Category: Stock News

Speculation on the commodities market has been overwhelmed in past years by technology stocks and cryptocurrency trading and investment. Now, recent gains for small mineral exploration companies and the regaining popularity of gold mean both are options not be overlooked.

Peel Mining Ltd, an Australian mineral exploration company that searches for deposits of precious, base, and specialty metals saw a 40% rise in its share price on Thursday after reporting finds of rich zinc and lead deposits, alongside gold, silver, and copper.

Peel’s managing director, Rob Tyson described the find as:

“Awe inspiring.”

Experts predict that successes like that of Peel today might not be isolated incidents as mineral exploration is seeing a massive injection of budget capital in the past year. This means funds for exploration projects.

Mineral Exploration Could Be Accelerating

S&P Global Market Intelligence this week reported company budgets for non-ferrous metal, including copper, zinc, and nickel, exploration have risen 19% in 2018 to over $10 billion. The number of active small mineral exploration companies has also risen globally by 8% marking the first increase since 2012.

Geologist Tim Treadgold comments:

“The more dollars that go into the ground in the search of new deposits the greater the chance of success, and a result like enjoyed by Peel.”

Prices of metals like zinc and copper have also risen after recent slumps. The value of Zinc hit lows in 2015 but has risen steadily in 2018, though dipping slightly recently. Zinc is used widely in the manufacture of consumer products including pharmaceuticals, batteries, and electrical products.

Gold prices have also seen a recovery across October and early November 2018 compared to a slump in August 2018. Retail sales of gold have increased more than analysts predicted and the price of gold is hovering at a trading support level of $1,200.

Gold’s success could be fuelled by fears of recession and falling stock and share values, both an indication of investors seeking safer havens for their money. Most recently momentum has stepped back slightly as investors focus on the US dollar.

Featured image from Shutterstock.

It looks like Under Armour is finally turning the corner. The athletic apparel manufacturer’s Q3 earnings came in at more than double estimates, earning 25 cents a share. FactSet consensus was 12 cents a share, and revenue was also higher at $1.44 billion USD. Q3 profit was $75.3 million USD, which is much higher than the $54.2 million they brought in during Q3 2017.

Under Armour has been in the middle of a multi-year turnaround, which has seen their stock fall nearly 80% from 2015 highs at times. The company started in on a plan to recover, and according to CEO Kevin Plank, “Our third quarter results demonstrate that our multi-year transformation is on track.”

Despite the street-beating earnings report, Under Armour’s US sales were down. Revenue from apparel was up 4% to $978 million USD, due to a rise in sales from their golf, team sports and training lines. Overall footwear revenue was static at $285 million USD. Accessories showed a marked decrease of 6%, coming in at $116 million USD. The company is expecting overall yearly revenue growth of 3% to 4%, even with the slight knock in US sales.

Under Armour is Turning Around

While Under Armour is the world’s third-biggest athletic clothing manufacturer, the last few years have been rough. The company has fired around 500 people over the last year, in an effort to cut costs. They have also worked to boost advertising spending in non-US markets, which appears to be working for them.

Under Armour CEO Kevin Plank has this to say after the latest earnings were made public, “As we work through this chapter, we are staying sharply focused on our brand by connecting even more deeply with our consumers while delivering industry-leading, innovative products and premium experiences. Coupled with increasingly greater business discipline and resulting efficiencies, we continue to gain confidence in our long-term path and ability to deliver for our consumers, customers and shareholders.”

So far this year Under Armor shares have been on fire. UA shares started the year at $15, and at the time of writing they are trading above $22. A 40% year-to-date rise is grabbing some attention on Wall St. and could mean a much higher share price for the athletic goods manufacturer down the road. The piles of US sporting goods retailers that have been going under in recent years seems to be nearing its end, which is more good news for investors that want to see stable earnings.

Columbia is Killing It

Columbia Sportswear also delivered higher than expected earnings, for the seventh quarter in a row!

Unlike Under Armour, Columbia Sportswear saw positive revenue trends from its North American unit. President and CEO Tim Boyle said the company’s best quarter ever, “…reflects broad momentum across our brand portfolio and regions, it is exciting to see the Columbia brand U.S. business leading the way,” and that, “Our robust, direct-to-consumer performance across both our brick & mortar and e-commerce channels is a testament to brand strength and demonstrates that consumers are responding positively to our innovative product line.”

Columbia Sportswear saw US sales jump by 9% from the last quarter. The company thinks that its direct-to-consumer model helps them to take advantage of a strong brand image, and their e-commerce sales in the USA rose by an impressive 20% in Q3. Under Armour might want to pay attention to the success of Columbia Sportswear’s e-commerce success, and try to get in on that tasty internet money.

