Day: September 3, 2024

(Reuters) – Market values of major tech firms declined in August amid concerns over escalating artificial intelligence infrastructure costs and rising recession risks that would make the stocks particularly vulnerable during a market correction.

Last month, Alphabet Inc’s lost 4.7% of its market value as a slowdown in YouTube’s advertising sales fuelled concerns about its earnings. A U.S. judge’s ruling that Google had violated antitrust laws and the emergence of new competition from OpenAI, which is developing an AI-based search engine prototype, also contributed to its shares’ decline.

Amazon.com Inc’s market value fell 4.5%, affected by slowing online sales.

Tesla’s market capitalisation fell 7.7% last month after weaker Q2 earnings and following the news that Canada planned a new 100% tariff on Chinese-made electric vehicles.

The world’s most valuable automaker started shipping Shanghai-made EV’s to Canada last year and Ottawa’s plans raised concerns about the potential profit impact of exporting from its higher-cost U.S. production base.

Meanwhile, Nvidia’s market value fell in the last week of August by 7.7% to $2.92 trillion, after it projected third-quarter gross margins below market estimates and reported revenues that only met expectations, disappointing investors who were expecting a stronger performance.

Nvidia, which commands more than 80% of the AI chip market, stands in a unique position as both the largest enabler as well as beneficiary of surging AI development.

On a positive note, U.S. drugmaker Eli Lilly’s market value surged nearly 20%, leading market gainers, driven by robust sales and the launch of a weight-loss drug that significantly reduces the risk of developing type 2 diabetes in overweight adults.

Berkshire Hathaway’s market value closed above $1 trillion for the first time at the end of August, reflecting investor confidence in the conglomerate that Warren Buffett built over nearly six decades into what many consider a proxy for the U.S. economy.

Meta’s market value also climbed nearly 10% after it beat market expectations for its second-quarter revenues and forecast strong revenue growth in the July-September quarter, indicating that strong digital ad spending on its platforms could offset the costs of its AI investments.

(Reporting By Patturaja Murugaboopathy and Gaurav Dogra in Bengaluru; Editing by Tomasz Janowski)

After a short-lived dip that started in the second half of July, the S&P 500 quickly bounced back and is now flirting with a new record high. Investors looking to put some money to work might be discouraged because they believe there aren’t many compelling opportunities in today’s market.

But that’s a flawed perspective. In fact, I believe one company looks like a no-brainer portfolio addition right now.

If I could buy only one stock in the last half of 2024, I’d pick Walt Disney (NYSE: DIS). Here’s why.

Disney’s transition

One of the most notable secular shifts happening across the economy has been the rise of streaming entertainment at the expense of traditional cable TV. The monster success of Netflix propelled this change. Now, Disney is in the middle of a major transition to its business model.

The company’s once-thriving linear networks, like ABC and ESPN, are still generating loads of profits. However, they are in secular decline as more households cut the cord. Consequently, revenue will remain under pressure here.

At the same time, to keep up with the shifting industry, Disney has had to invest aggressively in technology and content to build out its streaming operations, which include Disney+, Hulu, and ESPN+. Direct-to-consumer (DTC) services have so far posted billions in operating losses, which is a key factor that has weighed on the stock.

Disney’s latest financial update, though, reveals solid improvements in the DTC segment. Combined, the streaming services generated a positive operating income of $47 million in the fiscal 2024 third quarter (ended June 29). That’s not anything to write home about, but executives believe the company will improve in this area going forward.

However, it’s not all encouraging news. The experiences segment, which is where results for parks, cruises, and consumer products are included, is facing some challenges. Revenue was up just 2% in Q3, with operating income down 3%. “The demand moderation we saw in our domestic businesses in Q3 could impact the next few quarters,” the press release reads.

I will adopt a more upbeat perspective as it pertains to the long term. My view is that the experiences segment is a lucrative one that’s essential to Disney’s competitive standing. That’s why the company is planning to invest $60 billion over the next decade to bolster its offerings here, forcing my confidence that the segment will be stronger in the future.

