Michael Kamerman, CEO of Skilling, shares his opinion on what stock you should watch this week.
Micron Technology
The link between market trends and supply chain disruptions is inextricable, as demonstrated by Micron’s earnings report last week.
What’s more, the bullwhip effect is in full blast. When demand is strong, retailers over-order from manufacturers, who in turn over-order from their supplies. Ultimately, this leads to inventories that are severely skewed away from actual consumer demand.
Whilst Micron’s earnings report started positively with strong profitability and free cash flow, its stock remained stagnant. Investors should consider the decrease in industry demand, as well as the change in market conditions, before completely writing off Micron as a prospect.
However, research firm Gartner predicts worldwide PC shipments could decline by 9.5% this year. If true, the company’s attempt to clear some of its excess inventory will prove challenging.
Looking ahead, concerns around a recession are likely to see investors exercise more caution. As a company, Micron will have to navigate these concerns, as well as look at how to rebuild its stock price which has nearly halved this year.
Luckily, the strong employment landscape is likely to help cushion the severity of any upcoming recession.
Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Not investment advice. Past performance does not guarantee or predict future performance.
Two others are about the magic formula of becoming wealthy by accumulating gold, and how dividend-paying stocks are the ultimate money-making vehicle for personal portfolios.
It's never a good idea to make financial moves based on incorrect data. The smart approach is to study all your options by doing in-depth research on the kinds of investments that interest you most. After spending time exploring all the possibilities and evaluating the various selections, consider putting your money to work for you and maximising your long-term returns. Here are more details about the common money and wealth-related myths.
1. Real Estate Is Out Of Reach For Most Individuals
For more than a century, far too many people have fallen for a host of myths and fallacies about real estate. The list is a long one, but it includes several that directly relate to personal finance. Chief among the misinformation is that real estate is just too pricey for the vast majority of individuals. In fact, real estate can be one of the most profitable income-producing assets in a person's portfolio. Over the long haul of multiple decades, the two most beneficial ways to build personal wealth are through real estate and the stock market. Since the early 1900s, it's been simple to purchase stock, but the same can't be said for property.
However, recent changes in the way the real estate market is structured have changed that. Today, anyone, even those who only have $100 to invest, can take part in real estate investing via fractional shares and REITs. No longer are equity stocks the top choice among people who want the security of long-term, stable investments. The best way to get started is by learning all the facts about how investing in real estate measures up to traditional corporate stocks. In today's challenging economy, it's imperative for people to learn all they can about real estate vs stock market returns and how to make the most of every financial opportunity.
2. Investing In Gold Is The Secret Formula
Gold can be a smart way to diversify a portfolio, but it's almost never wise to put the bulk of one's investments into the yellow metal. Contrary to hundreds of online and television advertisements, gold is not a secret or guaranteed way to earn short or long-term profits. It has a few unique qualities and can perform well in weak economies, but during good times, it's not such a wonderful place to park capital. As of late, there has been a valid argument made regarding investing in gold vs bitcoin that is worth your time and research as well.
3. Dividend Stocks Are Guaranteed Winners
The current preference among investors for aristocrat shares is based on a misconception. That's not to say that the aristocrats are not excellent additions to certain portfolios. The myth is about the promise of these long-term dividend payers to generate a significant amount of income. The corporations in the category can and do pay regular percentages of their income to shareholders regularly. But they don't always perform well or offer the best opportunities compared to other kinds of stocks and commodities.
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Speaking to Yahoo Finance, Belfort warned against taking a "12-month or 24-month horizon" when investing in Bitcoin, urging people to instead to view Bitcoin as a long-term hedge against inflation, which is currently at a 40-year high in the US.
"With reasonable luck, I think if you take a 24-month horizon you'll almost certainly make money,” Belfort said.
"If you take a three or maybe five-year horizon, I would be shocked if you didn't make money because the underlying fundamentals of Bitcoin are really strong.”
"It has a limited supply, and as inflation keeps rising there will come a time when Bitcoin will start to trade more like a store of value and less like a growth stock."
In recent months, Bitcoin has continued to drop, with Binance’s CEO Changpeng Zhao warning that the world’s largest cryptocurrency could remain below its $69k peak for two years.