Featured image from Shutterstock.

Kraft Heinz Q3 earnings are due to be released tomorrow after the close of trade, and they could come in lower than expected. The food manufacturing powerhouse is suffering from shifting demographics, which may endanger their core businesses going forward.

The Kraft company has a long history of creating food products that appear to be something they aren’t. Take Velveeta “cheese” for example. Most people expect that cheese would involve both cows and milk. Kraft’s longstanding cheese product has no milk involved in the manufacturing process, which may leave some people sorely disappointed.

Once upon a time around a century ago, Velveeta was actually made from milk. To be more specific, it was made from broken cheese, that was bonded using whey protein. Over the course of the last 100 years, the actual cheese disappeared from Velveeta. Today it is comprised mostly of the whey protein that made it possible to begin with, and milk protein.

Velveeta’s slow fall from milk-based grace prompted the FDA to send Kraft a letter in 2002 requiring them to remove the words “cheese spread” from Velveeta packaging, as it isn’t cheese at all. Today it’s called a “Pasteurized Prepared Cheese Product” which is still something of a stretch.

Millennials Aren’t into Kraft Heinz

The baby boom generation was more than willing to accept products that purported to be natural food, but their kids are demanding the real thing.

Kraft’s cheese sales have been suffering for years. Analysts think that Kraft Heinz Q3 earnings will fall to 81 cents a share, down 2.4% from 83 cents in Q3 2017. The products that millennials are rejecting play a big role in Kraft’s problems, and they may be difficult to overcome.

Put simply, millennials don’t seem to want food that is made in a factory and would be impossible to create without a team of PhDs and manufacturing engineers. Pine cured goat’s milk cheeses probably aren’t comparable with Kraft’s present business model, which puts the company into a quandary.

A Faltering Business Model

The people that are willing to buy a “Pasteurized Prepared Cheese Product” and make a sandwich out of it are nearing the end of their lives. This is a problem for Kraft Heinz, who relies on mass appeal to create their margins.

To make matters worse, Kraft could be missing the point. Instead of working to make products that could appeal to a new kind of food buyer, Kraft is working to educate consumers about why they should use their existing products.

Kraft claims that their Kraft Singles have a unique “melt” that natural cheeses can’t match. According to Peter Cotter, the general manager of cheese and dairy at Kraft:

“Honestly, you can’t get that (melt) in a natural cheese… It’s a very unique product. The creamy smooth texture and melt of the cheese. The natural cheeses, they just don’t melt that way.”

Indian Sale Probably Won’t Boost Bottom Line

During Q3, Kraft Heinz sold off a few brands they owned in India to Zydus Wellness Ltd. for around $625 million USD. The sales won’t be official until early next year and are subject to regulatory approval.

According to Bernardo Hees, the CEO of Kraft Heinz:

“The sale of this niche business fits into our overall global growth strategy and our focus on investing in and growing brands within our core categories… India continues to be a key market for Kraft Heinz, and in fact, we’re strengthening our commitment to expand and grow our Heinz sauces and Kraft business in India,”

… which suggests that the sale isn’t part of a wider move out of India.

Kraft Heinz is also dealing with higher input costs, which may push earnings down even further. Things like aluminum and resin have been creeping up in price, due in large part to the trade war that US President Trump is waging. Regardless of the Q3 earnings print, Kraft Heinz is facing structural problems that can’t be addressed without serious changes to their core product strategy.

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Facebook shares went on a rollercoaster ride in after-hours trading on Tuesday, following a mixed third-quarter earnings report. However, amidst a barrage of criticism, dwindling stock over the last couple of weeks, and fleeing users, Facebook yesterday announced strong earnings, but a less-than-expected revenue and lower daily active and monthly users. The tech company also advised investors of increased expenses for the year ahead.

Data scandals and election skewing accusations aside, some 2.6 billion people around the world still use the company’s apps each month. And they own quite a lot of things, so if you thought you were boycotting Facebook by taking a hiatus, you’re probably still using WhatsApp, Instagram, or Messenger (some 2 billion people use these every day).

Low on Revenue and Active Users

The Q3 report came up short on revenue and had lower daily and monthly active users than expected this quarter. The company’s earnings per share exceeded all analysts expectations, however, as they announced the results after the closing bell on Tuesday.