Disney’s valuation

The market hates uncertainty. That’s the best word to describe Disney’s situation over the past few years as the media landscape shifts to streaming.

Story continues

Consequently, Disney shares are cheap. They trade at a forward price-to-earnings (P/E) ratio of 17 based on fiscal 2025’s consensus earnings per share estimate. If you believe the bottom line will expand meaningfully in the years ahead, like I do, then valuation is only going to get more attractive the further out you look. For what it’s worth, the S&P 500 trades at a forward P/E multiple of over 23, so Disney goes for a significant discount to the overall market.

In my opinion, that valuation creates a wonderful opportunity to buy shares. Investors can purchase a business that has an economic moat that discourages new entrants from coming in and adds durability over the long term.

Disney’s intellectual property, including its characters, storylines, and franchises, many of which were created decades ago, holds a special place in the minds and hearts of consumers across the globe. I think it’s impossible for any business to match or replace this type of position.

Of course, investors looking to buy the stock must have the patience to wait for solid improvements to happen, particularly around the view that earnings will soar. However, I believe that over the next three to five years, Disney will prove to be a successful investment.

Should you invest $1,000 in Walt Disney right now?

Before you buy stock in Walt Disney, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Walt Disney wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $731,449!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of August 26, 2024

Neil Patel and his clients have positions in Walt Disney. The Motley Fool has positions in and recommends Netflix and Walt Disney. The Motley Fool has a disclosure policy.

If I Could Only Buy 1 Stock in the Last Half of 2024, I’d Pick This was originally published by The Motley Fool

This article originally appeared in First Mover, CoinDesk’s daily newsletter, putting the latest moves in crypto markets in context. Subscribe to get it in your inbox every day.

Latest Prices

CoinDesk 20 Index: 1,843.91 +0.88%

Bitcoin (BTC): $58,458 +0.67%

Ether (ETH): $2,519 +1.89%

S&P 500: 5,658 +1%

Gold: $2400 −0.15%

Nikkei 225: 38,700.87 +0.14%

Top Stories

Bitcoin fluctuated around the $58,000 mark amid a generally sedate market on Labor Day in the U.S. The largest cryptocurrency was trading around $58,600 at the time of writing, about 1% higher in 24 hours. The broader digital asset market has risen 0.9%%, according to CoinDesk Indices data, with ETH and SOL gaining around 1.9% and 0.5%, respectively. U.S.-listed exchange-traded funds (ETFs) tracking BTC posted total net outflows of $175 million on Friday, extending a losing streak to four days. Ether ETFs had zero net inflows or outflows despite $173 million in trading volume, data tracked by SoSoValue shows.

Some traders noted that September is generally one of bitcoin’s most bearish months, but said that an interest-rate cut by the Fed could break the trend. “September is a historically negative month for bitcoin, as data shows it has an average value depletion rate of 6.56%,” Innokenty Isers, founder of crypto exchange Paybis, said. “Should the Feds cut the interest rate in September, it might help bitcoin rewrite its negative history as rate cuts generally lead to excessive US dollar flow in the economy – further strengthening the outlook of bitcoin as a store of value.”

Election punters on Polymarket are favoring Republican candidate Donald Trump again as Democrat Kamala Harris’ odds slipped to 47% over the weekend from even odds earlier. Harris’ appeal has drifted lower in the past weeks among traders on Polymarket, while Trump’s has gradually climbed back over 50%. He is again in the lead after nearly two weeks of even odds. Traders have placed $99 million in on-chain bets on Trump winning the election, with over $95 million put on Harris. Harris’ odds have slipped amid outcry for a proposal to tax unrealized gains for people worth over $100 million. Meanwhile, Trump’s odds have increased as he promotes a forthcoming decentralized finance project that could offer “high yields” for crypto users.

