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GameStop (GME) and biopharma Bausch Health Companies (BHC) are two firms that have put themselves back on the path for growth — after experiencing a downturn for a long time. Shares of these two stocks are higher by 2,790% and 82%, over the past year. 

These companies also have attracted substantial institutional demand. Ryan Cohen, the co-founder of Chewy, is personally steering GameStop’s momentum after buying a 13% stake in the firm. Meanwhile, billionaire hedge fund guru Carl Icahn bought 7.83% of Bausch Health’s shares. Here’s how these businesses might push forward.

1. GameStop

It was obvious from the start what this retailer needed to make a comeback: close their unprofitable locations, invest in e-commerce, and change its outdated services. 

The problem was no one believed in its future. Lenders believed the company was going extinct and stayed far away. Due to short-selling, its share price also stayed low to cause equity financing to be impossible. 

That changed when the legendary short squeeze, which happened on Reddit, sent its stock skyrocketing. Thanks to this boost, GameStop brought in $551 million in cash by selling only 3.5 million units (around 4% of the firm). A year ago, it would have brought in just $13.2 million by selling this same total.

With this cash, it was able to deal with its long-term debt. Now, GameStop is primed for growth. Last year, the company’s e-commerce went up by a stunning 191%. Online sales of consoles, video games, and collectibles are now 30% of its revenues of $5.09 billion.

The best thing about GameStop is its current low valuation. Despite its new momentum and cash balance, the stock is only at 2.26 times revenue. Stocks in the retail sector usually go for between 0.8 times to 4.5 times revenue, with more e-Commerce sales meaning a higher value. So there is certainly room for more money to be made.

2. Bausch Health Companies 

Bausch Health Companies is a pharma company with a dark history. Formerly called Valeant Pharmaceuticals, the company started a streak of leveraged purchases in the early 2010s. It had vast piles of debt, bought a competitor, laid off staff and raised its prices, and continued on to the next while its profit margins increased. This stopped suddenly in 2015 after an accounting scandal and political anger over its price-increasing dealt a heavy blow.

Now, Bausch Health is a group of contact lens makers and eye care company Bausch + Lomb, various dermatology companies and Salix Pharmaceuticals. The company has $24.1 billion in debt and generates only $1.428 billion per year in earnings.

 

Over $15 billion of its $8 billion in annual revenue goes to interest alone. The firm only has $452 million for the R&D to produce new drugs every year. 

The fact that it is still alive is a miracle. But, despite poor choices, the former CEO of Valeant Pharmaceuticals, Michael Pearson, made one smart move: the buying of Bausch + Lomb in 2013 for $8.7 billion. Due to the growth of contact lenses, Bloomberg says the subsidiary’s value could be between $20 billion and $30 billion.

Right now, Bausch is trying to unload its Bausch + Lomb company. If it finds someone to buy the subsidiary for anywhere close to that price, it might remove its debt and start new. It is also thinking of doing a spinoff of Bausch + Lomb away from its core business to silo out its liabilities.

Trading at just 1.45 times sales, Bausch might be a buy if it can come back from debt and chart a path forward. For now, the firm makes enough money to pay its interest and refinance when debt principles are due. It is now a bargain compared to the average pharma stock which are usually priced at five times revenue.

 

Author: Scott Dowdy
Artificial intelligence (AI) is expanding into everything from smartwatches to voice-enabled speakers and even cars. But while AI is going mainstream, not all AI companies are benefiting.

 

Investors seeking the top AI companies to invest in right now should look at NVIDIA, Amazon, and Microsoft. Here’s why this is the case:

1. NVIDIA

You might have heard that NVIDIA is a top graphics processing unit company that has made a lot of money from the gaming sector.

The company is a huge gaming leader, with revenue from GPUs increasing 67% in the recent quarter, making up 50% of the firm’s top line for the quarter.

But the company is also a leading AI player. The company makes use of its GPUs to aid data centers, which are more and more focused on ai. Nvidia’s GPUs help data centers to go through information like image recognition, allowing for greater cloud-based AI services.

The company’s data center sales increased 97% in Q4, and now make up 38% of the firm’s total revenue. That is impressive, especially since only two years ago data center sales were just 30% of NVIDIA’s revenue.

And then there is the company’s purchase of Arm Holdings, which is still pending. The company says it will use its AI expertise and Arm’s CPUs to “form a company perfectly positioned for the age of AI,” according to CEO Jensen Huang.

The deal has not ended yet and still faces a few roadblocks, but even if it doesn’t go through, NVIDIA’s AI opportunity is still enough to keep the company growing and make it appear on this list.

2. Amazon

Amazon is doing much more in the AI space than you might first realize.

For starters, the company has experimented with AI in its Amazon Go and Fresh stores, which utilize image recognition to track what customers are picking up — and what they walk away with — and then automatically charge their cards for it.

