Market Daily

Market Daily

Wise and Reliable ETFs for Low-risk Investors

These exchange-traded, low-volatility funds are intended to provide more excellent long-term stability.

In 2020, uncertainty was the norm as the pandemic and related economic challenges rocked stock markets. From sharp declines in U.S. stocks in the spring to uncertainty surrounding an impending Brexit in Europe to the latest questions about the valuation of tech stocks, it’s hard to find a safe place to store your money that lasts longer than a few months. The following nine exchange-traded, low-volatility funds aim for a much lower risk profile than the typical fund; however, with strategies designed to limit large movements. You may not double your money overnight, but these ETFs are smart choices for investors who today are just as concerned about the downside as well as the upside.

This iShares ETF is Wall Street’s most extensive low-volatility offering, with nearly $ 34 billion in assets under management and a daily trading volume of approximately 4 million shares. USMV’s strategy is simple yet attractive: it boils down to the top 200 US-based companies that show less volatility than their peers and the market as a whole. The result focuses on base stocks like telecom giant Verizon Communications (V.Z.) and utilities like NextEra Energy (NO) that will consistently perform regardless of what’s happening in the economy. USMV also has a low annual expense ratio of 0.15% or $ 15 for every $ 10,000 invested.

Invesco S&P 500 Low Volatility ETF (SPLV)

A slightly more focused fund, SPLV selects the 100 stocks in the S&P 500 with the lowest volatility, that is, investments that have undergone smaller price movements over time. Unsurprisingly, less than 10% of the total portfolio is invested in the three sectors of consumer discretionary, real estate, and materials. While there are sometimes high-flying names in these industries, there are also choices that have suffered significant losses in the past. Instead, you’ll find companies that are a little more boring but certainly more reliable, like the proven cleaning company Clorox Co. (CLX), which has withstood the pandemic like a champion and hit a record high over the summer.

Invesco S&P 500 High Dividend Low Volatility ETF (SPHD)

Going one step further, Invesco also offers a low volatility fund that prioritizes the potential for dividend income. SPHD has a much smaller list of just 50 choices, making it generally less diversified than some larger ETFs and allowing the fund to focus its assets on companies offering higher paydays. These include document archiving and cloud security company Iron Mountain (IRM), which produces over 8% and currently accounts for around 3% of this ETF’s portfolio. Together, all interests of SPHD converge on a 12-month payout percentage of approximately 5.4%. It comes with an expense ratio of 0.3%.

iShares MSCIareFE Min Vol Factor ETF (EFAV)

A sister fund of the first-mentioned fund, USMV, is the iShares MSCI EAFE Min Vol Factor ETF. This low volatility ETF focuses on EAFE companies rather than national companies – Europe, Australasia, and the Far East. This fund of about $ 11 billion consists of a slightly broader list of around 270 stocks. The risk profile is very similar to its sister fund focused on the U.S. Current top positions include consumer giant Nestlé SA (NESN) and telecommunications company Swisscom AG (SCMN). A note for those looking for proper diversification: Japan represents about 30% of the portfolio, so there is a geographic bias here to keep in mind.

iShares MSCI Emerging Markets Min Vol Factor ETF (EEMV)

True to the theme, this iShares fund is another large, low-risk ETF, with more than $ 4 billion in total assets and a regional focus on low volatility investments. However, this time around, the fund is made up of equities from emerging markets in regions such as China, India, and Thailand. With a similar filter methodology that favors low volatility, you don’t gain exposure to the fast-moving small companies that many investors envision when they think of emerging markets. Instead, investors are given more reliable choices, like $ 400 billion chipmaker Taiwan Semiconductor Manufacturing (TSM), in this low-volatility ETF’s roughly 320 holdings.

iShares MSCI Global Min Vol Factor ETF (ACWV)

Don’t you want to choose just one region? Well, you don’t have to do that with this low volatility ETFs that holds nearly 400 stocks you’d find on any of these other regional funds. Right, about half of all assets are still in the United States, as it is the world’s largest stock market. Nevertheless, its next largest allocations include around 11% in Japan and about 6% in various European countries. This results in a generally diverse list of stocks around the world. The fund is also quite diversified across sectors, with technology stocks accounting for the largest tranche at around 15%, but all other sectors accounting for approximately 13% or less of the portfolio.

