A Different Way to Think About Cryptocurrencies

If you’re an investor, you are probably familiar with cryptocurrencies. They are the latest investment option for individuals and represent a new asset class. When we think of them as a new asset class, that creates concerns for many investors.

New is synonymous with unfamiliar. Investors tend to be uncomfortable with unfamiliar ideas. They worry that the new idea is not legitimate or that the new idea is a bubble or a value trap.

It seems safe to say that cryptocurrencies are legitimate. Bitcoin, for example, can be used to buy pizza, buy a home, or obtain other items at auctions. Bitcoin, and other cryptos, are often sometimes used to complete transactions that are not traceable by authorities.

While cryptocurrencies are new, they have established themselves as real ways to transact business.

Read more here: A Different Way to Think About Cryptocurrencies

Investing Like Warren Buffett

Many individual investors wonder if they could be like Warren Buffett. They dream of buying and holding stocks for many years and accumulating great wealth. This dream is actually within reach for many individuals.

First, we need to define what great wealth means. Few individuals are likely to earn billions of dollars in the stock market like Warren Buffett has. But, the truth is most of us don’t need billions of dollars to be comfortable. We might need less than we think and great wealth could be an account of less than $100,000 at retirement.

Read More Here: Investing Like Warren Buffett

Winners From the Annual Consumer Electronics Show

Every year, companies attend the Consumer Electronics Show (CES) to showcase their new products and their ideas for the future. The Consumer Technology Association bills CES as “the largest global gathering of innovation.”

CES began life as a “gadget show” but the consumer electronics sector has grown to include more than traditional TVs, PCs. gaming and audiophile products. Now it includes home automation, driverless and connected cars, wearables, augmented and virtual reality gear, drones, smart speakers, personal assistants and more.

Read More Here: Winners From the Annual Consumer Electronics Show

Passive Income from P2P Lending

Interest rates are rising but they are still low. The truth is they are too low for many investors who seek a reasonable level of income from investments. A reasonable level of income varies by investor but it’s maybe a few percentage points above the rate of inflation.

That’s what interest rates were in the good old days. Before 2000, Treasury notes maturing in just 1 year typically carried interest rates of at least 5%. Certificates of deposit at banks often offered more than that.

With an interest rate of 5%, a $10,000 investment earns $500 a year. That may not be life changing money, but it is enough money for a retiree to enjoy a small vacation or fund nice gifts for grandchildren. Higher interest rates can, in simple terms, improve the quality of life for many.

Low rates are forcing investors to look elsewhere. But, many investors may not be aware of new markets that have been created.

Read More Here: Passive Income from P2P Lending

 

Interest rates are rising but they are still low. The truth is they are too low for many investors who seek a reasonable level of income from investments. A reasonable level of income varies by investor but it’s maybe a few percentage points above the rate of inflation.

That’s what interest rates were in the good old days. Before 2000, Treasury notes maturing in just 1 year typically carried interest rates of at least 5%. Certificates of deposit at banks often offered more than that.

With an interest rate of 5%, a $10,000 investment earns $500 a year. That may not be life changing money, but it is enough money for a retiree to enjoy a small vacation or fund nice gifts for grandchildren. Higher interest rates can, in simple terms, improve the quality of life for many.

Low rates are forcing investors to look elsewhere. But, many investors may not be aware of new markets that have been created.

Peer to Peer Lending Lets Individuals Be Bankers

Banks have long known that it is profitable to lend money. Their business model was relatively simple years ago. They collected deposits and paid account holders perhaps 3%. Then, they lent money for car loans, business loans or mortgages at perhaps 7% to 9%. The difference between the interest rates was profit.

Thirty years ago, consumers often went to their local bank to secure a loan. Now, they shop online and compare dozens of proposals in a matter of minutes. If the consumer has great credit, they often get a low rate and have funds quickly.

But, banks don’t lend money to every applicant. There may be consumers with bad credit who are a high risk or there may be consumers who simply don’t have a credit history the banks can judge risks with. The lack of credit for everyone led to a new market, the peer to peer or P2P lending market.

Peer to peer lending investment best returns is based on a simple idea. An individual goes to a web site and requests a loan, explaining why they need the loan and providing personal information. The site produces a risk profile. Other individuals look at the profile and decide whether they are willing to fund the loan.

