Day: November 16, 2024

With the market surging following the presidential election and the S&P 500 trading near an all-time high, finding bargains in the market isn’t the easiest task. However, that doesn’t mean they are not out there.

Let’s look at three bargain stocks investors can buy right now.

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Sirius XM Holdings (NASDAQ: SIRI) owns its namesake satellite radio service, the Pandora streaming music app, and a podcast network. It recently became a fully independent company following a transaction with Liberty Media.

The company has a number of opportunities in front of it. This includes letting users build a plan starting at $9.99 a month and adding extras like sports or talk only if they want. It said this will help it move away discounted pricing and bring in more users.

In addition, it is looking to form new automotive partnerships to help bring in customers. It just added Toyota Motor to its roster and now has nine original equipment manufacturers (OEMs).

The company is also expecting to see a big decrease in satellite related capital expenditures (capex) after this year with it declining to near zero in 2028. Together with reducing annual costs by $200 million, it should help bolster free cash flow and help the company reduce leverage.

Trading at a forward price-to-earnings (P/E) ratio of about 8.6 based on 2025 analyst estimates and an enterprise value (EV)-to-EBITDA ratio of about 7.2 as of this writing, Sirius XM’s stock is attractively valued.

While the company is seeing some ad market softness impacting its Pandora and podcast businesses, it is a fairly steady business that generates solid cash flow. With the Liberty Media transition behind it, it should become more focused so it can deliver solid value to its shareholders moving forward.

A cheap valuation combined with deleveraging opportunities makes the stock a buy.

One of the biggest gainers from the recent election, Geo Group (NYSE: GEO) is still very attractively valued given the opportunities in front of it trading at a forward P/E of under 16 based on 2025 estimates and a forward EV/EBITDA of 11.

Known as a private prison company, one of Geo Group’s biggest opportunities lies in the Intensive Supervision Appearance Program (ISAP), where it provides electronic monitoring of immigrants within the program.

ISAP has been a headwind for the company; participation in the program has fallen due to a lack of a government budget. However, in the past there have been bills to greatly expand the program. Under the Trump administration and with Republicans looking to have control over the House and Senate as of the time of this writing, more funding is expected to go toward immigration.

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The prior House appropriation bills called for a 20% increase in beds in detention centers from 41,500 to 50,000. More important to Geo Group, however, was a provision to use electronic GPS monitoring for all individuals in the non-detained docket. That is estimated to be 7 million people, which would be a huge win for Geo Group, which only currently monitors a small percentage of these individuals.

Despite the rise in Geo Group’s price, the stock looks like it has a lot of upside ahead of it.

E.l.f. Beauty (NYSE: ELF) has been one of the best growth stories in the consumer products industry, with the cosmetics company taking tremendous market share in the mass color cosmetics space the past few years. In fact, last quarter was the 23rd consecutive quarter in which it has gained market share.

The company has taken a cue from the fashion industry, and retailers like Zara, to use a fast-follower strategy where it quickly replicates popular prestige products. This, combined with an innovative marketing strategy using influencers, has led it to become one of the top brands among teens and young adults.

Despite its strong growth, the stock only trades at forward P/E of 31 and a price/earnings-to-growth ratio (PEG ratio) of only 0.6. PEGs under 1 are typically considered cheap, especially for a growth stock.

With strong international expansion still in its early days and expansion into skincare, e.l.f. has a lot of growth still ahead. As such, this is great, cheap growth stock to buy.

Before you buy stock in Sirius XM, 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 Sirius XM 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 $899,361!*

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 November 11, 2024

Geoffrey Seiler has positions in Geo Group and e.l.f. Beauty. The Motley Fool has positions in and recommends e.l.f. Beauty. The Motley Fool has a disclosure policy.

Have $500? 3 Absurdly Cheap Stocks Long-Term Investors Should Buy Right Now was originally published by The Motley Fool

The energy drink space is big and filled with many upstart players. One that has risen to prominence in recent years is Celsius (NASDAQ: CELH). The company was able to differentiate itself in the crowded space by making its portfolio sugar-free and by claiming its drinks are thermogenic, allowing drinkers to burn calories even while resting.

In short, Celsius has quickly skyrocketed to the No. 3 spot in the U.S. energy drink industry by market share, trailing only Red Bull and Monster Beverage.

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It’s unclear whether Celsius will ever be able to further climb the ranks of this market — Monster and Red Bull still have sizable leads at this point. But the company is still taking market share. As of its third-quarter report, management believes it has 12.1% market share, up from 11.4% earlier this year.

It’s here that astute observers might raise an eyebrow. How can Celsius possibly be taking market share when its Q3 revenue was down a painful 31% year over year, which included a 33% plunge in North America?