Currently, Bitcoin stands at around $19,000, down over 10% in the last seven days.
Disclaimer: This article does not constitute financial advice. All investments are made at the reader’s own risk.
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Inflation. It is in the headlines, your local shop, your costa coffee, your work lunch, your energy bills, your date nights - it is making financial life for most people pretty miserable, and with the highest rise in the cost of living for 40 years, it is understandable. But if you cannot beat them, join them, thus, I am on the lookout for investment options for my portfolio that can benefit from the rising prices.
The financial markets are in turmoil currently, partly as a result of the challenging economic conditions, so my ISA value relative to this time last year is not a welcome sight.
Why investors are worried
With inflation expected to continue rising, income investors like me are worried. Particularly as the FTSE 100’s yield is only 3.73% currently. To put this into context, the maximum dividend yield of the FTSE 100 index over the last 20 years was back in 2020. At one point during that year, it was at 7%, which would have at least been commensurate with the current level of inflation investors are faced with today.
Consumer price rises, currently at 9% compared to the same point last year, are expected to trend even higher this year. So, with persistent price rises looking like the medium-term norm, where can I turn to find investments that may provide an inflation-protected income, or growth, in the meantime?
Three places to consider investing
I would not normally invest in single stocks. But considering my portfolio is well-diversified, across assets, sectors and regions, mainly through a range of open-ended funds and investment trusts, a tactical move is justified considering the current market challenges.
Imperial Brands (LSE:IMB) is a good place to start. Tobacco stocks are cheap, and the British cigarette maker is one of the cheapest. The stock trades around 6.8 times projected 2022 earnings, significantly lower than the sector average of 11.4 times. It is also one of the highest yielding income stocks in the FTSE 100 currently, at 9%.
Alternatively, Phoenix Group (LSE:PHNX) is a stock with a yield in line with inflation, with additional growth potential. Its shares are now yielding over 8%. As interest rates rise, an insurance company’s liabilities (in the form of life policies) decline. In addition to this, the company is now writing more new business than the decline in its legacy business, so it is likely that the current dividend has the potential to grow from here.
These are two relatively high-income-producing stocks, which perform as well, or if not, better, in a high-inflation environment. As an income-focused investor, I ideally need returns yielding real returns above inflation. These stocks have the potential to provide this for me in the medium to long term.
Finally, core infrastructure stocks are another option that offers better inflation protection qualities than the wider stock market. Research and index providers, LPX AG, ran the numbers to prove this (up until May 2022). Core infrastructure stocks, as measured by the NMX Infrastructure Composite, have returned 9.9% per year since 1999. Seven percentage points more than the average inflation rate. It dwarfs the performance of the MSCI (6.6% per annum). The data shows that these stocks (as measured by the index) perform even better when inflation edges higher. For example, when the average inflation rate is above three per cent, the average excess return of infrastructure stocks over the MSCI World is 8.1 percentage points.
Final thoughts
There are no guarantees here, but these are the types of businesses and assets that seem more capable of defending against the effects of inflation than others. This is a key reason why I intend on buying these shares. Of course, all this is assuming that inflation will remain a problem and interest rates are going to rise on a sustained basis. Those are both possibilities but not certainties.
Nevertheless, I am dependent on my portfolio income and believe inflation will continue to persist. This requires me to seek out undervalued stocks to add to my portfolio that still has the ability to pay out growing income despite the volatile market environment.
If the current climate persists, assets that yield real returns (an investment return above inflation) will be vital to me maintaining my income and capital growth objectives.
About the author: Henry Adefope is an Associate Director at global communications and advocacy firm, SEC Newgate UK, and an investment commentator. He directs communication activities for major investment brands across a host of strategies and asset classes. Clients have included Vanguard, State Street Global Advisors, BNP Paribas, Barings, and RBC Global Asset Management. He began his career at Goldman Sachs and Broadwalk Asset Management and is a Chartered MCSI member of the Chartered Institute for Securities & Investments, as well as a member of the CFA Society.
Disclaimer: This article does not constitute financial advice. All investments are made at the reader’s own risk.