Chart of the Day

• The chart shows that bitcoin miners’ revenue fell in August to the lowest level since September 2023.

• This was accompanied by an increase in the bitcoin mining difficulty and decrease in the number of BTC mined.

• This highlights the challenge that miners face in adapting to the post-halving world.

• Source: Bitbo

Story continues

– Jamie Crawley

Trending Posts

Not that long ago, Etsy (NASDAQ: ETSY) was one of the top companies that investors could have owned. From the pandemic low in March 2020 to their all-time high in November 2021, shares skyrocketed 837%.

But slowing growth and the market’s disdain for growth tech stocks pressured investor sentiment. Etsy currently trades 81% below its peak price. But it’s still a smart buying opportunity right now.

Zoom in

Etsy’s growth was through the roof in 2020 and 2021. The company was adding buyers and sellers to its platform. Its gross merchandise sales (GMS) were soaring. Demand was very strong.

However, the normalization of consumer behavior, with people starting to leave their homes to shop again, created the perfect headwind for Etsy. It also didn’t help that inflation started to rear its ugly head about three years ago.

The slowdown has continued. In the most recent quarter (Q2 2024, ended June 30), Etsy posted a 2.1% year-over-year GMS decline. That figure was slightly lower than in the same period three years before. It makes sense that consumers are pulling back on discretionary spending when it seems like the price of everything has gone up in the past couple of years.

GMS is expected to fall again in the current quarter.

Zoom out

It’s understandable for investors to get caught up in quarterly financial figures. But if you’re a long-term stock market participant, then it’s always best to zoom out and focus on the bigger picture. With this perspective, it’s easy to still have a favorable view of Etsy’s business.

The company is truly differentiating itself. There are wide product assortments in various categories, like home furnishings, apparel, jewelry, and craft supplies tailored to specific needs. According to a survey, 83% of buyers agreed that Etsy sold items that they couldn’t find anywhere else.

The retail sector broadly, and the e-commerce niche specifically, is hyper-competitive. All companies operating in the industry must constantly worry about Amazon‘s presence. But while the tech titan thrives when it comes to mass-produced goods and fast shipping, Etsy draws in shoppers looking for unique offerings. This is a key competitive strength.

What’s more, Etsy’s two-sided ecosystem, as demonstrated by its 96.6 million active buyers and 8.8 million active sellers, is supported by network effects. Consumers want to come to the site because there are so many specialized goods being sold. Small merchants and entrepreneurs looking to showcase their craft might find no better platform to set up shop to target a global customer base.

Story continues

Cheap stock

The S&P 500 has climbed 19% since Etsy hit its all-time high. However, the e-commerce stock has lost 81% of its value during the same time. That’s an alarming trend.

However, it means that shares are cheap. They trade at a forward price-to-earnings ratio of 12.2, the lowest valuation in almost the last three years. This depressed multiple suggests that Etsy is a terrible business. And that’s just not true. I already talked about its differentiated marketplace offerings and the presence of network effects.

Also, consider the total addressable market, which management estimates is $500 billion (counting online sales of all relevant product categories) in its six core geographies, which includes the U.S., U.K., Canada, Australia, France, and Germany.

Plus, Etsy is a consistently profitable enterprise that rakes in lots of free cash flow every quarter. This reduces financial risk.

Depending on the state of the economy and the direction of interest rates and inflation, the fear is that the difficult times for Etsy could last for a few more quarters before things start to improve. But this is precisely where the opportunity lies for investors. I believe that three to five years down the road, this stock could be a big winner for your portfolio.

Should you invest $1,000 in Etsy right now?

Before you buy stock in Etsy, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Etsy wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $731,449!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of August 26, 2024

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Neil Patel and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Etsy. The Motley Fool has a disclosure policy.