In essence, an individual becomes the bank. Risks can be hedged by making multiple loans, or allowing investors to fund a small part of many loans. This is the way banks securitize mortgages and other debt and is feasible for individuals because the web site’s sponsors provide that service. After all, it’s just a computer program.

An example is an individual with $5,000 in credit card debt at a 20% annual interest rate, who is asking the P2P community to lend them $5,000 at 12%. Everyone wins in that deal since the borrower pays less interest and the lenders get better returns on their investments.

The market is currently funding an estimated $21 billion a year in P2P loans according to the 2017 Americas Alternative Finance Industry Report. And, the market is growing. But, of course, there are risks.

One report noted that an estimated 8% of loans were “charged off” as bad debt. This is how bankers describe loans that were never repaid. That estimate confirms this is a riskier market than banks are willing to fund.

By comparison, the average consumer loan from a bank are charged off at a rate of 2% to 3% in a typical quarter although that figure can rise. Even unsecured debt held on credit cards, considered to be the riskiest loans banks offer, generally show charge off rates of 3% to 5%.

Returns Are Compensation for Risks

Because some loans will be charged off, the higher interest rates are considered to be a compensation for risk. Charge offs could be thought of as losing trades. If an investor, for example, makes 100 trades, there may be 30 to 40 losses. This lowers the returns of the portfolio. Winners make up for losses.

Lending Club, one of the largest P2P networks, shows the historical returns of loans made since 2010. The chart below shows this data for the lowest rated loans, or those that carry the most risk. More than 26% of these loans are eventually charged off.

Source: Lending Club

Despite the high charge off rates, investors have generally earned rates of more than 10% on average. The chart shows rates start out high but as losses mount, the actual returns on investments decline. This is why diversification is important.

If you do decide to make an investment in a P2P network, instead of funding one large loan consider taking advantage of the site’s ability to securitize loans. This allows you to, in effect, fund pieces of loans and reduce the risk of charge offs.

The next chart shows that returns will be lower with this approach but risks also decline. Higher grade loans default less often and the returns of all loans through the site reflect a charge rate of less than 10%.

Source: Lending Club

Diversification From the Stock Market As Well

P2P lending is uncorrelated with the stock market. This is shown in the next chart which is a correlation matrix of various asset classes. Lower numbers show that the two assets move with less correlation.

Source: Mauldin Economics

For example, stocks of countries in the Pacific region (PAC stocks in the table) have an 85% correlation with US stocks. This means they move together 85% of the time. P2P lending shows a low correlation with all asset classes in the table.

This means when a market crashes, the returns from the P2P network are likely to remain stable.

Where to Learn More

Lending Club was founded in 2007 and is estimated to have a 45% market share of the P2P loans made. The site reports that 99% of portfolios with more than 100 Notes have seen positive returns and investors can start with just $1,000.

Prosper has been in business since 2006 and funded more thaP2P lendingn $10 billion in loans. The company allows investors to start with as little as $25 and estimates that returns will average about 6.8% a year.

Upstart was founded by ex-Googlers and notes that it is the first lending platform to leverage artificial intelligence and machine learning to price credit and automate the borrowing process. The company has originated more than $1.5 billion in loans since it began operating in may 2014.

In addition to its direct-to-consumer lending platform, Upstart provides technology to banks, credit unions and other partners via a “Software-as-a-Service” offering called Powered by Upstart.

According to the company, investors are earning an average 7.4% return across all grades with 97.6% of investors earning a positive return. But, to invest with Upstart, you must be an accredited investor.

This means a net worth of $1 million, excluding your home or an income of $200,000 or more in the last two years. Since you must be an accredited investor, they are open for investing in all states as they only are subject to federal securities regulations.

P2P lending could be a source of passive income for many investors and investors of all sizes could be able to participate in this new market.

 

 

Every year, companies attend the Consumer Electronics Show (CES) to showcase their new products and their ideas for the future. The Consumer Technology Association bills CES as “the largest global gathering of innovation.”

CES began life as a “gadget show” but the consumer electronics sector has grown to include more than traditional TVs, PCs. gaming and audiophile products. Now it includes home automation, driverless and connected cars, wearables, augmented and virtual reality gear, drones, smart speakers, personal assistants and more.

The growth in attendance mirrors the growth in product areas.