Michael Kamerman, CEO of Skilling, shares his opinion on what stock you should watch this week.
Coinbase
Although we are talking about stocks, in the past few weeks the spotlight has been on cryptocurrency market movements and stocks related to them. It’s fair to say that it’s been a rather eventful week for the crypto market…
Ethereum lost 21%, Bitcoin was down to its lowest level since December 2020, Solana plunged 24% and Cardano dropped 22%.
The individual coins themselves have suffered from dips, exacerbated by crypto lenders such as Celsius and subsequently trading giant Binance pausing withdrawals, swaps and transfers on their platform. As a result, there has been a significant shift in sentiment within the crypto space, which is sure to affect stocks that are directly linked. One such stock is Coinbase.
Despite reaching a market cap on IPO day of $86 billion, Coinbase has fallen from grace, reaching values below $13 billion, with the stock now being on a clear downtrend following its IPO open price of $381. With current sentiment toward cryptocurrency cooling, this dip may carry on.
The majority of Coinbase revenues come from transaction fees and commissions. If there’s less trade - reducing the value of the traded assets - it seems inevitable that the company revenues would take a hit. This is exactly what happened as total trading volume dropped from $547 billion in Q4 to $309 billion in Q1 2022, and retail monthly user transactions fell from 11.4 million in Q4 2021 to 9.2 million in Q1 2022. Those factors combined have seen total revenue fall 27% compared to last year, as Coinbase reported a net loss of $430 million in the first quarter.
On top of that, there is a clear correlation between cryptocurrency value and Coinbase’s share price. For example, an overlay of the Ethereum price chart and Coinbase price chart show a really strong correlation between the two.
From a business perspective, Coinbase announced in February this year its plans to add 2,000 employees across Product, Engineering and Design in 2022. However, this only added to expenditures resulting in the company then freezing its hiring process in June while also rescinding employment offers and refusing to rule out further job cuts.
Traders who are debating whether to invest or sell the stock should take into account the current market sentiment on cryptocurrency and weigh up the pros and cons of buying the dip, while also evaluating whether the company’s plans are viable. Questions to ask oneself: will the shares recover, and most importantly, are you willing to invest in them?
Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Not investment advice. Past performance does not guarantee or predict future performance. Trading cryptocurrency is not available for UK retail clients.
When the Federal Reserve made the unprecedented move in March 2020 to pump trillions into the economy, it was a global milestone. Because USD is the world’s reserve currency, the Fed is effectively the world’s central bank, overshadowing all others.
With such a drastic increase in circulating supply, the USD lost value, coupled with low-interest rates which resulted in cheap access to borrowing, we saw a worldwide inflation spiral. The UK closely follows the US inflation rate, as both have reached 40-year highs.
The UK Economic Woes A Mirror Of The US
While the US inflation reached 8.6% in May, UK inflation outpaced it even further, at 9% in April, the highest of the G7 nations. The cost of fueling up a family car in the UK is now £100.27, according to Experian Catalist’s database.
Compared to the US, this means that a gallon of gas in the UK is equivalent to ~$8.8, which is 76% higher than the US gas price national average of $5. This has had such a huge impact on the cost of living that one in four people have resorted to skipping meals, according to a Sky News survey.
Consequently, both the Federal Reserve and the Bank of England have started raising interest rates to lower consumer spending and borrowing, which levels down inflation. The latest FOMC meeting placed the target interest rate at 3.4% by the end of 2022. At the same time, the Bank of England is hiking its interest rate for the fifth consecutive time, to 1.25%, which is the highest it has been in 13 years.
Unfortunately, the hikes themselves, as a remedy to inflation, are decimating stocks and cryptos alike. Blue-chip representatives for Europe and the US are both down by over -20% year to date. On the upside, London’s “Footsie” index (FTSE 100) has been outperforming them.
Unquestionably, these are withdrawal symptoms of a market habituated to cheap, near-zero interest rate capital. Furthermore, the housing market is getting hit, as higher interest rates on mortgages are anticipated to price millions of individuals out of home ownership.
In other words, a remedy for inflation can trigger a recession—a period of declining output and hiring freezes as companies consolidate their capital under new conditions.
