Latest news with #analystteam
Globe and Mail
2 days ago
- Business
- Globe and Mail
Is Roku Stock a Long-Term Buy?
At first glance, Roku (NASDAQ: ROKU) looks like a terrible investment. Earnings are negative. Sales are rising, but much more slowly than they were four years ago. The stock trades at an unaffordable valuation of 125 times forward earnings estimates. After a long-forgotten price spike in the pandemic lockdown era, Roku's stock fell hard and then traded sideways over the last three years. But if you look a bit closer, you should see a healthy long-term growth story in play. Roku targets a huge global market, following in the footsteps of proven winners, and the stock doesn't appear expensive at all from other perspectives. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » It's actually one of my favorite stocks to buy in 2025, and Roku should be a helpful addition to long-term portfolios. Breaking down common concerns about Roku stock Let me deconstruct the scary qualities I mentioned above. Negative earnings Roku's red-ink earnings are at least partly a voluntary choice. The company treats its streaming hardware as a marketing tool, selling Roku sticks and TV sets below the manufacturing and distribution costs. This user-growth tactic is especially unprofitable in Roku's highest-volume sales periods. The holiday quarter of 2024, for example, nearly quadrupled the devices segment's negative gross margin from 7.6% in the third quarter to 28.6% in the fourth. In other words, Roku is running its business with unprofitable profit margins to maximize its market reach and user growth. Furthermore, I'm talking about generally accepted accounting principles (GAAP), which is the standard accounting method used for calculating taxes. Roku often posts negative GAAP earnings that result in tax refunds rather than expenses. At the same time, free cash flows tend to land on the positive side with modest cash profits. That's just efficient accounting powered by stock-based compensation and amortization of Roku's media-streaming content library. Slowing sales growth Roku's year-over-year sales growth has averaged 14.7% over the last two years. That's a sharp retreat from 40.9% in the three years before that. But don't forget that the extreme growth was driven by the COVID-19 pandemic. Lots of people turned to digital media during the lockdown period, resulting in a unique business spike for companies like Roku and Netflix (NASDAQ: NFLX). The pandemic also happened to take place just months after Walt Disney (NYSE: DIS) launched the Disney+ streaming service, inspiring a torrent of copycat service launches. Long story short, there may never be a media market like the one in 2020-2021 again. Holding on to nearly half of that nitro-boosted growth rate in recent years is actually really good. Sky-high valuation Let me point back to the voluntary GAAP losses. Roku isn't trying to generate huge taxable profits at this time, which makes price-to-earnings (P/E) ratios largely unusable. Even the forward-looking version of this common metric relies on Roku's guidance targets filtered through Wall Street's analysis. If anything, the analyst community's projections are more optimistic than Roku's official targets. Management expects a $30 million GAAP loss in fiscal year 2025, which would work out to another "not applicable" P/E ratio. If you look at other valuation metrics, Roku starts to look like a bargain. Trading at 2.6 times trailing sales, the stock is comparable to slow-growth giants such as Caterpillar or Unilever. Roku also seems undervalued, if you base your analysis on its robust balance sheet, with a price-to-book ratio of 4.4 and a price-to-cash multiple of 4.9. The stock seems stuck I'll admit that Roku's stalled stock chart can be frustrating. Share prices are down 17% over the last three years, missing out on 44% growth in the S&P 500 (SNPINDEX: ^GSPC) market index. Roku's sales are up 45% over this period, while free cash flow rose by 66%. When will the big payoff come, rewarding patient shareholders for Roku's quiet success? That's OK, though. Keeping stock prices low just gives investors more time to build those Roku positions. I have bought Roku more often than any other stock since the spring of 2022, and I might not be done adding shares yet. Whenever I have spare cash ready for investments, Roku pops up as a top idea. That remains true in June 2025. So, let the chart slouch lower. Affordable buy-in prices can set you up for tremendous long-term returns. Should you invest $1,000 in Roku right now? Before you buy stock in Roku, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Roku wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $868,615!* Now, it's worth noting Stock Advisor 's total average return is792% — a market-crushing outperformance compared to173%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 2, 2025