There is a simple explanation for this apparent contradiction. And the details here may help inform whether Celsius is a stock worth buying following its steep sell-off.

When someone meanders down to a convenience store and picks a can of Celsius over a can of Monster or Red Bull, that’s great for Celsius from a market-share perspective — it got a sale whereas the other two didn’t. But when that consumer walks up to the register and pays, that doesn’t count as revenue for Celsius.

Technically speaking, Celsius doesn’t sell beverages to thirsty consumers. Rather, it sells its beverages to distributors who in turn sell to retailers and consumers. That’s how it works in the consumer-packaged goods space. And normally, revenue tracks pretty closely with end sales to consumers. But sometimes, there can be disruption.

In this case, Celsius’ top distributor ordered too much product last year. Now, the distributor needs to correct its inventory levels. Celsius’ revenue consequently took a hit of over $100 million from this single partner. And yet, end sales to consumers still went up 7% year over year. Considering this 7% sales growth outpaced growth in the industry, its market share increased even though revenue to the company plunged.

Imagine if I pitched Celsius stock like this: “Celsius stock is down more than 70% from its all-time high, and its revenue plunged more than 30% last quarter. Would you like to buy shares?” Many investors would likely decline the offer. After all, who wants to own shares of a business in severe decline?

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The S&P 500 (SNPINDEX: ^GSPC) has advanced by 35% year to date, notching more than four dozen record highs in the process. Factors contributing to that upside include enthusiasm about artificial intelligence (AI), strong corporate earnings, and the Federal Reserve’s pivot to interest rate cuts.

More recently, stocks have surged on expectations that President-elect Donald Trump will improve the environment for businesses by cutting corporate tax rates and reducing regulation. Tom Lee, head of research at Fundstrat Global Advisors, expects the stock market’s momentum to continue through the end of the decade.

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Specifically, Lee believes the S&P 500 will hit 15,000 by 2030. That would be a 152% increase from its current level of 5,950, requiring an annualized growth rate of 16.7% over the next six years. His prediction is based on the assumption that technology stocks will shine as businesses lean on AI to offset the impact of a global labor shortage he estimates will reach 80 million workers by 2030.

Investors can gain exposure to that potential upside by simply purchasing a low-fee S&P 500 index fund like the Vanguard S&P 500 ETF (NYSEMKT: VOO).

The Vanguard S&P 500 ETF tracks the performance of the index, which has as its components 500 of the largest public U.S. companies, including growth stocks and value stocks from every market sector. Like the benchmark index, the exchange-traded fund is now heavily weighted toward the technology sector, which includes an array of companies well positioned to benefit from artificial intelligence.

The 10 largest holdings in the Vanguard S&P 500 ETF by weight are:

1. Apple: 7.3%

2. Microsoft: 6.6%

3. Nvidia: 6.1%

4. Alphabet: 3.6%

5. Amazon: 3.6%

6. Meta Platforms: 2.6%

7. Berkshire Hathaway: 1.7%

8. Broadcom: 1.6%

9. Tesla: 1.5%

10. Eli Lilly: 1.4%

Several of these are already major players in the AI economy. For instance, Amazon, Microsoft, and Alphabet’s Google are the three largest public cloud infrastructure providers worldwide, and collectively account for more than 60% of cloud infrastructure spending. That leaves them well positioned to benefit as businesses seek processing power to support their AI systems.

Similarly, Nvidia is the market leader in data center accelerators and AI networking gear, and it has a durable competitive advantage thanks to its CUDA software platform. Broadcom is the leader in networking chips and application-specific integrated circuits (ASICs), two markets expected to grow quickly due to rising demand for AI infrastructure.

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With a global labor shortage threatening to blunt business growth over the coming decade, technology companies could help alleviate the strain. Businesses have historically turned to innovative technologies to overcome productivity headwinds, and the result has typically been tremendous outperformance across the sector. AI fits the bill perfectly.

Fundstrat’s Lee made that point earlier this year. “Between 1948 and 1967, there was a global labor shortage and technology stocks went parabolic. And between 1991 and 1999, there was a global labor shortage and technology stocks went parabolic. So, this is what’s happening today,” he told clients.

Investors should always view price targets skeptically, even when those price targets apply to the entire stock market. Wall Street has traditionally done a bad job forecasting the future of the S&P 500.

“Over the past four years, the average delta between the median S&P 500 forecast at the beginning of the year versus the level that the S&P 500 finished the year was 17 percentage points,” according to Goldman Sachs. Given how much Wall Street struggles to accurately predict how the market will behave even across the short horizon of a single year, the odds of a prognosticator making an accurate multiyear forecast are remote at best.