Funds To Escape The Inflation Vice
While this economic cycle seems particularly harsh, they come and go as they always do. For this reason, one must adopt a long-term outlook. An outlook, so to speak, that aims for a 5-year investment gain. More importantly, it is crucial to consider assets that are in demand regardless of either inflation or a recession.
In the UK, open-ended investment company (OEIC) funds are equivalent to open-ended mutual funds in the US. They are priced once per day, diversifying investor money across a wide range of assets. For this reason, they are considered a long-term investment, of up to 10 years, spreading the risk widely so the growth outweighs the potential of losing the principal.
Because OEIC funds are professionally managed and diversified, their maintenance is relatively higher. The funds are generally available through many of the leading apps for trading stocks in the UK. They typically charge an annual management charge (AMC) between 1% to 1.5% of the allocated shares’ value. Here are three OEIC fund candidates for your consideration.
1. VT Gravis Clean Energy Income
By 2030, the UK will no longer allow for new gas-operated vehicles to be sold on the market. This speaks volumes about the relentless regulatory green push. Moreover, energy investments have been a historical safe haven against inflation.
In the near future, the UK government announced that it will phase out Russian oil imports as a result of the Ukraine-Russia conflict. This will be as early as the end of 2022. Both the intermediate geopolitics and long-term legislation translate to a mass adoption of renewable energy.
At $459.26 million and targeting 4.5% annual income, VT Gravis counts on that future by diversifying investor money on smart grids, energy efficiency, storage and other zero-emission alternatives. The fund charges 0.81% AMC.
2. LF Ruffer Diversified Return
Although launched in September 2021, it is based on the time-tested Ruffer Investment Strategy. Having received a “cautious balanced” rating, LF Ruffer is on the lower end of the risk spectrum. Its portfolio diversification is focused on times of market distress.
Specifically, high inflation is currently plaguing the world. LF Ruffer ties precious metals, energy stocks and index-linked bonds in a capital-protection bubble that are least likely to lose money on an annual basis. At a size of $751.29 which targets above 4% annual income, RL Ruffer charges 0.93% AMC.
3. M&G Global Listed Infrastructure
Infrastructure goes hand-in-hand with energy stocks, precious metals and renewables as guardians against inflation. Although high inflation impedes new infrastructure projects, all governments are aware that the cost of not building and maintaining roads and civic and utility buildings is higher in the long run if left behind.
That is why M&G Global covers infrastructural assets that are critical for any nation - social and economic. Furthermore, the fund counts on the growth of emerging markets - smart gridding the cities, data centres and communication towers. However, its portfolio does include a tighter range of investments, so a drop in one could significantly impact the fund’s value.At $634.96 million size and targeting 3% - 4% annual income, M&G Global charges 0.70% AMC.
Taking Advantage Of The Davos Agenda
In prior decades, it was more difficult to pick the right fund. One had to choose between an actively managed or a passively managed (index) fund. The latter typically have lower annual fees but are less likely to take advantage of changing market conditions. A strong case could be made that actively managed funds are also superior to life insurance policies, in terms of financial protection.
There is also the credit rating and default risk to consider. While all of these metrics still stand, the concentration of economic power has grown to the point where one metric is more important than others. Does the fund cater to the Davos Agenda?
Whether it is the World Economic Forum, UN’s 2030 Agenda or the World Government Summit, they all tie every economic act worth of note in a unified front. Furthermore, they deploy ESG framework - environmental, social, governance - to rate them above the immediate profit-return considerations.
This creates a streamlined investment outlook in which emerging infrastructure, renewables, digitisation and smart grids take priority regardless of market upheavals. From this perspective, the three listed funds pose the least risk in these uncertain times.
This article does not constitute financial advice. The author and Universal Media Ltd. are not qualified financial advisers. All investments are made at the reader’s own risk.
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Michael Kamerman, CEO of Skilling, shares his opinion on what stock you should watch this week.
Tesla
Despite a positive start to June, Tesla’s shares failed to hold above the 20-day working average, showing that the downward trend is still firmly intact.