Invesco S&P MidCap Low Volatility ETF (XMLV)

Slicing up the stock market by size rather than geographic location, Invesco offers a mid-cap fund designed with a low volatility strategy in mind. There is naturally a bit more risk, of course, if you rule out the Wall Street mega-caps with the most bottomless wallets, but XMLV proves that there are many modest-sized companies that don’t have to be a household name to have an incredibly strong foundation. XML is made up of about 80 stocks like bakery operator Flowers Foods (FLO) – which owns well-known brands such as Tastykake treats and Wonder Bread – and chemicals and lubricants company NewMarket Corp. (NEU). XML also has a relatively low expense ratio of 0.25%.

Invesco S&P SmallCap Low Volatility ETF (XSLV)

For investors who want to get even smaller by focusing on the shortest portion of the U.S. stock market, XSLV is a realistic option for a low volatility ETF. It may seem inherently risky to exclude larger and even mid-market companies. Still, again, the screening process that Invesco deploys helps traders focus on low-risk options – no matter how big they are. Modest. For example, the largest sector represented in this ETF is industry thanks to specialist companies such as the solvent manufacturer WD-40 Co. (WDFC) and safety and inspection components company OSI Systems (OSIS ). These niche companies may never succeed in dominating Wall Street. Still, they do brisk business with a particular group of clients – giving them a lower volatility profile than some much larger stocks.

5 Factors that May Crash the Stock Market

Wall Street has not reflected that fact at all in recent months, with the S&P 500 rising nearly 50% from its low on March 23 until today. After the 11-year record market bull run ended in a blink of an eye in March, a new rally occurred almost immediately. But has the recovery been too jubilant? Is the stock market going to collapse again?

Here’s a quick look at five risks that could threaten stock market gains in 2020. This article will briefly take a look at five potential risks that stocks face:

  • A “second wave” of the virus.
  • Long-term weakness in the labor market.
  • Inadequate stimulation.
  • Market dynamics: high valuations and high concentration.
  • Political uncertainty.

Before we get into this, it is important to distinguish between a bear market, defined as a 20% drop from a previous high, and a stock market crash.

“I have been in the investment management industry for 36 years,” says Hank Smith, head of investment strategy at The Haverford Trust Co. in Radnor, PA. “During that time I witnessed what I would call two incidents: the one-day accident on October 22, 1987, where the Dow fell 23%, and this year, when the S&P 500 fell. 35% in 4 1/2 weeks. “

Smith points out that “(the crashes) are caused by exogenous events known as ‘black swan’ events. By definition, an exogenous event is off everyone’s radar screen. “

As the above risks are fairly well known, Smith believes it is rather unlikely that they will cause a total accident in the near future, according to Smith. However, the more important risks specific to this era should be well understood by anyone wondering if there will be another impending market downturn.

The Pandemic

The most visible immediate risk to the economy is what triggered the 2020 stock market crash of 2020 in the first place: the pandemic.

“There is concern about the economy’s failure to recover,” says Brad Cornell, emeritus professor of finance at UCLA and senior advisor to Cornell Capital Group. If “the virus problem gets worse or vaccines don’t work or there is a second wave,” the risk of more prolonged economic despair – and a stock market hit – will increase, Dr. Cornell says.

Long-term weakness in the labor market

The August employment report found that 13.6 million Americans were unemployed, 7.8 million more than in February. Although the number of unemployed has decreased in recent months, the percentage of those who expect to be unemployed for the next six months is increasing.

“The greatest risk to staff is that leave or temporary unemployed people suddenly become permanently unemployed,” said Adam Coons, certified financial analyst and portfolio manager at Winthrop Capital Management.

Inadequate stimulation

 Wall Street had been expecting a second big round of virus relief from Capitol Hill, although the partisan negotiations have come to a serious standstill in recent weeks as the gap between left and right seems increasingly insurmountable.

“If (a) other stimulus measures are not agreed upon in Washington, the reduction in consumption will start to trickle down through the economy as a whole,” Coons said.

“The Republican Party will find it increasingly difficult to deliver a bilateral message that the economy is recovering strongly, but we need stronger stimulus,” he said.

High valuations, concentrated profits

One thing that many analysts and investors love to see in a stock market rally is the breadth of the market – broad participation in different sectors and market that are doing well. This was not the case in 2020, where a sector and some large companies within it led the way. Big Tech was the beauty of the ball, with Apple (ticker: AAPL), Amazon (AMZN), Microsoft (MSFT) and Facebook (FB) easily outpacing the broader markets to date.

“Stocks in general, especially technology stocks, are pricey by historical standards,” says Cornell.

A new generation of investors has also entered the markets through free trading apps such as Robinhood which offers split stocks and commission-free trades. These features allow investors with less capital to participate in the stock market in ways that were previously not financially viable.