1 Growth Stock Down 81% to Buy Right Now was originally published by The Motley Fool

As summer draws to a close, market watchers are witnessing a mix of resilience and challenges. The S&P 500 has showcased its strength with an 18% year-to-date gain, currently just 19 points shy of its all-time high. However, with uncertainties around US growth and the November elections, investors are carefully weighing their next moves.

So, where might the markets go from here? This is what every investor wants to know, and what every savvy analyst is striving to predict.

In a recent note, UBS’ investment office shared its forecast for the market’s direction in the coming months, noting: “We see room for US equities to rise further in a constructive environment driven by Fed rate cuts, the growth story around artificial intelligence (AI), and healthy earnings growth. We forecast the S&P 500 to rise to 5,900 by year-end and 6,200 by June 2025.”

The stock analysts at UBS are backing up this outlook by selecting the stocks they believe will ride this wave to gains. Let’s dive into two of their picks, each with a potential upside of at least 50%.

PVH Corporation (PVH)

The first stock we’ll look at is PVH, a clothing company that traces its roots, in part, to the garment industry of New York City in the 1880s and 1890s. Today, the company is the owner of the popular Tommy Hilfiger and Calvin Klein clothing lines, marketing these brands, and others, through department stores and branded retail locations. The company is truly international, generating more than 65% of its revenue outside of the US markets, and operating in over 40 countries around the world.

PVH’s goal is simple: the company aims to make Hilfiger and Calvin into the world’s most desirable lifestyle brands. The company has a detailed plan to accomplish this, including developing the best products and the best customer engagement, and using data-driven operations and efficiencies to win in a digital world. PVH’s activities are split among three main regions: North America, Europe, and the Asia-Pacific.

Despite some recent challenges, including a decline in revenue due to sluggish sales, PVH has managed to remain highly profitable. In its latest report for fiscal 2Q24, PVH posted a 6.3% year-over-year revenue decline, bringing in $2.07 billion. While this represented a dip from the previous year, it was in line with expectations. On the earnings front, PVH delivered strong results, with a non-GAAP EPS of $3.01 per share, surpassing forecasts by 73 cents.

Furthermore, PVH has been able to shore up its cash position. In the prior-year quarter, the company reported $372.8 million in cash liquid assets; in the current report, that figure was up significantly, to $610 million.

Story continues

The sound cash balance and the ability to maintain earnings growth caught the attention of UBS analyst Jay Sole, who writes about the company: “We think PVH has the brand strength and balance sheet to drive earnings growth over the long term. We forecast the company delivering a 10.5% 5-yr. EPS CAGR. We also expect major margin unlocks in the next few years, as CEO Stefan Larsson’s PVH+ Plan goes into full effect. As PVH’s earnings rebound and long-term drivers become clear, we expect stock’s ~8x FY2 P/E to expand towards our ~12x target valuation.”

For Sole, PVH deserves a clear Buy rating, with a $174 price target that implies a one-year upside potential of 76%. (To watch Sole’s track record, click here)

Overall, PVH has earned a Moderate Buy rating from the Street’s analyst consensus, based on 15 recent reviews, including 11 Buys and 4 Holds. Currently trading at $98.69, the stock has an average target price of $134.27, suggesting a 36% gain over the next 12 months. (See PVH stock forecast)

Dayforce, Inc. (DAY)

The next UBS pick we’ll look at is Dayforce, an HCM software company. Until earlier this year, the company was called Ceridian; this past February, it changed its branding to Dayforce, which lines up with its chief product, the Dayforce HCM software platform.

HCM, or human capital management, is the moniker for a holistic approach to human resources in business. The Dayforce platform allows its users to manage vital functions of HR, payroll, and workforce management in a single, unified platform. The company has been in business since the early 1990s and generated more than $1.5 billion in revenue last year.