However, with business magnate Elon Musk continuing to make headlines, it shouldn’t come as too much of a surprise that shares have taken a tumble. Just recently, he declared that approaching a recession was a “good thing” and later denounced remote working for Tesla employees.
Musk also told Tesla executives to pause all hiring and cut 10% of the total workforce. A move which has drawn strong criticism but also concern that talented employees will be deterred.
Despite this, Tesla’s AI Day scheduled for September 30th will showcase the Optimus Robot and the company remains a leader in the autonomous vehicle space.
Investors are right to be wary given Tesla is down by over 40% from all-time highs. However, ongoing geopolitical events have meant supply chains have been squeezed, another factor in the extent to which shares have been impacted.
Investors should sit tight to see whether Tesla stock was right to be criticised as overvalued or if Elon Musk can prove the critics wrong.
Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Not investment advice. Past performance does not guarantee or predict future performance.
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To help you on your journey, here are several tips that all successful traders follow religiously.
They Have A Plan
The first and most important thing that all successful traders have is a plan. This plan includes their investment goals, risk tolerance, and entry and exit strategies. Without a plan, it is very easy to get lost in the sea of information out there and make impulsive decisions that can lead to large losses.
To come up with a plan, you need to first determine your investment goals. Are you looking to make a quick profit or are you more interested in long-term gains? Once you know your goals, you can start thinking about how much risk you are willing to take. Higher risks usually mean higher potential rewards but they also come with a greater chance of losses.
After you have determined your goals and risk tolerance, it is time to develop your entry and exit strategies. These will be the rules that you follow when buying and selling assets. For example, you may decide to only buy stocks that are trading below their intrinsic value or you may sell an asset as soon as it reaches your desired profit level.
They Use Automation
Many successful traders use some form of automation in their trading. This could be something as simple as using a trading bot to execute their trades or it could be a more complex system that includes algorithmic trading. Using RoboForex, you can easily automate your forex trading strategies. For instance, using the MetaTrader platforms allows you to set up expert advisors that will automatically follow your trading rules.
Additionally, using automation can help you to take emotion out of the equation and make more logical unbiased decisions. It can also help you to execute trades faster which can be crucial in the fast-paced world of trading.
They Keep A Trading Journal
Another important habit of successful traders is that they keep a trading journal. In this journal, they track their trade setup, entry and exit points, and profit or loss. This helps them to stay disciplined and accountable for their trades. It also allows them to go back and review their previous trades to see what worked and what didn’t.
This has shown to be an extremely useful exercise for many traders as it allows them to improve their performance over time. If you don’t already keep a trading journal, it is highly recommended that you start doing so.
They Have A Risk Management Strategy
Risk management is one of the most important aspects of trading. Without proper risk management, it is very easy to lose all of your capital. That’s why successful traders always have a risk management strategy in place before they even enter a trade. This strategy includes things like setting stop losses and taking profits at predetermined levels.
By having a risk management strategy, you will be able to limit your losses and protect your capital. This will allow you to stay in the game even when things are going against you.
No matter how good of a trader you are, there will always be times when things don’t go your way.
That’s why it is important to prepare for the worst. This includes having enough capital to cover your losses and being able to emotionally handle losing streaks. Many traders blow up their accounts because they are not prepared for a losing streak. By having the proper mindset and capital in place, you will be able to weather any storm.
They Stay Up-To-Date
The world of trading is constantly changing. New products are being introduced, regulations are being implemented, and economic conditions are always fluctuating. That’s why traders need to stay up-to-date on all the latest news and developments.
This can be done by reading financial news articles, following thought leaders on social media, and attending industry events. There are also many great resources like Traders Laboratory where you can find useful information and connect with other traders. By staying up-to-date, you will be able to make better-informed trading decisions and you will also be able to adapt to changes in the market quickly which can give you a competitive edge.
Conclusion
Successful trading investors tend to follow similar patterns and guidelines to be successful. Some of these include automation, maintaining a trading journal, implementing a risk management strategy, and staying up-to-date with the latest news and developments. By following these tips, you will be on your way to a more successful trading career.