Globe and Mail
4 days ago
- Business
- Globe and Mail
This AI ETF Could Turn $10,000 Into $40,000 by 2035
There's no denying it -- artificial intelligence (AI) is likely going to have a profound impact on the world over the long term. Entire industries could be altered. It's no wonder management teams are increasingly focused on ways to better position themselves for long-term success. From an investment perspective, perhaps it's starting to make sense that your portfolio should have some exposure to AI. Luckily, investors don't necessarily need to pick individual stocks if they want to benefit from the trend. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » There's one top AI exchange-traded fund (ETF) that could turn $10,000 into $40,000 by 2035. Continue reading to learn more about how to supercharge your portfolio for future success. Looking at the past and future In the last 10 years, the Invesco QQQ Trust (NASDAQ: QQQ) has generated a total return of 414% (as of June 3). This means that a $10,000 investment made in June 2015 would be worth $51,400 today. I don't think anyone in their right mind would complain with that kind of fantastic result. Even better, the expense ratio of 0.20% is a minimal cost to bear for that type of gain. There's no guarantee that past returns will repeat themselves going forward. Let's assume that there is a slowdown. Even so, I wouldn't be surprised if investors who put the same $10,000 in this ETF today see a fourfold gain in the next decade, resulting in a 15% annualized return. There's a lot of talk about how the stock market's current valuation is expensive. But consider that this has been the general narrative for a very long time. Yet that hasn't prevented equity markets from marching higher. The rise of passive investing, ongoing economic expansion, and dominance of tech-driven enterprises have all played a part. I'm fairly confident these trends will continue. Diversified exposure to artificial intelligence The Invesco QQQ Trust can be considered a top AI ETF, even though it contains 100 stocks in total. There is heavy concentration among the top positions, many of which have a meaningful AI focus. The so-called hyperscalers, most notably Amazon, Microsoft, and Alphabet, combined represent 18.9% of the Invesco QQQ Trust's asset base. These dominant companies have leading cloud computing platforms that offer a range of AI tools to their customers. They're collectively planning to spend hundreds of billions of dollars on capital expenditures in 2025 in an effort to bolster their technical infrastructure to better position themselves for an AI future. We can't forget about Nvidia, the biggest beneficiary thus far of the AI boom. It provides the graphics-processing units that power AI data centers, posting unbelievable revenue and profit growth. It's the second-largest holding in the Invesco QQQ Trust. Other top positions are Apple, Meta Platforms, Netflix, and Tesla. There's no doubt that AI has and will keep impacting these businesses in some way as well. Play the long game Investing correctly means having patience. While the AI craze has definitely made some investors rich in a short period of time, that's the wrong mindset to have. When buying the Invesco QQQ Trust, it's critical to keep the attention on the next decade and beyond. AI has the ability to revolutionize many parts of our economy, and this will all take time to play out. As of this writing, the Invesco QQQ Trust trades 2% off its peak. It might be tempting to wait for a bigger pullback to put money to work. However, I believe this is a flawed approach. It's a smart idea to invest early and often, letting compounding work its magic. Investing in this top AI ETF could work wonders for your portfolio between now and 2035. Should you invest $1,000 in Invesco QQQ Trust right now? Before you buy stock in Invesco QQQ Trust, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Invesco QQQ Trust wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $674,395!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $858,011!* Now, it's worth noting Stock Advisor 's total average return is997% — a market-crushing outperformance compared to172%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 2, 2025 Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Neil Patel has positions in Invesco QQQ Trust. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Netflix, Nvidia, and Tesla. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Globe and Mail
25-05-2025
- Business
- Globe and Mail
Prediction: Dogecoin Will Plummet to New Lows by the End of the Year. Here's Why.