How the S&P 500 actually performs through the end of the decade will depend on a host of economic fundamentals, valuations, and emotionally driven factors that are harder to quantify. And while most of the latest data points suggest that the U.S. economy is fairly strong, the S&P 500 currently trades at 22.2 times forward earnings, a material premium to its five-year average of 19.6. In fact, its current forward earnings multiple is the most expensive valuation the S&P 500 has had in more than three years, according to FactSet Research.

Here’s the bottom line: With an expense ratio of 0.03%, the Vanguard S&P 500 ETF offers retail investors cheap and easy exposure to the S&P 500, which includes many of the most influential companies in the world. That compelling investment thesis is one reason Warren Buffett has repeatedly recommended an S&P 500 index fund to small investors. But investors should keep their expectations in check in the coming quarters and years. Lee’s prediction that the S&P 500 will rise by 16.7% annually through the end of the decade may be overly optimistic.

Before you buy stock in Vanguard S&P 500 ETF, 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 Vanguard S&P 500 ETF 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 $899,361!*

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 November 11, 2024

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Trevor Jennewine has positions in Amazon, Nvidia, Tesla, and Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Berkshire Hathaway, FactSet Research Systems, Goldman Sachs Group, Meta Platforms, Microsoft, Nvidia, Tesla, and Vanguard S&P 500 ETF. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

1 Vanguard Index Fund to Buy Before It Soars 152%, According to a Certain Wall Street Analyst was originally published by The Motley Fool

While Jeff Bezos is enjoying the recent rise in the stock market, his ex-wife, MacKenzie Scott, is making news for her generosity. She recently sold another $8 billion worth of Amazon shares and is using the money to help charities nationwide.

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Scott, who was previously married to Jeff Bezos, the founder of Amazon, has decided to use her money to try to change the world. Since their 2019 divorce, she has received a large amount of Amazon shares, making her one of the wealthiest people on the planet. But unlike many other billionaires, she isn’t keeping all that money for herself. Instead, she’s giving it away quickly, recently selling 11% of her Amazon shares to support nonprofits, per filings.

Since the divorce, Scott has sold or donated 255 million Amazon shares, worth about $37 billion. That’s huge, especially since she has done it in less than six years. Instead of holding onto her wealth, Scott focuses on giving back by providing grants to organizations working on education, health, poverty and economic opportunities.

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After graduating from Princeton University, she moved to New York City to follow her dream of becoming a writer. She had to take different jobs, like waitressing, just to pay her bills and these hard times taught her what it feels like to struggle with money, which made her want to help others in need.

Some groups that have received her donations include the Housing Trust Silicon Valley, which got $30 million to help make affordable housing and the Jewish Vocational Service in Boston, which received $7 million to help families become more financially stable. These donations are just a small part of her giving. Scott has already given more than $17 billion to over 2,300 nonprofits, making her one of the most generous people in the U.S.

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While Jeff Bezos’ net worth keeps growing with Amazon’s success, Scott’s net worth is shrinking – but that’s her goal. Forbes estimates that her wealth decreased from $59 billion in 2021 to about $30 billion in late September. She pledged to donate as much as she could over her lifetime when she joined The Giving Pledge in 2019.

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These three stocks offer investors huge dividend potential for many years. The Global X MLP ETF (NYSEMKT: MLPA) invests in master limited partnerships (MLPs) in midstream pipelines and storage. Meanwhile, Devon Energy (NYSE: DVN) and Diamondback Energy (NASDAQ: FANG) are oil and gas exploration and production companies set to gush cash in 2025 and use it to enhance dividends for long-term investors.

Whether you voted for President Trump or not, he will take office in January. That’s good news for gas pipelines and storage companies, not least because the Trump administration has promised to end the moratorium on new LNG export terminal licenses imposed by the Biden administration.

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While investors may enjoy picking winners in the sector, the Global X MLP ETF offers an alternative option. Currently holding 20 MLPs with Energy Transfer, Enterprise Product Partners, and MPLX each representing more than 10% of assets, the ETF offers a relatively stress-free way to get broad-based exposure to midstream pipelines and storage companies.

In addition to the new administration’s approach to LNG terminals, an increase in energy exploration and production is good news for energy infrastructure companies because it increases the likelihood of output increases in the fields they serve. That helps de-risk MLPs and improves their bargaining position when negotiating long-term contracts.

This ETF, with an 8.3% dividend yield and an expense ratio of 0.45%, is a buy for investors who are optimistic about the long-term future of energy production in the U.S.

I know what you are thinking: Devon Energy didn’t pay a variable dividend in the third quarter, and its quarterly fixed dividend of $0.22 equates to an annual dividend of $0.88. That figure would put Devon on a dividend yield of just 2.3%, so how is Devon Energy a high-yield stock?