Source: Verdict

The number of attendees is now higher than the number of hotel rooms in Las Vegas. According to the Las Vegas Convention and Visitors Authority, there are 149,339 hotel and motel rooms in Las Vegas.

Among this year’s attendees were rumored to be executives from Apple. Apple has long been rumored to be working on augmented reality glasses, but CEO Tim Cook and others have repeatedly denied that anything is in the works.

While that may still be the case, it appears the company’s interest in augmented reality — which Tim Cook has claimed will “change the way we use technology forever” — hasn’t subsided, as Bloomberg reports that the company was in attendance at CES 2018 talking to suppliers of components for AR glasses.

Apple wasn’t the only one holding these discussions, as Google, Facebook and Snap were all spotted at CES. Apple is late to the AR arena. Google has Daydream View, Facebook acquired Oculus in 2014, and Snap tried and failed to breach the market with Spectacles two years ago. Apple has probably learned from the missteps of its competitors.

Wall Street Analysts Also Attend

Once, the show was attended by individuals looking for the latest audio and video technology. Now, Wall Street analysts are equally likely to be strolling the convention center. CES offers a unique gathering of researchers, manufacturers and customers.

Analysts are able to gauge the interest in new technology and assess the likelihood of successful and on time delivery through interviews with different attendees. That makes it especially valuable for analysts pressed for time and for companies looking to impress.

This year, a number of companies gave analysts favorable impressions of their plans. Among companies impressing Wall Street analysts at the show this week were Dolby Laboratories (NYSE: DLB), Nvidia (Nasdaq: NVDA), ON Semiconductor (Nasdaq: ON) and Synaptics (Nasdaq: SYNA).

Audio and video technology licensing firm Dolby showcased advances in its Dolby Vision and Dolby Atmos products at CES. It also highlighted the momentum in its business by announcing a slew of customer wins, spanning televisions, PCs, Blu-ray Disc players and sound bars.

“We believe 2018 can be another solid year for Dolby’s stock given revenue is forecast to reaccelerate and margins expand,” William Blair analyst Ralph Schackart said in a report. He rates Dolby stock as outperform.

The stock is trading at about 25 times next year’s estimated earnings. On average, over the past five years DLB has traded with an average price to earnings (P/E) ratio of 22. While analysts are bullish, individual investors might want to wait for a pull back to enter.

Graphics-chip maker Nvidia kicked off CES week with a press conference Sunday where it touted its advancements in self-driving cars, artificial intelligence and augmented reality. This stock has been among the market leaders over the past two years.

Market leaders like NVDA may not offer investors a chance to buy in a pull back. As the chart shows, the trend has been nearly straight up for some time.

“Nvidia continues to innovate at a pace that is challenging for the competition to keep up,” Rosenblatt Securities analyst Hans Mosesmann said in a report. “Nvidia now is in a dominant position in the AI-based self-driving car market with a formidable ‘stack’ of software, middleware, and hardware.”

Mosesmann rates Nvidia stock as a buy with a price target of $250.

Consumer technology publisher Digital Trends awarded its “Top Tech of CES 2018” award to Nvidia for the Xavier automotive system-on-a-chip platform, which “puts mass adoption of autonomous vehicles one step closer to reality.”

ON Semiconductor stock jumped to a more than 17-year high last week.

Mizuho Securities analyst Vijay Rakesh on Thursday raised his price target on ON Semi to 26 from 24 and reiterated his buy rating.

ON Semi is showing strong momentum in chips for advanced driver-assistance systems and electric vehicles, Rakesh said. It also is showing nice growth in its USB-C connector chip business, he said.

ON is trading with a P/E ratio of 14.5 based on next year’s expected earnings. The stock has traded with an average P/E ratio of 28.8 over the past three years. Expected earnings growth of 27.8% a year indicates the stock could be significantly undervalued.

The PEG ratio assumes a stock is fairly valued when the P/E ratio is equal to the EPS growth rate. This valuation model recognizes that fast growing companies should trade at a premium to slow-growth companies. Applying the PEG ratio to ON provides a price target of about $46, almost double the current price of the stock.

Device interface maker Synaptics jumped on a bullish report from a Wall Street analyst. KeyBanc Capital Markets analyst John Vinh upgraded Synaptics to overweight from sector weight and set a price target of $60.