So far in 2025, the stock market has been a mixed bag. The S&P 500, Nasdaq Composite, and Dow Jones Industrial Average have all exhibited higher than usual levels of volatility. Between mixed economic data and ongoing tariff negotiations with trade partners, there is a lot of uncertainty surrounding the equity markets. During times like these, it's not unusual for investors to sell their stocks and redeploy capital into alternatives such as commodities, real estate, or even cryptocurrency. Over the last year, one cryptocurrency that has seen quite a bit of action is Dogecoin (CRYPTO: DOGE). Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » While Dogecoin's momentum can be tempting to follow, I think its price could be headed to new lows sooner rather than later. Let's explore Dogecoin's price action over the last several months and try to uncover what's been driving interest in this specific cryptocurrency. From there, I'll detail why I think Dogecoin could be headed for a precipitous sell-off. Taking a closer look at the Dogecoin roller coaster The chart below illustrates Dogecoin's price action over the last 12 months. Although its price is up 37% over the last year, recent trends clearly show that Dogecoin is trading well below prior highs. Dogecoin Price data by YCharts What may have caused the rapid ascent and descent of Dogecoin Does anything stick out to you as it relates to the timing of Dogecoin's rise and its more recent sell-off? Per the graph above, Dogecoin experienced an unprecedented rally in November. But why? In my opinion, I think Dogecoin's parabolic rise was correlated with the outcome of the presidential election. Following Donald Trump's reelection in November, he created a new task force called the Department of Government Efficiency (DOGE). Moreover, Tesla CEO Elon Musk was nominated to lead this initiative. In years past, Musk has demonstrated some support for Dogecoin -- albeit in joking and facetious ways (like referring to himself as "The Dogefather" on an episode of Saturday Night Live). Nevertheless, it's my thinking that some investors began creating a narrative that the acronym for the Department of Government Efficiency, coupled with Musk's involvement, would somehow result in an endorsement for Dogecoin. In some ways, I can understand how an investor would connect these dots. However, in truly ironic fashion, I think Dogecoin's sell-off in recent months also revolves around Musk. During an interview a couple of months ago, Musk explained that the U.S. government does not have any plans to use Dogecoin. Is Dogecoin a buy right now? If you think about the big picture, most (if not all) of Dogecoin's price action over the last year has been rooted in narratives as opposed to any fundamental truths. Unlike Bitcoin or Ethereum, Dogecoin doesn't have much in the way of utility. It is a meme coin and shouldn't be taken too seriously. While it's entirely possible it could experience a rally here and there, historical trends suggest these rises are often fleeting. As a long-term investor, I'm not interested in getting caught up in a momentum trade and being left holding the bag. With Musk telling investors that his time at DOGE will reduce significantly over the coming months, I think the narrative that Dogecoin will somehow benefit from him leading DOGE's efforts will fade. Given its high degree of speculation and Musk throwing water on the idea that the government may leverage Dogecoin in some capacity, my prediction is that Dogecoin will lose whatever support it has left and crater to new lows by the end of the year. For these reasons, I would pass on Dogecoin and avoid investing in the cryptocurrency. Should you invest $1,000 in Dogecoin right now? Before you buy stock in Dogecoin, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Dogecoin wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $639,271!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $804,688!* Now, it's worth noting Stock Advisor 's total average return is957% — a market-crushing outperformance compared to167%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of May 19, 2025
Globe and Mail
21-05-2025
- Business
- Globe and Mail
Prediction: 5 Dividend Stocks That Could Crush the S&P 500 Over the Next 10 Years
