Three Stocks You Should Buy Right Now

Three Stocks You Should Buy Right Now

With one of the longest-running bull markets in financial history starting to settle down, now might be a good time to buy individual stocks that once carried a hefty price tag. Most major market averages started 2018 on a tear, making some stocks unaffordable, but prices have now settled. Here are three stocks that are trading at substantial discounts, which could provide some solid long-term returns.

HP (Formerly Hewlett-Packard):

Although HP’s stock price has been performing well lately, many analysts who cover the company believe the price is still cheap. The S&P 500 trades at around 17 to 18 times forward earnings while HP only trades at 12.5 forward earnings. Also, the stock offers a 2.5 percent dividend yield, which is more than 60 basis points more than most dividend-paying stocks in the S&P 500.

The company’s outlook for 2018 is strong indeed. Although some analysts expect an EPS (earnings-per-share) of close to $2, the company’s guidance is for an EPS of $2.60. It is true that HP only offers two business models, printers and PCs, but the revenues from those businesses rose 13 percent and 7 percent respectively in 2018. Analysts who cover the stock believe revenues will rise by 4 percent and 10 percent in 2018. If you want to put an undervalued stock on your watch list, HP is certainly worth a look.

General Motors:

Although auto sales are starting to peak in the U.S., the recent pullback in stock prices might put GM stock in the undervalued category. For one thing, GM’s forward P/E ratio is a ridiculously low seven times forward earnings, and the company offers a dividend yield of 3.5 percent. If you are a passive investor looking for safe returns, the generous dividend yield alone is enough to put GM on your watch list.

Despite the peak in auto sales in the U.S., there is still a growing demand for automobiles overseas. In 2017, GM sold a record 4 million automobiles in China. Analysts also note there is a surge in overseas demand for luxury cars. This could bode well for GM as the company is putting much of its focus on its new line of luxury Cadillacs.

Macy’s:

As e-commerce continues to kill the bottom lines of traditional retailers (think Toys R Us), Macy’s remains optimistic about its future. That optimism could lead to some very healthy returns as the stock price starts to stabilize after losing almost 60 percent in value over the past three years.

The company should benefit nicely from the Trump administration’s corporate tax relief since most of Macy’s sales come from the U.S. Think about it, Macy’s paid an effective tax rate of close to 36 percent before tax reform. Under the new tax law, Macy’s will only pay around 20 percent in taxes. If the shares have hit bottom and revenues pick up due to additional working capital, Macy’s is certainly worth a second look if you are a value investor.

Edward Schinik has been with the Investment Manager since 2009 and has been with one Affiliated Investment Manager since 2005.

The Basics of Momentum Investing

The Basics of Momentum Investing

Introduction:

Momentum investing is a sharp contrast to typical long-term investing. Specifically, it focuses on short-term volatility, timing peaks and valleys of the security, and relevant market sentiment to generate returns. This type of investing is done with an eye on volatility and far less on underlying fundamentals, long-term trends, dividends, or balance sheet considerations. Here we will go over the basics of momentum investing.

Trading Fees:

Every time someone buys or sells on the market, two variables inevitably increase cost and decrease returns: trading fees and bid-ask spread. Trading fees are specified by the broker that executes a trade and must be taken into consideration when trading securities on momentum. Some brokers reduce or eliminate fees when certain trading or account specifications are met. Those types of discounts can work wonders for overall return from momentum investing since even small fees add up quick when trading momentum.

Bid-Ask Spread:

Bid-ask spreads are another facet of life and, unlike fees, cannot be negotiated. Bid-ask spreads are very narrow for popular and large-volume securities like mega-cap stocks or trusted currencies like the US dollar and the Euro. Obscure securities like nano-cap stocks or currencies issued by financial unstable countries have a much larger bid-ask spread.

Momentum vs. Fees and Spreads:

When trading momentum, an investor has to make a decision based on the following fact: volatility is a friend, and smaller securities can offer incredible volatility and potential for great returns. Is the larger bid-ask spread worth the volatility? Could I generate large enough returns consistently enough to overcome the substantially higher cost basis that comes with large spread? If not, momentum trading should be done extremely cautiously, if at all.

Greed and Fear:

A momentum investor has to be tuned into timing the scope of greed or fear that other large traders have regarding his security of interest. Market psychology is hardly rational in the short term in the sense that price doesn’t always reflect value; hence “overvalued” and “undervalued” parlance among traders. As such, entry and exit points can be anticipated with some success using technical indicators that, to some extent, quantify greed and fear relative to past price, volume, volatility, and other data. Executing trades quickly is critical when trading from the volatility generated by greed or fear.

Summary:

Momentum trading is a strong contrast to the slow-and-steady-wins-the-race approach. It is based on identifying entry and exit points indicated by past experience, technical indicators, and some degree of intuition about market psychology. Though volatility is sometimes perceived to be risky, a momentum investor can only make profits from volatile securities. Otherwise, trading fees and bid-ask spread eat up too much of the profit margin and increase losses past the point of compensating for the risk and expertise it takes to trade on momentum.

 

Edward Schinik has been with the Investment Manager since 2009 and has been with one Affiliated Investment Manager since 2005.

Why You Should Invest in the Stock Market

Why You Should Invest in the Stock Market

 

A lot of people fear the stock market even though historically it has performed well. In fact, it has always its upward trend. In other words, every bull market was stronger than the bear market or “recession” it had previously experienced. Why are people so hesitant to invest and grow their money? There are really stable investment vehicles that the stock market provides like Roth IRAs and 401k. Overall, people just have to learn to ride the market. In this article, I’m going to be breaking down the top reasons why it’s smart to invest in the stock market. Let’s get started.