Synaptics is well positioned with in-display fingerprint sensing technology for smartphones, Vinh said. The company’s business in microphones for smart speakers also is underappreciated, he said. This stock has been a market laggard and in a multiyear down trend.

SYNA trades with a P/E ratio of about 11, just a third of its long term average. This stock could be the most attractive of the group to value investors.

Not surprisingly, press reports indicate that tech giants also had good reviews from the show.

Google Assistant made it onto virtually every manner of hardware at the show, from TVs to refrigerators to electric bike wheels. Amazon provided a list of Alexa announcements at the end of each day. And the list is a solid one, according to TechCruch.

Amazon will launch Alexa on several Windows 10 PC, effectively eating into Microsoft Cortana’s one stronghold. We may learn which of the assistants is the biggest winner at next year’s CES.

 

 

 

Investing like warren buffett – investing advice, Many individual investors wonder if they could be like Warren Buffett. They dream of buying and holding stocks for many years and accumulating great wealth. This dream is actually within reach for many individuals.

First, we need to define what great wealth means. Few individuals are likely to earn billions of dollars in the stock market like Warren Buffett has. But, the truth is most of us don’t need billions of dollars to be comfortable. We might need less than we think and great wealth could be an account of less than $100,000 at retirement.

Who Is Warren Buffett?

Buffett is the chairman and CEO of Berkshire Hathaway (NYSE: BRK.B). He’s considered by many to be one of the most successful investors in the world. He is among the wealthiest people in the world with an estimated net worth of more than $90 billion, all of it earned from investing.

Berkshire Hathaway operates out of Omaha, Nebraska, giving rise to several of Buffett’s nicknames. He is often called the “Wizard”, “Oracle” or “Sage” of Omaha. His formal education includes a graduate degree from Columbia University where he learned value investing from Benjamin Graham.

Graham is considered to be the “father of value investing” and Buffett is his greatest pupil. After graduating from Columbia, Buffett eventually created the Buffett Partnership.

This investment firm would in time buy a textile manufacturing firm called Berkshire Hathaway and assume its name to create a diversified holding company. Buffett has been the chairman and largest shareholder of Berkshire Hathaway since 1970.

Over that time, shares of Berkshire Hathaway have delivered astonishing returns as the figure below, taken from the company’s latest annual report shows.

Source: Berkshire Hathaway

Share prices of the stock have grown an average of 20.8% and delivered a total return of 1,972,595%, more than 155 times the gains of the S&P 500, a benchmark index commonly used to measure the performance of the stock market.

While Berkshire Hathaway is often viewed as an investment company, it is an operating company as well. The company buys stocks and bonds for investments. It also buys companies and uses the cash flow generated by that company to invest in other companies or to buy more stocks and bonds.

Over time, in fact, Berkshire Hathaway has shifted from an investment company to an operating company. The next table shows that operations delivered larger profits every year since 2002.

Source: Berkshire Hathaway

Buffett is certainly a great investor but, often overlooked is the fact that he is also a great manager. His combination of skills may be unique and that unique combination may be what accounts for his extraordinary success and great wealth.

How Buffett Invests

Buffett himself has never explained how he makes investment decisions. From his public writing and statements, we do know he believes that value investing is the best approach to the markets. He has described value in memorable terms:

“Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.”

While Buffett has never gone into great detail on what he does, Mary Buffett spent more than a decade enjoying the wisdom of Buffett as his daughter in law and later wrote a book on what she learned.

After divorcing her husband, she wrote a book with David Clark called “Buffettology: The Previously Unexplained Techniques That Have Made Warren Buffett the World’s Most Famous Investor.” She presented a detailed stock valuation model that she learned from him.

Most analysts who have read the book agree that the model Mary Buffett presented is consistent with Warren Buffett’s own writings.

The first step is to estimate what earnings will be for a company ten years in the future. Buffett learned from his mentor, Ben Graham, that it is reasonable to project future earnings based on the annual compound rate of return of historical earnings.

The projected earnings per share figure can then be multiplied by the company’s historical average price-to-earnings (P/E) ratio to provide an estimate of what the stock should sell for at that time. This all sounds simple, but that again is consistent with Buffett’s approach. As he once said,

“The business schools reward difficult complex behavior more than simple behavior, but simple behavior is more effective.”