The uncertainty surrounding the general election

The last of the five risks highlighted that could cause a market crash is a political uncertainty. Investors know what to expect from a Trump administration, but how stocks would be affected by an administration led by Democratic presidential candidate Joe Biden is less clear.

Biden wants to increase corporate tax from 21% to 28%, which is often the fear cited around his election. At the same time, its infrastructure and green energy projects could inject hundreds of billions of additional dollars into the economy, which could help strengthen the labor market.

Not just the unknowns of a Biden presidency, but global geopolitical uncertainty of whether there would be a disputed or protracted election result is another, perhaps somewhat overlooked, risk.


Will the stock market crash again after the big rebound in 2020? It is certainly not something that can be clearly seen by the masses. However, some of the biggest risk factors that markets face, and any of them could make a significant contribution to an impending bear market.

That said, there are mitigating factors many market watchers, investors, and analysts that will help prevent another full market implosion. Most frequently cited? The Federal Reserve.

Following the recent Fed policy statement that interest rates were unlikely to rise until 2023, Wall Street is more confident than ever that the central bank will step in if necessary to allay fears, strengthen confidence and provide liquidity. inject.

“Never before in its history has the United States Federal Reserve made such an explicit long-term interest rate commitment,” says Nigam Arora, chief investment officer at The Arora Report.

“As a result of the Fed’s policy, traditional valuation metrics are obsolete, at least for the next year,” Arora says.

Arora is far from the only expert to point out the Fed’s unparalleled commitment these days. That said, the central bank can’t prevent every shock, crash, or sell-off in a free market system – no matter how hard it tries. And tax incentives cannot solve everyone’s problems either.

The Reliable Dividend Stocks to Purchase With 4% Yields

These dividend-paying stocks are havens for income investors.

The stock market in 2020 was a roller coaster. In addition to the unpredictable swings in stock prices, the Federal Reserve’s emergency interest rate cuts plunged bond yields, leaving income investors with few viable options. Many companies have also cut or suspended dividends to support their balance sheets during the economic recession. Reliable high-yield dividend stocks are difficult to find for investors looking to defend themselves in an uncertain environment; it has become difficult to find reliable, high-yielding dividend stocks. Here are seven Bank of America recommended stocks that have a return of at least 4% yields and at least A quality ratings from S&P Global.

PNC Financial Services Group (ticker: PNC)

PNC Financial Services is the seventh-largest deposit-based bank in the United States. Analyst Erika Najarian says PNC is well-positioned for both defense and offense, given a $5.9 billion allowance for loan and rental losses on its balance sheet. Low-interest rates are putting pressure on banks’ net interest margins, but Najarian says PNC’s gains are safe. PNC also pays a 4.1% dividend, which is more than double the average yield of the S&P 500. Bank of America has a ‘buy’ rating and a target price of PNC shares of $ 122.

Royal Bank of Canada (RY)

The Royal Bank of Canada is the largest Canadian bank in terms of market capitalization. In the most recent quarter, the bank’s credit losses decreased to 76% quarter-over-quarter. Royal Bank is not out of the woods yet, analyst Ebrahim Poonawala says, but its return and its 12% common equity Tier 1 capital ratio of common equity suggest that this is healthier than many of his peers. Poonawala is optimistic that Royal Bank can gain market share during the economic downturn. The share pays a dividend of 4.5%. Bank of America has a “buy” rating and a target price of $ 87 for RY stock.

Telus Corp. (TU)

Telus is one of the largest telecommunications companies in Canada. Excluding one-off costs, earnings before interest, taxes, depreciation, and amortization rose 5% in the second quarter increased 5%, the company said. Analyst David Barden is optimistic about Telus due to its continued growth in subscribers, its diversified service offerings, its ability to bundle services, its leading customer service, and seamless networks. Top-quality wire and wire. He predicts that 5G network coverage will reach 30% of the Canadian population by the end of the year. Telus shares pay a dividend of 4.8%. Bank of America has a ‘buy’ rating and a target price of TU shares of $ 21.50.


ECB is Canada’s largest telecommunications company and Telus’s biggest competitor. Barden says the second quarter has been the “weak watermark” of the current recession, and the headwinds for the company are expected to ease in the second half of the year. Despite the challenging environment, ECB recorded 35,000 new net prepaid and postpaid subscribers in the second quarter, and Barden says the fee income should help make up for lost roaming revenues. ECB shares pay a 5.9% dividend, and Barden says the company’s cash flow should support annual dividend growth of 5%. Bank of America has a ‘buy’ rating and a target price of BCE shares of $ 54.