Here are the stats:

• Earnings per share (EPS): $1.76 vs $1.47 estimated (Refinitv)
• Revenue: $13.73 billion vs. $13.78 billion estimated (Refinitiv)
• Daily active users (DAUs): 1.49 billion vs. 1.51 billion estimated (FactSet and StreetAccount)
• Monthly active users (MAUs): 2.27 billion vs. 2.29 billion estimated (FactSet and StreetAccount)
• Average revenue per user: $6.09 vs. $6.09 estimated, per 2.29 billion (Street Account)

Mixed Reports Sent Facebook Shares on a Wild Ride After-Hours

After the report was announced, shares fell by as much as 6% before rebounding to up by 5% and finally settling by up almost 3% as investors took in the report and Facebook CEO’s comments on future growth.

He said in a statement:

“Our community and business continue to grow quickly, and now more than 2 billion people use at least one of our services every day… We’re building the best services for private messaging and stories, and there are huge opportunities ahead in video and commerce as well.”

The company also stated that headcount had increased by a massive 45%, but that costs had also rocketed by 53% due to considerable investment in Facebook stories that has lower advertising rates than its original model. Moreover, compliance with the EU’s GDPR had also cost the company.

Still Better than Expected

After the highly publicized security breach leaving more than 30 million user accounts vulnerable, the Facebook report was expected to sink like a stone with investors. But it didn’t show as much of a slowdown as projected.

Zuckerberg recognized that protecting user data was a challenge but that the company expected to have it figured out by the end of next year. And also that major growth opportunities were to be had for the company in 2019 and beyond.

Featured image from Shutterstock.

Not many people like waking up to Monday morning, but yesterday’s further tanking of Amazon stock must have made its founder and world’s richest man Jeff Bezos want to crawl back in bed.

FANG stocks are suffering across the board at the moment but after Amazon’s disappointing Q3 report on Thursday, its shares dropped by 14% in two days, the worst performance since February 2014 and down by 23% this month. Bezos’ wealth also tumbled by $19 billion in the last two business days.

The internet giant was in good company on Monday, however, as tech stocks dropped in general with the Nasdaq down 1.6% at closing time. However, no other tech company saw such a brutal pummelling as Amazon with its shares shedding a further 6.3% in value in its steepest two-day decline in over four years. Amazon stock plunged by $103.93 to $1,538.88 at end of trading.

Monday’s drop came after already losing $139.36 (7.8%) on Friday to trade at its lowest price since April and register the worst decline in more than four years, when its stock dropped by 14.1% in February 2014.

The Outlook for Amazon

Amazon’s third-quarter report left investors less than impressed as it registered slower growth than expected and also outlined more cautious projections for quarter four. Amazon stock price dragged the Nasdaq down yesterday along with Netflix which, despite rallying stock after its impressive Q3 report, is now also in the midst of a sharp two-day drop down by 9%.

Monday was a turbulent day for tech stocks in general. After IBM announced its acquisition of Red Hat for $34 billion, Red Hat stock surged, but IBM stock fell by 4.1%.

News out of the UK about a digital services tax for large tech companies and the deepening trade war will not help the prospects for tech stock in the short to medium term.

However, most analysts agree that the prospects for Amazon are still good and that the change we’re seeing is a transition from hyper-growth to more modest growth. Eric Sheridan, UBS managing director said in an interview with CNBC:

“Nothing really has changed for the long term for Amazon, all the drivers for growth are still there.”

Featured image from Fortune.

Despite the catastrophic month in China with late selloffs on Monday taking the CSI 300 to new lows, European markets remained calm this morning. Italian stocks and bonds even rallied as S&P’s credit rating kept them above junk status.

Despite the Chinese renminbi at a near-10-year low, sliding oil prices, and China’s late sell-off, European stocks began trading healthily this Monday morning.

The London FTSE 100 gained 0.5% and Frankfurt’s Xetra Dax 30 gained 0.6% after a dismal week last for most markets led by tech selloffs and disappointing Q3 growth reports from Amazon.

Angela Merkel Steps Down and Italian Bonds Rally

The euro dropped by 0.2% against the dollar as Angela Merkel steps down as the leader of Germany’s governing CDU party. Although she will stay on as chancellor in the interim, she will not be standing for another term.

It was a good start to the day for Italy, as Italian bonds rallied and drove down their yields after the S&P Global kept the country’s credit rating a full two notches above junk status on Friday.

Ahead of the UK Budget announcement later today, the pound remained unaltered. Despite “business as usual,” the mood in European markets remains cautious in the wake of Europe’s uncertain political future and fears over a global economic slowdown.

Signs of Hope from Asia

Despite China’s slowing growth and waning stock markets, other Asian markets performed well, showing signs of hope coming out of Asia.

Japan’s Topix fell by 0.4% briefly after climbing by as much as 1.1%. And in Hong Kong, the Hang Seng rose by 0.1% overall after strong earnings news from HSBC, whose shares rose by 4.55% on the back of a Q3 report that beat all estimates.

