Shark Tank star Mark Cuban and Tesla CEO Elon Musk see dogecoin being the “strongest” cryptocurrency as it relates to being a means of payment. To support the usage of dogecoin further, the Dallas Mavericks will be giving “special pricing for people who pay using dogecoin.”

Spacex and Tesla CEO Elon Musk and Mark Cuban, the owner of the Dallas Mavericks, have both supported their belief that the cryptocurrency dogecoin is currently the “strongest” crypto when it comes to buying things.

Cuban supported DOGE during an interview recently with CNBC. Stressing that dogecoin is “a medium that you can use for the buying goods and services,” he said:

“The doge community is the strongest when it comes to using it as a means of exchange.”

Replying to Cuban’s dogecoin comment, Musk, who is sometimes called the Dogefather, said via twitter: “I have been telling people this for a while.”

In July, Musk doubled down on his support for dogecoin by changing his profile photo to be an image of the Shiba Inu dog that is on the Doge coin logo. The Tesla CEO recently confirmed he does own and will not sell his personal dogecoin. His son, also owns DOGE. Moreover, Musk has also been supporting Doge improvements.

Cuban’s Mavericks started allowing dogecoin back in March. Since then, the Shark Tank TV star has revealed that “great sales” have been made using DOGE. He even urged Ellen Degeneres to accept it at her store.

To encourage dogecoin as payments even more, Cuban tweeted last week that the Mavericks will have a special announcement concerning dogecoin. He said it was “a summer merch sale with special prices for people who pay using dogecoin.”

Some people disagree with Musk and Cuban about the merits of dogecoin, emphasizing that the crypto has an infinite supply. However, this argument did not lower Cuban’s enthusiasm for Doge.

Another Shark Tank star, Kevin O’Leary, is among those people who are not so keen on the cryptocurrency. He recently reported he would not invest into dogecoin. “I don’t understand why anyone would,” O’Leary said. “When you speculate with something such as dogecoin, that’s no better than going to Las Vegas. It’s just speculation.”

Author: Scott Dowdy

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Another $1,400 Stimulus Check Is Coming — But Do You Qualify?

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When the American Rescue Plan was enacted in March of this year, it gave a host of relief to people to get through the covid-19 pandemic, including stimulus checks. But the bill also aided a specific group of people who were in need of aid — people who are unemployed.

Not only have jobless people been entitled to more money in their current unemployment checks, but due to their limited income, they could be in a position to max out their stimulus and take home a lot more aid.

Stimulus payments

It’s hard to say for sure exactly how much the average unemployed American is getting in stimulus funds. But based on data we have, we can make an educated guess.

As of Feb. 2020, average weekly benefits were around $387 on the federal level, according to the Center on Policy Priorities. One thing that is vital to note is that maximum benefits vary state by state, which means that even though $387 might be the average, in certain states, those payments are much higher.

Thanks to the CARES Act, these benefits quickly reached $600 weekly boost that lasted for a while last year. That boost was then replaced with a $300 weekly boost that is actually still in effect in some states but will run out in Sept..

So what does this mean for future stimulus payments in 2021? 

The IRS uses tax filers’ most recent income to decide eligibility, so this year, it is using data from 2020. Meanwhile, the average unemployment receiver in 2020 got a maximum of $987 each week for a period of time — that is calculated by taking $387 and combining it the $600 boost from the CARES Act. Based on that, it is fair to say that the average person on unemployment who did not get any outside income was eligible for a complete $1,400 stimulus check.

We can make this assumption because the income limit to get a complete stimulus payment under this most recent series was $75,000 for individuals. For couples, it was doubled to $150,000.

However, that does not mean that all jobless people got a full stimulus. Also, many unemployed Americans got more than $1,400 in stimulus this year after you factor in payments from the newly expanded Child Tax Credit.

The enhanced Child Tax Credit currently ends at $3,600 per year for children under 6 and $3,000 per year for those between 6 and 17. Half of this credit is being given this year in monthly payments between July and Dec., and the income limits to get the credit in full are exactly the same as the income limits to get a full stimulus check. This means that an individual who got the average unemployment benefit last year would qualify for a $1,400 in stimulus plus the full amount their children render them eligible for.

Author: Blake Ambrose

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