BCE is Canada’s largest telecommunications company and Telus’ biggest competitor. Barden says the second quarter has been the “weak watermark” of the current recession, and the headwinds for the company are expected to ease in the second half of the year. Despite the challenging environment, ECB recorded 35,000 new net prepaid and postpaid subscribers in the second quarter, and Barden says the fee income should help make up for lost roaming revenues. BCE shares pay a 5.9% dividend, and Barden says the company’s cash flow should support annual dividend growth of 5%. Bank of America has a “buy” rating and a target price of $ 54 for BCE shares.

Enterprise Products Partners (EPD)

Enterprise Products Partners is one of the largest principal public limited partnerships and offers a range of intermediate energy services, including the collection, processing, and storage of natural gas and natural gas liquids. The energy sector was hit hard in 2020 due to travel restrictions, but analyst Ujjwal Pradhan says Enterprise’s second-quarter earnings are a clear demonstration of the company’s best operations. Recent data from the refining industry suggests operating speeds have recovered to about 80% of pre-crisis levels. Corporate stocks also have a return of 10.8%. Bank of America has a ‘buy’ rating and a price target of $ 24 for EPD stock.

Fifth Third Bancorp (FITB)

Fifth Third Bancorp is one of the largest regional banks in the US. Najarian says Fifth Third is likely to carry a high cash balance until the end of 2020, which will put pressure on margins. However, management has indicated that the net interest income should return to 3% if liquidities normalize after the economic downturn. Meanwhile, Najarian says investors should not undergo downward revisions to earnings guidelines, as the company has simply reduced risk by building up cash reserves. Finally, the shares of Fifth Third pay an attractive 5% dividend. Bank of America has a ‘buy’ rating and a price target of $ 26 for FITB stock.

Oil Prices From Around the World Rise Above $80

Image source: SodelVladyslav/Adobe Stock

As crude oil reached beyond the 80-dollar mark, prices of coal, carbon, and European gas have all hit record highs. With this upsurge, it has become apparent that an energy crunch, which would have an adverse effect on economic growth, is imminent. 

In fact, Brent crude skyrocketed as much as 0.9 percent to $80.22 a barrel, achieving a three-year high for the second consecutive day before settling 0.6 percent lower at $79.09. It even posted three straight weeks of gains, whereas U.S. crude futures rose $1.47, or 2%, to settle at $75.45 a barrel, its highest since July, after rising for a fifth straight week.

Now that prices have been steadily rising for seven consecutive days alongside the energy crisis in Europe, analysts strongly foresee that they will continue to do so during surging demand and tight supplies. 

Because European benchmark gas prices that are up for delivery next month have climbed another 10 percent, costs have doubled since the middle of August while the price of offsetting carbon emissions continued to rise, moving past €65 a ton in intraday trading last Tuesday.

According to investment bank Goldman Sachs, Brent could hit $90 per barrel by the end of the year, warning that rising input costs, higher gas prices and weaker growth were likely to weigh on European corporate profit growth for 2021. It raised its year-end forecast for Brent crude to $90 per barrel, considering that global supplies have tightened as a result of the fast recovery of fuel demand from the outbreak of the Delta variant of the coronavirus and Hurricane Ida’s hit to U.S. production.

“When growth slows, it becomes harder for companies to pass on higher input costs, which is the main risk for net income margins,” the Wall Street lender proclaimed. “While we have long held a bullish oil view, the current global supply-demand deficit is larger than we expected, with the recovery in global demand from the Delta impact even faster than our above-consensus forecast and with global supply remaining short of our below consensus forecasts,” it added.

The said growth came into existence when the pound experienced its biggest one-day drop against the dollar on Tuesday, tumbling 1.3% to just under $1.3530 despite inflation fears. It was its lowest since January, as investors sought a safe haven in the dollar.

In an interview, Jordan Rochester, a currency analyst at Nomura, said that rising inflation concerns are making sterling-denominated assets less attractive. On the other hand, Brent crude has already gained about 55% for the year to date. West Texas Intermediate (WTI) also rose to around $75 a barrel.

In light of the recent developments, global oil demand is expected to reach pre-pandemic levels by early next year as the economy recovers. However, producers and traders from around the world shared that spare refining capacity could still weigh on the outlook.

As expressed by Greg Hill, president of Hess Corporation, global demand is seen rising to 100 million barrels per day by the end of 2021 or in the first quarter of 2022.

Why September Is Considered the “Ghost Month” for the Stock Market

Photo by Ishant Mishra on Unsplash

Stocks followed a winning streak in August, with experts saying that it has been one of the strongest months of the year. But investors are growing wary as September enters, historically dubbed as the worst month for stocks. Although the market went up slightly on Wednesday, the S&P 500 has fallen about 0.5% on average in September, according to Ryan Detrick, chief market strategist for LPL Financial. However, despite its track record, many are still hopeful that this September will be different as stocks have already risen significantly throughout the year.