After determining expected earnings and a P/E ratio, the estimated future price is compared to the current stock price. According to Mary Buffett, Warren Buffett seeks out investments which can deliver a return of at least 15% a year. Only stocks that offer potential appreciation at this rate are considered as buy candidates.

That methodology can be reduced to a simple checklist:

• Stocks need to have at least seven consecutive years of positive earnings, demonstrating their ability to survive in all phases of the business cycle.
• The stock should have good management, measured by above average best return on investment on equity and profit margins.
• Only the top 5% of stocks by market capitalization with earnings per share growth rates in the top 25% of all stocks should be considered. This is because Buffett requires large stocks to make his investments meaningful.
• Based on the methodology described above, the stock must offer potential gains of at least 15% a year for the next ten years.

Applying the Rules

When applying this checklist, individual investors can do better than Buffett. Because he is investing billions of dollars, he isn’t going to buy 100 shares of a stock trading at $2 a share. Even if this stock soars to $10, it will not have a meaningful impact on his wealth.

Smaller investors can buy smaller stocks, and this is where the fastest growth in the markets is likely to be found. The ability to trade small caps means investors can, in effect, buy companies Buffett wishes he could buy.

Another advantage of small investors is that they can play defense. As the chart below shows, shares of Berkshire Hathaway have moved sideways or down for years at a time.

Buffett cannot take defensive measures other than to raise cash. Selling could generate billions of dollars in tax bills. It’s also not reasonable to expect traders in his firm to move billions of dollars on shares in a nimble manner. They would move markets and create costs.

Smaller investors aren’t faced with these constraints. They will face manageable tax bills and can trade without moving markets.

It’s possible to learn from Buffett and use his strategy to find stocks. It’s a simple approach and one that could benefit smaller investors who in some ways have an edge over Buffett, since they face fewer restrictions than the Oracle of Omaha.

Learn more about how to trade in stock market like warren buffet

 

 

If you’re an investor, you are probably familiar with cryptocurrencies. Best investment options for individuals and represent a new asset class. When we think of them as a new asset class, that creates concerns for many investors.

New is synonymous with unfamiliar. Investors tend to be uncomfortable with unfamiliar ideas. They worry that the new idea is not legitimate or that the new idea is a bubble or a value trap.

It seems safe to say that cryptocurrencies are legitimate. Bitcoin, for example, can be used to buy pizza, buy a home, or obtain other items at auctions. Bitcoin, and other cryptos, are often sometimes used to complete transactions that are not traceable by authorities.

While cryptocurrencies are new, they have established themselves as real ways to transact business.

The remaining concerns are more difficult to address. As the chart below shows, bitcoin has increased from less than $2,000 a coin to more than $19,000 in the past six months.

Source: BitcoinTicker.co

This is a sign of its new newness. The value is difficult to define since it is a new asset class. Its volatility, however, makes it difficult to spend. For that reason, it could be useful to frame cryptos as collectibles.

Coin Collecting Is an Investment and a Hobby

Collectible coins have some historic or aesthetic value to collectors. The value of many collectible coins exceeds the value of the metal used in the coin because their precious metal content is almost always rather small.

Rather than focusing on the value of the metal, coin collectors refer to this collectible value as numismatic value, and they say it is determined by factors like the type of coin, the year it was minted, the place it was minted, and its condition, or more technically the coin’s “grade.”

Dealers who sell collectible coins often have valuable coins graded by professional services. A grader examines the coin’s condition based on a set of criteria. Then the grader assigns it a numerical grade from 1 to 70, and places it in a plastic cover for protection.

Grading is not an exact science. Factors like “overall appearance” and “eye appeal” are subjective, and the grade assigned to a particular coin can vary among dealers. What’s more, fine distinctions between grades can mean big differences in the value or price of a coin.

The difference of one grade in the same coin can mean the loss or gain of thousands of dollars in value. Subjectivity in grading means there is real inherent risk in coin investing.

In part because of the subjective grading, expect to hold your investment for at least 10 years before possibly realizing a profit. Another reason it can take time to profit is because dealers usually sell collectible coins at a markup. The markup is how they make their money.

In addition, the market for numismatic coins may not be the same as the market for precious metals or bullion coins. It’s possible that the price of gold can increase while the value of a numismatic coin decreases.

Because of the complexities in the markets, the Federal Trade Commission recommends coin collectors should investigate before you invest. This is good advice for all investments and it should be applied to cryptos.