And then there are Amazon’s Echo speakers, which use voice-recognition assistant, Alexa. The virtual assistant is getting so popular that it’s now inside many third-party devices and is among the leading smart virtual assistants.

But what really puts the company near the top for AI is its leadership in the cloud market. Its Amazon Web Services (AWS) aids companies in creating chatbots, using video and image analysis, performing text-to-speech, forecasting demand, and a lot more.

AWS has 32% of the cloud market, and it is one of Amazon’s top sectors. The firm earned $4.2 billion in operating income from AWS in 2021’s Q1, higher than its $3.5 billion income from its e-commerce business in North America.

For a top AI play, look no further than Amazon.

3. Microsoft

Don’t underestimate Microsoft’s growing stature in the AI industry.

Microsoft’s Azure is the second cloud service behind AWS, and is growing thanks to the greater demand for cloud-based AI. Azure’s growth over the past three years has made Microsoft a large AI player — and so will its latest purchase.

Microsoft announced last month that it was buying Nuance Communications for $20 billion. The company creates voice recognition and healthcare AI, including patient engagement and voice transcription. Microsoft says the company will fit well into its Intelligent Cloud business. Nuance’s AI services — like its Dragon speech application — are used by firms globally, and its AI healthcare tech is used by 77% of American hospitals.

 

By buying Nuance, Microsoft has almost doubled its addressable market in healthcare to $500 billion, and given themselves even better AI tools.

If you are looking for an established company with a foothold in AI, Microsoft is exactly what you are looking for.

 

Author: Blake Ambrose

 

Just as some have predicted – but even sooner than anyone really expected – Treasury Secretary Janet Yellen not only walked back her previous statement but has completely reversed it.

Speaking at the CEO Council Summit, the former Fed leader said she “did not see Biden’s rescue program overheating the American economy.”

“Let me be clear I am not predicting this,” Yellen said concerning rates, changing her previous perspective completely.

Then she spoke about the topic of inflation, using the establishment take that inflation will be “transitory” for six months.

She also said that if there was an inflation issue she is certain the Federal Reserve could be counted on to solve it.

Previously, Yellen was speaking at The Atlantic’s “Future Economy Summit” and sparked investor worries with her prediction.

“It might be that interest rates will need to rise to ensure the economy does not overheat”

And this gem of truth:

“We have gone for too long allowing long-term problems in our economy”

Is she speaking of the Fed-sponsored money printing and wealth-creation? Listen to her comments here…

And in response to her comments – stocks plummeting as one might expect at the first signs of easy money being removed… The dollar also spiked.

Now, it seems, the establishment has reigned her in and forced her to play along.

 

Author: Steven Sinclaire

Social Security was created to give a safety net for retired Americans. While it has kept many people away from poverty and provides life-saving financial help, the program has changed a lot – and many of those changes are bad. Here are three changes you might not have been told about that could ruin the value of your benefits.

1. Benefits now cut for most retirees

When Social Security was formed, the age of retirement was set at 65. This is the age you are allowed to get your benefits without penalties for collecting your benefits too early.

But this age is not 65 anymore. In fact, if you were born after 1943, your retirement age is between 66 and 67, depending on the year you were born.

This change happened when Congress changed the laws in 1983. But many are not really aware of it, because the retirement age was pulled-back slowly. Now, due to this shift, every person born after 1943 essentially got a benefit cut. They either need to retire later, or accept the penalties.

2. Lower buying power

The program has also changed in an even worse way. Social Security benefits have lost purchasing power. And the program’s routine raises have not kept pace with the inflation that retirees face on a daily basis. The calculations used to find the cost of living adjustments (COLAs) does not accurately track the fact that seniors spend a large part of their income on housing and healthcare, both of which rise faster in pricing than other types of spending.

 

The result is that your benefits have lost up to 30% of their value in only two decades. Sadly, because there was no new law that caused this, most don’t know about it.

3. The IRS is removing its cut

Your Social Security benefits are not taxed until your qualifying income hits a certain amount.

But the limit at which your benefits are taxable is not linked to inflation. This means as our incomes increase from inflation, a larger number of retirees will see they are now being taxed on their Social Security earnings.

Many seniors (as many as 50%) have already been hit with this problem, and the number grows every year.

 

Author: Steven Sinclaire
A fourth stimulus check could be possible, it does not seem likely. Yet there is a new $3,600 relief benefit for many Americans that will be on its way in July.

New monthly payments will be given out as part of the expanded child credit of $3,600 per child for families, essentially making a “fourth” stimulus, which is monthly instead of all at once. Under Biden’s new American Rescue Plan Act from 2021, the child tax credit was increased to $3,600 for each child under 6 and $3,000 for children aged 6-17. Previously, this money only applied to kids under 17.