The answer lies in understanding how capital is best returned to shareholders over time. In a nutshell, Devon Energy’s management is currently using its substantive cash flow to reduce its debt and make share buybacks after it pays its quarterly fixed dividend. It’s a strategy that makes sense when it’s gushing cash flow from good production and a relatively high price of oil. The debt reduction will improve future cash flow as it won’t have to pay the interest on the retirement debt, and the share buybacks will lower the share count, so existing shareholders will have a more significant claim on future cash flow.

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Putting some numbers to this argument, management believes it will have a free cash flow (FCF) yield of 9% in 2025 based on a price of oil of $70 a barrel and the stock price on Nov. 1 of around $38.32. Interpolating for the current stock price suggests an FCF yield of 8.9%. In theory, Devon could pay all of that in dividends. However, management tends to return 70% of FCF to investors, with 30% earmarked to improve its balance sheet (debt reduction).

As such, if 70% of returns are in the form of dividends, this implies a 6.2% dividend yield. That would be fine, but given that the stock trades on such an attractive FCF yield, it makes more sense to use investors’ money to buy back stock yielding 8.9% in FCF.

As such, provided FCF stays high, Devon will have plenty of potential to increase its dividend significantly, not least as FCF per share will drop given the share count reduction.

In common with Devon, Diamondback Energy didn’t pay a variable dividend in the third quarter. Also in common with Devon, which acquired Bakken-focused Grayson Mill, Diamondback is expanding its production through a merger with Permian-focused Endeavor Energy (expected to close in the fourth quarter).

The parallels don’t stop there. Diamondback also expects to gush cash flow in 2024, with management forecasting $3.4 billion at commodity currency prices. It’s an FCF representing 6.4% of the current market cap. The market is likely valuing Diamondback over Devon due to the Endeavor deal.

Indeed, there’s good news on that front, with management recently lowering its post-dividend breakeven price of oil to $37 a barrel from an initial estimate of $40 a barrel.

In plain English, provided the price of oil stays above $37 a barrel, Diamondback will be able to pay its base quarterly dividend of $0.90, or $3.60 a year. That equates to a 2% dividend yield. However, given that the price of oil is currently around $70 a barrel, and management takes an opportunistic approach (just as Devon does) in making share buybacks when its valuation is low or increasing its variable dividend where possible, the stock has plenty of potential to grow its dividend in the coming years.

All told, the Global X MLP ETF offers excellent dividend yields now. If you believe energy prices will hold up, then Devon and Diamondback are likely to return to increasing their variable dividends in the future.

Before you buy stock in Devon Energy, 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 Devon Energy 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 $870,068!*

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 November 11, 2024

Lee Samaha has no position in any of the stocks mentioned. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy.

3 High Yield Energy Stocks That Are Screaming Buys Now was originally published by The Motley Fool

Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below.

SpaceX, under the leadership of Elon Musk, is reportedly preparing to initiate a tender offer next month.

What Happened: SpaceX’s tender offer will allow the sale of existing shares at $135 each, valuing the company at over $250 billion, as reported by Reuters.

Musk’s ambition for human Mars exploration could become a national priority under Trump’s administration. The NASA Artemis program, which intends to use SpaceX’s Starship for lunar missions as a precursor to Mars expeditions, is anticipated to shift focus towards Mars with uncrewed missions targeted this decade.

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SpaceX might push for relaxed regulations on worker and participant safety in private space flights under Trump’s presidency.

An investigation last year revealed over 600 worker injuries at SpaceX facilities, exceeding the industry average, raising concerns about the company’s adherence to safety standards.

Why It Matters: SpaceX’s valuation has seen a significant increase over the past year. In June, the company was reportedly set for a record $210 billion valuation in a tender offer, surpassing its previous $200 billion estimate. This was driven by substantial investor demand.

However, Musk has previously dismissed the possibility of a SpaceX initial public offering (IPO), citing the intense pressure for short-term results faced by publicly listed companies.

SpaceX’s dominance in the space sector is further highlighted by its control over two-thirds of the planet’s satellites, thanks to the rapid expansion of its Starlink satellite network.

As of September, SpaceX’s Starlink service connects over 4 million customers worldwide, demonstrating the company’s significant impact on global connectivity.

Check out more of Benzinga’s Future Of Mobility coverage by following this link.

The changing interest rate environment has created an incredible opportunity for income-seeking investors to earn massive yields, but not through dividend stocks… Certain private market real estate investments are giving retail investors the opportunity to capitalize on these high-yield opportunities and Benzinga has identified some of the most attractive options for you to consider.

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