Considerations for Collectible Coins and Bitcoins

If you’re thinking of investing in collectible coins, the FTC advises that you take your time and get to know the subject.

Ask for the coin’s melt value which is the basic intrinsic bullion value of a coin if it were melted and sold. The melt value for virtually all bullion coins and collectible coins is widely available. This might not be applicable to cryptos but think about the physical aspects of the crypto and decide how you will store it.

Read trade magazines to check the wholesale value of coins. Keep in mind that collectible coins generally sell for a premium or markup over the wholesale price, so the dealer can make a profit. You can find up-to-date wholesale value listings in trade magazines, like the Coin Dealer Newsletter and Certified Coin Dealer Newsletter.

Similar specialized publications exist for cryptos. Learn on your own before plunging in and buying. You may find that markups vary by exchange, and in fact, the markups do vary.

Be clear on the commission or fees that the metals dealer or broker is charging. This is true for coins or bitcoins.

The FTC recommends that you ask about the coin’s grade. If the coin has been professionally graded, check into the grading service. Is it independent from the dealer? What’s its reputation in the industry? Two services commonly used by dealers are Professional Coin Grading Service (PCGS) and Numismatic Guaranty Corporation (NGC).

Get a second opinion about the grade and value of the coin you’re considering as a double-check on the validity of the grade. Then, get a written copy of the return policy. Many reputable dealers offer a return period if you’re not satisfied with your purchase. Fourteen days is typical.

This is a lot of work, but do the same for cryptos. Learn about the currency, the exchange and the issuer. Know as much as possible before buying.

Also, consider the tax implications. The Internal Revenue Service classifies certain gold products as collectibles. Income from the sale of collectibles may be taxed at a higher rate than other investments. Likewise, there are specific rules for cryptocurrencies.

Source: Bitcoin.com

Even before you buy, consider visiting irs.gov or consult a certified public accountant for more information.

Finally, the FTC advises “check out any coin dealers in a search engine online. Read about other people’s experiences. Try to communicate offline if possible to clarify any details. In addition, contact your state Attorney General and local consumer protection agency. Checking with these organizations in the communities where promoters are located is a good idea, but realize that it isn’t fool-proof: it just may be too soon for someone to realize they’ve been defrauded or to have lodged a complaint with the authorities.”

Do the same with cryptos. Before opening an account, research the exchange and know where your money is going.

Then, consider thinking of the crypto like a collectible coin. Plan on owning it for a long time, perhaps, and enjoy the collecting process as much as the potential best return on investment.

 

 

 

U.S. to Rely on Russia for Astronaut Transportation Into 2019

NASA will continue using Russian spacecraft to take American astronauts into orbit for two more years, despite projections by U.S. government and industry officials that domestic vehicles will be ready to take over the job in 2018.

A National Aeronautics and Space Administration spokeswoman confirmed the agency had reserved three seats on Russian Soyuz spacecraft for missions to the international space station scheduled for 2019.

Boeing Co. and Elon Musk’s Space Exploration Technologies Corp. have separate contracts to develop space taxis to take crews to the station. SpaceX’s latest projections call for the first crewed test flight in August 2018, and Boeing is targeting its first crewed test flight for November. The plan is to quickly start ferry flights afterward.

Source: Wall Street Journal

Why this news matters to traders: US-based companies could be granted incentives to make space travel more affordable. Among the companies in this sector to consider is Aerojet Rocketdyne Holdings (Nasdaq: AJRD). This company produces propulsion systems for the aerospace sector. It is the leading provider in both the solid and liquid propulsion markets.

Aerojet Rocketdyne might be best known for providing the rocket motors that got the Curiosity rover to Mars, as well as the fuel that propelled it.

Sears to shutter 103 additional locations, including 1 in Houston

Sears Holding Corp. (Nasdaq: SHLD) will shutter 103 Sears and Kmart Stores — including one in Houston — in early 2018 as it looks to update its business model.

“We will continue to close some unprofitable stores as we transform our business model so that our physical store footprint and our digital capabilities match the needs and preferences of our members,” the company said on its website.  

Eligible employees impacted by the store closures will receive severance and have the investment opportunities to apply for open positions at area Kmart or Sears stores. Liquidation sales at the closing stores will start as early as Jan. 12.