Taxpayers will get half of this credit in the form of monthly payments. This means that for July through December, tax payers will get $250 to $300 per month for each child. Taxpayers will get the remaining half at the end of the year, on their 2021 returns.

Taxpayers making less than $75,000 per year, or $150,000 for couples can get the full credit. The credit will be lowered by $50 per $1,000 of income higher than those amounts.

It is important that you ensure your filing information is correct with the IRS, because using outdated information could trigger an over-payment, which would mean having to back the excess funds at tax time.

Author: Blake Ambrose
Legendary investor Warren Buffett stated over the weekend that near-zero interest rates have changed the financial world, warning that the results of easy money are an unanswered question.

As the pandemic took over the US last year, the central bank cut interest rates to almost zero and started quickly buying assets to stop another financial crisis.

Among their purchases was government debt. Those steps allowed both the Trump and Biden White Houses to give debt at lower rates, to fund the large relief programs that pushed trillions to households and companies.

“It causes businesses to grow, stocks to rise, causes voters to be happy, and we will see if it leads to anything else,” Buffett said during his annual shareholder meeting, which was put on virtually.

The Fed has stated it will keep its policy until the recovery displays signs of much greater progress.

Buffett told the audience that the effect of almost-zero short-term interest has given an “incredible alteration in the value of everything” because of the lowered incentive to have risk-free government debt.

He gave the example of keep $100 billion in short-term Treasury bills, which would now give around $20 million with a yield of two points. Before covid, Buffett said that would have given around $1.5 billion per year.

“There is a huge change,” Buffett said. “It was designed for that — the fed moved because they wanted a massive push.”

That push has given higher yielding assets, from tech companies to SPACs.

Who will win and lose?

Buffett said low rates cause stocks to look like “bargains.” This is because higher interest rates would erode a company’s cash flows.

“Interest rates do to the price of assets what gravity does to matter,” Buffett said, “if you could lower gravity by 80%, I would be at the Olympics jumping.”

Cheap borrowing also aids households and businesses which have been hurt by the pandemic, the same targets of relief bills.

The companies who would lose from low rates, according to Buffett, are the banks that had to lower their interest rates. During the worst part of the pandemic, Buffett sold his holdings in banks such as Goldman Sachs (GS) and JPMorgan Chase (JPM).

Buffett said he still likes banks “overall,” but wished to lower his exposure to the risks that he now admits did not fully show.

“We will see where everything leads, but we consider it the most intriguing movie we have ever seen, in relation to economics,” Buffett said.

Author: Blake Ambrose
Social Security was not exactly a top issue during the presidential race. Coronavirus controlled the headlines. But for 1 in 6 who get benefits, Social Security is on top of everyone’s mind.

President Biden’s program included numerous proposals that might raise Social Security for some people. But the real topic for those won’t get these benefits for at least ten years is: What will Biden do to guarantee the program’s solvency?

Social Security has started giving out more funds than it is bringing in. The OASI Fund, which gives retirement benefits, has enough to keep benefits through 2034. But longer than that, taxes will only give 76% of the needed funds to keep Social Security afloat.

Biden has not revealed details about his program since he entered the White House. But his team has said this about Social Security: “The Biden Plan will give Social Security a path to solvency by requesting that tax payers with high wages contribute the same taxes that middle-class Americans pay.”

But which people will pay these higher taxes, and will it be enough?

Can a tax increase save Social Security?

Workers give Social Security on their first $142,800 of wages in 2021, though that number rises every year. Biden promised during his campaign not to increase taxes on people making under $400,000, but also said he wanted to enact Social Security taxes on income higher than $400,000.

The program would form what some are calling a “doughnut hole” for Social Security, where wages over $142,800 but below $400,000 are not taxed. But the hole would decrease as the $142,800 cap rises each year.

Biden’s idea would bring in around $740 billion for Social Security over 10 years. The Urban Institute says that, if passed, the measure would extend solvency only by five years.

The truth: Biden’s program would not be enough to fix the problem.

Will Social Security be there for you?

Social Security will not disappear. If nothing changes, S.S. will still give 76% of its needed funds from payroll taxes.

But nothing President Biden is proposing will be the solution. Fixing the problem might require raising Social Security taxes for people with working-class salaries or increasing the retirement age for younger generations.

Even if you believe you will get 100% of your Social Security benefit, it is essential to keep in mind that living only on those checks is very difficult.

 

Author: Steven Sinclaire

The Dogecoin (DOGE) price has lowered since hitting its all-time record but bounced again recently. The cryptocurrency is expected by many to keep increasing and eventually reach another all-time high.

Between April 15-16, DOGE increased by 250%, putting it at a record of $0.45. However, the price then fell soon afterwards.