September is arguably the worst month for investors to bet their money on the stock market. Since 1928, the month has generated an average stock market return of roughly -0.1% with a win-ratio of only 46%, comparatively lower than any other month of the year. Unfortunately, the last two decades have not given September a chance at redemption too.

While investors are more likely to be extra careful over the next four weeks, Funsdtrat released data showing strong equity returns in September made possible when markets experience a strong first half of the year. In the first six months of 2021, the S&P 500 increased more than 15% than it did in the past year, but the truth to Fundtsrat’s prediction is yet to be known.

Liz Ann Sonders, Chief Investment Strategist of Charles Schwab, said that anything could happen in September. The stock market is continually growing along with society, and Sonders stated that it’s “simplistic” to assume 2021’s September will follow history. “Are there a myriad of risks out there that at some point in time could be a risk factor that could lead to more than a 3% or 4% pullback? Absolutely. Could it be in September? Sure.”

Seasoned investors would agree that buying and selling stocks based on the month on the calendar is not necessarily one of the soundest decisions one can make when dealing with the stock market. Even some of the most seasoned investors who have been in the game for decades of their life would testify that stocks are still likely to get hit regardless of the month they are in. An important idea to note, though, is how investors should bounce back from the “tough months” to suffer as small of a loss as possible.

With the momentum provided by the first half of 2021, investors remain optimistic that this year’s September will reap a different result. The S&P has undergone over 15 winning streaks since 1945, all thanks to the rapid and fruitful performances of the first six months of the year.

Ryan Detrick, Chief Market Strategist of LPL, recently said, “We remain in the camp that stocks will continue to go higher, and investors should use any weakness as an opportunity to add to core equity holdings.

September, being a down month, could also have its upside. Experts at LPL are suggesting the people use the month to “dip and buy” stocks and expect to see returns because, according to LPL, “this bull market is alive and well.”

Dow and S&P Breaching Stock Market Barriers as Valuation Continues to Climb

Photo by Yiorgos Ntrahas on Unsplash

US stock market traders and investors are experiencing a gold rush as many stocks in the US market continue to hit new barriers. Overall, the Dow Jones and S&P 500 continue to hit historic highs as the US economy experiences a great revival, with many reports of bank earnings on high and more companies reaching significant milestones in the third quarter of 2021.

The three major stock indexes, namely the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite, closed on new record highs on the first trading day of the week, Monday, as Wall Street continued on its bullish rally following economic growth prospects and predictions. However, this week, players in the stock market can expect more volatility as big bank earnings reports start on Tuesday, along with crucial inflation data.

One of the biggest winners currently is the Dow Jones market, which includes thirty blue-chip corporations, including Disney, Goldman Sachs, IBM, Coca-Cola, and many more. Last Monday, July 12, 2021, the Dow closed with a 126-point jump, recording a 0.4% end-of-day increase to 34,996, adding to the previous Friday’s all-time high. To date, the index has now pushed up to a gain of 16% this 2021 alone. One of the significant pushes to the index was the release of Disney and Marvel’s latest pandemic streaming film launch, Black Widow, which hit a movie-theater earnings pot of  $80 million and streaming earnings of $60 million throughout the weekend.

On top of the Dow growth, the S&P 500 also jumped to record highs as it added another 0.4% to 4,385 points. Leading the surge were the reported earnings of big banks Morgan Stanley, Goldman Sachs, and JP Morgan, who posted stock gains of 3%, 2.5% and 2%, respectively. The benchmark index has now notched three straight weeks of progress as it has hit new highs despite experiencing chopping trading in the past few weeks.  

Nasdaq’s tech-heavy index has also increased by 0.2% and has now also reached up to 16% growth in 2021 alone. S&P 500 has also been on a mid-term uptrend after collectively growing by 18.5% in 2021 to date.

Traders and investors will remember the short-lived drop in the market as the world fell to the COVID-19 pandemic early in 2020. Then, the nation hit economic crunches as many businesses closed and employees lost their jobs due to mandated lockdowns and border closures. Still, the stock market would recover well towards the latter part of 2020. The government would then put measures to reverse the recessive trend, and stocks of corporations that pivoted and thrived during the crisis pushed the stock market upward. 

As more earnings reports come out for the remainder of the year, stock market trading experts expect favorable increases. “We ran out of superlatives to describe corporate America’s stunning performance during first-quarter earnings season,” shares one leading Wall Street player, LPL Financial, in a note released on Monday after citing profits that exceeded their initial targets. 

