Day: September 28, 2024

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October has historically been a good month to have money in the stock market. The S&P 500 has rallied at least 10% on 61 occasions since World War II, and nearly one-third of those rallies have started in October, according to Bespoke Investment Group.

One example is the bear market that started on Jan. 3, 2022, and ended on Oct. 12, 2022. The S&P 500 rallied more than 60% during the subsequent bull market. And history says the upward momentum could intensify in October and beyond due in part to holiday spending.

Past performance is never a guarantee of future returns, but Shopify (NYSE: SHOP) and Uber Technologies (NYSE: UBER) are worthwhile long-term investments regardless of what happens next month. Here’s why.

Shopify: The market leader in e-commerce software

Shopify provides commerce software and services for businesses of all sizes. Its platform lets merchants manage sales across offline and online channels, including social media, marketplaces, and custom websites. Shopify also offers adjacent merchant solutions for marketing, payments, and logistics. That turnkey approach has helped the company secure a leadership position in e-commerce and omnichannel commerce software.

Shopify initially prioritized small and medium-sized businesses, but it’s engaging larger brands with Shopify Plus and Commerce Components. The first is a complete commerce platform designed for enterprises, and the second allows enterprises to adopt individual elements of Shopify’s commerce stack. Both include wholesale commerce tools that extend Shopify’s addressable market beyond retail.

Shopify looked strong in the second quarter. Revenue increased 21% to $2 billion, including a 4-percentage-point headwind from the sale of its logistics business. Meanwhile, non-GAAP (adjusted) earnings increased 85% to $0.26 per diluted share. President Harley Finkelstein told analysts, “More and more merchants across the world are putting their trust in Shopify’s unified commerce operating system to fuel growth and simplify complex operations.”

Importantly, the company made progress in physical retail, wholesale commerce, and international markets, three strategic growth vectors. In the second quarter, offline gross merchandise volume (GMV) increased 27%, and wholesale GMV rose 140%, both of which outpaced the 22% growth in total GMV. Meanwhile, the number of international merchants that use Shopify increased 30%.

Wall Street expects earnings to increase at 45% annually over the next three years. That makes the current valuation of 82 times earnings look reasonable. Whether or not a stock market rally begins in October, I think investors who buy a small position in Shopify today will be happy with their decision five years from now.

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Uber Technologies: The market leader in ridesharing

Uber breaks its business into three categories: The mobility segment connects riders with transportation, the delivery segment connects consumers with local grocery stores and restaurants, and the freight segment connects shippers with carriers. Uber operates the largest ridesharing platform in the U.S. as measured by revenue, and the second-largest food delivery platform, according to Bloomberg.

One thing that sets the company apart is its ability to offer ridesharing and delivery services through a single platform. Uber can encourage consumers and drivers on both sides of its ecosystem to engage with the opposite side, and its cross-promotional activities are paying off. According to a company presentation, 22% of first-time mobility trips come from the delivery app, and 31% of first-time delivery trips come from the mobility app.

Uber has another important advantage in its proprietary data. The company develops a deep understanding of users’ tastes and preferences by providing ridesharing and delivery services, and it uses that information to connect consumers with relevant advertising. User data also creates a network effect that helps Uber predict demand and route drivers more effectively over time.

Uber reported solid second-quarter financial results. Monthly active platform consumers climbed 14% to 156 million, and trips increased 21% to 2.7 billion, meaning users are engaging more frequently. In turn, revenue increased 16% to $10.7 billion, spearheaded by strong growth in mobility sales, and GAAP earnings increased 161% to $0.47 per diluted share.

Wall Street expects Uber’s earnings to increase at 48% annually over the next three years. That consensus makes the current valuation of 84 times earnings look reasonable. Investors should feel comfortable buying a small position in Uber at its current price, provided they plan to hold their shares for at least three to five years.

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

Before you buy stock in Shopify, 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 Shopify 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 $760,130!*

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 September 23, 2024

Trevor Jennewine has positions in Shopify. The Motley Fool has positions in and recommends Shopify and Uber Technologies. The Motley Fool has a disclosure policy.

A Stock Market Rally Could Start in October: 2 Brilliant Growth Stocks to Buy Now and Hold Long-Term was originally published by The Motley Fool

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

Nearly everyone likes an underdog. They’re the ones who don’t get the respect they deserve but often deliver pleasant surprises.

Three Motley Fool contributors think they’ve identified a handful of healthcare stocks that are underdogs. Here’s why they view Bristol Myers Squibb (NYSE: BMY), Moderna (NASDAQ: MRNA), and Pfizer (NYSE: PFE) as surprisingly underrated stocks to buy right now.

A top pharmaceutical stock trading at a significant discount

David Jagielski (Bristol Myers Squibb): There are no shortage of reasons for investors to feel bearish on Bristol Myers Squibb. The top pharmaceutical company has a lot of debt on its books due to acquisitions, and there are concerns that its growth prospects won’t be all that great as it loses exclusivity for multiple top drugs, including Eliquis and Opdivo.

However, with the stock down 17% in three years and trading at just 7 times its estimated future earnings (according to analyst expectations), investors appear to be heavily discounting it right now. The good news is that with such a reduced valuation, the stock provides investors with an attractive margin of safety should its growth strategy fall short of its expectations.

BMS has been obtaining new drug approvals and turning to acquisitions to bolster its portfolio of drugs, but that hasn’t been enough to convince investors that this company — which for decades has been growing and innovating — will be able to develop enough new products to overcome its current headwinds.