Source: Biz Journals

Why this news matters to traders: At this point, Sears Holdings Corporation (Nasdaq: SHLD) could be a low cost speculation for aggressive investors.

The company reports about $76 a share in assets and about $113 per share in liabilities. However, if the debt is reduced in bankruptcy, there could be equity for share holders. The trade is speculative but could deliver a large best return on investment if the company can be recapitalized.

Tesla Is Still Going Through Model 3 Production Hell

Tesla announced its preliminary December quarter delivery and production results and while it slightly exceeded its Model S and X delivery numbers the Model 3 took another hit. The biggest news was that for the second quarter in a row Tesla moved out when it plans to start producing 5,000 Model 3 cars per week.

Elon Musk, Tesla’s CEO, that predicted Tesla could reach 20,000 Model 3’s produced in December. However, it only managed to build 2,425 in the quarter, which was probably about 1,500 in the month of December.

A release this week included “we expect to have a slightly more gradual ramp through Q1, likelyending the quarter at a weekly rate of about 2,500 Model 3 vehicles. We intend to achieve the 5,000 per week milestone by the end of Q2.”

Source: Forbes

Why this news matters to traders: Tesla Motors, Inc. (Nasdaq: TSLA) consistently misses production numbers yet the stock continues higher.

Traders are buying the company’s technology which could be game changing for power storage. If TSLA succeeds in storing solar power, the stock has significant upside potential.

With Cannabis Investment, Constellation Bets on the Big Unknown

Constellation Brands Inc. isn’t quite sure whether legal cannabis is friend or foe to the alcohol industry. Either way, it wants in. 

The maker of Robert Mondavi wine, Corona beer and Svedka vodka is still waiting for the chips to fall into place after entering the up-and-coming (and turbulent) marijuana industry last year by taking a minority stake in Canada’s Canopy Growth. The rapid increase of the cannabis market has caused analysts to question whether drinkers could shift their spending to smoking as prohibitions on the plant’s recreational use are removed.

“It’s probably not worth getting in a big debate right now about whether it’s cannibalistic or complementary,” Constellation Chief Executive Rob Sands said on a call with analysts Friday. “There’s just not enough information to really say how that’s going to affect beverage alcohol generally moving forward. What we do know is it’s going to be a big market worldwide.”

Source: Bloomberg

Why this news matters to traders: Even without marijuana revenue, Constellation Brands Inc. (NYSE: STZ) has been a big winner in the stock market.

The company has consistently made money in alcohol distribution. Its distribution system could most likely be adapted to marijuana, another highly regulated consumer product assuming legal hurdles can be overcome.

Company Statement on U.S. Tax Cuts and Jobs Act

The Coca-Cola Company supports enactment of the Tax Cuts and Jobs Act because we are confident it will enhance the ability of U.S.-headquartered companies like ours to compete globally on more equal footing and better enable us to reinvest in our U.S. business system as we continue our transformation into a total beverage company.

Source: Coca Cola Company

Why this news matters to traders: Coca-Cola Company (NYSE: KO) is one of many companies to express support of tax reform. Large companies are expecting to benefit from lower rates and other changes in the law. KO is also breaking out to multiyear highs, a bullish technical pattern on the chart.

United Tech’s Geared Turbofan May Finally Be Wind Beneath Earnings Wings

The Geared Turbofan jet engine from United Technologies’ Pratt & Whitney unit may transform from a drag on earnings to a significant profit driver over the next decade, according to one analyst.

 In a note to clients Wednesday, RBC Capital Markets analyst Matthew McConnell wrote that initial “engine teething issues” seem to have been fixed, paving the path for a successful ramp-up in GTF production and deliveries.

“We believe the long-term growth opportunity at Pratt & Whitney is underappreciated, not just as the GTF ramps up and engine kinks are fully derisked, but also given the rich aftermarket opportunity from its large installed base of V2500s, competitive take-aways on key upcoming business jet platforms, and Pratt’s sole-source position on all three Air Force mega programs,” McConnell said.

Source: Investor’s Business Daily

Why this news matters to traders: United Technologies Corporation (NYSE: UTX) is another company that shows a bullish chart pattern and could be a beneficiary of tax reform.

New expensing rules could benefit companies like UTX that provide expensive equipment to other companies. New products and other divisions could help UTX deliver even more earnings to investors.

 

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