More members of Wall Street remain optimistic as more of the economy opens up following increased vaccination efforts across the country and the rest of the world.

Stock Predictions of TESLA

The surge of coronavirus brought turmoil in the stock market. Tesla rallied around 500% in the first eight months of 2020 but plunged about 30% in the early nine days of September.

Should You Buy Tesla (TSLA) Shares?

Tesla’s stock bulls generally claim that the company dominates the emerging global electric vehicle market and that comparing the stock and its valuation with traditional auto stocks is irrelevant. At the same time, Tesla Bears often point out that the stock’s valuation is too high, even when compared to fast-growing technology stocks, and Tesla will face an unprecedented wave of new competition over the next two years.

Doug Kass, chairman of hedge fund Seabreeze Partners Management, says he has opposed a short position in Tesla for years. However, with inventories surging more than 800% in the past 52 weeks, Kass says he could no longer sit on the sidelines. Kass finally pulled the trigger by exposing Tesla stock at the end of August for $ 2,014 in late August, representing a post-split price of around $ 403.

“It can now be argued that not only does Tesla’s stock represent a good short term, but at current prices, the stock could represent the largest single bubble – measured by a market cap of nearly $ 400 billion. – history,” Kass said.

But Tesla’s valuation is just one of several concerns he has about stocks.

Tesla’s Unproven Model

Tesla made another profit in the second quarter of 2020, but short-sellers like Kass are taking exception to how Tesla is generating income. Tesla reported a net income of $ 104 million for the quarter based on generally accepted accounting principles or GAAP. However, it also reported $ 428 million in regulatory credit sales in the quarter.

Tesla collects these legal credits to sell electric vehicles and sells many of these credits to other car manufacturers. These traditional automakers need the credits to avoid legal fines until they release their EV models. For now, Tesla can sell these credits for a 100% profit, but analysts say Tesla’s window of regulated credit sales window is closing.

Kass says that without regulatory credit sales, car sales are unprofitable.

“Adjusted for the sale of emission credits, Tesla has never been profitable in its 17 years of existence,” despite having no competition and no need for advertising, Kass says.

He is skeptical of Tesla’s valuation until it can prove that its automotive business can be significantly and consistently profitable.

Competition Is Tight

Another red flag for Tesla is that the company will face its first real wave of competition in electric vehicles in the next couple of years. In the first half of 2020, Tesla represented around 80% of the United States. Sales of electric cars, according to Loup Ventures. However, only 16 EV models are available in the United States, including five Tesla. By the end of 2021, competitors are expected to introduce another 20 EV models to challenge Tesla’s market share.

Kass says the first batch of new competitors comes from fresh, highly rated models from Polestar, Audi, and Volkswagen (VLKAF). Tesla was the first company to capture the electric vehicle market. But Kass says Tesla has a shallow competitive divide and no significant proprietary EV technology to set it apart from its competition, many of whom have a century of experience manufacturing and high-end marketing cars.

Priced for Perfection

Finally, Kass and many other Tesla short sellers are questioning of the stock’s valuation. Even after selling off nearly 30% in September from recent highs, Tesla stock is trading at an expected earnings multiple of 121 and a price-to-sell ratio of around 13.8. This valuation represents a substantial premium over former auto stocks Ford Motor Co. (F), General Motors Co. (GM), and Toyota Motor Corp. (TM), which on average, have a prepaid profit multiple of 10.3 and a price/sales ratio of 0.51.

“Faced with an onslaught of competition, Tesla’s market capitalization is now almost four times that of Ford, General Motors and Fiat Chrysler (FCAU) combined – despite selling only about (400,000) cars per year, against 17 million in sales for the big three units,” Kass says.

Tesla’s earnings fell nearly 5% in the last quarter, but many Tesla bulls say the automaker looks more like a high-growth technology stock than a car company. Unfortunately, valuation comparisons with large-cap tech stocks Apple (AAPL), Amazon (AMZN), and Microsoft Corp. (MSFT) is still considered overvalued. Tesla’s predicted earnings multiple is more than double the average of these technology giants, and the price-to-sell ratio is more than 50% higher.

While there is no doubt that Tesla has shaken up the global auto industry, its spiking share price has already resulted in significant long-term success. Tesla bears like Kass are skeptical that the company will ever be able to meet, let alone exceed, these sky-high expectations.

7 major European stocks to buy now for growth

It may finally be time for European stocks to shine.