By 2026, the company projects that its portfolio of new products will bring in $10 billion in annual revenue. Unfortunately, that may not be enough comfort for investors as Opdivo and Eliquis generated a combined $21 billion in annual revenue in 2023. Future losses from those products alone could offset the gains the company gets from new products.

There is undoubtedly some risk with Bristol Myers Squibb, but the company isn’t ignoring its challenges and is investing in innovating and growing its business. It may take some time to achieve strong gains, but at such a low valuation, the stock can make for a potentially underrated investment to hang on to if you’re willing to be patient and hold on for multiple years.

The reasons to like this stock are hiding in plain sight

Keith Speights (Moderna): It’s no secret why Moderna’s share price has plunged close to 36% this year. The messenger RNA (mRNA) pioneer’s revenue continues to decline. It posted another hefty net loss in the second quarter of 2024. To make matters worse, Moderna cuts its 2025 sales forecast while delaying the development timeline for several new products.

But is Moderna underrated? I think so. Investors are overlooking the fact that the company’s pipeline is loaded with promising programs. Moderna expects to win regulatory approvals for 10 new products over the next three years.

Two of those new products could be on the market relatively soon. Moderna expects to file for approvals of its next-generation COVID-19 vaccine and its combination flu/COVID vaccine this year.

Multiple key late-stage readouts are on the way as well. Moderna should report phase 3 results for cytomegalovirus (CMV) vaccine mRNA-1647 as early as year-end. It’s also on track to begin generating data later this year from pivotal studies of mRNA-3705 and mRNA-3927 targeting metabolic disorders methylmalonic acidemia and propionic acidemia, respectively.

Moderna recently launched its respiratory syncytial virus (RSV) vaccine mResvia, which should have huge commercial potential. The company plans to soon file for U.S. approval to expand the label for the vaccine to include high-risk adults ages 18 to 59.

Between 2026 and 2028, Moderna expects revenue growth of more than 25% annually thanks to its new products. With shares trading at a price-to-sales ratio below 4.9 (cheap for a biotech stock), I think Moderna could be a big winner in the future.

The slump won’t last forever

Prosper Junior Bakiny (Pfizer): It’s no secret: Pfizer is not investors’ favorite stock right now, and it hasn’t been for a while. In the past two years, the company’s financial results have failed to impress, to say the least. Of course, that’s only in comparison to the earlier pandemic years, including 2022, when Pfizer became the first pharmaceutical company to generate more than $100 billion in annual sales. The drugmaker won’t return to these heights soon, but the market is severely underrating Pfizer’s potential.

The company has significantly expanded its pipeline through internal development and acquisitions thanks to its pandemic-related work. Pfizer now has the means to develop important medicines across various therapeutic areas. It strengthened its position in oncology, it is going after the promising GLP-1 weight loss market, and its vaccine pipeline is also promising. Pfizer has 113 programs in its pipeline, including six under review for approval.

While no drugmaker has a 100% success rate or anywhere close to that, Pfizer’s pipeline is more than good enough to transform its lineup in the next five years. In the meantime, the company’s results will stabilize as the need for COVID-19 vaccines and medicines becomes more predictable. I predict Pfizer’s revenue and earnings will eventually start moving in the right direction, as will its share price. In fact, Pfizer’s revenue grew in the second quarter, the first time it had in a while.

Pfizer hasn’t fully recovered yet, not by a long shot. But it’d be a good idea to purchase the company’s shares before it does.

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

Before you buy stock in Moderna, 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 Moderna 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 $760,130!*

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 September 23, 2024

David Jagielski has no position in any of the stocks mentioned. Keith Speights has positions in Bristol Myers Squibb and Pfizer. Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bristol Myers Squibb and Pfizer. The Motley Fool recommends Moderna. The Motley Fool has a disclosure policy.

3 Surprisingly Underrated Stocks to Buy Right Now was originally published by The Motley Fool

Arthur Hayes, co-founder of BitMEX, highlighted the contrast between the vibrant crypto community and traditional finance while predicting a “volatility supercycle” in his latest essay.

What Happened: Hayes admitted that his short-term predictions are often inaccurate, but the overarching thesis of central bank intervention remains valid.

“As long as my portfolio is geared to benefit if printed fiat is supplied to suppress the natural volatility of human civilization, it doesn’t matter if I get every single event-driven prediction wrong as long as the policy response is as expected,” he states.

Hayes argues that global elites have been suppressing economic volatility through monetary policy, requiring ever-increasing amounts of money printing.

Looking ahead, Hayes predicts major economies will continue easing monetary conditions to suppress volatility. He expects the Federal Reserve to cut rates to near zero, regardless of economic indicators. Similarly, he anticipates monetary easing in the European Union, China, and Japan.

Also Read: Oops! Arthur Hayes Realizes $790,000 Loss On This Ethereum-Based Altcoin

Why It Matters: For crypto investors, Hayes suggests that this environment will be beneficial. He advises, “If you are fully invested in crypto, sit back, relax, and watch the fiat value of your portfolio pump. If you have extra filthy fiat, left curve this bitch and deploy into crypto.”

Hayes concluded by emphasizing the potential risks, including the possibility of a system reset if volatility can no longer be suppressed. However, he maintains that Bitcoin BTC/USD and crypto will serve as “release valves” for the excess fiat currency, potentially outperforming other assets even in a downturn.

Lookonchain data spotted that Hayes withdrew 24.39 billion Pepe PEPE/USD, worth $252,680 from Binance. According to Hayes, “it’s time for a meme coin breakout.”

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This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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