1. History:

Like I said earlier, the Dow and S&P 500 have historically been on an uptrend rather than a downtrend. This is due to the fact that every time there has been a recession in the economy, it has been followed by a strong and more powerful growth and expansion period. If all signs are pointing to a recession and a downtrend, just take the money out of your stocks and invest into something that will hold its value like gold or real estate. At the end of the recession, this is the best time to buy as stock prices are at their lowest. All in all, you should get to know the basics of investing before you invest at all. Focus on investing in quality picks that are experiencing growth and that you know the pattern of.

2. Retirement:

Retirement is probably one of the best reasons to invest in the stock market. Unless you operate a very profitable business or some other asset that will give you consistent cash flow when you retire, it’s probably a good idea to invest in the stock market. Like they say, the sooner the better. The sooner you invest, the more time you give your money to compound. The more times your money compounds and the more you add to it throughout the years, the more you will have when retirement comes. Make it a goal to invest a certain amount of money every month into your portfolio. Even if it’s only $100 invested every month, it will make a big difference in the long run. Also, take advantage of retirement accounts like 401ks and Roth IRAs. For a 401k, your employer will match your contributions. As for a Roth IRA, it grows tax-free every single year.

3. Returns:

The returns that the stock market has to offer are pretty great. Is it a “get-rich-quick” or “Bitcoin” type of investment that is going to show massive returns over the next few years? Probably not. The only ones who truly make large sums of money are those guys on Wall Street in hedge funds. However, you can make a great deal of money the larger your portfolio is. Like they say, it takes money to make money. 10% earned on 2,000,000 is a heck of a lot more than 10% earned on 20,000. Work ever month to consistently grow your portfolio so that the returns you see are much greater.
Edward Schinik has been with the Investment Manager since 2009 and has been with one Affiliated Investment Manager since 2005.

Here’s What You Need to Know About Taxes and Cryptocurrency

Edward schinik is the CEO of Yorkville Advisors

The advent of digital currencies like Bitcoin, Ethereum and Litecoin have made everyday joes who hopped on the train early into overnight millionaires, and in some cases, billionaires.

But while it’s exciting to see that initial $1,000 Bitcoin investment turn into over $100 million in capital gains, the hidden reality is that Uncle Sam will get a substantial cut of that as well. Here are three things to keep in mind when paying taxes on your crypto.

Cryptocurrencies are Treated as Property, Not Currency

IRS Notice 2014-21 addressed the issue of taxation on cryptocurrencies, especially during currency transactions. While you may think that exchanging Bitcoin for a goods or service is the same as using fiat money (and it can be, in practice), the government sees that as not just one transaction, but two. First, you have to pay tax on transitioning it to currency, then on the actual purchase itself.

For instance, if Gary uses Bitcoin to buy a new television set, he has to first determine the price of the Bitcoin at that moment and then subtract that by the cost of the television to discover the difference, which has to be reported. The same goes if a loss occurs. For this reason, Bitcoin accounting can be a monumental headache due to juggling multiple laws and constant surveillance of the price.

Some Events are not Taxable, But Still Need to Be Reported

While using Bitcoin to pay for goods or services can be a taxable event, others are not, such as making a wallet-to-wallet transfer or buying cryptocurrency with regular fiat money (while trading crypto to fiat money is, however). Likewise, trading crypto for crypto is a taxable event, but giving crypto as a gift is not unless the amount exceeds a certain limit. Confused? Join the club.

Even though everyone, including the IRS, is unsure how to actually tax cryptocurrency, you still are obligated to report any transactions that are made (it’s useless to hide anyways, thanks to blockchain technology). Even if you don’t know the exact market value of your capital gains or losses, you should still use your best estimates to file.

A Good-Faith File is Better than Not Filing at All

For some, part of the charm of buying cryptocurrency is the level of anonymity that it affords. Many are wrongly under the assumption that they can buy whatever they want on the crypto market and the government will never be able to track them down.

They could not be more wrong. Failing to file or trying to hide your assets is known as tax evasion and is a federal crime that could land you in jail. Making an effort to file your taxes on good-faith, using the best available resources, even if there are mistakes made, will simply result in a fine. If you’re unsure about your taxes from past years, file an amended return and get it fixed before the IRS finds out, and remember to always be consistent with your accounting methods.

Edward Schinik is the CEO of Yorkville Advisors

Apple Set To Buy Shazam On Latest Acquisition Run

Apple is all set to go through with the acquisition of the music recognition app, Shazam. The deal is allegedly worth $400 million and is set to go into full effect in the initial months of 2018. Shazam was first introduced to the public in 2009 as an app that would let people identify the song that was playing, through the apps patented software. Within a few months of the release, the app went to being one of the most downloaded apps of 2009. As of 2016, Shazam has been downloaded over a billion times by people all over the world, and that number is only rising with time. Continue reading “Apple Set To Buy Shazam On Latest Acquisition Run”

Ready to expand your portfolio? Here are 5 types of investments you should know about

If you are looking to build a rock-solid portfolio that will allow you a greater degree of financial freedom, you have no doubt considered investing. Investing is one of the best long-term ways to create wealth and diversify your sources of income. With that in mind, here are five types of investments that you should know about for a stronger financial portfolio. Continue reading “Ready to expand your portfolio? Here are 5 types of investments you should know about”