Pimco co-founder and Wall Street investment legend Bill Gross recently said that easy money is already being made for investors looking to play the rebound in the global health crisis. Gross says that central bank stimulus will likely be cut in the next few quarters in his latest investment outlook and there is “little money to be made” in global stock markets. However, Gross cited tobacco, banking, and European stocks as three market sectors shunned in the recent rally and could offer an additional advantage to long-term investors. Here are seven European stocks you can buy today, according to CFRA.

SAP (ticker: SAP)

SAP is one of the leading German business application software companies. US technology stocks have been on fire for over a decade, and the tech sector led the 2020 recovery from March lows. SAP has also been performing very well, gaining around 16% since the start of the year. According to analyst Jun Zhang Tan, SAP moves its business from a licensing model to a cloud model, which is expected to help the company reach 80% recurring revenue by 2023. Despite the health crisis, SAP is expected to achieve 87% growth in earnings per share growth this year, according to Tan’s plans. CFRA has a ‘buy’ rating and a target price of SAP stock of $ 176.

ASML Holding (ASML)

ASML is a Dutch market leader in lithography tools used in the semiconductor manufacturing process. The company also performed well in 2020, with a profit of about 22% since the beginning of the year. However, Tan says there are more benefits ahead for the tech stocks, given strong customer demand and growth factors like 5G support and high-power computing. Tan says supply chain disruptions will negatively impact its revenue in 2020, but sales will continue as usual into 2021. As we advance, ASML’s next-generation extreme ultraviolet lithography product is expected to help increase margins, Tan says. CFRA has a “buy” valuation and a $ 435 price target for ASML stock.

AstraZeneca (AZN)

AstraZeneca is a British pharmaceutical company that is testing one of the leading coronavirus vaccine candidates. The company recently had to stop trials due to a severe side effect in one trial participant. However, after an investigation, it was quickly resumed with testing in Great Britain. Analyst Wan Nurhayati says investors should not expect the vaccine to be a significant profitable factor, as the company prioritizes affordable distribution. But she says the company’s other new products will help boost revenue in the high-end single-digit percentage in 2020. CFRA has a ‘buy’ rating and a price target of $ 61 for AZN stock.

Total SE (TOT)

The French oil major Total SE is one of the largest energy companies in the world. The oil industry has again been hit hard by a sharp drop in global travel, but analyst Jia Man Neoh believes Total is an attractive opportunity. Neoh says Total has a long track record of growing steadily regardless of the external environment. The company also has a strong pipeline of on-going project startups and a healthy balance sheet with a debt ratio of less than 28%. CFRA has a “strong-buy” rating and a target price of $ 43 for the TOT stock.

Sanofi (SNY)

Sanofi is a global pharmaceutical company headquartered in France. Nurhayati is optimistic about the Dupixent monoclonal antibody drug, which treats allergic conditions such as eczema and asthma. She says Dupixent will help offset some of the adverse effects of the decline in Sanofi’s diabetes unit. Sanofi is also aiming for growth in the compounds’ annual sales in the mid-to-high figure in its vaccine unit through 2025. Nurhayati says the company’s goal of 30% operating margin by 2022 is probably within reach now that it’s slashing budgets for diabetes and cardiovascular research. CFRA has a ‘buy’ rating and a price target of $ 56 for SNY stock.


ABB is a Swiss technology company specializing in electrification, robotics, and industrial automation. According to analyst Varun Venkatraman, ABB’s decision to sell its Power Grids business to Hitachi for $ 6.85 billion in July has ABB well-positioned to improve its margins and generate long-term revenue growth for companies. Investors. Venkatraman said the deal’s cash proceeds would be used to buy back own shares, boosting earnings per share. Furthermore, he says ABB is a leader in the long-term growth market for industrial automation. CFRA has a ‘buy’ rating and a target price of ABB shares of $ 28.

Vodafone Group (VOD)

Vodafone is a British multinational telecommunications company with nearly half a billion customers in more than 30 countries. According to analyst Adrian Ng, Vodafone’s diverse business profile will help it drive long-term growth. Besides, he says the company has expanded its margins for five consecutive years thanks to its Fit for Growth cost-cutting initiative. Like its American telecom counterparts, Vodafone also pays a sizable 7.5% dividend. Ng expects earnings per share growth of 25% in fiscal 2021 and 42% growth in fiscal 2022. CFRA has a ‘buy’ rating and a price target of $ 16 for VOD stock.

6 Home Improvement Stocks to Brighten Your Portfolio

Some improvement companies are having a moment.