Do you want to succeed in the stock market? Then I've got good news and bad news for you today. A column in The Wall Street Journal recently described a theoretically simple way to crush S&P 500 annual returns -- although that could be a lot harder than it looks in practice. (But don't fret.) The idea goes like this. Historically, if you invest in a basic index mutual fund or exchange-traded fund (ETF) that tracks the S&P 500 -- such as the Vanguard S&P 500 Index ETF -- you can expect to earn around a 10% annual profit before inflation. That's a great number, and more than you'll make investing in bonds or earning interest on your bank account. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More » But according to this theory, you can do even better than the average S&P 500 returns with one simple trick: investing only in dividend stocks. And more specifically, investing in dividend stocks that pay almost, but not quite, the best dividend yields. The first shan't be last, but it's only second best This may sound counterintuitive. I mean, the idea that you make more money investing in stocks that pay you dividend income, than those that don't, seems clear enough. But logically, to make the most money, you should buy stocks with the biggest dividends, right? Except it doesn't work that way. According to the The Wall Street Journal, $1,000 invested in the S&P 500 in 1930 , and left there, would have grown to $8.56 million by 2024. And $1,000 invested in the 20% of S&P stocks paying the best dividends would have grown more than twice as much, to $19.37 million. So far, so good. It makes sense that stocks plus dividends would outperform stocks, period. But here's the surprising bit: $1,000 invested in the 20% of S&P stocks paying the next best dividends (the second quintile of dividend payers) would have grown to a cool $31 million. That's 262% better than the S&P 500 performance alone, and 60% better than the top quintile. Time to do some research I don't know about you, but I was surprised by these results. Perhaps I shouldn't have been. As the Journal warns, stocks with too-large dividends "really could be dogs." Their dividend yields may look big because their businesses are bad, their stock prices have declined, and as a result, their dividends look bigger relative to their stock prices. By investing in second-quintile dividend payers, you may dodge the bullet of buying into a seriously injured business. But what do these "second quintile" businesses look like? Running a screen on S&P 500 stocks on I determined this second quintile comprises 72 separate stocks, and from essentially all sectors of American industry. Buy into this second quintile, and you'll own shares of energy companies like ConocoPhillips (NYSE: COP), popular consumer brands such as Hershey (NYSE: HSY) and Starbucks (NASDAQ: SBUX), retailer Dollar General (NYSE: DG), and megabank Citigroup (NYSE: C). Dividends within the group are respectable, yet without looking extreme. Ranging from 2.5% to 3.7%, they all pay at least a full 1% better than the S&P 500 as a whole. How to buy second quintile dividend stocks? Despite the clear outperformance of second-quintile dividend stocks, there doesn't appear to be a single S&P index or ETF that tracks this particular group of 72 stocks. You can buy them each individually of course, but this would make for a rather unwieldy portfolio. The good news for me, your humble financial writer, is that it's easy to note down the tickers and form at least a virtual portfolio of these stocks, to keep track of how they perform. Individual investors, meanwhile, might want to pick just a good handful of the best-known names from these 72 stocks, and invest in them instead. You might, for example, start with the five stocks named up above: Conoco, Hershey, Starbucks, Dollar General, and Citigroup, which on balance I believe should make for a nice, dividend-rich, modestly priced portfolio. Paying from 2.6% (Dollar General) to 3.4% (Conoco and Hershey), they cover basically the same range of dividend payout as the larger second quintile. And their dividends look pretty safe. On average, across the five stocks, their dividend payout ratio is a modest 55%, according to data from S&P Global Market Intelligence. Valuation-wise, Starbucks is the only one exceeding the "average" value for an S&P 500 stock (31.5 times earnings). The others are all bargain-priced, ranging from Citi and Conoco costing less than 12 times earnings, all the way up to Hershey at a still-modest multiple of 20. Great dividend yields at bargain prices? Sounds like a good way to beat the market to me. Now let's put the idea to the test -- together. Check back here in three months, and I'll tell you how the portfolio is performing. And if the strategy seems to be working, I'll plan to keep the experiment going. Should you invest $1,000 in ConocoPhillips right now? Before you buy stock in ConocoPhillips, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and ConocoPhillips wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $642,582!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $829,879!* Now, it's worth noting Stock Advisor 's total average return is975% — a market-crushing outperformance compared to172%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of May 19, 2025
Globe and Mail
14-05-2025
- Business
- Globe and Mail
U.S.-China Tariff Cuts: Is the 2025 Stock Market Sell-Off Officially Over?