Australia’s S&P/ASX also rose 1.2% and the healthcare sector performed particularly well as shares rose by 2.4%.

Early US futures looked to an uncertain open, with the S&P 500 expected to slide to 0.1% and the Nasdaq Composite predicted to rise 0.2%.

Featured image from Shutterstock.

The latest dive in tech shares has knocked as much as $100 billion off the market cap of Amazon and Google in after-hours trading as quarter three results fuel investor fears that their strong run is waining.

Shares in Amazon dropped by 9% as the internet giant spelled out a more cautious approach for the all-important holiday season during Q4, forecasting lower than average estimates for net sales growth at between 10-20% YOY.

Shares in Alphabet also dropped by 5% as its advertising businesses slowed during the third quarter, making it a 21% YOY growth (2 points less than expected).

It’s Been a Good Run

To be fair, FANG stocks have been inflated for a long time and they’ve had a consistently decent run, with shareholders expecting the rapid growth to continue. Both tech companies Amazon and Google have consistently outperformed expectations and seen soaring share prices.

But with the spiral in global stock markets led by a volatile tech market, this latest dip has been nothing short of brutal.

One of the worst areas in which both Amazon and Google were hit was in currency changes which alone wiped 1% off revenue growth rates.

While the drop seems to be reflective of current concerns over the shape of the global economy, CFO at Amazon Brian Olsavsky reminded shareholders that there is always uncertainty in the fourth quarter, but the company was still confident they would have a strong holiday season.

Equity analyst at Hargreaves Lansdown George Salmon, quoted in FT, said:

“When you’re trading on 70 times earnings, it doesn’t take much to jolt the share price.”

The company’s sales growth in Q3 dropped significantly from 29% YOY in the second quarter to 13% YOY in quarter three. The moving of key Hindi festival Diwali to the fourth quarter had some impact on results, as well as Amazon’s acquisition of Souq.com, an online marketplace in the middle east.

Poor Growth but Better-Than-Expected Earnings

Google’s disappointing results cut short a long run for parent company Alphabet in which annual revenues have exceeded $100 billion and results have smashed expectations quarter after quarter.

While some analysts brush this drop off as a temporary change in momentum, others are pointing to the end of the dominance of FANG stocks.

Of significant note is that while both Amazon and Google saw a cool-off in growth, they still reported better-than-expected earnings, although this is the next concern for investors amid rising tariffs and tightening profit margins.

Amazon’s earnings were bolstered by its cloud computing business with shares in Amazon Web Services (AWS) making up more than half of all Amazon’s earnings in Q3 at $2.1 billion compared with $3.7 billion overall.

Google’s earnings came in at $13.06 per share, well above the expected $10.40 analysts had predicted.

Featured image from Shutterstock.

It’s been a pretty good ride for FANG stocks with VC funding flowing and exorbitant trading prices, but it seems the party’s about to end. Reuters reported yesterday that several tech-heavy US fund managers are starting to shift their focus away from the flailing FANG stocks. I’m referring of course to the insiders’ name for Facebook, Amazon, Netflix, and Google, not some Halloween costume making company.

Tech Funds Turning to Payment Companies Instead

As the panorama for tech companies all around looks a little bleak, major funds are turning back to the tried and tested companies that underpin vast volumes of mobile transactions, and online shopping payments.

These include Visa, Mastercard, and PayPal. All these companies are currently reporting above-average growth and have more reasonable valuations than the FANGs.

They’re also faring the latest stock market storm considerably better. Visa, for example, is down by around 3% over the past three months. But that’s compared to an over 30% plummet from Facebook and a 13.5% dive from Alphabet.

Portfolio manager of Plumb Equity fund Tom Plumb said:

“Right now we’re certainly looking at a test of the past [market] leadership and some of these FANG stocks have gotten ahead of themselves… We’re looking with companies that have high recurring revenue and high growth, and not a lot of companies are in a better spot than the payments space.”

More Realistic Price to Earnings

Plumb isn’t the only one who’s turning away from the FANGs. Managers from other investment firms like Ave Maria Mutual and Villere & Co. have also moved out of Facebook & Co. for the time being. Their valuations don’t seem sustainable and they haven’t fared well in the latest volatility.

The payments sector, on the other hand, is the perfect vehicle to tap into the rise of e-commerce and mobile purchasing. Moreover, Visa trades at a price-to-earnings ratio of 38.3, while Amazon trades at a P/E of 160.6. Lamar Villere from Villere & Co. said:

“You’re getting a lot of the same disruption but at a fraction of the price.”

With online sales expected to make up one-fifth of all US retail sales by 2022, payment providers could be your next best bet.

Featured image from Shutterstock.