The company achieved that by offering a solid product that is tailored for today’s complex digital world. Dayforce promotes its platform as a solution to diverse HCM needs, leveraging AI technology to address complex issues and adapt to evolving challenges. Known for delivering ‘simplicity at scale,’ Dayforce facilitates easy management of functions and clear visibility of results. With over 6 million users globally, the platform serves a broad array of prominent organizations, including the City of Columbus, Danone, Gannett, and others. It’s available in more than 200 countries and territories, making it a truly global solution.

In its last reported financial results for Q2 2024, Dayforce achieved total revenues of $423.3 million, marking a nearly 16% year-over-year increase and surpassing forecasts by $5.87 million. Recurring revenue accounted for $321.6 million of this total, comprising nearly 76% of the revenue and growing 20% year-over-year. Net cash from operations also saw a significant year-over-year increase of 16%, reaching $108.3 million. At the bottom line, Dayforce delivered non-GAAP earnings of 48 cents per share, outperforming expectations by 12 cents per share.

UBS analyst Kevin McVeigh takes an unabashedly positive view of Dayforce, writing: “We continue to have substantial confidence in our thesis as we believe DAY stock is poised to outperform on cloud revenue remix + improving free cash flow conversion—we believe recent underperformance is mostly due to risk-off sentiment amid higher treasury yields and macro concerns. We believe this is more than discounted in the stock, which is poised to benefit on more constructive 10-year yields + fundamental performance.”

McVeigh’s optimism is reflected in his Buy rating for Dayforce stock, accompanied by a $90 price target – indicating a potential 57% gain in the months ahead. (To watch McVeigh’s track record, click here)

That’s the UBS perspective, but what does the broader Street think about Dayforce? With 8 additional Buys and 4 Holds, the stock claims a Moderate Buy consensus rating. The average target price of $68.92 suggests a potential 20.5% gain over the next year. (See Dayforce stock forecast)

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

Billionaire investor Warren Buffett shared some career advice as his company, Berkshire Hathaway, hit a $1 trillion market cap – a milestone that coincides with Buffett’s 94th birthday.

What Happened: The “Oracle of Omaha” has had a significant week. Berkshire Hathaway reached a market capitalization of $1 trillion on Wednesday. Buffett also celebrated his 94th birthday on Friday, with no intentions of retiring.

Buffett, who has led Berkshire Hathaway since 1965, offered his unique viewpoint on career decisions. He suggested to those seeking employment to “take the job that you would take if you didn’t need the job.”

Don’t Miss:

“You want to be doing something you would do if you didn’t need the money. And most people do need the money. But if you’re in the position where you don’t, you should be doing what you would if you didn’t need the money,” Buffett once told Fortune.

He added that he still finds joy in his role at Berkshire Hathaway, despite not needing to continue to work out of financial necessity.

Buffett admitted that his energy levels aren’t as high as they used to be, but feels lucky to be in an industry that allows him to continue working. He also confirmed that Greg Abel, his chosen successor, will assume control when he chooses to retire.

Trending: These five entrepreneurs are worth $223 billion – they all believe in one platform that offers a 7-9% target yield with monthly dividends

“I am fortunately in a business where even though my muscles are gone, my balance is gone, my stamina is gone, it doesn’t make any difference in what I do, so I am very lucky in that way,” Buffett added.

Why It Matters: Buffett’s career advice comes at a time when his company has reached a significant milestone. His insights, drawn from decades of experience in the industry, could be invaluable for those navigating their career paths.

Furthermore, the confirmation of Greg Abel as his successor provides a sense of continuity for Berkshire Hathaway, ensuring that the company is in capable hands when Buffett decides to step down.

Read Next:

“ACTIVE INVESTORS’ SECRET WEAPON” Supercharge Your Stock Market Game with the #1 “news & everything else” trading tool: Benzinga Pro – Click here to start Your 14-Day Trial Now!

Story continues

Get the latest stock analysis from Benzinga?

This article Warren Buffett’s Career Advice: ‘Don’t Think About Money, Take The Job That You Would Take If You Didn’t Need The Job’ originally appeared on Benzinga.com

© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.