The broader market indexes soared on Monday, May 12, in response to news that the U.S. and China would pause their reciprocal tariffs on most goods for 90 days -- a move that built on the momentum from the trade deal framework that the U.S. and U.K. revealed at the end of last week. As of Monday's close, the S&P 500 (SNPINDEX: ^GSPC) was down just 0.6% year to date -- an astonishing rebound considering the index was down by more than 15% on the year at the nadir of its sell-off in early April. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » While it's great to see portfolio balances recover, those gains will matter little if they are fleeting, and investors are likely wondering if this bounce is the real deal or a head fake. Either way, it's important to focus on quality companies during volatile periods. But here's why I think the worst of the 2025 stock market sell-off may be over, and what I'd recommend you do if the market keeps rallying. An end in sight There's no perfect science for knowing when a sell-off is about to start nor for gauging when one is over. But there are some simple indicators you can use to gauge market sentiment. The simplest is the relationship between stock market sectors. When investors are optimistic about the outlook for the economy and corporate profits, growth-focused and cyclical sectors like tech, consumer discretionary, communications, financials, and industrials tend to do well. But when investors are fearful, then defensive and "safe" sectors such as utilities, consumer staples, and healthcare usually outperform the benchmarks. Similarly, investors often turn to hard assets like gold during times of uncertainty. At one point in late April, gold prices were up by over 30% year to date while the S&P 500 was down more than 12%. Another good indicator to watch is the CBOE Volatility Index, commonly known as the VIX. It measures the implied volatility of short-term options on the S&P 500. If investors are willing to pay more for a call option because they think the market will go up a lot in the short term, or a put option to protect against downside risk, then that will lead to higher volatility. The VIX was at its lowest point of the year when the S&P 500 was near its all-time high in late February. Then, shortly after President Trump unveiled his global tariffs on April 2 ("Liberation Day"), the VIX spiked in lockstep with a massive sell-off in the S&P 500. Data by YCharts. In the last few weeks, the VIX has been falling and the S&P 500 has been climbing, a combination that could signal that the worst of the sell-off is over. Great companies can sell off for bad reasons The last month and a half or so have been a great lesson on the pitfalls of getting caught up in stock market volatility and letting emotions drive your investment decisions. It also shows the degree to which the market despises uncertainty. The steep tariffs that Trump imposed led to a host of countries imposing their own higher tariffs on U.S. exports. The escalating tensions put the U.S. on the brink of an all-out trade war. Corporate leaders didn't shy away from outlining the effects these tariffs would have on their businesses. For example, Nvidia said it would be taking a $5.5 billion charge in its fiscal 2026 first quarter. Shares of Apple and Nike got crushed due to their exposure to China, both as a manufacturing hub and as a major market for sales. However, strong results from top tech companies in the recent earnings season were a reminder that much of the broad market sell-off was based on fears of an economic downturn that had yet to materialize. Microsoft reported phenomenal results and reaffirmed its upbeat revenue and operating margin guidance. Meta Platforms ramped up its data center and artificial intelligence investments, and management forecast higher capital expenditures this year. Alphabet reported steadily rising revenue and high margins. It also raised its dividend. Outside of big tech, several companies saw their stock prices get crushed for the wrong reasons. For example, American Express reported excellent results and reaffirmed its full-year guidance. Its long-term investment thesis looks stronger than ever with the company expanding its network while displaying impeccable risk management. Yet the stock got clobbered, and its price-to-earnings ratio was compressed to bargain-bin levels. Microsoft, Meta, Alphabet, and American Express are just some of the many examples of companies that were doing just fine even when trade war tensions were hot, yet their stock prices fell anyway. Quality wins in the long run Market sell-offs can be swift and brutal. When your screen flashes red with no end in sight, it's easy to get caught up in fear. However, companies with strong balance sheets don't need to overhaul their capital spending plans just because new policies in Washington appear liable to throw a wrench in a few quarters of results. Investors can take a similar approach by not overhauling their investment portfolios based on factors that don't pertain to the underlying investment theses of their holdings. Resisting the urge to take action can be difficult, but I've found that one of the best ways to handle volatility is to invest in a way that limits pressure. Pressure can come in different forms. But some of the simplest ways to mitigate pressure are to invest with a long-term mindset with money that you won't need anytime soon. Also, stick to holding shares of companies that you understand and that have strong fundamentals. Lastly, accept that rough conditions can get worse before they get better. The same approach applies when the market is going up. You can eliminate pressure on yourself by recognizing that you don't have to time the very bottom to buy, nor wait to buy stocks until you can get them at incredible prices. Even if you're feeling like you missed out on the bargain-bin prices from recent weeks, that's OK. The real wins come from investing in top companies and holding them over the long term, not from trying to capitalize perfectly on short-term periods of market volatility. Should you invest $1,000 in S&P 500 Index right now? Before you buy stock in S&P 500 Index, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and S&P 500 Index wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $613,951!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $796,353!* Now, it's worth noting Stock Advisor 's total average return is948% — a market-crushing outperformance compared to170%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of May 12, 2025 Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. American Express is an advertising partner of Motley Fool Money. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Daniel Foelber has positions in Nike and Nvidia. The Motley Fool has positions in and recommends Alphabet, Apple, Meta Platforms, Microsoft, Nike, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