Across the country, people remain indoors, staring at the same four walls day after day due to the pandemic. The desire to improve one’s home, the need for something new and the sheer monotony of staying indoors all day have sparked huge consumer interest in home improvement projects. DIY projects and renovations are on the rise across the country. As a result, companies that can provide customers with everything they need to brighten up their homes are making impressive profits as a result. In fact, the six companies on this list have seen tremendous growth in recent months – and the protracted tailwind from an improving real estate market offers all six of these home improvement stocks a great opportunity to profit from returns. impressive well into the future.

Home Depot (ticker: HD)

Thanks to the sheer number of homeowners looking to do some renovations, Home Depot’s same-store sales were up 23.4% year over year in the second quarter. Indeed, the second quarter was a hit across the board; the company experienced a 100% increase in digital sales, as well as a 10.1% increase in average customer ticket. Online or offline, people are turning to The Home Depot more than ever for their home improvement needs and buying more per transaction – this is a winning combination for The Home Depot and its shareholders. While Home Depot’s projected price-to-earnings ratio is at relatively high value of 24.7, investors need not be concerned given the company’s recent performance and future prospects. A dividend yield of 2.13% only makes investing in Home Depot all the more enjoyable.

Lowe’s (LOW)

Unlike many companies in the market, Lowe’s had a great 2020. Shares are up nearly 40% so far, hitting a record high in August after the company reported impressive second-quarter results. That report included a 30.1% year-on-year increase in sales, as well as a 75% increase in diluted earnings per share. Other highlights included a 135% increase in sales for and an 11.6% increase in the average comparable ticket size. The doubling of more online shopping, coupled with more comprehensive shopping carts, has propelled Lowe’s to new heights. A 1.47% dividend yield makes the deal more pleasant for investors, who should be excited about what’s next for this fast-growing home improvement titan. (OSTK)

Speaking of skepticism, Overstock’s recent earnings have raised a lot of eyebrows on the market. Shares of the online retailer have risen 900% this year, and some analysts believe Overstock’s rise is far from over. All thanks to the company’s new CEO, Jonathan Johnson, who took the job last September and began shifting the company’s focus toward home furnishings – a decision that now seems particularly timely in light. of the pandemic. Overstock reaped the rewards in the second quarter when the company experienced a 205% year-over-year increase to new retail customers, which contributed to a staggering 109% increase in sales. net business. The current focus of customers on home improvement will strengthen Overstock’s business in the near term, and in the long term, today’s profit should lead to further profitability tomorrow.

Wayfair (W)

While physical retailers around the world have been forced to close their doors and absorb the losses, online retailers like Wayfair have never been more profitable. Wayfair is providing customers with all the home furnishings they will ever need and customers have come to the site in record numbers – in fact, Wayfair saw nearly 5 million net new customers joining its site Web, which is more than the previous four quarters combined . All of these new clients contributed to an 83.7% year-over-year revenue increase in the quarter, which translated to non-GAAP (generally accepted accounting principles) EPS of $3.13. That’s well above the loss of $ 1.35 per share that Wayfair recorded in the second quarter of 2019. The company’s meteoric rise has some analysts skeptical about the ability to sustain these gains in the future, but Wayfair has clearly positioned itself for the future.

Sherwin-Williams Co. (SHW)

A fresh coat of paint can turn a house into a home, Sherwin-Williams knows, but the venerable paint producer hasn’t profited from higher rates of home renovation across the country. True, while DIY projects increased sales in Sherwin Williams’ consumer brands group by 21.8% year-on-year last quarter, those gains were offset by falling demand on professional markets; Sales in the performance coatings group dropped 16.5%, while the Americas group recorded a drop in sales of 8.4%. The result was a 5.6% drop in sales this quarter from a year earlier, but that didn’t stop the Sherwin-Williams stock from climbing 25% in 2020 as of mid-September. The recovery in professional demand thanks to a booming real estate market and the reopening of stores in its Americas group promises a better future for this painting company.

Pool Corp. (POOL)

As the urban exodus to the suburbs continues, many of these homeowners want to enjoy the outdoors from the comfort of their backyards. It should therefore come as no surprise that Pool Corp., supplier, and distributor of pool equipment, has enjoyed a historic summer. Pool Corp. reported second-quarter net sales of $1.28 billion in the second quarter, a company record, and a 14% increase year over year, while diluted earnings per share increased 20% to $3.87, another record. This has all been made possible thanks to a surge in demand for swimming pool equipment, as well as maintenance and repair supplies, as homeowners have renovated their outdoor spaces and with the arrival of new homeowners in the suburbs. , Pool Corp. saw an increase in demand for swimming pool building materials as well, indicating that long-term demand will support POOL’s hot series.