1. Forex signals cannot predict the future
No matter how good a forex signal provider is, it cannot predict the future. The best they can do is provide you with information that can help you make informed decisions about your trading. Many forex signal providers will talk about their "proprietary" methods for analysing the markets, but the reality is that they are all based on past data and no one can accurately predict what the markets will do in the future. Additionally, even the best forex signal providers cannot control the markets, so there is always a risk that the market will move in a way that is not anticipated by the signals. It's important to remember that forex signals are not guaranteed to make you money and there is always a risk of loss.
2. Forex signals are not a "get rich quick" scheme
If you're looking for a quick and easy way to make money in the forex market, forex signals are not for you. While forex signals can be a helpful tool, they are not a magic bullet that will make you rich overnight. To be successful with forex signals, you need to have a solid trading strategy and risk management plan in place. Additionally, it's important to remember that even the best forex signal providers have lost trades. No one can win all of the time and you should be prepared to accept losses as part of your trading strategy. It's also important to note that forex signals are not free.
3. Forex signals come with risks
As with any type of trading, there are risks associated with using forex signals. One of the biggest risks is that you could end up following a bad signal and losing money. It's important to do your research and only use forex signals from reputable providers. Additionally, you should always test any forex signals you plan on using with a demo account before risking real money. By doing this, you can get a feel for how the signals work and whether or not they are right for you.
4. You need to be able to act quickly
In order to profit from forex signals, you need to be able to act quickly. This means that you need to have a good understanding of the market and be able to make trades quickly. If you're not comfortable with making quick decisions, forex signals may not be right for you. Additionally, you need to have a good understanding of how to use the signals. If you're not sure what the signal is telling you, you could end up making a bad trade.
5. You need to have a solid trading strategy
If you want to be successful with forex signals, you need to have a solid trading strategy in place. This means that you need to know when to buy and sell, as well as how to manage your risk. Many forex signal providers will give you their trading recommendations, but it's important that you back-test their recommendations and make sure they fit your trading style. Additionally, you need to be comfortable with the level of risk you're taking on. Remember, even the best forex signal providers can't guarantee success, so it's important that you're prepared for the possibility of losses.
6. You need to be patient
One of the most important things to remember when using forex signals is that you need to be patient. Just because a signal provider is giving you a buy or sell recommendation does not mean that you need to act on it immediately. Oftentimes, the best thing to do is wait for the market to confirm the signal before making a trade. Additionally, you should always use a stop-loss order when trading based on forex signals. This will help you limit your losses in case the market goes against you.
Forex signals can be a helpful tool for traders, but they are not a magic bullet that will make you rich overnight. There is always a risk of loss when trading and you should be prepared to accept losses as part of your trading strategy. No one can win all of the time and you need to be patient when using forex signals. If you're not comfortable with the risks associated with forex trading, you should not use forex signals.
Michael Kamerman, CEO of Skilling, shares his opinion on what stock you should watch this week.
Palantir
The market has been ruthless in recent times, meaning that the current investing environment isn’t one for the weak-willed. Dips and troughs have affected companies across the board including Palantir, although all may not be lost.
Last week, while we saw signs of resurgence from dip buyers rallying the stock up 9.5%, following a couple of 5% increases weeks beforehand, the stock remained down 15% over the last month. It did, however, push above its 20-day moving average for the first time since March, leaving investors’ eyes on the stock.
Palantir’s earnings report published on May 5th was initially met with an air of dismay from investors. The stock jumped down from $9.41 and fell to $6.43. However, by simply glancing at their earnings report, it would be hard to understand why investors might be disappointed. Total revenue grew 31% YoY from 2021, commercial revenue increased by 54%, and the firm’s customer count increased by 86%; all of which indicate promising growth.
Taking a closer look into these results sheds light on investors’ dismay. While total revenue grew by 31% to $446 million, Palantir’s current market cap is just over $18 billion, with a price to earnings ratio of 68 meaning that it may be overvalued. For comparison, the price to earnings ratio of the S&P 500 is around 23.
Palantir’s goal is to continue growing revenues by 30% each year and if the firm hits those goals, revenues will be nudging towards $1 billion annually. A large part of their business still resides in data analytics contracts with US defence and intelligence agencies, although they have made inroads in the private sector of late and have recently teamed up with commodity trading giant Trafigura.