The decrease kept going until April 23, ending at a low of $0.169. After this, DOGE formed a hammer candlestick with a big lower wick—which is said to be a good sign of buying pressure. The price has been trending upwards since and technical indicators are bullish.

Trader @Altstreetbet showed a DOGE chart, saying that the next increase will likely take the cryptocurrency to a new high of over $0.55. If the A-B-C structure happens, then DOGE will start an impulsive move upwards afterwards.

The movement for DOGE/BTC looks close to DOGE/USD, with the one distinction being that the correction was an irregular flat.

If the two keep going up, the next resistance could be at 982 satoshis. This number is derived by using the 1.61 external Fib retracement from the recent lower movement.

DOGE has possibly started a new bullish move and might increase toward another all-time high.

Author: Steven Sinclaire

Ethereum (ETH), the number two cryptocurrency by market cap, has been increasing even more than Bitcoin (BTC) over the previous couple of days.

Hours ago, the price of the cryptocurrency reached a record to new all-time highs at $2,741. ETH was trading at about $2,730, making its market cap nearly $315 billion.

The Bitcoin competitor is now almost breaking into the top 30 most valuable global assets.

Ethereum (ETH) Beats Platinum

Ethereum (ETH) is now the 33rd most valuable global asset, beating the market cap of Platinum.

Based on a Cointelegraph report, the overall capitalization of precious metal platinum is at $303 billion. This is from from an analysis of the metal’s cumulative mining since 1900.

Ytd, Platinum has beaten other precious metals, including silver and gold, but can’t beat the momentum of Ethereum (ETH) and other cryptocurrencies.

Ethereum seems to be in the middle of an unusual bull run. Even Bitcoin is not matching ETH’s increasing trend ytd. More challenges are expected to show for the cryptocurrency which is pushing to attain new milestones.

Since the first day of 2021, Ethereum (ETH) has increased more than 350% amidst the large increase in adoption of cryptocurrencies and the hope of a big reduction in gas fees through the use of its new EIP-1559 implementation.

The current upside trend of ETH has also lowered Bitcoin’s dominance substantially. Ethereum now is around 15% of the crypto world, while Bitcoin is at 50%.

Author: Blake Ambrose
The beauty of having dividend-paying stocks is that you don’t have to give up income for retirement: Your dividend does not depend on you going to the office every day.

That’s only one reason for adding dividends to your strategy for retirement. Continue on for seven more reasons why dividend stocks are the MVPs of every smart investor’s retirement.

1. Comforting

In a downturn, good dividend payers are the bright points in your portfolio. They might take a temporary hit on their share price, but they still give you cash. When other positions you own are losing money, you will appreciate these little payments for the psychological comfort they provide.

2. Dividend yields vs Treasury maturities

A good dividend stock could yield 1% to 3% per year. Consumer company Colgate-Palmolive (CL) gives 2.28%, for example; McDonald’s  (MCD) gives 2.20%, and pharmaceutical giant Johnson & Johnson (JNJ) yields 2.49%.

These numbers are comparable to the yields on 20-year Treasury bonds. But short maturity Treasury yields are not so competitive. Seven- to 10-year bonds give between 1% and 1.8%, and five year maturities are under 1%.

3. Dividends and retirement accounts

You can accumulate a larger stake in dividend stocks by reinvesting the payments in the years before your retirement. That’s far more easy in a retirement account where you pay no taxes.

4. Dividends and inflation

Some dividend companies increase their payments every year. Those that grant annual dividend increases for more than 25 years in a row are rare gems. Once a company gets into this level of dividend, the executive team is very motivated to maintain it. Which is great because the rising dividend helps you combat inflationary increases in your living expenses during retirement.

5. Consistent dividends

Since we are talking about dependable dividend companies, take a moment to consider the achievement of raising dividends for 25 years or more. That takes a focused executive team as well as a good business model that produces plenty of cash. Those same benefits make good dividend stocks great as long-term parts of your portfolio.

6. Dividends and appreciation

Unlike bonds, your dividend stocks also increase while they are giving you cash. For instance, McDonald’s, Colgate-Palmolive, and J&J have all three had average annual gains of 9% over the past decade.

 

7. Dividends and cash

Dividend companies give you cash, and that is crucial to ensuring your retirement in comfortable. When you use your dividends to fund your retirement distributions, you’ll be less dependent on liquidations. Fewer liquidations will maintain your earnings power and lower your risk of selling your investments at a bad time.

Reliability and stability

 

There is no guarantee any company will keep paying you a dividend, just as there is no certainty any stock will increase. To avoid these risks, you have to stay out of the market completely, which could mean missing out on your retirement goals.

Dividend payers are not without risk, but they are more reliable and stable than their peers that don’t give dividends. And those are the benefits you want from these retirement MVPs.

 

Author: Blake Ambrose

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