What this will mean for Palantir’s share price and valuation in the short-term is still uncertain, but what is certain is that investors will need to pay close attention to the market and potential government rate hikes to make an informed decision on their trading.
Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Not investment advice. Past performance does not guarantee or predict future performance.
Michael Kamerman, CEO of Skilling, shares his opinion on what stock you should watch this week.
Peloton
2022 arguably hasn’t been the most accommodating environment for traders. With many stocks tumbling this year, including titans such as Google and Microsoft who are down 23-24% from their all-time highs, as well as other household names like Disney and Facebook (Meta) who are 47-48%, many companies are seemingly bearing the brunt of the “post-pandemic recovery”.
This is currently the case for Peloton, which is now down by over 90%.
Following its IPO in September 2019, its trading price began $2 below its IPO price at $27 before hitting $17.70 in March 2020. The pandemic did however help boost its value, with gyms closed, social distancing measures and limits to time outdoors put in place, people embraced Peloton’s social and physical offering, resulting in the stock trading at all-time highs of $171.
Looking back, traders who invested while the price was low and got out when the price reached new highs were blessed with decent returns. Those who held on may not be feeling so good about their position now that the stock is trading back beneath pre-pandemic lows.
When any stock reaches low prices similar to Peloton, traders often question whether this represents an opportunity to buy while low, ie: a tradeable low, or if this will become the ‘normal’ price. While buying something at a 90% discount may seem like a fantastic deal, the case isn’t as straightforward when it comes to navigating and predicting global financial markets.
Some may argue that Peloton’s share price is down for a reason other than general market lows, such as the classic case of a company being overvalued during a bull market due to short-term demands, before hitting its actual price soon after. Others may instead believe that the company still has potential post-pandemic and traders should get on board whilst value is low.
In any case, what one can do is look at the facts. In the last quarter, Peloton reported a total of approximately 7 million members with 2.96 million connected fitness subscriptions. However, they also recorded their biggest quarterly loss of -$757 million since going public and have borrowed $750 million to recapitalise. As well as this, the company has more inventory than anticipated, with vast amounts of stock sitting in warehouses rather than homes.
Nevertheless, the company is continuing to push for new products after recently soft announcing on Twitter that their rowing machine is on the way.
On many levels, FaaS (Fitness-as-a-Service), or ‘connected fitness’ is a promising concept in the digital era. One crucial question for investors to now consider is whether that idea can translate into a solidly profitable business, especially as the global economy searches for a post-Covid re-balance.
Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Not investment advice. Past performance does not guarantee or predict future performance.
Michael Kamerman, CEO of Skilling, shares his opinion on what stock you should watch this week.
AMD
What a week. Many of the companies within the S&P 500 have experienced severe falls which have in turn majorly affected the index. Stability within stocks has been almost nonexistent and traders will be tested for their resolve when choosing whether to sell losing assets, or buy further stocks in the current dip, hopeful of an increase.
While stocks for the majority of S&P companies have been turbulent, there are a few whose share price has remained relatively stable in comparison; AMD is one of them.
After having recently experienced a 48% fall from its November high, AMD has bounced back and though it has dipped and risen a few times following AMD’s recent earnings report, it will be interesting to see whether any upside momentum can be sustained in the current environment.
AMD’s latest earnings report has confirmed record quarterly revenues of $5.8 billion (+71% YoY) and they forecast even stronger growth going forward as an upcoming increase in data centres and cloud computing is expected to only boost demand for their computer chips.
On top of this, the company is looking to diversify its markets, entering into automotive tech and 5G mobile networks such as through the acquisition of Xilinx, a major player in the integrated circuits industry. AMD is also looking into integrating Xilinx’s AI optimised circuitry into their CPU products for increased performance.
With the company expecting revenues to reach $6.5 billion in the second quarter, things look promising for investors. However, as the current economic climate has highlighted, nothing is certain and investors should always be mindful of any risk-reward trade-off.
When thinking about whether to sell stocks in case of further dips, or buy more stocks while they’re down, this decision is entirely in the hands of each individual investor, but our advice is to only trade what you can afford to potentially lose.
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